Market Research, is ideally the first action undertaken by a developer for a property being considered for development. The purpose is to define target consumers, competition, products, pricing and sales absorption.
The process of Market Research consists of the following four sequential steps. The first step is definition of the consumer market in geographical terms (i.e., local census tracts, municipality, county, metropolitan area, state, multi-state region, nation, multiple nations) and definition of consumers by demographic (age, income, wealth, household size, employment) and psychographic characteristics (behavior, personality, attitudes). Second is geographic definition of the competitive market, using the above geographical units (could be the same as the consumer market, but usually smaller). Third is geographic definition of the competition market, using the above geographical units.
The majority of real estate developments in the United States serve local markets, with the notable exceptions of resort and active adult retirement developments. The fifth step is summarization of the above four steps and analysis of findings in terms of recommendations for the subject property. Historically, such research required travel to these markets for individual data gathering, whereas the evolution of the Internet now permits data-gathering by computer. However, REMA research includes market verification by personal visitation to examine geographical features and competitive product offerings. Note that the term “product” is defined to include site amenities and nearby off-site amenities in addition to the priced (ownership and rental lease) buildings.