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El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Contents Purpose Methodology Findings El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Contents Purpose p Methodology Findings g El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Purpose of Study • Revitalization of San Pablo Corridor is a top priority • Prior to soliciting development partners, complete analyses of: g p p , p y – market demand – parking demand • In order to: – identify appropriate parking management strategies and policies – formulate realistic goals for development, based on market conditions and development. El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Key Findings • Current real estate market near feasible but below prevailing profit expectations • Some sites along San Pablo are on the brink of market-driven development – Projects experience a positive return on cost, but not enough to incentivize development • Sites with highest development potential are around BART stations – Can charge higher rents – Developers more likely to build at lower parking ratios parking ratios • Creativity on the part of developers and the City of El Cerrito can nudge some sites over the brink making projects feasible El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting the brink, making projects feasible ---PAGE BREAK--- Key Findings Avenues of Creative Thinking Avenues of Creative Thinking – Establish entitlement certainty • Reduces risk Demonstrate potential feasibility to land – Demonstrate potential feasibility to land owners – Land prices (on Agency owned parcels) – Consider non-retail uses on ground floor Consider non retail uses on ground floor • Allows developers greater flexibility – Specific plan intended to transition the p p Corridor from “Suburban” to “Urban” – Improve urban design along Corridor • Increases desirability of area and ability to generate rents – Implement parking strategies • Reduces the amount of parking developers need / choose to build El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting developers need / choose to build ---PAGE BREAK--- Contents Purpose Methodology Findings Findings El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Prototypes Tested 4 d Plaza North Node 4 nodes 10 sites 22 scenarios Midtown Node Del Norte Node Plaza Node El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Varying Heights Varying Heights 80 feet 45 feet 65 feet 45 feet El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Varying Program Varying Program – Multifamily residential – Office –Class A Build-to-Suit –Professional offices – Retail –Big box –Neighborhood El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Varying Parking Ratios Prototypes Tested Plaza North Node 1 20 per unit Prototypes Tested V i P ki R ti Varying Parking Ratios Midtown Node 1.40 per unit 3 3 1 000 1.20 per unit 3.3 per 1,000 Varying Parking Ratios 3.3 per 1,000 Del Norte Node 1.04 per unit 1.81-2.70 per 1,000 Plaza Node 1.04 per unit 1.81 per 1,000 El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Varying Densities As Other Assumptions Change Prototypes Tested Varying Densities As Other Assumptions Change – Less ground floor retail –Less parking required to meet demand Less demand –More parking demand for commercial space compared to residential space Lower parking demand Less ground floor retail residential space –More buildable area for residential space On the ground floor Heights at 65’ –On the ground floor –Buildable area occupies more of site Heights at 65’ – Heights at 65 –Past 65’, apply setback Higher residential densities El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Flexible Assumptions Varying Costs Varying Costs – Base residential construction cost: $200 per square foot – More than 65’ –Construction cost increases 25% – Sites with less than 60 units –Construction cost increases 10% – Sites with more than 500 units –Construction cost decreases 7% – Structured vs. unstructured parking –Surface parking: $4 000 per space –Surface parking: $4,000 per space –Tuck under parking: $15,000 per space –Podium parking: $22,500 per space El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Varying Parking Ratios Prototypes Tested Plaza North Node Flexible Assumptions Varying Residential Revenues Varying Parking Ratios Midtown Node No premium $2.16/sq ft Varying Residential Revenues No premium $2.16/sq. ft Del Norte Node 7% Bart-adjacent Del Norte neighborhood $2 27/sq ft Plaza Node 7% Bart-adjacent 3% Plaza neighborhood $2 37/ ft $2.27/sq. ft $2.37/sq. ft El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Stable Assumptions C t • Costs – Land costs ($40/ft) – Site prep costs ($20/ft) – Stabilized vacancies Residential –10% Commercial – Residential Construction Costs ($180-$250/ft) • Commercial revenues – $1.70 sq. ft / month / NNN Convenience Retail – $1.30 sq. ft / month / NNN Big Box Retail – $3.25 sq. ft. / month / Full service Class A Office El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting $ q – $2.25 sq. ft. / month / Full service Professional Office ---PAGE BREAK--- Stable Assumptions R id ti l U it Si 4th and U - Berkeley • Residential Unit Size – Studio: 450 sq. ft. – 1 bedroom: 700 sq. ft. – 2 bedroom: 900 sq. ft. • Residential Unit Mix Studio: 15% – Studio: 15% – 1 bedroom: 45% – 2 bedroom: 40% Avenue 64 Emeryville • Residential Base Rents – Studio: $1,200 – 1 bedroom: $1 525 Avenue 64 - Emeryville – 1 bedroom: $1,525 – 2 bedroom: $1,750 – Rent per square foot: $2.16 El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Static Pro-Forma Analysis • Feasibility analysis performed using static pro-formas • A static pro-forma analysis estimates future cash flows based on p y stabilized point in time • A snapshot of the development potential El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Contents Purpose Methodology Assumptions Findings El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Feasible Projects are Possible • The first successful development project will: – Demonstrate the market for TOD in El Cerrito – Minimize the perception of risk Potentially increase future project feasibility and reduce future financing costs – Potentially increase future project feasibility and reduce future financing costs • No developer wants to be a test case • Any of the sites can be developed if the developer has opportunities to be creative. What will take a project over the line? – Reduce land or construction costs – Reduce interior circulation – Remove ground floor retail requirement Remove ground floor retail requirement – Utilize lift parking El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Return on Cost For each site, the most feasible alternative For each site, the most feasible alternative 6 3% 6 0% 6.8% 10% 2.2% 2.2% 6.3% 2.6% 6.0% 0% 5% -3.8% -3.6% 0% 1 2 3 4 5 6 7 8 9 10 -8.5% -14.4% -15% -10% -20% Del Norte Node Mid Plaza North Plaza El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Return on Cost For each site, the most feasible alternative For each site, the most feasible alternative 6.3% 6.0% 6.8% 10% 2.2% 2.2% 2.6% 0% 5% 1 2 3 4 5 6 7 8 9 10 -8.5% -3.8% -3.6% -10% 1 2 3 4 5 6 7 8 9 10 -14.4% -20% -15% Del Norte Node Mid Plaza North Plaza 45’ 65’ 65’ 65’ 65’ 45’ 65’ 65’ 65’ 65’ El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Return on Cost For each site, the most feasible alternative For each site, the most feasible alternative 6.3% 6.0% 6.8% 10% 2.2% 2.2% 2.6% 5% 0% 5% 1 2 3 4 5 6 7 8 9 10 -8.5% -3.8% 14 4% -3.6% -15% -10% -14.4% -20% 15% All multifamily residential, 0-30% ground floor retail Del Norte Node Mid Plaza North Plaza 45’ 65’ 65’ 65’ 65’ 45’ 65’ 65’ 65’ 65’ El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Del Norte Site Height Retail Units Units Per Acre Parking Spaces Res. Parking Ratio Comm. Parking Ratio ROC 1 45’ 0 137 87 143 1.04/unit 1.8/1,000 2.2% 2 65’ 16,000 325 71 368 1.04/unit 1.8/1,000 2.2% 3* 65’ 6 000 38 48 50 1 04/unit 1 8/1 000 -8 5% 3 65 6,000 38 48 50 1.04/unit 1.8/1,000 8.5% 4 65’ 42,000 853 71 1,005 1.04/unit 2.7/1,000 6.3% 5 65’ 19,100 384 75 436 1.04/unit 1.8/1,000 2.6% * N t Sit 3 h f ki fi ti ll it * Note: Site 3 has a surface parking configuration, small site El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Midtown Site Height Retail Units Units Parking Res Comm ROC Site Height Retail Units Units Per Acre Parking Spaces Res. Parking Comm. Parking ROC 6 45’ 20,000 708 59 1,057 1.40/unit 3.3/1,000 -3.8% El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Plaza North Site Height Retail Units Units Parking Res Comm ROC Site Height Retail Units Units Per Acre Parking Spaces Res. Parking Comm. Parking ROC 7 65’ 1,800 36 52 49 1.20/unit 3.3/1,000 -14.4% 8 65’ 0 105 71 126 1 20/unit 3 3/1 000 3 6% 8 65 0 105 71 126 1.20/unit 3.3/1,000 -3.6% El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Plaza Site Height Retail Units Units Per Acre Parking Spaces Res. Parking Ratio Comm. Parking Ratio ROC 9 65’ 3,000 59 71 67 1.04/unit 1.8/1,000 6.0% 10 65’ 9,000 195 71 222 1.04/unit 1.8/1,000 6.8% . El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Where is Development Most Feasible? Plaza North Node Midtown Node Del Norte Node Plaza Node El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Return on Cost at Baseline Developable Sites Six sites with positive ROC Six sites with positive ROC 10% 6.3% 6.0% 6.8% 6% 8% 2.2% 2.2% 2.6% 2% 4% 0% 1 2 4 5 9 10 All multifamily residential, 0-30% ground floor retail Del Norte Node Mid Plaza North Plaza 45’ 45’ 65’ 65’ 65’ 45’ 65’ 65’ 65’ 65’ El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Varying Parking Ratios Prototypes Tested Development potential highest d BART Varying Parking Ratiosaround BART stations Del Norte Node Plaza Node El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Varying Parking Ratios Prototypes Tested Development potential highest d BART Varying Parking Ratiosaround BART stations • Where there are Where there are potential economies of scale (outlined in blue) Del Norte Node Plaza Node El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Varying Parking Ratios Prototypes Tested Development potential highest d BART Varying Parking Ratiosaround BART stations • Where there are Where there are potential economies of scale (outlined in blue) Del Norte Node Plaza Node • At sites that are rectilinear (shape is square) ( p q ) El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Prototypes Tested Varying Parking Ratios Prototypes Tested Development potential highest d BART Varying Parking Ratiosaround BART stations • Where there are Where there are potential economies of scale (outlined in blue) Del Norte Node Plaza Node • At sites that are rectilinear (shape is square) X ( p q ) • Where there aren’t excessive parking replacement policies replacement policies (X’d out) • Where the City of El El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting y Cerrito can directly impact land costs (color is green) ---PAGE BREAK--- Return on Cost at Baseline Developable Sites 14% 16% 12% 14% 6.3% 6 0% 6.8% 8% 10% 2 2% 2 2% 2.6% 6.0% 4% 6% 2.2% 2.2% 0% 2% 1 2 4 5 9 10 El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting 1 2 4 5 9 10 Del Norte Node Plaza ---PAGE BREAK--- Return on Cost at Developable Sites 10% Market-Driven Parking Demand Reduction 10% Market Driven Parking Demand Reduction Residents Customers reduce driving Residents reduce car ownership Developers recognize change, build less build less parking 10% fewer parking spaces El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting 10% fewer parking spaces are constructed ---PAGE BREAK--- Return on Cost at Developable Sites 10% Market-Driven Parking Demand Reduction Baseline Return on Cost + 10% Parking Demand Reduction 10% Market Driven Parking Demand Reduction 12 0% 14.0% 16.0% g 6 8% 8.5% 8.1% 8.8% 8 0% 10.0% 12.0% 6.3% 2 6% 6.0% 6.8% 4.0% 4.0% 4.5% 4.0% 6.0% 8.0% 2.2% 2.2% 2.6% 0.0% 2.0% 1 2 4 5 9 10 El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting 1 2 4 5 9 10 Del Norte Node Plaza ---PAGE BREAK--- Return on Cost at Developable Sites 10% Market-Driven Parking Demand Reduction Site Height Retail Units Density ROC 1 45’ 0 137 87 2.2% 10% Market Driven Parking Demand Reduction 10% less parking demand 0 154 98 4.0% 2 65’ 16,000 325 71 2.2% 10% less parking demand 18 000 361 79 4 0% p g 18,000 361 79 4.0% 4 65’ 42,000 853 71 6.3% 10% less parking demand 47,200 950 76 8.5% 5 65’ 19,100 384 75 2.6% 10% less parking demand 21,000 428 79 4.5% 9 65’ 3,000 59 71 6.0% 10% less parking demand 3,200 65 78 8.1% 10 65’ 9,000 195 71 6.8% 10% less parking demand 11 000 217 79 8 8% El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting 10% less parking demand 11,000 217 79 8.8% ---PAGE BREAK--- Return on Cost at Developable Sites 10% Market-Driven Parking Demand Reduction Baseline Return on Cost + 10% Parking Demand Reduction 10% Market Driven Parking Demand Reduction 12 0% 14.0% 16.0% g 6 8% 8.5% 8.1% 8.8% 8 0% 10.0% 12.0% 6.3% 2 6% 6.0% 6.8% 4.0% 4.0% 4.5% 4.0% 6.0% 8.0% 2.2% 2.2% 2.6% 0.0% 2.0% 1 2 4 5 9 10 El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting 1 2 4 5 9 10 Del Norte Node Plaza ---PAGE BREAK--- Return on Cost at Developable Sites 10% Market-Driven Parking Demand Reduction Baseline Return on Cost +10% Parking Demand Reduction 10% Market Driven Parking Demand Reduction + 5% Rent Increase 13.8% 13.2% 14.0% 14 0% 16.0% g Rent Increase 8.5% 8 1% 8.8% 9.2% 9.0% 9.4% 13.2% 10.0% 12.0% 14.0% 6.3% 2 6% 6.0% 6.8% 4.0% 4.0% 4.5% 8.1% 4 0% 6.0% 8.0% 2.2% 2.2% 2.6% 0.0% 2.0% 4.0% 1 2 4 5 9 10 El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting 1 2 4 5 9 10 Del Norte Node Plaza ---PAGE BREAK--- Return on Cost at Developable Sites 10% Market-Driven Parking Demand Reduction Site Height Retail Units Density ROC 1 45’ 0 137 87 2 2% 10% Market Driven Parking Demand Reduction + 5% Rent Increase 1 45’ 0 137 87 2.2% 10% less parking demand 0 154 98 4.0% 5% increase in rents 9.2% 2 65’ 16,000 325 71 2.2% 10% less parking demand 18,000 361 79 4.0% 5% increase in rents 9 0% 9.0% 4 65’ 42,000 853 71 6.3% 10% less parking demand 47,200 950 76 8.5% 5% i i t 13 8% 5% increase in rents 13.8% 5 65’ 19,100 384 75 2.6% 10% less parking demand 21,000 428 79 4.5% El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting 5% increase in rents 9.4% ---PAGE BREAK--- Return on Cost at Developable Sites 10% Market-Driven Parking Demand Reduction Site Height Retail Units Density ROC 10% Market Driven Parking Demand Reduction + 5% Rent Increase g y 9 65’ 3,000 59 71 6.0% 10% less parking demand 3,200 65 78 8.1% 5% increase in rents 13 2% 5% increase in rents 13.2% 10 65’ 9,000 195 71 6.8% 10% less parking demand 11,000 217 79 8.8% 5% increase in rents 14.0% El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Return on Cost at Developable Sites 10% Market-Driven Parking Demand Reduction Baseline Return on Cost +10% Parking Demand Reduction + 5% Rent Increase 13.8% 13.2% 14.0% 14 0% 16.0% g Rent Increase 8.5% 8 1% 8.8% 9.2% 9.0% 9.4% 13.2% 10.0% 12.0% 14.0% 6.3% 2 6% 6.0% 6.8% 4.0% 4.0% 4.5% 8.1% 4 0% 6.0% 8.0% 2.2% 2.2% 2.6% 0.0% 2.0% 4.0% 1 2 4 5 9 10 El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting 1 2 4 5 9 10 Del Norte Node Plaza ---PAGE BREAK--- Conclusions • Development standards should allow flexible and creative development solutions – A height maximum of 70’ – Typical 6 story building is 65’ – Allow for interesting roof articulation – Allow for higher top floor ceilings L ibiliti i th l t – Leave open possibilities in the long-term – Low parking ratio minimums – Allow for greater buildable area and densities Allow new development to respond to changes in parking demand by – Allow new development to respond to changes in parking demand by residents and customers – Let design and market factors drive project densities – Setbacks parking ratios and ground floor uses result in project Setbacks, parking ratios, and ground floor uses result in project densities – These factors have a greater impact on residents and community than densities El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting ---PAGE BREAK--- Thank you! Q + A / Discussion Thank you! Q + A / Discussion El Cerrito Development Feasibility Analysis City of El Cerrito City Council Meeting