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South Park Property Overview
1. SOUTH PARK
CHARLOTTE, NORTH CAROLINA
CONFIDENTIAL MEMORANDUM
2. SOUTH PARK
TABLE OF CONTENTS
SECTION PAGE
EXECUTIVE SUMMARY 3
FINANCIAL SUMMARY 5
REASONS TO INVEST 5
PROJECT RISKS 9
MARKET SNAPSHOT 10
RENT COMPARABLES 13
SALES COMPARABLES 19
APPENDIX 1 ā AERIALS, MAPS AND SITE PLANS 20
CONFIDENTIAL
PRIVATE AND
STRICTLY
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3. SOUTH PARK
EXECUTIVE SUMMARY
Project Name South Park
Location The site is ideally located along Fairview Road, and sits equidistance
between Fairviewās intersection with both Park Road and Sharon
Road; two of Charlotteās most heavily traveled corridors. Located
approximately five miles due south of Charlotteās Central Business
District (āCBDā), the areaās largest employment sector, the
demographic makeup of the South Park sub-market is in-line with our
target market.
The propertyās proximity to South Park Mall significantly enhances the
siteās desirability. Anchored by a Neiman Marcus, Nordstrom,
Dillardās, Macyās and Belk, the mall is a major destination for the
region and has acted as a catalyst for continued high-end
development in the surrounding area.
Site The site, located at 6010 Fairview Road, consists of approximately
10.533 acres and is immediately adjacent to two +/- 15-story Class-A
office buildings, both of which are served by separate four level
structured parking decks. The topography of the site is relatively flat
in nature and presently provides additional parking for the
aforementioned structures.
Timing Prior to the recent acquisition of the site by ___________ (d.b.a.
___________), the previous owners, LNR Property Corporation,
successfully had the property rezoned from 0-1 and 0-3 (office
districts) to Mixed Use Development District with Optional Provisions
(āMUDD-0ā). As approved, the present zoning classification allows up
to 185,000 square feet of Retail, 685 residential units and 150 hotel
rooms.
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While ___________ās future role in the proposed development
continues to remain in the formative stages, it is anticipated that the
existing residential component of the aforementioned classification is
more than sufficient to support
Proposed Project The present MUDD-O zoning classification allows for a mix of uses to
include residential, retail and hotel. While the proposed development
will seek to maintain the aforementioned zoning classification, the
degree to which use-related changes will be made has yet to be
determined. Based on initial discussions with ___________, the retail
developer of the site, the present plan is to incorporate both retail and
residential uses. To accommodate the siteās need to maximize retail
square footage, podium construction will used with retail occupying
the ground floor and four floors of stick-built residential above the
street level base. The proposed development will consist of 330
residential units and parking for both retail and residential will be
provided through a combination of both surface and structured
parking. The residential design will include an integrated resident
amenity center that will house a club room, fitness center, computer
room, media room and access to a resort style swimming pool. In
addition, a street-level leasing center will be constructed to take
advantage of the foot traffic that will be created by the retail uses.
Due to the siteās proximity to Charlotteās CBD, it is anticipated that the
Target Market
proposed developmentās perspective tenant base will consist of young
professionals and growing families. Tenants will not only benefit from
easy access to their place of employment, but will also enjoy the siteās
surrounding amenities.
Rental Unit Mix Although the exact unit mix has yet to be determined, the 330 unit
development will primarily consist of one and two bedroom units that
will average 850 and 1,100 square feet, respectively. Should
additional market research determine a need for three bedroom units,
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the design will be adjusted to accommodate the proven demand for
these units.
FINANCIAL SUMMARY
(TO BE INSERTED)
REASONS TO INVEST
The South Park site represents a unique opportunity for ___________ to acquire a marquee site
that will ensure a high profile entry into the Charlotte-Mecklenburg marketplace. Once
completed, the development will enjoy great visibility from Fairview Road and will benefit from
an abundance of cars that travel past the site each day. Located in one of Charlotteās most
desirable sub-markets, comparable properties are able to demand some of the highest rents in
the area and are also currently outperforming most of the market as it pertains to overall
vacancy at 7.9%.
While the uncertainty of Wells Fargoās pending acquisition of Wachovia has been cause for
concern during the past few months, it is important to note that Charlotte is the second largest
banking center in the United States, next to New York. In addition to Bank of America, which is
headquartered in Charlotte, the area is home to numerous large employers that include, but is
not limited to, Duke Energy, Carolinas Healthcare System, UPS, US Airways, TIAA-CREF,
Adecco, Compass Group, IBM, AT&T-NC, BB&T, Time Warner Cable and Wells Fargo Home
Mortgage.
While job growth remained relatively flat in the region over the past year, the job growth rate did
increase by a positive 1.2% between February and August of 2008. While it is impossible at this
time to forecast the impact the Wells/Wachovia merger will have on the region, several local
employers have announced additional jobs that will be created in the forthcoming twelve to thirty
six months. IBM, Pharmaceutical Product Development, Time Warner Cable, Maersk, ATI
Allvac and Tessera Technology have announced the creation of more than 1,500 new jobs for
the region.
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The site is located less than five miles from the Bank of
America Stadium and Time Warner Arena.
The siteās proximity to South Park Mall provides an abundance of both local and national
retailers and will almost certainly serve as a primary attraction to potential residents. Not only
will residents be able to walk to the mall, they will also be able to frequent numerous restaurants
and entertainment venues in the immediate area. From a recreational standpoint, residents will
enjoy onsite amenities (pool and resident fitness center) as well as easy access to several
community parks in the area. In addition, the site is located less than five miles from the Bank
of America Stadium (home of the NFLās Carolina Panthers) and the Time Warner Arena (home
of the NBAās Charlotte Bobcats).
Location
The propertyās location in the South Park sub-market coupled with its proximity to Charlotteās
Central Business District (the regionās largest employment sector), makes the South Park site
an attractive housing option for residents whose household income reflects our target
demographic. In addition to its proximity to an abundance of employment options, the site also
provides easy access to several major thoroughfares, as well as Charlotte Douglas International
Airport. With the exception of the Downtown sub-market, the South Park sub-market (reflected
below as Southeast-1) demands the highest average per square foot rents at $0.954. The
āComparative Rentsā graph below highlights how the Southeast-1 sub-market compares to other
sub-markets within the region.
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7. SOUTH PARK
Tightening Market
Several recent regional studies have predicted that the Charlotte-Mecklenburg region, like many
similar markets throughout the United States, will continue to experience the economic crunch
that has impacted the American economy. It is unclear when a turnaround will occur. While the
creation of jobs is expected to remain static during the foreseeable future, it is expected that the
desirability of the South Park sub-market, coupled with its proximity to high paying jobs, will
continue the trend of sub-market experiencing a positive influx of new residents.
A perceived oversupply of multi-family units in the South Park sub-market (reflected below as
Southeast-1) can directly be attributed to proposed developments along the South Boulevard
Light Rail Corridor. According Real Dataās September 2008 Apartment Index Study, there are a
total of 1,615 units presently under construction in the Southeast-1 sub-market. It is important
to note that approximately 1,270 (roughly 78%) of those units are located along the South
Boulevard Corridor. Of the remaining units, it appears that none will be in direct competition
when the subject property is delivered to the market.
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The following āComparative Absorptionā graph shows that the Southeast-1 sub-market was
ranked fifth among all Charlotte sub-markets, having absorbed a positive 109 units during the
previous six months. While this statistic is not overwhelmingly impressive, it is important to
point out that no new units were delivered during this same period. Real Dataās report also
forecasts an additional 2,234 units are on in the planning phase. Again, a majority of these
units are proposed along the South Boulevard Corridor and, as such, it is anticipated that as
many as 50% of these developments will not come to fruition.
Barriers to Entry
While small tracts in the Southeast-1 sub-market (which includes South Park) still exist, land
properly zoned to allow multi-family development is scarce. This coupled with the fact that
adjacent neighborhood groups are often vocal in opposing multi-family development makes the
āby rightā status of the South Park property an invaluable asset. Although this sub market has
seen a relatively sizable increase in new construction multi-family during the past several years,
activity has primarily been attributed to the South Boulevard area along the Cityās recently
completed light rail system. The lack of developable sites in the area surrounding the subject
site large enough to accommodate multi-family will act as a barrier to future competition.
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PROJECT RISKS / OPPORTUNITIES
The Charlotte-Mecklenburg region has not been immune from the same economic woes that
have plagued the country during the past twelve months. While this is a relatively serious
concern, the subject propertyās location in one of the more economically stable sub-markets,
coupled with the scarcity of available multi-family land should help offset some of the market-
associated risk.
While it is yet to be seen what type of impact the Wells Fargo / Wachovia merger will have on
the local economy, it is important to note that the region does not attribute an unbalanced share
of it employment demographics to the banking industry. In addition, Bank of America, which is a
much larger institution and employer than Wachovia, is, by all accounts on stable ground. The
following chart provides a breakdown of the employment sectors in the market and the
percentage of employees that are attributed to each of those classifications:
It is also important to note that the property is presently zoned to allow the proposed residential
and retail uses. The citizen-lead groups that represent the residential communities surrounding
the site are known to be a very vocal when it comes to rezoning petitions. A contentious
rezoning would subject the property to a public process that could last up to two years. The
siteās āby rightā status is an invaluable asset in moving forward with the proposed development.
In addition, the desirability of the location coupled with its proximity to high paying white collar
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jobs will enhance the developments ability to achieve per square foot rents that are reflective of
the comparable properties featured in later in this report.
The majority of risk associated with this property outside of achieving forecasted rents and
reaching stabilization is primarily limited to the time it takes to secure all of the municipal
approvals necessary to initiate construction. While it is tough at this time to forecast an
approval timeline due to the uncertainty of the overall development plan, it is realistic to expect
that the development could secure the aforementioned approvals within twelve months of the
initial submission of a site plan.
MARKET SNAPSHOT
According to statistics compiled by Real Data in their September 2008 Apartment Index, there
are a total of 6,771 multi-family units in Charlotteās Southeast-1 sub-market. This sub-market
represents roughly 8% of Mecklenburg Countyās overall inventory and demands the second
highest per square foot rent at $0.954 (see āCharlotte Submarket Comparisonā chart below).
While job growth in the Charlotte region has traditionally weathered nationwide downturns, the
recent impact of the national economy has had a slight impact on the region. While there was a
slight decrease in jobs between August of 2007 and February 2008 (799,548 down to 790,819),
the region experienced a slight recovery to 800,245 during the months leading up to August
2008. The unemployment rate in the region has historically hovered below 5%, but has ticked
slightly up during the past twelve months to a present rate of approximately 6.2%. While some
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of this increase can be attributed to employment tied to the banking sector, steady decreases in
service related jobs also have played a major role in the increase in unemployment. It is
impossible to predict what overall impact the nationās struggling economy will have on the
Charlotte region, but it is anticipated that the Southeast-1 submarket will continue to outperform
the majority of other submarkets in the near future. The chart below provides an overview of the
historical trending of the unemployment rate as compared to the actual number of those
employed in the market:
The Real Data report shows that the Charlotte marketās overall vacancy rate had ticked slightly
downward to 9.1%. (as compared to February 2008ās 9.2%). Although the region experienced a
substantial increase in vacancy between August 2007 (6.8%) and February 2008 (9.2%), it is
worth noting that the vacancy rate has remained somewhat static during the previous two
reported periods. During the same period, rents increased from $735 in February of 2008 to
$751 in August of the same year.
In the Southeast-1 sub-market the average vacancy rate reported in August 2008 was 7.9% (1-
Bd. 7.4%, 2Bd. 8.0% & 3Bd. 9.1%). These figures are much lower than the regionās average of
9.1% and represents a nearly 1.5 point decrease in the vacancy rate between February and
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August (9.3% compared to 7.9%). The following graphs show the trend line attributed to this
Southeast-1ās vacancy performance as compared to the market as a whole:
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RENT COMPARABLES
The following properties are comparable to the proposed development in size, available
amenities and location:
THE RESIDENCES AT SOUTH PARK
4300 SHARON ROAD, CHARLOTTE
The Residences at South Park,
developed by Hanover, is located on
an out-parcel of South Park Mall.
The property is located less than
2/10 mile from ___________ās site
and is the closest comparable. The
Residences was completed in 2007
and is presently 63% occupied.
Amenities include a pool, work out
facility, resident lounge and
business center. The property also
has high-end retail on the ground
floor.
Unit Total Average Average Avg. Rent
Type Units Sq. Ft. Rent Per Sq. Ft.
1/1 73 1,219 $1745 $1.43
2/2 & 2.5 71 1,824 $3,129 $1.72
3/3 & 3.5 6 2,574 $5,576 $2.17
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POST UPTOWN
305 NORTH GRAHAM ST., CHARLOTTE
Located within walking distance to
Charlotteās Central Business District,
Post Uptown boasts a pool, fully ā
equipped fitness center, resident
lounge, garage parking and a small
amount of retail space on the
ground floor.
Completed in 2000, the property
consists of 227 units and is presently
97% occupied.
Unit Total Average Average Avg. Rent
Type Units Sq. Ft. Rent Per Sq. Ft.
1/1 181 892 $1,275 $1.43
2/2 42 1,110 $1,576 $1.42
3/2 4 1,322 $1,877 $1.42
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POST PARK
4835 CAMERON VALLEY PARKWAY, CHARLOTTE
The Residential component of the
highly successful Philips Place
Mixed-Use development, Post Park,
developed by Post Properties,
consists of 402 units and was
completed in 1997. The property is
located less than 3/4 mile from the
subject property, and is presently is
reporting a 94% occupancy rate.
The property has a pool, fitness
center and resident clubhouse. In
addition residents can walk to an
abundance of high-end retail.
Unit Total Average Average Avg. Rent
Type Units Sq. Ft. Rent Per Sq. Ft.
1/1 192 835 $927 $1.11
2/2 174 1,227 $1,362 $1.11
3/2 36 1,845 $2,435 $1.32
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CAMDEN GRANDVIEW
309 E. MOREHEAD STREET, CHARLOTTE
Located in the shadow of
downtown Charlotte, Camden
Grandview provides an abundance
of resident amenities including a
clubhouse, fully-equipped fitness
center, pool and business center. In
addition, the property has secured
parking and controlled access to all
common areas. Most units include
a balcony. Completed in 199, the
property consist of 266 units and is
presently 94.7% occupied.
Unit Total Average Average Avg. Rent
Type Units Sq. Ft. Rent Per Sq. Ft.
1/1 140 879 $1,204 $1.37
2/2 105 1,300 $1,560 $1.20
3/2 21 1,610 $2,093 $1.30
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LAND SALES COMPARABLES
(TO BE ADDED)
SALES COMPARABLES
(TO BE ADDED)
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Appendix I: Aerial, Maps & Site Plans
Aerial Site Overview
The 10.533 acre site has direct access to Fairview Road and is immediately
adjacent to South Park Mall. It is one of the last remaining large acre tracts in the
South Park (Southeast-1) sub-market.
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