Market Feasibility Analysis

A Market Feasibility Analysis determines the likelihood that a proposed land use or development will fulfill the objectives of a particular investor or community. For example, a feasibility study for a proposed housing subdivision should:

• Estimate the demand for housing units in the area;
• Estimate the absorption rate (expected annual sales or new occupancy of a particular type of land use) for the project;
• Discuss legal and other considerations;
• Forecast Cash Flows; and
• Approximate investment returns likely to be produced.

Though it is helpful to have development sites in mind to complete a market feasibility study, it is not necessary.  A market study can help a community understand its economic strengths and weaknesses.  These studies analyze spending patterns, incomes, leakage (sales revenues leaving the community) and service gaps.

Cities and Counties often see either a gap in services/demand for services or see an opportunity within their community, but need to know whether or not the gap/demand is enough to make a project feasible.

Studies can be done for specific uses like housing, lodging/conference, retail, office/commercial, parking, recreation opportunities, special events, community uses (like museums, theatres, and music venues) as well as for neighborhoods, focus areas or districts such as a downtown feasibility study.

The tools in this toolbox focus on various types of feasibility studies and how these studies inform the development process.