Feasibility study

The Feasibility Study seeks to identify whether the market value or gross sales of a project at a steady state level equals or exceeds all production costs, including profits. Market value applies to properties for rent, whereas gross sales apply to projects that will be developed into several units for sale to multiple users.

A feasibility analysis may use a defined rate of return to determine economic viability, or, an appraiser may use a market-derived rate of return. When ordering a feasibility study, it is important to disclose your resistance level or minimum return required if you have taken these factors into account.

Feasibility Study Development Services

Feasibility studies are best suited for the properties specified with the highest and best use . One reason is that a feasibility study, while very similar to a highest and best use analysis, has much greater detail. In general, the feasibility part of the highest and best use analysis is a tier A or B market analysis.

This is because the highest and best use analysis compares several property types to determine the highest return and in many cases, it is impractical to perform a fundamental market analysis for each potential property type considered in the highest and best use suitability portion. analysis.

In contrast, most feasibility studies include fundamental market analysis. Focusing on a single property or property type allows for easier-to-read and budget-friendly reports. Conducting a feasibility study with a fundamental market analysis for five or more property types would not be within the budget, nor would it be relevant to users of the report.

If you have conducted preliminary research into one or two types of property that you believe are suitable for development or redevelopment, a feasibility study may be a good fit for you.

If you’re still not sure which use will give your property maximum value, you may be better suited to a highest and best use study .