In Search of Good News
Assessing the New Urbanism in the Face of the Recession
Jonathan Bartlett – jbartlett@rclco.com | C...
ABOUT OUR FIRM

SERVICES
 Management Consulting
 Market & Economic            RCLCO is a real estate
  Consulting
 Real...
THREE BITS OF GOOD NEWS, AND A CHALLENGE

  • A demographic shift is in progress that will create
    extraordinary opport...
Boom . . . Boom!




                   3   CNU 18
GEN Y, BOOMERS CALLING THE SHOTS
                                 2010 U.S. Pop.


                                   Gen ...
GEN Y MAKING ITS MARK TODAY
  SHAPING POST-RECESSION PLACEMAKING EFFORTS
                                 RCLCO Consumer R...
GEN Y WILL PAY FOR WALKABLE, MIXED-USE
CHALLENGE IS PROVIDING PRODUCT THEY CAN AFFORD

                      • Driven by c...
> 85% OF GROWTH IS HOUSEHOLDS WITHOUT CHILDREN
DIFFERENT HOUSEHOLD LANDSCAPE BY 2025
 Absolute Change in Households, Unite...
FORGET ABOUT EQUAL PAY…
WOMEN POISED TO OUT-EARN MEN – ARE YOU READY?
 Data from 2003-2004 shows a dramatic reversal from ...
Green Research Shows Importance of Messaging




                9                      CNU 18
“GREEN” COMPETES IN A CROWDED FIELD
 SCHOOLS, SPACE, SIZE STILL MOST IMPORTANT FACTORS
                                   ...
THREE PRIMARY MOTIVATIONS


     Green homes are better
      for “the environment”




   Green homes save energy
   (and...
WHAT’S IN IT FOR ME?
HOOK TO SELL SMART LOCATIONS IS “ME”, NOT “WE”
          If their green investment may not pay them b...
“BRANDING” THE GREEN BUILDING
ENERGY STAR IS THE BRAND THEY KNOW AND TRUST
                      For those who answered ‘M...
A Tale of Two Suburbs




                 14     CNU 18
OLD MODEL VERSUS THE NEW

                           Telfair (#4)              Daybreak (#6)

  Metro Area               H...
DISTRIBUTION OF HOME SALES IN 2009

        Telfair                     Daybreak


                                       ...
IS THERE ARE SMART GROWTH PREMIUM?




                         (*even in a downturn)




  Source: Eppli and Tu

        ...
If you prefer quick and easy exurban development,
                                     development
please raise your hand....
But New Urbanism Creates Long
                         Long-
Term Value!!

                  19             CNU 18
CONTACT US
                                    JONATHAN BARTLETT
                                    Vice President - Atla...
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In Search of Good News

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Presented at the Congress for the New Urbanism in Atlanta, May 2010

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In Search of Good News

  1. 1. In Search of Good News Assessing the New Urbanism in the Face of the Recession Jonathan Bartlett – jbartlett@rclco.com | CNU18 May 2010
  2. 2. ABOUT OUR FIRM SERVICES  Management Consulting  Market & Economic RCLCO is a real estate Consulting  Real Estate Strategy advisory firm providing market y p g Planning intelligence, strategy, and  Valuation Services  Acquisition & Disposition implementation solutions since Strategies 1967 196  Workouts & Restructuring  Transaction, Structuring & Investment Analysis  Development Services Austin  Atlanta  Los Angeles  Orlando  Washington, DC 1 CNU 18
  3. 3. THREE BITS OF GOOD NEWS, AND A CHALLENGE • A demographic shift is in progress that will create extraordinary opportunities for developers and the professionals hi d t d th i thi ki f i l hired to do their thinking. • Green, whatever it means, is a big deal, and people have started to expect it it. • TND projects have earned the right to fail for the same reasons as their more conventional counterparts counterparts. • More than ever before, empirical evidence shows that the traditional model of suburban development is broken Can broken. you provide a scalable, inclusive alternative? 2 CNU 18
  4. 4. Boom . . . Boom! 3 CNU 18
  5. 5. GEN Y, BOOMERS CALLING THE SHOTS 2010 U.S. Pop. Gen Z (?) 10% - 30M Eisenhowers 17% - 51M Gen Y 27% - 81M Baby Boomers B b B 27% - 78M Gen X 18% - 52M SOURCE: Claritas, National Center for Health Statistics, US Census 4 CNU 18
  6. 6. GEN Y MAKING ITS MARK TODAY SHAPING POST-RECESSION PLACEMAKING EFFORTS RCLCO Consumer Research shows:  41% of Generation Y plan to rent for at least three years  77% of Generation Y plan to live in an Urban Core 4,200,000 Largest group began graduating in 2009 – 4,100,000 Greatest demand for rental housing in this period 4,000,000 If this group rents for at least three years, 3,900,000 there will be more first-time homebuyers 3,800,000 in the market in 2013-2018 than ever before 3,700,000 , , 3,600,000 3,500,000 3,400,000 3 400 000 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Number of 22 Year Olds Same 22 Year Olds Turn 25 NOTE: Number of 22-year olds is based upon birth rate and does not factor in death rates and migration. SOURCE: U.S. Centers for Disease Control and Prevention CNU 18
  7. 7. GEN Y WILL PAY FOR WALKABLE, MIXED-USE CHALLENGE IS PROVIDING PRODUCT THEY CAN AFFORD • Driven by convenience, connectivity, and a healthy work-life balance to maintain relationships • 1/3 will pay more to walk to shops, work, and entertainment • 2/3 say that living in a walkable community is important • More than 1/2 of Gen Y would trade lot size for proximity to shopping or to work • Even among families with children, one-third or more are willing to trade lot size and “ideal” homes for walkable, diverse communities SOURCE: RCLCO Consumer Research 6 CNU 18
  8. 8. > 85% OF GROWTH IS HOUSEHOLDS WITHOUT CHILDREN DIFFERENT HOUSEHOLD LANDSCAPE BY 2025 Absolute Change in Households, United States 1980–2005 Married with children, 1,376,788 children 1 376 788 Married, no children, 5,476,979 One-person Single male with households, children, 2 165 939 hild 2,165,939 11,825,702 11 825 702 Single female with children, 4,680,913 Nonfamily, Other Family, 3,416,246 1,758,377 , , SOURCE: US Census 7 CNU 18
  9. 9. FORGET ABOUT EQUAL PAY… WOMEN POISED TO OUT-EARN MEN – ARE YOU READY? Data from 2003-2004 shows a dramatic reversal from only a few decades ago – whereas 60% college graduates were men in 1978, today almost exactly the reverse is true. These Gen Y women will begin to outpace their male counterparts with respect to earning and purchasing power. Degrees by Sex: 2003 – 2004 47.66% 57.46% 58.93% 52.34% 42.54% 41.07% Bachelor's Master's Doctorate Male M l Female F l 8 CNU 18
  10. 10. Green Research Shows Importance of Messaging 9 CNU 18
  11. 11. “GREEN” COMPETES IN A CROWDED FIELD SCHOOLS, SPACE, SIZE STILL MOST IMPORTANT FACTORS Most Important Factors When C Choosing a New Home Excellent school system Seclusion and space from neighbors First-floor master bedroom Reduced electricity bills Indoor parking for at least tw o vehicles Use of materials that do not contain potentially hazardous chemicals A larger home w ith more square footage Costs more today but saves energy and has reduced energy bills over time Appliances that use less w ater and less energy Additional storage space Improved indoor air quality A smaller home w ith less square footage Uses the sun for home heating/energy Energy Star certification Pedestrian-friendly location Proximity to major highw ay or thruw ay Hardw ood floors Walking distance to transit Community amenities such as pools, basketball courts, and clubhouses Large law n Finished basement Fireplace Walking distance to w ork Use of renew able materials Ten foot ceilings or higher NAHB Model Green Home certification Golf course Luxury appliances, such as Viking and Miele Surfacing h S f i that minimizes runoff i i i ff Formal dining room LEED certification Stainless steel appliances Berber or other luxury carpet flooring Granite countertops N=1,011 Use of low -w ater usage landscaping Uses less w ater SOURCE: RCLCO Consumer Research 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 10 CNU 18
  12. 12. THREE PRIMARY MOTIVATIONS Green homes are better for “the environment” Green homes save energy (and have lower utility bills) Living in a g g green home is better for my health and that of my family 11 CNU 18
  13. 13. WHAT’S IN IT FOR ME? HOOK TO SELL SMART LOCATIONS IS “ME”, NOT “WE” If their green investment may not pay them back over time, buyers are willing to spend more money on their home if…. 50% 45% 41% 40% 35% 30% 24% 25% 18% 20% 15% 10% 5% 0% It Saves Energy It Provides Health Benefits It’s Good for the Environment E i t 12 CNU 18
  14. 14. “BRANDING” THE GREEN BUILDING ENERGY STAR IS THE BRAND THEY KNOW AND TRUST For those who answered ‘MORE INCLINED TO STAY’ in CQ27, please indicate your willingness to pay a higher rent for one or more of the following certifications: None Specify Other National Audubon Society Built Green Model Green Home Healthy Home or HealthHouse1 y Green Globes EarthCraft Energy St E Star LEED 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Not Willing to Pay any more Rent Willing to Pay more in Rent 13 CNU 18
  15. 15. A Tale of Two Suburbs 14 CNU 18
  16. 16. OLD MODEL VERSUS THE NEW Telfair (#4) Daybreak (#6) Metro Area Houston Salt Lake City Metro Area Population 5.9 million 1.2 million MPC Gross Acreage 2,018 4,126 Market Positioning Primary Home Primary Home Active Adult First Home Sale June 2006 June 2004 Units Sold to Date 1,452 1 452 2,423 2 423 Units Sold in 2009 450 (2.4% of market) 375 (16% of market) Lots Sold in 2009 404 355 Most Popular Amenities Walking Trails/Parks Walking Trails/Parks (51)- (15), Lifestyle Center, -70% of kids walk to Resort-Style Water Park school--, Community Gardens, future rail 15 CNU 18
  17. 17. DISTRIBUTION OF HOME SALES IN 2009 Telfair Daybreak 13% Large Lot SFD 27% C d /MF Condo/MF 100% Large Lot 33% Small Lot SFD 27% Townhome 16 CNU 18
  18. 18. IS THERE ARE SMART GROWTH PREMIUM? (*even in a downturn) Source: Eppli and Tu 17 CNU 18
  19. 19. If you prefer quick and easy exurban development, development please raise your hand. 18 CNU 18
  20. 20. But New Urbanism Creates Long Long- Term Value!! 19 CNU 18
  21. 21. CONTACT US JONATHAN BARTLETT Vice President - Atlanta jbartlett@rclco.com ATLANTA (As of June 1) 1168 Howell Mill Road, Suite F ORLANDO Atlanta, GA 30318 964 Lake Baldwin Lane (404) 365 9501 365-9501 Orlando, FL 32803 (407) 515-6592 LOS ANGELES 1880 Century Park East, Suite 250 WASHINGTON, DC Los Angeles, CA 90067 7200 Wisconsin Avenue, 7th (310) 914 1800 914-1800 Floor Bethesda, MD 20814 AUSTIN (301) 907-6600 106 E. Sixth Street Suite 900 Austin, Austin TX 78701 (512) 215-3156 Phone WWW.RCLCO.COM CNU 18

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