Urban Real Estate Why it Works Today' ' ' and Tomorrow

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Urban Real EstateWhy it Works Today. . . and
Tomorrow
Jon M. Knorpp Urban Land Institute Place Making
Conference September 13, 2004
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What is Urban Real Estate?

• Urban development redevelopment projects
• Central/Inner cities
• Urban infill/High-density areas
• Along public-transit corridors
• Not typical CBD office buildings
• Emphasis on residential/commercial mixed-use
  projects and affordable housing
• Areas with predominantly minority residents

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Why Urban Real Estate?

• Traditional greenfield development will not
  accommodate expected U.S. population growth over
  next 25 years

291 Million
2003
309 Million
2010
336 Million
2020
364 Million
2030
Millions of U.S. Residents
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Why Urban Real Estate?

• Traditional greenfield development will not
  accommodate expected U.S. population growth over
  next 25 years

Where will we put 71 million people?
Do we really want. . . Longer commutes? Lost open
space? Further environmental degradation?
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Why Urban Real Estate?
The U.S. population is fast becoming Majority
Minority
2030
2000
2050
31
42
50
50
58
69
Non-Hispanic White
Hispanic White Other Races
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Why Urban Real Estate?
California is already Majority Minority
2030
2000
2050
23
29
47
53
77
71
Non-Hispanic White
Hispanic White Other Races
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Why Urban Real Estate?

• Urban/Minority Neighborhoods a Huge Underserved
  Market
• Population Density High Aggregate Purchasing
  Power

Naperville, Illinois South Chicago Census
Tract Census Tract Population 60,000 112,000 Total
Income 2.3 Billion 2.1 Billion Food
Expenditures 52 of Income 56 of Income
Source Dr. Susanne Cannon, DePaul University
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Why Urban Real Estate?

• Rise of older empty nesters and younger echo
  boomers increasingly prefer urban lifestyle

U.S. Household Growth by Age Segment, 2000-2010
760,000
lt25
1.1 Million
25-54
9.7 Million
55
(Millions)
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Why Urban Real Estate?

• Government emphasis on Smart Growth
• Redeveloping underutilized urban sites
• Developing high-density housing
• Focusing on urban mass transit and planning for
  transit-oriented development projects

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Bay Street Emeryville
Location Emeryville Property Type Mixed-Use
Urban Village Size l 400,000 Square Feet of
Retail l 365 Residential Units (284
Apartments/95 Condos) JV Partner Madison
Marquette Cost 250 Million (City
Subsidies/Tax Credits) Demographics 59
Minority Status l Retail Opened in
2002 l Residential Construction to be Completed
in 2005
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Bay Street Emeryville
Location Emeryville Property Type Mixed-Use
Urban Village Size l 400,000 Square Feet of
Retail l 365 Residential Units (284
Apartments/95 Condos) JV Partner Madison
Marquette Cost 250 Million (City
Subsidies/Tax Credits) Demographics 59
Minority Status l Retail Opened in
2002 l Residential Construction to be Completed
in 2005
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Bay Street Emeryville
Location Emeryville Property Type Mixed-Use
Urban Village Size l 400,000 Square Feet of
Retail l 365 Residential Units (284
Apartments/95 Condos) JV Partner Madison
Marquette Cost 250 Million (City
Subsidies/Tax Credits) Demographics 59
Minority Status l Retail Opened in
2002 l Residential Construction to be Completed
in 2005
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Metropolitan Lofts
Location Downtown Los Angeles Property
Type 80/20 Affordable Multifamily
Residential Size 264 Apartment Units JV
Partner Forest City Enterprises Project
Cost 59 Million Demographics 91
Minority Status l Under Construction l
Completion Expected in Early 2005 l On Ground
Lease from LA Redevelopment Agency
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The Meridian Apartments at The Crossing
Location San Bruno Property Type 80/20
Affordable Multifamily Residential Size 30
0 Apartment Units JV Partner TMG Partners/Regis
Homes Cost 69 Million Demographics 65
Minority Status l Under Construction l
Completion Expected in 2004
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Uptown Oakland
Location Oakland Property Type Residential/Reta
il Mixed-Use Size l 700 Apartment Units l
14,500 Sq. Ft. Retail JV Partner Forest City
Enterprises Demographics 69 Minority Status l I
n Underwriting l Forest City and City of
Oakland in Negotiations
PLANNED
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Keys to Successful Urban Development

• Community buy-in is crucial
• Cities and communities need to be educated,
  especially for affordable housing, retail
  development and brownfields
• Arbitrary profit goal by cities is
  counterproductive and overlooks ancillary
  benefits of neighborhood revitalization
• Adequate public transportation is increasingly
  critical

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Keys to Successful Urban Development

• Quality projects and services are basic
  requirements
• Proactive management of property operations and
  maintenance is essential -- no skimping
• Creating a safe environment is critical
• Property managers and leasing agents who are
  involved in the local community are a plus