How to approach a challenging forecast
The decision to invest in a real estate forecasting model is often driven by the promise of conducting efficient site evaluations that will yield dependable results. Regardless of how sophisticated or robust your model may be, it is inevitable that you will face scenarios that pose unique challenges. It is important to keep the perspective that all analytical tools aim to mitigate risk, not to eliminate risks entirely.
Forecasting models effectively address most of the common and pervasive variables contributing to unit performance; however, the best models also provide an analytical framework that can be leveraged in support of more challenging site evaluations.
Scenarios that prove to be the most difficult are those with circumstances that deviate, often significantly, from the typical operating environment of the brand’s existing network of locations. Examples include:
- An operator predominantly positioned in suburban or rural markets that are considering an urban expansion strategy (or vice-versa)
- Geographic expansion into new markets or regions
- Greenfield development in an unestablished, high-growth trade area
- A unique layout and/or experimental prototype variation
The following iterative steps form the foundation for the advice that we often share with clients when faced with these more difficult site forecasts:
It is worth repeating that challenging sites inherently carry a higher degree of risk. The above steps can help to isolate risk and to provide fact-based assessments that will empower the approval committee to make a much more informed decision.
To learn more about how Kalibrate mitigates risk through the development of analytical solutions for real estate, please contact us.
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