PACE LAW SCHOOL LAND USE & SUSTAINABLE DEVELOPMENT CONFERENCE PRESENTED BY: WILLIAM V. CUDDY, JR. December 8, 2016 Multifamily Residential Development as a driver and consequence of economic development PAGE 0
NATIONAL MULTIFAMILY RESIDENTIAL STATISTICS (MIL) 50 45 40 35 30 25 20 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 70% 69% 68% 67% 66% 65% 64% 63% 62% 61% 60% # RENTER HOUSEHOLDS % HOMEOWNERSHIP # of renters increase 24.4% between 2006 2016 % of home owners decreased 6% between 2006-2016 Source: CBRE Research PAGE 1
TOP 10 U.S. CITIES FOR UNIT DELIVERY RATIO Denver, CO 3.24% Kansas City, MO 6.34% Columbus, OH 3.03% Top 10 U.S. Cities Ratio of Deliveries GDP Growth Population Growth Income Growth Nashville 6.34% 9.06% 6.77% 14.29% Greenville 5.61% 6.90% 4.86% 11.03% Charlotte 5.01% 10.02% 7.23% 11.09% Austin 4.96% 14.34% 11.11% 11.83% San Antonio 4.34% 12.65% 7.64% 9.92% Raleigh 3.60% 14.54% 8.41% 9.94% Kansas City 3.28% 5.81% 1.97% 7.51% Denver 3.24% 10.06% 5.44% 12.10% Columbus 3.03% 6.68% 4.80% 9.49% Dallas 2.91% 10.33% 7.89% 10.92% Raleigh, NC 3.60% Charlotte, NC 5.01% Greenville, SC 5.61% San Antonio, TX 4.34% Dallas, TX 2.91% Austin, TX 4.96% Nashville, TN 6.34% Source: CBRE Econometrics Advisors PAGE 2
BOTTOM 10 U.S. CITIES FOR UNIT DELIVERY RATIO Detroit, MI 0.61% Cleveland, OH 0.75% Sacramento, CA 0.10% Providence, RI 0.47% Oakland, CA 0.59% Denver, CO 3.24% Louisville, KY 0.66% Riverside, CA 0.62% Bottom 10 U.S. Cities Ratio of Deliveries GDP Growth Population Growth Income Growth Tucson, AZ 0.62% Albuquerque, NM 0.25% Birmingham, AL 0.61% Cleveland 0.75% 3.15% -0.24% 5.54% Louisville 0.66% 4.52% 2.09% 7.96% Tucson 0.62% -1.04% 3.76% 3.33% Riverside 0.62% 7.61% 4.46% 13.20% Birmingham 0.61% 3.09% 0.74% 5.17% Detroit 0.61% 4.64% 0.47% 9.97% Oakland 0.59% 9.27% 5.57% 5.33% Providence 0.47% 3.62% 0.94% 5.72% Albuquerque 0.25% -0.40% 0.64% 4.49% Sacramento 0.10% 5.86% 4.80% 6.97% Source: CBRE Econometrics Advisors PAGE 3
MARKET METRICS 2012-2016 INCOME GROWTH POPULATION GROWTH 11.0% 7.0% 10.0% 9.0% 8.0% 7.0% 37.4% Differential 6.0% 5.0% 4.0% 3.0% 2.0% 64.9% Differential 6.0% 1.0% 5.0% Top 10 Bottom 10 0.0% Top 10 Bottom 10 GDP GROWTH 12.0% 10.0% 8.0% 59.9% Differential 6.0% 4.0% 2.0% 0.0% Top 10 Bottom 10 Source: CBRE Research Bureau of Economic Analysis PAGE 4
WESTCHESTER COUNTY AFFORDABLE HOUSING STATISTICS AND DEFINITIONS PROGRAM PROPERTIES UNITS DEFINITION SECTION 8 61 5,690 Provides rental assistance to low-income families unable to afford market rents. LOW-INCOME HOUSING TAX CREDIT (LIHTC): 64 4,514 A tax incentive intended to provide an income tax credit to owners of newly constructed or substantially rehabilitated lowincome rental housing projects. SECTION 202 13 1,008 SECTION 811 2 12 PUBLIC HOUSING 27 4,518 Provides capital advances to finance the construction, rehabilitation or acquisition of structures that will serve as supportive housing for very-low-income elderly persons to help make them affordable and provides rent subsidies for the projects to help make them affordable. Provides capital advances to finance the construction, rehabilitation or acquisition of structures that will serve as supportive housing for very-low-income individuals with disabilities and provides rent subsidies for the projects to help make them affordable. Housing assisted under the provisions of the U.S. Housing Act of 1937 or under a state or local program having the same general purposes as the federal program. Distinguished from privately financed housing. TOTAL 120 11,339 Source: HUD PAGE 5
WESTCHESTER COUNTY MULTIFAMILY RESIDENTIAL STATISTICS WESTCHESTER MARKET SIZE DELIVERIES RENT POPULATION 2006 85,500 52 $2,214 931,426 2007 85,748 248 $2,110 933,414 2008 86,696 948 $2,120 937,449 2009 87,213 517 $2,036 944,201 2010 87,213 0 $ 2,193 950,544 2011 87,553 340 $2,129 957,271 2012 88,203 650 $ 2,191 961,849 2013 88,347 144 $2,274 969,296 2014 88,595 248 $2,393 972,634 2015 89,115 520 $2,474 977,910 *2016 89,644 1498 $2,549 979,590 10-year average deliveries 2006 2015: 367 per annum *2016 deliveries are 4X the prior 10-year average Source: CBRE Research U.S. Census PAGE 6
WESTCHESTER COUNTY MULTIFAMILY RESIDENTIAL STATISTICS WESTCHESTER COUNTY AREA MEDIAN INCOME (AMI) 100% AMI 80% AMI 60% AMI 30% AMI Westchester County AMI $107,800 $86,240 $64,680 $32,340 Family of 4 Annual Rent @ 30% AMI $32,340 $25,872 $19,404 $9,702 Monthly Rent $2,695 $2,156 $1,617 $809 If valued members of our communities do not qualify for market rate apartments or even qualify at the 60% AMI guidelines level, can we represent we have a responsible housing policy? Teachers Salary Nurses Salary Policeman Salary Fireman Salary Westchester County AMI $60,015 $76,000 $59,186 $49,525 Family of 4 Annual Rent @ 30% AMI $18,005 $22,800 $17,756 $14,858 Monthly Rent $1,500 $1,900 $1,480 $1,238 Source: Bureau of Labor Statistics PAGE 7
WESTCHESTER COUNTY MULTIFAMILY RESIDENTIAL MYTHS Multifamily Residential development overburdens schools Multifamily Residential development requires high parking ratios Affordable means deplorable Source: PAGE 8
OPPORTUNITIES WHERE Conversion of underperforming commercial real estate Transit-oriented development (TOD) In-fill locations BENEFITS Creates jobs Generates fees and tax revenue Alleviates burden of NYS 2% tax cap Renters spend more of their income locally than homeowners National Multifamily Housing Council Source: CBRE Research PAGE 9
EXISTING OFFICE INVENTORY MIGRATION: CLASS A AND B OFFICE 34 33 33,202,550 SF - 16% -67 Buildings 5,390,607 SF 32 31 # OF BUILDINGS 30 29 28 282 27,811,943 SF 27 26 215 25 2001 2016 # of Buildings Source: CBRE Research PAGE 10
REPURPOSING OF INVENTORY BREAKDOWN 2001-2015 2 1.8 2,113,952 SF 1.6 1.4 1.2 1 0.8 776,556 SF 0.6 0.4 0.2 356,399 SF 475,088 SF 117,798 SF 243,000 SF 0 Educational Hospitality Medical R&D Recreational Residential Source: CBRE Research PAGE 11
EXISTING COMMERCIAL INVENTORY BREAKDOWN 2015 OFFICE A OFFICE B OFFICE C R&D MEDICAL WAREHOUSE INDUSTRIAL FLEX # OF BLDGS. 68 150 136 14 51 227 73 TOTAL EXISTING 16,274,407 12,035,420 5,986,452 2,022,996 3,618,269 11,199,840 4,301,516 ± AVERAGE NNN RENT $16.00 NNN $12.00 NNN $7.00 NNN $15.00 NNN $14.00 NNN $9.00 NNN $14.00 NNN Source: CBRE Research PAGE 12
KEY RESIDENTIAL PROJECT The Residences at Corporate Park Drive 103-105 Corporate Park Drive, Harrison, NY Pending final approval for a 421-unit rental apartment complex on 10.35 acres including related amenities and a restaurant First apartment complex on the Platinum Mile in Harrison Illustrates trend of repurposing aging suburban office parks Eliminates 164,884 RSF of existing under performing office space PAGE 13
WESTCHESTER HINDRANCES Lack of a coherent public policy SEQRA Limited availability of developable land Costs Community opposition PAGE 14
CONCLUSIONS Multifamily Residential development is a driver and consequence of economic development Residential deliveries should encourage and promote the desired economic development objectives of the community Urban residential development with fewer cars promotes walkable cities, reduces congestion and pollution, allows for more capital to be deployed locally and creates a safer and more dynamic community A residentially focused development policy will have a direct and dynamic impact on the financial viability and performance of the region PAGE 15
THANK YOU WILLIAM V. CUDDY, JR. T 203 325 5380 William.Cuddy@cbre.com CBRE RESEARCH TEAM: Roger Galindo and Carter Lovejoy PAGE 16