Understanding Penetration Rate Methodologies
Independent Living Penetration Rates: One Indicator of Market Demand is a white paper from Dixon Hughes Goodman designed to help sponsors of a project to understand the penetration rate methodologies and their implications.
Penetration rates help measure the degree to which a market is either underserved or saturated. Simply put, what percentage of the qualified market must be captured to achieve stabilized occupancy? Different types of penetration rates give insights into various stages of a project’s development.
The paper answers these questions:
- What is a penetration rate?
- What are the basic components of a penetration rate calculation?
- How are industry penetration rates calculated?
- How does Dixon Hughes Goodman calculate penetration rates?
- What are “acceptable” penetration rates?
- Does the penetration rate really tell the whole story?
It is important for the sponsor of a project to understand the methodologies and their implications since they will have to live with the challenges and rewards of the project once it is operational.