5 Best Ways to Conduct Competitive Market Analysis in Commercial Real Estate
Understanding your market position and spotting opportunities and threats is crucial for any commercial real estate professional. Conducting a competitive market analysis is a key tool in achieving this.
It helps you evaluate the demand and supply of various property types, segments, and locations. Additionally, it gives insights into your competitors' performance and strategies.
In this blog, our expert commercial real estate advisors at Terra Alma have collected some of the best methods to conduct a competitive market analysis in commercial real estate.
1. Identify Your Market
The first step in a competitive market analysis is to identify your market and its boundaries. Your market can be based on geographic, demographic, or psychographic factors or a mix of these.
For example, you might focus on office properties in a specific city, submarket, or neighborhood. Alternatively, you could look at multifamily properties serving a particular customer segment or lifestyle. It's also important to consider your market’s size, scope, growth potential, and the key drivers and trends that impact it.
2. Identify Your Competition
Identify your direct and indirect competitors in your market. Direct competitors offer similar properties, services, or value propositions to your target customers.
Indirect competitors provide alternative or substitute solutions to your customers' needs. For example, if you own a multifamily property, your direct competitors are other multifamily property owners in your area.
Indirect competitors might be single-family properties, hotels, or co-working spaces. Additionally, categorize your competitors based on their market share, reputation, and positioning.
3. Run SWOT Analysis
Our CRE advisors in Atlanta highly recommend analyzing your competitors' strengths, weaknesses, opportunities, and threats (SWOT). Gather information from public records, websites, reports, surveys, reviews, social media, etc.
Look for data on their properties, prices, occupancy rates, amenities, marketing strategies, customer segments, and feedback. Visiting or inspecting your competitors' properties can also give you a firsthand impression of their quality and appeal. Use the SWOT method to organize and compare your findings.
4. Know What Makes You Different
Understanding your competitive advantage and unique selling proposition (USP) is critical. Your competitive advantage makes you unique, valuable, and attractive to your customers. This may be based on property features, location, service quality, brand image, or customer loyalty.
Likewise, USP means the unique benefit or solution you offer that meets your customers' needs or solves their problems.
5. Analyze, Improve, Test, Repeat
The final step is to analyze and improve your analysis regularly. This helps you stay informed about changes in your market and among your competitors. Use your analysis to guide your business decisions and strategies.
For example, you can set your pricing, optimize your marketing, improve customer experience, or explore new opportunities. Periodically review your analysis to measure your progress and performance against your goals and benchmarks.
To Sum Up
Conducting a competitive market analysis in commercial real estate is essential for understanding your market position and identifying opportunities and threats. By defining your market, identifying your competition, running a SWOT analysis, and knowing your unique advantages, you can make informed decisions to stay ahead.
Regularly updating your analysis ensures you adapt to market changes and improve your strategies continuously. At Terra Alma, our expert commercial real estate advisors in Atlanta recommend these steps to help you succeed in the competitive commercial real estate industry.
Contact Terra Alma to be well-positioned, achieve your business goals, and thrive in the commercial real estate market.
FAQs
1. What is the first step in a competitive market analysis for commercial real estate?
Identify your market and its boundaries based on geographic, demographic, or psychographic factors.
2. How do you identify your competitors in the market?
Look for direct competitors offering similar properties and indirect competitors providing alternative solutions.
3. What is a SWOT analysis?
A SWOT analysis examines competitors' strengths, weaknesses, opportunities, and threats.
4. Why is knowing your competitive advantage important?
It highlights what makes you unique, valuable, and attractive to customers.
5. How often should you update your competitive market analysis?
Regularly update it to stay informed about market changes and improve your strategies.