Glossary

Capture Rate (Market/Feasibility Study)

Also known as: required capture rate

In a market or feasibility study, the percentage of a defined, demographically qualified demand pool (e.g., income- and age-qualified households in a trade area) that a proposed project must attract as tenants, buyers, or patients in order to reach its projected occupancy or sales — a core feasibility test comparing required capture against realistic, market-supportable capture benchmarks.

Capture rate is the pivotal sanity check in any market study: an analyst first sizes the total qualified demand pool for a use (for senior housing, for example, the age- and income-qualified population within the defined trade area, adjusted for existing homeownership or care needs), then divides the subject project's unit count by that pool to derive the required capture rate, which is then compared against reasonable benchmarks for the use and market. A required capture rate that is implausibly high relative to comparable recently-stabilized projects in similar markets (for instance, requiring 15% capture of the qualified pool when comparable successful projects have captured 3-5%) is a strong feasibility red flag, regardless of how favorable the project's other underwriting metrics appear, because it implies the project would need to draw a disproportionate, historically unsupported share of the available demand to reach stabilization. Because required capture rate is highly sensitive to how narrowly or broadly the trade area and qualified-pool definitions are drawn, a favorable capture rate conclusion can sometimes reflect an overly generous trade area or demand-pool definition rather than genuine market support — a common point of scrutiny when a lender's or investor's own market analyst reviews a sponsor-commissioned feasibility study.