Commercial Investment Real Estate March/April 2019 | Page 22

CCIM
ED UCATION
Cost Markup Model
Market Value
Profit
Retail Analysis
– Cost of Sale
Total Project Cost
– Total Project Cost
= Cost Markup
= Profit
Use these tools to determine the feasibility of a project
and its ultimate go/no-go decision.
T
he retail industry is tougher than ever, especially with
the pervasive influence of e-commerce. Having the skills
and tools to make informed decisions is critical. One
such tool is the retail property feasibility analysis fea-
turing the CCIM Strategic Analysis Model. The model consid-
ers the goals and objectives of the investor/developer, alternative
investments available, and the investment criteria that lead to the
final decision.
A retail feasibility analysis determines whether a proposed or
existing use at a particular site will meet the objectives of the
developer or investor and the prospective tenants. Based on the
CCIM Strategic Analysis Model, the comprehensive feasibility
analysis includes analyses of the market and competition; location
and site; political and legal components; and financial compo-
nents. This holistic approach helps determine the feasibility of a
project and its ultimate go/no-go decision or a go-decision with
specific modifications.
Market and Competitive Analysis
The market competitive factors are the supply and demand con-
siderations that affect the retail market in which the property
competes. The information about supply and demand is related in
a retail gap analysis to judge the economic viability of the proposed
asset’s trade area.
Retail Demand Analysis. Retail demand segmentation focuses
on grouping customers by their demographic, economic, and/or
20
March | April 2019
Rent Constant Spread
1st Year NOI
Total Project Cost
= Cost Rent
Constant
Rent Constant
psychographic attributes. Three of the most Cost
important
attributes
–
Net
Value
Rent household
Constant
are the consumer’s disposable income; population and
Rent Constant
Spread
numbers;
expenditure
percentages
for certain
retail
1st and
Year consumer
NOI
= Net Value
Rent Constant
products
and - services
categories
such as food at home, food away
(Market Value
Cost of Sale)
from home, apparel, and furniture.
Location and Site Analysis
Linkages are the spatial relationships between the user on the
subject property site, a retail establishment, and other land users
CCIM Strategic Analysis Model
Market and
Competitive
Analysis
Feasibility Analysis
Financial
Analysis
• Goals and Objectives
• Alternatives
• Decision Criteria
• Go/No-Go Decision
Location and
Site Analysis
Political and
Legal Analysis
Edited by Catherine Simpson Olson
COMMERCIAL INVESTMENT REAL ESTATE
Rent Con