Definition
Market Capture, commonly referred to as Capture Rate, is a metric used in real estate to determine the proportion of demand that a specific property or a collection of properties covers within a particular market. Essentially, it measures the share of market demand that a property is able to “capture” and is pivotal for landlords, property managers, and developers for assessing competitiveness and market positioning.
Examples
- Residential Real Estate: A developer assessing a new apartment complex tracks how many units will be required to meet 20% of the anticipated local demand for housing.
- Commercial Real Estate: A shopping center owner calculates their market capture to determine what percentage of the retail market they occupy in a given region relative to competitors.
- Office Space: A company launching a new office tower in a bustling downtown area evaluates their capture rate by comparing the office space demand that their property fulfills against the entire market’s demand.
Frequently Asked Questions
What is a ‘good’ Market Capture rate?
A “good” Market Capture rate is contextual and varies based on market conditions and property types. However, higher capture rates generally indicate a stronger market position and competitiveness.
How is Market Capture calculated?
Market Capture is calculated by dividing the number of units or the amount of space a property provides by the total market demand for similar units or types of space, expressed as a percentage.
Why is Market Capture important?
Market Capture is critical as it helps property owners and developers understand their position in the market, identify growth opportunities, and develop strategies to increase their market share.
Does Market Capture affect property valuation?
Yes, Market Capture can significantly affect property valuation. Properties with higher market capture rates may be more attractive to investors and can command higher prices.
Is Market Capture used in all types of real estate?
Market Capture is applicable across various real estate sectors including residential, commercial, retail, and industrial properties.
Related Terms
Market Demand
Market Demand refers to the total amount of a product or service that is desired by buyers in a market at a specific time.
Market Share
Market Share represents the percentage of a market’s total sales that are earned by a particular company or property over a specified time period.
Absorption Rate
Absorption Rate measures how fast properties are sold or leased in a specific real estate market over a given time period.
Comparative Market Analysis (CMA)
CMA is a method used to evaluate the value of a property by comparing it to similar properties that have recently sold in the same area.
Online Resources
- National Association of Realtors (NAR): www.nar.realtor
- Real Estate Research Institute (RERI): www.reri.org
- Urban Land Institute (ULI): uli.org
References
- Brueggeman, W. B., & Fisher, J. D. (2010). Real Estate Finance and Investments. McGraw-Hill Education.
- Ling, D. C., & Archer, W. R. (2013). Real Estate Principles: A Value Approach. McGraw-Hill Education.
- Geltner, D., Miller, N., Clayton, J., & Eichholtz, P. (2014). Commercial Real Estate Analysis and Investments. South-Western Educational Pub.
Suggested Books for Further Studies
- Real Estate Investment: A Strategic Approach by David M. Geltner
- The Real Estate Wholesaling Bible by Than Merrill
- Profit by Investing in Real Estate Tax Liens by Larry Loftis
- Real Estate Market Analysis: Methods and Applications by John M. McCue
