Bay Area Economics bae Bay Area Economics Plowing New Ground: Economics of Mixed-Use Projects in Greenfield Settings SACOG Monthly Planners Seminar Series April 27, 2005 Graphic courtesy Fletcher, Farr, Ayotte
Jan 11, 2016
Bay Area Economics
baeBay Area Economics
Plowing New Ground:
Economics of Mixed-Use
Projects in Greenfield
Settings
SACOG Monthly Planners
Seminar SeriesApril 27, 2005
Graphic courtesy Fletcher, Farr, Ayotte
Bay Area Economics
baeBay Area Economics Economic Issues
Mixed Use Is Contrary to Business As Usual
Need more examples of successful projects
The market still rewards single-use projects
Mixed Use Can Be More Complicated
Can take longer to develop
May be incompatible with existing zoning
Investors and lenders may consider mixed use more risky
Bay Area Economics
baeBay Area Economics Economic Realities
Vertical mixed use buildings can cost more than single-use buildings.
Horizontal mixed use projects represent a “first step” in a progression towards true mixed use
Mixed use requires a developer to have skill in developing multiple land uses.
Current Sacramento economics are such that structured parking is typically not feasible, limiting density.
Current economics can favor single-use, but mixed use projects must compete with single use projects for land.
Bay Area Economics
baeBay Area Economics Encouraging Signs
The market is starting to respond
“New urbanism has definitely been mainstreamed.” – Urban Land Institute, Emerging Trends in Real Estate, 2005
Elsewhere in the U.S., advocates are starting to find that mixed-use projects command lower cap rates than single-use projects.
Local developers see mixed-use as desirable
Elliott Homes: Villages of Zinfandel
Opus West: Promenade at Natomas
Summit Commercial: Parks at Southport
Bay Area Economics
baeBay Area EconomicsThe Parks at Southport
West Sacramento
Bay Area Economics
baeBay Area Economics The Parks at SouthportWest Sacramento
graphic courtesy of Fletcher, Farr, Ayotte
Bay Area Economics
baeBay Area EconomicsThe Parks at Southport
West Sacramento
graphic courtesy of Fletcher, Farr, Ayotte
Bay Area Economics
baeBay Area Economics Promenade at Natomas
graphics courtesy of Opus West
Bay Area Economics
baeBay Area Economics What Brings the Market to Mixed-Use?
Competitive rates of return
Realization that mixed use adds value Complementary uses mean higher rents
Supportive planning policies (i.e., ease of entitlement)
“Encouragement” from local government
Consumer Demand Demographic shifts (e.g., aging of population resulting in
empty-nester households) 2004 P.P.I.C. survey of Californians found 48 percent would
prefer to live in a mixed-use neighborhood instead of a residential only neighborhood, if it meant they could walk to stores, schools and services
2004 study by Metro Atlanta Chamber of Commerce found that 1/3 of suburban Atlantans wanted to move to more dense, mixed-use neighborhoods)
Bay Area Economics
baeBay Area Economics What Do Users Want?
What Do Residents Want? Sense of community Convenience to everyday activities and services Security and privacy Willing to make trade-offs on home for community
amenities
What Do Retailers Want? Visibility and access Environment that reinforces their “brand” Synergistic co-tenants
What Do Office Tenants Want? Accessibility to employees Convenient support services Location that fits their image
Bay Area Economics
baeBay Area Economics Key Project Ingredients
Realistic mix of uses Must tailor each component to market support
Phasing and Flexibility Phasing can assist with financing and also allows
project to be built according to market demand
Understand how project fits with surrounding trade area Target unmet niches Complement; don’t compete with other development
Utilize existing community assets Existing homes, parks, schools, shopping,
employment centers build synergy and add value
Bay Area Economics
baeBay Area Economics
Contact:
Matt Kowta, M.C.P.
Principal
Bay Area Economics
Sacramento Region Office
803 Second Street, Suite A
Davis, CA 95616
Phone: 530-750-2195 phone
Fax: 530-750-2194 fax
E-mail: [email protected]