Berkshire Hathaway Homeservices the Loft Warehouse Condo Market

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Berkshire Hathaway Homeservices the Loft Warehouse Condo Market Berkshire Hathaway HomeServices The Loft Warehouse Condo Market Report Downtown Detroit June 30th 2018 DEVELOP WITH CONFIDENCE Contents Introduction Market Outlook Development Map Desirability Analysis Development Markets • New Development Market • Hybrid (New + Resale) Development Market • Resale Development Market Condo Market Report Downtown Detroit - June 2018 DEVELOP WITH CONFIDENCE Copyright 2018 The Loft Warehouse Inc. Introduction Welcome to our Detroit Condo Market Report! This report is aimed at listing all significant condominiums project in Detroit, and organizing essential information about them so that buyers. sellers, developers and real estate agents can use it to quickly find relevant information and aid in their decision making process. It includes key metrics such as sold price per sf, desirability index, as well as a list of the most recent sales, with unit size, price, and close date. We hope it becomes an essential tool for anyone already involved in our very dynamic and growing market, as well as an exciting introduction for those considering a move to our City either a new residents or as investors and developers. Definitions • New Development - A project that is new to the market and has never been sold before. Only projects that are publicly offered for sale are reported. Contact us to learn more about upcoming developments. • Hybrid (New + Resale) Development - A project where both developer sale and existing owner sales happen at the same time. • Resale Development - A project that was sold out by its developer and only has existing owner sales. • Average Absorption - Units sold per month over last ten sales or last three years. • Launch Year - Year that closings started or that closings are expected to start for new developments. • Sold Out Year - Year when the last developer owned unit was sold. For older projects this is often an estimate. • Average Listing Price/SF - This is applicable only to new developments, and represents the average of the price per square foot of the units that are publicly marketed at the time this report is issued. It does not include the price per square foot of units under contract and not yet closed, as this is not public information. • Address - When a development has multiple addresses (as is typical for townhome developments for example) the unit number is a short form of the street address comprised of the street number followed by a letter code indicating the street. • Condominiums/Cooperative - This report only covers condominiums in the city of Detroit and excludes cooperative units that are usually bundled with condominiums on the MLS. Due to the specific type of ownership and ownership restrictions, the cooperative market does not follow the same dynamic than the condominium market. • Desirability Index - The Desirability Index reported for resale developments is an average for the units sold during the period. The Desirability Index reported for new developments (units not yet sold) is based on the publicly available information. • Sources - Realcomp II Ltd. is the source of all sale data. Other data is credited to each project specific website and other marketing materials. • Amenities - The visual key below has been used to describe the amenities available for each Development. Valet Concierge Hotel Storage Fitness Lounge Food Outdoor Parking Pool & Drink Condo Market Report Downtown Detroit - June 2018 DEVELOP WITH CONFIDENCE Copyright 2018 The Loft Warehouse Inc. Market Outlook $800 Price/sf vs. Close date $700 10-year sales history $600 Book Cadillac $500 $400 CBD Midtown $300 Detroit Average $200 $100 $- 1/1/2008 1/1/2009 1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 With an average sold price at $225/sf, the Detroit market has confirmed a complete recovery from the 2008 economic crisis and is now well surpassing its historical high. That recovery is lead by the Central Business District (CBD) and Midtown, both neighborhoods well above $300/sf. The Westin Book Cadillac is still the market leader even in a full resale mode and outperforms even new construction condominiums with an average above $500/sf. The market dynamic at play for the last few years has been a severe lack of new inventory compared to the accelerating pace of demand. More and more people come and work downtown in the new office buildings being renovated by the likes of Dan Gilbert and his Bed- rock group or for employers that see significant growth such as Meridian Health or Olympia Entertainment. These new employees are attracted to the City where they can now find amenities (especially food & beverage, entertainment) that easily compete with surround- ing communities while offering the benefits of a reduced commute. The residential market started to respond over the last 3 years with an increased supply of rental inventory, but the for sale demand has not been addressed until 2018. We are now seeing the first new condo inventory coming on the market with Selden (12 units), Fort Shelby Residences (56 units) and City Modern (104 units). This lag in inventory response to the market demand combined with the major improvements in the City’s infra- structure, are fueling a sharp appreciation at rates of $50/sf/yr to $75/sf/yr. Condo Market Report Downtown Detroit - June 2018 DEVELOP WITH CONFIDENCE Copyright 2018 The Loft Warehouse Inc. Map of Coverage Q B E N T M E A G F K L A P J B W D D G I X I D U V A B C S H O R C F C H New Developments Resale Developments A Saint Charles - 1454 Townsend Street A Leland Lofts Q Gramont Manor Condos B The Selden - 438 Selden Street B Lofts at New Center R Westin Book Cadillac Residences C Fort Shelby - 525 W. Lafayette Boulevard C Grinnell Place Lofts S Spinnaker Tower D 9 on 3rd Townhomes - 4402 - 4434 3rd Street D Campau Farm in Elmwood Park T Research Lofts E Cass & York - 5935 Cass Avenue E 55 West Canfield U Garden Lofts F Ashton Detroit - 659 Howard Street F Canfield Lofts V Woodward Place at Brush Park G City Modern - 318 Edmund Place G Stuber-Stone Lofts W Ellington Condos H Franklin Lofts - 2987 Franklin Street H Riverfront Tower Condos X Carola &Lamar Lofts I 64 Watson - 64 Watson Street I Lofts at Rivertown J Indian Village Manor New + Resale Developments K Detroit Towers Condos L Shoreline East Condos A Willys Overland Lofts - 444 W. Willis Street M Park Shelton Condos B Great Lakes Tower - 250 Harbortown East Drive N Art Center Town & Carriage Homes C Garden Court - 2900 Jefferson Avenue O 200 River Place Lofts D Carlton Lofts - 2915 John R. Street P FD Lofts Condo Market Report Downtown Detroit - June 2018 DEVELOP WITH CONFIDENCE Copyright 2018 The Loft Warehouse Inc. Desirability Analysis A Buyer Behavior Model The Desirability Index is a proprietary index developed by Berkshire Hathaway HomeServices The Loft Warehouse, that represents how desirable a property is for a typical buyer. It is a number from 0% (least desirable) to 100% (most desira- ble), based on a statistical model of buyer behavior extracted from past and current sales data. The desirability index is the cornerstone of a new statistical method to model condominium markets that allows us to predict the sale price of any con- dominium unit based on its location, finishes and amenities. Changes in the buyer behavior occur because of long term trends in buyer taste and changes in available construction and material technology, but also more rapidly, through the influx of new residents to the City moving from surrounding com- munities, as well as bringing fresh expectations from other Cities & States. As we update regularly our model, we are able to see trends in buyer behavior such as the continued importance of park- ing, or the evolution away from industrial lofts toward refined products featuring higher quality finishes. More importantly, we are able to quantify these changes and their impact on perceived value. Market Model The use of the Desirability Index allows us to compute a very simple market model as the relationship between the Desira- bility Index and the Price/sf is linear. By separating the Buyer model from the Market model, we can observe “pure” market changes independently. For example, we are able to detect early any signs of a market change that would be otherwise hidden by the variation of product offered for sale. Our recent observations of the Detroit condo market is that it is progressing slowly (the price/sf for a product of a given desirability does not change much) but that the inventory is shifting quickly toward more desirable product either through the release of new product or improvement of existing resale units. Model Usage We support developers as they work on the concept for their future product by applying this model. It allows us to precise- ly value and compare various options for finishes and amenities, and fine tune the product design to optimize its cost vs. the expected sale price. The model gives us a deeper understanding of what matters for a buyer and how to best choose a site for a given product, or what product best fits an existing site. The chart below illustrates, as an example, the relative importance of Location, Finishes and Amenities for a condo buyer as of the time of this report. Finally, we have calculated the average Desirability Index for each development in this report and illustrated their relative position on the graph on the next page. DEVELOP WITH CONFIDENCE Desirability Analysis $700 $600 E R $500 F A B I $400 C G A E F U H W C D $300 D G X H T M O P A V B $200 I S B N C Q J $100 K L D $- 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% New Developments Resale Developments A Saint Charles - 1454 Townsend Street A Leland Lofts Q Gramont Manor Condos B The Selden - 438 Selden Street B Lofts at New Center R Westin Book Cadillac Residences C Fort Shelby - 525 W.
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