Housing Marketability Study

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Housing Marketability Study RESIDENTIAL AND RETAIL MARKETABILITY STUDY OF THE PROPOSED DEVELOPMENT OF THE WEST MAIN STREET SITES PENSACOLA, FLORIDA FOR STUDER PROPERTIES AS OF March 24, 2019 THIS STUDY HAS BEEN PREPARED FOR THE SOLE USE BY STUDER PROPERTIES, AND NO OTHER PARTY MAY USE OR RELY UPON THIS STUDY FOR ANY PURPOSE. THIS STUDY IS COPYRIGHTED, AND NO REPRESENTATION OTHER THAN THIS COMPLETE VERSION OF THIS STUDY CAN BE PRESENTED, DISTRIBUTED, OR REFERENCED FOR ANY PURPOSE. THIS STUDY CANNOT BE MODIFIED, REFORMATTED, EXCERPTED OR OTHERWISE CHANGED OR PRESENTED DIFFERENTLY WITHOUT THE EXPRESS WRITTEN PERMISSION OF WEITZMAN ASSOCIATES, LLC. Weitzman Associates, LLC 355 Lexington Avenue New York, NY 737 N. Michigan Avenue, Suite 2060 Chicago, IL File No. 035-19 March 24, 2019 Mr. Andrew Rothfeder Studer Properties 321 North De Villiers Street Suite 103 Pensacola, Florida 32501 Re: Residential and Retail Marketability Study of the West Main Street Sites Pensacola, Florida Dear Mr. Rothfeder: At your request, Weitzman Associates, LLC is pleased to submit the attached marketability study presenting the findings of our research into the prospective residential and retail development to be spread across an 18.54-acre rectangular plat along the north side of West Main Street, between South De Villiers and South Clubbs Streets, and seven smaller parcels to the south of West Main Street within Vince J. Whibbs Sr. Community Maritime Park, in downtown Pensacola, Florida (the “Project”). The total combined land area of the parcels is approximately 28.02 acres. The purpose of our study is to provide you with an understanding of the market fundamentals that directly affect the likely demand for housing and retail space that may be developed on the site. This study will assist you in making decisions as to how to proceed with the property’s development and will provide the necessary research and documentation for use as you continue to plan the project and capitalize its development. The study can be relied upon you for the purpose of planning the development and can be distributed for reference purposes to the community and other members of your project team. Our research in completing this study was conducted in February and March 2019. Our analysis is subject to the Basic Assumptions and Limiting Conditions contained in the Addenda. We have enjoyed working with you on this assignment, and more broadly, we have been privileged to continue our engagement with your beautiful city. We trust that this study will provide a helpful basis for constructive community dialogue, consensus building, and good decision making as you proceed with this development opportunity. Very truly yours, WEITZMAN ASSOCIATES, LLC Peter T. Bazeli, MRICS Catherine Tam Principal and Managing Director Vice President Joshua Levitt Peter Carle Assistant Vice President Associate Copyright © 2019, Weitzman Associates, LLC. All Rights Reserved. This study is for the sole use by Studer Properties, and no other party may rely upon or use this report for any purpose without the express written permission of Weitzman Associates, LLC. The research, conclusions and recommendations contained herein cannot be applied to any property other than the Project for any purpose. CONTENTS PROJECT OVERVIEW ................................................................................................................................. 2 ECONOMIC AND DEMOGRAPHIC OVERVIEW ................................................................................... 12 RENTAL APARTMENT MARKET ANALYSIS ....................................................................................... 33 FOR-SALE HOUSING MARKET ANALYSIS .......................................................................................... 52 HOUSING DEMAND ANALYSIS ............................................................................................................. 75 RETAIL MARKET OVERVIEW ................................................................................................................ 89 TARGET MARKETS ................................................................................................................................. 108 AQUARIUM CASE STUDIES & MARKET PENETRATION ANALYSIS ........................................... 121 DEVELOPMENT RECOMMENDATIONS ............................................................................................. 131 CONCLUSION ........................................................................................................................................... 151 Addenda Exhibit A – Basic Assumptions and Limiting Conditions Exhibit B – Certification of the Consultants Exhibit C – Qualifications of the Consultants Copyright © 2019, Weitzman Associates, LLC. All Rights Reserved. This study is for the sole use by Studer Properties, and no other party may rely upon or use this report for any purpose without the express written permission of Weitzman Associates, LLC. The research, conclusions and recommendations contained herein cannot be applied to any property other than the Project for any purpose. REGIONAL MAP NEIGHBORHOOD MAP Copyright © 2019, Weitzman Associates, LLC. All Rights Reserved. This study is for the sole use by Studer Properties, and no other party may rely upon or use this report for any purpose without the express written permission of Weitzman Associates, LLC. The research, conclusions and recommendations contained herein cannot be applied to any property other than the Project for any purpose. 1 INTRODUCTION Weitzman Associates, LLC has been engaged to independently evaluate the market potential of the prospective residential and retail development of the property known as the West Main Street initiative in downtown Pensacola, Florida (the “Project”). This study reflects in summary our research, findings, and recommendations for this development. Our work in analyzing the market potential of the site’s development during our research has included the following tasks: • Toured the site, and the project’s immediate neighborhood; • Evaluated rental housing, for-sale housing, and retail market trends; • Visited and analyzed comparable properties in Pensacola; • Interviewed numerous local stakeholders, including the owners or managers of local businesses, developers and retail brokers, and planning department officials; • Analyzed the local economic and demographic trends; • Performed rental housing, for-sale housing, and retail demand analyses of the market areas; • Produced our recommendations for the Project’s achievable rents, sale prices, absorption, and physical characteristics necessary to successfully market and lease the Project; • Provided guidance on the amenity program that will be necessary to attract households to the property; and • Conducted an analysis to project potential visitation to an aquarium that could be developed on the site or elsewhere along the waterfront. While we have not been engaged to review the marketability of a potential hotel to be developed as part of this initiative, we have considered the marketability of the residential and retail uses in the context of a new hospitality use being incorporated into the master plan. Similarly, while we are aware that an indoor sports and recreation facility has been proposed for the site, we have not analyzed the marketability of this use, and believe it would be better located further west on Main Street in order to create a western anchor and to be located within the context of larger scale commercial uses that have historically existed there. The following report sets forth the findings of our research, our conclusions, and recommendations for the Project. Copyright © 2019, Weitzman Associates, LLC. All Rights Reserved. This study is for the sole use by Studer Properties, and no other party may rely upon or use this report for any purpose without the express written permission of Weitzman Associates, LLC. The research, conclusions and recommendations contained herein cannot be applied to any property other than the Project for any purpose. 2 PROJECT OVERVIEW LOCATION AND NEIGHBORHOOD AMENITIES The development site is comprised of eight parcels located along West Main Street in Downtown Pensacola. The largest parcel, the former site of the Main Street Wastewater Treatment Plant, is an 18.54-acre rectangular plat on the north side of West Main Street, immediately west of South De Villiers Street, east of South Clubbs Street and south of West Government Street. The seven smaller parcels are irregularly shaped and surround Vince J. Whibbs Sr. Community Maritime Park, south of West Main Street. The total combined land size of the parcels is approximately 28.02 acres. Size (Ac) Parcel Reference Number Approximate Location North of Main Street 18.54 00-0S-00-9070-010-033 NW Corner of W. Main St & S. De Villiers St Subtotal 18.54 South of Main Street Lot 3 0.26 00-0S-00-9400-000-030 SW of W. Cedar St & S. Spring St (Stadium Adjacent) Lot 4 3.02 00-0S-00-9400-000-040 SE Corner of W. Main St & S. De Villiers St Lot 5 1.74 00-0S-00-9400-000-050 NW Corner of W. Cedar St & S. Reus St Lot 6 0.84 00-0S-00-9400-000-060 SW Corner of W. Main St & S. De Villiers St Lot 7 1.48 00-0S-00-9400-000-070 SW Corner of Whibbs Dr & S. De Villiers St Lot 8 1.75 00-0S-00-9400-000-080 SW Corner of S. De Villiers St & Museum Ln Lot 9 0.39 00-0S-00-9400-000-090 SE of W. Cedar St & Museum Ln (Stadium Adjacent) Subtotal 9.48 Grand Total 28.02 Source: Escambia County Property Appraiser; Compiled by Weitzman Associates, LLC The
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