Seattle Employers Bike Summit 2015 Keynote Calculations Sheet

1. Distributed 6/16/2015
Financial Justification* for Bike Amenities
Presentation and concept by Matt Griffin, Pine Street Group LLC
*Used for Seaboard Building (landlord justification); presented at the 2015 Seattle Employers Bike Summit, 6/12/15
Assumptions:
1. It’s harder to justify investing in and building bike amenities in a small building, especially relative to larger
buildings.
2. There’s no opportunity cost to space for bikes.
Example: $90K investment in bike amenities reduces risk of revenue lost and/or provides revenue gain.
total building commercial sq. ft. 50,000 sq. ft.
area for two restrooms with showers 130 sq. ft.
storage rent rate in $/sq. ft./yr. $15/sq. ft./yr.
annual rent (2 restrooms) $ 1,950
rounded rent (2 restrooms) $ 2,000
cap rate 5%
value $ 40,000
construction cost $ 50,000
total of opportunity cost and actual cost $ 90,000
tenant -- who said would not renew without bike
amenities
6,000 sq. ft. same for tenant who won't come
without bike amenities
rent rate in $/sq. ft./yr. $30/sq. ft./yr.
annual rent $ 180,000
first justification
risk of 4 months vacancy if lease terms not met $ 60,000
TI costs at $5/sq. ft. (actual would be $30/sq. ft.) $ 30,000
total $ 90,000
second justification
desired amenities produces higher occupancy 1%
total building commercial sq. ft. 50,000 sq. ft.
average rent rate in $/sq. ft./yr. $30/sq. ft./yr.
annual rent $ 1,500,000
marginal rent $ 15,000
Value $ 300,000
third justification
desired amenities produces higher rent 1%
total building commercial sq. ft. 50,000 sq. ft.
average rent rate in $/sq. ft./yr. $30/sq. ft./yr.
annual rent $ 1,500,000
marginal rent $ 15,000
Value $ 300,000
Notes:
1) The three justifications are mostly additive.
2) Tech tenants are key to downtown growth and more likely to require bike storage/showers.
3) Showers also are amenity for running crowd.