On today’s show we’re talking about the importance of market segmentation. Because real estate is not easily moved, the supply and demand picture is hyper local. That means each real estate product has a radius where the demand is real. Outside of that radius and the demand could fall off significantly.
In real estate we tend to segment the market according to asset class. We look at demand for residential, for apartments, for office space, for retail space and so on. But that’s far too simplistic an approach. The analysts quote the market vacancy rate. But frankly that’s a useless metric.
How does that break down when you compare new construction, versus older properties? How does vacancy compare in 1BR apartments versus 3BR apartments? How is the vacancy in studio apartments? What is the vacancy in short term rentals? The generalization provides zero insight to the specific question you are interested in answering.
Host: Victor Menasce