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When to Invest in a Micro-neighborhood

Using metrics to determine when neighborhoods are on the cusp ofcommercial revitalization

(working title)Chad Shuskey (8/4/15)

When to Invest? | Neighborhood Commercial Cycletimeplace/people favorable datalocalnationallocal / nationalInvestoremergingneighborhood

too early?too late?When to Invest? | TimingWhen to Invest?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 OpportunityBy 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 MallSample 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 | 20002400 block of Rhode Island Avenue, NESample Study | Rhode Island Avenue, NEBuilding Permits Issued | 20002400 block of Rhode Island Avenue, NE286 avg.412 avg.Sample Study | Rhode Island Avenue, NEWhen to Invest?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 Criteria4. Stable housing stock1. Two five block commercialcorridor2. Minimum of 3 new businessopenings/commitments since 20103. Lack of Metrorail AccessApproach | DataDemographics 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 - SurveysSelect 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 locationNot at All | Weak Relationship | Moderate Relationship | Strong RelationshipReal Estate Costs (e.g. rent, mortgage)Customer ParkingPerception of SafetyNeighborhood AdvocateX Trendsetter Business

4. What is your current base rent (NNN)Preliminary Observations, Assumptions & ChallengesGIS analytical models by themselves will not sufficevisual inspection, surveys, data smell test

Data Acquisitionhistorical data

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

Geographical limitations of dataCensus block groups, Census tracts, zip codes, point level data GIS Challenges

Questions/CommentsWhen to Invest in a Micro-neighborhood

Using metrics to determine when neighborhoods are on the cusp ofcommercial revitalizationChad Shuskey (8/4/15)

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