Regional Real Estate Market Analysis ………………………………………………… 2-1 I
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(This page intentionally left blank.) TABLE OF CONTENTS Executive Summary ………………………………………………………………………………... i I. Introduction…………………………………………………………………………. i II. Summary of Key Findings …………………………………………………………..….. iii A. Existing Conditions and Current Land-Use Policies…..……………………..…... iii B. Economic and Real Estate Market Conditions ….…………………………….... iv C. Airport-Adjacent Development Trends and Best Practices in Land Use …..…..... vii III. Recommendations and Policy Implications…………………………………………........ ix Key Recommendation #1………………………………………………………..…. ix Key Recommendation #2………………………………………………………..…. x Key Recommendation #3…………………………………………………………... xi Key Recommendation #4 ………………………………………………………..… xii Key Recommendation #5………………………………………………………….. xii Section 1: Existing Conditions……………………………………………………………………… 1-1 I. Introduction …………………………………………………………………………….. 1-1 II. Station Area Development and Land Use……………………………………………… 1-2 III. Economic Conditions in Loudoun County ……………………………………………….. 1-7 IV. Trends and Forecasts for Dulles and Regional Airports ……………………………….. 1-10 V. Implications for the Market Assessment ………………………………………………... 1-11 Section 2: Regional Real Estate Market Analysis ………………………………………………… 2-1 I. Introduction …………………………………………………………………………….. 2-1 II. Locational Advantages of Station Areas……………………………………………….. 2-1 III. Assessment of Regional & Local Demographic & Economic Factors …………………… 2-3 Demographic Demand Drivers……………………………………………………... 2-3 Economic Demand Drivers………………………………………………………….. 2-6 Key Conclusions from Demographic and Economic Analysis ……………………….. 2-10 IV. Real Estate Market Conditions………………………………………………………….. 2-11 Station Areas………………………………………………………………………. 2-11 Office Markets …………………………………………………………………….. 2-12 Retail Markets ……………………………………………………………………... 2-18 Residential Markets………………………………………………………………… 2-20 Hotel Markets ……………………………………………………………………... 2-24 Industrial Markets ………………………………………………………………….. 2-25 Key Conclusions from Real Estate Market Conditions ……………………………... 2-26 V. Competitive Position Among Regional Transit/Transportation Centers & Along the Silver Line………………………………………………………………………………. 2-27 Competitive Position Within the Metrorail System ………………………………… 2-27 Conclusions and Implications from Regional Transit Center Analysis ……………… 2-31 Competitive Position Within the Silver Line Corridor ……………………………… 2-32 Conclusions and Implications from Silver Line Analysis…………………………… 2-33 Application of Findings from Silver Line Analysis for Development in Loudoun County ……………………………………………………………………………... 2-35 VI. Airport-Adjacent Development Trends…………………………………………………. 2-36 Evaluation of Landside Development at Select Airports …………………………... 2-39 Dallas/Fort Worth International Airport…………………………………………… 2-39 Frankfurt International Airport …………………………………………………….. 2-40 Singapore Changi International Airport……………………………………………. 2-40 Kuala Lumpur International Airport ………………………………………………... 2-41 Minneapolis-Saint Paul International Airport………………………………………. 2-42 Denver International Airport ……………………………………………………… 2-42 VII. Potential Catalytic Anchor Uses………………………………………………………… 2-44 Evaluation Framework ……………………………………………………………... 2-44 Station Area Context ……………………………………………………………… 2-45 Evaluation of Anchor Uses …………………………………………………………. 2-45 Assessment of Compatibility with County Development Goals ……………………. 2-58 VIII. Conclusions: Outlook for Non-Residential Development ……………………………… 2-64 Section 3: Key Trends in Airport-Adjacent Development ………………………………………… 3-1 I. Introduction…………………………………………………………………………. 3-1 II. Land Use Planning Around Airports ……………………………………………………. 3-3 Compatibility Regarding Aircraft Accidents and Safety Concerns ………………... 3-4 Aircraft Noise and Land Use Compatibility ……………………………………….. 3-4 III. Case Studies of Compatible Airport Adjacency ……………………………………….. 3-8 Dallas/Fort Worth International Airport (DFW)……………………………………. 3-9 Denver International Airport (DEN)………………………………………………… 3-16 Minneapolis- St. Paul International Airport (MSP)…………………………………... 3-26 Frankfurt International Airport (FRA)……………………………………………….. 3-37 Singapore Changi International Airport (SIN)……………………………………. 3-44 Kuala Lumpur International Airport (KUL)………………………………………… 3-50 IV. Conclusions………………………………………………………………………….. 3-53 Section 4: Recommendations for Station Area Development …………………………………….. 4-1 I. Introduction …………………………………………………………………………….. 4-1 II. Recommendations………………………………………………………………….... 4-2 Key Recommendation #1 ………………………………………………………….. 4-2 Key Recommendation #2…………………………………………………………... 4-9 Key Recommendation #3…………………………………………………………... 4-15 Key Recommendation #4…………………………………………………………... 4-17 Key Recommendation #5…………………………………………………………... 4-19 Appendix …………………………………………………………………………………………... 5-1 I. Attachment 1…………………………………………………………………………… 5-2 II. Attachment 2…………………………………………………………………………… 5-6 III. Attachment 3…………………………………………………………………………… 5-20 IV. Attachment 4…………………………………………………………………………… 5-22 V. Attachment 5…………………………………………………………………………… 5-31 EXECUTIVE SUMMARY I. INTRODUCTION In the context of changing real estate market and economic conditions and in response to a range of recommendations from an Urban Land Institute Technical Assistance Panel in May 2014, Loudoun County retained HR&A Advisors and Kimley-Horn (“the HR&A Team”) to conduct a market analysis and best practices study to guide the land use recommendations around Loudoun County’s Future Metrorail Station Areas. HR&A is a real estate, economic development, and public policy consulting firm. Kimley-Horn is a transportation and land-use planning firm, with expertise in airport development and operations. The opening of the Loudoun Gateway and Ashburn Silver Line Metrorail Stations in Loudoun County will provide a new opportunity to bring higher density, transit-oriented development to the County. However, since the creation of the land use plan policies around the Station Areas, the regional economy has evolved with changing needs from office and other types of users. This market analysis and best practices study focuses in particular on the areas within one-half mile of the two Station Areas, and based on this analysis provides recommendations with respect to the County’s four goals for these Station Areas and the larger Metrorail Service District, which are: 1. Prompt realization of tax revenues to support future Metrorail operations; 2. Maximizing future employment generation; 3. Achieving the desired land use pattern; and 4. Minimizing demands on the County’s transportation infrastructure. The HR&A Team used the following approach in conducting this study: Section 1: Existing Conditions. The HR&A Team established a baseline of information through an extensive review of County policies, planning documents, and previous studies; an assessment of usage trends at Dulles Airport; a site tour; and interviews with a range of key stakeholders, including county staff and area land owners. The purpose of this existing conditions assessment provided in Section 1 of the report is to describe the current plan policy and land use context. The HR&A Team structured the findings of this Section to include: a. A discussion of the current Station Area Development and Land Use patterns (page 1-2); b. An overview of the current Economic Conditions in Loudoun County (page 1-7); c. An overview of the Trends and Forecasts for Dulles and Regional Airports (page 1-10); and d. Implications for the Market Assessment (page 1-11). Section 2: Regional Real Estate Market Analysis. The HR&A Team conducted an analysis of market conditions in Loudoun County to assess demand for development at the Station Areas. The purpose of this analysis is to provide an outlook for non-residential development, with additional context on trends in airport-adjacent development and potential catalytic anchor uses that might be suitable to promote non-residential station area development or to provide alternative forms of development if the office market does not materialize. This section includes: HR&A Advisors, Inc. i Executive Summary a. An assessment of Regional and Local Demographic and Economic Factors in Loudoun County compared to the region (page 2-3); b. An assessment of the Real Estate Market Conditions for office, retail, industrial, hospitality, and residential uses (page 2-11); c. An analysis of the Competitive Positioning of the Station Areas with other station-area development in the region (page 2-27); d. An overview of Airport-Adjacent Development Trends at select airports around the world (page 2-36); e. An assessment of Potential Catalytic Anchor Uses for the Station Areas (page 2-44); and f. Conclusions on the Outlook for Non-Residential Development (page 2-64). The HR&A Team’s research of real estate market data and precedents was supplemented by interviews with 18 stakeholders, including county staff, local property owners, and business leaders. A list of stakeholders interviewed and key takeaways from the interviews can be found in Attachment 4 of the Appendix. Section 3: Key Trends in Airport-Adjacent Development. Building on the scan of the airport adjacent development in Section 2, the HR&A Team conducted an in-depth analysis of land use and development patterns around six airport areas that were selected based on evaluation of metrics, including exurban location and proximity to transit, and in conjunction with the project steering committee. Key findings in Section 3 are structured by: a. A discussion of Land Use Planning Around Airports focused on land-use and development compatibility,