S.J. Fowler Commercial Investment Presents: Camelback Road

Transcription

1 S.J. Fowler Commercial Investment Presents: Light Rail Redevelopment Opportunity 5 Acres: Camelback/3rd Ave Light Rail Station 7th Ave/Camelback 7th Avenue 3rd Avenue Camelback Road Central Light Rail Station Central/Camelback Central Contact: Lloyd Kaipainen, Associate Broker, CCIM Lois Kaipainen, Senior Advisor, S J F

2 Table of Contents The Assemblage Light Rail Camelback Corridor Development Potential/TOD Area Photos Comps/Management Demographics Contact Information Page 3 Page 4/5 Page 6 Page 7 Page 8 Page 9 Page10/11 Page 12

3 The Assemblage 3 This assemblage includes ten contiguous parcels at the Northwest corner of Camelback Road and 3rd Avenue, creating a 5 acre site that is well positioned for redevelopment. The property is in a Class A redevelopment area and is ideally situated for an infill, mixeduse, pedestrian-oriented environment. It is located directly on the new Light Rail transit route. Light Rail construction is complete in front of the assemblage, but trains will not be in use until the remainder of the route is completed in December of This assemblage is situated between two Light Rail Stations, walking distance to both. The City has installed a new traffic signal at 3rd Avenue, allowing easy access from Camelback Road in both directions. The assemblage boasts approximately 600 feet of Camelback Road frontage. There is approximately 530 feet of frontage on West Pasadena Avenue and approximately 425 feet of frontage on 3rd avenue! There is also the potential for a significant gain in square footage if the City of Phoenix will grant an abandonment for the alley between Pasadena Avenue and Camelback Road. Pasadena Avenue rd Avenue 35/34 33/ Camelback Road Lot 24: Tamarack Apartments Lot 25: Uptown Apartments Lot 26: Arcadia Apartments Lot 27: Marue Apartments Lot 28: Royal Pasadena Apartments Lots 35/34: 444 Office Building Lots 33/32: Orleans Office Building Lots 31/30/29: Beef Eater s Restaurant

4 Light Rail 4 Phoenix is following the pattern of all major cities with the construction of the Light Rail and with urban renewal. Given the exponential growth in Phoenix and the massive size of the Metro area, Phoenix is ripe for increased density in the heart of the city. As shown in the map below, the Light Rail Station at Central & Camelback will be well within walking distance from the assemblage and a second station, also within walking distance, will be located at Camelback Road and 7th Avenue. The Light Rail will pass directly in front of the Camelback side of the assemblage. Construction is complete on this segment of the Light Rail and this is the ideal time to build. The Light Rail route is available at the following url: 7th Avenue Camelback Road CentralAvenue 7th 7th Ave Ave && Camelback STATION Central Ave & Camelback STATION Population 5,833 Population 3,289 Employees 3,570 Employees 9,192 Households 2,834 Households 1,665 Avg. Household income $51,594 Avg. Household income $70,223 Source: 2000 Census (½ mile radius or 10 min.walk from station) Source: 2000 Census (½ mile radius or 10 min.walk from station)

5 5 Light Rail (cont) The Light Rail will be able to carry up to 600 passengers in each three-car train. During peak hours, the system is projected to carry 3,000 to 5,000 passengers per hour initially. The system will have the capacity to carry up to 12,000 people per hour, which is the equivalent of a six-lane freeway. In addition, the Light Rail will operate on a dedicated line, will have priority at traffic signals and will travel at posted speeds. It will also connect seamlessly with the current city bus transport system. The cost of the initial 20 mile Metro line is $1.4 billion dollars, approximately 41% of which will be funded by a federal grant. Six extensions to the initial line were approved by voters in three separate transportation elections. The Regional Transportation Plan currently includes 37 miles of future light rail extensions in Phoenix, Tempe, Mesa and Glendale. The Northwest (Glendale) segment is scheduled for completion in 2012, Mesa and Tempe segments in 2015 and additional segments through The most comprehensive report to date on light rail and property values was conducted in 2002 by the University of North Texas on the DART light rail system in Dallas. The study found that property values near light rail stations had a 50 percent greater increase in value than comparable properties in other areas without light rail. Vacant land values appreciated five times faster around DART stations. One year after DART service began, retail sales jumped more than 12 percent in the Central Business District versus less than a one percent increase city-wide. A newer study by the same group took a different track and estimated that between 1999 and 2005, $3.3 billion dollars has been spent on development and redevelopment on or near the Dart routes. The U.S. Department of Transportation reports the potential for growth in transit zone population to be % in expanding, large and new start areas. This is due to household growth and the emergence of transit as a viable mode of transportation. 7th Ave & Camelback METRO Light Rail STATION STATISTICS Connecting Cities Phoenix, Tempe, Mesa Rail Length Travel Time Operation Frequency 20 miles total 1 hr one end to end 23 min Phx. to Tempe hrs / day 7 days / week min. wait peak min. wait off-peak

6 Camelback Corridor 6 The assemblage is located in an affluent North Central Avenue neighborhood, North Central is well known for its historic residential neighborhoods with tree-lined streets and jogging trails, local coffee shops, exclusive restaurants, first-rate public schools (Madison School District) and exclusive private schools. There are numerous offices, shops and restaurants in the immediate area along with a ten story office building at the Southeast corner of Camelback Road and Central Avenue, M & I Bank is the major tenant. A shopping center, anchored by Target, is located at Camelback and 7th Avenue. The property is located just a few miles West of the renowned Biltmore area at 24th Street and Camelback Road. The assemblage is conveniently located near the SR 51 and I-17, providing easy access to entertainment and employment venues throughout the Valley of the Sun. This neighborhood is also a job-rich area within the thriving economy of the fifth largest city in the United States. The mixed-use development on the site will enable the popular live-work style units for small business owner/operators. With soaring fuel prices and approximately 350 new residents moving to the Phoenix area every day, the demand for urban housing has never been stronger. Keith Mishkin, a recognized Valley expert on urban living, is called upon by analysts and economists for market information. He states that People like that critical mass. It s what makes so many cities around the world great cities: that pedestrian lifestyle. So much of the architecture is the same out here. People love and appreciate architecture of urban living...if you look at any one of those cores, particularly downtown Phoenix, Scottsdale and Tempe...that s where you re going to see a tremendous amount of density and critical mass, and more and more people flocking to them. Retail will follow the roof tops here. Mishkin said, Nightlife will follow. There s enough space to create a really great new American City.

7 Development 7 The City of Phoenix has established a Transit-Oriented Development (TOD) Overlay District to encourage a pattern of development characterized by a mix of uses surrounding a transit station, where streets have a high level of connectivity, blocks are small and buildings and uses cater to the pedestrian. The purpose is to make access to and from the transit station walk-able and accessible in an environment that is humanscaled and provides for a mix of compatible and complementary land uses which facilitate transit rider-ship. Additional information is available in a brochure published by the City of Phoenix in conjunction with Metro Light Rail. The parcels with Camelback Road frontage are currently zoned C-2 and used for office and retail space and are in the Transit Overlay Plan. The parcels on Pasadena Avenue are zoned R-4 with multi-family use. All of the neighboring parcels around the assemblage have commercial or multi-family zoning with the exception of one single family rental property which is located on the Southeast corner of 3rd Avenue and Pasadena. Adjoining properties to the West have already obtained density and height variances with no substantial opposition from neighborhood groups. While it is always necessary to meet with neighborhood coalitions and work with the neighbors during zoning changes, both the Councilman and the Village Planner indicated that they would expect support from the neighborhood groups as long as neighborhood parking and traffic concerns are addressed in a constructive manner. The owners are not pursuing the zoning variances to keep all options open and allow a developer who can design the site and the buildings according to their own market intelligence and product strategy. The ultimate profitability will depend on the design of the final product. Underground parking will ensure the optimization of construction, but it does add to the cost of the finished product. Alternatively, spacious luxury units would also be highly marketable in this outstanding location. Comparable luxury units in the Biltmore and Scottsdale Waterfront areas are commanding $600 to $1,000 per square foot!

8 Area Photos 8 Orleans Office Building M&IBank Central & Camelback The Marue Apartment complex Royal Pasadena Apts Medlock Historical District Light Rail Tracks heading East!

9 Comps/Management 9 The redevelopment projects, condominium conversions, new condominiums, loft and luxury townhouses of the Camelback and Central Corridor have moved swiftly; many projects have sold out during the reservation phase. The average sale price for new upscale urban condos and lofts was approximately $424/SF in Phoenix in 2007 with additional revenues from parking, view premiums and custom design features. Some projects, such as the Optima Biltmore at Camelback Road and 24th Street, sold for an average of $470/SF in Century Plaza, a 15 story design with 143 units, is a few blocks farther South and priced at $475/SF. Tapestry on Central is a 280 unit complex on Encanto just off Central, with prices starting at $299/SF. Chateau on Central is a Victorian design with only 21 units and four stories, nearing completion with unit sizes ranging from 5,100 sf to 8,200 sf, with starting prices of $318/SF. Portland Place at Central and Portland, is a ten story, 190 unit complex with prices at starting at $533/SF. The Landmark on Central is a conversion with 238 units and 17 stories, selling at $279/SF. Teresa Welborn is the principle investor in the assemblage. She is President of Desert Homes Property Management Corporation (DHPM) which manages most of the assemblage properties. Ms. Welborn has been a real estate investor for over 30 years. Over the last several years Ms. Welborn has purchased or led investor groups to purchase a number of apartment communities in the Phoenix area. Ms. Welborn s business experience includes management consulting and operating several small businesses. There are numerous other investors involved in the project, however Ms. Welborn has full decision authority for the project. All of the parcels are occupied with excellent occupancy with the exception of the Beef Eater s Restaurant which is being offered for lease, all or part. The owners may be willing to continue to manage the buildings for a twelve to twenty-four month period while the new owner pursues the zoning variances. Below is an illustration of potential income. Gross Market Rents Adjusted Gross Inc Expenses (40%) NOI SF Buildings SF Land Zoning Current Occupancy Royal Pasadena 20 Units $222,000 $210,910 $84,360 $126,540 19,224 18,910 R-4 95% Camelback & 3rd Avenue Assemblage Property Income/Expense Summary Proforma Marue 12 Units $85,680 $81,396 $32,558 $48,838 7,303 18,910 R-4 95% U/A 36 Units $280,140 $266,133 $106,453 $159,680 28,779 35,987 R-4 95% Tamarack 20 Units $152,400 $144,780 $57,912 $86,868 16,928 15,180 R-4 95% Beef Eater s Restaurant $204,000 $204,000 Triple Net $204,000 17,881 46,590 C-2 Occupied Orleans 33 Suites $210,000 $199,500 $79,800 $119,700 19,815 41,000 C-2 95% 444 Office 4 Floors $130,500 $123,975 $49,590 $74,385 11,089 30,000 C-2 95% Total $1,284,720 $1,230,694 $410,673 $820, , ,577 Note: The above financial information is designed to illustrate potential income during the entitlement/preliminary construction period. The Beef Eaters Restaurant is currently being offered for lease with attractive terms, for additional income.

10 Demographics 10 Market Area: 5 mile radius of 400 W Camelback Road, Phoenix AZ Population: In a five mile radius of the assemblage, the annual rate of population growth from 2007 to 2012 is expected to be 2.08%. The 2007 population in the same five mile radius was 487,309, increasing to 540,208 by In 2000, the census count was 447,619. The rate of change from 2000 to 2007 was 1.37% annually. Currently, the population is 51.8 percent mail and 48.2 percent female. Households: The household count in this market area has changed from163,968 in 2000 to 176,185 in 2007, a change of 1.16%. The five year projection of households is 194,790, a change of 2.03% annually from Average household size in 2007 is 2.70, compared to 2.67 in The number of families in 2007 was 97,256 in the market area. Housing: In 2007, 41.8% of the 191,570 housing units in the market area are owner occupied; 50.1% are renter occupied and 8% are vacant. In 2000 there were 177,159 housing units--44.2% owner occupied, 48.4% renter occupied and 7.4% vacant. The rate of change in housing units since 2000 is 1.08 %. Median home value in the market area was $197,655 in 2007 compared to a median home value of $192,285 for the US. In five years, median home value is projected to change by 3.65% annually to $236,432. From 2000 to 2007, median home value changed by 11.24% annually. Households by Income: Median household income in 2007 was $ in this market area compared to $53,154 for all US households. Median household income is projected to be $50,059 in five years. In 2000, median household income was $32,998, compared to $23,888 in Average household income in 2007 was $60,189 in this market area compared to $73,126 for all US households. Average household income is projected to be $74,212 in five years. In 2000,average household income was $46,800, compared to $33,343 in Per capita income in 2007 was $22,172 in this market area compared to $27,916 for all US households. Per capita income is projected to be $27,182 in five years. In 2000,average household income was $17,512, compared to $13,790 in 1990.

11 Demographics (cont) 11 Market Area: 5 mile radius of 400 W Camelback Road, Phoenix AZ Population by Employment: In 2007, the total number of businesses in a 1 mile radius was 838, with 5,826 employees. In a 3 mile radius there were 8,329 businesses with 61,326 employees. And in a 5 mile radius there were 17,561 businesses with 164,555 employees. In 2007, 95.6% of the civilian labor force in this market area were employed and 3.4% were unemployed. In comparison, 93.4% of the US civilian labor force is employed and 6.6% are unemployed. In five years the rate of employment in this market area is expected to be 96% with an 4% unemployment rate, compared to the US rates of 93.9% and 6.1% respectively % of the employed are in white collar jobs (compared to 60.2% nationwide) % are in service jobs (compared to 16.5% nationwide) % are in blue collar jobs (compared to 23.3% nationally) In 2000, 64.8% of the market area population drive alone to work and 2.8% worked at home. The average travel time to work in 2000 was 24.4 minutes compared to the US average of 25.5 minutes. Population by Education: In 2000, the educational attainment of the population aged 25 or older in the market area was distributed as follows: % had not earned a high school diploma (19.6% in the US) were high school graduates only (28.6% in the US) - 5.7% had completed anassociates degree (6.3% in the US) - 12% had a Bachelor s degree (15.5% in the US) - 7.5% had earned a Master s/professional/doctorate Degree (8.9% in the US) The data contained in this demographics section have been reproduced with permission of ESRI/Business Analyst Online All data contained is believed to be accurate, however SJ Fowler GMAC Real Estate nor the owners of this assemblage shall be held liable for any errors contained herein.

12 12 Please direct all inquires to: Lloyd Kaipainen PC CCIM Associate Broker S J Fowler/GMAC Real Estate 5060 N 40th Street Phoenix, AZ Voice Fax lloydofakron@sprintmail.com Please visit for the latest developments on Light Rail construction.