The desire to effectively interact with the commercial Property valuation market is closely related to the need to understand the mechanisms of this niche. The basis of market knowledge is the study of the commercial real estate market as a whole and the study of individual market segments. Valery Trushin, head of research and consulting at IPG.Estate , shared what real estate market research includes, how it affects the behavior of owners, and how it can help tenants and investors.
There are two types of research that a consulting company conducts. The first type is quarterly reports on the state of the real estate market for each segment. They are in the public domain on the resources of consulting service companies and acquaint market players with professional expertise. Specialists collect information on all segments, update it and track changes in the market.
Such a review is a brief of the second type – an in-depth market research. Work on it is carried out on an ongoing basis and is detailed for each segment.
A detailed analysis of the real estate market contains much more information than a squeeze from the calculations. The data presented in the study separately cover the studied areas, business zones, and specifically relate to each type of commercial facilities. Due to its completeness, such a study is a paid service. At the same time, it is extremely useful for owners, tenants and investors for a number of reasons.
Does the owner need research?
It is fundamentally important for the owner to be aware of the dynamics of the market. The success of its activities directly depends on balanced management decisions, the need for which is simplified by the fact that all the necessary information is at hand.
Consider a situation where the owner of an office center has a pool of tenants. Office lease agreements are coming to an end. In order to enter into negotiations on the extension or replacement of the tenant, the owner must understand what are the rental rates of competitors and the average market, current trends in office real estate in terms of demand; what is the occupancy of neighboring objects and the average occupancy in the market.
Thus, the study of the development of office real estate, which the landlord gets acquainted with, becomes the foundation on the basis of which management decisions can be made. For example, to raise the rental rate if the average rate in neighboring properties is higher than the established one.
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