Kris Chewlin - Lakeforest Mall Case Study

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Information about Kris Chewlin - Lakeforest Mall Case Study

Published on December 17, 2017

Author: kc1053


MPRE 631-202: Real Estate Markets December 2017 Lakeforest Mall Site Analysis & Case Study: MPRE 631-202 : Real Estate Markets December 2017 Lakeforest Mall Site Analysis & Case Study Presented by Kris Chewlin Agenda : Agenda Executive Summary Site Conditions Assessment in terms of Office Potential, Residential Potential and Retail Potential Trade Areas Office Analysis Residential Analysis Retail Analysis Impact of Mixing Uses On Site Conclusion & Recommendations Executive Summary: Executive Summary Located in Gaithersburg MD, suburb approximately 25 miles NW of Washington DC (drive time of about 1 hour) Land space of nearly 100 acres Super-regional Mall on site currently ; has experienced severe financial difficulties over recent past. Executive Summary (cont’d): Executive Summary (cont’d) Office: Rising vacancy rates, low absorption rates, outdated inventory and new inventory being delivered in competing areas Residential: Low vacancy rates despite outdated inventory, relatively high level of income, median age lower than overall State median Retail: Current position of the Mall is cause for caution, however capture rates indicate there is still some level of opportunity Recommendation No Office but the potential for a mixed use site comprising Multifamily Residential and appropriate mix of Retail is high Site Conditions Assessment: Site Conditions Assessment Very good access to main thoroughfares – I-270 into DC located 10 minutes away Located near the intersection of 2 main local routes – Routes 355 & 124 Close to all types of Retail Close to several residential communities; population of approx. 69,000 individuals in 25,000 households Median household income of $84,000 which places it in the top third of all incorporated cities in Maryland Median age of 36, slightly lower than median of 38 for Maryland and the USA Many businesses in the City – approx. 34,000 employees Site Conditions Assessment (cont’d): Site Conditions Assessment (cont’d) Office Potential High Traffic Counts Good access to transit systems Close access to outdoor activity, eating establishments, retail Residential Potential County school system ranked 2 nd best out of 24 in MD and in the top 10% of all School Districts in the USA Crime is down and 8% lower than national average. However informally there are still concerns about activity near the Mall site Traffic, access to transit and access to retail as noted above Retail Potential Wide draw available from number of residents and working population High visibility and traffic, access to transit as noted above Trade Areas: Trade Areas Primary Trade Area is highlighted in map (PTA) – Montgomery Village to the North, Redland to the East, Shady Grove neighborhood to the South, Kentlands neighborhood to the West Secondary Trade Area (STA) – Germantown to the North, Laytonsville to the North East, Rockville to the South, Darnestown to the West Office Analysis: Office Analysis Looked at Gaithersburg and Germantown which is in the STA for initial prox y of the market Also looked at Rockville which is in the STA for future developments as they would compete directly with Gaithersburg Total current supply of 9M SF with 5M SF additional approved office space to be developed High vacancy rates despite growth in employment in the State over the past year Conclusion – Oversupply of Office space, do not invest primarily in this area Residential Analysis: Residential Analysis Demographics – Median age lower than State median, median household income of $84K in top 3 rd of cities in MD, highly educated population, average family size of 3 persons Crime on the decrease but still detracting feature of neighborhood Very good school system (2 nd in 24 state school districts, in top 10% overall in the country) Competing sites in the PTA comprise mostly old inventory and lack of studio units, however vacancy rates are still favorable compared to 5 year average rate for the PTA Projected growth in employment and population forecasts growth in demand for housing units in the city from approx. 26K presently to 28K by 2025 Conclusion – Opportunity exists for a Multifamily site with studio apartments available and updated amenities Retail Analysis: Retail Analysis Healthy Retail Market – Total Sales of $812M with 52% going towards GAFO, 32% NG&S and 16% F&B Capture Rates – GAFO 27%, NG&S 12%, F&B 4% Retail projects totaling 542K SF are expected to be developed by 2020 within a 5 mile radius of the site Conclusion – Opportunity for Retail, however a scaled back versio n could work relative to what exists presently on the site Total Estimated Demand   415,881 sq ft Less: Estimated Supply   141,098 sq ft Total Unmet Demand   274,783 sq ft Impact of Mixing Uses on site: Impact of Mixing Uses on site Multifamily Residential will generate built in traffic for Retail on site or nearby Retail serves as an additional amenity for both the younger, working professional and families and would attract renters to the site Small office space targeted for professional services i.e. attorneys, CPAs was considered as they could also draw renters because of nearby retail. However because of the risk detailed previously we opt not to recommend building out office space at this time Conclusion & Recommendation: Conclusion & Recommendation 50% Multifamily Residential, studios available, updated amenities 25% Retail – Mix of all 3 types but preferably local and not huge chain stores to avoid mass traffic to the site and not potentially harm the feel of the neighborhood being created 25% Parking space for Residents and shoppers

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