Feasibility analysis makes the difference between whether commercial real estate transactions succeed or fail, according to CCIM Institute senior instructor Gary Ralston, CCIM, CRE, SIOR, who will be speaking at ICSC RECon in Las Vegas on May 22 at 4 p.m.
“Retail Real Estate Market and Feasibility Analysis” will focus on how a feasibility study can help forecast potential outcomes before prematurely investing time and capital. The workshop will explore the relationship between successful retail projects and the feasibility analysis.
“An astute investor considers what a user can afford to pay to occupy the space as part of their analysis,” says Ralston, managing partner at Coldwell Banker Commercial Saunders Ralston Dantzler Realty LLC in Lakeland, Fla. He teaches the CCIM feasibility model that is based on a user focused thought pattern. Attendees will learn about evaluating location characteristics, defining the market area, and establishing the trade area for a hypothetical user at the subject property.
“It is also important to examine the land use and zoning laws,” Ralston says, who also emphasizes the legal characteristics, which include deed restrictions, easement agreement restrictions, lease exclusive use provisions, and other variables.
The analysis concludes with the occupancy cost, or rent, compared to the capital cost of the project with a view to determining if the return on the invested capital meets the threshold requirements of the investor. “Understanding and being able to articulate the feasibility of the retail real estate property is the key to success,” Ralston says. “In the simplest terms, projects that are not financially feasible eventually fail.”