Highest and Best Uses Midway Mall Elyria, OH

Transcription

1 Highest and Best Uses Midway Mall Elyria, OH Prepared for: City of Elyria, OH Prepared by: Nov. 21, 2016

2 Scope Market feasibility analysis on viability, type, and timing for: Retail, Restaurant, Entertainment Multi-Family Residential Office Hotel Potential sales revenue forecasts Possible Site Plan Reciprocal Easement Agreements Public Finance

3 Retail Methodology Market Evaluation Competitive Analysis Residential Trade Area Definition Resident, Worker, Visitor Population Demographics and Lifestyles of Trade Area Residents Mapping Retail Expenditure Potential Determination Recommended Category/Tenant Mix and Sales Forecasts Recommended Other Uses

4 Trade Areas, Competition & Avg. Income Average Household Income < $25,000 $25,000 - $40,000 $40,000 - $60,000 $60,000 - $80,000 $80,000 - $100,000 $100,000 - $150,000 > $150,000 Midway Mall Trade Area Midway Mall Trade Area

5 Projected Population Growth Cleveland MSA 2,059,955 2,061,058 Lorain Co. 310, ,698 Elyria 54,018 54,116 Total Trade Area 224, , ,000 1,000,000 1,500,000 2,000,000 2,500,000

6 Projected Household Growth Cleveland MSA 866, ,562 Lorain County 122, ,097 Elyria 23,068 22,867 Total Trade Area 92,016 89, , , , , , , , , ,000 1,000,000

7 Resident Spending Potential Retail Store Type Current Year Estimate 5-Year Projection Department & Discount Department Stores $307,475,119 $340,613,019 Apparel, Shoes & Accessories $113,086,884 $124,560,633 Food and Restaurant $590,381,189 $626,922,456 Other Retail $947,720,448 $1,048,338,144 Total Identified Expenditures $1,959,663,640 $2,140,434,252 Source: The Nielsen Company 2016

8 Retail Void Retail Category 2016 Demand (Expenditures) 2016 Supply (Retail Sales) Void/Surplus Department Stores $194,007,722 $178,341,738 $15,665,984 Discount Department, Clubs, Superstores $258,645,714 $279,541,950 ($20,896,236) Clothing and Clothing Accessories Stores $166,878,611 $26,233,502 $140,645,109 Furniture and Home Furnishings Stores $74,936,353 $36,649,013 $38,287,340 Electronics and Appliance Stores $64,258,583 $28,286,903 $35,971,680 Building Material, Garden & Equip. Stores $409,276,909 $371,622,809 $37,654,100 Supermarkets, Grocery Stores $308,110,128 $126,892,804 $181,217,323 Sporting Goods, Hobby, Book, Music Stores $66,730,122 $33,925,588 $32,804,534 Full-Service Restaurants/Fast Food $406,490,615 $331,401,996 $75,088,619 Pharmacies & Drug Stores $193,466,551 $224,285,708 ($30,819,157) Cosmetics, Beauty Supplies, Perfume $17,013,398 $5,626,626 $11,386,773 Optical Goods $11,214,871 $4,230,725 $6,984,147

9 Characteristics Total Trade Area City of Elyria Lorain County % Bachelor s Degree or Higher 20.7% 15.6% 23.5% Person per HH Median Age % Married 48.6% 45.4% 50.2% % Owner Occupied Housing 69.6% 62.1% 73.2% % Seasonal/Vacant Housing 10.7% 12.4% 9.5% % White 81.4% 78.1% 84.2% % African American 9.7% 14.4% 8.2% % Hispanic 11.8% 5.7% 9.4% % Asian/Pacific Is. 1.1%.9% 1.2% % White Collar 55.3% 51% 57.6% % Finance, Mgmt, & Professional 15.6% 12.9% 16.9% % Services 10.6% 11.4% 9.9% % Sales 10.8% 10.7% 11.1% % Production 10.5% 12.9% 9.6% % Office/Admin. Support 13.5% 13.0% 13.3%

10 Retail Recommendations GAFO Retail Leakage: $260 million Fast Food / Sit Down Restaurant Leakage: $76 million Retail, Restaurants & Entertainment: 530,000 sf total Anchored by JC Penney, Gordmans, and TJ Maxx Alamo Drafthouse or Studio Movie Grill Round 1 Bowling & Amusement Relocation of Marc s Relocation of PetSmart, GameStop, and BWW Relocation of Verizon, Chipotle, and Olive Garden Tenant Sales Revenue Forecasts: $140 m for $160 m for Viable: 2017

11 Retail Sales Existing Midway Mall Sales: $71,436,305 Proposed Redeveloped Mall Sales: $159,758,875 Mall Remains As Is: Erosion of Retail Sales Sears Will Likely Close

12 Apartment Market Inventory Class A Class B Class C Total Elyria 0 1,306 1,776 3,082 Under Construction Proposed Projected Inventory ,306 1,776 3,082 CoStar 2016

13 Apartment Market Apartment Market Performance (YTD 2016) Class A Class B Class C Total Elyria Vacancy NA 4.50% 4.40% 4.40% Asking Rent/Unit NA $807 $580 $683 Asking Rent/SF NA $0.80 $0.80 $0.80 Concessions NA 2.10% 3.80% 2.90% Yr. over Yr. Rent Growth NA 7.00% 0.40% 2.90% CoStar 2016

14 Residential Recommendations Up to 240 Class A, Market-Rate Apartment Units Studio, 1 BR and 2 BR Higher quality finishes Amenities and community features in mixed-use buildings Est. gross rent revenues: $2,800,000 ($13/sf) Est. net absorption of new inventory: 27 months Viable: 2017

15 Hotel Market Hotel Rooms by Brand Scale Economy Midscale Upper Midscale Upscale

16 Jan 11 Mar 11 May 11 Jul 11 Sep 11 Nov 11 Jan 12 Mar 12 May 12 Jul 12 Sep 12 Nov 12 Jan 13 Mar 13 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14 Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16 Hotel Occupancy WHAT IS HAPPENING WITH HOTEL OCCUPANCY? 12-MONTH MOVING AVERAGE (PERCENT)

17 Jan 11 Mar 11 May 11 Jul 11 Sep 11 Nov 11 Jan 12 Mar 12 May 12 Jul 12 Sep 12 Nov 12 Jan 13 Mar 13 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14 Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16 Hotel Revenues $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 HOW ARE HOTEL REVENUES IN ELYRIA, OH? 12-MONTH MOVING AVERAGE $3,879,020 $4,479,804 $7,802,664 $8,672,524

18 Hotel Recommendation Best Western Plus: 80-Room, Limited Service No. of Rooms 80 Days Open 365 Total Room Nights 29,200 Average Daily Rate $105 Photo: Best Western Hotels, Best Western Plus in Saskatoon, Saskatchewan Year 1 Estimates Occupancy Rate 70% Revenues $2,146,200 RevPAR $ Year 3 Estimates Occupancy Rate 75% Revenues $2,299,500 RevPAR $ 78.75

19 Lorain County Office Market Year Inventory Bldgs Inventory SF Vacant SF Total Vacant Percent Total Net Absorption SF Total Deliveries SF Under Construction SF Office Gross Rent /SF A 3 124, % $16.00 B 136 2,097, , % 23,303 10,519 0 $12.60 C 472 3,233, , % 21, $12.66 YTD 611 5,456, , % 44,633 10,519 0 $12.62

20 Forecasted Office Demand 18,000 16,000 14,000 Employment Projections by Office User 14,570 15,305 15,277 15,661 16,563 12,000 10,000 8,000 7,332 7,912 9,255 10,316 12,027 6,000 4,000 3,056 2,832 3,057 3,357 3,484 2, Financial 3,056 2,832 3,057 3,357 3,484 Prof. & Bus. Svcs. 7,332 7,912 9,255 10,316 12,027 Educ. & Health Care 14,570 15,305 15,277 15,661 16,563 Financial Prof. & Bus. Svcs. Educ. & Health Care

21 Forecasted Office Demand Demand Forecasts, 2016 to 2026 Lorain County, OH Change in SF/Employee Employment, 2016 to 2026 Office Demand (SF) Finance, Insurance, & Real Estate ,864 Professional & Business Services 200 2, ,290 Education & Health Services 200 1, ,855 Total Private 200 4, ,009

22 Office Gap Net Annual Total Est. Office Available Est. Office Demand SF ( ) Est. Gap Office Absorption Projections ( )* Class A 17, ,003 (257,003) 33,015 Class B 234, ,003 (39,326) 6,603 Class C 249, ,003 (24,756) 4,402 Total 500, ,009 (321,085) 44,020 * CoStar

23 Office Recommendation Up to 260,000 sf Class A Demand segments: Professional and business services Healthcare, Medical, Lifesciences Education Est. Lease Rate: $16 Viable: 2017

24 Other Uses to Consider Not Part Of Scope Medical facility such as an urgent care clinic or specialty health center Senior housing (Independent & Assisted Living, Memory Care) Conference center Warehousing, logistics, self storage

25 Possible Site Plan

26 Reciprocal Easement Agreements Binds owners to a set of property management, maintenance, buildings, construction, restrictions and covenants Use as a guide for owners in a redevelopment plan

27 Public Finance Incentives Establish Midway mall as a Community Reinvestment Area to Offer Tax Abatements Create a TIF District to Provide Non-Tax Revenue Financing Involve Port Authority Form a Separate Entity to Collect Development Fees City Acquire Midway Mall by Eminent Domain or Purchase

28 Conclusions Midway Mall Sales (2016): $71,436,305 Potential Repositioned Mall: $100 million new sales New Retail Sales: $90 million (Overall Sales $159M) New Residential Rent Revenues: $3 million Office Rental Revenues: $3 million New Hotel Receipts: $2.5 million

29 Conclusions Leave As-Is: $892 million in retail spending leakage Retail sales from existing tenants likely to erode further Blighted property / area Diminished future development opportunities

30 THANK YOU! Prepared by: