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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Transcatheter mitral valve replacement for patients with symptomatic mitral regurgitation: A global feasibility trial. J Am Coll Cardiol 2017;69:381-91.
Because of this, and a need to clarify other methodologic issues, the currently-approved PR.15 trial comparing external beam radiation therapy with or without high-dose rate brachytherapy in men with intermediate-risk prostate cancer is planned to move forward first as a feasibility trial and will include success of accrual as one of its endpoints.
Purpose: This randomized controlled feasibility trial examines the association between Cortisol and quality of life in breast cancer patients during adjuvant or palliative treatment with Viscurn album (Iscador[R] P, IP) to create well-founded hypotheses for future prospective clinical studies.
The Engager System was evaluated successfully in a feasibility trial earlier this year.
"While APOLLO was a safety and feasibility trial, Cytori's larger European trial ADVANCE is designed to demonstrate efficacy, economic impact and the long-term benefit in patient outcomes in up to 370 patients."
[Editor's note: In 2009, investigators reported that low-dose CT screening was associated with twice the rate of false positives and more unneeded interventions, compared with chest x-ray, in a randomized feasibility trial that preceded the NLST.
In an open feasibility trial, 10 individuals recovering from an initial psychotic episode were assigned to receive treatment as usual plus GRIP for up to 36 weeks, and completed baseline and post-treatment assessments.
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.
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.
The increase can be attributed in large part to expenditures for our clinical feasibility trial and in preparation for the follow on pivotal study.

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