A market risk score compresses a great deal of evidence into one number, which makes it useful and makes it dangerous. This page sets out exactly what ours measures, what it deliberately excludes, and the circumstances in which we will not issue one at all.
The score explained below is carried in a report an analyst prepares to a scope agreed with you. You are emailed a written confirmation when the request is opened, and an analyst comes back to you within one business day to agree the scope, the price and a delivery date. Nothing is charged until that is agreed, and the finished report arrives as a personal download link rather than an attachment.
The score is a structured reading of how much risk a defined property market carries for a defined property cohort — upscale select-service hotels in one metropolitan market, say, or light manufacturing buildings of a given size band in one county. It runs from 0 to 100, and a higher number means greater market risk.
Two things follow from that definition. The first is that the score describes a market, not a building. A well-located asset with a strong operator can sit inside a market carrying material risk, and frequently does. The second is that it is cohort-specific: the risk attaching to economy lodging and to luxury lodging in the same city is not the same risk, and a score that averaged them would be worse than no score at all.
The score expresses no opinion of value for any property. It is not an appraisal, it is not prepared under USPAP, and it does not substitute for one.
It says nothing about a borrower, a sponsor, a guarantor or a loan structure. It is an input a credit decision may use, not the decision.
Building condition, management, franchise affiliation and site characteristics are outside its scope. It scores the market those things operate in.
It is not a recommendation to buy, sell, lend against or develop anything. It is evidence, presented so you can reach your own conclusion.
Each component is assessed from measured evidence for the selected cohort and geography, and each is reported separately in the report so you can see which one is driving the reading. A single composite number that cannot be decomposed is not analysis; it is an assertion.
The competitive inventory already standing in the cohort, measured against the demand base the market actually generates. Not square footage in isolation — square footage relative to what the local economy can absorb.
What is under construction and credibly planned, set against the market’s demonstrated absorption. A pipeline that would take years to absorb at the market’s own historic rate is a different risk from one that would take months.
The direction and the durability of the demand drivers — employment in the sectors that actually occupy this property type, population and household formation, and for lodging and retail, visitation and spending.
How concentrated the local economy is, and in what. A market whose demand rests on a single employer or a single sector carries risk that a diversified market of the same size does not.
How much of the above is measured rather than inferred. A market we can observe directly and a market we can only estimate from regional analogues are not the same risk, and the score says so instead of hiding it.
The numeric score is reported alongside a band, because a two-point difference between two markets rarely means anything and a two-band difference always does.
| Band | What it indicates for the selected cohort and market |
|---|---|
| Low | Supply, pipeline and demand are in balance on the evidence available, and the economic base is broad enough that a single sector reversal would not dominate the outcome. |
| Moderate | The market functions, but at least one component is under pressure — commonly a pipeline that is large relative to recent absorption, or a demand driver that has flattened. |
| Elevated | Two or more components are working against the cohort, or one is doing so severely. Underwriting at market-average assumptions is unlikely to be defensible without support. |
| High | The evidence points to a market that cannot absorb its existing and committed supply on current demand trends within a normal underwriting horizon. |
| Severe | Structural, not cyclical. The demand base for this cohort is contracting, or supply has overshot to a degree that recovery depends on withdrawal of inventory rather than growth in demand. |
A single-point forecast of a market is a guess with a decimal place. The full report therefore does not stop at a central case: it runs the market’s key variables — absorption, rent or rate movement, pipeline delivery timing, and the demand drivers underneath them — across a simulated distribution of outcomes, and reports where the cohort lands at the tenth, twenty-fifth, fiftieth, seventy-fifth and ninetieth percentiles.
That is what makes the score usable in credit. The question a lender is actually asking is not “what happens if things go as expected” but “how bad is the tail, and how likely is it”. The distributions, the sensitivity ranking showing which variable the outcome is most exposed to, and the stress cases sit in the purchased report; this page describes how they are produced. The method is set out in full on the methodology page.
Before anything is ordered, the coverage check on the Market Risk Intelligence page reports what we hold for the exact property type and geography you have selected, band by band: building inventory, economic data, construction pipeline, market trends and forecast evidence. Where a band is missing, unreliable or out of date, the analyst sources that evidence for your commission and the report is written to your brief rather than to our published structure — and the check tells you so before you order.
What we will not do is print a number that looks precise and is not. A score is issued only where the evidence behind it supports one: where a band has to be sourced first, the report says which reading rests on sourced evidence, and where a component cannot be evidenced at all the report records the gap instead of scoring it. Our reports desk will tell you which of the two your market is before you commission the work.
These three are routinely conflated, and the conflation is expensive. Market risk asks whether the market supports the cohort. Credit risk asks whether this borrower repays this loan. Property risk asks whether this particular asset performs within its market. Our score addresses the first only, and is designed to be an input to the other two rather than a replacement for either.
Independent analysis may be requested according to the program, transaction and lender/CDC or SBA instructions. Projection reliance, a startup or a special-purpose property alone does not establish an automatic independent-study mandate. Those are commissioned engagements with a defined scope; see our feasibility study and appraisal services.
Analyst-prepared market risk reports for hotels, manufacturing, office, retail, industrial and warehouse, multifamily, mixed-use, hospitals and ASCs, gas stations and truck stops, and special-purpose properties. Every report is prepared by an analyst and commissioned through our reports desk, which agrees the scope, the price and a delivery date with you before anything is charged. The coverage check tells you what we already hold for your market and what the analyst sources for it — where we hold the data the report follows our published structure, and where we do not, the analyst sources the evidence and writes it to your brief.
The firm also writes analyst-prepared market reports to your own brief for any of these classes — office, retail, warehouse and industrial, multifamily, mixed-use, hospital and ASC and gas station and truck stop. A separate product, bought for a separate reason.
We accept all major credit cards. Payment is taken by telephone: call +1 310-857-2443 ext. 800 and a member of the reports desk will take your card.
For your security we never ask for card details by email or through this website. So that you are not left waiting on a call, the order form asks for your time zone and the best time to call, and the desk rings you in that window where we can, or writes to agree another time. Nothing is charged until we have confirmed the scope and the price with you.
Legal disclosure. Wert-Berater, Inc. offices are mailing addresses only. Following the COVID-19 pandemic the firm has elected to work remotely; its office locations receive mail and are not staffed for visitors or in-person meetings. Headquarters mailing address: 1968 South Coast Hwy, Ste 2382, Laguna Beach, CA 92651.
Wert-Berater, Inc. is an independent provider of feasibility studies and other related services. The firm does not provide financing or equity investment advice, and does not arrange, broker, or place debt or equity capital of any kind.
All appraisal assignments are performed by Bruce E. Jones, MAI, ASA-GC, BCA, CMEA, a member of the Appraisal Institute since 2006, a staff member of Wert-Berater, Inc. and owner of Special Purpose Realty Valuation.
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