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One Big Sky Cover Page 1-3-19 Mm ONE Big Sky Market & Financial Analysis Landmark Development Services Company, LLC 10 W. Mifflin Street, Suite 400 Madison, WI 53703 February 4, 2019 February 4, 2019 Landmark Development Services Company, LLC 10 W. Mifflin Street, Suite 400 Madison, WI 53703 RE: One Big Sky District Development Market Analysis Dear Strategy Partners, Landmark Development Services Company, LLC, in tandem with Big Sky Economic Development (BSED) and the City of Billings (Strategy Partners) engaged Hunden Strategic Partners, Inc. to conduct a market and financial analysis for the for the One Big Sky District (Project) in Billings, Montana. The attached is our report. This deliverable has been prepared under the following general assumptions and limiting conditions: § The findings presented herein reflect analysis of primary and secondary sources of information that are assumed to be correct. HSP utilized sources deemed to be reliable but cannot guarantee their accuracy. § No responsibility is taken for changes in market conditions after the date of this report and no obligation is assumed to revise this report to reflect events or conditions occurring after the date of this report. § HSP has no control over construction costs or timing of construction and opening. § Macroeconomic events affecting travel and the economy cannot be predicted and may impact the development and performance of the project. We have enjoyed serving you on this engagement and look forward to providing you with continuing service. Sincerely, Hunden Strategic Partners www.hundenpartners.com TABLE OF CONTENTS ------------ Executive Summary Chapter 1 Introduction Chapter 2 Project Profile Chapter 3 Economic, Demographic & Tourism Analysis Chapter 4 Convention, Entertainment and Sports Market Analysis Chapter 5 Hospitality Market Analysis Chapter 6 Office Market Analysis Chapter 7 Residential Market Analysis Chapter 8 Restaurant and Retail Market Analysis Chapter 9 ONE Big Sky Feasibility EXECUTIVE SUMMARY Purpose of the Report Landmark Development, in tandem with Big Sky Economic Development (BSED), the City of Billings (City), Billings Chamber of Commerce, Downtown Billings Alliance, and Visit Billings engaged Hunden Strategic Partners (HSP) to provide a market and feasibility analysis of the proposed ONE Big Sky development in downtown Billings. In this analysis, HSP analyzes the proposed Project, profiles current conditions within the relevant real estate marketplace, and measures and evaluates the market demand and financial viability for each of the core program elements of ONE Big Sky. Landmark Development plans to transform the long-term economic vitality of downtown Billings, the broader city, and the greater region through the development of the project. ONE Big Sky is a proposed mixed-use project that features several anchor developments in various designated districts throughout downtown. These include a multi-use convention and entertainment facility, a 175-key convention hotel, and multiple residential projects, including senior housing. The project plans to leverage public-private partnerships to support the anchor institutions, including healthcare, tourism, and financial sectors. The primary purpose of the project is to re-urbanize downtown Billings by creating unique experiences and offerings for residents and visitors alike. This includes natural environments that complement the existing Billings and Montana culture. The project also aims to enhance to appeal of Billings in order to attract new private businesses, while also growing the tax base in Billings through mixed-use and residential development. When completed, ONE Big Sky aims to have established Billings as the region’s destination for healthcare and education assets, as well an emerging tourism base. Conclusion As discussed in the report introduction, HSP has found that each of the core elements is supported by market demand. There is market demand for high quality downtown office, residential, retail, restaurant and various types of housing, not to mention a desire and demand from regional users for a convention and events center, as well as a higher quality hotel package. Currently, the financial viability of certain elements is challenging due to the existing conditions in the downtown market. However, long-term, HSP’s analysis indicates that the program elements are financially feasible provided the appropriate transformation strategy is advanced and key elements of civic infrastructure are developed. This civic infrastructure will serve the long-term anchors to strengthen downtown Billings as a regional destination. This includes the civic center, which is viewed as the dominant new anchor to lead the transformation of downtown Billings, and will be designed to be a more diverse and active venue than a traditional convention center The core elements of ONE Big Sky can be feasible if they are developed simultaneously, to create critical mass and synergy among projects, and tools exists to contribute to public infrastructure costs and allow the projects to recoup their direct fiscal impacts (new taxes). Overall, the success of ONE Big Sky is dependent on the formation of a public-private partnership that is led by private capital investment and a sharing of the costs needed to build important civic infrastructure. Billings ONE Big Sky Market & Financial Analysis Executive Summary – Page 2 Project Overview and Summary of Financial Viability The ONE Big Sky project, which is proposed to be developed over multiple phases, is summarized in the table below. Table 1 ONE Big Sky Program Summary PHASE 1 FUTURE PHASE(S) TOTAL USE Convention / Event Center 150,000 GSF - GSF 150,000 GSF Hotel 270 KEYS 150 KEYS 420 KEYS Commercial / Office 105,000 GSF 134,500 GSF 239,500 GSF Residential 954 UNITS 955 UNITS 1,909 UNITS Retail 440,000 GSF 337,800 GSF 777,800 GSF Education / Innovation 50,000 GSF 935,000 GSF 985,000 GSF Health / Wellness 390,000 GSF 675,000 GSF 1,065,000 GSF Parking 3,644 STALLS 1,158 STALLS 4,802 STALLS Source: Landmark Development The overall program of ONE Big Sky, including future phases, is proposed to include a multipurpose convention complex, three hotels totaling 420 rooms, 400,000 square feet of office space, 1,900 residential units (including senior and student housing), 777,000 square feet of retail/restaurant space, 985,000 square feet of education and innovation space, one million square feet of health and wellness space, and 4,800 parking stalls. The following table details the proposed ONE Big Sky Development for Phase 1. Table 2 ONE Big Sky Phase 1 Program ENTERTAINMENT CIVIC & WELLNESS EDUCATION / INNOVATION LIFESTYLE PHASE 1 District District District District TOTAL USE TOTAL GROSS SF UNITS TOTAL GROSS SF UNITS TOTAL GROSS SF UNITS TOTAL GROSS SF UNITS TOTAL GROSS SF UNITS Convention / Event Center 150,000 - - - - - - - 150,000 - Hotel 175,000 175 95,000 95 - - - - 270,000 270 Mixed-Use Office 40,000 - 65,000 - - - - - 105,000 - Civic Office Tower - - -- - - - - - - - Mixed-Use Residential 65,000 50 175,000 140 - - 519,000 415 759,000 605 Multifamily Residential - - - - - - - - - - Senior Housing - - 345,000 216 - - - - 345,000 216 Student Housing - - - - 200,000 133 - - 200,000 133 Mixed-Use Retail 136,000 - 90,000 - 40,000 - 61,000 - 327,000 - Urban Retail (Anchor) - - 55,000 - - - - - 55,000 - Urban Grocery - - 58,000 - - - - - 58,000 - Education (Technical Training) - - - - 50,000 - - - 50,000 - Medical School - - - - - - - - - - Health Care / Medical Office - - 300,000 - - - - - 300,000 - YMCA - - 90,000 - - - - - 90,000 - TOTAL* 566,000 1,273,000 290,000 580,000 2,709,000 *Does not include parking Source: Landmark Development Billings ONE Big Sky Market & Financial Analysis Executive Summary – Page 3 Phase 1 of ONE Big Sky is proposed to feature a 150,000-square foot convention and event facility with an attached/adjacent 175-room headquarter hotel, a 95-room limited service hotel, 605 market rate mixed-use residential units, 216 senior housing units, 133 student housing units, and two parking structures totaling 3,644 spaces. The first phase also includes 270,000 square feet of mixed-use and civic office space, 382,000 square feet of mixed-use and urban retail, a 58,000-square foot grocery, 50,000 square feet of technical training space, 300,000 square feet of healthcare and medical offices, and a new YMCA. As detailed above, ONE Big Sky has been divided into four distinct districts. The figure below shows the four designated districts and how they relate to downtown Billings. Billings ONE Big Sky Market & Financial Analysis Executive Summary – Page 4 Figure 1 The following table details the proposed project plan for future phases of ONE Big Sky. Billings ONE Big Sky Market & Financial Analysis Executive Summary – Page 5 Table 3 ONE Big Sky Future Phase(s) Program ENTERTAINMENT CIVIC & WELLNESS EDUCATION / INNOVATION LIFESTYLE FUTURE PHASE District District District District TOTAL USE TOTAL GROSS SF UNITS TOTAL GROSS SF UNITS TOTAL GROSS SF UNITS TOTAL GROSS SF UNITS TOTAL GROSS SF UNITS Convention / Event Center - - - - - - - - - - Hotel 165,000 150 - - - - - - 165,000 150 Mixed-Use Office 64,000 - - - - - 70,500 - 134,500 - Civic Office Tower - - - - - - - - - - Mixed-Use Residential 167,500 134 120,000 100 - - 440,500 352 728,000 586 Multifamily Residential - - - - - - - - - - Senior Housing - - 165,000 103 - - - - 165,000 103 Student Housing - - - - 400,000 266 - - 400,000 266 Mixed-Use Retail 72,800 - 175,000 - - - 90,000 - 337,800 - Urban Retail (Anchor)
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