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Downtown / SoBro. Market Analysis Major Findings Presented to Urban Land Institute Nashville Randall Gross / Development Economics Nashville Metropolitan Development and Housing Agency (MDHA). Introduction & Purpose. Market Analysis

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Downtown / SoBro


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    Presentation Transcript
    1. Downtown / SoBro Market AnalysisMajor Findings Presented to Urban Land Institute NashvilleRandall Gross / Development EconomicsNashville Metropolitan Development and Housing Agency (MDHA)

    2. Introduction & Purpose • Market Analysis • Forecast potential: All uses in SoBro & broader Downtown Area • Downtown: the economic “core of the apple” & “face of Nashville” • Strategic Planning • Translate the market findings into development, marketing, management, and financing strategies for implementation • Purpose of this Information • MDHA: Programs, redevelopment policies & incentives • Specific attention to Rolling Mill Hill • Inform the SoBro Master Plan (CCA) • Downtown development planning & ED • Downtown marketing • Data/information to help guide private development

    3. STUDY AREA

    4. HISTORICAL CONTEXT

    5. EXISTING CONDITIONS • Location • Center of 13-county MSA; market of 1.7 million • 1-day’s drive of 50% US population • Good air connections, but lacks strong international access • Local Transportation Access • Limited, but gradually expanding public transit system • Convergence of 6 interstates: “Nexus” & “Noose” • East-west connectivity issues • Parking • Accelerating need for parking management & access • Physical Conditions • Topography & flooding • Important architectural heritage but “missing teeth” • Sporadic but limited “identity marketing” urban design

    6. EXISTING INVENTORY • Industrial: 9.0 million sq. ft. • Office: 7.9 million sq. ft. • Housing: 5,900 units • Retail: 1.5 million sq. ft. • Convention: 1.2 million sq. ft. • Hotels: 2,500 rooms • Government & Community: 150+ • Parking lots 754 • Vacant lots 1,560 • Audience Support: • Museums 4 (+2 planned) • Performing arts venues 6 • Multi-use & sports venues 5 • Commercial entertainment 46 (650,000 sq. ft.) • Historic/Visitor attractions 11 • Parks & trails 4

    7. ECONOMIC OVERVIEW • Diversified regional economic base • Concentrations in health care, accommodation services, and retail trade • 6.7% employment growth since 1998 • 100,000 jobs added 1998-2007 • 60,000 jobs lost 2007-2010 • Declining industries • Manufacturing: -36% (-30,000 jobs) • Construction -10% (-3,600 jobs) • Growing industries • Health care +35% (+27,300 jobs) • Accommodation +31% (+16,000 jobs) • Management +49% (+8,600 jobs)

    8. OFFICE MARKET ANALYSIS

    9. OFFICE – Existing Market • Downtown Mix • State Government • Banks & financial institutions • Law firms • Corporate • Technology • Media

    10. OFFICE – Existing Market

    11. OFFICE – Existing Market

    12. OFFICE – Existing Market

    13. OFFICE – Existing Market • Absorption Trends • 640,000 sf / year (96-11) • 840,000 sf / year (07-11)

    14. OFFICE – Demand Forecasts • Office Employment Projections (MSA): 2012-2021 • Growth: 27,100 (19.5%) • Prof/Technical Services • +12,700 jobs (33.2%) • Management Services • +5,900 jobs (22.1%)

    15. OFFICE – Demand Forecasts • Competitive Framework • Cool Springs-Brentwood • Franklin Park • Airport • Buchanan Point • Midtown • West End Summit • 1515 Demonbreun • One City / Charlotte Medical Corridor

    16. OFFICE – Market Potential • Potential: 564,000 – 745,000 sq. ft. by 2022 • Equal to 1 “Batman” Bldg or 2 SunTrust Plazas • Escalating trend of Re-urbanization • Demand Drivers: • Professional, scientific & IT/technical services • Management services • Media & entertainment • Others: Health care, FIRE • Growing Base: • Small IT, entertainment & service firms

    17. OFFICE – Downtown Districts • Gulch • Interstate access • Proximity to health centers • Downtown • State Government draw-down • Pro-active recruitment • So Bro • Information & Media Services 38,400 – 50,800 square feet • Professional & Technical Services 34,200 – 70,600 • Management Services 26,100 – 28,600 • Medical Offices 23,700 – 25,800 • Finance & Insurance 20,300 – 20,600 • Real Estate 6,100 - 27,700

    18. OFFICE - Caveats & Prerequisites • Create space to accommodate smaller, emerging “footloose” firms • Create supportive environment for office tenants • Provide sufficient parking & transit • Ameliorate State Government drawn down (20%) • Reduce space /change use in functionally-obsolescent buildings • Pro-active marketing & recruitment can result in “drop ins”

    19. HOUSING MARKET ANALYSIS

    20. HOUSING – Existing Market • Diverse central city neighborhoods • Rutledge Hill • The Gulch • Rolling Mill Hill • SoBro • Germantown • Salemtown • Hope Gardens • Capitol Hill (Sulphur Dell, N Capitol, Market District) • Downtown

    21. HOUSING – Existing Market • Downtown Market Drivers • Young, Single Prof. & “DINKS” • Downtown Workers • Students & Parents • Investors • Empty Nesters • “Transitionals”

    22. HOUSING – Existing Market

    23. HOUSING – Existing Market • CBD Rental Market • High occupancy • 92% (2009) – 98% (2012) • CBD highest in region • Rents • $1.95 psf average • Absorption • 140 – 160 units / month • 30 units / mo / project • CBD For-Sale Market (2011-12) • Ave SF: 1,260 • Ave Sale Price: $196,070 • Ave Sale/SF: $156 • # Sales: 630/year • # Condos on market: <10

    24. HOUSING – CBD Employee Survey • Demographics • 94% have attended college • 1/3 have advanced degrees • Diverse incomes • 40% work in Government, 12% in non-profits • 16% work in law firms • 77% are home owners; Only 21% are renters

    25. HOUSING – CBD Employee Survey

    26. HOUSING – CBD Employee Survey • 8% already live downtown • Another 30% would consider living downtown • Highest propensity: • Antioch • Hermitage • West Meade • Old Hickory • Bellevue • Crieve Hall/Glencliff • S Nashville/Woodbine • Reason to live downtown: • Closer to work: 43% • Closer to city life: 34% • N/A or Already in CBD: 17% • Other reasons: 5% • Closer to friends/people: < 1%

    27. HOUSING – CBD Employee Survey

    28. HOUSING – CBD Employee Survey • Preferences • Historic or consistent with neighborhood character • Home ownership • Single-family: 54% • Detached: 31% • Attached: 23% • Affordable • $2,200 / month average • 1/3 < $1,000 / month

    29. HOUSING - Demand

    30. HOUSING - Demand • Competitive Framework

    31. HOUSING – Market Potential • Potential: 3,530 housing units in Loop by 2017 • 2,200 move-ups / move-downs • 1,330 growth-generated (600 relocations) • Product: • Detached Single-Family Homes 650 DU • Attached Single-Family/Brownstones 505 • Lofts/Units in Mixed-Use Buildings 500 • Condominiums 400 • Multi-family Apartments 1,480

    32. HOUSING- Districts • Northside Neighborhoods (Germantown, Capitol Hill, Buena Vista, Salemtown) • Single-family attached & detached • Mid-rise lofts, mixed-use • SoBro/Rolling Mill Hill • High-rise apartments and condominiums • Loft/Mixed-use, Mixed-income buildings • Single-family attached (e.g., brownstones) • Gulch/Downtown • High-rise apartments and condominiums • Conversions of office space • Mixed-use

    33. RETAIL & ENTERTAINMENT MARKET ANALYSIS

    34. RETAIL – Existing Market

    35. RETAIL – Existing Market

    36. RETAIL – Existing Market • CBD Area Rents • Downtown Core $17.19 per square foot • SoBro $14.29 • Germantown $15.42 • East $12.50 • Gulch $26.00 • Sales (per business interviews) • Average $207psf • Growth +1.7%/annum • Increasing 63% • Declining 17%

    37. RETAIL – Existing Market • Key Issues • Parking accessibility & pricing • Dominance of dining & entertainment • Dependency on events & tourism • CMA Fest is “Christmas” • Heavy dependence on Bridgestone Arena • Limited (but growing) regional market appeal • Lack of shopping “district” • Parking / traffic • Lack of anchors

    38. RETAIL - Demand • Trade Area: • $4.2 Billion forecasted growth in income by 2017 • $2.5 Billion growth in expenditure potentials • Visitors: • $117.5 million growth • Downtown Workers: • $53.7 million growth • Students: • $1.0 million growth

    39. RETAIL - Potentials

    40. RETAIL

    41. RETAIL • Key anchor uses • Cinemas • Musical theatre entertainment • Local Brands • Jack Daniels, Goo Goo Clusters • “Artisan” industrial * • Toy, hobby & game store • Department / GM store (“General store” concept) • Sporting goods store • Apparel & accessory stores • So Bro • Mixed-use, anchored shopping district (3-5 blocks) • Lafayette Street

    42. HOTEL MARKET ANALYSIS

    43. HOTELS – Existing Market

    44. HOTELS - Demand • Leisure Travel • Sightseeing is 45% of all visits to Nashville • 1,130,000 estimated out-of-town visitors to CBD attractions (2011) • 84% of overnight visitors stay in hotels • Business Travel • Estimated 390,000 convention attendance in 2012, increasing to 516,000 by 2016 (MCC).

    45. HOTELS – Planned Development • CBD Area – 4,000+ rooms • Omni Nashville – 800 rooms • Hyatt Place-255 • Gulch – <450 • Eakin Partners (270+/-) • Vision Hospitality (150+/-) • Hilton Harden Inn-200 • Giarrantana-315 / Marriott • Trail West (Westin)-475 • Others: • White Lodging (4*) • Pinnacle Hotels • 5th Ave/KVB • 415 4th Avenue • Matthews/Northpoint (5th/KVB) • Platinum Hosp (406 6th ) • Arizona investors 432 6th • Competition • Homewood Suites-192 • Residence Inn/Spring Hill Suites • Intercontinental

    46. HOTELS – Comparables • 4,100 rooms near MCC with 1,740 existing & 2,400 planned “known” hotel rooms • Yields ratio of 0.011 rooms/SF convention space. • Roughly equal to comparables average of 0.012 rooms/SF

    47. HOTELS - Potentials • Demand for +361,500 room-nights by 2017 • Potential for +2,590rooms in SoBro area • 2,460 “known” rooms planned in SoBro area • Classification Mismatch: • Only 2 planned hotels are full-service properties with 300+ rooms, as needed by convention planners

    48. INDUSTRIAL OPPORTUNITIES

    49. INDUSTRIAL – Existing Conditions • Industrial is largest land use in CBD study area • ICBD is 2nd largest regional industrial sub-market • ICBD vacancy is only 5.9%, lowest of all sub-markets • Industrial absorption rebounded in 2011 • CBD is competitive for machine shops, repair services, wholesale supply, recycling, transportation services, showroom space, & specialty niche manufacturing spaces • Despite decline in manufacturing overall, growth in niche industries, i.e., food & beverage

    50. INDUSTRIAL - Opportunities • SoBro “Artisanal” Manufacturing Uses • Whiskey distilleries • Micro-breweries • Specialty bakeries • Confectionary manufacturers (chocolate and non-chocolate) • Artisanal / regional food manufacturers • Craft furniture and furnishings designers, producers & wholesalers • Small specialty lighting and electrical equipment manufacturers • Craft paper, bookbinding and specialty printing companies • Visual artists and sculptors • Craft toy and game producers • Clothing, footwear, jewelry and accessory designers and producers • Specialty regional meat producers/butchers (e.g., smoked hams) • Record & DVD pressing companies • Film production companies