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 ?
Transcatheter mitral valve replacement for patients with symptomatic mitral regurgitation: A global feasibility trial.
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.
After a six-month feasibility trial on the plant's 32-ounce line of beverages in July 2007, an immediate improvement was seen in the way the pallets reacted to the plant's almost 25-year-old palletizers.
The neurostimulation technique was associated with a significant reduction in both the number of headache days per month and the intensity of pain in nearly 40% of patients with chronic migraine who were randomized to its use in a multicenter feasibility trial, reported Dr.
Changes in sexual behavior during a safety and feasibility trial of a microbicide/diaphragm combination: an integrated qualitative and quantitative analysis.
We expect that the FDA will soon approve enrolment in the BTT Pivotal Trial, after reviewing the results of the Feasibility Trial we submitted to the FDA on 3 March 2007.
Rami Eliakim of Rambam Medical Center in Haifa, Israel, director of a three-center, prospective feasibility trial of capsule colonoscopy.
This study was a randomized feasibility trial in low responders who had failed previous treatments and were scheduled for an aggressive IVF protocol.
Swansea council has been running lpg and electric vehicles on test for some time and was the first to pilot spot checks in the late 90s as a feasibility trial for the rest of the country.
However, an on-going feasibility trial begun in 1985 put that concern to rest.