Comparable Market Rent and Setting Appropriate Rent for Multifamily Development
Part 1 - Determining an Appropriate
Part 2 - Regression Analysis and the 100% Database Field
Part 3 of 4
The Regression Analysis (continued)
The regression analysis is a key tool used to determine market rent for a project at
any amenity level. First, all the projects in the area (the 100% database) are surveyed
to determine rent and amenities. Each project is then rated based on its level of
amenities, or Amenity Index . The Amenity Index has three components: unit amenities,
project amenities, and curbside appeal (aesthetic amenities).
All rents are converted to net rents, and each project is plotted on a scatter graph,
with rents on the y axis and Amenity Index along the x axis. From this scatter graph, a
regression line is determined.
This regression line indicates the average rent in the market for any project at any
In the regression chart shown below, for example, projects 1, 2, 21, 52
and 61 are achieving rents at the market-driven level.Projects 32, 48, 49,51 and 53 are
achieving rents well above the market-driven average Projects 20, 30, 54, 55, and 57 have
rents well below the market-driven average.
Distribution of Two-Bedroom Units
By Net Rent and Comparability Rating
Part 4 - Making Adjustments and Flaws with Selected