Market research is the process of collecting and analyzing market data and trends in order to make informed marketing, business and investment decisions.
In a broad sense, market research includes all the activities and processes involved in gathering data, measuring market size, assessing the competitive environment, and determining price levels. Market research also includes characterizing user needs and preferences and understanding how and if those needs are met in the market place.
In real estate, some of the more basic data gathered in the market research process includes demographics, sales prices, rental rates, vacancy or occupancy rates, net absorption rates, and sales or lease turnover rates.
Market depth may be indicated by the number of buildings or tenants, or total square footage in a given area for a given land use or property type.
Market research must be presented clearly and effectively. Market research reports should be targeted to serve the purpose of the intended information user or decision maker.
What Is The Purpose Of Market Research?
The purpose of market research is to provide the necessary information to identify market opportunities, measure their potential, and assess the path of delivering a product to the ultimate user. The resulting research can also provide an understanding of the competition, and how to position a product or company relative to their competitors.
The information provided may also be necessary to assess business risks, justify investments, and support underwriting assumptions. The real estate business is an example of a business that relies heavily on market research for these purposes.
As large capital expenditures, real estate investments and developments often entail significant market expertise and market research to assist decisions makers and stakeholders on evaluating investment real estate or development projects. Commercial real estate services firms also heavily rely on market research capabilities to deliver their value propositions to their clients.
How To Conduct Market Research?
Market research can be outsourced to companies specialized in providing information and analysis. However, data is available from a variety of sources for firms and individuals who wish to conduct research themselves.
Government data is often available for free or at minimal cost and can be found online. The U.S. Census bureau is one example of a government agency that provides vast amounts of free demographic data in the United States. Private firms also specialize in aggregating business data at a cost.
Within the real estate industry, many professionals and firms have vast amounts of data that can be useful. Title companies are an example of a source for real estate data. Publications from real estate organizations also exist to assist real estate professionals in their market research projects.