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dustry concentrations ? Other concentrations 13 14 The Due Diligence Process Sales Contract Executed Tenant Review Market Analysis Pro Forma Analysis Remendation to Buyer Financial Operational Review Physical Asset and Environmental Review 14 15 Market Analysis ? Three primary ponents – Site analysis – Supply – Demand Supply Demand Square Feet Time 15 16 Market Analysis ? Site Analysis – Visibility – Access – Ingress/Egress – Amenities – Sources of demand – Competition – Quality – Surrounding land uses, current and projected 16 17 Market Analysis ? Supply – Historical inventory – Existing and future petitive – Disaggregated by size, quality, and age – Projected future development ? Planning departments ? Media research ? Local market interviews 17 18 Market Analysis ? Demand – Historical absorption – Market research of key indicators ? New business startups ? Population growth ? Other economic trends ? Other demographic trends – Projected growth in demand Demand (sq ft) Time 18 19 Market Analysis ? Reconciliation of supply and demand – Rental rates – Percentage rents – Occupancy levels – Commissions – Buildout – Growth rates ? Rental ? Expense – Capitalization rates – Renewal assumption 19 20 Market Analysis ? Space may be vacant prior to releasing ? New rent is set ? New tenant improvements, missions ? Base years, sales, other levels are set Renewal assumptions What happens at the end of a lease? 20 21 The Due Diligence Process Sales Contact Executed Tenant Review Market Analysis Pro Forma