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Why do developers need multi-family market data?

Updated: 8/16/2019
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A developer who plans to build an apartment building will likely either plan to sell the units off individually as condos, and/or rent them out. A developer will need to know how much units currently sell and/or rent for. As we know now, these numbers aren't completely accurate in gauging what units *will* sell or rent for. Nevertheless, this information allows the developer can use simple arithmetic to determine the upper limits of what he can spend in order to profit. If the development site is very expensive, it may be cost prohibitive to develop anything that has high-end finishes. However, if that is what the market demands, then it may not make economic sense to develop in the first place. Many developers throughout the country paid exorbitant prices for development sites, expecting that they would be able to sell expensive condos. They did not account for the possibility that the condo market would tank, and that the building would have to make money as a rental building. Since the building does not support itself as a rental, many developers are now defaulting on their construction loans.

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