Analysis of the Retail Investment Property Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Analysis of the Retail Investment Property Case Solution

Market Preview

In order to understand the Miami’s potential, one has to note that it’s population has grown by 15.2% since 2000. In addition to this, the per capita income has also increased to approximately $ 22,692 in 2013 as compared to $ 15,125 in 2000. Moreover, it can be seen that the overall population of the country is divided between 51% Males and 49% Females. By looking at the overall statistics, it can be seen that with the growing population, the demand for the shopping centers increased whereas the supply side is concerned, there is still a gap, which can be filled from this investment.

Moreover, it can be seen that the individual’s per capita income is rising with improving economic conditions of the country which conveys the fact that the individual’s standard of living has also increased with which they are now able to spend more on their own selves by spending on the shopping activities which previously they don’t. The 51% of Males depicts that the Earning power will increase nationwide in the near future, whereas the 49% of the Females highlights a potential rise of interest in the shopping related activities.

As far as the rental market is concerned, it can be seen that the market conditions are quite favorable in terms of asking rent and the vacancy rates have reduced from the previous years to 7%. However, due to the tight conditions in the market coupled with the recovery from the economic downturn the large investors are decreasing their investment in the real estate business. The selling market for the country is also relatively favorable for the investment because of the increasing demand from the customers and the shortage of suppliers to fill those demands. Therefore, the investors do have the opportunity to enter the market to fill those demands.

Marketability

The current submarket condition of Miami is that there are increasing vacancy rates with the continued new retail construction. As far as the rent growth rate at the national level is concerned, it is estimated to be positive, in comparing the current investment with the national average it can be seen that the market is not much favorable with the increasing competition. It can be seen that the total demand from the selling units is about 22,600 units from which 1,350 units are still under construction, whereas the demand for the rental units is just about 4,925 units whereas 580 rental units are still under construction. As far as the end users for these products are concerned, it can be analyzed from the growing population in the country and the increasing per capita income that the standard of living has risen and that the individual can spend more on such activities.

Comps/ Rent

In comparing the rental position with competitors that include Rayos Del Sol, Los Suenos, Hamilton on the Bay, The Corinthian and many others, it can be seen that the proposed investment could provide the best deals for its customers by minimizing rental rates as much as possible. Only 16% of the neighbors in the overall area are providing the competitive data but they are below the average in quality.

Comps/ Sales

As far as the comparable sales are concerned, of proposed investment with comparable competitors in the country, the proposed investment require capitalization rate of about 8% which is providing the required rate of return of about 10% as can be seen from exhibits shown below...............

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