Downtown Bothell Redevelopment Economic Feasibility Analysis and Downtown Programming

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Downtown Bothell Redevelopment Economic Feasibility Analysis and Downtown Programming. THE CONCORD GROUP. THE CONCORD GROUP. Real Estate Advisory Services. The Concord Group provides vital analytical and market input throughout all stages of an asset’s lifecycle: Market and economic analysis - PowerPoint PPT Presentation

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  • August 24, 2009Downtown Bothell RedevelopmentEconomic Feasibility Analysis and Downtown ProgrammingTHE CONCORD GROUPTHE CONCORD GROUP

    THE CONCORD GROUP

    Real Estate Advisory ServicesThe Concord Group provides vital analytical and market input throughout all stages of an assets lifecycle:

    Market and economic analysisLand-use programming and phasingProduct segmentation & positioning strategy Comprehensive marketing strategyConsumer research and focus groups

    Property due diligenceFinancial optimizationValue assessmentInvestment and disposition strategyStrategic planningAsset repositioningDowntown Programming Asset or Property LevelRecommendations

    THE CONCORD GROUP

    ObjectivesThe project team was tasked to identify a development strategy for Downtown Bothell that:Represents the market and financial highest and best mix of usesMeets the planning and financial criteria of potential third party developersMeets the needs and wants of the citizens of Bothell

    THE CONCORD GROUP

    Methodology

    THE CONCORD GROUP

    Market Results46 Net Acres;1.07MM Square Feet of Development over 10yrs

    THE CONCORD GROUP

    Residential OpportunitiesFuture employment and household growth in the region will fuel demand for 228 for-sale units in Downtown Bothell over the next ten years. Buyers qualified by lifestyle, product type and income.Key buyer types:Close-In Urban AdventurersBothell BoostersPuget Sound CommutersRegional Upscale UrbanitesKey issues:Downtown competition Rent versus ownSynergy of usesProduct types

    THE CONCORD GROUP

    Retail OpportunitiesCurrent spending gap and additional growth over 10 Years demonstrates demand for 130k square feet of NEW retail in Downtown Bothell.Key tenant types:RestaurantsPubsClothingGroceryCompetitive strengths:Mixed Use Environ.Pedestrian-orientedSynergy of usesHigh traffic counts/road improvements

    THE CONCORD GROUP

    Retail Gaps and Demand

    Chart1

    00.02035589

    0.02396829680.0073825499

    0.0628286110.0473920673

    0.36093220670.0990850343

    00.006203399

    00

    0.047241390.0466958693

    00.0311367123

    00.0216793854

    00.1367554142

    0.04010068730.042531989

    00.1616136499

    0.04724918780.0132297631

    0.05346327990.0578468178

    0.18917588440.1451107582

    0.17504045620.1629807001

    Current Gap

    Future Demand

    Regional Location

    EXHIBIT III-3

    RETAIL MARKET OVERVIEW

    SEATTLE, WASHINGTON

    JULY 2009

    Source: Business Maps

    &L&"Times,Regular"&12&F: &A&C&"Times,Regular"&12Page 1 of 5&R&"delphian,Regular"&18The Concord Group

    The Primary RTA is defined as the citiesof Bothell, Kenmore and Woodinville.

    The Secondary RTA includes Lake Forest Park, Mill Creek, Brier, Alderwood Manor, North Creek and Martha Lake.

    Primary RTA

    Secondary RTA

    The Retail Trade Area ("RTA") is the area from which the majority of demand for product at the subject site is expected to emanate, and the competitive context in which the subject the subject site will compete.

    Trends

    EXHIBIT III-3

    RETAIL MARKET OVERVIEW

    RETAIL TRADE AREAS

    JULY 2009

    Demand Trends

    Regional

    ("GSMA") grew at an average rate of 1.2% annually; current projections

    forecast similar growth patterns to continue in the next 5- and 10-year periods.

    that the secondary RTA can support 160 SF/year over the next 10 years.

    Local

    a decline of 9.7% from the previous year. From 2000 to 2008 taxable retail sales

    averaged a modest 1.2% annual growth rate given market downturns in the early

    2000s and post-2007; between 2004-2007, however, sales ballooned 12% annually.

    collectively represent 73% of the current retail gap in the RTA in terms of SF.

    Grocery and Clothing / Accessories establishments are anticipated to capture

    the highest shares of future demand growth, each accounting for between

    10% and 16% in terms of square footage.

    Supply Trends

    Regional

    absorbed over 6.7 million SF of retail space, while delivering 6.9 million SF;

    vacancies in the GSMA ticked above 5% in the first quarter 2009.

    have performed worse of late, with vacancies over 7.5%, followed by power centers

    (4.8%), malls (4.1%), general retail properties (3.8%) and specialty centers (1.0%).

    Local

    of retail space, for an average annual growth rate of 1.7%.

    have pitched downward in recent years; per CoStar, average sublet lease-rates

    have dropped from $19.75 to around $15 since Q4 2005.

    Sources: TCG, CoStar, Claritas, Washington Department of Revenue

    RTA

    200020012002200320042005200620072008

    Total Buildings1641651681711731751851861920

    Y/Y Change0.6%1.8%1.8%1.2%1.2%5.7%0.5%3.2%

    18.505560975617.7194479167

    Gross Leasable Area (K SF)3,034.93,044.33,080.93,228.53,247.83,254.63,329.53,333.43,402.11.7%2,980.72,980.7

    Deliveries (K SF)54.29.436.6147.619.36.874.94.068.70.0

    Y/Y Change1.8%0.3%1.2%4.8%0.6%0.2%2.3%0.1%2.1%

    Net Absorption (K SF)12.2-18.346.0116.657.7-21.520.147.28.10.0

    Y/Y Change-250.1%-352.0%153.5%-50.5%-137.3%-193.6%134.2%-82.8%

    Vacancy Rate (%)na0.6%1.4%2.6%1.7%2.0%3.2%2.5%3.0%0%

    Y/Y Changena131.0%81.3%-32.9%16.1%57.9%-19.5%18.6%

    Available Sublet Space (SF)na0.00.80.00.00.00.00.00.00.0

    Y/Y Changena0.0%0.0%0.0%0.0%0.0%0.0%0.0%

    Average Rents ($)nana$13.00$16.49$20.77$24.25$24.61$21.26$25.51$0.00

    Y/Y Changenana26.8%26.0%16.8%1.5%-13.6%20.0%

    3733292521171395

    3531272319151173

    0200020012002200320042005200620072008

    Total Buildings

    Total GLA3034.93044.33080.93228.53247.83254.63329.53333.43402.1

    New Supply54.29.436.6147.619.36.874.94.068.7

    Year-Start Supply2980.73034.93044.33080.93228.53247.83254.63329.53333.4

    Average Rents ($)nana13.016.520.824.324.621.325.5

    Quarterly Net Absorption -- RTA

    02000 1Q0

    12000 2Q8.405

    22000 3Q-14.052

    32000 4Q17.81

    42001 1Q3.623

    52001 2Q2.654

    62001 3Q6.994

    72001 4Q-31.524

    82002 1Q36.207

    92002 2Q3.502

    102002 3Q3.075

    112002 4Q3.209

    122003 1Q-14.312

    132003 2Q122.073

    142003 3Q25.158

    152003 4Q-16.32

    162004 1Q25.548

    172004 2Q11.921

    182005 2Q-26.445

    222004 4Q11.122

    202005 1Q-0.407

    212005 2Q-26.445

    222005 3Q-11.67

    232005 4Q17.007

    242006 1Q-2.122

    252006 2Q23.256

    262006 3Q15.258

    272006 4Q-16.261

    282007 1Q10.288

    292007 2Q35.475

    302007 3Q-5.003

    312007 4Q6.39

    322008 1Q21.143

    332008 2Q4.882

    342008 3Q4.278

    352008 4Q-22.188

    36QTD10.905

    &L&"Times,Regular"&12&F: &A&C&"Times,Regular"&12Page 2 of 5&R&"delphian,Regular"&18The Concord Group

    Trends

    0

    8.405

    -14.052

    17.81

    3.623

    2.654

    6.994

    -31.524

    36.207

    3.502

    3.075

    3.209

    -14.312

    122.073

    25.158

    -16.32

    25.548

    11.921

    -26.445

    11.122

    -0.407

    -26.445

    -11.67

    17.007

    -2.122

    23.256

    15.258

    -16.261

    10.288

    35.475

    -5.003

    6.39

    21.143

    4.882

    4.278

    -22.188

    10.905

    Quarterly Net Absorption -- RTA

    Square Footage (Ks)

    Quarterly Net Absorption - Primary RTA

    Supply - Demand

    2980.676054.236

    3034.91209.402

    3044.3141336.602

    3080.91616.49147.613

    3228.52920.7719.288

    3247.81724.256.78

    3254.59724.6174.886

    3329.48321.263.964

    3333.44725.5168.687

    Year-Start Supply

    Average Rents ($)

    New Supply

    Square Footage (Ks)

    Historical Trends - Primary RTA

    Opportunities

    EXHIBIT III-3

    RETAIL MARKET OVERVIEW

    SECONDARY RETAIL TRADE AREA

    JULY 2009

    Current - 2014Current - 2019

    Market FactorAnnualTotalMarket FactorAnnualTotal

    Potential DemandPotential Demand

    492.2Current Supply Overhang0.0

    14.874.0

    Annual Demand from HH Growth98.8494.0Annual Demand from HH Growth0.00.0

    Total Square Footage Demanded98.81,060.2Total Square Footage Demanded0.0

    Potential SupplyPotential Supply

    Current Supply Overhang0.0

    140.6702.9Projected Deliveries (2009-2019)0.00.0

    Projected Supply (2009-2014)140.6702.9Projected Supply (2009-2019)0.0

    Under / (Over) Supply(41.8)357.3Under / (Over) Supply0.0

    Potential Demand GrowthProjected Supply Growth

    New Demand494.0

    Entertainment74.0

    Current Retail Gap492.2

    New Supply702.9

    (1) See Appendix V-9 for further detail

    (2) Entertainment establishments not picked up by data sources; 14.8K represents 10% up-lift to demand figures

    (3) See Appendix V-14 for further detail

    Source: Puget Sound Regional Council, Claritas CoStar, TCG

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    Opportunities

    10772.91910387.8478933092237.532

    11010.45110395.896066042716.508

    11026.95910624.205847154856.932

    11083.89110857.7889965464185.081

    11268.97211096.7678187518105.057

    11374.02911341.2674785612370.704

    11744.73311591.416067894760

    11804.73311847.34467424110

    11804.73312109.1874507460

    12264.73312377.0816876646220

    12484.73312651.1678861826220

    Year-Start Supply

    Demand

    New Supply

    Square Footage (Ks)

    Graph

    Square Footage (Ks)

    Retail Market Area

    Costar

    Current Retail Gap

    Entertainment

    New Demand

    New Supply

    Square Footage (Ks)

    Se