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Rclco Draft Market Findings092909


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Rclco Draft Market Findings092909

  1. 1. Waco Plan 2050: Market Analysis Findings Greater Downtown Waco Steering Committee | September 29, 2009
  2. 2. EXISTING CONDITIONS & MARKET ASSESSMENT Downtown Existing Conditions and Market Assessment • Residential • Retail • Office • Hotel Future Market Opportunities 02-12283.00
  3. 3. Residential Market Existing Conditions 2 02-12283.00
  5. 5. OPPORTUNITY TO ATTRACT A WIDER VARIETY OF AUDIENCES FOR RESIDENTIAL DOWNTOWN WITH WALKABILITY AND AMENITIES STRENGTHS Large student body and small amount of on-campus housing creates a strong market audience for apartments and affordably priced single family homes and condos Riverfront serves as an amenity, opportunity to draw audience by river-oriented product Proximity Heritage Square serve as focal points for downtown area Ease of access to both Dallas and Austin through I-35 Sites of cultural interest and entertainment, including proximity to BU sporting event facilities, serve as areas of interest for downtown residents. Heritage Quarters- new student apartments in downtown Proximity to downtown jobs (in particular government, insurance and retail employers) CHALLENGES Perception of Downtown's quality of life deters many potential buyers Not an established residential location (lack of variety of product) Lack of appetite for dense residential development Lack of local serving retail Challenges associated with retrofitting older buildings or building new projects downtown Direct competition with lower-cost suburban homes Austin Avenue Flats- newly constructed condo building with many units leasing 4 02-12283.00
  6. 6. RESIDENTIAL MARKET IS DRIVEN BY BAYLOR STUDENTS, WITH MAJORITY CHOOSING RENTAL PRODUCT Apartment market driven by proximity to Baylor University and Central Newly constructed student Business District apartments, Heritage Square, is Emerging rental market commanding the highest rents downtown includes new New urban product such as Austin per unit at $1.50/sf. This construction condominium quality construction and Avenue Flats and Praetorian Lofts apartment is performing well in lease-up, mostly due to its high rehabilitation of existing are renting for more than $1.00/sf. level of amenities. product into loft style Highest premium for rental above apartments. retail. Dorm style apartments for Baylor Older apartments Students are highly amentized and target retail and carry hefty rents of $1.30-$1.50/sf. manufacturing and are rented by room. Other new employees. Rents communities with the same quality of average $0.80/sf. amenities but do not rent by room have rents around $1.00/sf. Many Baylor students choose to live in older communities, east of campus that rent for $0.60 to $0.90/sf. Baylor University area has student- oriented apartments both in student Individually owned-professionally dorm and traditional apartment style. managed condominiums and townhomes compete with the older traditional apartments. Newly constructed Residences at Central Texas Marketplace appeal to hospital, education and skilled-manufacturing employees. Rents average $0.90 /sf. Greater Downtown Waco SOURCE: RCLCO Apartment Communities 5 02-12283.00
  7. 7. MOST NEWER COMMUNITIES RENT FOR MORE THAN $1.00 PER FOOT, STUDENT- DORM STYLE APARTMENTS ARE CLOSER TO $1.50 Wgt. % Relevant Price Under- Apartment Per Total grad Communities Occ SF Units student 1 Behrens Lofts 93% $1.02 57 25% 2 Austin Avenue 92% $1.68 49 30% Flats 3 Praetorian Lofts 100% $1.16 12 25% 4 LL Sams Lofts 100% $1.11 126 95% 5 75%, 7 Aspen Heights 100% $1.20 107 100% 1 4 in 2008 3 2 6 Abby Glen 92% $1.00 168 100% 6 7 Heritage 75% $1.45 368 100% Quarters 8 The Grove 98% $1.34 192 100% 5 One bedrooms appear to be the most popular 8 floorplan downtown. Not many are available and more young professions or grad students look for apartments downtown Greater Downtown Waco SOURCE: RCLCO 6 02-12283.00
  9. 9. THE DOWNTOWN AREA CURRENTLYLACKS NEW RESIDENTIAL PRODUCT, EXISTING HOMES ARE VERY AFFORDABLY PRICED Waco has virtually no new single family homes available in Waco city limits. Older, more established single family Austin Avenue Lofts and other loft neighborhoods: Dean- buildings downtown were first Highlands, North Waco, conceived as condo buildings but Brook Oaks. Ranging in sales have been slow, priced from price from $60,000- $119-495K. Units are currently for $150,000. rent from $850 to $2,400/month. Single family homes are priced very Austin affordably with an average sales Avenue Lofts price $130,000, or $45/SF. Listing prices within the downtown area average under $100,000. Old Waco High Most single-family and multi-family homes around Baylor are investment properties for Baylor student rentals. Currently on-hold redevelopment of the old Waco High site will add Older, less established Baylor neighborhood is a roughly 70 new affordable condos to single-family homes , mixture of single family downtown. majority of listing pricing and multifamily homes. from $30,000-$75,000. SOURCE: RCLCO Greater Downtown Waco 8 02-12283.00
  10. 10. Retail Market Existing Conditions 9 02-12283.00
  11. 11. THE DOWNTOWN AREA ENJOYS A VARIETY OF RETAIL MARKET AUDIENCES, REPRESENTS AN OPPORTUNITY TO ATTRACT NEW RETAIL USES STRENGTHS Strong downtown convention and visitor traffic will serve downtown retail Government and insurance jobs will fuel office- serving retail and restaurants Growing downtown residential population could fuel local-serving retail Large student body represents a strong market audience for local-serving and boutique retail Unique entrepreneurship program at Baylor Shops at River Square include restaurants and local boutique retail could spur boutique store-front opportunities for stores, targeting Baylor students and downtown employees. students CHALLENGES Household incomes present challenges for recruiting retailers with narrow locational criteria Majority of existing space downtown is older space with smaller floorplates, makes attracting larger tenants difficult Large amount of obsolete retail space begs redevelopment Majority of large-scale retailers located along Valley Mills Drive and 340 Loop Major regional retailers are already present at large centers in the Lack of night-time population could be difficult market, eg. Central Texas Marketplace for grocery stores or restaurants to survive 10 02-12283.00
  12. 12. THE DOWNTOWN AREA TYPICALLY ATTRACTS SMALLER FORMAT RETAILERS, WITH THE BIG BOX STORES LOCATING ALONG VALLEY MILLS AND I-35 Downtown renovation is beginning in the Heritage Square and River The western part of the River Square is new Square area. study area includes office/retail development with a mostly vacant variety of boutique shops and New trolley system linking Baylor to dilapidated street front restaurants. This development the downtown area will bring a retail is very popular among Baylor greater interest to downtown retail students and downtown employees. and restaurants Valley Mills Drive Corridor includes lower Downtown street-front retail around density older strip retail with regional serving Heritage Square rents from $12- tenants. $16/SF. Downtown residents and students must travel to suburban centers to Heritage Square area has been shop redeveloping in the last few years, offering renovated and Rents at large suburban centers new construction space. range from $17-$20/SF, with Tenants include restaurants, restaurant/outparcel space renting bars, and coffee shops serving from $12-$16/SF. downtown employees, conventioneers ,and visitors Wal-Mart Planned Town Center development anticipates rents of roughly $20/SF Richland Mall , built in 1980 for space. Well over current and renovated in 1996,and is more than 700,000 square Central Texas Marketplace is a downtown average. feet. Main tenants are newly constructed 700,000 square Dillards and JCPenney and foot power center. Major national Movie Theater. tenants include Belk, Sports Greater Downtown Waco Authority and Bed Bath and Beyond. Retail under 10K SF SOURCE: RCLCO, Costar Retail over 10K SF 11 02-12283.00
  13. 13. DOWNTOWN RESIDENTS AND VISITORS MUST DRIVE OUTSIDE THE DOWNTOWN AREA FOR MUCH OF THEIR SHOPPING NEEDS Relevant Lease Key Total Retail Occ Rates Tenants SF Comps (NNN) EXISTING RETAIL CENTERS 1 Ninfa’s, River Square Crickets Bar 92,874 100% $16 and Grill, 2 HEB Center HEB 77,534 97% N/A 3 1 7 3 Heritage Square Bar, 7,85 Square Retail 2 100% $17 Olive Branch 2 OUTSIDE GREATER DOWNTOWN AREA 8 4 Tractor Waco Supply 160,000 89% $12 Commons Store 4 5 Central Texas Marshalls, 700.000 93% $20 Marketplace Belk 6 Dillards, JC Richland Mall 708,068 98% $15 6 Penny PLANNED AND PROPOSED 7 61,000 Town Square N/A total N/A $20-$25 5 planned 8 Speight Ave. N/A 4,000 N/A $24 SOURCE: RCLCO Greater Downtown Waco 12 02-12283.00
  14. 14. Office Market Existing Conditions 13 02-12283.00
  15. 15. MUCH OF DOWNTOWN OFFICE SPACE IN NEED OF REHABILITATION TO ATTRACT NEW TENANTS STRENGTHS Study area encompasses central business district with notable historic buildings Concentration of government and insurance employers Walkability creates active daytime population, attractive to employees Proximity to I-35 Redevelopment downtown (including Chamber of Commerce and Roosevelt building) could spur further development Regional serving airport Redevelopment downtown, catalyzed by Heritage Square and Quality infrastructure and streetscape Chamber Building (left) CHALLENGES Developable land underutilized with extensive parking lots Many major employers are located outside of the study area and CBD Lack of traditionally office using employers in the MSA Large amount of obsolete and vacant space in need of redevelopment Asking rents for quality space are high compared to suburban space Lack of service-oriented retail for office workers Vacant Waco Tribune Building 14 02-12283.00
  16. 16. DOWNTOWN REPRESENTS 40% OF THE OCCUPIED OFFICE SPACE WITHIN THE MSA Office market in downtown Waco is small and comprised of mostly of insurance, finance, government and emerging telecom tenants.. Downtown office space rents from $6/ SF for older street front space to $18/SF for River Square high-rise space. The Roosevelt Office leasing above $18/SF is sparse, many companies will settle for lower quality Office space intermixed with retail centers along N. Valley Mills space under $18/sf. Road and Bosque Boulevard. The newly renovated Roosevelt is currently 100% occupied and had rents of $18/SF but offered concessions. Downtown office space, mostly The Roosevelt shows a pent-up up demand built from 1910-1950, is in need of for newer office space but it did not produce renovation. Many office tenants net- new tenants. Mostly relocations from are in need of better quality space other lower quality space downtown. Cluster of office space along N. Valley Mills and Bosque Blvd. are achieving roughly Legend Crossing $15/SF. Currently proposed office at Legends Crossing is looking to collect the highest rents in the city of $22.50 to $24.50/SF. Greater Downtown Waco Downtown Office SOURCE: RCLCO, Costar Suburban Office 15 02-12283.00
  17. 17. WACO EXISTING OFFICE TENANTS ARE COST SENSITIVE, MOST WILL NOT RENT SPACE FOR MORE THAN $18/SF REGARDLESS OF THE QUALITY Avg. Relevant Lease Office Total Rates Comps Key Tenants SF Occ. (NNN) EXISTING OFFICE 1 Seg-it, LAN Inc., River Nelson Law Firm, 20,500 61% $16 Square New England Financial 2 National Lone Star Legal Floyd's Aid, Central TX 57,332 91% $18 Building Social Services 3 Naman, Howell, Smith & Lee, July The Business 3 1 110,510 100% $16 Roosevelt Services, Pakis, 2 6 Giotes, Page & 5 Burleson 4 4 Bank of Bank of America 15,727 75% $12 America 5 Kress N/A 40,374 $17 Building 6 Wells Wells Fargo 218,168 100% N/A Fargo Greater Downtown Waco SOURCE: RCLCO 16 02-12283.00
  18. 18. Hotel Market Existing Conditions 17 02-12283.00
  19. 19. CONVENTION AND VISITOR TRAFFIC HAS FUELED WACO’S HOTEL MARKET, OPPORTUNITY TO CAPTURE MORE OF THIS DEMAND WITH RENOVATED CONVENTION CENTER STRENGTHS Close proximity to major entertainment venues Immediate access to convention center Adjacent to Central Business District Strong regional access Strong demonstrated performance Proximity to Baylor University Recently renovated Hilton at the Convention Center CHALLENGES Seasonality of tourists, convention, and student activity Large amount of delapidated underperforming product Limited tourist-serving retail and entertainment options Lack of major airport Hotel Waco 18 02-12283.00
  20. 20. HOTELS WITH ADR’S ABOVE $75 ARE THE STRONGEST SEGMENT OF THE MARKET WITH 63% OCCUPANCY IN 2008 Average hotel quality is low in Waco, yet consistent demand will continue to grow with the renovation of the convention center and visitor traffic due to Baylor athletics Downtown hotels Occupancy among the 29 hotels targeting business and Waco area hotels (including convention travelers downtown hotels) through 1Q 2009 is with proximity to convention center and at 51% and is down 6% from 2008 bulk of financial and Revenue per room, however, government offices increased roughly 12% from 1Q 2008 to 1Q 2009. The Waco hotels are geared towards Hotels along I-35 target mid-priced business travelers, highway travelers and conventioneers, weekend sport visitors to Baylor travelers. athletics Many hotels downtown are also oriented toward I-35 travelers. The Hilton hotel, recently renovated, carries the bulk of the business and convention demand. It boasts an occupancy of 70% SOURCE: Waco Convention & Visitors Bureau, TravelTex Greater Downtown Waco Hotel Location 19 02-12283.00
  21. 21. FEW UPSCALE HOTELS IN WACO, MANY ROOMS UNDER $90 PER NIGHT Typical # of Room Relevant Room Rate Hotel Comps s Range1 1 Hilton 196 $119 Courtyard 2 153 $109 by Marriott Residence 3 78 $100 Inn 1 4 Hotel Waco 114 $80 2 4 3 5 Clarion 148 $89 Best 6 84 $80 5 Western 6 7 La Quinta 102 $67 7 Econo 8 53 $64 Lodge 8 SOURCE: RCLCO 1 Based on weekday rack rate, August 2009 20 02-12283.00
  22. 22. FUTURE OPPORTUNITIES ASSESSMENT Waco Existing Conditions and Market Assessment Future Market Opportunities • Opportunity by Land Use • Target Markets • Long-Term Demand Figures 21 02-12283.00
  23. 23. Office Opportunity 22 02-12283.00
  24. 24. MODERATE DEMAND EXISTS WITHIN DOWNTOWN WACO FOR NEW LARGE-SCALE OFFICE SPACE Economy is relatively healthy in Waco but the fastest growing employment sectors, namely healthcare and education, are not users of conventional office space. Other large Waco employment sectors including manufacturing and trade, transportations, and utilities typically locate in warehouse and industrial space outside of the urban core To date, the corporate office market has had a price ceiling of approximately $18/sf, limiting the opportunity for new construction office projects The market in Waco has largely been driven by government, insurance, and finance tenants. The Roosevelt, at approximately 110,00 SF Large companies seeking build-to-suit opportunities (larger is a good example of a recently renovated floorplates, newer buildings, air & light quality, updated office building in Waco features) may be attracted to new construction or rehab opportunities in Downtown Waco 23 02-12283.00
  25. 25. OVER THE NEXT FIVE YEARS DOWNTOWN IS LIKELY TO ADD ABOUT 75,000 SF OF OFFICE SPACE Statistical demand analysis shows that downtown can support approximately 76,000 SF of additional office space by 2015 and 350,000 by 2025. The demand is likely to be split between rehab projects and build-to-suit opportunities. Additional office demand could be driven by the introduction of one or more large corporate users into the downtown market or through economic development efforts to recruit new tenants from an emerging office using sector such as information and technology. Example of rehabbed small office space (LoDo Denver, CO.) 02-12283.00
  26. 26. Residential – For-Sale Opportunity 25 02-12283.00
  27. 27. THE BULK OF DOWNTOWN RESIDENTIAL DEMAND EXISTS FOR PRODUCT OFFERED AT $250K & BELOW1 Demand for residential units primarily exists for units priced $150,000 and below for multifamily units and $250,000 for single-family homes. Young professional households and some students are typically more flexible and willing to buy into downtown neighborhoods before all residential amenities, including retail and green space have been put in place. Example of Midrise condominium project Younger households are most likely to seek out locations directly within entertainment districts as they are more likely to take full advantage of the entertainment benefits and more willing to put up with the challenges (parking, noise, event crowds) The target market audience (below age 44) currently makes up nearly 70% of the downtown area Initially, the empty-nester (age 45 and up) market will be shallow but has the potential to grow over time if the downtown is able to become a more established residential neighborhood and can connect successfully to existing cultural amenities. Example of a small lot single family home 1 See Exhibit III-1 for statistical demand analysis and underlying assumptions 26 02-12283.00
  28. 28. RCLCO PRIMARY HOME STATISTICAL DEMAND MODEL ANNUAL NEW HOME DEMAND WITHIN PRIMARY MARKET AREA1 AGE AND INCOME QUALIFIED NEW HOME DEMAND 2009-2014 Primary • Income Qualified • % Buy New Attached3 Market Area X • Annual turnover rate2 X • Downtown Capture Owners • % Remain owners DEMAND Primary FOR UNITS • Income Qualified • % Buy New Attached PRICED Market Area X • Annual turnover rate X • Downtown Capture $110,000 Renters • % Renters become owners TO $375,000 Primary Market Area • % Buy New Attached New X • Income Qualified X • Downtown Capture • % Owner Households Households 1The 2 Primary Market Area (PMA) is defined as the Waco MSA. Turnover is defined as those households that move within a given year 3 Attached product includes condominiums or townhomes 27 02-12283.00
  29. 29. DEMAND FOR FOR-SALE PRODUCT DROPS OFF SHARPLY ABOVE $200,000 2009-2014 Annual Statistical Demand for Units in Downtown by Price Point New or Rehabbed Multifamily and Small Lot Single-Family Homes 70 Single Family Multifamly 22 37 13 13 12 6 7 4 2 Less than $112,000- $150,000- $188,000- $250,000- $112,000 $150,000 $188,000 $250,000 $375,000 28 02-12283.00
  30. 30. AT $120K - $200K PRICE RANGE, PURCHASING A ONE-OR TWO- BEDROOM COMPARABLE CONDOMINIUM IS 30% LESS EXPENSIVE THAN RENTING IN WACO Avg. Monthly Monthly Monthly Tax Total Actual Cost of Unit Type Purchase Mortgage Property Condo Saving Housing Rent 3 Owning vs. Price 1 Payment2 Taxes 4 Fees6 s5 Cost Renting One Bedroom $119,000 $574 $228 $110 ($214) $699 $950 -$251 (-26%) Two Bedroom $200,000 $1062 $422 $170 ($395) $1,259 $1,870 -$611 (-33%) Comparing the rents at Austin Avenue Lofts, the monthly cost of owning a one bedroom condominium is roughly $251/month less than renting at the building and a two bedroom will cost roughly $611 less per month – or 26% and 33% less than renting, respectively. This represents an unmet and underlying demand for for-sale condominium product downtown. Mortgage Assumptions Down Payment 15% Marginal Tax Rate 28% Interest Rate 5.50% 1 Price based on conceived pricing from Austin Avenue Lofts 2 Reflects an average payment, assuming a three-year hold period, on a 30 year mortgage Condo Fees $0.15/sf 3 Current rents at the Property 4 Based on City of Waco tax rate of $2.56 mills per $100. 5 Calculation based on property tax plus interest expense at 28% tax rate 6 Assumption of potential condo fees on site 29 02-12283.00
  31. 31. Residential - Rental Opportunity 30 02-12283.00
  32. 32. RCLCO STATISTICAL DEMAND MODEL FOR RENTAL UNITS ANNUAL RENTAL DEMAND WITHIN PRIMARY MARKET AREA1 AGE AND INCOME QUALIFIED NEW RENTAL DEMAND 2009-2014 • Income Qualified Primary • Annual turnover rate • % Rent New Market Area X • % Remain renters X Renters • Downtown Capture • % Rent apartment vs. home DEMAND FOR NEW RENTAL UNITS Primary Market Area • Income Qualified • % Rent New New X • % Renter Households X • Downtown Capture Households • % Rent apartment vs. home 1The 2 Primary Market Area (PMA) is defined as the Waco MSA. Turnover is defined as those households that move within a given year 31 02-12283.00
  33. 33. DEMAND FOR MULTIFAMILY RENTAL PRODUCT IS PRIMARILY BELOW $875 BUT MUCH OF DEMAND IS DRIVEN BY STUDENTS WHO TEND TO HAVE ROOMMATES 2009-2014 Annual Statistical Demand for Rental Units in Downtown by Price Point 39 9 6 1 less than $875 $875 - $1250 $1250 - $1875 $1875 - $2500 Monthly Rent 32 02-12283.00
  34. 34. STUDENT TARGETED APARTMENTS ARE A VIABLE OPTION DOWNTOWN Rental product is a logical fit for Downtown • Demonstrated demand at projects like Heritage Quarters, offering amenities such as fitness center, pool, lounge area and access to downtown, have performed very well. • The newly implemented bus route connecting Recently constructed Heritage Quarters are student targeted Baylor to Heritage Square, in addition to planned apartments in Downtown Waco retail offerings and downtown events, should enhance the appeal of downtown living for students and young professionals. • High quality apartments would appeal to a broad market audience, particularly students and downtown employees seeking flexibility and affordability • Rental properties are attractive to landowners or developers seeking long-term holds on income The Praetorian lofts have a mix of students and young producing assets. professionals 33 02-12283.00
  35. 35. Retail Opportunity 34 02-12283.00
  36. 36. DOWNTOWN WACO HAS A VARIETY OF MARKET AUDIENCES BUT ONLY CAPTURES 33% OF THEIR POTENTIAL EXPENDITURES Existing Market Audience Breakdown Downtown Area Households Of the $510 million in potential annual 10,086 downtown households1 spending of these markets audiences the $67M total annual retail spending Downtown Area is only capturing 36%. Students 5% 14,500 downtown students $18M total annual retail spending 25% 36% Area Employees 16,000 downtown employees $45M total annual retail spending2 Downtown Conventioneers 106,000 conventioneer visitors 24% $9M total annual retail spending3 10% Tourists 2.9 M annual tourists3 1 Claritas $47M total annual retail spending 2 Expenditures from ICSC "Office Worker Retail Spending Patterns" 3 Based on data form the Waco Convention and Visitors Bureau NOTE: Excludes some retail uses including automotive and electronic/mail order shopping. 35 02-12283.00
  37. 37. RCLCO PROJECTS IMPROVED RETAIL DEMAND OVER THE NEXT FIVE YEARS: GROWTH IN MARKET AUDIENCES+ INCREASED MARKET CAPTURE = MORE EXPENDITURES $24 million additional sales potential 69,000 sq. ft. additional supportable space in Downtown Area $100 $90 + $12M 2008 2013 $80 $70 + $7M $60 + $3M $50 $40 $30 + $1M $20 + $1M $10 $0 ($ mil.) Households Students Employees Conventioneers Tourists 36 02-12283.00
  38. 38. NEIGHBORHOOD-SERVING RETAIL NEEDED TO PREVENT RETAIL DOLLARS FROM LEAKING OUT OF THE DOWNTOWN AREA Statistical demand1 dovetails with interview feedback which reveals the need for more service-oriented retail to support growing residential base, students and existing office tenants. Currently these market audiences are driving to Central Texas Marketplace or Valley Mills Drive for the majority of their retail needs. Retailers at Denver’s Lower Downtown Warehouse District Potential neighborhood retail demand (2009-2014)2: Level of existing Future Primary Market Audiences retail in category Potential Convenience Grocery/Specialty Food Low 13,000 SF Residents, Students, Employees Apparel and Accessories Low 17,000 SF Employees, Students, Residents Personal Care Low 13,000 SF Employees, Residents, Students Restaurant and Bars Medium/High 18,000 SF Residents, Employees, Tourist/Convention, Students Other Discretionary Low 8,000 SF Employees, Residents, Students TOTAL 69,000 SF 37 02-12283.00
  39. 39. Hotel Opportunity 38 02-12283.00
  40. 40. CONTINUED SUCCESS IN ATTRACTING EVENTS TO DOWNTOWN AREA WILL DRIVE HOTEL DEMAND Waco room night bookings for Events, Conventions, and Sports have increased from 411,000 in 1995 to 525,000 in 2007. This represents an annual growth rate of 2%.1 Visitor spending on hotels and motels has increased from $38 million in 2001 to $56 million in 2008. This represents an annual growth rate of 7%.1 According to the Office of the Governor occupancy in all Waco hotels was 61% in 2008, while occupancy in hotels with average daily rates above $75 was 63%. Currently the market for hotel rooms with average daily rates above $75 is undersupplied, with demand outpacing supply. 1 Waco Convention and Visitors Bureau 39 02-12283.00
  41. 41. DOWNTOWN CAN SUPPORT AN ADDITIONAL HOTEL BY 2014 The demand for the next five years is within the ‘upscale’ segment of the hotel market (hotel with average daily rates above $75). RCLCO estimates demand for a 214 upscale rooms by 2014. RCLCO recommends diversifying hotel offerings in Downtown by adding a least one non-chain hotel catering to Baylor families and offering classic ‘college town’ architecture and amenities. Examples of other college towns with classic hotels include Tuscaloosa, Alabama and Auburn, Alabama. The Auburn University Inn and Conference Center 40 02-12283.00
  42. 42. Summary of Overall Opportunity 41 02-12283.00
  43. 43. SUMMARY OF WACO TARGET MARKETS LAND USE TARGET MARKET Commercial Small-scale convenience retail tenants serving local households, downtown tourists, local employees, and Baylor students. Over long term the opportunity could evolve into larger scale Retail formats as the household density increases in the downtown area. Rehab spaces will primarily appeal to small tenants such as law-firms, engineering and other small professional service firms. Also an opportunity to pursue build-to-suit opportunities for large office Office tenants either as a headquarters location or anchor of a multi-tenant building. These large users could include insurance companies, business service firms, or government agencies. Targeted to a wide range of convention-goers, Baylor visitors, business travelers, tourists, and Hotel event visitors. The short term opportunity calls for more hotels in the upscale segment (ADR of $75+) and a non-conventional hotel offering targeting Baylor visitors. Residential Targeted primarily to younger professionals earning $45-$75k seeking the urban lifestyle. Mainly 1- For-Sale Multifamily and 2- person households seeking 1- and 2-bedroom units. Secondary target markets include empty-nesters and students. Targeted primarily to students seeking an alternative to on campus housing or lower quality rental options. The secondary market includes professionals earning $30-$55k seeking the urban lifestyle For-Rent Multifamily and proximity to employment. This group should include a large number of government and insurance sector employees. Targeted to younger professionals and empty-nesters earning $60-$100k seeking the privacy of Single-Family single-family residence with the convenience of an urban location. 42 02-12283.00
  44. 44. SUMMARY OF FUTURE LAND USE OPPORTUNITY BASE LINE SCENARIO Overall Opportunity Cumulative Depth of Demand Average Assessment1 in Downtown Area (SF) Initial Pricing/ Annual Land Use Lease Rates Demand Near Mid Long By By By (2009$)2 (2010 to (0-5 yr) (5-10 yr) (10+) 2015 2025 2050 2050) Commercial Office X X XX 75K 350K 1.1M $16-$18 26K Hotel XXX XX XX 100K 300K 900K Variable 21K Retail XXX XX XX 85K 240K 800K $16-$19 19K Residential Multifamily For-Sale XX XX XX 150K 425K 1.2M $150-$200/sf 29 units Multifamily For-Rent XXX XXX XXX 285K 800K 2.3M $1.10-1.40/sf 62 units Single-Family XX XXX XXX 275K 777K 2.2M $110-$120/sf 24 units Based on the Baseline Scenario the study area would add the following between 2010 and 2050: 5,000 housing units, 19,000 new residents, and 5,600 office using jobs. 1 X= minimal, XX = moderate, XXX = strong 2Commercial rents are triple net 43 02-12283.00
  45. 45. SUMMARY OF FUTURE LAND USE OPPORTUNITY AGGRESSIVE SCENARIO Overall Opportunity Cumulative Depth of Demand Average Assessment1 in Downtown Area (SF) Annual Land Use Demand Near Mid Long By By By (2010 to (0-5 yr) (5-10 yr) (10+) 2015 2025 2050 2050) Commercial Office X X XX 100K 420K 1.4M 32K Hotel XXX XX XX 110K 325K 1.1M 26K Retail XXX XX XX 150K 420K 1.4M 32K Residential Multifamily For-Sale XX XX XX 225K 650K 1.8M 43 units Multifamily For-Rent XXX XXX XXX 400K 1.1M 3.3M 90 units Single-Family XX XXX XXX 450K 1.2M 3.6M 38 units Based on the Aggressive Scenario the study area would add the following between 2010 and 2050: 7,300 housing units, 28,000 new residents, and 7,000 office using jobs. 1 X= minimal, XX = moderate, XXX = strong 2Commercial rents are triple net 44 02-12283.00
  46. 46. ASSUMPTIONS FOR FUTURE DEMAND SCENARIOS LAND USE ASSUMPTIONS Commercial The baseline scenario is based solely on the projected growth of each of the market audience groups (residents, students, tourists, employees, etc) while the aggressive scenario is based on Retail growth plus an additional 2% capture of expenditures. The baseline scenario has the downtown capturing its current ‘fair-share’ of office using employment growth which is currently at 40% of the MSA. The aggressive scenario shows the Office downtown area with a 50% capture rate, including the ability to locate 25% of healthcare and education jobs with the study area. Aggressive scenario is based on 2% long term annual growth of business and leisure travel while Hotel the baseline scenario is based on 1% growth. Residential The baseline scenario assumes that 100% sales will occur above $112,000 while the aggressive For-Sale Multifamily scenario assumes that with incentives the market can deliver product below this price point. The baseline scenario assumes the downtown area captures its ‘fair share’ of apartment demand at For-Rent Multifamily 13% of the MSA, while the aggressive scenario assumes that downtown captures 20% of demand. The baseline scenario assumes that 100% sales will occur above $188,000 while the aggressive Single-Family scenario assumes that with incentives the market can deliver product below this price point. 45 02-12283.00
  47. 47. Imagine Waco: Greater Downtown Waco Plan Building Prototype Summaries Based on RCLCO and FAI Research – For review and consideration Draft – 9/22/09
  48. 48. Building Prototypes Project will create general prototypes for development in the Downtown:
  49. 49. Tipping Point Analysis
  50. 50. Mixed-Use Prototypes • Mixed Use Residential (Low- ,Mid- and High Rise) • Mixed Use Office (Low-, Mid- and High-Rise) • Live-Work 02-12283.00
  51. 51. Mixed Use Residential (High Rise) Uses Residential and Retail Site Size 30,000 sf Height 10 stories FAR 6.8 Residential Units 163 % Open Space 15% Parking Spaces 184 Parking Type Below-grade 02-12283.00
  52. 52. Mixed Use Residential (Mid Rise) Uses Residential and Retail Site Size 30,000 sf Height 5 stories FAR 2.24 Residential Units 38 % Open Space 15% Parking Spaces 36 Parking Type Surface and Internal 02-12283.00
  53. 53. Mixed Use Residential (Low Rise) Uses Residential and Retail Site Size 20,000 sf Height 3 stories FAR 1.37 Residential Units 18 % Open Space 15% Parking Spaces 28 Parking Type Surface and Internal 02-12283.00
  54. 54. Mixed Use Office (High Rise) Uses Office and Retail Site Size 30,000 sf Height 10 stories FAR 4.13 Residential Units N/A % Open Space 10% Parking Spaces 300 Parking Type Below-grade 02-12283.00
  55. 55. Mixed Use Office (Mid Rise) Uses Office and Retail Site Size 30,000 sf Height 5 stories FAR 3.01 Residential Units N/A % Open Space 10% Parking Spaces 120 Parking Type Surface and Internal 02-12283.00
  56. 56. Mixed Use Office (Low Rise) Uses Office and Retail Site Size 20,000 sf Height 3 stories FAR 1.10 Residential Units N/A % Open Space 10% Parking Spaces 37 Parking Type Surface and Internal 02-12283.00
  57. 57. Live-Work Uses Residential and Retail Site Size 2,500 sf Height 2 stories FAR 0.98 Residential Units 1 % Open Space 30% Parking Spaces 2 Parking Type Garage 02-12283.00
  58. 58. Residential Prototypes • Small Lot Single Family • Townhome • Garden Apartments • Apartment Mid-Rise • Warehouse Rehab 02-12283.00
  59. 59. Small Lot Single Family Uses Residential Site Size 4,000 sf Height 2 stories FAR 0.71 Residential Units 1 % Open Space 25% Parking Spaces 2 Parking Type Garage 02-12283.00
  60. 60. Townhome Uses Residential Site Size 2,500 sf Height 2 stories FAR 0.89 Residential Units 1 % Open Space 30% Parking Spaces 2 Parking Type Garage 02-12283.00
  61. 61. Garden Apartment Uses Residential Site Size 20,000 sf Height 3 FAR 1.21 Residential Units 22 % Open Space 20% Parking Spaces 22 Parking Type Surface 02-12283.00
  62. 62. Apartment Mid-Rise Uses Residential Site Size 20,000 Height 5 stories FAR 2.52 Residential Units 40 % Open Space 10% Parking Spaces 40 Parking Type Surface and Internal 02-12283.00
  63. 63. Warehouse Rehab (Lofts) Uses Residential Site Size 20,000 sf Height 3 stories FAR 1.79 Residential Units 32 % Open Space 0% Parking Spaces 32 Parking Type Surface 02-12283.00
  64. 64. Commercial Prototypes • Hotel • Office Mid-Rise • Main Street Retail • Restaurant or Theater Rehab 02-12283.00
  65. 65. Hotel Uses Restaurant and Hotel Site Size 30,000 Height 10 stories FAR 2.91 Residential Units 193 rooms % Open Space 10% Parking Spaces 202 Parking Type Structured 02-12283.00
  66. 66. Office Mid-Rise Uses Office Site Size 40,000 Height 5 stories FAR 1.68 Residential Units N/A % Open Space 10% Parking Spaces 135 Parking Type Structured 02-12283.00
  67. 67. Main Street Retail Uses Retail Site Size 20,000 sf Height 1 story FAR 0.68 Residential Units N/A % Open Space 10% Parking Spaces 14 Parking Type Surface/On- Street 02-12283.00
  68. 68. Restaurant or Theater Rehab Uses Restaurant Site Size 10,000 sf Height 1 story FAR 0.86 Residential Units N/A % Open Space 10% Parking Spaces 0 Parking Type On-street 02-12283.00
  69. 69. Other Building Types Adaptive Reuse Office rehab 02-12283.00
  70. 70. ROI Model 02-12283.00
  71. 71. Prototype example Shuttered commercial building Parcel Size: 14,500 SQFT 02-12283.00
  72. 72. Prototype example 02-12283.00
  73. 73. Prototype example 02-12283.00
  74. 74. 02-12283.00
  75. 75. Next Steps • Input from today’s presentation • Further refinement financial assumptions • Prepare detailed Tipping Point analysis 02-12283.00