when to invest in a micro-neighborhood using metrics to determine when neighborhoods are on the cusp...

When to Invest in a Micro-neighborhood

Using metrics to determine when neighborhoods are on the cusp of

commercial revitalization

(working title)

Chad Shuskey (8/4/15)

When to Invest? | Neighborhood Commercial Cycle

time

plac

e/pe

ople

favo

rabl

e da

ta local

national

local / national

Investor

emergingneighborhood

too early?

too late?

When to Invest? | Timing

When to Invest?

1. How do you prove a market is ready before there are

obvious signs?

2. What metrics can an investor follow to determine when

they should invest in a micro-neighborhood?

3. Is there a tipping point?

Investor = small (or micro) business, entrepreneur / start-up or small developer

When to Invest? | The Opportunity

By determining the next growth areas investors can make more knowledgeable real estate decisions to determine the next location to open a business.

• Economic development organizations can help facilitate and spur growth in these targeted neighborhoods

• Governments can better utilize incentives or services to help these identified areas gain their own momentum.

Sample Study | Emerging Markets

> 50%

20 – 50%

10 – 20%

< 10%

Poverty Rates

National Mall

Sample Study | Rhode Island Avenue, NE

2300 block of Rhode Island Avenue, NE (2009)

2300 block of Rhode Island Avenue, NE (2014)

Sample Study | Rhode Island Avenue, NE

2010 v 2014

$8.60 PSF rent increase

$17,000+ annual difference (assuming 2,000 SF tenant)

Sample Study | Rhode Island Avenue, NE

2012/13 v 2014

$21 PSF v $24 PSF

~$6,000 annual difference (assuming 2,000 SF tenant)

New Business Openings | 2000–2400 block of Rhode Island Avenue, NE

Sample Study | Rhode Island Avenue, NE

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

100

200

300

400

500

600

294 325

286 249

276

402 352

390 428

490

Building Permits Issued | 2000–2400 block of Rhode Island Avenue, NE

286 avg.

412 avg.

Sample Study | Rhode Island Avenue, NE

When to Invest?

1. How do you prove a market is ready before there are

obvious signs?

2. What metrics can an investor follow to determine when

they should invest in a micro-neighborhood?

3. Is there a tipping point?

Investor = small (or micro) business, entrepreneur / start-up or small developer

Approach | Site Criteria

Micro-neighborhood Criteria

4. Stable housing stock

1. Two – five block commercial

corridor2. Minimum of 3 new business

openings/commitments since 2010

3. Lack of Metrorail Access

Approach | Data

Demographics

• education attainment, household incomes and age distribution

Real Estate

• home sales, building permit activity, tax delinquent properties, rent

Crime

• type of crime / perception of safety

Business Environment

• zoning, liquor license caps/moratoriums, neighborhood advocate

Transportation

• Metrobus, Capital Bikeshare

Trendsetters (i.e. pioneers)

Approach | Data - Surveys

Select Questions

1. When did you open at your current location (month/year)?

2. Was this a relocation, expansion or first-time business?

3. Please select the relevance that each factor impacted your current location

Not at All | Weak Relationship | Moderate Relationship | Strong Relationship

Real Estate Costs (e.g. rent, mortgage)

Customer Parking

Perception of Safety

Neighborhood Advocate

X Trendsetter Business

4. What is your current base rent (NNN)

Preliminary Observations, Assumptions & Challenges

GIS analytical models by themselves will not suffice• visual inspection, surveys, data “smell test”

Data Acquisition• historical data

Data relevance• what can we learn from the dataset?• Are patterns really there (e.g. business licenses are issued every 2 years)

Geographical limitations of data• Census block groups, Census tracts, zip codes, point level data

GIS Challenges

Questions/Comments

When to Invest in a Micro-neighborhood

Using metrics to determine when neighborhoods are on the cusp of

commercial revitalization

Chad Shuskey (8/4/15)