Capture rate is the part of age, size, and revenue qualified renter steading in the primary market area that the belongings must capture to fill the units. What is more the Capture Rate is figured by dividing the all number of units at the property by the total number of size, age and income clasified renter households in the primary market sphere.
This indicator is most often described as a rate related to sales, which compares the congruous projects. Moreover it can also be related to the leasing. What is essential it is being point out, that some restrictions might be applied in calculations by funding agencies to the households. The constraints refer to the variables like income level, age and other comparable factors .
One thousand of real estates are being offered in the specific area. One part of the project, equal to 250 estates, is offered by one Stakeholder. Sales level in this area in January is 100 estates and a half of this quantity is sold out specifically by this Stakeholder. In this case, the capture rate of this Stakeholder is equal to 50%.
There is a lot of different explanation of capture rate, lexicographical term can be found below :
- As Business Dictionary says Capture rate is an environmental management, the percentage of secondary material recovered from household, commercial, and industrial waste.
- Capture rate might be explained as an average number of square feet leased per month, quarter or a year.
What is more
To broaden the reference range, the US Department of Housing and Urban development provides the other example: “a capture rate of 5 percent would indicate that 5 percent of the potential, eligible renters in that market would need to become tenants” .
This inclines to clarification, that the percentage of property renter, that search for a real estate meeting the certain criteria (e.g. price, house type, location), needs to be caught by the offered property to make the process successful.
Capture rate's theoretician
Jack Friedman describes capture rate among the terms of economy as “ the portion of total sales in the market that are sold by one entity or one project”. To assess the level of capture rate as favorable, the value shall remain equal or lower than 5%. In the range of 5 and 10%, there are reasonable chance to succeed. Economically, when ratio differs between 10 and 45%, projects shall be avoided. However, taking into account special factors, the success of the project is possible. Cases with the value above 45% are in general recommended to be abandoned .
- National Council of Affordable Housing Market Analysis members, (2007) “Market Study terminology”
- Business & Financial Dictionary.
- US Departments of Housing and urban development, (2013) “Home and the Low-Income Housing Tax Credit Guidebook”
- J. P. Friedman, (2012) “Dictionary of Business and Economics Terms”, Barron’s Educational Series
- Capture rate, (2019) Business Dictionary
- Friedman J. P., (2012) Dictionary of Business and Economics Terms, Barron’s Educational Series, s. 27
- National Council of Affordable Housing Market Analysis members, (2007), Market Study terminology, s. 2
- US Departments of Housing and urban development, (2013), Home and the Low-Income Housing Tax Credit Guidebook, s. 9
Author: Anna Droczak