The Micro Unit
CAPSTONE 2016
La Petit Maison
THE MICRO UNIT DEVELOPMENT DEVELOPMENT TEAM: MARK MCKENZIE JOHN JANKUSKA KATYA HRISTOVA
MJK Ventures gratefully acknowledges the support of Auburn University MRED Program in preparation of this RFP.
COMPONENT III: ADDITIONAL INFORMATION
TABLE OF CONTENTS PERMITTING PROCESS…………………………..…………………………………2 STORM WATER MANAGEMENT PLAN….…………………………….………….7 LOW IMPACT DEVELOPMENT PRACTICES…………..………………………….7 LEED GOLD/LEED ND DESIGN CERTIFICATION………….....………………….8 CONSTRUCTION BEST MANAGEMENT PRACTICES…..………………………10 MARKET RESEARCH AND ANALYSIS………………..…..………………EXHIBIT II
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1. Permitting Process The permit process is dependent on the submission of plans, specifications and studies. All plans, specifications and studies must be in compliance with the following applicable codes. • • • • • • • • • • • •
International Building Code, 2006 Edition with Georgia state amendments Rules and Regulations of the Safety Fire Commissioner for the State Minimum Fire Safety Standards, Chapter 120-3-3 January 5, 2007 (Georgia Safety Fire Law) National Fire Protection Association (NFPA) Life Safety Code, 2000 Edition with Georgia State Amendments International Fuel Gas Code, 2006 Edition with Georgia State Amendments International Mechanical Code, 2006 Edition with Georgia State Amendments International Plumbing Code, 2006 Edition with Georgia State Amendments National Electrical Code, 2005 Edition with Georgia State Amendments Georgia State Handicapped Accessibility Law 120-3-20 International Energy Conservation Code, 2006 Edition with Georgia State Amendments International Fire Code, 2006 Edition with Georgia State Amendments
Upon completion of the drawings and studies, the following must be submitted for consideration of a full permit: 1. All plans must be released for construction, signed and sealed by a Georgia registered architect or engineer on all pages. 2. All buildings described in these plans shall be designed in compliance with the current applicable codes along with revisions and amendments. 3. Eleven (11) separate sets of civil and landscape plans including: a. Tree removal, protection and replacement information. b. All parking, including parking decks. 4. Two (2) copies of hydrology study. 5. Two (2) copies of any pertinent ordinances (rezoning), special administrative permits, variances or other documents relating to zoning approval, if applicable. 6. Three (3) separate copies of plans showing general site plan, grading plan and utilities plan showing fire hydrants.
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7. Three (3) separate copies of plans showing water service with backflow prevention at meter. 8. Five (5) separate sets of architectural and structural plans. 9. Three (3) separate sets of mechanical/HVAC plans. 10. Three (3) separate sets of electrical plans. 11. Three (3) separate sets of plumbing plans. 12. One (1) copy of specifications. 13. For buildings which include assembly occupancy also provide: a. One additional full set of architectural plans. b. Two additional copies of seating layout (or floor plan if there is no seating). c. One additional copy of electrical plans. 14. For Multi-family projects a completed Bureau of Buildings form listing the specific street address and/or other designation for each building must be submitted. For living units that will be for sale the form must also include specific street address and/or other designation and accurate area for every unit. Such building and unit identification must also be shown on the civil and architectural plans. Upon submission, the city will send the submittal package off to the various review personnel to see if the plans and specifications are in compliance with their codes and regulations. The following permits would need to be filed for Arborist Permit, Building Demolition Permit, New Building Permit, Pool Permit, Electrical Permits, Mechanical Permits, Plumbing Permits Sign Permits, Special Event Permits and Land Development Permit. Along with the evaluation from the permitting bodies, additional review from the following agencies must be obtained: • Atlanta Fire and Rescue • Fulton County Health Department • Site Development • Department of Public Works – Traffic and Sanitation • Department of Watershed Management – Water Services All of the architectural, civil and structural listed above have some minimum requirements and they are as follows: CIVIL AND SITE PLANS 1. Site Plan a. Must include a property survey by a Georgia registered Land Surveyor. b. Must provide complete grading and civil engineering plans and all appropriate details.
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c. Must show complete boundaries and topography. d. Must show location of buildings, driveways and all other proposed improvements to be constructed (fences, walls, accessory buildings, etc.). e. Indicate zoning district. f. Must provide complete land use intensity calculations for multifamily residential uses. g. Indicate lot coverage. h. Indicate floor ratio. i. Show parking – required and provided. j. Show dimensions of all property clearances (such as 7’ clearance from the property line to the building). k. Indicate any existing 100 year flood plan limits and elevations, any “water of the state” limits, any drainage courses or swales, any wetlands, etc. l. Indicate any existing easements and their dimensions. 2. Show erosion and sedimentation control devices. a. Silt fences. b. Construction exit. c. Provide a complete soil and erosion control plan showing all required best management practices and details. d. Show area of total site disturbed acreage in acres. e. Show existing and proposed ground contours. f. List separately both cut and fill earth quantities in cubic yards. 3. Sanitary Sewer Connection. a. Locate on site plan. b. Show clean out at property line. c. Show location and size of existing City of Atlanta public sanitary sewer to be tied into on site plan. 4. Tree Ordinance a. On site plan providing existing tree inventory, (diameter at breast height and specie), four foot protection fencing, removals (including total inches removed) and replacement (2 ½” caliper minimum shade trees). ARCHITECTURAL/ENGINEERING PLANS 1. The following minimum code and project information is required on the plans: a. Indicate name, address and phone number of project designer of record (engineer and/or architect).
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b. Indicate street address (as issued by the Bureau of Buildings) for all buildings or structures of project in title block of each drawing including title sheet. c. List all applicable codes used. d. Provide drawing index. e. A brief project description. f. Occupancy classification asper NFPA 101. g. Type of construction, Table 500 IBC. h. Sprinklered/Non Sprinklered. i.Building area in square feet per IBC. j. Building height in feet per IBC. k. Number of stories. l.Basis of structural design per IBC Chapter 16. m. Statement of special inspections per IBC Chapter 17. 2. The project plans should also include drawings & documentation detailing: a. Compliance with Means of Egress Requirements per NFPA 101. b. Compliance with Handicap Accessibility requirements per Georgia Handicapped Accessibility Law. c. Compliance with International Energy Conservation Code. d. All fire protection assemblies. e. Finish grade at all building exterior elevations. f. A Life Safety/Exit plan with calculated occupancy loads, paths of travel, and exit widths per NFPA 101. g. Compliance with interior finish requirements per NFPA Chapter 10. If all of the paper work is in compliance, one can pay the permit fees and proceed with construction. If everything is not in compliance, then drawings, details and/or specifications that are noncompliant will have to be revised and resubmitted. FEES 1. Building Permit fee is $5.00 per $1,000.00 of total cost/valuation of work plus a $25.00 technology fee ($100.00 minimum building permit fee). 2. A notarized Bureau of Buildings form stating projected cost of construction and method for determining such cost is required; the letter must be signed by the owner, architect, engineer or contractor and stamped by a notary public. 3. The contractor must sign a notarized State of Georgia Contractor License Affidavit form. 4. Impact Fees:
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5.
6. 7. 8.
a. Calculated by gross building area and use for non-residential uses, number of living units for single family & multi – family, & number of rooms for lodging (hotel/motel, dormitory, etc.). b. Redevelopment and/or Change of Use adjustments may apply. c. Impact Fees are required to be paid at the issuance of the first permit (Site, Foundation or Full permit.) A separate permit is required by a licensed professional from: a. Electrical b. Plumbing c. Heating Ventilation and Air Conditioning Plan review and site inspection fees are required by the Department of Watershed Management- Site Development. Water Meter permits are issued by the Department of Watershed Management-Bureau of Water Certificate of Occupancy/Temporary Certificate of Occupancy vary in cost and are issued by the Building Permit Issuance Division.
Permits can be filed for by any of the parties involved, but usually are filed by the Owner/Developer or the General Contractor. The specialty permits are usually filed by the general contractor’s subcontractors (Electrical Plumbing & Heating/Air Conditioning). Ultimately it is the Owner/Developer’s responsibility to make sure that all the proper permits are acquired. The time required to get plans submitted, reviewed and approved in Atlanta is 2 to 3 months. The Atlanta Permitting Division is doing certain things (additional people, guaranteed review times and additional hours worked) to reduce that time period to 1-½ months.
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2. Storm Water Management Plan Low Impact Development (LID) and storm water management have been used as synonymous terms. This can be considered a true statement today, but prior to 1990, storm water management was perceived as ‘costly-end-of-the pipe facilities located at the bottom of drainage areas’. LID addresses storm water through small, cost effective landscape features located at the lot or roof level. There are 4 basic methods of managing water runoff in LID; Bio retention swales, bio retention cells, permeable pavers and soil amending. At La Petit Maison MJK has incorporated 2 of the 4 Integrated Management Practices (IMP). We will utilize the IMP at the rooftops, streetscapes and sidewalks. Along the perimeter of the structures, from the base of the building to the curb 65% of the area will be constructed of permeable pavers. This will amount to 8,700 sq. ft. The other 35% of the perimeter at the base of the building will be utilized as bio retention cells. These green areas will incorporate grasses and trees to capture rainwater and filtrate it back into the soil. This will occupy approximately 3,500sq.ft. The roofs of all the structures will incorporate bio retention cells. Fifty percent of the 2 lower roofs will be utilized as green space, approximately 44,100 sq. ft. One third of the upper roofs will incorporate green space and tree box planters, some 11,000 sq. ft. This will be achieved while utilizing the other areas on the roofs as work and relaxation areas. In hopes of motivating people to start developing and building using LID, the U.S. government offers a 20% subsidy grant to people who utilize this technology. MJK will file for this grant to defray the additional upfront costs that will occur. Additionally, all standard construction practices will be maintained during construction. Silt fences will be installed around the perimeter of the construction site. Gutter guards will be install at all the street gutters in insure that water and only water goes into the drainage system. A wash down area will be installed at the exit area of the site, so that the dirt and mud stay on the property and not in the street or in the drainage system.
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4. LEED Gold Certification
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The development is designed to achieve LEED Gold Certification. Advanced commissioning is scheduled for the first year of stabilization and building performance will be measured incrementally through first, second and third year of the holding period to establish base line and subsequently track implementation of all building systems and their compliance to the LEED standards. MJK will be certifying La Petit Maison under LEED version 4.0. We think we can achieve the following credits: Location and Transportation, a total of 12 credits including Surrounding Density and Diverse Uses, Access to Quality Transit, Bicycle Facilities, Reduced Parking Footprint, and Green Vehicles. Under Sustainable Sites, we think we can achieve Site Assessment credit, Rainwater Management, Heat Island Reduction and Light Pollution Prevention. For Water Efficiency credits we are applying for Outdoor and Indoor Water Use Reduction, and Water Metering. Energy and Atmosphere gives the largest portion of credits and we are considering Enhanced Commissioning, Optimized Energy Performance, Demand Energy Response, Enhanced Refrigerant Management, and Green Power and Carbon Offsets. Material and Resources will contribute nine additional credits, Building Life-Cycle Impact Reduction, Building Products Disclosure and Optimization, Declarations, Construction and Demolition Waste Management. Under Indoor Environmental Quality we think we can secure LowEmitting Materials, IAQ Management Plan, Thermal Comfort, Indoor Lighting, Day-lighting, and Quality Views. Lastly, we think we can achieve one Innovation credit and LEED AP credit. The total projected credits are 68 with 5 under additional consideration and 34 not in pursuit.
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5. Construction Best Management Practices MJK Ventures is proposing the following construction best management practices to be observed at La Petit Maison – The Micro Unit Development: 1. Exercise the ability to preserve existing vegetation. 2. The use of straw mulch as a soil stabilizer during early stages of construction. 3. The use of the following products for temporary sediment control: a. Silt Fences b. Fiber Rolls c. Sandbag Barriers d. Straw Bale Barriers e. Storm Drain Inlet Protection 4. Stabilize construction entrances and exits with wash down areas. 5. Stabilize construction roadway with street cleaning. 6. Maintain vehicle and equipment cleaning to keep roadways clear of mud and dirt. 7. Maintain vehicle and equipment fueling to isolate any contamination of soils to a given area. 8. Maintain vehicle and equipment maintenance to isolate any contamination of soils to a given Area. 9. Ensure that all concrete finishing waste materials are contained and/or cleaned up. 10. Ensure that the proper control and use of equipment, materials, and waste products from temporary batch plant facilities will reduce the potential of pollutant discharges to storm drain systems and/or watercourses, reduce air emissions, and mitigate noise impacts. 11. Materials associated with construction activities must be delivered and stored using practices that prevent these materials from polluting receiving waters. 12. Materials associated with construction activities must be used in accordance with practices that prevent them from polluting receiving waters. 13. Protect all stockpiled materials with tarps or plastic to prevent the possibility of polluting receiving water from washout with storm water. 14. Incorporate a spill prevention and prompt spill response system to reduce
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the possibility of polluting receiving waters with spilled contaminants. 15. Provide dumpsters to recycle solid waste materials and separate dumpsters to allow for the appropriate recycling. 16. Hazardous waste should be collected, stored and disposed of using practices that prevent contact with storm water. 17. Contaminated soil on construction sites should be managed to prevent any pollutants from entering storm drain systems or receiving waters. 18. Concrete waste materials must be properly managed to minimize or eliminate contact with storm water. 19. The BMP includes procedures to prevent the introduction of wastes from construction site toilet facilities to storm drains or receiving waters. 20. The BMP includes procedures to prevent pollutants related to nonhazardous liquid wastes from entering storm drains or receiving waters. Liquid wastes include drilling slurries, drilling fluids, wastewater that is free from grease and oil, dredging and other non-storm water liquid discharges 21. Proper control and use of equipment, materials, and waste products from pile driving operations will reduce the discharge of potential pollutants to the storm drain system or receiving waters. 22. During paving and grinding operations, precautionary measures should be taken in all phases: a. Remove and recycle grindings and waste as work progresses. b. If not removed, do not allow grindings waste or any other residues into the storm drain system or receiving waters. c. Do not apply sealcoat, tack coat, slurry seal or fog seal if rain is predicted. d. Protect drainage inlets and manhole covers with filter fabrics when applying seal coat, tack coat, slurry seal and fog seal. e. Coat asphalt/concrete equipment with non-toxic non-foaming products. f. Clean equipment offsite if possible. g. Place equipment on plastic sheeting to capture drips or leaks when stored on site. 23. Street sweeping and vacuuming are practices to remove tracked sediment from public roads in order to prevent sediment and dirt from entering storm drains or receiving waters.
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EXHIBIT II: MARKET ANALYSIS - LEVEL B
Part I: Property Description and Productivity Analysis Proposed Development Product A. Physical Attributes
1075 Brady Ave NW
Imagery ©2016 Google, Map data ©2016 Google
50 ft
Capstone Site 3-Ring
Source: ©2015 Esri.
January 30, 2016 ©2015 Esri
Page 1 of 1
Site Analysis The Proposed site consists of three parcels in Midtown West Atlanta bordered by Howell Mill Road NW, Brady Avenue NW, and 11th Street NW. The area of the
proposed site according to Fulton County Tax Records is a total of 3.0295 acres (131,965 square feet). The site is basically triangular in shape with a rounded northwest border along Brady Avenue. The project site sits slightly higher than the surrounding parcels with it’s highest elevation at approximately 1000 feet and a gentle slope of approximately 10 feet to the lowest point at the corner of Brady Avenue NW and Howell Mill Road NW. The entire area appears to be located on a bedrock and quartz foundation just below the surface. This fact may determine the amount of excavation that is possible on the site. No designated flood zones exist in the immediate vicinity of the proposed development site. The site lies in FEMA Map Zone X. This is any area determined to be outside of the 0.2% annual chance floodplain. Flood Insurance Rate Map number 13121C0241F, panel 241 of 490. Current Fulton County Tax Information Parcel
Address
Owner
17 015000040396 1055 Brady Ave NW
UFFDA Holdings LLC
17 015000040313 1077 Brady Ave NW
Appraisals Area (Acres) Total
Improvements Land
Assessment
2015 Tax Paid Last Recorded Sale
1.65 $ 1,366,000
$ 287,900
$ 1,078,100
$ 546,400
$ 11,036
Glores Garage Inc
0.6965 $ 500,000
$ 44,900
$ 455,100
$ 200,000
$ 4,080
Jacobs, Joann F & 17 015000040289 1034 Howell Mill Rd NW Isaacson, Lisa Ann
0.683 $ 450,000
$ 104,000
$ 346,000
$ 180,000
$ 3,636
3.0295 $ 2,316,000
$ 436,800
$ 1,879,200
$ 926,400
$ 18,752
Totals
$ 2,500,000
Assessed Tax Value and Annual Taxes (Current Year)
The above table shows appraisal and tax-assessed values for the three parcels and the combined totals. The total tax assessment stands at $926,400 and $18,752 in property taxes were paid in 2015. Upon review of the three parcels, permitting shows that each parcel has the water and electrical utilities supplied to that parcel. Additional fees for increasing the supply to the property should be considered. There are five easement/encroachment issues to be addressed, three of which are relevant and require legal counsel. The first two noted encroachments reveal parts of a building and a rock wall from the parcel held by 1075 Brady LLC that extend onto tract one by 2.1 feet and 7.1 feet respectively. 1075 Brady LLC should be notified as to our intent upon legal consultation. The third encroachment is a billboard that extends onto tract three by 2 feet. The encroachment is from the historic bar that sits on the Northeast corner of Brady Avenue and Howell Mill Road. The fourth issue is a building on tract three that encroaches onto tract one by 0.7 feet and the last issue identifies pavement from tract two encroaching on tract one by 2.2 feet. Issues four and five are moot points considering the building on tract three will be removed and the asphalt on tract two will be removed and recycled. The three tracts of land being developed all have existing buildings on them. All of these buildings will have to be removed to proceed. Tract one has one 10,518
square foot concrete structure as well as two lumber storage sheds totaling 5,973 square feet. It also has 3,080 square feet of asphalt parking that can be recycled. Tract two has a 38,522 square foot metal building and 32,820 square feet of recyclable asphalt on it. Tract three has two concrete buildings totaling 10,052 square feet and redeemable asphalt of 7,900 square feet.
B. Legal Attributes Current zoning for the site is MRC-3 with max FAR of 7.2, comprised of residential FAR of 3.2 and non-residential of 4.0. 20% bonus area can be achieved for nonresidential component if retail usage spreads across 20% of the building frontage. The max area allowable on the site is 756,182 gsf including retail bonus, excluding affordable housing bonus and parking area. The maximum height is 225’ above lowest grade on the site with min. of 25’ along the street frontage. Title search reveals five easements, mentioned above. Current city policies encourage the construction of residential structures in mixused developments. However, due to oversupply on the market, restriction could be expected in the near future. Alternative residential product type is recommended to avoid direct competition.
C. Location Attributes The triangular shaped property is fronted on all three sides with roads. Howell Mill Road fronts the east side of the property and goes in a southeast – northwest direction. It is larger than the other two roads and would be considered a minor arterial thoroughfare. Brady Avenue fronts the north side of the property and starting at the northeast corner at Howell Mill runs in a southwest direction. It is less traveled than Howell Mill and would be considered a collector. Eleventh Street fronts the south side of the property, runs in a northeast – southwest direction and terminates at Howell Mill in the east and Brady in the west. Smaller in size this would be another collector. Access to the nearest interstate is a 5minute ride away across 10th or 14th street. Traffic flow at present is minimal due to the type of product on the existing site. Development on the site may create a possible congestion area where the two collector roads feed into Howell Mill. The incorporation of stoplights or roundabouts may become a necessity.
Presently, the area of the site is somewhat hostile to pedestrian traffic. Sidewalks are sporadic and in places nonexistent. Three schools, Centennial Place Elementary School, Inman Middle School, and Henry W. Grady High School service West Midtown public education. All schools are high quality and received good ratings. All three schools are within three miles of the Howell Mill site and can be reached in twelve minutes or less by car. There are twenty-two colleges and universities in the greater Atlanta area. Georgia Tech is the closest to the site being a 3-minute drive or a 15-minute walk. Hospitals and health care facilities are numerous. Within 3 miles one can find health care for every practical need. There is a Smart Care Urgent Care less than a mile from the site. It received a 5 star rating from its peers in the medical profession. Atlanta’s MARTA (Metropolitan Atlanta Rapid Transit Authority) moves 425,000 people throughout the city every day. The bus and rail systems connect people to every part of the city. Atlanta’s rail system has three rail stations all within a five to ten minute drive or a forty-minute walk. Bankhead Station is to the southwest of the site, while North Ave and Midtown are to the east. There is a bus route that starts at Cumberland transfer station in the north, follows Howell Mill in a southerly direction and terminates at the Midtown Station in the south. Midtown Atlanta is a magnet for young professionals. This part of Atlanta is home to numerous banks, insurance companies, law firms and credit agencies. Turner broadcasting, Coca-Cola, EarthLink, Equifax, Bank of America, BB&T, and many more make this there corporate headquarters.
D. Economic Attributes The Atlanta Metro Statistical Area ranks the highest in overall job growth compared with the top twelve MSA’s in the country according to the United States Bureau of Labor Statistics. As of December 2015, total nonfarm employment showed a 3.4% increase over the year compared to a 1.9% growth nationally and Atlanta’s unemployment rate stood at 4.9%. The largest job sector in the Atlanta Metro Statistical Area is the Trade, Transportation, and Utilities sector with a total of 599,200 employees as of December 2015 with a 2.9% 12-month growth. Professional Business Services is the next largest sector at 496,500 employees while demonstrating a higher 12-month growth rate of 5.1%. Other noted sectors in order of size were as follows: Government at 334,400 employees and 2% growth; Education and Health Services at 322,000 employees and 2.6% growth; Leisure and Hospitality at 273,000 employees and 3.4% growth; Financial Activities at 165,800 employees and 1.7% growth; Manufacturing at 159,900 employees and 4.2% growth; Construction at 109,900 employees and 7.4% growth; Other Services at 95,200 employees and -1.1% growth; and Information at 87,300 employees and -2.6% growth. It is obvious from the above data that Atlanta has a diverse Economic Base with two sector at or above a half-million employees and three others with over a
quarter-million all showing substantial growth over the year. It is believed that this diversity in employment sectors is the reason for Atlanta’s higher than national average growth and stability over the past several years. At the current growth rates of the top two sectors, Professional Business Services will surpass the Trade, Transportation, and Utilities sector in number of employees over the next ten years. It may be assumed that the above average overall employment growth has created more building and development demand in the area and therefore contributed to the 7.1% Construction sector growth. Location Quotients: Top Six Sectors, Atlanta LQi=(ei/e)/(Ei/E)
LQi
ei
e
Ei
E
Trade, Transportation, and Utilities
1.20
599.20
2644.50
27109
143147
Professional and Business Services
1.35
496.50
2644.50
19981
143147
Government
0.82
334.40
2644.50
22039
143147
Education and Health Services
0.78
322.00
2644.50
22369
143147
Leisure and Hospitality
0.96
273.00
2644.50
15338
143147
Financial Activities
1.10
165.80
2644.50
8192
143147
Totals
1.03
2190.90
15867.00
115028
858882
*Calculated using data from U.S. Bureau of Labor Statistics LQi= location quotient for sector in regional economy ei= employment in sector in regional economy e= total employment in regional economy Ei= employment in sector in national economy E= total employment in national economy
Top 7 Employers Atlanta 1 2 3 4 5 6 7
Full-Time Employees Delta Air Lines Inc 31237 Emory University/ Emory Healthcare 29937 Wal-Mart Stores Inc 20532 The Home Depot Inc 20000 AT&T Inc 17882 The Kroger Co 14753 Wellstar Health System 13500 *Metro Atlanta Chamber 12/2014
The above Location Quotient calculations of the largest six sectors in the Atlanta MSA indicates a surplus output in three of these sectors: Trade, Transportation, and Utilities; Professional and Business Services; and Financial Activities. The overall Location Quotient for all sectors also indicates a surplus of production and basic employment in the region. The average hourly wage in the Atlanta MSA as of May 2015 stands around 4% higher than national average according to the U’S Bureau of Labor Statistics. Delta Airlines remains as the largest employer in the area. The Metro Atlanta Chamber Report from December 2014 gives a count of 31,237 full-time employees at Delta. Delta operates its main hub, the largest in the world, at Hartsfield-Jackson Atlanta International Airport. This is considered the world’s busiest airport and has been a major economic driver since it was built in the 1950’s. The chart below lists the Top 7 Employers of the area. Atlanta is home for nearly 30 Fortune 500/1000 companies. Other major companies such as Coca-Cola and United Parcel Service are headquartered in Atlanta as well as 57 institutes of higher education including Georgia Tech and Georgia State University. The educational facilities of course not only provide an employment base but also inject a vast number of consumers in the form of students into the market. According to the Atlanta Regional Council for Higher Education, more than 250,000 students are enrolled each year in the region and the sector generates a $10.8 billion impact on the state or 3.2 percent of Georgia’s annual gross product. The wealth brought to the area by the student population represents a very significant driver to the product demand within the area not necessarily indicated by employment numbers.
Atlanta-Sandy Springs-Roswell, GA Economy Data Series Labor Force Data Civilian Labor Force (1) Employment (1) Unemployment (1) Unemployment Rate (2)
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
(Preliminary) Dec-15
2,840.20 2,667.60 172.6 6.1
2,810.80 2,652.20 158.7 5.6
2,809.50 2,655.60 153.9 5.5
2,823.30 2,671.90 151.3 5.4
2,827.70 2,687.80 140 4.9
2,835.70 2,695.40 140.3 4.9
Nonfarm Wage and Salary Employment Total Nonfarm (3) 12-month % change
2,587.40 3.5
2,595.70 2.8
2,595.60 3
2,627.60 3.5
2,647.90 3.5
2,644.50 3
Trade, Transportation, and Utilities (3) 12-month % change
573 3.4
572.1 3
571.5 3.1
582.1 3.2
596.1 3.3
599.2 2.9
Professional and Business Services (3) 12-month % change
491.9 5.6
490.6 4.3
490.4 4.6
496.8 5.3
496.7 5.2
496.5 5.1
Government (3) 12-month % change
315.3 1.9
324.3 1.1
331.1 2.1
334.2 2.5
336.5 2.7
334.4 2
Education and Health Services (3) 12-month % change
312.4 3.3
317.8 2.8
318.6 3
321.6 3
321.9 2.6
322 2.6
Leisure and Hospitality (3) 12-month % change
280.1 5.7
275.4 3.6
270.7 3.9
274.6 4.9
276.4 5.1
273 3.4
165 3.1
165.1 2.7
164.8 2.9
166.7 3.2
167.2 2.8
165.8 1.7
Manufacturing (3) 12-month % change
156.2 2.1
155.9 1.5
156.9 2.2
158.7 3.9
159.5 3.8
159.9 4.2
Construction (3) 12-month % change
107.8 5
110.6 6.8
109.5 5.4
109.2 3
109.9 5.1
109.9 7.4
Other Services (3) 12-month % change
95.6 -0.3
94.6 -1.4
93.2 -2
94.3 -0.6
94.9 -1.9
95.2 -1.1
Information (3) 12-month % change
88.8 -0.8
87.9 -1.5
87.6 -0.7
88 0.3
87.4 -0.2
87.3 -2.6
1.3 0
1.4 7.7
1.3 0
1.4 0
1.4 7.7
1.3 0
Financial Activities (3) 12-month % change
Mining and Logging (3) 12-month % change Consumer Price Index: Atlanta, GA CPI-U, All items (4) CPI-U, All items, 12-month % change (4) CPI-W, All items (5) CPI-W, All items, 12-month % change (5)
225.027 0.6 222.998 0.4
Footnotes (1) Number of persons, in thousands, not seasonally adjusted. (2) In percent, not seasonally adjusted. (3) Number of jobs, in thousands, not seasonally adjusted. See About the data. (4) All Urban Consumers, base: 1982-84=100, not seasonally adjusted. (5) Urban Wage Earners and Clerical Workers, base: 1982-84=100, not seasonally adjusted. (P) Preliminary Data extracted on: February 05, 2016 Source: U.S. Bureau of Labor Statistics
222.282 0.5 219.684 0.1
221.015 1.4 218.09 1
E. Sociological Attributes The Howell Mill Corridor/ West Midtown area was an industrial district of Atlanta. Recent developments have started to transform the area to a generation Y destination. Development of the area has brought or is bringing mixed use development. Multi storied apartments with commercial space on the 1st and 2nd floors are being built. Élan Westside and Walton Westside have both opened in the last year. Perennial Properties is close to finishing construction on 230 units and 9000 sq. ft. of commercial. The corridor has attracted numerous restaurants and continues to attract new unique places to eat. Marcel’s, The Optimist and Bacchanalia have made Midtown West their home. The opening of the Goat Farm Arts Center and Westside Arts District (WAD) has attracted the young creative artist of dance, theater and the arts. Numerous Atlanta nightclubs including Compound and Six Feet Under have made the corridor home. Of course The Northside Tavern, one of Atlanta’s most famous historic blues venues, sits adjacent to the proposed site and will remain. Being that the Howell Mill corridor was an industrial area, some of the social amenities such as schools, places of worship and hospitals / health care are not in the immediate vicinity. Within a fifteen-minute car ride, one can find these amenities. The three schools that are part of this district are all within a ten-minute drive. Centennial Place, Inman Middle School, and Henry W. Grady High School all receive high marks as institutions of education. Health care services are no more than a fifteen-minute drive from the site of Brady and Howell Mill. The facilities are numerous and the services provided varied. Hospitals, children’s centers, women’s care, and emergency centers are all in the nearby vicinity, with the closest (Urgent Care) being less than a mile away. Places of Worship are numerous and diversified. There are eighty places of worship within a five-mile radius of the planned site including Baptist, Christian, Presbyterian, Catholic, and Jewish. The lack of outdoor and green space is a concern. Atlanta has one of the worst ratios of green space per population and square miles. However the Atlanta Beltline Master Plan is an attempt to change that. In subarea 8, where the site is located, the master plan has proposed a variety of green spaces. It calls for open spaces at the lower west side, Ethel Road, and the Tech Parkway Trail. All of these areas are three to four blocks from the site. Atlanta Beltline has opened up conversations with the City of Atlanta’s Department of Watershed Management to reopen some of the green spaces that surround Atlanta’s Waterworks I &II and still maintain the safety and security of the areas to public. The plan calls for the opening of four large green space areas and a pedestrian pathway that navigates around 2/3 of the waterworks. Midtown West and Howell Mill corridor couldn’t be positioned any better for further development than it is. The city couldn’t be more receptive and willing to work with developers. Atlanta’s Master Plan is looking to create a friendlier
environment for pedestrian, bicycle and vehicular traffic. Creating bicycle lanes, building bigger sidewalks and better walkable space along with more turning lanes are just a few of the many points of their elaborate plan. They want to create more green space, make the mass transit system better with more stops and more routes. Atlanta’s government wants to see these rundown areas be transformed into something special and is willing to work with the developers to achieve it. The development that has occurred over the past few years has started the machine of progress. The new shops, restaurants and artistic entertainment have pulled a wide array of people in. Generation Y are coming and not leaving. The young upcoming professionals are staying because of the amenities and proximity to Midtown and all of the jobs. The older generation is coming to enjoy the top-notch restaurants, the shops and the artistic entertainment. The area has a wide reaching appeal. It may not have all the amenities in the immediate proximity such as schools, churches and medical facilities but they are not more than a ten-minute ride away.
Market Delineation - Setting the Boundaries Boundaries used for initial delineation of the market were set by 1-, 3-, and 5-mile ring analysis using Site To Do Business. Population, demographics, and business data were gathered from this analysis. Continuing deeper into these evaluations, limitations were discovered in the census data from Site To Do Business in the categories of residential supply, vacancies, and pipeline of expected new product coming to market. Atlanta is a rapidly changing market in respect to housing data. As in most major U.S. cities, there is an evident move inward to the urban areas of the city. This includes both established areas and newer submarkets such as Midtown West. This combined with the single-family home crisis of 2007-2008 and its remaining effect appears to distort the vacancy numbers from census based aggregates such as Site To Do Business. Therefore, the vacancy and supply data from STDB does not accurately reflect the vacancies and supply in the urban multi-family markets. Recognizing these limitations, market delineation was further drilled down into a more defined area primarily including the Midtown and Midtown West submarkets. Data gathered from Reis, CBRE, Atlanta Business Chronicle, various online leasing portals, and area brokers was combined with the acceptable data from Site To Do Business to create a detailed Supply and Demand Analysis. Considering the trending influx of population into the urban areas and the apparent growth of the Midtown and Midtown West submarkets, it is deemed appropriate to use population data from the broader 1-, 3-, and 5-mile boundaries for use in the potential demand analysis.
Part II: Market/Marketability Analysis (Demand and Supply) Demand Forecast A. Primary User Attributes and Source of Demand The expected user of the multi-family portion of the proposed development would primarily be recent the college graduate and/or young professional. The age demographic used for the demand calculations is the year 2020 projected 20-34 year old segment of the area population. This same demographic would hold true for majority source of demand for all market segments of the proposed development including especially the storage and parking as well as the retail, co-work office space, and to a certain extent the hotel. The demand for the storage component of the development is expected to primarily come from the residents of the micro-units. The general public will easily absorb any surplus. The same applies to the parking demand with additional demand created for parking by, but not limited to, retail customers, commuting office workers, and hotel guests. Co-work office space is an interesting and rapidly growing trend. This holds especially true in the tech and startup industries dominated by the target demographic and age. It should be also noted that larger corporate clients are realizing productivity benefits associated with Co-work space and are now starting to embrace this type of arrangement. (See Bloomberg Business article from February 19, 2016 in Addenda) Rent rates prove significantly higher on average per square foot for co-work office space compared to traditional office space. At the same time, this type of co-work arrangement allows for greater flexibility for both the client and the owners of the space. This business snapshot indicates a strong volume of business currently existing in the area. With the addition of another 650 residents to this development alone, the demand for retail squarely points back to same demographic noted above for micro-units. Hotel demand will be generated from visitors of micro-unit residents, Georgia Tech visitors, and sporting event patrons of the Georgia Dome and soon to be completed Falcons stadium as well as other sources as Midtown West continues to develop.
B. Major Demand Drivers and Supporting Data 2020 Estimated Housing (ESRI Data) 1-mile 3-mile 5-mile Population 17,501 148,569 326,190 Total Households 5,766 67,592 151,857 Persons / Household 1.70 1.80 1.95 Owner Occupied 991 21,858 57,553 Renter Occupied 4,775 45,734 94,304 Median HH Income $ 36,164 $ 52,831 $ 53,922 Target Rent (30% Rule) $ 904 $ 1,321 $ 1,348 Targeted Age Demographics (2020) 20-24 year olds 5949 22639 25-34 year olds 4453 34766 Totals 10402 57405 Target Age Percentage of Total Population
34755 69735 104490 32.03%
Considering the above targeted demographic population projections, nearly one-third of the total area population will be potential users of the multi-family portion of the project. Below are several current comparable Co-work spaces. The almost double average rental rates for these types of environments indicate a strong demand for Co-work space. Cowork Office Space Midtown Desk Office1 $ 370 $ 725 $ 220 $ 350 $ 400 $ 600 $ 275 $ 450 $ 260 $ 250 $ 700 Average Cost $ 296 $ 565 Estimated SF 100 100 Average Rates(SF/year) $ 35.50 $ 67.80 Combined Average Rates (SF/Year) $ 50.13 Assumption of 100sf per desk space including amentiy space. Industrious Office Berthold Building Atlanta Tech Village Strongbox west Experience Rethink 5-Points Cowork
Office2 Office3 Office4 Office5 $ 1,025 $ 1,450 $ 1,700 $ 2,000 $ 450 $ 1,000 $ 850 $ 1,100 $ 1,420 $ 1,775
$ 1,200 $ 1,700 $ 881 $ 1,313 $ 1,560 $ 1,888 200 300 400 500 $ 52.88 $ 52.50 $ 46.80 $ 45.30 (Data compiled from current online offerings.)
Below is a snapshot of the current business activity within the 5-mile radius of the site.
Businesses 2015 Total Sales ($000) 2015 Daily Business Population Total Number of Businesses
$ 61,762,321 373,681 24,209
Supply Forecast The Atlanta Midtown and Midtown West submarket is very active and growing in terms of the apartment sector. The 27,201 units online in 151 buildings throughout this submarket maintain a 7.8% vacancy rate and an average rent of $1,194 per unit. Atlanta Apartment 3Q2015 Submarket (Data: Reis Inc 2016)
Midtown Central I-75 West Totals
Inventory Buildings
Inventory Units 96 17,756 55 9,445 151 27,201
Free Rent Average Unit Rent Vacancy (months) Expenses Size Estimate $ 1,342.00 8.3% 1.11 38.1% $ 1,046.00 7.3% 0.99 38.4% $ 1,194.00 7.8% 1.05 38.3% 911
With the micro-unit being a newer trend in major urban areas and no exact product type to directly compare in the Atlanta area, rate analysis was approached from more than one angle. First, nearby studio and one-bedroom apartment data was gathered and found to average $2.03 per square foot. Next, larger 2-bedroom units were analyzed arriving at a $1.82 average rate per square foot. Midtown Current Market Apartment Offerings (Studio/1-bed) SF Elan Westside 691 14th St NW
1016 Lofts
1016 Howell Mill
The Brady Tenside
930 Howell Mill 1000 Northside Dr
The Exchange WestMar Lofts 935M
470 16th St NW 800 W Marietta St 935 Marietta St NW
M Street
950 Marietta NW Averages
611 734 672 735 803 780 720 972 972 765 771 843 750 425 520 600 585 600 561 706
Low$ High$ Average$/Unit $/SF $ 1,228 $ 1,263 $ 1,246 $ 2.04 $ 1,258 $ 1,358 $ 1,308 $ 1.78 $ 1,288 $ 1,839 $ 1,564 $ 2.33 $ 1,318 $ 1,832 $ 1,575 $ 2.14 $ 1,319 $ 1,851 $ 1,585 $ 1.97 $ 1,573 $ 2,129 $ 1,851 $ 2.37 $ 1,348 $ 1,724 $ 1,536 $ 2.13 $ 1,487 $ 1,755 $ 1,621 $ 1.67 $ 1,498 $ 1,908 $ 1,703 $ 1.75 $ 1,450 $ 1,525 $ 1,488 $ 1.94 $ 1,230 $ 2,025 $ 1,628 $ 2.11 $ 1,255 $ 1,720 $ 1,488 $ 1.76 $ 1,354 $ 1.81 $ 720 $ 765 $ 743 $ 1.75 $ 915 $ 1,170 $ 1,043 $ 2.00 $ 1,090 $ 1,440 $ 1,265 $ 2.11 $ 1,115 $ 1,505 $ 1,310 $ 2.24 $ 1,200 $ 1,420 $ 1,310 $ 2.18 $ 1,189 $ 1,586 $ 1,388 $ 2.47 $ 2.03
Midtown Current Market Apartment Offerings (Larger/2-bed) SF Elan Westside 691 14th St NW
1016 Lofts
1016 Howell Mill
The Brady Tenside
930 Howell Mill 1000 Northside Dr
The Exchange
470 16th St NW
935M
935 Marietta St NW
M Street
950 Marietta NW Averages
1093 1133 1172 1128 1225 972 1218 1053 1068 1121 1138 989 1051 1090 1205 980 1205 1300 1165 955 1166 1116
Low$ High$ Average$/Unit $/SF $ 1,780 $ 1,815 $ 1,798 $ 1.64 $ 1,900 $ 1,960 $ 1,930 $ 1.70 $ 1,948 $ 2,937 $ 2,443 $ 2.08 $ 1,973 $ 2,996 $ 2,485 $ 2.20 $ 2,030 $ 2,105 $ 2,068 $ 1.69 $ 1,533 $ 1,690 $ 1,612 $ 1.66 $ 1,810 $ 2,074 $ 1,942 $ 1.59 $ 1,930 $ 1,935 $ 1,933 $ 1.84 $ 1,700 $ 2,945 $ 2,323 $ 2.17 $ 1,775 $ 3,090 $ 2,433 $ 2.17 $ 1,920 $ 3,115 $ 2,518 $ 2.21 $ 1,655 $ 1.67 $ 1,892 $ 1,902 $ 1,897 $ 1.80 $ 1,938 $ 1,968 $ 1,953 $ 1.79 $ 2,286 $ 1.90 $ 1,500 $ 1,820 $ 1,660 $ 1.69 $ 1,610 $ 1,970 $ 1,790 $ 1.49 $ 1,730 $ 2,220 $ 1,975 $ 1.52 $ 1,650 $ 2,010 $ 1,830 $ 1.57 $ 1,642 $ 2,219 $ 1,931 $ 2.02 $ 1,764 $ 2,424 $ 2,094 $ 1.80 $ 1.82
By using the ratio between the differences in average rates versus differences in average square footage, a baseline was established to project the average potential rate that a micro-unit may demand.
Micro-unit Rate Calculations Rate Increase From 2- to 1-Bed Units 36.69% Decrease in Unit Size 11.54% Increase in Unit Rate Therefore Average Micro-unit Size 400SF 43.36% Decrease in Unit Size 13.64% Increase in Unit Rate Therefore Average Micro-unit Rate $ 2.31 SF/Month From this point, in order to establish a better understanding of the micro-unit market nationwide, comparable product was examined in New York, Washington DC, and Seattle. Seattle by far has the largest number of micro-units of different variety with 782 units currently online and another 1598 planned. The Seattle comps were compiled to achieve an average rate and the Consumer Price Index was applied to arrive at a higher than above projected average rate for Atlanta of $2.70 per square foot. Taking this concept a step farther, the inclusion of utilities into the rental price was evaluated again with the Consumer Price Index applied. Comparing these rates with Seattle and Washing DC generated comps at over $1.00 more per
square foot of $4.17 and $3.94 respectively while the utilities only increased cost by $0.25 per square foot. Micro Unit Comps- Other Cities New York Carmel Place Washington DC The Harper Seattle (782 Current 1598 Pipeline) Alder Flats Marq 211 Three20 The Cairns Uwajimaya Village Square One Dexter Lake Union Fountain Court Viva Cirrus Odin Olympus Junction 47
Price Index # of Units 100 55
Price/Month Rate/SF 300 $ 2,750
$ 9.17 (Not used for comps)
400 $ 2,000
$ 5.00 Utilities, WiFi, Amenities
200 467 486 566 480 408 501 481 452 652 505 414 434
$ 5.00 Utilities, WiFi, Amenities $ 3.24 Amenities $ 3.10 Amenities $ 2.75 $ 2.71 $ 3.70 $ 3.53 $ 3.11 $ 3.25 $ 3.29 $ 3.10 $ 3.57 $ 3.46
96.02 90.71
134 36 176 112 201 193 105 355 301 328 206 Seattle Comp Averages
Atlanta
SF
$ 1,000 $ 1,515 $ 1,508 $ 1,557 $ 1,302 $ 1,509 $ 1,770 $ 1,494 $ 1,470 $ 2,145 $ 1,567 $ 1,478 $ 1,502
465 $ 1,524
75.7 Consumer Price Index Applied To Seattle Comps CPI Applied To Seattle Comps w/Utilities CPI Applied To DC Comps w/Utilities
$ 3.24
$ 2.70 $ 4.17 $ 3.94
Utility Calculations Average Home Size US 2164 Avg Power Consumption GA/home 1152 Avg Power Consumption Per SF 0.532347505 Avg Cost Per kWh $ 0.12 Total Square Footage 260,000 Total Estimated Power Costs$ 16,124.81
SF kWh kWh/SF/Month $/kWh SF $/Month
Average Water Usage/Person/Month 3000 100 Cubic Feet Conversion (CCF) 4.01 Atlanta Water Rate $ 5.34 Atlanta Sewer Rate $ 13.64 Estimated Water/Sewer Cost$ 76.02
gallons CCF $/CCF $/CCF $/Unit/Month
Total Number of Units 650 Total Estimated Water/Sewer Cost $ 49,413.89 $/Month Total Estimated Utility Costs$ 65,538.69 $/Month Total Estimated Utility Costs$ 0.25 $/SF
Interaction of Supply/Demand and Equilibrium Analysis Housing Analysis Residential Demand Estimates 2015 Residential Population 2020 Residential Estimate Population Growth 2015-2020 Estimated Change in Population Percentage of Rental Dwellers Net Removal of Units Actual Vacancies in Rental Units Frictional Vacancies @ Units Under Construction Number of Persons Per Household
308,941 326,190 5.58% 17,249 10,712 0 2,122 536 1,627 1.95
62.10%
5%
Total New Housing Units in Demand 2015-2020 New Housing Unit Demand For Targeted Age 2015-2020
4,561 1,461
Demand vs Supply 2015-2020 Units Total Potential Demand Total Available Supply Total Delta
4,561 2,249 2,313
Potential Demand Target Demographic Supply Specific to Target Demographic Delta for Demographic
1,461 720 741
Delta Considering 1-person Household Micro-units
1445
The above existing housing analysis shows a demand over the next five years for 741 traditional units. This is based on the average household size of 1.95 persons per unit. With the introduction of the micro-units that are designed for one-person residency into the market, the demand delta is projected at 1445 units. This is well below the proposed 650 micro-units of the project. Office Analysis Atlanta Office 3Q2015 Submarket (Data: Colliers International 2015)
Midtown Class A Midtown Class B Midtown Class C Totals
Inventory Buildings 40 95 34 169
Inventory SF 16,154,521 5,543,911 815,754 22,514,186
Rate Vacancy $ 29.52 12.8% $ 22.98 13.5% $ 18.58 3.1% $ 23.69 9.8%
CBRE Atlanta Office Marketview 4Q2015 Total Inventory Vacancy Rate Midtown 14,766,641 Midtown West 478,665 Totals 15,245,306
YTD Net Under Available Inventory Absorbtion Constructio 15.8% 2,333,129 546,042 0 5.8% 27,763 14,511 0 10.8% 2,360,892 560,553 0
Gross Lease Rate SF/Yr $ 27.20 $ 22.50 $ 24.85
Considering the relatively low vacancy rates, strong absorption, and lack of product in the pipeline, the office demand within Midtown and Midtown West is easily justified. Combine this with above average rental rates and positive trends for cowork office space further supports office development as a segment of this project. Retail Analysis Existing Retail Market Potentials 1 Mile Radius
Retail Demand Food & Beverage Stores $ 28,529,558 Grocery Stores $ 25,026,534 Specialty Food Stores $ 2,008,756 Health & Personal Care Stores $ 7,773,941 Other General Merchandise Stores $ 7,225,814
Retail Supply $ 27,745,329 $ 16,529,563 $ 1,812,163 $ 1,858,723 $ 1,832,045
Gap Leakage/Surplus Factor Number of Businesses $ 784,229 1.4 21 $ 8,496,971 20.4 14 $ 196,593 5.1 2 $ 5,915,218 61.4 3 $ 5,393,769 59.5 3
Health & Personal Care Stores $ 122,340,669 General Merchandise Stores $ 446,370,983 Other General Merchandise Stores $ 110,115,299
$ 114,837,770 $ 389,755,134 $ 13,309,838
$ 7,502,899 $ 56,615,849 $ 96,805,461
3.2 6.8 78.4
77 46 21
Health & Personal Care Stores $ 292,838,992 Sporting Goods, Hobby, Book & Music Stores $ 144,083,693 Sporting Goods/Hobby/Musical Instr Stores $ 120,540,533 General Merchandise Stores $ 1,035,871,933 Department Stores Excluding Leased Depts. $ 780,080,766 Other General Merchandise Stores $ 255,791,168
$ 261,132,471 $ 129,177,802 $ 79,699,245 $ 587,944,950 $ 548,288,032 $ 39,656,918
$ 31,706,521 $ 14,905,891 $ 40,841,288 $ 447,926,983 $ 231,792,734 $ 216,134,250
5.7 5.5 20.4 27.6 17.4 73.2
168 155 97 95 42 54
3 Mile Radius
5 Mile Radius
Observing only the 1-mile radius, the above data supports the development of a Grocery store with a sales gap of $8.5 million and a leakage factor of 20.4, and the development of a Health and Personal Care Store as well as a General Merchandise Store with leakage factors of 61.4 and 59.5 respectively. The demand factors for a General Merchandise Store continue to increase with the 3- and 5-mile radii.
Storage Analysis Storage Midtown West- 50sf Units Average Monthly Rate $/sf/year Uncle Bob's SS $ 138.50 $ 33.24 Public Storage 1 $ 82.50 $ 19.80 Public Storage 2 $ 115.00 $ 27.60 Public Storage 3 $ 98.50 $ 23.64 Extra Space $ 91.00 $ 21.84 Average $ 25.22
Distance(miles) from Site 0.7 0.9 0.9 0.9 1.2
The closest storage facilities average a 1-mile distance from the proposed development. More importantly, the micro-unit product itself with its reduced living space will create a demand for additional storage capacities for the tenants.
Hotel Analysis Hotels, Midtown West Rooms Courtyard Midtown/GT Hampton Inn GT/DT Hilton Garden Inn MT Total/Average
154 106 136 396
Rates(night) Distance(miles) $ 134.00 1.4 $ 139.00 1.6 $ 144.00 1.9 $ 139.00
There are no hotels in the immediate area of the development site. The closest options being one and half to two miles from the site. With the addition of the new Falcons Stadium nearby along with demand again generated by the microunit community from their potential guests, a 100-room hotel will be easily absorbed with a strong occupancy rate. Parking Analysis The parking demand needs little explanation. This demand will obviously come from the apartments, office, retail, and hotel components of the development. Full occupancy and utilization of the above components will more than generate the demand to cover the 757 parking spaces required by zoning regulations.
Part III: Feasibility Analysis HURDLE RENT/FEASIBILITY (MULTI-FAMILY) HURDLE RENT/FEASIBILITY (COWORK OFFICE) Total Development Cost $69,333,333 Total Development Cost $7,583,333 Cap Rate (direct) 5.47% Cap Rate (direct) 6.80% Required NOI $3,792,533 Required NOI $515,667 Operating Expense Ratio 38% Operating Expense Ratio 50% Operating Expenses $2,349,221 Operating Expenses $515,667 Effective Gross Revenue $6,141,754 Effective Gross Revenue $1,031,333 Expected Vacancy Rate (frictional) 7.8% Expected Vacancy Rate (frictional) 19.1% Vacancy Allowance $6,661,339 Vacancy Allowance $1,274,825 Load Factor 25.0% Load Factor 10.0% Potential Gross Revenue $4,996,004 Potential Gross Revenue $1,147,342 Building Area (SF) 260,000 Building Area (SF) 39,000 HURDLE RENT (Multi-family) $1.60 HURDLE RENT (Office) $29.42 Market Rent ($/sf/month) $2.31 Market Rent ($/sf/year) $50.13 FEASIBLE??? YES FEASIBLE??? YES
HURDLE RENT/FEASIBILITY (STORAGE) Total Development Cost $4,333,333 Cap Rate (direct) 6.25% Required NOI $270,833 Operating Expense Ratio 30% Operating Expenses $116,071 Effective Gross Revenue $386,905 Expected Vacancy Rate (frictional) 10.4% Vacancy Allowance $431,813 Load Factor 25.0% Potential Gross Revenue $323,860 Building Area (SF) 32,500 HURDLE RENT (Storage) $9.96 Market Rent ($/sf/year) $25.22 FEASIBLE??? YES
HURDLE RENT/FEASIBILITY (HOTEL) Total Development Cost $10,666,667 Cap Rate (direct) 8.07% Required NOI $860,800 Operating Expense Ratio 50% Operating Expenses $860,800 Effective Gross Revenue $1,721,600 Expected Vacancy Rate (frictional) 29.0% Vacancy Allowance $2,424,789 Load Factor 25.0% Potential Gross Revenue $1,818,592 Building Area (SF) 40,000 HURDLE RENT (Hotel) $45.46 Market Rent ($/sf/year) $118.63 FEASIBLE??? YES
HURDLE RENT/FEASIBILITY (EFFECTIVE) Total Development Cost $140,473,122 Cap Rate (direct) 6.64% Required NOI TDC*Cap Rate $9,329,841 Operating Expense Ratio 33.3% Operating Expenses (NOI/1-OER)-NOI $4,654,145 Effective Gross Revenue NOI/(1-OER) $13,983,986 Expected Vacancy Rate (frictional) 9.2% Vacancy Allowance EGR/(1-Vac Rate) $15,407,936 Load Factor 22.6% Potential Gross Revenue $11,931,364 Building Area (SF) 619,750 HURDLE RENT (Total) PGR/Area $19.25 Effective Market Rent ($/sf/year) $32.77 FEASIBLE??? YES
RESIDUAL LAND ANALYSIS Net Operating Income $10,898,008 Cap Rate (direct) 6.64% Total Market Value $164,083,963 Total Development Costs w/o Land $125,990,577 Development Margin $2,519,812 RESIDUAL LAND VALUE $35,573,574 Land Cost $12,090,784 Land Residual (Deficit) Over Cost Residual
HURDLE RENT/FEASIBILITY (RETAIL) Total Development Cost $15,166,667 Cap Rate (direct) 7.24% Required NOI $1,098,067 Operating Expense Ratio 5% Operating Expenses $57,793 Effective Gross Revenue $1,155,860 Expected Vacancy Rate (frictional) 9.5% Vacancy Allowance $1,277,193 Load Factor 10.0% Potential Gross Revenue $1,149,474 Building Area (SF) 78,000 HURDLE RENT (Retail) $14.74 Market Rent ($/sf/year) $26.29 FEASIBLE??? YES
HURDLE RENT/FEASIBILITY (PARKING) Total Development Cost $6,810,000 Cap Rate (direct) 7.86% Required NOI $535,266 Operating Expense Ratio 30% Operating Expenses $229,400 Effective Gross Revenue $764,666 Expected Vacancy Rate (frictional) 30.0% Vacancy Allowance $1,092,380 Load Factor 25.0% Potential Gross Revenue $819,285 Building Area (SF) 170,250 HURDLE RENT (Parking) $4.81 Market Rent ($/sf/year) $20.79 FEASIBLE??? YES
Feasibility has been calculated and confirmed for each individual use based on current market conditions including direct capitalization rates, market rents, and average vacancy rates. These individual results are then combined to arrive at an effective direct cap rate of 6.64%, effective vacancy rate of 9.2%, and an overall hurdle rent of $19.25 per square foot/year. The Residual Land Value is then computed at 35,573,574 based on the 36-month Projected Stabilized Net Operating Income and using the effective direct cap rate.
La Petit Maison Permanent Loan Schedule
Loan Amount Term Rate
$ 84,283,873 25 6.50%
Debt Service Coverage Ratio
2017 2018 2019 2020 Payment $6,909,717 $6,909,717 Amortization $ 1,431,265 $ 1,524,297 Interest $ 5,478,452 $ 5,478,452 $ 5,478,452 $ 5,385,420 Year Balance $ 82,852,608 $ 81,328,311 Reserve $2,076,068 1.25 1.24
2021 2022 2023 2024 2025 2026 2027 2028 $6,909,717 $6,909,717 $6,909,717 $6,909,717 $6,909,717 $6,909,717 $6,909,717 $6,909,717 $ 1,623,377 $ 1,728,896 $ 1,841,274 $ 1,960,957 $ 2,088,419 $ 2,224,167 $ 2,368,737 $ 2,522,705 $ 5,286,340 $ 5,180,821 $ 5,068,442 $ 4,948,760 $ 4,821,297 $ 4,685,550 $ 4,540,979 $ 4,387,011 $ 79,704,934 $ 77,976,038 $ 76,134,764 $ 74,173,807 $ 72,085,388 $ 69,861,221 $ 67,492,484 $ 64,969,778 1.55
1.83
La Petit Maison Sources and Uses Total SF Construction/Perm Loan Equity
Sources Construction/Perm Loan Equity Sponsor Investor
1.87
1.91
800,333 60% 40%
Amount Per SF $ 84,283,873 $ 56,189,249 10% $ 5,618,925 90% $ 50,570,324
Total Sources
$ 140,473,122
Uses Land Acquisition Construction Hard Cost Construction Soft Cost Interest Reserve
Amount Per SF $ 12,090,784 $ 119,588,000 $ 8,794,337
Total Uses
$ 140,473,122
1.95
1.98
2.02
2.06
Proposed project financing is one continuous loan with a two-year interest-only portion to cover the construction phase and converting to a permanent structure beginning in 2019. The proposed Loan-to-Value is 60% with 40% equity coming from sponsors and investors. The loan will be amortized for 25 years at 6.5% interest.
Part IV: Conclusions & Recommendations The above data, analysis, and commentaries support the conclusion that the proposed program is accurate and appropriate. RESIDENTIAL Net Units (SF) # Units Gross (SF) 350 160 56,000 74,667 400 330 132,000 176,000 450 160 72,000 96,000 Sub-Total 650 260,000 346,667 STORAGE # Units Net Gross (SF) 5x10 50 650 32,500 43,333 PARKING Parking Area (SF) # Spaces Gross (SF) Residential 300 468 140,400 Hotel 300 72 21,600 Commercial 300 217 65,000 Total 757 227,000
COMMERCIAL Per floor Area (NRSF) Area (GSF) 43,333 117,000 130,000 HOTEL 350 30 10,500 14,000 450 30 13,500 18,000 Sub-total 100 40,000 53,333
TOTAL Area (GSF) Total Built Area Including Parking BICYCLES Residential 1 per 5 DUs Commmercial 1 per 20 cars Total Bicycles Area per bike 20sf
573,333 800,333 130 38 168 3,357
It is the opinion based upon this Market Analysis that the above program is within the Highest and Best Uses of this development site.