Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Applying correct market factors

892 views

Published on

Published in: Technology, Business
  • Be the first to comment

  • Be the first to like this

Applying correct market factors

  1. 1. True, False or I Dont Know? Identifying, Understanding and Applying Correct Market Factors Before Developing a Land-Use StrategyECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  2. 2. Development Advisory Services Project Sustainability Analysis Greyfield Redevelopment Analysis Park & Trail Economic Analysis Fiscal & Economic Impact AnalysisNEW YORK PHILADELPHIA PITTSBURGH ATLANTA BOSTON
  3. 3. Social 4thought• Housing Choice• Availability of Full-Service Food Markets• Access to Primary Care• Open Space per Capita• Availability of Quality Childcare
  4. 4. Environmental 4sight• Air Quality• Water Quality• Carbon Footprint• Stormwater Management• Energy Consumption
  5. 5. Fiscal 4cast• Revenue per Capita• Service Costs per Capita• Property Value Trends• Debt Service per Capita• Total School Age Children
  6. 6. Economic 4mulation• Direct & Indirect Economic Impacts• Park & Open Space Revenue Generation• Industry Employment Trends• Entrepreneurial Activity• Non-Financial Incentives
  7. 7. Demographics Oriented The local region’s population and household growth has been relatively flat, over the past ten years, and growth is expected to slow further in the coming years. While area employment remains fairly strong, the fastest growing population segment are persons 55 years of age and older. Should your future local zoning deemphasize housing development in the wake of an increase in retirements?ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  8. 8. Demographics Oriented Answer: Not necessarily You do not have enough of a complete picture to make such a land-use decision.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  9. 9. Ann Arbor, MI:[Project Name]Socio-Economic Trends and Projections September 23, 2012 Age The below identified age groups represent the principal source of residential demand within and around Ann Arbor’s CBD area over the coming two decades. While persons within the 25 to 54 age groups represent the majority of adult residents in the City of Ann Arbor, population growth has been and is projected to continue within the 55 to 74 age cohort – a group which will exert considerable influence on the type of in-town housing developed. Figure A-6: Housing Demand Sources, City of Ann Arbor 20.0% 18.0% 2000 2010 2015 16.0% Percent of Total Population 14.0% 12.0% 10.0% 8.0% 25 to 34 65 to 74 6.0% 35 to 44 75 to 84 4.0% 45 to 54 2.0% 55 to 64 0.0% Young ProfessionalsEarly Stage Families Late Stage Families Young Empty Older Empty Mostly Retired Nesters Nesters Source: US Census Bureau; Esri; 4ward Planning LLC, 20124WARD PLANNING LLC Page 10
  10. 10. Ann Arbor, MI:[Project Name]Socio-Economic Trends and Projections September 23, 2012 Age Near- and long-term CBD housing demand will, principally, come from within the William Street 10-Minute Drive Contour and the below highlighted demographic groups. The below demographic groups are closely associated with downtown living trends, based on national and regional migration patterns. Figure A-7: Housing Demand Sources, City of Ann Arbor 20.0% 18.0% 2000 2010 2015 16.0% Percent of Total Population 14.0% Near-Term 12.0% Demand 10.0% Near-Term 8.0% Near-Term Demand Demand 6.0% Long- 4.0% Term 2.0% Demand 0.0% Young ProfessionalsEarly Stage Families Late Stage Families Young Empty Older Empty Mostly Retired Nesters Nesters Source: US Census Bureau; Esri; 4ward Planning LLC, 20124WARD PLANNING LLC Page 11
  11. 11. Demographics Oriented A major commuter rail line runs through your town, providing daily service to several large cities (employment centers). Currently, the station is surrounded by surface parking, low-density commercial development and several obsolescent abandon factory buildings.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  12. 12. Demographics Oriented Household density and incomes in the surrounding 20- minute drive-time area are relatively high, as are the number of persons who are college educated. Further, the transit system would like to increase ridership at this location. Do you have sufficient information to recommend TOD treatment for this station in the near term?ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  13. 13. Demographics Oriented Answer: No Within a ten-minute drive of this station are two other rail stations offering better market viable opportunities in the near term.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  14. 14. Garwood, New JerseyTransit-Oriented Planning
  15. 15. Labor & Industry Oriented Your local community hosts several large employers who employ well educated persons. However, the local community is built-out and population and household growth, regionally, has remained flat over the past ten years, and is projected to remain so over the next ten years.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  16. 16. Labor & Industry Oriented Further, the vast majority of local workers commute into your community daily. As there are limited developable land opportunities remaining in the community, the mayor and council believe commercial zoning should take precedence over residential zoning. Is this the correct decision?ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  17. 17. Labor & Industry Oriented Answer: No There is apparent pent-up demand for workforce housing, based on large worker in-commutation. Existing housing prices will continue to be bid up, placing upward pressure on wage rates and decreasing the region’s economic competitiveness.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  18. 18. Oakland 2025[Project Name]Comprehensive Plan September 23, 2012 Worker Inflow-Outflow The below figure illustrates that, over the 2004-08 period, nearly 90 out of every 100 persons employed in Oakland lived outside of Oakland. The percentage of persons both living and working in Oakland is relatively small (slightly more than three percent) and decreased over the 2004-08 period. Figure B-6: Worker Inflow/Outflow by Percent of Total Strong indication of Workers and Residents, Oakland Neighborhood limited workforce LIVE INFLOW OUTFLOW housing choice in (Work Only) & WORK (Live Only) Oakland and pent- Net Job Inflow (+) up housing 3.2% or Outflow (-) demand. 2008 89.5% 7.3% 82.3% 3.3% 2006 89.5% 7.2% 82.3% 3.4% 2004 88.4% 8.1% 80.3% Source: US Census Bureau, OnTheMap; 4ward Planning LLC, 20114WARD PLANNING LLC Page 19
  19. 19. Social Infrastructure Oriented Your town of 53,000 has close access to three full-service grocery stores (not more than a ten-minute drive to any location). A local developer has convinced another full- service supermarket to lease space in your town. The sticking point to the deal is a variance is required to allow the use. Should you support the developer’s position for the variance?ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  20. 20. Social Infrastructure Oriented Answer: Yes The conventional benchmark is for one full-service supermarket per 10,000 population, within a five- to 10- minute drive. Based on the identified population figure, your community can easily support another full-service supermarket.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  21. 21. Retail Real Estate Trend Scenarios 2009 Supply/Demand Mix NEED MORE Entertainment 102 153 Clothing and Accessories -148 400 Furniture & Equipment 108 53 Existing S.F. (000s) Home & Garden Supply -89 182 Needed S.F. (000s) Restaurants TOO 51 212 MUCH Grocery Stores 184 213 -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hunting Park West Industrial Area Study 4ward Planning LLC, 2010
  22. 22. Real Estate Supply Oriented General demographic, labor and industry trends are normally incorporated within a comprehensive planning document, as a required component. Is the inclusion of these trend metrics sufficient to inform the plan’s zoning recommendations?ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  23. 23. Real Estate Supply Oriented Answer: No In order to facilitate a sound understanding of prospective future land-use changes, a thorough real estate supply/demand analysis, in addition to demographic, labor and industry analyses, is necessary.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  24. 24. Ann Arbor, MI:[Project Name]Socio-Economic Trends and Projections September 23, 2012 Net Unit Estimated Municipality Difference Demand, 2030 Possible Units Demand and Available Acreage Antrim 2,226 11,426 9,200 Chambersburg 2,398 1,000 -1,398 EPD and Franklin County Fannett 174 4,643 4,469 Planning provided 4ward Planning with the estimated total number of Greencastle 453 0 -453 housing units that could be built Greene 4,627 14,061 9,434 on currently available residential Guilford 1,314 4,603 3,289 acreage in the county. Hamilton 867 2,932 2,065 Letterkenny 191 1,666 1,475 Based on existing zoning and land Lurgan 132 2,131 1,999 use characteristics and conditions, Mercersburg 89 210 121 Franklin County contains more acreage than is needed for Metal 132 2,150 2,018 projected residential demand Mont Alto 115 0 -115 through 2030. Therefore, the Montgomery 457 3,943 3,486 county might want to consider Orrstown 14 0 -14 rezoning a portion of this land for 2,936 Peters 321 2,615 other uses. Quincy 552 2,775 2,223 St. Thomas 514 2,766 2,252 Six of the 22 municipalities are projected to see higher housing Shippensburg 110 4 -106 unit demand than current Southampton 1,225 3,777 2,552 conditions will allow for; this Warren 50 1,250 1,200 excess demand likely would be Washington 2,442 6,893 4,451 captured by neighboring 15 Waynesboro 1,349 -1,334 municipalities in theCensus Bureau; ScanUS; Source: US county. Franklin County Planning; EPD; 4ward Planning, 2010 TOTAL 19,753 69,179 49,4264WARD PLANNING LLC Page 25
  25. 25. Ann Arbor, MI:[Project Name]Socio-Economic Trends and Projections September 23, 2012 Retail, Office, and Industrial Build-Out Based on analysis of existing non-residential land use in Franklin County, projected employment by industry through 2018, and projected population and household trends through 2030, Franklin County should expect to see combined retail and office real estate demands that total over 1.54 million SF, requiring approximately 135 acres of non-residential development. Based on flat projected growth and a significant amount of planned development in the pipeline, real estate demand is not expected to increase for manufacturing or warehousing through 2018. Franklin County currently maintains an estimate of over 16,500 acres of developable non-residential land, suggesting plenty of available land to meet these projected demands and potentially be allocated to other uses. Required Required Total Estimated SF Additional Building Parking Total Non-Residential Development Type Demanded (2030 – retail; Lot Acreage Acreage Acreage 2018 – office and industrial) Acreage (est.)* (est.)* Community shopping center 800,000 (2 @ 400,000) 18.37 9.89 32.14 60.40 Neighborhood retail 200,000 (5 @ 40,000) 4.59 4.59 8.03 17.21 Office 540,300 12.40 23.03 21.71 57.14 Light/Medium manufacturing 0 0 0 0 0 Transportation and warehousing 0 0 0 0 0 TOTAL 1,540,300 35.36 37.51 61.88 134.75 * Denotes estimated minimum required by statute. Actual acreage could be higher. Source: Bureau of Labor Statistics; FCADC; Infogroup/Sales Genie; 4ward Planning, 20104WARD PLANNING LLC Page 26
  26. 26. Real Estate Supply Oriented A developer approaches you with a plan to build a live- work loft apartment project in your stable downtown area. She states that the large segment of local well- educated residents 50 years of age and older is the principal reason for pursuing the project. Is this project likely to be market and financially viable?ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  27. 27. Real Estate Supply Oriented Answer: Yes Based on combination of recent surveys and general observations, many persons 50-years of age and older, typically, look to downsize close to where they presently live. Further, the fastest growing segment of entrepreneurs are persons 50-year of age and older (Kaufman Foundation, 2011).ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  28. 28. Ann Arbor, MI:[Project Name]Socio-Economic Trends and Projections September 23, 2012 Renter-Occupied Housing Trends As would be expected, based on the owner-occupied housing rates, renter-occupied rates are lowest in the town of Brookfield, in comparison with the comparison geographies. The relatively low rate of renter-occupied housing units in Brookfield presents an opportunity for new rental stock, particularly given tighter lending restrictions for housing purchases and a strong increase in the number of households choosing to rent. Further, there may be pent-up demand for increased rental stock by local homeowners who may looking to downsize, but remain local. Source: US Census Bureau, Scan US; 4ward Planning LLC, 20114WARD PLANNING LLC Page 29
  29. 29. Park & Public Space Oriented Recently, however, the city council voted to decrease the park’s operating and maintenance budget, under the rationale that the annual revenues associated with park fall well short of annual park expenditures. Is this argument, likely, right?ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  30. 30. Park & Public Space Oriented Located within the center of your town’s commercial district is a one-acre, well maintained passive park (e.g., walkways, benches, grassy areas, etc.), which is generally well patronized and serves as host site for various year-round events. The blocks fronting onto the park contain a mix of ground floor retail and personal service businesses, and upper floor offices and residential uses.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  31. 31. Park and Public Space Oriented Answer: No Many urban area parks, particularly those in a commercial district, can create incremental real estate value through the “proximity effect.” The associated incremental value, which can range from 3 percent to 25 percent, also increases for the incremental real property tax revenues collected.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  32. 32. Fiscal Impact Oriented A local developer proposes to build a 400-unit multi- family rental apartment complex (100 1BR, 250BR, and 50 3BR units) in your older first ring suburban community of 60,000 people. While population and household numbers have declined over the past decade, he’s stated his market analysis suggests strong area demand for market rate rental and he’s lined up his financing to build the project.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  33. 33. MELLON SQUARE Pittsburgh, PennsylvaniaECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  34. 34. The Economic Value of Small Urban Parks September 23, 2012 Real Estate Value Added – Before Improvements Under current conditions (2010), Mellon Square is estimated to create five-percent of total aggregate real property value within 500 feet of its boundaries. Based on the foregoing analysis, Mellon Square is estimated to contribute $35 million in increased property value to those properties within 500 feet, under current conditions.4WARD PLANNING LLC Page 35
  35. 35. The Economic Value of Small Urban Parks September 23, 2012 Real Estate - Existing Property Values Total Total Assessed Block Block Assessed Value Value 1 $50,592,250 12 $27,139,700 2 $14,252,700 13 $9,300,000 3 $61,114,000 14 $9,633,300 4 $39,800,000 15 $176,471,800 5 $32,723,800 16 $194,585,300 7 $4,196,500 17 $22,252,000 8 $12,354,056 18 $25,270,300 9 $13,524,500 20 $6,334,900 10 $10,845,900 21 $49,500,000 11 $5,424,900 22 $33,000,000 2010 Total Assessed Real Estate Value: $798,315,906 4ward Planning used GIS-based mapping software and data from the Allegheny County Tax Assessor’s Office to identify the current assessed value of all properties within 500 feet of Mellon Square.4WARD PLANNING LLC Page 36
  36. 36. The Economic Value of Small Urban Parks September 23, 2012 Real Estate – Properties Fronting Mellon Square Block Property/Owner One Oliver Plaza 3 Associates Southwestern 10 Pennsylvania Commission German Evangelical 20 Protestant Church 21 BNY Mellon 22 Omni William Penn Source: City of Pittsburgh; 4ward Planning LLC, 20104WARD PLANNING LLC Page 37
  37. 37. The Economic Value of Small Urban Parks September 23, 2012 Real Estate - Value Added 4ward Planning then developed an Excel-based model to estimate the incremental real estate value contributed by Mellon Square to real property within 500 feet. Parks are known to increase the value of surrounding real property – referred to as the “proximate value.” 4ward Planning assumed a range of value effects associated with Mellon Square – decreasing with distance. Source: 4ward Planning LLC, 20104WARD PLANNING LLC Page 38
  38. 38. Fiscal Impact Oriented A vocal citizens group is opposing the project on the grounds that 400 rental units will bring an overwhelming number of school-age children and drive up local school taxes. Is their argument likely to be wrong?ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  39. 39. Fiscal Impact Oriented Answer: Yes Based on the above population metrics and proposed residential unit type, count and bedroom mix, and given the town is an older first ring suburban community which has experienced population and household decline, there is likely adequate capacity within the existing school system to accommodate the number of school age children associated with this project.ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™
  40. 40. Canal District Fiscal Impact Analysis September 23, 2012 Residential Inputs and Assumptions Table 1: Residential Development Program: Housing Unit Characteristics Block Total Low Moderat Market Location Type Units Owned Rented Income e Income Rate 1-BR 2-BR 3-BR 1 SF 7 7 0 0 3 4 0 0 7 1 MF 123 0 123 0 37 86 25 86 12 2 TH 8 8 0 0 0 8 0 6 2 2 SF 10 10 0 0 5 5 0 0 10 3 MF 39 0 39 0 16 23 8 27 4 4 MF 144 0 144 0 43 101 29 101 14 5 MF 126 0 126 0 63 63 25 101 0 7 MF 186 0 186 0 93 93 56 130 0 8 MF 186 0 186 0 93 93 56 130 0 9 MF 186 0 186 0 93 93 56 130 0 13 MF 51 0 51 0 26 26 10 36 5 14 MF 100 0 100 0 50 50 0 70 30 16 MF 33 0 33 0 17 17 10 23 0 17 MF 18 0 18 0 9 9 5 7 5 20 MF 106 0 106 0 53 53 21 74 11 24 TH 14 14 0 0 0 14 0 14 0 24 SF 2 2 0 0 0 2 0 0 2 TOTAL: 1,339 41 1,298 0 600 740 301 936 103 PERCEN T: 100.0% 3.1% 96.9% 0.0% 44.8% 55.2% 22.4% 69.9% 7.7% Source: Cooper Carry; 4ward Planning LLC4WARD PLANNING LLC Page 41
  41. 41. Canal District Fiscal Impact Analysis September 23, 2012 Residential Inputs and Assumptions Table 2: Residential Development Program: Sales and Annual Rent Owned Units Sale Price Discount Average Unit Price Total Sales One-Bedroom 0 $0 Low-Income 0 -25% $89,250 $0 Moderate-Income 0 -15% $101,150 $0 Market Rate 0 0% $119,000 $0 Two-Bedroom 20 $4,228,000 Low-Income 0 -25% $109,200 $0 Moderate-Income 0 -15% $123,760 $0 Market Rate 20 0% $211,400 $4,228,000 Three-Bedroom 21 $4,192,062 Low-Income 0 -25% $158,550 $0 Moderate-Income 8 -15% $179,690 $1,401,582 Market Rate 13 0% $211,400 $2,790,480 TOTAL 41 $8,420,062 Total Annual Rented Units Rental Reduction Factor Average Monthly Rent Rent One-Bedroom 301 $2,747,973 Low-Income 0 0.70 $714 $0 Moderate-Income 139 0.85 $759 $1,263,475 Market Rate 162 1.00 $765 $1,484,498 Two-Bedroom 916 $11,179,435 Low-Income 0 0.70 $764 $0 Moderate-Income 418 0.85 $928 $4,653,512 Market Rate 498 1.00 $1,092 $6,525,923 Three-Bedroom 82 $1,246,453 Low-Income 0 0.70 $951 $0 Moderate-Income 35 0.85 $1,155 $486,826 Market Rate 47 1.00 $1,359 $759,627 TOTAL 1,298 $15,173,861 Source: Cooper Carry; Trulia; 4ward Planning LLC4WARD PLANNING LLC Page 42
  42. 42. Canal District Fiscal Impact Analysis September 23, 2012 Residential Inputs and Assumptions Table 3: Residential Multiplier Assumptions Owned Units Persons PSAC K-6 7-9 10-12 One-Bedroom Low-Income 1.44 0.05 0.05 0.00 0.00 Moderate-Income 1.36 0.02 0.02 0.00 0.00 Market Rate 1.54 0.03 0.03 0.00 0.00 Two-Bedroom Low-Income 2.03 0.27 0.18 0.05 0.04 Moderate-Income 2.00 0.20 0.12 0.03 0.05 Table 4: Residential Population Impact Market Rate 2.01 0.14 0.08 0.03 0.03 Three-Bedroom Total Low-Income 3.66 1.21 0.84 0.17 0.21 Persons 5,266 Moderate-Income 3.09 0.96 0.75 0.15 0.06 Market Rate 2.67 0.98 0.55 0.19 0.24 Total Rented Units Persons PSAC K-6 7-9 10-12 PSAC 596 One-Bedroom K-6 373 Low-Income 1.19 0.07 0.04 0.03 0.00 7-9 132 Moderate-Income 1.34 0.07 0.00 0.04 0.02 Market Rate 1.42 0.07 0.02 0.04 0.01 10-12 104 Two-Bedroom Low-Income 2.12 0.26 0.17 0.06 0.04 Source: Cooper Carry; 4ward Planning LLC Moderate-Income 2.05 0.25 0.17 0.04 0.05 Market Rate 1.96 0.15 0.08 0.04 0.03 Three-Bedroom Low-Income 3.62 1.11 0.78 0.11 0.22 Moderate-Income 3.12 0.84 0.59 0.15 0.11 Market Rate 3.46 0.56 0.47 0.05 0.04 Source: Rutgers Center for Urban Policy Research Residential Housing Multipliers: Indiana4WARD PLANNING LLC Page 43
  43. 43. Canal District Fiscal Impact Analysis September 23, 2012 Expenditure Inputs and Assumptions Table 10: Municipal Expenditure Inputs and Assumptions Resident Expenditures Allocation of budget to residential uses: 79.0% Allocation of budget to non-residential uses: 21.0% Most Recent Budget Obligations (Expenditures) $31,768,534 Allocated to Residential $25,100,957 Allocated to Non-Residential $6,667,577 Current Residents $34,414 Current Non-resident Workers $17,150 Government Expenditures per Resident $729 Government Expenditures per Worker $389 School District Estimated Expenditure per Student $10,500 Estimated Percent of Expenditures from Local Taxes 50.0% Identified Required Capital Investments Sewer $34,249,581 Road/Bridge $6,521,406 Other $24,893,558 Total $65,664,545 Source: Clark County Auditor; City of Jeffersonville budget; Scan US; US Census Bureau; Construction Solutions, Inc.; 4ward Planning LLC4WARD PLANNING LLC Page 44
  44. 44. Thank You! www.LandUseImpacts.comECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES™

×