Case Study: Geographic Expansion Analysis for Residential Developer

Nationwide

Client

Residential Developer

Product Type

Market/Submarket Selection

The Challenge

A Residential Developer engaged RCLCO to assist in evaluating market expansion opportunities beyond their high-cost, East Coast metropolitan area. The Developer deals in particular with the creation of luxury, high-design residences, often at a quality and price-point that is above the local competition. After seeing success in their initial market but growing frustrated with high land prices and competition for development sites, they requested RCLCO’s help in determining an optimal second market into which they may expand. In this study, RCLCO was tasked with creating a market evaluation framework to assess markets that met their criteria of travel time from their home market to compare alongside the home market and evaluate the expansion potential.

Solution

RCLCO gathered data and information and performed an initial analysis of approximately 30 markets that met the specified travel criteria and created a preliminary ranking of these markets to share with the client. Together, seven major metropolitan areas were chosen as finalists, and a more detailed analysis was performed to compare these metro areas with their home market. These particular geographies were chosen based on the analysis of data points seen to be strategic to the client’s business strategy such as young professional household growth, the percent growth in high-income households, and net migration, among many others. A more unique ask was that this client was seeking markets in which their design-forward product orientation would be valued and met with pricing power, and we utilized some unique datasets including web search patterns to estimate this at a market level. The combination of these data points allowed RCLCO to create various scenarios assigning different weights to demographic, lifestyle, and real estate factors in order to create a final ranking of the seven metropolitan areas based on their overall market potential for the Residential Developer.

Impact

The Residential Developer is now equipped with research-backed data should they decide to expand into other markets, as they actively evaluate their business strategy.

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