MT. LEBANON STATION TRANSIT-ORIENTED DEVELOPMENT PROJECT Mt. Lebanon Transit-Oriented Development (TOD) Project Market Analysis DELTA DEVELOPMENT GROUP, INC. 9000 BROOKTREE ROAD, SUITE 203 WEXFORD, PA 15090 Phone: (724) 778-4005 Fax: (724) 778-4008 www.deltaone.com DELTA DEVELOPMENT GROUP, INC. MT. LEBANON STATION TRANSIT-ORIENTED DEVELOPMENT PROJECT TABLE OF CONTENTS Introduction ...................................................................................................................................... 1 Conclusion and Key Findings − Summary............................................................................................. 1 Housing Market ......................................................................................................................................................... 1 Retail Market ............................................................................................................................................................. 3 Office Market ............................................................................................................................................................ 4 Development Economics ........................................................................................................................................... 5 Project Background ............................................................................................................................ 6 Existing Studies .......................................................................................................................................................... 6 Housing Market Demand ................................................................................................................... 7 Regional and Local Demographic Trends .................................................................................................................. 7 Existing Multi-Family Housing in the Area............................................................................................................... 15 For-Sale Units ...................................................................................................................................................... 16 Rental Units ........................................................................................................................................................ 16 Proposed New Housing Development .................................................................................................................... 17 Shannon Station Project – Castle Shannon ......................................................................................................... 17 South Hills Village – Bethel Park ......................................................................................................................... 17 Dormont Junction Transit-Oriented Development ............................................................................................. 17 Other Proposed and/or Recently Constructed Multi-Family Housing Developments in the Area.......................... 18 East Liberty Transit Center .................................................................................................................................. 18 Newbury ............................................................................................................................................................. 18 The Gateway At Summerset ............................................................................................................................... 19 Bakery Square 2.0 (East Liberty) ......................................................................................................................... 19 Lot 24 (Strip District) ........................................................................................................................................... 19 Potential Market Demand ....................................................................................................................................... 20 Retail Market ................................................................................................................................... 23 Existing Conditions .................................................................................................................................................. 23 Competitive Environment ................................................................................................................................... 23 Market Indicators ............................................................................................................................................... 23 Proposed and New Development ....................................................................................................................... 24 Retail Market Demand ............................................................................................................................................ 25 DELTA DEVELOPMENT GROUP, INC. MT. LEBANON STATION TRANSIT-ORIENTED DEVELOPMENT PROJECT Office Market .................................................................................................................................. 28 Local and Regional Market Indicators ..................................................................................................................... 28 Mt. Lebanon/South Hills Office market .............................................................................................................. 28 Employment Growth as a Driver for New Construction .......................................................................................... 29 Development Economics .................................................................................................................. 31 Appendix ......................................................................................................................................... 39 Retailer Stakeholders Summary .............................................................................................................................. 40 Case Studies – TOD Infill Projects ............................................................................................................................ 42 Del Mar Station – Pasadena, California .............................................................................................................. 42 Collins Circle – Portland, Oregan ........................................................................................................................ 42 200 Second Street –Oakland, California ............................................................................................................. 43 TABLES Table 1: Total Population Change, Allegheny County versus Broader Region, 2010 to 2012 ..................... 8 Table 2: Demographic Comparison, One-Mile Radius, City of Pittsburgh, Allegheny County ..................... 8 Table 3: Migration Patterns in Allegheny County, 2011 .............................................................................. 9 Table 4: Municipality of Mt. Lebanon, Demographic Characteristics ........................................................ 10 Table 5: Single Family Housing Permit Trends, Study Area Jurisdictions ................................................... 11 Table 6: Multi Family Housing Permit Trends, Study Area Jurisdictions.................................................... 12 Table 7: West Submarket Rental Market Vacancy Rate Versus Pittsburgh, Northeast, and United States .................................................................................................................................................................... 13 Table 8: West Submarket Rental Market Indicators .................................................................................. 14 Table 9: West Submarket Rental Market Average Rents by Apartment Type ........................................... 14 Table 10: Total Inventory By Age Building Constructed, West Submarket ................................................ 15 Table 11: Potential Residential Market Demand, Mt. Lebanon TOD Site .................................................. 22 Table 12: Retail Market Trends, Fourth Quarter 2011 .............................................................................. 24 Table 13: Potential New Retail Space Demand, Incremental New Residents and Hotel Guests ............... 26 Table 14: 10-Minute Drive Time Demographic Characteristics ................................................................. 27 Table 15: Office Market Indicators, Pittsburgh Region, Second Quarter 2013 ......................................... 28 Table 16: Employment Projections, Allegheny County Outside of Pittsburgh .......................................... 29 Table 17: Projected Demand, New Office Space, TOD Project Site ........................................................... 30 DELTA DEVELOPMENT GROUP, INC. MT. LEBANON STATION TRANSIT-ORIENTED DEVELOPMENT PROJECT Table 18: Development Economic Assumptions, Mt. Lebanon TOD Site .................................................. 33 Table 19: Development Program Assumptions, Mt. Lebanon TOD Site, 100 Rental Units ....................... 34 Table 20: Development Program Assumptions, Mt. Lebanon TOD Site, 160 Rental Units ....................... 34 Table 21: Development Program Assumptions, Mt. Lebanon TOD Site, Low-Density