Market Feasibility Analysis

Preparing to load PDF file. please wait...

0 of 0
100%
Market Feasibility Analysis

Transcript Of Market Feasibility Analysis

Market Feasibility Analysis
Westfield Landing 421 Lamar Road North Macon, Bibb County, Georgia 31210
Prepared For
Ms. Carly Gast Herman & Kittle Properties, Inc. Westfield Landing Limited Partnership (Owner) 500 East 96th Street, Suite 300 Indianapolis, Indiana 46240
Effective Date
June 5, 2019
Job Reference Number
19-294 JW
155 E. Columbus Street, Suite 220 Pickerington, Ohio 43147 Phone: (614) 833-9300 Bowennational.com

Table Of Contents
A. Executive Summary B. Project Description C. Site Description and Evaluation D. Primary Market Area Delineation E. Community Demographic Data F. Economic Trends G. Project-Specific Demand Analysis H. Rental Housing Analysis (Supply) I. Absorption & Stabilization Rates J. Interviews K. Conclusions & Recommendations L. Signed Statement M. Market Study Representation N. Qualifications
Addendum A – Field Survey of Conventional Rentals Addendum B – Comparable Property Profiles Addendum C – Market Analyst Certification Checklist Addendum D – Methodologies, Disclaimers & Sources Addendum E – Achievable Market Rent Analysis
TOC-1

Section A – Executive Summary
This report evaluates the market feasibility of the Westfield Landing rental community to be constructed utilizing financing from the 4% Tax-Exempt Bond program in Macon, Georgia. Based on the findings contained in this report, we believe a market will exist for the subject development, as long as it is constructed and operated as proposed in this report:
1. Project Description:
Westfield Landing involves the new construction of 252 apartments on a portion of a 20.0-acre site at 421 Lamar Road North in Macon. The project will offer 60 one-, 132 two- and 60 three-bedroom garden-style units within eight (8) two- and threestory, walk-up residential buildings together with a free-standing community building. Westfield Landing will be developed utilizing financing from the 4% TaxExempt Bond program and will target lower-income family (general-occupancy) households earning up to 60% of Area Median Household Income (AMHI). Monthly collected Tax Credit rents will range from $506 to $665, depending on unit size. None of the units within the subject development will receive project-based rental assistance. The proposed project is expected to be complete by June 2021. Additional details regarding the proposed project are included in Section B of this report.
2. Site Description/Evaluation:
The subject site is a 20.0-acre wooded property located on the north side of Plantation Way, just northwest of the Macon city limits. Surrounding land uses include a singlefamily subdivision, a market-rate multifamily apartment property, a fire department, a shopping center and undeveloped land. The surrounding residential and commercial land uses are all in good condition and will have a positive impact on the marketability of the site. Visibility of the subject site is limited and, as such, promotional signage is recommended throughout all portions of the market area to increase its awareness during the initial lease-up process. Access to and from the site is considered good, as it is within 1.9 miles of State Routes 19 and 408, U.S. Highway 41 and Interstate 475. The subject site is close to shopping, employment, recreation, entertainment and education opportunities in the northern portion of Macon. The nearest shopping center (Plantation Village) is located on the south side of Plantation Way, and includes Kohl’s, a U.S. Post Office and several restaurants. Walmart Supercenter is located 0.6 miles southeast of the site, and Kroger supermarket is 1.0 mile southeast of the site. Social services and public safety services are all within 8.0 miles. Overall, the site neighborhood and proximity to community services should contribute to its marketability, which is also evidenced by the high occupancy rates reported among apartment properties in the immediate site area.
A-1

3. Market Area Definition:
The Macon Site PMA includes the northern and western portions of Macon-Bibb County. Specifically, the boundaries of the Site PMA include the Bibb/Monroe County line, U.S. Highway 23/State Route 87 and Arkwright Road to the north; Ocmulgee River and State Route 247 to the east; U.S. Highway 41, Brookdale Avenue, Napier Avenue, Log Cabin Road, and State Route 74 to the south; and Estes Road to the west. A map illustrating these boundaries is included on page D-2 of this report.
4. Community Demographic Data:
Overall, population and households within the Macon Site PMA are expected to generally remain stable between 2019 and 2021. Renter households within the market are also projected to remain relatively stable during the same time period. Regardless, the projected 9,340 renter households in 2021 within the Site PMA represent a deep base of potential support for the subject project. In addition, the subject project will be able to accommodate nearly all of the market’s renter households, based on household size. Overall, the demographic trends contained within this report demonstrate a stable base of potential support for the proposed subject development. Additional demographic data is included in Section E of this report.
5. Economic Data:
According to data provided by the U.S. Department of Labor: Bureau of Labor Statistics, the Bibb County economy continues to experience growth. Notably, the labor force within the Macon Site PMA is based primarily in four sectors, Health Care & Social Assistance (19.0%), Retail Trade (18.7%), Accommodation & Food Services (15.0%) and Other Services (10.9%), all of which typically offer positions that are well-suited for renters seeking affordable housing. Additionally, aside from a downturn between 2009 and 2010, the employment base within the county has generally experienced growth over the preceding nine-year period, increasing by 3,875 jobs, or 6.2%. Further, the unemployment rate has generally decreased since 2010 and is averaging 4.6%. Overall, these positive economic trends indicate that the Bibb County economy is improving. Based on these recent trends, it is anticipated that Bibb County will continue to experience positive economic trends for the foreseeable future, which will continue to create a stable environment for housing. Additional economic data is included in Section F of this report.
A-2

6. Project-Specific Affordability and Demand Analysis:

Per GDCA guidelines, capture rates below 30% for projects in relatively urban markets such as the Macon Site PMA are considered acceptable. As such, the project’s overall capture rate of 25.6% is considered achievable within the Macon Site PMA and demonstrates that a sufficient base of potential income-eligible renter support exists for the subject project.

7. Competitive Rental Analysis

We identified and surveyed two existing family (general-occupancy) non-subsidized LIHTC rental communities in the Site PMA. These two projects target households with incomes of up to 30%, 50% and/or 60% of AMHI and are considered competitive properties. Given the lack of LIHTC product within the market, we identified one additional LIHTC property outside of the Site PMA, but within Macon, that we consider comparable to the subject development. The three competitive/comparable LIHTC projects and the subject development are summarized in the following table:

Map

I.D.

Project Name

Site

Westfield Landing

25

Pinewood Park

26

River Walk Apts.

902

West Club

OCC. – Occupancy

HH – Households

*Number not available

Map ID 902 is located outside of Site PMA

Year Built 2021 2006 1993 1998

Total Units 252 148 152 140

Occ. Rate
100.0% 93.4% 100.0%

Distance to Site
6.6 Miles 7.3 Miles 5.9 Miles

Waiting List Yes* None 2 HH

Target Market Families; 60% AMHI Families; 30%, 50%, & 60% AMHI Families; 60% AMHI Families; 50% & 60% AMHI

The three LIHTC projects have a combined occupancy rate of 97.7%, a strong rate for rental housing. In fact, two of these developments are 100.0% occupied and maintain a waiting list, illustrating that pent-up demand exists for additional affordable rental housing within the Macon area. The subject development will be able to accommodate a portion of this unmet demand.

It should also be pointed out that the subject development will be at least 15 years newer than the comparable LIHTC projects. This will position the subject project at a competitive advantage and will bode well for the demand of the subject units.

A-3

The gross rents for the competing/comparable projects and the proposed rents at the subject site, as well as their unit mixes and vacancies by bedroom are listed in the following table:

Map

I.D.

Project Name

Site

Westfield Landing

25

Pinewood Park

26

River Walk Apts.

OneBr. $607/60% (60) $318/30% (3/0) $522/50% (28/0) $663/60% (4/0)
-

902

West Club

$554/60% (8/0)

Map ID 902 is located outside of Site PMA

Gross Rent/Percent of AMHI

(Number of Units/Vacancies)

Two-

Three-

Br.

Br.

$729/60% (132)

$841/60% (60)

$382/30% (7/0)

$441/30% (6/0)

$627/50% (53/0) $726/50% (23/0)

$789/60% (16/0)

$917/60% (8/0)

-

$947/60% (152/10)

$618/50% (52/0)

$784/60% (24/0) $906/60% (48/0)

FourBr. -
-
$1,011/60% (8/0)

The proposed subject gross LIHTC rents, ranging from $607 to $841, will be some of the lowest LIHTC rents relative to those offered at the comparable affordable developments targeting similar income levels within the market and region. Combined with the fact that the subject project will be at least 15 years newer than these LIHTC projects, this will position it at a significant competitive advantage.

Competitive/Comparable Summary

Based on our analysis of the proposed rents, unit sizes (square footage), amenities, location, quality and occupancy rates of the existing LIHTC properties within the market and region, it is our opinion that the subject development will be very competitive. In fact, the subject project will be at least 15 years newer than the comparable affordable product within the market and region, offering some of the lowest LIHTC rents targeting similar income levels and a slightly superior amenities package. The aforementioned characteristics will provide the subject with a significant competitive advantage. This has been considered in our absorption projections.

An in-depth analysis of the Macon rental housing market is included in Section H of this report.

8. Absorption/Stabilization Estimates

For the purposes of this analysis, we assume the absorption period at the site begins as soon as the first units are available for occupancy. Since all demand calculations in this report follow GDCA guidelines that assume a 2021 completion date for the site, we also assume that initial units at the site will be available for rent sometime in 2021.

Rent Special
-
None None
None

A-4

Considering the facts contained in the market study and comparing them with other projects with similar characteristics in other markets, we are able to establish absorption projections for the subject development. We have assumed that the developer and/or property management will begin preleasing units a few months in advance of opening and that 25 units, or 10%, will be preleased by the time the project is available for occupancy. Our absorption projections take into consideration the high occupancy rates and waiting lists reported among existing non-subsidized LIHTC projects in the market and region, the low proposed subject rents, the required capture rate, achievable market rents and the competitiveness of the proposed subject development within the Macon Site PMA. Our absorption projections also take into consideration that the developer and/or management successfully markets the project throughout the Site PMA.
Based on our analysis, it is our opinion that the 252 proposed LIHTC units at the subject site will reach a stabilized occupancy of at least 93.0% within approximately 14 months. This absorption period is based on an average monthly absorption rate of approximately 15 units per month.
These absorption projections assume a June 2021 opening date. A later opening date may have a slowing impact on the absorption potential for the subject project. Further, these absorption projections assume the project will be built as outlined in this report. Changes to the project’s rents, amenities, floor plans, location or other features may invalidate our findings. Finally, we assume the developer and/or management will aggressively market the project a few months in advance of its opening and continue to monitor market conditions during the project’s initial leaseup period. Note that Voucher support has also been considered in determining these absorption projections and that these absorption projections may vary depending upon the amount of Voucher support the subject development ultimately receives.
9. Overall Conclusion:
Based on the findings reported in our market study, it is our opinion that a market exists for the 252 Tax Credit units proposed at the subject site, assuming it is developed as detailed in this report. Changes in the project’s site, rents, amenities or opening date may alter these findings.
The Macon rental housing market is performing well, as evidenced by the overall rental market occupancy rate of 95.9%. In fact, the most comparable LIHTC property within the market, Pinewood Park (Map ID 25), is 100.0% occupied with a waiting list. This indicates that pent-up demand for additional affordable housing exists within the market. As such, the proposed Tax Credit units at the subject site will help alleviate a portion of this unmet demand. The subject project will be competitively positioned in terms of unit sizes (square feet) and amenities offered. Notably, the subject project will be at least 15 years newer than the comparable LIHTC projects, offering some of the lowest rents. The aforementioned characteristics will provide the subject with a significant competitive advantage.
A-5

The overall required capture rate of 25.6% for the subject project is considered achievable and further demonstrates that a sufficient base of potential incomeappropriate renter support exists for the subject project within the Macon Site PMA. Based on the preceding analysis and facts contained within this report, we believe the proposed subject development is marketable within the Macon Site PMA, as proposed. We do not have any recommendations or modifications to the subject development at this time.
A-6

2019 Market Study Manual

GDCA Office of Affordable Housing

SUMMARY TABLE (must be completed by the analyst and included in the executive summary)

Development Name: Westfield Landing

Total # Units: 252

Location:

421 Lamar Road North, Macon, Georgia 31210

# LIHTC Units: 252

PMA Boundary:

Bibb/Monroe County line, U.S. Highway 23/State Route 87 and Arkwright Road to the north; Ocmulgee River and State Route 247 to the east; U.S. Highway 41, Brookdale Avenue, Napier Avenue, Log Cabin Road, and State Route 74 to the south; and Estes Road to the west.

Farthest Boundary Distance to Subject: 6.5 miles

RENTAL HOUSING STOCK (found on page H-1 & 6)

Type All Rental Housing Market-Rate Housing Assisted/Subsidized Housing not to include LIHTC LIHTC
Stabilized Comps Properties in Construction & Lease Up

# Properties 32 28
1 3 2 2

Total Units 5,508 5,008
120 380 300 315

Vacant Units 224 214
0 10 10 89

Average Occupancy
95.9% 95.7%
100.0% 97.4% 96.7% 71.7%

# Units
60 132 60

Subject Development

# Bedrooms

# Baths

Size (SF)

One

1.0

835

Two

2.0

1,095

Three

2.0

1,280

Proposed Tenant Rent
$506 $596 $665

Average Market Rent

Per Unit $831 $974 $1,165

Per SF $1.00 $0.89 $0.91

Advantage 64.2% 63.4% 75.2%

Highest Unadjusted Comp Rent

Per Unit $1,072 $1,206 $1,570

Per SF $1.26 $0.97 $1.09

Targeted Population Capture Rate

CAPTURE RATES (found on page G-5)

30%

50%

60%

25.6%

Market-rate Other:__

Overall 25.6%

A-7

Section B - Project Description
The subject project involves the new construction of the 252-unit Westfield Landing rental community on a portion of a 20.0-acre site at 421 Lamar Road North in Macon, Georgia. The project will offer 60 one-, 132 two- and 60 three-bedroom garden-style units within eight (8) two- and three-story, walk-up residential buildings together with a free-standing community building. Westfield Landing will be developed utilizing financing from the 4% Tax-Exempt Bond program and will target lower-income family (general-occupancy) households earning up to 60% of Area Median Household Income (AMHI). Monthly collected Tax Credit rents will range from $506 to $665, depending on unit size. None of the units within the subject development will receive project-based rental assistance. The proposed project is expected to be complete by June 2021. Additional details of the subject project are as follows:

A. PROJECT DESCRIPTION

1. Project Name:

Westfield Landing

2. Property Location:

421 Lamar Road North Macon, Georgia 31210 (Bibb County)

3. Project Type:

New Construction

4. Unit Configuration and Rents:

Total Bedroom

Square

%

Collected

Units

Type

Baths Style

Feet

AMHI

Rent

60

One-Br. 1.0 Garden

835

60%

$506

132 Two-Br. 2.0 Garden 1,095

60%

$596

60 Three-Br. 2.0 Garden 1,280

60%

$665

252

Total

Source: Herman & Kittle Properties, Inc.

AMHI – Area Median Household Income (Macon, GA HUD Metro FMR Area; 2019)

MR – Market-Rate

Proposed Rents Utility
Allowance
$101 $133 $176

Gross Rent
$607 $729 $841

Max. Allowable LIHTC Gross
Rent
$607 $729 $841

5. Target Market:

General-occupancy

6. Project Design:

Garden-style units within eight (8) threestory, walk-up residential buildings together with a free-standing community building.

7. Original Year Built:

Not applicable; New construction

8. Projected Opening Date:

June 2021

B-1
Subject DevelopmentReportSubject ProjectMaconMarket