MARKET ANALYSIS

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MARKET ANALYSIS
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• 1A. Overall Economy
• Economic recovery continues slowly, though
  potential setbacks abound
• Inexpensive capital, uncertain stock returns
  driving real estate investment

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Executive Summary

• 1B. Product Assumptions
• Residential property
• Hotel / Extended Stay

• 1C. Market Risk
• Oversupply
• Uncertainty about the area (Time and
  Competitors)

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2A. Historical Analysis of Bostons Economy

• All indicators show steady growth until 2001,
  then a substantial drop and rebounded in 2003 and
  2004
• Bostons data corresponds to national trends,
  although slightly more depressed than overall U.S.

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Market Overview
2B. Future Trends for Bostons Economy

• Bostons slow growth continues but with certain
  segments showing stronger performance (special
  attention in our case for Professional Business
  Service and Hospitality Leisure)

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3A. Market Area
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Demand Analysis

• Assumption 1
• Multi-Family Housing
• - Geography 3-mile radius
• User Primarily CBD and Convention
• Center white-collars
• - Price Medium

• Assumption 2
• Hotel / Extended Stay
• - Geography 5-mile radius
• User Conventioneers, tourists,
• business travelers
• - Price Medium

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3B. Demand Drivers

• Market continuing to recover slowly, with tepid
  job growth
• Bostons economy historically shows similar
  trends as national scenario

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Demand Analysis
Assumption 1 Multi-Family Housing - Employment
sectors with highest projected growth rates are
over-represented in S. Boston as compared to MSA.
Therefore, demand growth in S. Boston is expected
to outpace the overall region
Assumption 2 Hotel / Extended Stay -
Employment Growth - Masterplan The Seaport
Public Realm Plan (Convention Center)
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3C. Absorption
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Demand Analysis
Assumption 1 Multi-Family Housing - Employment
growth
Assumption 2 Hotel / Extended Stay -
Masterplan The Seaport Public Realm Plan
(Convention Center)
Occupied Room Nights / Year
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4A. Existing Inventory and Near-term Inventory

• Stock growth of 6.5 over last 10 years,
  outpaced employment growth by 1.5.
• Recent employment spike driving absorption and
  vacancies.
• Vacancy rate at LT avg, expected to trend slowly
  upwards over 5 years.
• - 2005 completions 50 over LT avg, will decline
  beginning in 2006, but remain ahead of absorption
  going forward.

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Supply Analysis
Vacancy rate
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4B. South Boston Supply Pipeline
Project location 505 Congress St.
5.5 MSF including 1,559 residential units
planned or under construction
6.2 MSF including 2,500 residential units in
pre-planning
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Supply Analysis
744 units planned or under construction
S. Boston stock 4 of MSA stock S. Boston
pipeline 29 of MSAs projected 5 year net
absorption
Convention Center Hotel under construction
800-rooms 320 second phase
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4C. Business / Building Cycles

• CA/T opportunity for redevelopment
• BCEC since 2004
• Fort Point Channel, 100 acres development
• Fan Pier, ICA
• Pier 4
• World Trade Center
• South Station Tower (Office Hotel)
• Silver Line

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Supply Analysis
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5. Site Analysis (Outstanding Attributes)

• Cons
• - Poor Geometry
• Limited Vehicular Access
• - Heavy Traffic Flow (noise and visual pollution)
  
• - Tunnel Exhaust Stacks at neighbor site
• Pros
• Substantial Investments in Infrastructure
• Strong potential for competition or beneficial
  development of new neighborhood
• Good Public Transportation Linkage (Silver Line
  to the Airport)
• Good linkage to Convention Center, Waterfront
  and CBD

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Site Analysis
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6A. Opportunity
- Multi-Family Housing gtgt opportunity to attend
particular demand for single, mid-income
employees from CBD and Convention Center
(employment rate growth) - Hotel / Extended Stay
gtgt opportunity to attend particular demand for
conventioneers and business travelers from CBD
6B. Risks

• Exceeding Current and Projected Supply for above
  mentioned uses
• Uncertainty about neighborhood development
  timeline

6C. Initial Conclusions
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Conclusion
- Employment growth will spur residential demand
over coming years. However, substantial available
land in the market area will require careful
product differentiation in order to produce an
acceptable capture rate
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