Franklin Township Community Market Analysis Franklin Township, NJ August 7, 2017
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Franklin Township Community Market Analysis Franklin Township, NJ August 7, 2017 ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES™ [ProjectFranklin Township Name] Community Market Analysis August 7, 2017 Table of Contents EXECUTIVE SUMMARY 3 REAL ESTATE & SUPPLY/DEMAND ANALYSIS 64 Project Scope 4 Methodology 65 Background 5 Background 66 Key Findings & Takeaways 6 Key Findings 68 Development Pipeline & Inventory 69 CASE STUDY ANALYSIS 9 Multi-Family 73 Commercial Corridors 10 Office 85 Office Parks 17 Retail 96 Lodging 108 SOCIO-ECONOMIC TRENDS 31 Warehouse & Distribution 113 Methodology 32 Key Findings 33 IMPROVEMENT-TO-LAND VALUE ANALYSIS 118 LABOR & INDUSTRY TRENDS ANALYSIS 43 APPENDIX 127 Methodology 44 Business Survey 128 Key Findings 45 Glossary of Terms 136 Data Sources 139 INDUSTRY CLUSTER ANALYSIS 52 Background 53 Methodology 55 Key Findings 56 4WARD PLANNING LLCINC Page 2 EXECUTIVE SUMMARY ECONOMIC AND REAL ESTATE ANALYSIS FOR SUSTAINABLE LAND USE OUTCOMES ™ [ProjectFranklin Township Name] Community Market Analysis August 7, 2017 Background: Project Scope Background Review & Case Study Analysis •Interviews and Public Input •Online Dashboard •Focus Groups •Business Survey Strategic Analysis and Recommendations 4ward Planning was retained by Franklin Township •Community Market Overview to help it develop a community market analysis in •Socio-Economic Trends •Labor and Industry Trends Scope support of recommendations for its Corporate •Industry Cluster Analysis Business (CB) district near Interstate 287 and its •Real Estate Market Supply vs. Demand Analysis Hamilton Street Business District. The community market analysis process and the final study product are based on a combination of locally Analyze Limitations, Alternatives & Opportunities derived data and input, as well as third-party data •Improvement-to-Land Value sources. Analysis •Opportunities for Maximizing Economic Activity The recommendations emanating from this report •Targeted Business Opportunities •Strategic Redevelopment Sites carefully match targeted private investment with •Financial Feasibility Analysis •Identify Major Findings for market supportable current and future Business Development and development opportunities. Strategic Recommendations 4WARD PLANNING LLCINC Page 4 [ProjectFranklin Township Name] Community Market Analysis August 7, 2017 Background: Study Geographies The Franklin Township community market analysis covers the following study areas. Northeast Business •Commercial Districts Primary Market Areas Corridors (Drive-Time Contours) •Mount Airy, PA New Somerset Franklin •Richmond, VA Township •Corporate Business Jersey County (CB) District •Washington, D.C. •Hamilton Business •Office Parks District (HBD) •Holmdel, NJ Socio-Economic & Labor & Industry Analysis •Bridgewater, NJ •Innsbrook, VA Real Estate Analysis Case Studies ILV Analysis 4WARD PLANNING LLCINC Page 5 [ProjectFranklin Township Name] Community Market Analysis August 7, 2017 Key Findings & Takeaways: Socio-Economic Analysis Key Metric Key Findings Project Takeaway Observation • Although all geographies examined are • Current research indicates that non-family households, projected to experience flat annual population generally, prefer smaller homes, are more likely to rent, Population/ Non-Family growth through 2020, regional household and have more discretionary income than family Households Households formation is forecast to be dominated by non- households – and the Franklin Township is likely to see family households. continued investment in multi-family housing. • While both the Township and County have • The region’s modest increase in young adults, generally, experienced growth in Baby Boom populations and non-family household formation, in particular, (ages 55+) in recent years, the region is seeing Balanced Age suggests continued opportunity for businesses reliant Age an increase in younger persons, as well. This Representation upon discretionary incomes – such as restaurants, coffee trend is likely to continue through 2020, while houses and small specialty shops – stores which would fit most other age groups are expected to decline the character of the Hamilton Business District. slightly or remain flat. • The township should leverage the area’s strong incomes • Median household income in both Franklin and spending power to attract a variety of goods and Household Well above Township and Somerset County are relatively services businesses to the Hamilton Business District. In Income & average high to both state and national averages – and, particular, specialty goods, restaurants, and unsurprisingly, so are the average household Expenditures entertainment related businesses should be targets. consumer expenditures for both geographies. • Presently, 65 out of 100 housing units in the • Well designed, located and priced rental housing can and Typical owner- township are owner-occupied. However, Housing should prove highly beneficial to local area businesses – renter split, empirical observations, as well as identified in terms of the relatively larger share of discretionary Tenure but… data trends suggest renter-households are likely incomes and the housing options offered to local workers. to increase, markedly, over the coming years. • The current housing vacancy rate suggests the local area • The housing vacancy rate in the township and Housing housing market is in balance – that is, supply is, generally, Low Vacancies county hover around five-percent, which is meeting existing demand – which also bodes well for the Vacancy consistent with a natural vacancy rate. general economic development environment. 4WARD PLANNING LLCINC Page 6 [ProjectFranklin Township Name] Community Market Analysis August 7, 2017 Key Findings & Takeaways: Labor and Industry Analysis Metric Observation Key Findings Project Takeaway • The relatively large share of well educated professional • 15 percent of workers within Franklin workers in Franklin Township should continue to serve as a Professional, Township and 11 percent of workers within draw for local area and regional companies and industries Employment Scientific, and Somerset County are employed in the looking to access knowledge worker talent. Further, the Technical by Share relatively well paid Professional, Scientific and relatively large share of these workers also suggests a deep Services Technical Services sector. pool of entrepreneurial talent that may lead to yet more private business development, locally. • The current and projected expansions in these and other • The Wholesale Trade industry sector has broad industry sectors suggests that Franklin Township’s Wholesale nearly doubled its employment in Franklin economic environment – e.g., unemployment rate, tax Employment Trading, Township, since 2011. ratable base and private sector investments – should Growth Health Care, • Somerset County’s Health Care and Social continue to remain strong over the next ten years. In and Social Services sector is projected to add over 5,000 particular, the industries which exhibiting employment Assistance jobs by 2025. growth – such as the healthcare industry – offer many career path options to high wage and salary occupations. • While the total projected decline in manufacturing • The manufacturing sector – the third and employment is not particularly large, the anticipated Manufacturing fourth largest industry sector by employment Employment shedding of workers with valuable manufacturing skill sets in Franklin Township and Somerset County, should prompt Franklin Township officials to identify how Decline respectively, in 2014, is projected to decline other area businesses might leverage the skills of these by just over seven percent through 2025. workers. 4WARD PLANNING LLCINC Page 7 [ProjectFranklin Township Name] Community Market Analysis August 7, 2017 Key Findings & Takeaways: Real Estate Analysis Metric Observation Key Finding Project Takeaway • With an apartment vacancy rate of 3.2 percent, Somerset • Combined, and based on a capture rate of Support for County has a very tight multi-family housing market. Multi-Family between 10- and 20-percent, the two districts 730 to 1,570 • According to interviews with a local broker, there is a 60- have the potential to accommodate between 730 Residential dwelling units unit apartment project currently being planned on Hamilton and 1,570 multi-family units by 2026. Street, in the center of the HBD. • There is approximately 3.3 million SF of vacant office space • Given that there will remain adequate office Weak Office within Somerset County, 331,790 SF within Franklin supply to absorb all of the future demand, there is Market but…. Township, and 149,525 SF within the CB District. little need for new office building space, except for Commercial Demand for • By 2026, the projected number of office workers will result build-to-suit space. Office Medical in a demand for 3.5 million SF of office space within the CB • Flex and medical office space are the two Office District’s 15-minute drive- time contour and nearly 2.5 segments most in demand in the general market million SF within HBD’s 15-minute drive-time contour. and the CB District should target these segments. • There is approximately 115,040 SF of vacant retail space Demand for • While most general retail needs are currently met, within Franklin Township, and 10,020 SF vacant retail Selected the investment in new restaurants and specialty space within the HBD. Retail Retail Trade retail (think bakeries or boutique