feasibility study

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feasibility study

An analysis of the marketplace to determine if it is economically practical and desirable to develop a particular project. Contrast with a market analysis, which merely identifies whether a defined market or trade area desires what you propose to build. A market study determines demand for the real estate development;a feasibility study determines whether that demand is willing to pay what the project will cost,plus a profit.

Example: The demand for first-class office space in downtown Elm City exceeds the available space. There are no vacancies, and potential tenants must take space in the suburbs or settle for less desirable space downtown. The market analysis determines that a market exists for a new midrise office building. The feasibility study then analyzes all acquisition and construction costs, the length of time until a new building would be at break-even occupancy, the cost of funds for construction financing, and the expenses of operating such a building. According to the feasibil- ity study, the building would have to command rents in the range of $28 to $30 per square foot per year in order to be a viable project. Current market rents downtown for similar space range between $19 and $23 per square foot per year.

This constitutes the feasibility study—what will it cost,what must I charge,what will the market pay? The portion of the study that asks “What will the market pay”is the portion with the most risk, the most in need of salesmanship when one is talking to lenders and investors,and the truest test of a seasoned developer with good instincts. In the preceding example, the market may very well respond positively to a new building with rental rates significantly higher than anything else downtown.On the other hand,it might not.One has to choose,in the end,after all the analysis has been completed.

References in periodicals archive ?
In a multicenter feasibility trial including more than 50 patients, Cardioband was shown to significantly reduce annular size, with significant improvement in MR.
The TIARA-I Early Feasibility Trial is a multicentre, multinational, trial being done to evaluate the performance and safety of Neovasc's Tiara mitral valve system and implantation process in high-risk surgical patients suffering from severe mitral regurgitation.
feasibility trial marks a significant milestone for the company, and is the first step on our path to providing a new treatment option to tens of thousands of U.
A feasibility trial of a cognitive-behavioural symptom management program for chronic pelvic pain for men with refractory chronic prostatitis/chronic pelvic pain syndrome.
In addition, a Feasibility Trial of a small number of patients was conducted for the FDA to reach a level of confidence so that a larger clinical trial could commence.
If the control group dropped much below 37 percent fat, it would weaken the study's power to detect a statistically significant difference in breast cancer rates between the two groups," explains Ross Prentice, of the Fred Hutchinson Cancer Research Center in Seattle, which spearheaded the feasibility trial.
The designation was based on the results of a multicenter feasibility trial that demonstrated the safety and effectiveness of Cardioband in mitral valve repair and will allow Valtech to market and sell Cardioband in the European Union.
The study, entitled "Randomised controlled feasibility trial on the use of medical grade honey following microvascular free tissue transfer to reduce the incidence of wound infection," was conducted by Dr.
Boston Scientific Corporation (NYSE: BSX) announces results from the REPRISE I feasibility trial, which evaluated the acute safety of the Lotus(TM) Aortic Valve System in patients with severe aortic valve disease.
It has successfully passed the first phase of a feasibility trial where they treated a mannequin with bullet injuries by inserting a plastic rube into a damaged blood vessel and operating to close a perforated bowel.
The trial represents an extension of the feasibility trial, which began in June 2000 at the Methodist Hospital in Houston.