Simply stated this is a study that seeks to determine the economic returns from developing a specific piece of property in a certain way.

The first question is to determine what the demand for the developed product (residential lots, office buildings, strip center retail, multi-family, etc.) would be and at what price? Crucial to this question is determining how rapidly the product will sell or lease. The primary tools available to the analyst are knowledge of the current inventory, prices, and absorption rates (demand) that exists in the marketplace.

From all of this a model is created that schedules the total sales revenue, after which marketing costs and time carrying costs are subtracted.

From the above is then subtracted soft and hard development costs, i.e., engineers, architects, lawyers, consultants, earth moving and or building contractor, etc.

Subtracted from all of this is what rate of return the developer will demand for profit to cover risk and time.
What is left over is in theory, "the value of the bare land!" Knowing the numbers here is not only indispensable to the developer, but to capital partners and lenders as well. And, in the arena of some land use legal hoops a developer may be required to show "need" for the product, and this goes to substantiating what the current inventory is and the absorption rates that exist (when does the city or county run out?).

InvestWEST was engaged to provide this support in the now approved Barclay Meadows Business Park in Sisters, the Sunset View Estates subdivision in Bend, and many commercial buildings too numerous to list.