Forecasting for Demand, Growth, or Consolidation

Demand forecasting is one of the trickier analyses because growth is usually not straight-line but occurs dynamically because of a new product or process. Normally, one tries to model future demand by making “best case” estimates.

If in doubt it normally pays to take more space than needed because a space shortage can crimp production and the additional marginal costs is small compared to a loss of sales. Additionally, if done right, the extra space can be subleased until needed.

Overall Strategic Context – What direction is the company heading?

• Growth Management
• Under control with incremental growth
• Out of control growth without strategy
• Consolidation and Disposition
• Migration to lower cost position
• Repositioning

Types of Forecasting Stages:

1. Direct Translation

• Headcount to square feet
• Widgets and product to square feet
• Historical growth and metrics needed
• Straight line charting

2. Extrapolation from Business Indicators

• Non-linear relationships
• Partially subjective
• Sudden growth through new product or invention
• Metrics

3. Bull and Bear Scenarios

• Risks of multiple outcomes
• Modeling and wave analysis
• Minimum and maximum analysis

4. Build in Flexibility

• Land banking, optioning, space banking
• Note space under the curves