Market Study for Proposed Waterfront Hotel
Total Page：16
File Type：pdf, Size：1020Kb
MARKET STUDY Proposed Waterfront Hotel BROADWAY STREET & THE EMBARCADERO SAN FRANCISCO, CALIFORNIA SUBMITTED TO:PROPOSED PREPARED BY: Mr. Ricky Tijani HVS Consulting and Valuation Services Port of San Francisco Division of M&R Valuation Services, Inc. Pier 1, The Embarcadero 100 Bush Street, Suite 750 San Francisco, California 94111 San Francisco, California, 94104 [email protected] www.hvs.com +1 (415) 274‐0680 +1 (415) 896‐0868 January‐2016 January 15, 2016 Mr. Ricky Tijani Port of San Francisco Pier 1, The Embarcadero HVS SAN FRANCISCO San Francisco, California 94111 [email protected] 100 Bush Street, Suite 750 San Francisco, California, 94104 +1 (415) 274‐0680 +1 (415) 896‐0868 +1 (415) 896‐0516 FAX Re: Proposed Waterfront Hotel www.hvs.com San Francisco, California HVS Reference: 2015040272, 2015250020 Dear Mr. Tijani: Pursuant to your request, we herewith submit our market study pertaining to the above‐captioned property. We have inspected the real estate and analyzed the hotel market conditions in the San Francisco, California area. The results of our fieldwork and analysis are presented in this report. Our report was prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP), as provided by the Appraisal Foundation. We hereby certify that we have no undisclosed interest in the property, and our employment and compensation are not contingent upon our findings. This study is subject to the comments made throughout this report and to all assumptions and limiting conditions set forth herein. Sincerely, M&R Valuation Services, Inc. Aaron Solaimani Senior Associate [email protected], +1 (415) 268‐0362 Suzanne R. Mellen, MAI, CRE, FRICS, ISHC Senior Managing Director Superior results through unrivaled [email protected], +1 (415) 268‐0351 hospitality intelligence. Everywhere. Table of Contents SECTION TITLE PAGE 1. Nature of the Assignment 4 2. Description of the Site and Neighborhood 7 3. Market Area Analysis 14 4. Supply and Demand Analysis 37 5. Benchmarking 62 6. Statement of Assumptions and Limiting Conditions 66 7. Certification 68 Addenda Qualifications 1. Nature of the Assignment Objective of the HVS has been engaged by the Port of San Francisco to perform consulting services Market Study and on a commercial site located in San Francisco, California. Phase Two of this six‐ Identification of the phase engagement is to perform an abbreviated market study to provide a basis Client for evaluating the potential financial performance of a proposed boutique hotel on the subject site. The client for this assignment is the Port of San Francisco; this report is intended for the addressee firm and may not be distributed to or relied upon by other persons or entities. Subject of the The subject of this market study is the site located at the intersection of The Market Study Embarcadero and Broadway Street; the site comprises four separate parcels and totals approximately 1.31 acres, or 57,180 square feet. As of our date of inspection, the site was improved with a revenue‐generating parking lot. It is important to note that specific details regarding the subject property’s proposed improvements have not yet been provided to us. We understand through conversations with the Port of San Francisco that the proposed project is likely to include the development of a boutique hotel containing 180 to 200 guestrooms, a dinner theater operated by Teatro ZinZanni, potentially 10 small live‐in units for the artists performing at the theater, and a public park. Throughout the course of this market study, our research and statistics were based on the development of a boutique hotel containing approximately 180 to 200 rooms. However, we were not provided with specifics of the development, including the potential brand of the property, its management, the size of the guestrooms, the amount of public and meeting space, the food and beverage offering, the quality of its construction, the parking situation, development costs, and other details that are vital in positioning the property within the existing hotel market and ultimately determining its feasibility. Scope of Work The methodology used to develop this study is based on the market research and valuation techniques set forth in the textbooks authored by Hospitality Valuation Services for the American Institute of Real Estate Appraisers and the Appraisal Institute, entitled The Valuation of Hotels and Motels,1 Hotels, Motels and 1 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). January‐2016 Nature of the Assignment Proposed Waterfront Hotel – San Francisco, California 4 Restaurants: Valuations and Market Studies,2 The Computerized Income Approach to Hotel/Motel Market Studies and Valuations,3 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,4 and Hotels and Motels – Valuations and Market Studies.5 1. All information was collected and analyzed by the staff of M&R Valuation Services, Inc. Information was supplied by the client and/or the property’s development team. 2. The subject site has been evaluated from the viewpoint of its physical utility for the future operation of a boutique hotel, as well as access, visibility, views, and other relevant factors. 3. The surrounding economic environment, on both an area and neighborhood level, has been reviewed to identify specific hostelry‐related economic and demographic trends that may have an impact on future demand for hotels. 4. Dividing the market for hotel accommodations into individual segments defines specific market characteristics for the types of travelers expected to utilize the area's hotels. The factors investigated include purpose of visit, average length of stay, facilities and amenities required, seasonality, daily demand fluctuations, and price sensitivity. 5. Supply and demand trends in the market, with a particular focus on the boutique hotel segment, were assessed through our database of hotel operating statements and our ongoing experience in the San Francisco market. 6. Potentially competitive lodging facilities displaying market attributes similar to the proposed subject hotel were identified; research was conducted to assess facilities and services and understand the market profile and orientation of these properties. Occupancy, room rate, and market penetration levels were estimated. 7. Development and operating metrics were be compiled to provide a basis for benchmarking the projected performance of the proposed boutique 2 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 3 Stephen Rushmore, The Computerized Income Approach to Hotel/Motel Market Studies and Valuations. (Chicago: American Institute of Real Estate Appraisers, 1990). 4 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 5 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001). January‐2016 Nature of the Assignment Proposed Waterfront Hotel – San Francisco, California 5 property. HVS maintains a database of hotel income and expense statements and sales transactions. Research was conducted to extract the most appropriate operating revenue, expenses, and sales data to use in the benchmarking process. January‐2016 Nature of the Assignment Proposed Waterfront Hotel – San Francisco, California 6 2. Description of the Site and Neighborhood The suitability of the land for the operation of a lodging facility is an important consideration affecting the economic viability of a property and its ultimate marketability. Factors such as size, topography, access, visibility, and the availability of utilities have a direct impact on the desirability of a particular site. The subject site features an excellent location on the San Francisco waterfront along The Embarcadero. It is located in the northwest quadrant of the intersection formed by Broadway Street and The Embarcadero, proximate to many of the area’s major attractions and demand generators. Views of the San Francisco Bay, the Bay Bridge, and other scenery are available from the subject site. Physical Characteristics The subject site measures approximately 1.31 acres, or 57,180 square feet. The site is generally flat and irregularly‐shaped. Its adjacent uses are set forth in the following table. FIGURE 2‐1 SUBJECT SITE'S ADJACENT USES Direction Boundary Adjacent Use North The Embarcadero/Green Street Office Building South Broadway Street Office/Condominium East The Embarcadero San Francisco Piers 9 and 15 West Davis Street Office Building 1.31 Acres 57,180 Square Feet The following images further detail the site’s location, its layout, and its proposed uses. January‐2016 Description of the Site and Neighborhood Proposed Waterfront Hotel – San Francisco, California 7 LOCATION OF SUBJECT SITE WITHIN SAN FRANCISCO January‐2016 Description of the Site and Neighborhood Proposed Waterfront Hotel – San Francisco, California 8 AERIAL VIEW OF SUBJECT SITE January‐2016 Description of the Site and Neighborhood Proposed Waterfront Hotel – San Francisco, California 9 SITE MAP AND PROPOSED USES Access and Visibility It is important to analyze the site in regard to ease of access with respect to regional and local transportation routes and demand generators. The subject site is readily accessible to a variety of local, county, state, and