RV 2014: TOD Market Dreams + Reality by John Breitinger
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TOD Market Dreams + Realities The station is in, the riders are coming and the development has been proposed. Now everybody wants retail. But is there a market for it? Will it be supported? Or would other uses be more appropriate and generate additional riders? Everyone expects TOD to generate a mix of uses -- to create a 24/7 environment at every station. How do market realities change that equation? Learn what it takes to support that mixed-use environment that everyone expects; how to assess the market and what residents really want; and how to manage expectations if the market doesn't deliver. Moderator: William M. Velasco, Chair of Board TOD Committee, DART, Dallas, Texas Christine Maguire, AICP, EDFP, Senior Manager, Development Planning and Finance Group, Austin, Texas Anne B. Ricker, Principal/Owner, Ricker Cunningham, Centennial, Colorado John Breitinger, Vice President, Investment and Development, United Properties, Bloomington, Minnesota Michael Horsting, AICP, Principal Analyst, Regional Transportation Authority, Chicago, Illinois
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RV 2014: TOD Market Dreams + Reality by John Breitinger
- 1. Development Scenario Workshop Corridor Wide Infrastructure Recommenda3ons to Accelerate Private Investment Summary Hosted by: FOR:
- 3. Development Scenario Workshop Data Support Provided by: • Cushman Wakefield/Northmarq • Marque@e Advisors
- 4. Targeted Infrastructure and Development public policy + infrastructure investments Targeting Priority Development Areas State, regional, local policies and $$ • Met Council • Utilities • Water Districts • Counties • Municipalities
- 5. Purpose Southwest LRT Corridor Community Works and ULI Minnesota engaged an independent panel of local and national developers, economists, and designers to work with the Technical Implementation Committee and provide corridor and station recommendations with a particular focus on five key SW LRT Corridor station areas: – Penn – Beltline – Blake – Golden Triangle – Mitchell Road The intended outcome is to identify key development opportunities, barriers and strengths related to land use and station location, and identify critical infrastructure improvements for consideration by the Cities and SW Project Office linking land use and engineering with market knowledge.
- 7. 30% 25% 20% 15% 10% 5% 0% Timing Disconnect Between Transit and Developer Decisions Private Land Development Coordinate District Infrastructure Final Design Construc)on Preliminary Engineering 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Year Land price premium Transit Infrastructure Timeline Hypothe3cal Land Price Impact Alterna)ves Analysis Preliminary Poli)cs Opera)on Source: Emerson, Donald; “Successfully Naviga3ng the FTA New Starts Process”; PB Consul3ng, 2006
- 8. TOP TEN TOD STRATEGIES
- 9. 1. IdenNfy specific corridor-‐wide targets for both community benefits and economic development Artsit’s Studios Workforce Housing Belmar, CO TOD 3.0 Strategies
- 10. 2. Incorporate market and development criteria TOD 3.0 Strategies
- 11. Cost Assump3ons Construction HARD Cost Estimates for SW Corridor Pat John Stacie Site Work Site Prep/Demo/Landscaping $6.00 6 4 psf Assumes structures on site and includes removal of surface parking Parking Surface Parking $3,000.00 3500 2500 3000 psf incl. landscape and lighting Structured Parking $16,666.67 12500 17500 20000 psf Structured parking Below Grade Parking $23,333.33 27500 25000 17500 psf Retail Concrete Podium Construction $102.50 100 105 psf Masonry (CMU) Construction $75.00 90 60 psf Standard retail strip center, dependent upon size Steel Frame Construction $60.00 60 Storefront $1,050.00 1050 plf Retail Tenant Fit-Out $85.00 85 psf Depends on end user. Restaurants can have significant higher costs Office Multistory Concrete Construction $110.00 110 psf Steel Frame Construction $105.00 105 Office Tenant Fit-Out $50.00 40 60 psf Depends on end user. Medical office can have significant higher costs Residential Single Family Wood Frame Construction $ 60.00 psf Will's best guess Townhouse Wood Frame Construction $ 80.00 psf Will's best guess Multifamily Wood Frame Construction $120.00 105 135 psf Includes const profit. overhead, city fees, etc. Multifamily Concrete Construction $138.00 psf Industrial Concrete Tilt-up Construction $45.00 45 psf Masonry (CMU) Construction $50.00 50 psf
- 12. Rent Assump3ons Rent and Vacancy Estimates for SW Corridor Premium Mitchell Golden Triangle Blake Beltline Penn Residential Vacancy Rate 2.3% 2.3% 3.2% 2.0% 1.9% Vacancy Rate 10% 2.3% 2.3% 3.2% 2.0% 1.9% Average Size 1,016 1,021 944 902 698 $/SF (month) $1.11 $1.10 $1.04 $1.32 $1.49 $/SF (month) 50% $1.66 $1.65 $1.56 $1.98 $2.23 Office Vacancy % 2.61% 17.81% 21.37% 7.83% 12.29% Vacancy % 10% 2.6% 10.0% 10.0% 7.8% 10.0% Ave Net Rent (yr) $12.83 $12.84 $10.56 $13.09 $12.18 Ave Net Rent (month) $1.07 $1.07 $0.88 $1.09 $1.02 Ave Net Rent (month) 50.0% $1.60 $1.61 $1.32 $1.64 $1.52 Retail Vacancy % 1.97% 6.45% 7.97% 7.38% 18.40% Vacancy % 10% 2.0% 6.5% 8.0% 7.4% 10.0% Ave Net Rent (yr) $19.67 $17.87 $12.45 $16.45 $13.76 Ave Net Rent (month) $1.64 $1.49 $1.04 $1.37 $1.15 Ave Net Rent (month) 50.0% $2.46 $2.23 $1.56 $2.06 $1.72
- 13. Project Feasibility Analysis Building Type ConstrucNon Type Podium Parking Mitchell Golden Triangle Blake Beltline Penn RESIDENTIAL Low Density Wood No Surface 1 1 1 1 1 Medium Density Wood No Structure 0 0 0 1 1 High Density Concrete No Below Grade 0 0 0 0 1 MIXED-‐USE Medium Density -‐ ResidenNal Wood Yes Structure 0 0 0 0 1 High Density -‐ ResidenNal Concrete Yes Below Grade 0 0 0 0 0 MIXED-‐USE OFFICE Medium Wood Yes Structure 1 1 0 1 1 High Concrete No Below Grade 0 0 0 0 0 OFFICE Low Cinder block No Surface 1 1 1 1 1 Medium Concrete No Structure 1 1 0 1 1 High Steel No Below Grade 1 1 0 1 1
- 14. 3. Extend mobility, access, connecNons to place Hop ShuRle -‐ Boulder, CO TOD 3.0 Strategies
- 15. 4. Derive the staNon influence area and specific boundaries TOD 3.0 Strategies
- 16. 5. Enable market metrics to shape staNon area land uses Mid-‐rise Freight Project – Denver, CO office – Woburn, MA TOD 3.0 Strategies
- 17. 6. Street designs, pedestrian networks and open spaces = transit infrastructure CASE STUDY: Creating an Urban Boulevard – Alameda Ave. Alameda Ave Lakewood, CO TOD 3.0 Strategies
- 18. CASE STUDY: Creating an Urban Boulevard – Alameda Ave. Alameda Ave Lakewood, CO TOD 3.0 Strategies
- 19. CASE STUDY: Creating an Urban Boulevard – Alameda Ave. Alameda Ave Lakewood, CO TOD 3.0 Strategies
- 20. CASE STUDY: Creating an Urban Boulevard – Alameda Ave. Alameda Ave Lakewood, CO TOD 3.0 Strategies
- 21. 7. Avoid over planning specific development design MIXED USE OFFICE RESIDENTIAL INDUSTRIAL TOD 3.0 Strategies
- 22. 8. Phase incremental infrastructure improvements Industrial/Residen3al – Boulder, CO TOD 3.0 Strategies
- 23. 9. Emphasize shared parking faciliNes 15th and Pearl Parking Garage Boulder, CO TOD 3.0 Strategies
- 24. 10. Create a long-‐term district organizaNon/organizer Federal Major Employers Small Businesses TOD 3.0 Strategies State Local/County Governments METC District Coordinator Real Estate Developers Investors Metro Transit
- 25. For Discussion • Process for Metro Transit to provide opera3ng and capital cost data for alterna3ves early in the PE process; • Ability to assemble land for cataly3c projects and workforce housing; • Legisla3ve enabling language to fund infrastructure • Coordina3ng en3ty to focus on system wide infrastructure and placemaking