What happens when there is an excess of one type of facility in a market?

When there is an excess of one type of facility in a market, the result is typically a decreased value of all such facilities. This situation arises because an oversupply can lead to diminished demand for those facilities, as there are more available than potential users or buyers. The market dynamics work in such a way that when supply exceeds demand, property owners may be forced to lower their prices to attract tenants or buyers, which directly affects property values across the board.

As more properties are available than are needed, competition among property owners increases, leading to price reductions in an effort to fill vacancies or sell properties. This can create a downward pressure on property values, resulting in a broader decline in market prices for similar facilities. Therefore, the existence of an excess facility not only influences the specific facilities that are in surplus but also impacts the overall market by reducing the perceived value of all similar facilities due to increased competition.