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