august 24, 2009 downtown bothell redevelopment economic feasibility analysis and downtown...
TRANSCRIPT
August 24, 2009
Downtown Bothell RedevelopmentEconomic Feasibility Analysis and Downtown ProgrammingTHE CONCORD GROUP
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– Land-use programming and phasing– Product segmentation & positioning strategy – Comprehensive marketing strategy– Consumer research and focus groups
– Property due diligence– Financial optimization– Value assessment– Investment and disposition strategy– Strategic planning– Asset repositioning
Downtown Programming
Asset or Property LevelRecommendations
THE CONCORD GROUP
Objectives
• The project team was tasked to identify a development strategy for Downtown Bothell that:1. Represents the market and financial ‘highest and best’ mix of uses2. Meets the planning and financial criteria of potential third party
developers3. Meets the needs and wants of the citizens of Bothell
THE CONCORD GROUP
MethodologyMarket Analysis Case Studies/Lessons LearnedSite Evaluation
Physical Walk-Throughs
Parcel-Specific Data
Review Prior Reports
Demand Conditions
RegionalLocalSupply Trends
Determine depth of demand for land uses under consideration
Identify opportunites and challenges similar developments have faced
Evaluate strategic positioning of downtown Bothell in regional
context
Analyze parcel constraints and suitability for land uses under
consideration
Project downtown Bothell's capture of future regional demand
Assess public/private partnerhsip structures, specificially as they relate
to City Hall development
Preliminary Development Scenario
Recommended Strategic Plan Feedback from CityFinancial Analysis
THE CONCORD GROUP
Market Results
46 Net Acres;1.07MM Square Feet of Development over 10yrs
For-Sale For-RentResidential Residential Retail Office Hotel
Market Area Definition Central-North Central-North Bothell/Kenmore/ Bothell/Kenmore/ Bothell/ Kenmore/ MillEastside Eastside Woodinville/North Woodinville/Kirkland Creek/ Woodinville/
Suburbs KirklandQualified Market Area Demand PoolAnnual 2,208 units - units 162,800 s.f. 334,100 s.f. 36 rooms10-Year Total 22,810 units 54,443 units 1,628,200 s.f. 3,340,600 s.f. 362 rooms
Opportunity Capture 1.0% HH 1.0% HH 8.0% s.f. 3.0% s.f. 5.0% rooms(Downtown)
10-Year Downtown 228 units 544 units 130,300 s.f. 100,200 s.f. 18 roomsDevelopment Potential 311,900 s.f. 525,400 s.f. 3,617 s.f.
THE CONCORD GROUP
Residential Opportunities• Future 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 Adventurers– Bothell Boosters– Puget Sound Commuters– Regional Upscale Urbanites
• Key issues:– Downtown competition – Rent versus own– Synergy of uses– Product types
For-Sale (Current - 2013)
0
400
800
1,200
1,600
2,000
Total For-Sale Demand (2009-2013)
Projected Supply (2009-2013)
For
-Sal
e U
nit
s
THE CONCORD GROUP
Retail Opportunities• Current spending gap and additional growth over 10 Years demonstrates
demand for 130k square feet of NEW retail in Downtown Bothell.• Key tenant types:
– Restaurants– Pubs– Clothing– Grocery
• Competitive strengths:– Mixed Use Environ.– Pedestrian-oriented– Synergy of uses– High traffic counts/road improvements
Current - 2014
Market Factor Annual Total
Potential Demand
Annual Demand from HH Growth 98.8 494.0
Total Square Footage Demanded 98.8 1,060.2
Potential Supply
Current Supply Overhang 0.0
Projected Supply (2009-2014) 140.6 702.9
Under / (Over) Supply (41.8) 357.3
Secondary Retail Trade Area (Current - 2014)
0
200
400
600
800
1,000
1,200
Potential Demand Growth Projected Supply Growth
Squa
re F
oota
ge (
Ks)
Current Retail Gap Entertainment New Demand New Supply
THE CONCORD GROUP
Retail Gaps and Demand
0% 5% 10% 15% 20% 25% 30% 35% 40%
Bars/Clubs
Beauty Supplies
Books/Music/Hobby
Clothing/Accessories
Collectables
Department Store
Drugstore
Electronics
Food/Drink Store
Grocery
Home Furnishings
Home Repair
Jewelry
Miscellaneous
Sit-Down Rest.
Take-Out Rest.
Current Gap Future Demand
THE CONCORD GROUP
Catalytic Parcels
Anderson Building’s unique character and northern location will provide a draw for potential tenants. Key ‘promontory’ and intro to downtown activity
Future new City Hall development will serve as a linkage between Main Street and 527.
THE CONCORD GROUP
ProgrammingEARLIEST MKT IMPLIED FOR-RENT RESIDENTIAL FOR-SALE RESIDENTIAL RETAIL OFFICE HOTEL CIVIC
CLUSTER PARCEL(S) ENTRY NET ACRES F.A.R. MR GAR TH MR ROW L/W TH ANCH INLINE M/U CL A CL B M/U MID BOU B&B CH
Park/River A 2013 0.2 0.35 3,150
Pop Keeney South O,P 2013 1.8 0.57 30
Pop Keeney South Q,R 2013 1.9 0.57 32
Central Commercial K 2013 1.4 0.74 25,000 20,000
Central Commercial L 2013 0.9 0.37 5,000 10,000
Anderson M 2013 3.1 0.45 25 15,000 10,000 15,000
Safeway Edge I,J 2013 0.1 0.00
City Hall H1,H2 2015 1.8 1.21 17,000 3,000 20,000 55,000
Pool/Skatepark N 2015 1.7 0.83 25 11 7,500
Crossroads B,C1,C2 2015 0.6 0.37 10,000
Crossroads D 2015 2.0 0.34 25,000 5,000
Crossroads E,F,G 2015 0.7 0.41 10,000 2,500
Hope Link/Dawson S,T,U 2016 * 1.4 0.21 20
TOTAL 17.7 0.55 0 0 20 25 87 11 0 50,000 37,650 43,000 40,000 17,500 15,000 0 0 0 55,000
TOTAL BY LAND USE 20 123 130,650 72,500 0 55,000
10-YEAR DOWNTOWN POTENTIAL (FROM MARKET DEMAND) 544 228 130,255 100,218 18 55,000
DEVELOPMENT SCENARIO CAPTURE % OF 10-YEAR DOWNTOWN POTENTIAL 4% 54% 100% 72% 0% 100%
10-YEAR DOWNTOWN POTENTIAL (FROM MARKET DEMAND) WITH PLACEMAKING UPLIFT 653 274 156,306 120,262 22 55,000(20% uplift)DEVELOPMENT SCENARIO CAPTURE % OF 10-YEAR DOWNTOWN POTENTIAL W/UPLIFT 3% 45% 84% 60% 0% 100%
THE CONCORD GROUP
Value Creation
Pre-disposition (Pre-2010)
City invests in acquiring
parcels, capital improvements
Years 11+ (2020+)
Years 1 - 5 (2010 - 2014)
Years 6 - 10 (2015-2019)
Value created primarily through City's dispositions of parcels to developers - last
parcels disposed 2013 Last development of City-owned parcels around 2017
City-catalyzed development spurs new development (on non
City-owned parcels), values rise, more tax revenue
generated
Time
Value Created Baseline market prices and residual land values
Potential 15% - 20% uplift in market prices (with higher uplift for residual land
values) and absorption as development takes shape and more jobs, housing and
retail located downtown
Additional uplift in market prices and residual land values, as well as
increased market share absorption as redevelopment matures
Anderson Building and City Hall Catalysts
THE CONCORD GROUP
Key Conclusions• Catalytic parcels are available and under City control• City involvement as active development partner• Future mixed use district anchored by retail, residential, civic and
cultural uses– 46 Acres– 1MM+ Square Feet of development over 10yrs
• Market opportunity is strong for retail uses – 130ksf of total demand/capture opportunity
• Additional demand– 770 residential units (for sale and for rent)– 100ksf office
• Majority of demand opportunity is for complimentary or appropriate tenant types
• Anderson Building and future City Hall developments represent first developments in a new, mixed-use development node.
THE CONCORD GROUP
The Concord Group: OverviewThe Firm
The firm was founded in 1995 with a vision of delivering the highest level of quality, insight and responsiveness to the real estate industry. Today we have offices in Newport Beach, San Francisco and Boston, whose teams complete over 350 engagements annually in the United States, Europe, Asia, Latin America and the Caribbean.
Our team consists of highly talented and dedicated professionals with deep roots in real estate development, strategy and finance. We hold leadership roles in associations that help shape the future of real estate.
Core ServicesOur services include market analysis, transaction due diligence and asset valuation. Recently our focus has been on strategic market and financial valuations of distressed assets. Additionally, we continue to be involved with developer, financial and public agency clients assessing strategies and tactics to maximize the value of owned-assets.
Clients in the financial sector include major investment/commercial banks, private equity firms and other institutional and entrepreneurial capital. In land use and infrastructure specifically, we have a cadre of developer/builder clients spanning all property sectors.
THE CONCORD GROUP
The Concord Group & THG
Newport Beach: 130 Newport Center Dr, Suite 230, Newport Beach, CA 92660| Phone: 949.717.6450San Francisco: 251 Kearny St, 6th Floor, San Francisco, CA 94108 | Phone: 415.397.5490
Boston: 77 Summer St, 7th Floor, Boston, MA 02110 | Phone: 617.451.1100
www.theconcordgroup.com
Tim M. Cornwell Director
Richard M. Gollis Principal in Charge
Robert Holmes [email protected]
www.thgadvisory.com
Dexter Horton Building Suite 1400, 710 Second Avenue, Seattle, WA 98104| Phone: 206.245.2006