2. Property Markets, Economics and Cycles

Introduction and Context

Real estate investment is inseparable from the operation of property markets. A building does not generate value merely because it exists; its value depends on the interaction of users, investors, developers, lenders, governments, infrastructure providers and broader economic forces. Office space is valuable when firms need locations for productive activity, housing is valuable when households can afford and desire it, and logistics property is valuable when goods must be stored and distributed efficiently. The investment performance of each asset therefore reflects both property-specific characteristics and the market environment in which the asset operates.

Property markets differ from many financial markets. Real estate is heterogeneous, locations are fixed, transactions are infrequent, information is imperfect, and supply responds slowly to changes in demand. A sudden increase in demand may raise rents and reduce vacancy before new buildings can be completed. Conversely, a large development pipeline may produce oversupply long after demand has weakened. These adjustment lags contribute to cycles in rents, values, construction and investment activity.

For investment professionals, market analysis is the bridge between macroeconomic observation and asset-level decision-making. The analyst must determine whether observed rent growth is supported by employment and household formation, whether vacancy is temporary or structural, whether new supply is likely to arrive, and whether capital-market conditions justify current pricing. This chapter develops a framework for answering those questions.

Learning Objectives

By the end of this chapter, the learner should be able to:

1. Explain how demand and supply interact in different property markets.

2. Analyse the effects of location, accessibility, economic structure and demographics on real estate performance.

3. Distinguish between market rent, contract rent, effective rent, vacancy and absorption.

4. Apply economic and demographic indicators to property-market research.

5. Explain the relationship between property markets and capital markets.

6. Identify the stages and mechanisms of real estate cycles.

7. Construct a practical market-analysis and forecasting framework.

8. Evaluate risks, limitations, ethical issues and technology applications in property research.

The Property Market as a Set of Interrelated Markets

There is no single real estate market. Property markets are segmented by use, geography, quality, tenant type, tenure and price. A metropolitan office market may contain central business district towers, suburban campuses, flexible-work buildings and small professional offices. These segments may respond differently to the same economic event. A technology-sector expansion may increase demand for high-quality offices in one submarket while traditional office stock remains weak.

A useful distinction is between the space market and the asset market. The space market is where users occupy property and pay rent. Its participants include households, businesses, tenants, landlords and developers. The asset market is where ownership interests in property are bought and sold. Its participants include investors, funds, lenders, institutions and owner-occupiers. Conditions in the space market influence property income, while conditions in the asset market influence required returns, liquidity and capitalisation rates.

The two markets are connected but not identical. A property may have strong occupancy and rent growth but experience a fall in value if interest rates rise sharply and investors demand higher returns. Conversely, asset prices may increase in anticipation of future demand before current rents improve. Understanding this distinction prevents the common mistake of assuming that property prices always move contemporaneously with operating fundamentals.

Demand: Users, Income and Location

Demand for property is derived demand. It arises because households need accommodation, firms need space for production and administration, and consumers require places in which to shop, access services or spend leisure time. The demand for a particular building is therefore linked to the economic activity supported by that building.

For residential property, important demand variables include population growth, household formation, employment, wages, borrowing capacity, migration, household preferences and tenure choices. Population growth does not automatically create equal demand for all housing types. A growing student population may support small rental units near universities, whereas affluent professional households may generate demand for larger units close to employment and amenities.

For commercial property, demand depends on employment, business formation, productivity, industry composition and space requirements per worker. Retail demand is associated with household income, consumer confidence, footfall, competing channels and catchment characteristics. Industrial and logistics demand reflects production, inventory policy, trade, e-commerce, transport networks and supply-chain design.

Demand is also shaped by willingness and ability to pay. A location may be highly desirable but produce limited effective demand if households or firms cannot afford the associated rent. Consequently, demographic growth must be interpreted together with income distribution, credit conditions and affordability.

Supply, Development and Adjustment Lags

Property supply consists of existing stock, vacant space, space under construction and projects that can reasonably be delivered in the future. Unlike manufactured goods, buildings require land, planning approval, finance, design, construction capacity and time. Supply is therefore relatively inelastic in the short run but more responsive over a longer horizon.

The supply response can be described in stages. When vacancy is high and rents are weak, developers may postpone projects and existing buildings may be converted or withdrawn. As vacancy falls and rents rise, previously marginal projects become feasible. Construction then increases, but the resulting stock enters the market only after a lag. If developers base decisions on current rents rather than expected future conditions, many projects may be completed after demand has slowed.

The distinction between stock and flow is central. Stock is the amount of property available at a point in time; completions, demolitions and conversions change that stock. Flow demand is the amount of additional space absorbed during a period. A market can have positive net absorption while vacancy still rises if new supply exceeds occupied demand.

Supply is constrained by zoning, density limits, infrastructure, environmental regulation, land assembly, financing costs and construction inputs. In some locations, these constraints protect existing owners by limiting competition. They may also increase rents and reduce affordability. In other areas, relaxed planning rules can permit rapid expansion and reduce the persistence of rent increases.

Location, Accessibility and Urban Structure

Location is not simply an address. It is a bundle of accessibility, surrounding uses, infrastructure, environmental qualities, institutional conditions and future development expectations. The economic value of a location arises from the benefits it provides relative to alternatives.

Accessibility may be measured through travel time, transport connectivity, proximity to customers and employees, or access to highways, ports and airports. A logistics facility near a major interchange may command a premium because it reduces delivery time and transport costs. A residential location near employment, schools and public transport may attract a broader pool of tenants and buyers.

Location value is relational. A building’s performance depends partly on the quality of neighbouring properties and public spaces. Agglomeration economies occur when firms benefit from proximity to suppliers, customers, labour markets, knowledge and complementary businesses. This helps explain why particular industries cluster geographically.

Urban structure also changes over time. New transport infrastructure can shift development toward previously peripheral areas. Remote and hybrid work may reduce the importance of daily commuting for some office users while increasing the importance of amenities, flexibility and building quality. Analysts must therefore avoid treating historical location advantages as permanent.

Rent Formation, Vacancy and Absorption

Rent is formed through the interaction of demand for space and available supply. In competitive segments, stronger demand generally permits landlords to raise asking rents, reduce incentives or improve lease terms. In weaker markets, landlords may preserve a headline rent while granting rent-free periods, fit-out contributions or other concessions. The economically relevant measure is therefore often effective rent, which adjusts contractual rent for incentives and other lease economics.

Market rent is the rent currently supportable for comparable space under prevailing market conditions. Contract rent is the rent specified in an existing lease. Contract rent may be above or below market rent because leases were negotiated at different points in the cycle. The difference creates potential mark-to-market risk or opportunity when leases expire.

Vacancy rate is commonly expressed as vacant space divided by total stock. Its interpretation requires care. A low vacancy rate may indicate strong demand, constrained supply or both. A high vacancy rate may reflect weak demand, obsolete stock, temporary relocation, speculative development or poor building quality. Analysts should distinguish physical vacancy from economic vacancy, which includes the impact of concessions and non-collection of rent.

Absorption measures the change in occupied stock over a period. Positive net absorption means occupied space has increased; negative absorption means occupied space has declined. Gross absorption records leasing activity without necessarily accounting for space vacated elsewhere. Net absorption is generally more useful for evaluating whether demand is consuming available inventory.

A simple market identity is:

Ending vacancy = Beginning vacancy + New supply − Net absorption − Removals or conversions.

For example, if a market begins with 1.0 million square metres of stock and 8 per cent vacancy, it has 80,000 square metres vacant. If 100,000 square metres are completed and net absorption is 60,000 square metres, vacancy increases by 40,000 square metres before considering removals. This demonstrates why strong leasing activity may coexist with rising vacancy.

Economic and Demographic Drivers

Real estate demand responds to the economic cycle. During expansion, employment, incomes, business investment and credit availability often increase. Demand for offices, housing, retail and logistics space may strengthen. During contraction, firms may reduce space, households may delay purchases and lenders may tighten underwriting standards.

The effect is not uniform across sectors. A recession may weaken discretionary retail but support demand for discount formats. A rise in online commerce may reduce demand for some traditional shops while increasing demand for distribution facilities. Demographic ageing may reduce demand for large family housing in some areas but increase demand for healthcare, assisted living and accessible housing.

Important indicators include:

• employment and unemployment by industry;
• population growth, migration and household formation;
• wages, disposable income and affordability;
• business births, closures and investment;
• inflation, interest rates and credit conditions;
• construction costs, land prices and planning approvals;
• consumer spending, trade volumes and transport activity.

Indicators should be linked to a causal mechanism. For example, employment growth in financial services may support office demand, but the result depends on workplace density, remote-work practices and the location of new jobs. A forecast that merely extrapolates population or GDP growth without examining sector composition is incomplete.

Capital Markets and Property Valuation

Property markets are linked to capital markets through financing and investor required returns. The value of an income-producing property can be represented using the capitalisation relationship:

Value = Net operating income / Capitalisation rate.

The capitalisation rate is not simply an interest rate. It reflects the risk-free rate, risk premiums, expected income growth, liquidity, lease structure, asset quality and market sentiment. If net operating income remains constant and the capitalisation rate rises from 5 per cent to 6 per cent, the implied value falls by approximately 16.7 per cent because value changes from 20 times income to 16.67 times income.

Interest rates influence property through several channels. They affect borrowing costs, investor opportunity costs, mortgage affordability, development feasibility and the discount rate applied to future cash flows. Higher rates may reduce values even when rents are stable. However, the effect can be moderated if rents and incomes rise strongly or if supply is highly constrained.

Leverage magnifies both returns and risks. Debt can improve equity returns when property income exceeds the cost of debt, but refinancing risk becomes significant when loans mature during a period of higher rates or lower values. Institutional investors must therefore analyse debt maturity, covenants, interest-rate hedging and liquidity alongside operating forecasts.

Understanding Real Estate Cycles

A property cycle is a recurring pattern of changes in rents, vacancy, construction, prices, credit and investment sentiment. Cycles are not perfectly regular, and their duration differs across markets. A local oversupply cycle may occur within a broader national expansion.

A commonly used four-phase model includes:

1. Recovery: vacancy begins to decline, excess stock is absorbed, rents stabilise and construction remains limited.

2. Expansion: demand strengthens, rents rise, vacancy falls and new development becomes attractive.

3. Hypersupply: construction delivers substantial new stock; vacancy stops falling and may begin to rise.

4. Recession or correction: demand weakens, vacancy increases, rents soften, values decline and development activity contracts.

These phases should not be treated as mechanical predictions. Markets can skip phases, remain structurally weak, or experience simultaneous strength and weakness in different submarkets. The practical value of the model lies in identifying relationships and lags.

Cycles are generated by interaction among expectations, finance and supply. Rising rents and prices encourage development and lending. Optimistic expectations can cause projects to be approved on aggressive assumptions. When supply arrives, demand may be insufficient, and falling occupancy reduces income. Lower income weakens values, which can restrict lending and force further sales. This feedback mechanism can deepen a downturn.

Cycle analysis should combine leading, coincident and lagging indicators. Building permits, land transactions, lending standards and investor sentiment may lead the cycle. Rents, occupancy and employment are often coincident or moderately lagging. Distressed sales and completed construction may appear after the market has already turned.

A Market Research and Forecasting Framework

A professional market study should move from broad context to specific investment implications. The following sequence is useful.

First, define the market precisely. Specify geography, property type, quality segment, tenant category, tenure and time period. “The office market” is too broad if the investment concerns a particular grade of building in a defined transport corridor.

Second, establish the existing supply base. Record stock, age, quality, ownership concentration, vacancy, planned demolitions, conversions and competitive projects. A development pipeline should be classified by probability rather than treated as certain supply. Projects with land assembled and permits secured deserve greater weight than concepts announced in the media.

Third, analyse demand through economic and demographic drivers. Identify the users who generate space demand, the industries or households supporting them, income and affordability conditions, and likely changes in behaviour. Where possible, estimate demand by submarket rather than applying a single metropolitan growth rate.

Fourth, examine market performance. Track rents, effective rents, incentives, absorption, vacancy, leasing velocity, transaction volumes and development starts. Compare current conditions with long-run averages, but investigate whether structural changes make historical averages misleading.

Fifth, connect operating performance with capital-market conditions. Estimate appropriate yields or discount rates under base, upside and downside assumptions. Analyse debt availability, refinancing exposure and investor liquidity.

Sixth, forecast scenarios rather than presenting a single precise number. A base case may assume moderate employment growth and scheduled supply. An upside case may reflect stronger demand or delayed construction. A downside case may incorporate recession, higher financing costs or accelerated competing supply. Each scenario should state its assumptions and show effects on vacancy, rent, income, value and exit liquidity.

Finally, translate the market view into an investment decision. The question is not merely whether the market is growing, but whether the asset is priced attractively relative to its risk. A high-growth market may already be fully priced, while a slow-growth market may offer value if cash flows are stable and the acquisition price provides a margin of safety.

Illustrative Case: The Riverside Logistics Submarket

Background

This illustrative case concerns Riverside, a fictional metropolitan submarket located near a motorway interchange and a major population centre. The area contains 4.0 million square metres of logistics stock. Vacancy is 5 per cent, annual net absorption has averaged 160,000 square metres over the previous three years, and 300,000 square metres are scheduled for completion over the next eighteen months.

Situation

An investment fund is considering purchasing a 40,000-square-metre distribution facility. The property is 95 per cent occupied, has a diversified tenant base, and is leased at rents close to current market levels. The seller argues that strong e-commerce growth will produce rapid rent increases. The investment committee is concerned that the announced supply pipeline could create oversupply and that higher interest rates may reduce the exit value.

Analysis

The initial vacancy is 200,000 square metres. If the market absorbs 160,000 square metres annually and 300,000 square metres are delivered, occupied stock rises by 160,000 while available space rises by the remaining 140,000, ignoring removals. Vacancy therefore increases in the short term. The result is not necessarily a collapse, because absorption may accelerate and some projects may be delayed. Nevertheless, the pipeline prevents the analyst from simply extrapolating recent rent growth.

Demand analysis shows that population growth supports last-mile distribution, but the submarket also faces competition from a newer corridor with larger plots and lower land costs. The subject property benefits from existing motorway access and a scarce inner-suburban location, which may protect it from direct competition. Its smaller floorplate may also suit regional distributors, although it may be less attractive to very large operators.

The fund models three scenarios. The base case assumes moderate absorption, flat real rents and a temporary increase in vacancy. The upside case assumes stronger consumer demand and delayed competing projects. The downside case assumes a recession, slower leasing and a higher exit capitalisation rate. The downside value is materially lower because both net operating income and the valuation multiple decline.

Approach and Decision

The recommended strategy is not to reject the property solely because the market is approaching a supply-heavy phase. Instead, the fund should negotiate a price reflecting near-term vacancy risk, verify the deliverability of competing projects, review tenant credit and lease expiry concentration, and use conservative refinancing assumptions. A purchase may be justified if the entry yield provides adequate protection and the location produces durable tenant demand.

Outcome and Learning Points

The case illustrates that market growth, property quality and investment attractiveness are separate questions. Strong demand does not eliminate the effect of new supply. A well-located asset can outperform a weak asset in the same market, but it remains exposed to market-wide capital costs. The appropriate response to uncertainty is scenario analysis, due diligence and pricing discipline rather than a categorical forecast.

Limitations, Risks and Common Analytical Errors

Market data are often incomplete, delayed or inconsistent. Vacancy definitions may differ, asking rents may be reported instead of effective rents, and transactions may be too few to establish reliable pricing. Analysts should document sources, definitions and adjustments.

A frequent error is extrapolating recent growth indefinitely. Another is double counting demand—for example, treating population growth and household formation as independent drivers when they describe related phenomena. Analysts may also count the entire announced development pipeline even though many projects will never be built.

Other risks include survivorship bias in comparable transactions, failure to account for lease incentives, overreliance on aggregate economic forecasts, ignoring tenant concentration, and treating a market average as representative of a particular asset. Forecast precision can create false confidence; transparent assumptions and sensitivity testing are more valuable than unsupported decimal accuracy.

Governance, Ethics and Professional Responsibilities

Property research can influence major financial decisions and public outcomes. Analysts should present material risks, not only the assumptions supporting an acquisition. Conflicts of interest must be disclosed, particularly when research is commissioned by a seller, lender or developer. Data should be used lawfully, and confidential tenant or transaction information must be protected.

Forecasts should not disguise discriminatory assumptions about neighbourhoods or residents. Location analysis must distinguish legitimate economic variables from prohibited or ethically problematic proxies. Development decisions should also consider displacement, affordability, environmental effects, accessibility and community impacts. Professional judgement requires recognising that financial feasibility and social responsibility are connected rather than mutually exclusive.

Technology, Analytics and Emerging Developments

Digital property databases, geographic information systems, remote sensing, mobility data and automated lease abstraction have improved the speed of market research. GIS can combine rents, transport access, demographics, planning permissions and competing supply at a fine geographic scale. Machine-learning models can identify relationships in large datasets, but they do not remove the need for causal reasoning or professional review.

Artificial intelligence can assist with document classification, scenario generation and anomaly detection. Its outputs remain sensitive to data quality, model design and changing market conditions. A model trained during a low-interest-rate period may perform poorly after a structural shift in financing costs or work patterns. Human analysts must therefore validate inputs, test model stability, explain assumptions and retain accountability for decisions.

Emerging market issues include hybrid work, logistics reconfiguration, energy efficiency, climate adaptation, housing affordability, flexible leasing and the repricing of obsolete buildings. These developments create both risks and opportunities. They should be analysed as changes in cash-flow durability, capital expenditure, tenant demand and regulatory exposure, not merely as fashionable themes.

Best Practices for Property-Market Analysis

Sound practice begins with a clearly defined market and a documented evidence base. Analysts should triangulate official statistics, broker evidence, planning records, interviews, transaction data and property-level inspection. They should separate observed facts from assumptions and distinguish nominal from real growth.

A robust analysis should:

• reconcile stock, supply, absorption and vacancy mathematically;
• examine submarkets rather than relying only on metropolitan averages;
• model effective rather than headline rent where incentives are material;
• test supply delays, demand shocks, interest rates and exit yields;
• assess asset-specific advantages and obsolescence risks;
• include tenant, refinancing, liquidity and regulatory risks;
• update forecasts as new evidence emerges; and
• communicate uncertainty clearly to decision-makers.

Chapter Summary

Property markets operate through the interaction of a space market and an asset market. Demand is derived from household and business activity, while supply is constrained by land, planning, finance and construction lags. Location creates value through accessibility, agglomeration and relative attractiveness, but location advantages can change.

Rent formation must be analysed using market rent, contract rent, effective rent, vacancy and absorption. Economic and demographic indicators explain demand only when connected to actual users and affordability. Capital markets influence property values through interest rates, leverage, liquidity and required returns. The capitalisation relationship shows why value can fall even when current income is stable.

Property cycles arise from the interaction of demand, supply, expectations and finance. Recovery, expansion, hypersupply and correction are useful analytical phases, not mechanical laws. Professional market research defines the market, measures supply and demand, analyses operating performance, links fundamentals to capital markets, and tests alternative scenarios. Ethical practice requires transparent assumptions, disclosure of conflicts, responsible use of data and attention to social and environmental effects.

Key Terms

Absorption: The change in occupied property stock over a specified period.

Agglomeration economy: Benefits arising from the geographic concentration of firms, workers, suppliers and related activities.

Asset market: The market in which ownership interests in property are bought and sold.

Capitalisation rate: The ratio of a property’s net operating income to its value, reflecting income yield and risk expectations.

Contract rent: The rent specified in an existing lease agreement.

Economic vacancy: The income effect of unoccupied space, concessions, non-payment and related revenue loss.

Effective rent: Rent adjusted for incentives, rent-free periods and other lease concessions.

Gross absorption: The amount of leasing activity during a period without necessarily deducting space vacated elsewhere.

Market rent: The rent supportable for comparable space under current market conditions.

Net absorption: The net increase or decrease in occupied space after accounting for space vacated.

Net operating income: Property income after operating expenses but before financing costs and income taxes.

Property cycle: Recurring fluctuations in rents, vacancy, construction, values, credit and investment activity.

Required return: The return investors demand given risk, opportunity cost and expected cash flows.

Space market: The market in which tenants and users occupy property and pay for accommodation.

Stock: The total quantity of existing property available in a defined market.

Supply pipeline: Projects expected or proposed to add future property stock.

Tenant demand: The willingness and ability of users to occupy and pay for property space.

Vacancy rate: Vacant space expressed as a proportion of total market stock.

Yield: A measure of income return relative to property value or price.

Review Questions

Short Answer Questions

1. Why is real estate demand described as derived demand?

2. Distinguish between the space market and the asset market.

3. Define net absorption and explain how it differs from gross absorption.

4. What is the difference between contract rent and market rent?

5. Why does new property supply usually respond slowly to changes in demand?

Long Answer Questions

1. Explain how economic, demographic and locational factors interact to determine property demand.

2. Discuss the relationship between vacancy, absorption, new supply and rent formation.

3. Explain how interest rates, capitalisation rates and leverage affect property investment values.

4. Describe the stages of a property cycle and the feedback mechanisms that connect them.

5. Develop a detailed framework for conducting a market study for a proposed real estate acquisition.

Analytical / Application Questions

1. A market has 6 per cent vacancy, annual net absorption of 100,000 square metres and new completions of 180,000 square metres. Analyse the likely short-term effect on vacancy and identify additional information required before forecasting rents.

2. An office building has stable current income, but interest rates and market capitalisation rates have increased. Explain how its value may change and identify factors that could offset or intensify the decline.

3. Using the Riverside logistics case, prepare base, upside and downside assumptions for demand, supply, rent, vacancy and exit yield. Explain which assumptions should receive the greatest due-diligence attention.

22. Multiple Choice Questions with Answers

Question 1

Which statement best distinguishes the space market from the asset market?

A. The space market concerns construction costs, while the asset market concerns planning approvals.

B. The space market concerns occupation and rent, while the asset market concerns ownership transactions and investment pricing.

C. The space market concerns only residential property, while the asset market concerns only commercial property.

D. The space market determines interest rates, while the asset market determines population growth.

Correct Answer: B. The space market concerns occupation and rent, while the asset market concerns ownership transactions and investment pricing.

Question 2

A market begins with 80,000 square metres of vacant space. During the year, 100,000 square metres are completed and net absorption is 60,000 square metres. Ignoring removals, what happens to vacant space?

A. It falls by 160,000 square metres.

B. It falls by 40,000 square metres.

C. It rises by 40,000 square metres.

D. It remains unchanged.

Correct Answer: C. It rises by 40,000 square metres.

Question 3

Why can a low vacancy rate fail to indicate a permanently strong market?

A. Low vacancy always results from falling demand.

B. It may reflect temporary supply constraints before new stock enters the market.

C. Vacancy is unrelated to supply conditions.

D. Low vacancy means market rents must be below contract rents.

Correct Answer: B. It may reflect temporary supply constraints before new stock enters the market.

Question 4

If net operating income remains constant while the capitalisation rate rises, the direct effect on value is generally to:

A. Increase value.

B. Leave value unchanged.

C. Reduce value.

D. Eliminate operating expenses.

Correct Answer: C. Reduce value.

Question 5

Which factor most directly explains why property supply is relatively inelastic in the short run?

A. Buildings can be produced instantly when rents rise.

B. Development requires time for land, approvals, finance and construction.

C. Tenants control all development decisions.

D. Property demand never changes rapidly.

Correct Answer: B. Development requires time for land, approvals, finance and construction.

Question 6

A market records positive net absorption but vacancy rises. Which explanation is most plausible?

A. New supply exceeds the increase in occupied space.

B. All existing tenants have left the market.

C. Positive absorption always reduces total stock.

D. Contract rents have become equal to market rents.

Correct Answer: A. New supply exceeds the increase in occupied space.

Question 7

During which phase of a typical property cycle does construction often continue rising even though vacancy has begun to increase?

A. Recovery

B. Expansion

C. Hypersupply

D. Stable maturity with no cycle effects

Correct Answer: C. Hypersupply

Question 8

Which approach is most appropriate when a development pipeline contains projects at very different stages of certainty?

A. Treat every announced project as completed supply.

B. Ignore the pipeline entirely.

C. Weight projects according to evidence of deliverability, such as approvals and financing.

D. Count only projects already demolished.

Correct Answer: C. Weight projects according to evidence of deliverability, such as approvals and financing.

Question 9

Why might a property’s value fall even when its current rent has not changed?

A. Higher required returns or capitalisation rates can reduce the value of unchanged income.

B. Stable rent automatically causes vacancy to rise to 100 per cent.

C. Current rent has no relationship to value.

D. Property values are determined only by population.

Correct Answer: A. Higher required returns or capitalisation rates can reduce the value of unchanged income.

Question 10

Which practice best improves the credibility of a property-market forecast?

A. Presenting one precise forecast without assumptions.

B. Extrapolating recent rent growth indefinitely.

C. Combining evidence from supply, demand, capital markets and alternative scenarios.

D. Using only a city-wide average for every asset.

Correct Answer: C. Combining evidence from supply, demand, capital markets and alternative scenarios.