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Good Market Studies for Seniors’ Housing Projects can Save you Millions of Dollars; Bad ones can Cost you Millions of Dollars

Posted by kmancer on May 20th, 2010

Since one of Lumina’s business lines is market studies, it may sound self-serving for me to say that it is false economy of the worst kind to launch a real estate development project of any kind without doing a market study first. But very often, developers have great difficulty grasping the fundamental truth of this observation, partly because of personality. Lack of confidence is not a trait shared by many developers but it is easy to tip over the line from confidence to hubris. Even granting a solid understanding of a market on the part of a developer, a third party study is invaluable in terms of reducing risk and maximizing profitability. Lenders know this, which is why they are usually more likely to require a market study than a developer.

To make the matter more complicated, there are numerous ways for market studies to go off the rails, many of them not especially obvious to casual or uninformed observers, OR, it must be said, to unethical market analysts who write “market studies to order”.  Firms like this certainly exist and in most cases, knowledgeable industry participants know exactly who these companies are.

In future posts (interrupted by posts from Phoenix, where I am headed to the ALFA conference on Sunday) I will address some of the ways market studies can go off the rails and what you should watch for. This is assuming of course, that you are interested in a market study that tells you the truth.

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This entry was posted on Thursday, May 20th, 2010 at 5:59 pm and is filed under Market Studies, News, Senior Housing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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