Sample Real Estate Consulting Projects

Market Demand Study for Luxury High-Rise Apartment Tower
Homebuilder / Real Estate Consulting
Real Estate Consulting Project

Market Demand Study for Luxury High-Rise Apartment Tower

Situation Finger Companies, a major apartment development and management company; had negotiated a long-term lease on a prime block in downtown Houston on which it wanted to develop the first luxury apartment tower in the downtown district in 40 years. The firm contacted CDS Market Research to perform a market demand study for the project.

Approach
CDS used a three-pronged approach to achieve the objectives of the study. First, a telephone survey was conducted among households with annual incomes of $100,000 or more in the six zip codes comprising the most likely draw area for current Houston residents to gauge their likelihood of moving near-term, own vs. rent preferences, space requirements and levels of interest in the proposed project. Second, an analysis was made of the tenant mix in a similar Houston tower to gauge the attraction of premium apartments to professionals moving to Houston from other cities, states and countries. Third, executive interviews were conducted among Human Resources managers for downtown corporations, law firms and accounting firms to determine the likely number of near-term new hires and transferring executives with incomes of $100,000 or more and their likely potential interest in leasing luxury apartments close to their offices downtown. The results of these three analyses were then combined to produce near-term projections of demand and absorption that were favorable to the project.

Action to date
The developer proceeded with financing, design and construction of a 37-story luxury apartment tower that includes thirty floors of apartments accommodating 346 units, a garden terrace with a two-tiered swimming pool, six floors of parking and 21,800 square feet of ground floor retail. Indications are that there is strong early demand.

Homebuilder / Real Estate Consulting

Situation A national homebuilder and developer needed objective third party market research to support their in-house strategic planning and land acquisition effort. CDS was called upon to provide deeper analysis of potential acquisitions including tracts to develop traditional single family homes, age restricted communities, and higher density duplex product. Geographically, this work was conducted both in the Houston area and in smaller Central Texas markets. Proposed acquisitions included both large development tracts and finished lots to be purchased from a land development company.

Approach
For large development tract acquisitions, CDS performed a detailed Target Market Research (TMR) study. The principle objectives of the TMR are to:

Define target markets by identifying the types of buyers most likely to consider purchasing in the defined area


Identify key product design parameters and optimal pricing levels


Estimate market depth, size and absorption potential.

In order to meet these objectives, CDS executed the following methodology:

Performed a phone survey of people considered likely buyers of housing in the market of interest, to determine opinions of the area and development concept, likelihood to purchase, product features preferred, price willing to pay, and other information specific to the development and the location.


Analyzed comparable housing absorption rates at various price levels and demographic dynamics (forecast population growth, etc) to determine depth of market and probable development build out time.

For acquisitions of finished lots on an option contract from a land development company, CDS performed an extensive realtor sentiment survey comparing the subject subdivision with other area locations and communities.

Action Taken
Senior management utilized CDS's findings to make crucial go or no go decisions regarding both land acquisitions and new product development. CDS was continually engaged to analyze multiple different acquisitions over a four year period.

Real Estate Consulting Project

Situation
Post Properties wanted to develop a 190-unit Class A loft-style high-rise apartment building in the northwest part of Midtown close to Downtown Houston. CDS Market Research was retained to perform an analysis of demand for the proposed project, as well as supportable rents, unit sizes and mix, building and tenant services required and prospects for future condominium conversion.
Approach
CDS utilized both secondary and primary research methods to perform the study. After reviewing the history of residential development in Midtown, CDS proceeded to estimate near term high-rise apartment demand in the district based on an earlier CDS study of housing potentials for Downtown and Midtown. This was followed by a city wide overview of the luxury high-rise apartment market and the supply/demand balance for Midtown. CDS was able to confirm that sufficient market demand existed for the proposed project. Subsequently, CDS was able to recommend the optimum unit and size mix, rental rates, services, amenities, and project realistic absorption rates for the proposed project. Finally, the potential for future condominium conversion was explored based on the characteristics of the condominium market, the economics of conversion and a rent vs. buy payment comparison analysis.

Action to Date
Post Properties proceeded to develop the project called Midtown Square. Actual absorption was in line with CDS's forecast. The project has been regarded as one of the truly successful projects in Midtown Houston.