In commercial real estate (CRE), the terms “market” and “submarket” have many characteristics. Hierarchy: In terms of geographic hierarchy, a region is made up of markets, and a market is made up of submarkets. Boundaries: Markets and submarkets have generally accepted geographic boundaries that do not overlap. They are most commonly bound by streets, roads and natural features such as parks and rivers, which clearly indicate where one market or submarket ends and another begins. Purpose: Markets and submarkets are the foundation upon which analysts track real estate fundamentals such as vacancy, absorption, rents and construction activity. Markets and submarkets are further broken down by total buildings and by total square footage in those buildings. Product types: Office and industrial product types may share generally accepted market or submarket boundaries because in the United States, office space tends to be clustered together as does industrial space. However, there may also be separate and distinct boundaries for each respective property type. Suburban retail is more closely tied to residential and, therefore, is dispersed across large geographic areas, whereas urban retail is typically clustered in specific areas or on specific streets.
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