Development Feasibility Analysis

     The Process for Evaluating a Potential Project: There are four primary phases of analysis required to evaluate the feasibility of potential development projects.  They are site analysis, regulatory analysis, market analysis and financial analysis.

      Site Analysis: The site analysis for a project requires evaluation of several important factors including: 1) visibility and accessibility of the site; 2) size, configuaration and topography of the site; 3) traffic count; 4) exisiting and pre-existing site uses; 5) tenant mix; and, 6) site utilities and infrastructure.

     Regulatory Analysis: Factors to be considered in the regulatory analysis phase of a feasibility study can include: 1) Allowed uses, entitlements, and zoning; 2) height and density restrictions; 3) set back requirements; 4) water detention requirements; 5) floor area ratios; 6) tree ordinances; 7) deed restrictions; 8) eminent domain concerns; and, 9) the risk of changing regulations.

     Market Analysis:  Demographics is a key consideration in the market analysis of a project. The age, income, education levels and population trends of an area are significant drivers of project success.  Other factors worthy of consideration include pre-existing or planned competition to the contemplated project; employment trends; psycho-graphics analysis; market momentum; and, where a the project site is the current market cycle.

     Financial Analysis: The financial analysis is where the proverbial rubber meets the road.  Each of the above factors figure into the financial analysis, directly or indirectly. 

    

     Specific factors to be evaluated in the financial analysis of a proeject include: 1) local rent and occupancy rates; 2) projected operating expenses for the project; 3) construction costs; 4) cost of capital; 5) land cost; 6) projected holding period; 7) DSCRs; 8) LTVs; and, 9) soft costs for project, such as design fees, attorney fees, lobbying fees, etc.