embedded workshop 12 follow the money infuse 2013

Follow the Money The Key to Developing Effective Policy

David Bell – Colliers International Consulting

Justin Barer – GP Rollo & Associates

David Fitzpatrick - DIALOG

1. Introduction 1:00 PM

2. Market Analysis Overview 1:15 PM

Coffee Break! 1:55 PM 3. Financial Analysis Overview 2:05 PM

5. Market and Financial Analysis in Action 2:45 PM

6. Case Study Exercise (with coffee break) 3:05 PM

Workshop Overview

Introduction 1 1.1 Good Intentions, Poor Outcomes

− Planning policies do not always unfold as envisioned.

1.1 Good Intentions, Poor Outcomes

Introduction 1

Introduction 1 1.1 Good Intentions, Poor Outcomes

− Planning policies do not always unfold as envisioned.

1.1 Good Intension, Poor Outcomes

Introduction 1

1.2 Similar Goals, Different Language

Introduction 1

Insert Word Bubble from David Bell

Multidisciplinary TOD language is as complex as the development type.

1.2 Similar Goals, Different Language – Multi-Disciplinary TOD Language

Introduction 1

Insert Word Bubble from David Bell

Real Estate Developers Policy Planners

Market Analysis Overview 2 How Can An Understanding of Market Analysis Inform Better Planning Policies and Yield Better Development Results?

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2.1 What is Market Analysis?

2.2 Why Do Market Analysis?

2.3 Who Uses Market Analysis?

2.4 How can Market Analysis Inform the Development Process?

2.5 How can Market Analysis Inform the Planning Process?

2.6 Key Drivers of Effective Market Analysis

2.7 Market Analysis in Practice – Canadian Examples & Takeaway Lessons

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Market Analysis Overview 2

2.1 What is Market Analysis? (Real Estate / Land Use)

− “Market” has many meanings:

• Marketing: Sellers = Client, Buyers = Market

• Business: Various ways of grouping customers (i.e.Geographic, Demographic, Product type)

• Economics: Supply and Demand, Buyers & Sellers

− Our Focus: Planning – Analysis of Markets for Land Use & related Product Type (Office, Industrial, Residential, Retail)

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− Market Intelligence, not just Sharing of Collected Data!

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− Market Analysis should be an Ongoing Process, Not a One-Time Snapshot!: Market is a moving target, constantly evolving and shifting. Market analysis can provide public and private sector decision makers with vital information at all stages of the planning and development process.

?!

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Stable! Growth!


2.2 Why do Market Analysis?

− Objectives of Market Analysis:

• Preliminary project planning – e.g. a developer’s go/no go decision!

• Input for public sector planning and economic development initiatives.

• Build community support for private development proposals.

• Funding: equity investors, debt financing, or government grants

• Fine-tune proposed land use mix and product type

• Market Analysis Outputs = Financial Analysis Assumptions

− Our Focus: Planning Policy– Markets for Major Land Uses & Related Product Types

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2.2 Why do Market Analysis? (Real Estate / Land Use)

− Need to assess depth of market (demand) for each major land use under consideration

− Can not discuss optimal land use mix without understanding support for each.

− A reversal of Ursus Wehrli’s approach to “Tidying Up Art” (TEDTalk)

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Unlike (BC) voter participation rates, market reviews can also be inspiring & invigorating.

Cue Urban Land Institute’s latest 2013 Survey of Views on Housing, Transportation, and Community:

− Generation Y (1979 to 1995) - 30% of survey total – 80 million in U.S. population

− Generation X (1966 to 1978) – 23% of survey, population of 50 million

− Baby Boomers (1947 to 1965) – 31% of survey, 75 million US population

− War Babies (1932 to 1946) – 12% of survey

− Silent Generation (1931 or earlier) – 3% of survey, numbering 35 million with War Babies

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Fun Highlights of ULI’s America in 2013 Survey:

− Gen Y: expected to have the most profound impact on land use.

• 59% prefer diversity in housing choices; 62% prefer developments that mix shopping, dining and office space; 76% place high value on community walkability

− Baby Boomers trending toward a clear break from the past:

• 72% would choose a shorter commute and smaller home over a longer commute/larger home; 49% want to live near developments offering shopping/dining/offices

− Generation X most likely to favour single-family neighbourhoods:

• 92% commute by car; only 45% want public transportation options, 54% willing to forego larger home for shorter commute

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Encouraging Facts – Shifts in Household Travel to Work Mode Share

− Metro Vancouver - 2001 Census: 72% of population chose “Car as driver” as primary mode of travel to work. 2013 estimate: 68%.

− Over the same period, “Public transit” choice: 11% 16%.

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Canada Line Growth • Sep. 2009: 2.33 million

(28% of system-wide volume)

• Dec. 2009: 2.87 million (33% of system-wide)

• 2010 Olympics spike to 5.46 million/38%

• Dec. 2010: 3.06 million (32% of system)

• Dec. 2011: 3.31 million (34% of system)



− Tracking Progress Against established local & regional Benchmarks/Goals

− Eg. Metro Vancouver’s Regional Growth Strategy

• Population density targets by defined growth node

• Employment density targets

• Related land use/floor area targets

• Measuring gaps (actual vs target timing, and growth)

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METRO VANCOUVER'S REGIONAL GROWTH STRATEGYDwelling Unit Growth Targets

Area / Hierarchy 2006 2041 2006-41 AAGR (#)Metropolitan Core 88,000 119,000 31,000 886Surrey Metro Centre 8,300 43,000 34,700 991Regional City Centres 71,000 162,000 91,000 2,600Municipal Town Centres 49,000 123,000 74,000 2,114Urban Centres Total 216,300 447,000 230,700 6,591Frequent Transit Development Areas 217,000 378,000 161,000 4,600General Urban Area 382,000 561,000 179,000 5,114Rural, Agricultural, Conservation., Rec. 33,000 36,000 3,000 86Metro Vancouver Total (nearest 1,000) 848,000 1,422,000 574,000 16,400

Source: Metro Vancouver 2040 Shaping Our Future. Regional Growth Strategy Bylaw No. 1136, 2010

Colliers AAGR (Average Annual Growth Rate) Increase calculations.

METRO VANCOUVER'S REGIONAL GROWTH STRATEGYEmployment Growth Targets

Area / Hierarchy 2006 2041 2006-41 AAGR (#)Metropolitan Core 256,000 313,000 57,000 1,629Surrey Metro Centre 18,000 49,000 31,000 886Regional City Centres 124,000 237,000 113,000 3,229Municipal Town Centres 69,000 163,000 94,000 2,686Urban Centres Total 467,000 762,000 295,000 8,429Frequent Transit Development Areas 254,000 412,000 158,000 4,514All Other Areas 437,000 579,000 142,000 4,057Metro Vancouver Total (nearest 1,000) 1,158,000 1,753,000 595,000 17,000

Source: Metro Vancouver 2040 Shaping Our Future. Regional Growth Strategy Bylaw No. 1136, 2010

Colliers AAGR (Average Annual Growth Rate) Increase calculations.



− The core user groups of real estate market analysis are:

1. Real Estate Developers

2. Government Officials (including municipal/regional planners)

3. Investors and Lenders

For CIP InFuse 2013 we are especially interested in the goals and interactions of planners and developers. Why?

As David mentioned, there is immense, relatively untapped potential to improve the quality of conversation between planners and developers.

Without healthy discussion of common goals, high likelihood of:

• Undue time delays

• Roadblocks/setbacks

• Compromised vision/results

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David already introduced the language used by Real Estate Developers and Policy Planners in describing Transit-Oriented Development opportunities:

Real Estate Developers Policy Planners

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TOD language of:

Architects & Urban Designers Engineers

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TOD language/measures and goals of Transportation Authorities:

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2.4 How Can Market Analysis Inform the Development Process?

− Critical step in predevelopment process; helps the developer:

• Determine suitability for development

• Nature and depth of demand by land use

• Existing & future potential competitive nodes + potential impacts (e.g. retail impact analysis)

• Initial development concepts

• Market positioning (product pricing, sizing)

• Optimal project phasing – # of units or floor area per year

• Inputs for proforma cash flow analysis

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2.5 How Can Market Analysis Inform the Planning Process?

− Municipal/regional housing demand and implications for growth

− Research for large scale redevelopment plans

− What is market supportable?

− Review rezoning applications

− Quantify demand for new TOD when new lines/stations are being planned

− Evaluate fiscal impacts to assist in the consideration of proposed major projects or land use planning decisions

− Impacts of proposed major retail facilities

− Linking planning efforts to economic development objectives

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Planning Policy

Economic Development


2.5 How Can Market Analysis Inform the Planning Process?

− Planning of Public space has a market story.

− Provision of quality public realm positive impact on rents, prices, demand

The most basic rationale for public space is an economic one…According to this new paradigm for economic development, value is attributed to quality of life and place as much or more

than land, labour and capital costs…

Cities and regions that compete with each other primarily on cost are engaged in a losing game, since “beggar thy neighbour”

policies inevitably lead to a race to the bottom and impoverishment of the very public realm and public services that

generate wealth.

- Ken Greenberg, “Walking Home”

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2.6 Key Drivers of Effective Land Use Market Analysis

We will look briefly at the key factors and issues needed for consideration of each of the following major land use markets.

Residential Office/Industrial Retail

− Special Mixed-Use Case Transit-Oriented Development (TOD)

− Case Study “Take-Aways”

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KEYS TO RESIDENTIAL MARKET ANALYSIS

− Demographic shifts and implications for housing demand by product type

− Employment opportunities & shifting travel preferences

− Competitive market areas widely spread across a given region

− Planning area/site specific level, need to understand:

• Historical market activity by product type

• Competitive areas/subdivisions/projects on prospective buyers’ “radar””

• Annual demand & servicing implications

• Fiscal implications of residential growth

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FISCAL IMPACT BY LAND USE TYPELand Use Municipality School District

Office parks + +Industrial + +High-rise/studio-1BR apts. + +Garden condos (1-2 BR) + +Open space + +Retail facilities - +Townhomes (2-3BR) - +Expensive Single Family - +Townhomes (2-3BR) - -Inexpensive Single Family - -Garden condos (3-4 BR) - -Mobile homes - -Fiscally

Draining

Fiscally Positive



KEYS TO OFFICE/INDUSTRIAL (i.e. EMPLOYMENT) MARKET ANALYSIS

− Market Area Definition more focused, less subjective than for Residential

− Geographic extent of market area depends on:

• Location of existing/emerging business clusters

• Access to regional transportation network

• Commuting distances from residential concentrations

• Proximity to supporting uses (i.e. educational institutions/training facilities

• Jurisdictional boundaries

• Quality/appeal of commercial/recreational amenities

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KEYS TO OFFICE/INDUSTRIAL (i.e. EMPLOYMENT) MARKET ANALYSIS (Continued)

− Historical market supply and demand trends (e.g. market cycles mean straight-line projections usually unreliable)

− Competitive cluster review (quality, user types, remaining capacity)

− Proposed site/area vs. competitive clusters – over time

− Demand a function of growth by industry sector

− Different sectors require more office floor area/land than others

− Per sq. ft. employee ratios decreasing over time

− Industrial demand more driven by corporate level changes in logistics and industry-wide demand (regional, national, international)

− Surveys of major employers in region offer best possible information on expansion/contraction and associated space needs but $$$

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KEYS TO RETAIL MARKET ANALYSIS

− Retail follows rooftops. (Residential #1 driver, with additional support from employment uses, visitors, tourism)

− Accurate trade area delineation – What is the geographic area of influence, from within which the majority of support (spending) will be drawn?

− Retail floor area needs for a given planning site/plan area a function of:

• Trade area population growth

• Annual spending by retail sector

• Trade area employment growth – mainly lunch/dinner/service impact

• Industry-specific sales productivity rates ($ per sq. ft. per year)

• Market + Physical Context is key – existing travel and shopping patterns, ease of site access from residential concentrations

• Site Users not necessarily shoppers! (e.g. TOD – ridership does not equal patronage, modest contribution)

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There’s gold in the linking of modes An alchemical brew for mixed nodes

Give people a choice And they will rejoice

As it cleans up the build-up on roads

2.6 Key Drivers of Effective Market Analysis

Transit Oriented Development offers a particularly potent mix of challenges

− Challenges of Mixed-Use + Functional Transit Integration

− Growing body of knowledge and experience in terms of:

• Time to implement

• Land use mix – land uses relating to rapid transit stations?

• Parking needs – what is needed?

• Degree of optimal integration of commercial uses


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2.7 Market Analysis in Practice (TOD example)

The Plaza at New Westminster Station – Expo/Millenium Line (Metro Vancouver)

− Transit-Oriented Development in New Westminster, BC:


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The Plaza at New Westminster Station


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2.7 Market Analysis in Practice (TOD best illustrated by example)


− Major Project Takeaways (Architect/Developer perspective):

• Is fully integrated TOD – worth the time and effort? Perhaps Transit-Adjacent/Related Development offer better cost-benefit ratio?

• Shared parking strategies to reduce parking need

• TODs still require parking as not all visitors will use transit!

• Leverage office vs. residential vs. retail patterns of use

• Parking maximums, not minimums – in mixed-use, urban, transit-friendly locations, more appropriate

• E.g. City of Vancouver’s Transportation 2040’s policies on parking – eliminate parking mins., explore district parking strategies

• Suggested reading: “The High Cost of Free Parking”


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2.7 Market Analysis in Practice (TOD best illustrated by example)


− Major Project Takeaways (Architect/Developer perspective):

• Be flexible about intent vs. letter of the law.

• Less rigidity and more focus on people’s needs – POD

• Review antiquated bylaws

• Impact of time: market needs are always evolving, developer costs.

• Iterative aspect to design on longer term projects leasing opportunities must be measured against vision impact physical design


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2.7 Market Analysis in Practice

Anderson Station TOD – (City of Calgary)

− Existing station on Calgary’s South LRT line - subject of a TOD planning initiative


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Downtown Calgary

Anderson Station


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− In evaluating retail potential, need to understand adjacencies + market support implications


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− Major Project Takeaways:

• Supply context: retail opportunity based on gaps in existing supply

• Primary drivers of need for additional on-site retail-commercial will be future on-site residents and office workers

• Market demand insufficient to support a commercialized double-loaded “high street” streetscape, but sufficient for a small node (50-100K sf) with future expansion potential

• Must keep in mind future retail anchor need (i.e. supermarket site needs)


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New-Format Retail Design Feasibility Assessment

− Market Drivers: 10M + sf of retail projects in planning/development pipeline

− City’s Larger Planning Objective: Encourage better (more sustainable and aesthetically pleasing) retail redevelopment forms throughout the city.

− Project Objective: Investigate feasibility of incorporating a range of desirable urban design characteristics into all suburban retail developments:

• Higher ratio of structured vs. surface parking to enhance urban form

• Double-loaded Main Street orientation with street-fronting retail uses

• Urban street grid to facilitate future redevelopment potential

• Multi-level buildings with complementary uses above at-grade retail

Tools to be used:

1. Market Opportunity Analysis

2. Financial (Developer Proforma) Analysis


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New-Format Retail Design Feasibility Assessment (City of Calgary)

− Major Project Take-Aways:

• Anchor Go/No-Go Decision – without anchor(s), no project!

• Phasing Essential - match new supply to growing market demand

• Structured Parking Kills the Proforma!

• Planning for future redevelopment/intensification is a worthy goal - supported by integration of a grid of streets

• Second level commercial space must have market support - most suitable for professional service/office uses

Best Approach to Major/Regional-Serving Retail in Suburbs:

Hybrid Shopping Centre Model


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New-Format Retail Design Feasibility Assessment (City of Calgary)

− The Shops at Don Mills (formerly Don Mills Shopping Centre)


As it was in 1983 2009

3.1 What is Real Estate Economic Analysis?

A means of assessing financial characteristics of development or investment

• DEVELOPMENT: • Buy, build, sell • Residential subdivision, multi-family, condo project, some mixed-use (strata

commercial + residential), some pure commercial.

• INVESTMENT: • Buy, build, hold • Rental apartments, most commercial buildings, retail developments, multi-tenant

industrial buildings, marinas…

• Land Value (“residual land value analysis”)

Financial Analysis Overview 3

3.1 What is Real Estate Economic Analysis?


3.2 What does this have to do with Planning?

• Developing land use policy that motivates private sector to create quality communities

• Engaging with developers on even playing field

• What motivates them? Marketability and profitability.

• Understanding highest and best use, weighing against other considerations



EXAMPLE #1 – Type, Density, Location of Land Uses



EXAMPLE #1 – Type, Density, Location of Land Uses


Given likely revenues, costs, financing and profit requirements, are these uses & densities feasible?


EXAMPLE #2 – Establishing Density Bonusing & Amenity Contribution Rates: How Much can Developers Afford?


• Change in use or density can affect financial performance of a development.

Sample Density Bonus Calculation for Low-Rise Apartment Scenario 1 Scenario 2Development @ Base Density Development with bonus density

Site Size 43,560 sq.ft. 43,560 sq.ft.FSR 1.3 1.3+0.1 bonus = 1.4Gross Floorspace 56,628 60,984Units (1,000 sq.ft. net) 48 52Sales Revenue* $16,800,000 $18,200,000Total Development Costs** $12,000,000 $13,000,000Amenity Contribution $0 $250,000Land Cost $3,000,000 $3,000,000Developer Profit $1,800,000 $1,950,000*Assume $350,000 per unit**including marketing, DCCs, all hard and soft costs, interim financing, excluding land cost, total $250,000/unit


EXAMPLE #2 – Establishing Density Bonusing & Amenity Contribution Rates: How Much can Developers Afford?


• Change in use or density can affect financial performance of a development.

Pinpoint incremental value being created Not left to guess what developer can afford.


EXAMPLE #3 – What is Impact of Municipality Charges/Process on Development Viability and End-User Affordability?


How are unit prices affected by changes in: Planning and approvals times

Taxes during construction

Permit fees

DCCs

Parking Requirements




A 50% reduction in… Results in… Planning/approvals times 1% saving per townhouse &

apartment unit Property taxes Negligible savings Permits/Fees 0.3%+ saving per unit DCCs 1% savings per unit

A 25% reduction in… Results in… Parking requirements 0.6% savings for townhouse

w/surface parking 4.9% per unit savings for apartment with UG parking




• Taken together, savings can be significant. • We can use tools of financial analysis to understand how our fees impact

development viability and income requirements.

o Also understand impacts on affordability from: Amenity contributions Secondary suite rental income Increased density Green building codes LEED certification Unified Building Code


Other Examples –


• Distributing fees associated with new neighbourhood

development (e.g. green space levy) • Municipal land disposition


Other Examples –


Cost of Greenspace Levy by Dwelling Type per Unit5 Different Methodologies Compared

Per AcreBuildable Square

FeetPer Unit

Population Based (DCC method)

Manual Option

Single Family 1/4 acre lot $31,309 $22,848 $10,538 $14,641 $20,000Single Family 375 sq. metre lot $12,523 $16,056 $10,538 $15,008 $20,000Low Density Cluster Homes $15,654 $14,203 $10,538 $12,235 $16,000Cluster Homes $11,385 $11,115 $10,538 $12,235 $16,000Townhomes Low Density $9,277 $11,115 $10,538 $10,196 $9,900Townhomes Medium Density $5,566 $9,263 $10,538 $10,196 $8,250Apartment Low Density $3,296 $6,175 $10,538 $8,564 $7,500Mixed-Use (Apartment, Commercial) $3,578 $6,175 $10,538 $8,564 $7,500Source: GPRA


Other Examples –


• Distributing fees associated with new neighbourhood

development (e.g. green space levy) • Municipal land disposition


Other Examples –


Will a developer do this?

NW Corner 100 St. & 100 Ave, Fort St. John BC

3.3 Commonly Used Terms


• Hurdle Rate – minimum profit or yield that is needed to proceed with development or property acquisition

• Present value – amount in today’s $$$ • Future Value – Total amount in the future • Discount Rate – like a reverse interest rate • Net Present Value (NPV) – PV revenues less PV costs • Internal Rate of Return – rate of return at which NPV is zero. It is rate of

interest that makes sum of all cash flows zero. Useful to compare one investment to another.

• Hard Costs – materials, excavation, construction • Soft Costs – architects, lawyers, engineers, municipal fees

3.4 Present Value Example


REVENUES RECEIVED Year 0 Year 1 Year 2 Year 3

$0 $100 $200 $300

Convert to PV @ 8% Discount Rate Year 0 Year 1 Year 2 Year 3

$100/1.08^1 $200/1.08^2 $300/1.08^3

Discounted Revenues Year 0 Year 1 Year 2 Year 3

93$ 171$ 238$

We can sum discounted revenues to provide present value $93 $171 $238 $502

$502 is the Present Value of $100 received in year 1 $200 received in year 2 and $300 received in year 3

3.5 Tools of Real Estate Financial Analysis


Analysis Tools:

• Back of the Envelope or “Quick” Analysis

• Static Pro Forma Analysis

• Dynamic Analysis (discounted and non-discounted cash flow)



Back of Envelope for Townhouse Development 1.0 Assumptions Site Area 43,560 sq.ft. Units 18 per acre Avg. Unit Size 1,450 sq.ft. Land Cost $50,000 per unit Construction Cost $175,000 per unit Soft Cost 25% of land and hard costs Unit sales prices $230 per sq.ft. 2.1 Project Costs Land Cost $900,000 Construction Cost per unit $175,000 Total land & construction cost $3,150,000 Soft Cost $1,012,500 Total Project Cost $4,162,500 2.2 Sales Revenue Price/sq.ft. $230 Avg. Unit Size 1,450 Price (per unit / total) $333,500 / $6,003,000 2.3 Profit Profit $ (revenue less cost) $1,840,500 Profit % (of total costs) 44%



Analysis Tools:



• Dynamic Analysis (discounted and non-discounted cash flow)



Analysis Tools:



• Dynamic Analysis (discounted & non-discounted cash flow)



When to Use Which Tools? Static Analysis

Short-term build and sell developments Varying levels of complexity (back of envelope pro forma)

Measures viability by PROFIT



Static Analysis

Profit on total project cost (land + construction + soft costs)

$ profit = Net sale revenue less project cost

%profit = $ profit / total project cost



Static Analysis

Profit on Cost

Project Cost Items

Amount

Land $100 Building $900 Total Cost $1,000

Net Income:

$100

Return to Cost:

Net Income / Cost

100/1,000

10%



Static Analysis

Profit on equity investment (project cost – financing)

$ profit = net sales revenue less total project cost

% profit = $ profit / equity investment



Static Analysis

Profit on Equity

Financing Amount Equity $250 Mortgage $750 Total Cost $1,000

Mortgage Payment (25 yrs, 7%)

$63

Return to Equity Cash flow / equity

$37 / $250

14.8%

Cash Flow Items Amount Net Op. Income (NOI)

$100

Less Mortgage $63 Cash Flow $37



Static Analysis

Profit on Cost vs. Profit on Equity

10% 14.8%



Measures viability by calculating NPV and IRR

Discounted and undiscounted cash flow analyses

Either can be done with constant dollars or current dollars Constant $ - no accounting for inflation Current $ - inflates revenues and costs over time

Dynamic Analysis

Long-term build and hold (phased developments) and build and sell developments

Undiscounted cash flows can produce results that overstate project viability



Dynamic Analysis

Income Producing Property (e.g. office)

3.6 Take-Away Points


• Developers need to make a profit, but municipality can and should share in value

it creates through discretionary powers. Need to do financial analysis to know what “fair share” is!

• Every planning decision has economic consequences and implications

• Densities & uses • Ground floor commercial • Second floor office space • Underground parking requirements & parking ratios • How fees are levied

• Economic analysis can help us develop well targeted and implementable policies,

and engage with development community more effectively

• Allows us to make highly informed trade-off choices

4.1 Project Example: Tecumseh Hamlet Secondary Plan

− How does market and financial analysis get applied by planners?

− How do these issues connect with land use planning and design?

Market and Financial Analysis in Action 4

Detroit

Windsor

Tecumseh

1. Complete Community 2. Pedestrian Oriented Commercial Node 3. A Greater Mix of Housing Typologies 4. Positive Impact on Tecumseh and Windsor Region

Objectives:

Market Reality: Windsor’s economy is weak Implication: a “buyers” market a large development will have external impacts

4.2 Balancing Objectives with Market, Financial, and Political Realities


Objectives: 1. Complete Community 2. Pedestrian Oriented Commercial Node 3. A Greater Mix of Housing Typologies 4. Positive Impact on Tecumseh and Windsor Region

Financial Reality: Low rent and land values Implication: Expensive designs will fail




Objectives: 1. Complete Community 2. Pedestrian Oriented Commercial Node 3. A Greater Mix of Housing Typologies 4. Positive Impact on Tecumseh and Windsor Region

Political Reality: Planning control is geographically limited Implication: Recognize that developers have alternatives


4.3 Planning in Progress


4.4 Market Analysis

− How much commercial space will be supported by new residential growth?

− At what size would the development begin to have negative impacts on other areas of Tecumseh?


19,500 m2

Supportable Retail Space

÷ by Sales Performance

$69 Million New Retail Spending

6,875 Residents

x

=

$10,000 Retail Spending

per Resident

=

4.4 Market Analysis – Tenant Identification


grocery stores

3,500 m2 grocery store

4.4 Market Analysis – Tenant Identification


pharmacies 1,800 m2

pharmacy


4.5 Site Programming



1,800 m2 pharmacy

5,000 m2 community centre A

nchor Tenants

Market and Financial Analysis in Action 4 4.5 Site Programming

−Anchors matter. Any retail development over 3,000 m2 needs to be anchored.

−Anchors are beneficial in that they draw visitors to a destination.

−Anchors pay little rent and often exert a lot of influence over a development.

−The market and financial viability of a project is dependent on having the right type of anchors, and the right amount of anchors.


Anchor Ratio: 60% to 70%


Anchor Ratio: 30% to 50%


Anchor Ratio: Variable

Anchor 50% grocery

store pharmacy

community centre

Inline 50%

bank bank

dentist doctor produce

bar restaurant restaurant

cafe clothing cafe shoes

home hardware restaurant

Market and Financial Analysis in Action 4 4.6 Layout Planning

Case Study Exercise 5


1km

University of Regina

CAC – What Happened?


• University determined that revenues from future LOC would allow Centre to

support bank loan: $12.2 million

• Fundraising + Capital Contributions + Loan = $34.2 million

• Total Cost w/interest: $65-70 million.

• Funding Gap: between $30-40 million



• Try to fill funding gap with residential

• Determined that could fit between 124,000 and 200,000 sq.ft. of residential

• Revenue potential of residential depends on strategy: 1. University Development Corporation 2. Hire Project Manager 3. “sell” land on prepaid lease to developer

Residential Revenue PotentialDevelops Hires Project Prepaid Land

Amount of Residential On Own Manager Lease $'s OnlyLow (124,000 sq.ft.) 19,057,372 15,760,106 8,388,600Medium (162,000 sq.ft.) 25,339,108 20,852,012 11,153,670High (200,000 sq.ft.) 31,934,931 26,198,513 14,056,994



• Recommendation: Development Corporation

• Even at highest density, still a funding gap.

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Develop on Own Hire P. Manager Prepaid Land Lease

Low (124,000 sf)

Medium (162,000 sf)

High (200,000 sf)

CAC – Overall Site Plan


CAC – Overall Site Rendering


CAC – Proposed Link Building


Contact Information

Justin Barer [email protected] @JMB81 David Bell [email protected] @UrbBlurb

David Fitzpatrick [email protected] @reurbanist

Thank you! 6