D - Downtown Zoni ng Di str i ct- Economi c & Mar ket Anal ysi s. City of Naples

Transcription

1 1 D - Downtown Zoni ng Di str i ct- Economi c & Mar ket Anal ysi s City of Naples

2 2 I ntroduction Lambert prepared the economic and market analysis in the effort to guide the land use and zoning review for the CRA and D-Downtown This area has been studied extensively including complete report in 2013 To large extent, there has been no notable change, other than continued growth following recession However new and expanded opportunities have emerged Zoning regulations will play a key role in CRA/D-Downtown redevelopment

3 3 S ECTI ON 1 Regional Context

4 4 1.5% 1.2% 1.9% VOLUSIA Collier County, Lee County. And Char l otte County CHARLOTTE SEMINOLE 1.8% Though r egi onal popul ation 2.6% ORANGE 3.4% growth has moderated, it LEE 3.1% remains generally robust OCEOLA 1.5% Lee County captur i ng some of the move out of Col l i er gi ven 4.6% BREVARD 2.4% 2.1% 3.7% housing affordability COLLIER INDIAN RIVER = 20 years ST. LUCIE 3.1% = 10 years Source: IS Census

5 5 City of Naples, CRA, Trade Area (10 minute Drive- t i me), & D- Downt own Ar ea Primary Trade Area of CRA/D- Downtown defined by 10-minute drive time Demand models naturally take into account inflow/outflow = CRA District = City of Naples = 10 min drive time Source: IS Census

6 6 S ECTI ON 2 Economic & Demographic Highlights

7 7 S e c t i o n 2 Demographic Snapshot Primary Trade Area (PTA) represents younger population than City overall, but still above County Collier County City of Naples Trade Area (10 min) ACS Population 334,474 20,214 42, ACS Total Households 126,331 10,068 19, ACS Median Age White (64.8%) 18,060 (89.3%) 85.3% (including Hispanic)* Black (6.7%) 904 (4.5%) 7.0% All Others 7,049 (2.2%) 214 (1.1%) 7.7% Hispanic of Any Race 88,094 (26.34%) 1,036 (5.1%) 19.8% Source: ACS Census, *Trade Area is based on ESRI 2016

8 8 S e c t i o n 2 Demographic Snapshot Household Income in PTA falls well below the City and County Homeownership significantly lower as well Collier Count y Cit y of Naples Trade Area (10 min) ACS Median Household Income $56,250 $80,571 $51, ACS Per Capita Income $37,236 $84,721 $40, ACS Owner Occupied Households % ACS Renter Occupied Households % 72.9% 80.4% 41.4% 27.1% 19.6% 59.6% Source: ACS Census, *Trade Area is based on ESRI 2016

9 9 S e c t i o n 2 Population Projections Collier County population projected to remain strong through 2025, with Trade Area forecast to capture a measurable part of growth City of Naples lost population from 2000 to 2010; forecast to continue loss albeit at more modest pace 3.00% 2.50% 2.40% 2.00% 1.50% 1.60% 1.30% 1.00% 0.50% 0.60% Pop Growth Pop Growth % -0.50% -1.00% -1.50% Collier County City of Naples Trade Area -1.00% -0.30% Source: US Census; Florida Data Clearinghouse; ESRI

10 10 S e c t i o n 2 Population Projections The mid to long term opportunity for population/housing growth in the CRA/D-Downtown is supported by growth in the surrounding Trade Area. PTA population forecast to increase nearly 10,000 by 2030; or, roughly 4,848 households (2.1 persons/hh) Projections from U.S. Census and Florida Data Clearinghouse Total Change Avg. Annual Avg. Annual (Estimate) Projections Change Growth % Collier County 343, ,400 92,204 6, % City of Naples 19,455 18,252-1, % Trade Area 42,998 52,969 9, % Source: US Census; Florida Data Clearinghouse; ESRI

11 11 S e c t i o n 2 Population Projections - Seasonal Seasonal population plays a large role for the City of Naples While City s population declined from 2000 to 2010, the total number of dwelling units inched up Difference between households and actual dwelling units is dramatically higher than comparable size cities with little second homeownership. Seasonal household growth estimated to add more than 30% over base households Seasonal factor plays major role in area expenditures and taken into account in retail models # of Housing # of Households Total Percent Units ( ) Difference Difference (2010) City of Naples 17,753 10,068 7, % City of Doral, FL 17,785 14,507 3, % City of Plantation, FL 37,587 33,521 4, % Sun City Center, FL 14,042 11,790 2, % Plant City, FL 13,732 12,329 1, % Source: US Census; Florida Data Clearinghouse; ESRI

12 12 S E T I O N 2 Collier County Employment Profile & Projections 5 largest sectors expecting solid expecting solid growth Professional/Business Services & Health Care typically higher wage jobs Change CAGR Trade & Transportation 26,502 29,979 3, % Leisure & Hospitality 25,841 29,865 4, % Education & Health 19,142 23,380 4, % Prof. & Business Services 15,370 18,803 3, % Construction 13,495 19,489 5, % Government Services 13,106 14,849 1, % Financial Activities 7,649 8, % Other Services (Except Gov. 6,999 7, % Agricultural & Mining 4,279 4, n/a Manufacturing 3,391 3, % Information 1,526 1, % Total (w/ Government) 137, ,184 24, % Total (Private only) 124, ,335 23, % Source: FDEO

13 13 S E T I O N 2 City of Naples Employment Profile Total Jobs in City of Naples = 23,793 Health care is by far the largest sector in Naples, followed by hospitality Collier County School Board, NCH Healthcare System and Collier County offices comprise nearly 11,000 jobs in Naples (or just under 50% of total jobs) Indicates majority of employment lives outside of City boundaries Public Administration Other Services (excluding Public Administration) Accommodation and Food Services Arts, Entertainment, and Recreation Health Care and Social Assistance Educational Services Administration & Support, Waste Management and Remediation Management of Companies and Enterprises Professional, Scientific, and Technical Services Real Estate and Rental and Leasing Finance and Insurance Information Transportation and Warehousing Retail Trade Wholesale Trade Manufacturing Construction Utilities Mining, Quarrying, and Oil and Gas Extraction Agriculture, Forestry, Fishing and Hunting Source: OnTheMap

14 14 S E T I O N 2 City of Naples Employment Profile Heaviest employment concentration in vicinity of CRA/D-Downtown

15 15 S E T I O N 2 Naples CRA Employment Profile Public Administration Other Services (excluding Public Administration) Accommodation and Food Services Arts, Entertainment, and Recreation Health Care and Social Assistance Educational Services Administration & Support, Waste Management and Remediation Management of Companies and Enterprises Professional, Scientific, and Technical Services Real Estate and Rental and Leasing Finance and Insurance Information Transportation and Warehousing Retail Trade Wholesale Trade Manufacturing Construction Utilities Mining, Quarrying, and Oil and Gas Extraction Agriculture, Forestry, Fishing and Hunting Source: OnTheMap

16 16 S E T I O N 2 Naples CRA Employment Profile Heaviest concentration around Hospital Less than 5% of Employees in CRA, live in CRA

17 17 S ECTI ON 3 Residential Market Overview

18 18 S E C T I O N 3 Residential Permit Activity The housing market in Collier County/Naples has steadily improved since the end of the recession in 2010 City has seen stable (albeit modest) growth in single family development, but limited development in multifamily sector Single Family 2-4 Units MF- 5-Units or More Total Collier Collier Collier Collier Year County Naples County Naples County Naples County Naples , , , , , , , , , , , , , , , , , , Q , ,996 - Source: STR: Lambert Advisory

19 19 S e c t i o n 2 Naples Housing Market Trends Since early 2013, single family home sales has been on modest decline, with notable drop in early 2016 Number of Sales Apr Oct Apr Oct Apr 14 Oct Apr 13 Oct 12 Apr 12 Oct Source: Trulia

20 20 S e c t i o n 2 Housing Market Trends Naples housing sales values has been on long and sustained growth trend Median Sales Price Apr Oct 15 Apr 15 Oct 14 Apr 14 Oct 13 Apr Oct 12 Apr Oct Source: Trulia

21 21 S E C T I O N 3 Notable New Projects in the CRA Naples Square is a 292-condominium development under construction on the west side of Goodlette-Frank Road between the 3 rd and 5 th Avenue South block of Goodlette-Frank Road. The project is being built in four phases of 73 units per phase. Phase 1 is sold out and Phase 2 is 80% Sold. Unit sizes range from 1,295 to 3,328 square feet and prices from the $600 s to $1.4 million. The project will also have 71,700 square feet of commercial retail Residences at 5 th and 5 th is a three-story, 11- unit condominium development planned for the NWC of 5 th Avenue and 5 th Street South. The project will feature two floors of residential over 11,000 square feet of retail at street level. Units size will range from 2,200 to 3,300. The project is taking reservations with preliminary unit pricing ranging fro $2.2 to $3.3 million. Mangrove Bay is a 53- unit single family home development located on the east side of Goodlette- Frank Road between Riverside Drive and 1 st Avenue S. The project began selling in 2014, with 7 home sold to date, Home range from 2,586 to 4,246 square feet. Prices have been reduced in past year and are now priced from $1.95 to $2.90 million. Source: Lambert Advisory

22 S E C T I O N 3 22 Mul ti -family Rental Apartment Market Occupancy and Rental Rate Trends Since 2010, occupancy Rates In Collier County have ranged between 95 and 98 percent and between 94.8 and 98.9 percent in Naples The average base rental rate in Collier County grew from $1,225 in 2010 to $1,339 in the 2Q 2016, equal to an annual average rate of 1.2%. The average base rent in Naples also grew by 1.2% on average, from $1,357 in 2010 to $1,450 in 2Q % 99.0% 98.0% 97.0% 96.0% 95.0% 94.0% Occupancy Collier County Occupancy Naples $1,500 $1,450 $1,400 $1,350 $1,300 $1,250 Avg. Base Rent Collier County Avg. Base Rent Naples 93.0% $1, % Q 2016 $1, Q 2016 Source: STR: Lambert Advisory

23 23 S E C T I O N 3 Housing Opportunity & Estimate of Demand Roughly 1,000+ units of market rate multi-family housing demanded within CRA s PTA through 2030 (and potentially higher as proportion of MF housing increases) CRA/D-Downtown should potentially capture significant amount of this demand Naples CRA/D-Downtown Trade Area Multifamily Housing Demand Projections (Market Rate Housing) 2015 through Change Population 42,998 45,223 47,562 50,023 7,025 Total Households 20,475 21,535 22,649 23,821 3,345 Persons per HH % Study Area HH w/income > $50K (Future Demand) 52.0% 52.0% 52.0% 52.0% No. HH with Income > $50,000 10,647 11,198 11,777 12,387 1,740 % MF Dwelling 51.8% 51.8% 51.8% 51.8% Total Demand for New MF Dwelling Units 5,515 5,801 6,101 6,

24 24 S ECTI ON 4 Office Market Overview

25 25 S E C T I O N 3 Office Market Snapshot There is currently an estimated 9.19 million square feet of office space in Collier County. Of this total, 1.28 million square feet (+14%) is in the City of Naples submarket. As of the 2Q 2016, both the occupancy level and average quoted rental rate for office space in Naples is higher than that compared to Collier County. Market Area Inventory Sq. Ft. Number of Buildings Avg. Size Building Vacant Sq. Ft. Vacancy Rate Occp. Rate Quoted Rent (Full Service) Collier County 9,192, , , % 91.4% $21.89 City of Naples Submarket 1,278, ,041 83, % 93.5% $22.43 Source: CoStar

26 26 S E C T I O N 3 Office Development Trends According t o CoSt ar, from 2007 t o t he 2Q 2016, t here was approximat el y 1.35 million square feet of offi ce space del i vered t o t he Col l i er Count y offi ce market. Approximately 88% of the new office space, (equal to 1.2 million square feet) was delivered from 2007 to Only 150,000 square feet has been delivered since ,000 Collier County New Office Space Delivered Annually, Q , , , , , Q 2016 Source: CoStart

27 27 S E C T I O N 3 Office Market Trends The Col l i er Count y of f i ce market, whi ch was si gni f i cant l y i mpact ed by t he recessi on, has experienced sl ow but st eady i mprovement, but i s st i l l bel ow pre- recessi on l evel s..the office occupancy rate, which peaked at 94.6% in 2006, declined year over year to 84.8% in 2011, before increasing year over year to 91.4% as of the 2Q Asking rental rates (full service) for office peaked at $24.23 per square foot in 2007, before trending down to $20.11 per square foot in Asking rental rates have since improved modestly to $21.89 per square foot as of the 2Q 2016 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Occupancy Avg. Asking Rent Full Service Q % 94.0% 92.0% 90.0% 88.0% 86.0% 84.0% 82.0% 80.0% 78.0% Source: CoStar

28 28 S E C T I O N 3 Office Market Absorption 256,000 square feet net absorption of office space in 2007, followed by a total of 99,000 square feet net absorption from 2008 to 2011, including negative net 42,000 square feet in Annual Absorption of office space has fluctuated since 2011, with a high of 255,000 square feet absorbed in 2013, to a low of 21,000 square feet absorbed in 2015, and only 8,000 square feet absorbed through the 2Q , , , , ,000 50,000 0 (50,000) (100,000) Collier County Annual Absorption Square Feet of Office Q 2016 SourceCoStar

29 29 S E C T I O N 3 Collier County & Study Area Office Demand Projections Collier County s estimated office job employment forecast to increase by a total 1,600 to 2,000 jobs between 2015 and 2023; 2.2% average annual growth Indicates roughly 400,000 to 500,000 sq.ft. of office demand County-wide over next 8 years Provides solid but limited supporting use for CRA/D-Downtown mixed use development Net New Office Demand Low High Estimated County Office Job Growth (2015 to 2023) 1,600 2,000 Sq.Ft. Office Net 233+ sf per employee 400, ,000 % Estimated CRA/D-Downtown Submarket Capture 10% 20% CRA/D-Downtown Total Potential - Office Demand (Sq.Ft.) 40, ,000 Source: STR: Lambert Advisory

30 30 S ECTI ON 5 Retail Market Overview

31 31 S E C T I O N 3 Retail Market Snapshot There is currently an estimated million square feet of office space in Collier County. Of this total, 2.92 million square feet (+13%) is in the City of Naples submarket. As of the 2Q 2016, both the occupancy level and average quoted rental rate for retail space in Naples is higher than that for Collier County. Source: CoStar

32 32 S E C T I O N 3 Retail Development Trends From 2007 t o t he 2Q 2016, t here was approximat el y 3.95 mil l ion square feet of ret ail space del ivered t o t he Col l ier Count y ret ail market. The largest share, equal to 3.06 million square feet (77.5%), was delivered from 2007 to ,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 0 Collier County New Retail Space Delivered Annually, Q Q 2016 Source: STR: Lambert Advisory

33 33 S E C T I O N 3 Retail Market Trends The Collier County retail market has experienced slow but steady improvement since 2010, but is still below pre-recession levels..the retail occupancy rate, which peaked at 97.7% in 2006, declined year over year to 90.6% in 2009, before increasing year over year to 94.0% as of the 2Q Asking rental rates (full service) for retail peaked at $23.94 per square foot NNN in 2007, before trending down to $16.42 per square foot NNN in Asking rental rates have since improved modestly to $19.55 per square foot as of the 2Q % 98.0% Occupancy Avg. Asking Rent Full Service $30.00 $ % 94.0% 92.0% 90.0% $20.00 $15.00 $ % $ % Q 2016 $0.00 Source: CoStar

34 34 S E C T I O N 3 Retail Market Absorption Approximately 1.82 million square feet of retail space in, 2007 and 2008 combined, followed by negative net 343,000 square feet in Annual Absorption of retail space has fluctuated since 2010, with a high of 307,000 square feet through the 2Q 2016, to a low of 108,000 square feet absorbed in ,200,000 1,000, , , , ,000 0 (200,000) (400,000) (600,000) Collier County Annual Absorption Square Feet of Retail Q 2016 SourceCoStar

35 35 S E C T I O N 3 Trade Area Retail Demand Projections ( ) 7,000+ person increase in population (3,300+ new households) in PTA generates roughly 300,000 square feet of estimated retail demand Importantly, a portion of this demand likely absorbed by vacant and/or underutilized existing retail inventory CRA/D-Downtown should aim to capture 20 to 30% Estimated Sq.ft. Demanded /Person Total Sq.Ft. Demanded Food & Beverage ,200 Shopper s Goods ,800 Convenience Goods ,400 Other Non-retail ,800 Total/Avg ,000 Source: STR: Lambert Advisory

36 36 S ECTI ON 6 Hotel Market Overview

37 37 S E C T I O N 3 Collier County Visitor Highlights 1.8 million visitors in 2015 $21 million in tourist tax revenue, $121 million in sales and gas tax revenue 36,000 jobs within hospitality sector Source: STR: Lambert Advisory

38 38 S E C T I O N 3 Regional (Naples/Ft. Myers) Hotel Market Snapshot Occupancy and average daily rate (ADR) within region has seen strong sustained growth during past five years Though market occupancy considered to be below stabilized levels (or mid 70% range) 80% $150 70% $145 60% $140 50% $135 40% $130 30% $125 20% $120 10% $115 0% $110 ADR Occupancy Source: STR: Lambert Advisory

39 39 Naples Hotel Inventory Profile Property Class Sample Properties Total Rooms % Total More than 50% of Naples hotels built before Development ramped up during the 1990 s, slowing down during the past 15 years. Economy Red Roof, Super % Mid/Upper Mid-Scale La Quinta, Holiday Inn Express, Hampton Inn, Fairfield Inn 1,965 32% % Rooms by Year Built UpScale Bay Inn on 5 th, Courtyard Residence Inn 1,004 16% 19% Pre 1990 Upper Upscale Naples Beach, Hilton, Ballesera, Naples Grand 1,431 23% 29% 54% Present Luxury Ritz Carlton, La Playa Resort, Naples Bay Resort 1,142 18% Total 6,,233 Source: STR

40 40 S E C T I O N 3 Opportunity for Hotel New Hyatt House proving market strength Select Service is recommended product for CRA/D-Downtown But unique brand such as Aloft or Indigo Potential for 2 development (125+ rooms) during next 15 years Source: STR: Lambert Advisory

41 41 S ECTI ON 7 S ummar y of Findings & Conclusions

42 42 C O N C L U S I O N S HEADLI NE & CONCLUSI ONS City of Naples forecasts limited population growth; however, surrounding PTA shows measurable growth Multi-family housing is the key driver to the CRA/D-Downtown growth Represents combination of for-sale and rental Market rate rental housing should be met with near term demand; financial viability needs to be tested Considerable pent-up demand for Workforce housing Opportunity for select service hotel within 3 to 5 years Market supports quality brand Moderate level of demand for retail near term, but can be expanded over time as housing increases and broader revitalization efforts take hold Encourage local/regional businesses Limited demand for office Medical office in connection with hospital

43 43 C O N C L U S I O N S HEADLI NE & CONCLUSI ONS Support redevelopment of critical mass requires relaxation of regulatory constraints Increase height to encourage housing Mixed use should not be required district wide Mixed use (including retail) oriented to main thoroughfares Parking is a critical element to redevelopment planning, particularly as it relates to revitalizing smaller parcels. Identifying optimal location of centralized parking is crucial to maximize utilization and impact within D- Downtown Centralized parking garage can be a joint public/private effort; but, will require at least some level public subsidy

44 44 S ECTI ON 8 Illustration of Rental Housing Development Feasibility

45 45 Illustrative Feasibility Evaluation of a 250 unit Luxury Apartment Complex (and Impact of Garage Parking) Property Valuation Estimated Avg. Rent/Month $2,100 (+ $2.05/sq.ft) Avg. Annual Occupancy/Operating Expense Ratio 95% / 40+% Stabilized Estimated Annual Net Operating Income $3,500,000 Capitalized Valuation (at 6.0%) $57,000,000 Development Cost Evaluation Estimated Total Cost per Unit (w/out Garage Parking) $160,000 per unit plus: Estimated Land Cost (per unit) $35,000 per unit Total Cost of Development (without Garage Parking) $49,000,000 plus: Minimum 350 spaces required at $20K/space $7,000,000 Total Cost of Development (with Garage Parking) $56,000,000 Marginal ROI ROI = 15+%