Sustainable Urbanism REMEDY MEETS REALITY: STRIP ......STRIPPING DOWN THE STRIP MALL •Next planning stage (10-20 years) will be retrofitting existing, not greenfield development

REMEDY MEETS REALITY:

STRIP MALLS TRANSFORMED

American Planning Association National Conference

April 14, 2013

Sustainable Urbanism

INTRODUCTIONS

JEFFREY FARNER

Deputy Director

Planning and Zoning

Alexandria, VA

SARAH WOODWORTH

Managing Member

W-ZHA, LLC.

Annapolis, MD

ED WOODBURY

President

McCaffrey Interests, Inc.

Chicago, IL

SESSION OUTLINE

• ALEXANDRIA

• HISTORICAL CONTEXT

• REALITY – OUTLOOK

• REMEDY – TOOLKIT

• FINANCIAL VIABILITY

• CASE STUDY – NORTH POTOMAC YARD

CONTEXT REALITY REMEDY CASE STUDY

ALEXANDRIA

CONTEXT

REALITY REMEDY CASE STUDY CONTEXT

CITY AND REGION – 2010 to 2030

• Region will add 1 million new jobs.

• Region will need 1,800,000 workers.

• 700,000 new housing units needed by 2030.


POPULATION SHIFT

1946 – 1964 ±77,000,000

1983 – 2000

± 80,000,000

1965 – 1982

± 50,000,000

77% of Millennials

plan to live in an

URBAN AREA

Households 50% with children:

1950 Households

33% with children:

2000


BABY BOOMERS GEN X GEN Y

MILLENNIALS

CITY AND REGION – TRANSPORTATION

LOCATION MATTERS

• Car Ownership $10,000 to $15,000 per year

• Suburban: 1.0 to 1.5

• Urban with Transit: 0.75 to 0.85

• Transportation: Added Value 10-20%


LONG-TERM STRATEGIC PLANNING

ARTERIALS

SHOPPING CENTERS

INTERSTATES


HISTORICAL

CONTEXT


HISTORICAL CONTEXT

• Beginning of 20th century – 1-2 story buildings, main street retail

• Examples still exist today

CONTEXT CONTEXT REALITY REMEDY CASE STUDY

HISTORICAL CONTEXT

• Progression of retail condition

• Strip retail as invasive species – Financial issues

– Greenfield development

– Suburban boom

– Lack of foresight/planning


http://www.cmt-landdevelopment.com/

OUTLOOK

REALITY


STRIPPING DOWN THE STRIP MALL

• Next planning stage (10-20 years) will be retrofitting existing, not greenfield development

• How do we shift the planning process towards a more sustainable model?


TOOLKIT

REMEDY


REDEVELOPMENT TOOLKIT

• Blocks

• Streets

• Green Infrastructure

• Parking

• Land Use

• Transit

• Phasing


BLOCKS


STREETS

©Google Earth 2013

©Google Earth 2013 ©Google Earth 2013

• Right-of-way widths

• Sidewalk width

• Proportions

• Parking

• Street trees


GREEN INFRASTRUCTURE

TRADITIONAL STREET

Street with GREEN

INFRASTRUCTURE


PARKING

STRUCTURED PARKING BELOW GRADE PARKING


TRANSIT


BLOCKS – PHASING – LAND USE

RETAIL

OFFICE

RESIDENTIAL

OPEN SPACE


FINANCIAL VIABILITY

REMEDY


CONSIDER ECONOMICS EARLY

• Visioning without consideration of economics can be problematic

– Plans aren’t implemented

– Community frustration (“broken promise”)

– Planning’s credibility at risk

– Stakeholder alienation



Investment Yield

Net operating income $21,516,000

Project development cost $334,650,000

Investor yield 6.4%

Investment Threshold 7 – 7.5%

Doesn’t work without subsidy

• “Back-of-the-envelope” economics is all that is needed and it’s not that hard!

– Understand whether market rents can support costs and generate a sufficient yield to an investor.



With economics as part of the planning process, implementation is considered and informed decision-making can take place during the process.

• Evaluating trade-offs and implications

• Is the public sector willing/able to fund structured parking?

• Is there a less

expensive solution that still satisfies community goals?

• What are the community’s priorities?


“BACK OF THE ENVELOPE” ECONOMICS

1. Understand the property

2. Estimate the property’s value to the owner(s)

3. Estimate land value for envisioned use

4. Determine whether redevelopment makes sense economically

5. To the extent original plan is infeasible, consider alternatives


#1: UNDERSTAND THE PROPERTY

• Land area

• Building area

• Occupancy

CHARACTERISTICS OLD & VIABLE OLD & STRUGGLING

Site size 9 acres 9 acres

Building size 60,000 sq. ft. 60,000 sq. ft.

Occupancy 95% 50%

Net operating income $11.00/sq. ft. $8.00/sq. ft.

• Rent

• Anchor tenants w/ long leases?

• Owner motivations

Note: More land than is needed for the building.


#2: ESTIMATE PROPERTY VALUE TO OWNER

CHARACTERISTICS OLD & VIABLE OLD & STRUGGLING


Building size 60,000 sq. ft. 60,000 sq. ft.

Occupancy 95% 50%

Net operating income $11.00/sq. ft. $8.00/sq. ft.

Income $627,000 $240,000

Capitalization rate 9% 12%

Value $7,000,000 $2,000,000

Old shopping centers may not look good,

but they are often quite valuable.


#3: ESTIMATE LAND VALUE

Prospective Project: Development Program and Supportable Land Value

Site size 9 acres

Dwelling units/acre 30

Dwelling units 270

Land value/unit $15,000

Supportable Land Value $4,050,000

Estimate land value for envisioned use: the market

• Consult assessor’s office – “land value per unit around this location?”

• Back-of-the-envelope calculation – what can an investor afford to pay given rents, development costs, and required investment yield.


#4: REDEVELOPMENT ECONOMIC FEASIBILTY

Economic Feasibility of Redevelopment

Old & Viable Old & Struggling

Existing property value $7,000,000 $2,000,000

What the market is willing to pay

$4,050,000 $4,050,000

Difference ($2,950,000) $2,050,000

Feasible? NO YES

Determine whether redevelopment

makes sense economically


#5: CONSIDER ALTERNATIVES

Beware: Increasing density

Original Increased density


Dwelling units/acre 30 60

Dwelling units 270 540

Structured parking cost/unit

$0 ($20,000)

Land value/unit $15,000 $15,000

Supportable land value $4,050,000 ($2,700,000)

• Increase density – Sufficient market?

– Careful of increased costs

• Change land use mix to lower cost or increase value

• Consider incremental moves – Surplus land

redevelopment

• Public/private financing


REDEVLEOPMENT ECONOMICS: SUMMARY

• Economics should be considered early when contemplating shopping center redevelopment

• “Back-of-the-envelope” economics informs the planning process

The economic analysis is not that difficult to do!


NORTH POTOMAC YARD

CASE STUDY


Sustainable Urbanism REMEDY MEETS REALITY: STRIP ......STRIPPING DOWN THE STRIP MALL •Next planning stage (10-20 years) will be retrofitting existing, not greenfield development

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