TAKE CHARGE OF YOUR REAL ESTATE RECOVERY Proactive Step-by-Step Process for Developing Your Next Game-Changing Project
WHO WE ARE Hunden Strategic Partners
HUNDEN STRATEGIC PARTNERS Master Placemaking § Physical Programming § Market Feasibility § Financial Feasibility § Funding Options/Public Incentives § Economic & Fiscal Impact Analysis § RFQ/P Processes § Partnership Options § Business Plans
HOST | STAY | PLAY
ROB HUNDEN, PRESIDENT & CEO Public and Private Sector Employment Experience § § City of Indianapolis Bond Bank/Mayor’s Office 1996 - 1998 § Capital Markets, Consulting 1999 - 2005 § Hunden Strategic Partners – 2006 - Present § 25 Years of Industry Experience Nationwide § 750 Projects and Studies § Speaker, Teacher and Author § Move projects from Concept to Reality
COVID-19 OPPORTUNITIES Challenges & Responsibilities
CHALLENGES – DUH! Nearly every industry that HSP focuses on has been wiped out due to the pandemic. Hopefully only temporarily. Looting in some cities has been a gut-punch to business confidence and economic resiliency. Is there local support for business? So, why plan new projects?
THREAT AND RESPONSIBILITY ACTIONS HAVE CONSEQUENCES Whether or not anyone agrees with decisions that local leaders have made, their reaction to the pandemic and unrest has often left our cities – the places we have been trying to rehabilitate for 50 years – as shells of their former selves. Several are still fairly empty.
THREAT AND RESPONSIBILITY ACTIONS HAVE CONSEQUENCES Maslow’s hierarchy of needs: safety and § security come first. If people feel they are unsafe, they will leave, and many are. Covid gave people permission to work § from anywhere. Many want their parents to live with them vs. nursing homes. A large % of small businesses have failed. § Economic security is key to development. As storefronts are boarded up, problems crop up. Busy streets quash problems.
WHAT CAN WE DO? Remind our leaders that money and people Remind leaders that we are all in this § go where they are treated well. together. Ensure that projects that are developed § Economic and other damage to any § will be priorities and kept safe, vibrant business affects us all by scaring investment away and lowering the tax base Get activity back onto the streets § to fund quality of life. Work to establish revolving loan funds and § Outreach to all entrepreneurs to encourage § other incentives to encourage the risk-capital, then lower that risk with any development of projects and new incentives available. businesses (or reboots of closed biz)
WAIT, THERE’S AN UPSIDE? YES INDEED Perfect time to study new projects that § can be designed with the pandemic and other threats in mind. Diversity of uses (both within the buildings § and amongst the development) can mitigate negative impacts to one element. Low interest rates (really low) to fund § projects Eager construction and materials industry § offer lower bids than before Covid
Perseverance is key! Look at how many war-torn countries have come back stronger than before!
KEY STEPS IN THE DEVELOPMENT PROCESS Why is Order Important?
HAS THIS EVER HAPPENED TO YOU? Your mayor/exec asks you to put out an RFP for a Developer for a project you haven’t studied…. Your mayor/exec decides you have to have a bigger/better version of something another city next to you did Your mayor/exec comes back from vacation with big crazy ideas You must now make this magically happen!
CART BEFORE THE HORSE If you do not go through a logic process, you will confuse yourself and the market you are trying to attract. Deciding what to build before you know the feasibility…. Issuing an RFP before you have a financing mechanism/plan…. Negotiating with developer before getting approvals from politicos…
8-STAGE MODEL OF REAL ESTATE DEVELOPMENT 1) Market Feasibility 6) Political Leadership/Financial Approval 2) Site Analysis 7) Developer RFQ/P Process + 3) Financial Feasibility & Gap Analysis; Development Agreement Impact Analysis 8) Final Design, Budgeting, Funding 4) Financing and Incentive Options 5) Business Plan (Public Projects)
ACTIONS / INACTIONS HAVE CONSEQUENCES Sioux City, IA Badgerow Building - Timing, Geography & Lack of Homework Navy Pier Expansion & Hotel - Unexpected Developer Creativity
ACTIONS / INACTIONS HAVE CONSEQUENCES Columbus, IN Conference Hotel & Grocery - Process Followed - Pandemic forced a decoupling of hotel from apts and grocery Tulsa, OK Downtown Mixed-Use District - Process Followed, but some late curveballs
LESSONS LEARNED FROM OUR PROCESSES Evansville, IN Convention Hotel Amarillo, TX Convention Hotel Farmer City, IL Mixed-Use Development Bedford Park, IL Multi-Use Sports & Event Center Fort Worth, TX Convention Center Hotel Chandler, AZ Wild Horse Pass District Indianapolis, IN Convention Center Hotel Columbus, OH Mixed-Use District Michigan City, IN Lakefront Hotel Columbus, IN Conference Hotel & Grocery San Juan, PR Entertainment District Durham, NC American Tobacco District Hotel Sioux City, IA Badgerow Building Durham, NC Convention Center Management Sioux City, IA Convention Hotel Enid, OK Event Center Hotel Tulsa, OK Downtown Mixed-Use District Erie, PA Convention Hotel
LESSONS LEARNED FROM OUR PROCESSES Community input : process for fielding and § Process timeline : realistic and efficient § responding to community concerns throughout the process Due diligence work : market § analysis/economic impact study Advisor middle-man : intermediary between § the public sector and potential developers is Location convenience : § key to safeguarding the integrity of the RFQ/P State and local laws : minimum wage laws, process § incentives, etc. Decision-making process : involve decision § makers from the beginning
IT IT’S TOO GOOD TO BE TRUE… IT PROBABLY IS Have you or your city been approached to participate in a project that sounded too good to be true? Then the deal changed? Mmmmhmmmm….
1. & 2. MARKET FEASIBILITY & SITE ANALYSIS Key Steps in the Development Process
MARKET § Define market area § Compare subject proposal to competition/comparables § Evaluate competitive supply § Project market demand for subject § Evaluate existing demand proposal § Project future market area demand § Determine ways to make subject more competitive
HOW TO ASSESS MARKETS FOR… SPORTS, RETAIL, OTHER? Sports Market Analysis What is the RELEVANT market area? Local Supply/Demand Metro Supply/Demand Regional/National Events Accessibility Weather and Hotel Situation How do Comps Perform? Local Anchor Organizations
HOW TO ASSESS MARKETS FOR… CONVENTION CENTERS? Convention Market Analysis What is the RELEVANT market area? Relevant Supply Performance Demand Interviews: Convention, Consumer, Sports, Corporate, Local Air Connectivity Walkability Hotel Package! How do Comps Perform?
HOW TO ASSESS MARKETS FOR… ARENAS? Arena Market Analysis What is the RELEVANT market area? Relevant Supply Performance Demand Interviews: Concert, Family Shows, Leagues Capacity breakpoints Pre-/Post-Activity Premium Amenities How do Comps Perform?
HOW TO ASSESS MARKETS FOR… SITE OPTIONS? Site Analysis for Sports Accessible? Large enough for venue plus parking? Is it flat? Weather impact surface type? Ownership Occupancy Percent by Day of Week by Month - November 2017 - October 2018 Hotels, restaurants, retail? Sunday Monday Tuesday Wednesday Thursday Friday Saturday Avg 36.3% 53.2% 61.0% 64.4% 62.1% 68.9% 68.9% 59.5% Adjacent Uses Synergistic? Nov - 17 28.3% 50.9% 54.7% 53.6% 42.7% 43.8% 39.6% 44.1% Dec - 17 25.3% 42.5% 53.9% 57.2% 36.5% 29.2% 29.9% 40.4% Jan - 18 Feb - 18 27.6% 59.3% 65.0% 61.6% 44.9% 42.1% 41.4% 48.8% 40.4% 63.9% 71.9% 69.9% 59.1% 74.6% 70.3% 64.6% Mar - 18 45.9% 69.2% 80.0% 82.6% 79.2% 84.5% 83.4% 73.8% Apr - 18 39.9% 57.7% 70.0% 74.7% 75.0% 88.4% 87.1% 70.7% May - 18 52.1% 83.2% 84.1% 83.9% 69.2% 74.4% 79.8% 75.4% Jun - 18 Jul - 18 53.3% 77.0% 78.4% 75.7% 71.0% 67.3% 68.4% 70.1% Aug - 18 46.7% 76.9% 84.2% 84.4% 74.7% 77.9% 82.6% 75.7% 39.7% 59.6% 70.1% 73.4% 68.1% 71.4% 71.3% 64.2% Sep - 18 Oct - 18 61.9% 79.2% 85.6% 84.6% 76.9% 86.3% 86.9% 80.5% 41.5% 64.6% 71.6% 72.2% 63.6% 67.4% 67.3% Average Sources: Smith Travel Research
WHAT INFLUENCES VIABILITY & RECOMMENDATIONS? Existing Competitive Supply: Size, Quality, Location Performance Existing Local Market: Demand: Size, Strength, Performance of Tourism Competition Recommended Project Comparables/P Site Location: eers: Access, Performance, Visibility, Keys to Adjacent Uses Success/Failure Industry: Economics, Realities, Trends
WHAT INFLUENCES PERFORMANCE OF A RECOMMENDED PROJECT? Supply Growth Comp Set Local Market Performance Growth Project Performance Peer Location Performance SWOT Industry Performance Averages
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