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Valley of the Sun TOD Housing Market Demand Study

Valley of the Sun TOD Housing Market Demand Study. Arizona Housing Forum 10/3/2012. bae. About BAE. Award-winning real estate economists & development advisors Focus on public agency services 20 person firm, founded in 1986 Offices in Emeryville, Sacramento, Los Angeles and Washington DC

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Valley of the Sun TOD Housing Market Demand Study

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  1. Valley of the Sun TOD Housing Market Demand Study Arizona Housing Forum 10/3/2012 bae

  2. About BAE • Award-winning real estate economists & development advisors • Focus on public agency services • 20 person firm, founded in 1986 • Offices in Emeryville, Sacramento, Los Angeles and Washington DC • Core Services: • Economic Development • Affordable & Workforce Housing • Transit-Oriented Development • Public-Private Partnerships (P3s) • Public Financing Strategies • Fiscal & Economic Impacts

  3. Study Purpose • Commissioned by the Sustainable Communities Collaborative • Define market for mixed-income housing near existing and planned light rail transit stations in Phoenix, Mesa and Tempe • Survey the TOD development landscape and evaluate financing needs for TOD projects • Assess investor/lender willingness to participate in a “TOD” loan fund

  4. Historic Population Growth in the Valley: 1975-2010

  5. The TOD Opportunity: Transit Access • Major new investment ($1.4 B) in light rail transit and related infrastructure development • Ridership has exceeded expectations – 12.8 million boardings in 2011 • Final light rail system will be an extensive system of 63 stations • College students and workers are the two largest categories of users

  6. The TOD Opportunity: Jobs • 200,000 jobs within ½ mile of light rail transit as of 2005 (MAG) • 15 percent of all jobs in the three cities • Office and public-sector jobs most common • Education and health care constitute fastest growing industry sectors (Urban Institute, 2012)

  7. The TOD Opportunity: Economic Vitality • Future of urban work: physical, social and technological connectivity • Dense, walkable places foster collaboration and creativity • Dynamic urban neighborhoods and business districts key to regional economic competitiveness

  8. The TOD Opportunity: Housing Choice • Current lack of choice for most consumers seeking housing in transit accessible locations • Opportunity to provide broader housing choices for individuals and households across the income spectrum

  9. Market Study Approach • Focus on market conditions and economic trends in the three SCWG Cites • Define “net potential demand” for housing near light rail transit rather than gross demand for broadly defined transit household categories • Segment demand by affordability level, household type and tenure

  10. Key Market Findings: Supply • Multifamily housing increasing as a share of overall housing stock in the three cities • Highly amenitized rental housing performing relatively well despite downturn • Some evidence that condominiums and townhomes in urban locations have retained value comparatively well

  11. Demand for Transit Housing: Transit Household Typology • Households with no vehicle • Households with one or more people using transit to get to work • Households with more workers than vehicles available • Total demand = pent-up demand plus new demand from transit households

  12. Demand for Transit Housing, 2010-2040 • Total Demand =130,699 HHs • 4,300 HH per year • 2,000 HHs average per station area

  13. Demand for Transit Housing by Income Level (Phoenix MSA Area Median Income 2012= $66,400) (MAG, 2011)

  14. Priority Development Needs: Findings • Strong interest in light rail station areas and in new infill development types • Rising demand for mixed-use places with homes, jobs, services and community amenities • Extensive feedback from development community on land use, zoning and regulatory obstacles to infill development impacting feasibility (MAG, 2011)

  15. Priority Financing Feeds: Findings • Acquisition financing for land around transit stations • Increased gap financing for residential projects (affordable and mixed-income) • Construction bridge financing for commercial and community facilities projects • Financing for amenities needed to support infill development in urban settings (MAG, 2011)

  16. Funder Outreach: Findings • Strong interest in new development types and TOD investment opportunities • Extremely cautious about short-term investments in housing • Some see community facilities and job-generating land uses as the short-term development priority • Interest in public sector leadership/support for TOD • Desire to see more creative and flexible financial products

  17. Discussion and Q&A Paul Peninger Principal BAE Urban Economics 1285 66th Street Emeryville, CA 94608 (510) 547-9380 ppeninger@bae1.com

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