A Market Feasibility Study Of: Addison Apartments
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A MARKET FEASIBILITY STUDY OF: ADDISON APARTMENTS A MARKET FEASIBILITY STUDY OF: ADDISON APARTMENTS 6500 Central Avenue Seat Pleasant, Prince George’s County, Maryland 20743 Effective Date: May 14, 2018 Report Date: June 13, 2018 Prepared for: Cary Weinstein Gershman Mortgage 3773 Cherry Creek Drive, Suite 110 Denver, CO 80209 Prepared by: Novogradac & Company LLP 6700 Antioch Road, Suite 450 Merriam, KS 66204 (913) 677-4600 June 13, 2018 Cary Weinstein Gershman Mortgage 3773 Cherry Creek Drive, Suite 110 Denver, CO 80209 Re: Market Study for Addison Apartments located at 6500 Central Avenue in Seat Pleasant, Maryland Dear Mr. Weinstein: At your request, Novogradac & Company LLP has performed a study of the multifamily rental market in the Seat Pleasant, Prince George’s County, Maryland area relative to the above-referenced proposed new construction mixed-income low income housing tax credit (LIHTC)/market rate property. The purpose of this market study is to assess the viability of Addison Apartments (the “Subject”), a proposed new construction 88-unit LIHTC/market rate multifamily development with 28,300 square feet of ground floor commercial space. The following report provides support for the findings of the study and outlines the sources of information and the methodologies used to arrive at these conclusions. The scope of this report meets the requirements of the HUD MAP program, per the HUD MAP guide dated January 2016, including the following: ñ Analyzing appropriateness of the unit mix, rental levels, available amenities, and site. ñ Estimating market rent, absorption and stabilized occupancy level for the market area. ñ Investigating the health and conditions of the multifamily market. ñ Calculating income bands, given the Subject rents. ñ Estimating the number of income appropriate households. ñ Reviewing relevant public records and contacting appropriate public agencies. ñ Analyzing the economic and social conditions in the market area in relation to the Subject. ñ Establishing the Subject Primary Market Area. ñ Analyzing the commercial space. This report contains, to the fullest extent possible and practical, explanations of the data, reasoning, and analyses that were used to develop the opinions contained herein. The depth of discussion contained in the report is specific to the needs of the client as well as HUD. ADDISON APARTMENTS MARKET STUDY PAGE 2 Please do not hesitate to contact us if there are any questions regarding the report or if Novogradac & Company LLP can be of further assistance. It has been our pleasure to assist you with this project. Respectfully submitted, Novogradac & Company LLP Rebecca S. Arthur, MAI Kelly Gorman Partner Manager [email protected] [email protected] 913.312.4615 732.623.7005 Addam Fishel Connor Mattoon Analyst Junior Analyst [email protected] [email protected] 415.356.7624 415.356.8041 TABLE OF CONTENTS 1. Executive Summary ............................................................................................................................................... 1 2. Description of Proposed Project ........................................................................................................................ 12 Project Location/Neighborhood Characteristics .......................................................................................... 16 3. Primary Market Area Definition ......................................................................................................................... 24 4. Economic Context ................................................................................................................................................ 27 5. Demographic Analysis ......................................................................................................................................... 35 6. Current Housing Market Conditions .................................................................................................................. 45 Competitive Rental Inventory ........................................................................................................................ 51 Recent Market Experience ............................................................................................................................. 54 Property Characteristics ................................................................................................................................. 89 7. Characteristics of Rental Units in the Pipeline ............................................................................................. 107 8. Demand Estimate and Analysis ...................................................................................................................... 111 Penetration Rate ......................................................................................................................................... 122 Discussion of Most Comparable Properties .............................................................................................. 127 9. Findings and Conclusions ................................................................................................................................ 128 10. Additional Requirements/ Guidance for Income Restricted Projects ...................................................... 132 11. Data, Estimates, and Forecast ........................................................................................................................ 134 Data, Estimates, and Forecast ................................................................................................................... 135 Addenda A………………………………………………………………….Certifications, Assumptions, and Limiting Conditions Addenda B………………………………………………………………………………………………………………….Subject Photographs Addenda C…….……………………………………………………………………………………………….Qualifications of Consultants Addenda D…….…………………………………………………………………………………………………Site/Floor Plans and Survey 1. EXECUTIVE SUMMARY ADDISON APARTMENTS – SEAT PLEASANT, MARYLAND – MARKET STUDY EXECUTIVE SUMMARY 1) Description of Site and Immediate Surrounding Area The Subject site is located at 6500 Central Avenue, Seat Pleasant, Maryland 20743. The site is accessible from the north side of Central Avenue. Central Avenue is a six-lane road that provides access throughout the central portion of Prince George’s County. To the west Central Avenue turns into E Capitol Street SE and provides access to Washington D.C. Interstate 495 is accessible via Central Avenue to the east and provides access to cities surrounding Washington D.C. along with access to interstates 95, 270, 395, in addition to numerous state highways. Overall, access and traffic flow to the Subject site are considered excellent. The Subject site is located within close proximity to a number of locational amenities, including schools, grocery stores, hospitals, and retail. The Subject site is located within Census Tract 1233.00, which is not a Qualified Census Tract. The Subject site is generally level and is approximately 0.259 acres or 11,280 square feet in size. The site is currently improved with four existing apartment buildings to be demolished, is rectangular in shape, and has frontage along the north side of Central Avenue. The Subject site is zoned Commercial Shopping Center (C-S-C), which allows for a variety of uses including multifamily residential uses, retail, recreational, office, among other commercial uses. Therefore, the Subject will be a legal, conforming use as proposed. Surrounding land uses of the Subject site consist of commercial/retail uses, public transportation, and single-family and multifamily housing in average to good condition. The general boundaries of the Subject’s neighborhood are Backlog Street, and Seat Pleasant Drive to the north, Hill Road and Shady Glen Road to the east, Walker Mill Road to the north, and Brooke Road and Route 704 to the west. Access to public transportation from the Subject is excellent, as the Addison Road Metro Station is located directly south of the Subject, across Central Avenue. The Addison Road Metro station provides access to the Washington, D.C in addition to other urban areas in the MSA. Uses north of the Subject include single-family homes in good condition and vacant land. Uses east include commercial uses, condominium townhomes and multi-family uses. The Villages at Peppermill is a three-story over parking townhouse condominium property located approximately 0.3 miles east of the Subject. Central Garden Apartments, located approximately 0.5 miles east of the Subject is a 106-unit, Section 8, subsidized multifamily property offering one, two and three-bedroom units. Central Garden Apartments has been excluded from our analysis due to subsidized rents. Single-family homes in the Subject’s neighborhood, including the condominiums at The Villages at Peppermill, range in price from $200,000 to $300,000. Uses south of the Subject include the Addison Road Metro Station, single-family uses in average condition, a house of worship, vacant land, and the Central High School, which is part of the Prince George’s County Public School District with enrollment of 985 students. Uses immediately west of the Subject include local shopping and retail options including Dunkin Donuts, and Exxon Mobil gas station. The Addison Plaza retail center is located farther west across Addison Road and includes a Subway, Domino’s Pizza, Taco Bell, Popeye’s, CVS, Wells Fargo, and Dollar Tree. A strength of the Subject’s