Panama City Real Estate | Commercial Real Estate
Overview of User Activities
The remaining portion of this module focuses on the task o services that can provide for a user client or investor, including the different ways that involvement in commercial real estate can be profitable.
Users. One of the first steps to understanding the user side of the business is to learn as much as possible about a specific product and the type of clients who use it. This is a never-ending process, as technology, construction techniques, and client applications always are changing.
The first step in positioning a property in its market is to gain a through knowledge of the subject property’s strengths and weaknesses. Knowledge of the immediate area around the property and the secondary and tertiary markets the property draws from also is needed. The subject property should be ranked in comparison to the most similar sites closest to the subject property.
Defining the boundaries of the market is on of the early steps in a market survey. This usually is done by defining three rings around the property. The immediate area around the property is the first ring special concentration is spent on comparable properties closes to the subject property.
The second ring includes properties that are similar to and nearby the subject property, but are not in the immediate area. The third ring includes all other similar propertied that might affect the subject property. Other boundaries may be defined by changes in the landmarks—a river, a forest preserve, or a highway, for example. Boundaries also can be defined by a change in land use--- from a residential neighborhood to an industrial area, for example.
Market Surveys for Commercial Properties
Office buildings are classed as A, B, or C space. The market survey should first define which class the subject office building is in, then identify the properties that most clearly resemble it. For example, for a class A office space in a central business district (CBD), the primary market may be one or two miles in any direction. Location is also important—an office in the CBD would not be compared to a secondary or suburban market.
Market areas for industrial properties are determined in much the same way as office properties.
The primary market for a retail site is its trade area—the nearby community that make up its primary customer base. Major malls may have a county or several counties as their trade area, whereas small retail spaces would have a tighter definition of the trade area.
For retail properties, the primary trade area is the area from which 70 percent to 75 percent of business is generated. It is usually within a three-mile radius of the store. The secondary zone represents another 20 present to 25 percent of the business generated. It is usually within a three to five mile radius of the store. The third zone represents the remainder of the business.
Calculating the Vacancy Rate for a submarket or the General Market
The two ways to derive a vacancy rate for a market area are to use total inventory or average rates for individual buildings.
The first method (using total inventory) is more accurate since it is a “weighted