Chapter 7 powerpoint

* Chapter 7 Forecasting Ownership Benefits and Value: Market Research Feb 18 Real Estate Process #306 * Course Business Quiz #1-Discussion Sections THIS WEEK Review sheets sent out & linked to website Textbook chapters: topics, concept checks and test problems to know PowerPoint slides to know Lecture material ? Chap 5 (part 2) ? TIF (general question) Chap 3 ? know slides 25 & 26 (condo, timeshare, etc) Chap 4 ? all legal descriptions * Exam #1 About 40 - 45 questions (about 1/3 True/False, 2/3 Multiple Choice) About 8-10 questions will be math related (HW-quiz) There will be general questions from guest speaker presentations Machine graded ? will fill out scantron No programmable calculators, No dictionaries Be prepared to show your student ID if requested MAKE SURE YOUE KNOW HOW TO USE YOUR CALCULATOR. You might want to have extra batteries Bring several #2 pencils and an eraser McBurney students MUST make arrangements with me. 1100 Grainger ? Eric?s Sections ? #303 1:20 PM Thursday; #305 2:25 PM Thursday, #306 6 PM Wednesday) 132 Noland Zoology Bldg (250 N Mills St) - Beth?s Sections ? #301 - 7:45 AM Thursday; #302 1:20 PM Tuesday, #304 - 6PM Tuesday * Real Estate Club Real Estate Club http://realestateclub.org/ Meetings at the Pyle Center (on Langdon Street). Pizza and drinks are from 6:30 - 7:00, and speakers normally begin at 7 - 7:15 PM Meetings: Thursday, Feb 19 ? Mike Komppa ? Corum Real Estate Group Thursday, March 26 ? Adam Cibik ? CPP Investment Board Thursday, April 16 ? Fiduciary Field Trips - This semester: San Francisco ? Feb 25-27 * Now on to Chapter 7? In Chapter 5, looked at How/why cities grow Forces that determine its form (access, bid-rent curve, clustering, central place pattern) Chapter 7 looks at the dynamics of a specific property and its location Does it have the amenities wanted by the market? Is the local advantageous? Are there enough people who would rent/buy? Are there numerous competitors vying for those same people? Chapter 7 goes over several examples in text. Know basics Elysian Forest ? planned unit development Palm Grove ? proposed office building Plane Vista ? proposed apartment expansion * Dr. James Graaskamp ?When you buy real estate, you are buying a set of assumptions about the future? Market analysis should help to identify and measure assumptions about the future. * Market Analysis Supply and Demand Analysis Property value directly affected by how much demand there is for the product and how much competitive supply there is in a defined area Demand for product - population growth and composition employment characteristics and income levels user preferences/lifestyles area regulations (UW enrollment, moratorium on nursing homes, etc.) Supply of (competing) product government regulations (zoning, building codes) interest rates construction costs lease rates and vacancies amount of available land * Other Factors That Affect Real Estate Demand Location is important Need good access ? linkages Close to your clientele Non-locational factors ? Characteristics of product Housing (style, design, size; financing available) Commercial (tenant mix and character; parking facilities) Offices (style, design, floor plate size; amenities and services; electrical and communications service) * Critical Questions to Answer from text What is the real estate product under consideration? Product/locational characteristics Who are the customers (target market)? Demand for product Where are the customers? (What is the market area?) Demand for product What do the customers care about? (What aspects of the product?) Product/locational characteristics Who are the competitors? Supply of competing product Grand Central Apartments * Laundry and vending on each floor Main floor resident lounge, study and event rooms Resident package delivery service Underground car parking, inside bike and moped parking Ice makers in common areas (that's cool) Private 13th floor outdoor terrace (fantastic views) Main floor resident coffee shop Choice of cable and Internet providers 163 units 21 efficiency, 33 one-bdrm, 37 two bdrm, 27 three-bdrm & 44 four-bdrm apt units. Parking: 161 cars stalls & 73 bike spaces located on three levels of parking. Plus some parking a street level. * Residential Product/Locational Characteristics What is the real estate product under consideration? What do the customers care about? (What aspects of the product?) 1022 W. Johnson St. #606 Madison - WI 53715 Apt Rent: $1260 One-bedroom, one bath. Sq Ft (approx): 614 Utilities Paid By Resident: Elec., Hot Water, Heat & A/C (unit portion) Laundry: On Each Floor Parking: $165 Heated Underground Large bedrooms with closet organizers Hardwood laminate floors in kitchen & bathrooms Each unit furnished (very nicely we might add) Units include private deck or balcony * * 40 seconds or less: Educational Science Chemistry Noland Hall 80 seconds or less: Grainger Hall 115 seconds or less Chamberlain 145 seconds or less: Computer Science Geology Meteorology 200 seconds or less: Vilas Hall Humanities 215 seconds or less: Bascom Hall 275 seconds or less: Van Hise Medical Sciences 300 seconds or less: Social Sciences Locational Attributes * Demand for Product Who are the customers? Market segmentation - differences in preferences or needs among market subgroups Preferences/needs change over time, location, & user group 1 car garage versus 2-3 car garage Single floor house versus multi-story Close to classes or State Street? Where are the customers? Market area- (Primary Market Area ?PMA, or a trade area) PMA is defined as the area in which similar properties compete with the subject property for consumers. Students, others? Enrollment is not increasing Where are they coming from? * Supply of Competing Properties Who are the competitors?. * Equinox A new luxury high-rise residence, Close to UW, State Street, and the Kohl Center. Has115 units w/ a variety of floor plans. Underground parking. Lucky is 412,000 total square feet with 359 apartments, 669 bedrooms and 569 bathrooms. Lucky is 10 stories high and sits on top of 2 floors of retail space The apartment mix includes studios, one-, two-, three- and four-bedrooms * High-Tech Tools for Real Estate Market Research Geographic information systems (GIS), (made analysis of Plane Vista possible) Widely used in store location research Psychographics Market segmentation research seeks to relate product preferences to ?attitudes, interests, opinions, and values, and to demographics Used to date in retail real estate, but may also apply to housing * Customer Analysis ? Mapping Demographic Characteristics * Customer Analysis - Psychographic Characteristics Demographic segments may have a lot of similarities, but? $75K income, home owner, enjoys live music, drives a Volkswagen $40K income, renter, buys two books a month, drives a Pontiac Photo © UW-Madison University Communications, Jeff Miller * Survey Research Potentially powerful tool if used carefully Coastal Condo design: How many bedrooms? Plane Vista: Where do current residents really work? Risk: End up with meaningless questions or a meaningless sample