RESIDENTIAL MARKET POTENTIAL

Transcription

1 RESIDENTIAL MARKET POTENTIAL On Behalf of the CITY OF UTICA Conducted by 6 East Main Street Clinton, New Jersey 08809

2 6 East Main Street Clinton, New Jersey facsimile Research & Strategic Analysis STUDY CONTENTS Residential Market Potential 1 Introduction 1 Market Potential 3 Where will the potential market for housing in the City of Utica move from? 4 Market Potential for 6 Where will the potential market for housing in move from? 7 How many households are likely to move to? 7 Table 1: Potential Housing Market 9 How fast will the units lease or sell? 12 Target Market Analysis 14 Who is the potential market? 14 Table 2: Target Residential Mix By Household Type 16 Downtown Market-Rate Rent and Price Ranges 21 What is the market currently able to pay? 21 Table 3: Optimum Market Position 22 Rental Distribution 24 Table 4: Target Groups For Rental Lofts/Apartments 25 For-Sale Distribution 26 Table 5: Target Groups For For-Sale Apartments 27 Table 6: Target Groups For Townhouses 29 The Current Context 30 Demographic Overview 30 Table 7: Household Income Groups as a Share of Total Households Oneida County, New York 31 Table 8: Household Income Groups as a Share of Total Households 32 Table 9: Housing Stock, Tenure and Vacancy Oneida County, New York 34 Table 10: Housing Stock, Tenure and Vacancy 35 The Supply Side 36 Table 11: Housing Value, Specified Owner-Occupied Housing Units Oneida County, New York 37 Table 12: Housing Value, Specified Owner-Occupied Housing Units 38 Table 13: Summary Of Selected Rental Properties 39 Table 14: Summary of Selected Individual Listings 41

3 RESIDENTIAL MARKET POTENTIAL Page ii Downtown Housing Types 43 Courtyard Apartment Building 43 Loft Apartment Building 43 Townhouse/Rowhouse 44 Flex Rowhouse (Live-Work Rowhouse) 44 Downtown Housing Strategies Designate Areas for Residential Development Ensure Appropriate Urban Design Market and Monitor the Downtown 50 Policies, Programs and Best Practices Policies and Programs 52 Special Code for Adaptive Re-Use 52 Loft Overlay Zoning 53 Adaptive Re-Use Handbook 53 Adaptive Re-Use Ombudsman 53 Sales and Income Tax Incentives 54 Gap Financing Pool 54 Live Where You Work 55 City-Owned Land 55 Arts District Housing Best Practices 56 Smart Growth Zoning Codes: A Resource Guide 56 Form-Based Zoning Codes 56 Methodology 58 Assumptions and Limitations 67 Copyright 68 o

4 6 East Main Street Clinton, New Jersey (908) (908) facsimile Research & Strategic Analysis R E S I D E N T I A L M A R K E T P O T E N T I A L INTRODUCTION The purpose of this study is to identify the market potential for newly-introduced market-rate housing units created both through the adaptive re-use of existing non-residential buildings as well as through new construction to be leased or sold in. For purposes of this study, has been defined as an area encompassing the Central Business District bounded by Oriskany Boulevard to the north, John and Park Streets to the east, Oneida Square to the south, and State Street to the west; and includes Bagg s Square East and West, as well as the Broad Street Corridor. Although the Brewery District is technically located outside the Downtown Study Area, there is a general consensus is that this area has many of the characteristics that make an attractive downtown neighborhood; the conclusions and recommendations of this study could, therefore, encompass the Brewery District. The extent and characteristics of the potential market for Downtown housing units were identified using Zimmerman/Volk Associates proprietary target market methodology. This methodology was developed in response to the challenges that are inherent in the application of conventional supply/demand analysis to urban development and redevelopment. Supply/demand analysis ignores the potential impact of newly-introduced housing supply on settlement patterns, which can be substantial when that supply is specifically targeted to match the housing preferences and economic capabilities of the draw area households. In contrast to conventional supply/demand analysis, then which is based on supply-side dynamics and baseline demographic projections target market analysis determines the depth

5 RESIDENTIAL MARKET POTENTIAL Page 2 and breadth of the potential market derived from the housing preferences and socio-economic characteristics of households in the defined draw area. Because it considers not only basic demographic characteristics, such as income qualification and age, but also less-frequently analyzed attributes such as mobility rates, lifestyle patterns and household compatibility issues, the target market methodology is particularly effective in defining a realistic housing potential for urban development and redevelopment. In brief, using the target market methodology, Zimmerman/Volk Associates determined: Where the potential renters and buyers for new housing units in are likely to move from (the draw areas); Who currently lives in the draw areas and what they are like (the target markets); How many are likely to move to if appropriate housing units were to be made available (depth and breadth of the market); What their housing preferences are in aggregate (rental or ownership, multi-family or single-family); What their alternatives are (existing housing stock in the city); What they will pay to live in (market-rate rents and prices); and How quickly they will rent or buy the new units (market capture/absorption forecasts). The target market methodology is described in detail in the METHODOLOGY section at the end of this study. NOTE: Tables 1 through 6, included in this document, contain summaries of the market potential and optimum market position for new market-rate housing units created through adaptive re-use of existing buildings and/or new construction within, in the City of Utica, Oneida County, New York. Tables 7 through 14, also included in this document, outline the relevant demographic and supplyside context. The appendix tables, provided in a separate document, contain migration and target market data covering the appropriate draw areas for the Study Area..

6 RESIDENTIAL MARKET POTENTIAL Page 3 MARKET POTENTIAL American households, perhaps more than any other nation s, have always demonstrated extraordinary mobility. Last year, depending on region, approximately 15 percent of American households moved from one dwelling unit to another. In general, household mobility is higher in urban areas and in the West; a higher percentage of renters move than owners; and a higher percentage of younger households move than older households. Analysis of migration, mobility and geo-demographic characteristics of households currently living within defined draw areas is therefore integral to the determination of the depth and breadth of the potential market for market-rate housing units within. Analysis of Oneida County migration and mobility patterns from 1999 through 2003 the latest data available from the Internal Revenue Service shows that the number of households moving into the county has increased from approximately 2,750 households in 1999 to 3,125 households in Nearly a third of the county s in-migration is from adjacent or nearby counties households moving to Oneida County from Herkimer, Madison and Onondaga Counties. Over the same period, the number of households moving out of the county declined from just under 3,800 households in 1999 to 3,465 households in As a result, the annual losses in households due to net out-migration experienced by Oneida County have fallen from more than 1,000 households in 1999 to just 340 households in Between the 1990 Census and the 2000 Census, the City of Utica lost more than 3,250 households: the number of households living within the city limits fell from 28,358 households in 1990 to 25,100 households in 2000, a loss of approximately 11 percent. To achieve a stable household population then, a core premise for the City of Utica should be that it is just as important to retain current residents as it is to attract new ones.

7 RESIDENTIAL MARKET POTENTIAL Page 4 This study therefore identifies the depth and breadth of the potential market for market-rate housing units within both the City of Utica and, including those households already living in the city and those households that are likely to move into the city if appropriate housing options were available. Where will the potential market for housing in the City of Utica move from? The depth and breadth of the potential market for market-rate housing units in the City of Utica was determined through migration, mobility and target market analyses of households currently living within defined draw areas. The draw areas for the City of Utica have been delineated as follows: The local (internal) draw area, covering households currently living within the Utica city limits, as well as those currently living in the balance of Oneida County. Approximately 12 percent of the households living in the city move to another residence within the city each year. Just over three percent of the households living in the balance of Oneida County move to a residence within the city each year. The regional draw area, covering households with the potential to move to the City of Utica from surrounding and nearby counties (Herkimer, Madison and Onondaga Counties, New York). Households moving to Oneida County from this area comprise a third of total in-migration. The national draw area, covering households with the potential to move to the City of Utica from all other U.S. counties. Just over 69 percent of all households moving into Oneida County are moving from all other counties in the United States not included in the regional draw area. As derived from migration, mobility and target market analysis, then, the draw area distribution of market potential (those households with the potential to move within or to the City of Utica and the financial capacity to rent or purchase market-rate housing units) would be as follows:

8 RESIDENTIAL MARKET POTENTIAL Page 5 Market Potential by Draw Area City of Utica (Local Draw Area): Oneida County (Local Draw Area): Adjacent and Nearby Counties (Regional Draw Area): Balance of US (National Draw Area): Total: SOURCE: Zimmerman/Volk Associates, Inc., percent 44.4 percent 7.3 percent 17.4 percent percent

9 RESIDENTIAL MARKET POTENTIAL Page 6 MARKET POTENTIAL FOR DOWNTOWN UTICA Utica is a very attractive and historic city of approximately 59,200 people; although located in the easternmost portion of Oneida County, the city is the regional center of the Mohawk Valley. Utica occupies just over 16 square miles, and is the largest city in Oneida County. The New York Thruway (Interstate 90) crosses the northern part of the city, as do the Mohawk River and the historic Eric Canal. The Utica Marsh State Wildlife Management Area occupies a large area in the northern half of the city, which is also the location of the Riverside Center Mall. Utica currently contains approximately 28,550 housing units, of which an estimated 24,570 were occupied. In 2005, median housing value citywide is $75,900, just under 50 percent below that of the national median of $149,300, in large part because more than two-thirds of the city s housing units were built before The Utica median income of $27,000 which, although 44 percent below the national median of $47,800, is the same as the median household income in the City of Syracuse. However, more than 25 percent of Utica s households have annual incomes of $50,000 or more. is the location of most of the county and city s civic buildings, the Memorial Auditorium, a number of churches, several banks, the Hotel Utica and Radisson Hotel, and Union Station. Several arts and cultural institutions are located in Downtown, including the Children s Museum, the restored Stanley Theater home to the Utica Symphony Orchestra, the Mohawk Valley Ballet, the Great Artists Series, and the Broadway Theatre League and the Munson- Williams-Proctor Arts Institute, with its Museum of Art, Performing Arts, and School of Art gallery. Currently, offers limited neighborhood-oriented retail and services, although there are venues attractive to young people the Chatterbox and Space 26 on Bank Place as well as a small selection of clothing stores, jewelry stores, pizza parlors and coffee shops located within the Downtown. During the summer months, Utica is also home to the Bank Place Jazz Fest, Utica Monday Nite, and Saranac Thursdays, which are attracting greater crowds each year.

10 RESIDENTIAL MARKET POTENTIAL Page 7 Where will the potential market for housing in move from? The target market methodology also identifies those households with a preference for Downtown living. After discounting for those segments of the potential market with preferences for suburban and/or rural locations, the distribution of draw area market potential for new housing units in would be as follows: Market Potential by Draw Area DOWNTOWN UTICA City of Utica (Local Draw Area): Oneida County (Local Draw Area): Adjacent and Nearby Counties (Regional Draw Area): Balance of US (National Draw Area): Total: SOURCE: Zimmerman/Volk Associates, Inc., percent 31.1 percent 4.5 percent 22.0 percent percent The City of Utica and the national draw area represent a significantly larger proportion of market potential for new housing in Downtown than for the city as a whole. Conversely, the balance of Oneida County and the regional draw area represent significantly smaller segments of market potential for Downtown than for the city. How many households are likely to move to? Based on the target market analysis, in the year 2005, up to 1,000 younger singles and couples, empty nesters and retirees, and family-oriented households represent the potential market for new market-rate housing units within. The housing preferences of these draw area households according to tenure (rental or ownership) and broad financial capacity can be arrayed as follows (see also Table 1):

11 RESIDENTIAL MARKET POTENTIAL Page 8 Potential Market for New Housing Units DOWNTOWN UTICA NUMBER OF PERCENT HOUSING TYPE HOUSEHOLDS OF TOTAL Multi-family for-rent % Multi-family for-sale % Single-family attached for-sale % Low-range single-family detached % Mid-range single-family detached % High-range single-family detached % Total 1, % SOURCE: Zimmerman/Volk Associates, Inc., These 1,000 households comprise approximately 38 percent of the nearly 2,600 households that represent the potential market for all of the City of Utica, a share of the total market that is consistent with Zimmerman/Volk Associates experience in other cities. For example, in recent analyses, the downtown market was found to represent approximately 23 percent of the city s potential market in Birmingham, Alabama and Atlanta, Georgia; 26 percent in Norfolk, Virginia, Redding, California, and Toledo, Ohio; 30 percent in Detroit and Grand Rapids, Michigan, Spokane, Washington, and Baltimore, Maryland; 35 percent in Lexington, Kentucky and Buffalo, New York; and 36 percent and 38 percent in Louisville, Kentucky and New Haven, Connecticut, respectively. As in Utica, many of these cities are in low-growth or slow-growth regions, where the majority of any increase in the number of households has typically occurred outside the city limits. In most cases, the introduction of newly-created, appropriately-positioned housing units within the city limits, particularly in the downtown, has had an impact on settlement patterns by providing appropriate new housing options for households that previously had none.

12 Table 1 Potential Housing Market Derived From New Unit Purchase And Rental Propensities Of Draw Area Households With The Potential To Move To The Area In 2005 The City of Utica; Balance of Oneida County; Herkimer, Madison and Onondaga Counties, New York; All Other U.S. Counties Draw Areas Total Target Market Households With Potential To Rent/Purchase In The 2,590 Total Target Market Households With Potential To Rent/Purchase In 1,000 Potential Housing Market Total Households: ,000 {Mix Distribution}: 31.0% 27.0% 20.0% 7.0% 11.0% 4.0% 100.0% Target Residential Mix (Excluding Single-Family Detached) Multi- Single Family Family Attached Urban Detached For-Rent For-Sale All Ranges Low-Range Mid-Range High-Range Total Multi- Single Family Family..... Attached.. For-Rent For-Sale All Ranges Total Total Households: {Mix Distribution}: 39.8% 34.6% 25.6% 100.0% NOTE: Reference Appendix One, Tables 1 through 11. SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc.

13 RESIDENTIAL MARKET POTENTIAL Page 10 The market potential numbers therefore indicate the depth of the potential market for new housing units within, not housing need and not projections of household change. These are the households that are likely to move within or to Downtown if appropriate housing options were to be made available. From the perspective of draw area target market propensities and compatibility, and within the context of the new housing marketplace in the Utica market area, the potential market for new housing units within the Downtown could include the full range of housing types, from rental multi-family to for-sale single-family detached. However, redevelopment of existing buildings is limited to multi-family housing; opportunities for new construction should also concentrate on higher-density housing types, which support urban development and redevelopment most efficiently and include: Rental lofts and apartments (multi-family for-rent); For-sale lofts and apartments (multi-family for-sale); and Townhouses, rowhouses, live-work or flex units (single-family attached for-sale). The creation of loft dwelling units through adaptive re-use of existing buildings has been instrumental in the establishment of successful residential neighborhoods in or near the downtowns of numerous American cities, from Louisville, Kentucky, where the first loft apartment building was successfully introduced and leased in 2002, to Saint Louis, Missouri, where, over the past three years, more than 900 loft apartments in the Washington Avenue Loft District have been completed and occupied, are under construction, or are in development. In addition to the major cities of New York, Boston, San Francisco and Chicago, other cities where loft development has occurred or is underway include Albuquerque, Atlanta, Baltimore, Birmingham, Buffalo, Charlotte, Dallas, Denver, Detroit, Lexington, Louisville, Grand Rapids, Minneapolis, Richmond, Nashville, New Orleans, Portland, Roanoke, Saint Paul, Syracuse and Toledo.

14 RESIDENTIAL MARKET POTENTIAL Page 11 Excluding single-family detached units, then, this analysis has determined that in the year 2005, just under 800 households currently living in the defined draw areas represent the pool of potential renters/buyers of new market-rate housing units (new construction and/or adaptive re-use of formerly non-residential structures) within (see again Table 1). As derived from the tenure and housing preferences of those draw area households, the distribution of rental and forsale multi-family and for-sale single-family attached housing types would be as follows: Potential Housing Market Market-Rate Higher-Density Housing Units DOWNTOWN UTICA NUMBER OF PERCENT HOUSING TYPE HOUSEHOLDS OF TOTAL Rental Multi-Family % (lofts/apartments, leaseholder) For-Sale Multi-Family % (lofts/apartments, condo/co-op ownership) For-Sale Single-Family Attached % (townhouses/rowhouses, fee-simple ownership) SOURCE: Zimmerman/Volk Associates, Inc., Total % Again, these numbers indicate the depth of the potential market for market-rate housing units within if appropriate housing options were available. These households represent a lost opportunity for the city. Without an appropriate range of available housing options in, these households have either moved elsewhere or have moved less frequently than their typical mobility rates would indicate.

15 RESIDENTIAL MARKET POTENTIAL Page 12 How fast will the units lease or sell? After nearly 20 years experience in cities across the country, and in the context of the target market methodology, Zimmerman/Volk Associates has determined that, for new development (including both adaptive re-use of existing non-residential buildings as well as new construction) within the downtown study area, where few or no market-rate housing units currently exist, an annual capture of between 10 and 15 percent of the potential market, depending on housing type, is achievable. Based on a 15 percent capture of the potential market for rental and for-sale multifamily units, and a 10 percent capture of for-sale single-family attached units, then, Downtown Utica should be able to support up to 108 new units per year, as follows: Annual Capture of Market Potential DOWNTOWN UTICA NUMBER OF CAPTURE NUMBER OF HOUSING TYPE HOUSEHOLDS RATE NEW UNITS Rental Multi-Family % 47 (lofts/apartments, leaseholder) For-Sale Multi-Family % 41 (lofts/apartments, condo/co-op ownership) For-Sale Single-Family Attached % 20 (townhouses/rowhouses, fee-simple ownership) SOURCE: Zimmerman/Volk Associates, Inc., Total Based on the migration and mobility analyses, and dependent on the creation of appropriate new housing units, more than 57 percent of the annual market potential of 108 new dwelling units in, or approximately 60 units per year, could be from households moving from outside Utica. Over five years, the realization of that market potential could lead to an increase of 300 households living in that moved from a location other than the city.

16 RESIDENTIAL MARKET POTENTIAL Page 13 This analysis examines market potential over the next five years. Because of the significant changes in the composition of American households that occurred during the 1990s (see THE TARGET MARKETS below), and the likelihood that significant changes will continue, both the depth and breadth of the potential market for downtown living is likely to expand. The experience of other American cities has been that, once the downtown residential alternative has been established, the percentage of households that will consider downtown housing typically increases. NOTE: Target market capture rates are a unique and highly-refined measure of feasibility. Target market capture rates are not equivalent to and should not be confused with penetration rates or traffic conversion rates. The target market capture rate is derived by dividing the annual forecast absorption in aggregate and by housing type by the number of households that have the potential to purchase or rent new housing within a specified area in a given year. The penetration rate is derived by dividing the total number of dwelling units planned for a property by the total number of draw area households, sometimes qualified by income. The traffic conversion rate is derived by dividing the total number of buyers or renters by the total number of prospects that have visited a site. Because the prospective market for a location is more precisely defined, target market capture rates are higher than the more grossly-derived penetration rates. However, the resulting higher capture rates are well within the range of prudent feasibility.

17 RESIDENTIAL MARKET POTENTIAL Page 14 TARGET MARKET ANALYSIS Who is the potential market? The market for urban housing, particularly within downtowns, is now being fueled by the convergence of the two largest generations in the history of America: the 82 million Baby Boomers born between 1946 and 1964, and the 78 million Millennials, who were born from 1977 to Boomer households have been moving from the full-nest to the empty-nest life stage at an accelerating pace that will peak sometime in the next decade and continue beyond Since the first Boomer turned 50 in 1996, empty nesters have had a substantial impact on urban, particularly downtown housing. After fueling the dramatic diffusion of the population into everlower-density exurbs for nearly three decades, Boomers, particularly affluent Boomers, are rediscovering the merits and pleasures of urban living. At the same time, Millennials are just leaving the nest. The Millennials are the first generation to have been largely raised in the post- 70s world of the cul-de-sac as neighborhood, the mall as village center, and the driver s license as a necessity of life. As has been the case with predecessor generations, significant numbers of Millennials are heading for the city. They are not just moving to New York, Chicago, San Francisco and the other large American cities; often priced out of these larger cities, Millennials are discovering second, third and fourth tier urban centers. The convergence of two generations of this size simultaneously reaching a point when urban housing matches their life stage is unprecedented. This year, there are about 40 million Americans between the ages of 20 and 29, forecast to grow to 44 million by In that same year, the population aged 50 to 59 will have also reached 44 million, from 36 million today. The synchronization of these two demographic waves will mean that there will be an additional 12 million potential urban housing consumers 10 years from now. As determined by the target market analysis, and reflecting the national trend, the potential market for new market-rate housing units in the Downtown can be characterized by general household type as follows (see also Table 2):

18 RESIDENTIAL MARKET POTENTIAL Page 15 Downtown Residential Mix By Household Type DOWNTOWN UTICA PERCENT RENTAL FOR-SALE FOR-SALE HOUSEHOLD TYPE OF TOTAL MULTI-FAM. MULTI-FAM. ROWHOUSES Empty-Nesters & Retirees 31% 20% 41% 35% Traditional & Non-Traditional Families 7% 3% 4% 20% Younger Singles & Couples 62 % 77 % 55 % 45 % Total 100% 100% 100% 100% SOURCE: Zimmerman/Volk Associates, Inc., The largest general market segment is composed of younger, mostly childless households (younger singles and couples). These households typically choose to live in neighborhoods that contain a diverse mix of people, housing types, and uses. The most significant potential markets for in this segment are Small-City Singles, Twentysomethings, Suburban Achievers and The VIPs young professionals and office workers; small business owners; and artists or artisans. These households prefer to live downtown for its diversity, as well as for the availability of a variety of activities, including employment and cultural opportunities, as well as restaurants and clubs. Younger singles and couples currently represent between 45 and 77 percent of the market, depending on housing type, for market-rate housing units in. However, as noted above, the Millennials are likely to become an even larger market for Downtown housing. If the preference for urban housing demonstrated by the leading edge of this group is representative of the entire generation, the market potential from this segment should increase significantly over the next decade.

19 Table 2 Target Residential Mix By Household Type Derived From New Unit Purchase And Rental Propensities Of Draw Area Households With The Potential To Move To The Area In 2005 The Multi- Single Family Family Attached.. Total For-Rent For-Sale All Ranges Number of Households: Empty Nesters & Retirees 31% 20% 41% 35% Traditional & Non-Traditional Families 7% 3% 4% 20% Younger Singles & Couples 62% 77% 55% 45% 100% 100% 100% 100% SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc.

20 RESIDENTIAL MARKET POTENTIAL Page 17 The next largest market segment is comprised of older households (empty nesters and retirees). A significant number of these households have children who have grown up and moved away; another large percentage are retirees, with incomes from pensions, savings and investments, and social security. Many of them are currently living in Utica s older neighborhoods and suburbs. These older households are quite dissimilar in their attitudes from either younger or family-oriented households. They have different expectations, and paramount among them is the perceived ease and convenience of apartment living, without the maintenance and repairs required for single-family detached houses. The most significant potential markets for in this segment are Middle- Class Move-Downs, Middle-American Retirees and Affluent Empty Nesters, predominantly empty-nest couples (many of whom lived in in their youth and still retain strong emotional and cultural ties to the Downtown) who are likely to be attracted to appropriately-designed downtown housing. An additional significant empty-nester market is Cosmopolitan Elite. In other cities, these households have been among the first to move into downtown units, particularly once larger and more amenity-oriented condominiums have become available. Empty-nest and retiree households currently represent between 20 percent and 41 percent of the market for housing units in, depending on housing type. However, as with the Millennial Generation, over the next several years this market segment should substantially increase, because larger numbers of the Baby Boom generation will be entering the empty-nest life stage. In 2005, the oldest Baby Boomers are celebrating their 59th birthdays; in city after city across the country, a significant number of Baby Boomers have already made the decision to move from detached houses in the suburbs to rental or condominium apartments in or near downtowns, when those units have been available. This will be a significant segment of the empty-nest market in.

21 RESIDENTIAL MARKET POTENTIAL Page 18 The third, and smallest, general market segment is comprised of family-oriented households (traditional and non-traditional families). Non-traditional families, which during the 1990s became an increasingly larger proportion of all U.S. households, encompass a wide range of family households, from a single parent with one or more children, an adult caring for younger siblings, a grandparent with grown children and grandchildren, to an unrelated same-sex couple with children. Traditional families contain a married man and woman with an average of two or more children. These can also include blended families, in which each parent was previously married to another individual and each has children from that marriage. Households with school-age children have historically been among the first to leave a city when one or all of three significant neighborhood elements good schools, safe and secure streets, and sufficient green space are perceived to be at risk. Although this is the smallest market segment, the households within the family groups Full-Nest Urbanites, Multi-Cultural Families, Unibox Transferees, Multi-Ethnic Families and The Entrepreneurs are households that have a preference for urban living. Most of the adults in these households were raised in or near an urban center and have rejected the suburban alternative; most will already have made appropriate school accommodations public, parochial or private. Depending on housing type, family-oriented households comprise between three and 20 percent of the market for housing units within.

22 RESIDENTIAL MARKET POTENTIAL Page 19 The primary target groups, their median and range of incomes, and median home values, are as follows: Primary Target Groups (In Order of Median Income) DOWNTOWN UTICA HOUSEHOLD MEDIAN BROAD INCOME MEDIAN HOME TYPE INCOME RANGE VALUE (IF OWNED) Empty Nesters & Retirees Old Money $220,700 $150,000 $350,000 $352,500 Suburban Establishment $82,700 $45,000 $125,000 $194,100 Affluent Empty Nesters $82,300 $40,000 $135,000 $191,200 Cosmopolitan Elite $76,500 $40,000 $125,000 $190,100 Cosmopolitan Couples $65,700 $35,000 $120,000 $216,000 Mainstream Retirees $64,200 $35,000 $100,000 $122,400 Multi-Ethnic Empty Nesters $53,300 $35,000 $90,000 $144,800 Middle-Class Move-Downs $51,200 $30,000 $80,000 $141,900 Middle-American Retirees $49,700 $30,000 $75,000 $111,100 Traditional & Non-Traditional Families The Entrepreneurs $114,200 $75,000 $150,000 $296,900 Unibox Transferees $82,600 $50,000 $125,000 $195,900 Full-Nest Urbanites $74,300 $40,000 $100,000 $257,000 Multi-Ethnic Families $51,300 $30,000 $80,000 $124,500 Multi-Cultural Families $49,300 $30,000 $75,000 $162,800 Younger Singles & Couples e-types $81,700 $50,000 $125,000 $234,900 The VIPs $72,500 $45,000 $100,000 $168,800 Fast-Track Professionals $68,200 $40,000 $90,000 $162,800 Upscale Suburban Couples $67,900 $40,000 $85,000 $149,200 New Bohemians $54,800 $30,000 $90,000 $188,300 Twentysomethings $53,900 $30,000 $80,000 $132,800 Suburban Achievers $52,600 $25,000 $90,000 $134,200 No-Nest Suburbanites $51,800 $25,000 $85,000 $125,400 Urban Achievers $47,700 $25,000 $80,000 $169,200 Small-City Singles $46,200 $25,000 $75,000 $125,600 NOTE: The names and descriptions of the market groups summarize each group s tendencies as determined through geo-demographic cluster analysis rather than their absolute composition. Hence, every group could contain anomalous households, such as empty-nester households within a full-nest category. SOURCE: Zimmerman/Volk Associates, Inc., 2005.

23 RESIDENTIAL MARKET POTENTIAL Page 20 The mix of general household types often progresses during the establishment of downtown living. In city after American city, the successful establishment of new market-rate housing options in previously non-residential areas has often been initially dependent upon risk-oblivious households. Risk-oblivious households are mostly young singles and couples, often with a large contingent of gays and a high percentage of artists and artisans seeking inexpensive live-work space. These pioneers will typically begin neighborhood transformation by living illegally in commercial space. Eventually, once the area becomes populated, restaurants, bars, clubs and innovative or off-beat retail establishments begin to define the neighborhood character. At this point, these neighborhoods become sought after by risk-tolerant households. Risk-tolerant households are also usually young and almost always childless. The risk-tolerant includes those willing to make investments in ownership housing sometimes they are the former risk oblivious seeking to recoup years of sweat equity. In every case, however, the neighborhood established by these households has grown to encompass more than simply housing; its flavor and tone has been reinforced by the non-residential uses avant garde shops, cutting-edge galleries, trendy clubs, and stylish eating and drinking establishments that follow the risk-oblivious and risk-tolerant households, make the neighborhood acceptable for the risk-aware households that follow and contribute to the area s residential rent/price escalation and perceived economic stability. The target market analysis indicates that there is a growing number of younger and older, singleand two-person households who already live within the Utica city limits, and a significant market with the potential to move from other urban areas, particularly the City of Syracuse.

24 RESIDENTIAL MARKET POTENTIAL Page 21 DOWNTOWN MARKET-RATE RENT AND PRICE RANGES What is the market currently able to pay? Based on the tenure preferences of draw area households and their income and equity levels, the general range of rents and prices for newly-developed market-rate residential units that could currently be sustained by the market is as follows (see also Table 3): Rent, Price and Size Range Newly-Created Housing DOWNTOWN UTICA RENT/PRICE SIZE RENT/PRICE HOUSING TYPE RANGE RANGE PER SQ. FT. Rental Hard Lofts * $550-$1,050/month 500-1,000 sf $1.05-$1.10 psf Soft Lofts $750-$1,450/month 650-1,350 sf $1.07-$1.15 psf For-Sale Soft Lofts $80,000-$150, ,200 sf $125-$133 psf Luxury Apartments $165,000-$275, ,750 sf $157-$174 psf Townhouses $145,000-$250,000 1,000-2,000 sf $125-$145 psf * Unit interiors of hard lofts typically have high ceilings and commercial windows and are either minimally finished, limited to architectural elements such as columns and fin walls, or unfinished, with no interior partitions except those for bathrooms. Unit interiors of soft lofts may or may not have high ceilings and often include full or partial interior partitions. SOURCE: Zimmerman/Volk Associates, Inc., 2005.

25 Table 3 Optimum Market Position Base Base Base Rent/Price Unit Size Rent/Price Housing Type Range* Range Per Sq. Ft.* Multi-Family For-Rent Hard Lofts $550 to 500 to $1.05 to Open Floorplans $1,050 1,000 $1.10 Soft Lofts $750 to 650 to $1.07 to Studios to 3-Bedrooms $1,450 1,350 $1.15 Multi-Family For-Sale Soft Lofts $80,000 to 600 to $125 to 1- and 2-Bedrooms $150,000 1,200 $133 Luxury Apartments $165,000 to 950 to $157 to 2- and 3-Bedrooms $275,000 1,750 $174 Single-Family Attached For-Sale Townhouses $145,000 to 1,000 to $125 to 2- and 3-Bedrooms $250,000 2,000 $145 NOTE: Base rents/prices in year 2005 dollars and exclude floor and view premiums, options and upgrades. SOURCE: Zimmerman/Volk Associates, Inc.

26 RESIDENTIAL MARKET POTENTIAL Page 23 The above rents and prices are in year 2005 dollars, are exclusive of consumer options and upgrades, or floor or location premiums, and cover the broad range of rents and prices currently sustainable in Downtown. These rents and prices are also market rates that is, within the current economic capability of the target households that represent the initial market for downtown housing; however, depending on acquisition and construction costs, units in these price and rent ranges could require substantial subsidy to bring to market. Significant premiums are typically achievable on units that face squares, parks or greens, or are located on high floors with view potential. The rents and prices will depend not only on location and adjacencies, but also on the number of new units created in that location; the larger the number of units created, the greater the potential for a wider range of values. To meet the expectations of potential urban residents, all units should be wired for cable television and high-speed internet or, if practical, be served by a building-wide WiFi system. For hard lofts or soft lofts in adaptive re-use structures, existing floors should be salvaged and refinished wherever possible; in new construction, stained and polished concrete would be appropriate, with ceramic tile for the bathroom and kitchen areas. In the kitchens, buyers in particular will expect countertops to be polished concrete or some other solid material, e.g. Corian, granite, with integral or undermount sinks, mid-scale appliances, and plain-front European-style cabinetry; renters will expect contemporary, durable finishes appropriate to urban living, as opposed to the beige interiors of suburban multi-family housing. Although hard lofts are typically designed without interior walls, with the exception of the bathroom, as much closet and storage space as possible should be provided. Soft lofts are units that are fully finished and partitioned into individual rooms but also contain architectural elements reminiscent of hard lofts, such as exposed beams, ductwork and masonry or brick walls, reconditioned floors and large, commercial-style windows. The luxury apartments will require more conventional finishes, such as crown molding, chair rails, five-panel interior doors, carpeted bedroom floors, with carpet or hardwood in living and

27 RESIDENTIAL MARKET POTENTIAL Page 24 dining areas and tile in the kitchens and baths. Kitchen countertops should be Corian, granite or bluestone, with integral or undermount ceramic sinks and upscale appliance, such as stainless steel, and a choice of European or traditional cabinets. Bathrooms should have ceramic tile floors and high-style, traditional fixtures. Rental Distribution The market-rate rent range covers leases by households with annual incomes ranging between $25,000 and $75,000 or more. A one-person household with an income of $25,000 per year, paying no more than 30 percent of gross income for rent and utilities (the national standard for affordability) would qualify for a rent of $550 per month. A two-person household, with an income of $75,000 or more per year, paying no more than 30 percent of gross income for rent and utilities, would qualify for a rent of $1,450 per month. Based on the incomes of the target households, the distribution by rent range of the 47 market-rate rental units that could be absorbed each year over the next five years in is as follows (see also Table 4): Loft/Apartment Distribution by Rent Range DOWNTOWN UTICA MONTHLY UNITS RENT RANGE PER YEAR PERCENTAGE $450 $ % $600 $ % $750 $ % $900 $1, % $1,050 and up % Total: % SOURCE: Zimmerman/Volk Associates, Inc., 2005.

28 Table 4 Target Groups For Rental Lofts/Apartments Empty Nesters Number of At 15 Percent & Retirees Households Capture Multi-Ethnic Empty Nesters 10 2 Middle-Class Move-Downs 20 3 Mainstream Retirees 10 2 Middle-American Retirees 20 3 Traditional & Non-Traditional Families Subtotal: Multi-Ethnic Families 10 2 Younger Singles & Couples Subtotal: 10 2 e-types 10 2 New Bohemians 10 2 Urban Achievers 20 3 The VIPs 20 3 Twentysomethings 50 7 Small-City Singles 70 9 Upscale Suburban Couples 10 2 Suburban Achievers 40 5 No-Nest Suburbanites 10 2 Subtotal: Total Households: SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc.

29 RESIDENTIAL MARKET POTENTIAL Page 26 For- Sale Distribution The market-rate price range covers purchases by households with annual incomes ranging between $30,000 and $100,000. A one-person household with an income of $30,000 per year, paying no more than 25 percent of gross income for housing costs, including mortgage principal, interest, taxes, insurance and utilities, would qualify for a mortgage of $75,000 at current interest rates. A two- or three-person household with an income of $100,000 per year, paying no more than 25 percent of gross income for housing costs, including mortgage principal, interest, taxes, insurance and utilities, would qualify for a mortgage of at least $250,000 at current interest rates. Based on the incomes of the target households, the distribution by price range of the 41 marketrate for-sale apartments that could be absorbed each year over the next five years in Downtown Utica is as follows (see Table 5): Loft/Apartment Distribution by Price Range DOWNTOWN UTICA PRICE UNITS RANGE PER YEAR PERCENTAGE $50,000 $100, % $100,000 $150, % $150,000 $200, % $200,000 and up % Total: % SOURCE: Zimmerman/Volk Associates, Inc., 2005.

30 Table 5 Target Groups For For-Sale Apartments Empty Nesters Number of At 15 Percent & Retirees Households Capture Cosmopolitan Couples 10 2 Multi-Ethnic Empty Nesters 10 2 Cosmopolitan Elite 10 2 Middle-Class Move-Downs 20 3 Old Money 10 1 Suburban Establishment 10 2 Affluent Empty Nesters 20 3 Mainstream Retirees 10 1 Middle-American Retirees 10 1 Traditional & Non-Traditional Families Subtotal: Multi-Cultural Families 10 2 Younger Singles & Couples Subtotal: 10 2 e-types 10 1 New Bohemians 10 1 Urban Achievers 10 2 The VIPs 20 3 Twentysomethings 20 3 Small-City Singles 20 3 Fast-Track Professionals 20 3 Upscale Suburban Couples 20 3 Suburban Achievers 20 3 Subtotal: Total Households: SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc.

31 RESIDENTIAL MARKET POTENTIAL Page 28 Based on the incomes of the target groups, the distribution by price range of the 20 market-rate townhouse units that could be absorbed each year over the next five years in is as follows (see Table 6): Townhouse Distribution by Price Range DOWNTOWN UTICA PRICE UNITS RANGE PER YEAR PERCENTAGE $100,000 $150, % $150,000 $200, % $200,000 and up % Total: % SOURCE: Zimmerman/Volk Associates, Inc., 2005.

32 Table 6 Target Groups For For-Sale Townhouses Empty Nesters Number of At 10 Percent & Retirees Households Capture Multi-Ethnic Empty Nesters 10 1 Cosmopolitan Elite 10 1 Middle-Class Move-Downs 10 1 Suburban Establishment 10 1 Affluent Empty Nesters 20 2 Middle-American Retirees 10 1 Traditional & Non-Traditional Families Subtotal: 70 7 Full-Nest Urbanites 10 1 Unibox Transferees 10 1 Multi-Ethnic Families 10 1 The Entrepreneurs 10 1 Younger Singles & Couples Subtotal: 40 4 Urban Achievers 10 1 The VIPs 20 2 Twentysomethings 10 1 Small-City Singles 10 1 Fast-Track Professionals 10 1 Upscale Suburban Couples 20 2 Suburban Achievers 10 1 Subtotal: 90 9 Total Households: SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc.

33 RESIDENTIAL MARKET POTENTIAL Page 30 THE CURRENT CONTEXT Demographic Overview The changes in number of households, incomes, tenure and vacancy rates, and housing values that are projected to occur in Oneida County and the City of Utica between 2005 and 2010 show that, as is typical in many small regions across the country, unless historical trends are reversed, the city will continue to lose population to the county. New residential and mixed-use development is encouraged in the downtown and in vacant buildings and parcels located elsewhere within the city limits to help reverse this trend. Population According to the U.S. Bureau of the Census, the population of Oneida County will decline by 1,220 residents between 2005 and 2010, a loss of 0.5 percent. (See Table 7.) By 2010, the county is projected to be home to 233,195 persons. In 2005, more than 25 percent of the county s population, or 59,215 persons, is estimated to live in the City of Utica. (See Table 8.) By the year 2010, it is projected that the city s population will fall by 1,520 persons to 57,695 persons (a loss of 2.6 percent). Because the city is projected to lose more population than the county over the study period, the balance of Oneida County is projected to gain population. As a result, by 2010, the population of the city will comprise 24.7 percent of the county s population. Households and Income Although the Oneida County population is projected to decline between 2005 and 2010, the number of households is expected to rise slightly, due to a projected decrease in average household size and increase in the number of single-person households. According to the Census Bureau, the number of households in Oneida County is projected to reach 91,355 households by 2010, an increase of 0.2 percent, or 140 households, over five years. (See again Table 7.) Median household income should rise by 10.5 percent between 2005 and 2010, increasing from an estimated $40,600 in 2005 to a projected $44,800 in 2010.

34 Table 7 Estimates And Projections Household Income Groups As A Share Of Total Households Oneida County, New York 2005, 2010 Estimates Projections Change Income Number Share Number Share Number Percent Less than $15,000 15, % 13, % -1, % $15,000 to $24,999 12, % 11, % -1, % $25,000 to $34,999 12, % 11, % -1, % $35,000 to $49,999 14, % 14, % % $50,000 to $74,999 17, % 17, % % $75,000 to $99,999 8, % 10, % 1, % $100,000 to $149,999 6, % 8, % 2, % $150,000 or More 2, % 3, % 1, % Total: 91, % 91, % % Median Household Income: $40,600 $44,800 $4, % Population: 234, ,195-1, % Average Household Size: % Current dollars for each year. SOURCE: U.S. Bureau of Census; Claritas, Inc.; Zimmerman/Volk Associates, Inc.

35 Table 8 Estimates and Projections Household Income Groups As A Share Of Total Households 2005, 2010 Estimates Projections Change Income Number Share Number Share Number Percent Less than $15,000 7, % 6, % % $15,000 to $24,999 4, % 4, % % $25,000 to $34,999 3, % 3, % % $35,000 to $49,999 3, % 3, % % $50,000 to $74,999 3, % 3, % % $75,000 to $99,999 1, % 1, % % $100,000 to $149, % 1, % % $150,000 or More % % % Total: 24, % 23, % % Median Household Income: $27,000 $28,900 $1, % Population: 59,215 57,695-1, % Average Household Size: % Current dollars for each year. SOURCE: U.S. Bureau of Census; Claritas, Inc.; Zimmerman/Volk Associates, Inc.

36 RESIDENTIAL MARKET POTENTIAL Page 33 Compared to many other cities in Central and Western New York, which are projected to see significant declines in the number of households over the next five years, the City of Utica is projected to lose just 2.7 percent of its household population, with the number of households falling from 24,570 in 2005 to 23,900 in (See again Table 8.) The number of households in the city with annual incomes below $25,000 per year should fall by 920 households over the study period; conversely, the number of households earning more than $75,000 a year should increase substantially by more than 400 households. Median household income for the city should therefore rise slightly from $27,000 in 2005 to $28,900 in 2010, a seven percent increase over five years. Housing Stock Between 2005 and 2010, the number of housing units in Oneida County is projected to rise by just 155 units, from an estimated 103,590 dwelling units in (See Table 9.) The vacancy rate in the county should remain at just under 12 percent of all units over the study period. Over the same period, the county is projected to experience a 1.7 percent decline in multi-family rental units and a one percent increase in ownership dwelling units. The City of Utica is projected to lose approximately 2.7 percent of its housing stock between 2005 and 2010, falling from 28,500 dwelling units in 2005 to 27,770 units in (See Table 10.) As in the county, the vacancy rate is likely to remain stable over the study period, at just under 14 percent of all units. In 2005, owner-occupied housing is estimated to represent just over 49 percent of all occupied housing units in the city; by 2010, given projected losses in the city s housing stock, and barring significant new-home construction within the city limits, owner-occupied housing should rise to just 49.6 percent of all occupied housing units. (See again Table 10.)