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Current view of the West Northfield Drive focus area
Real Estate Development & ReuseIndiana Economic Development CourseHorizon Convention Center, Muncie, Indiana
www.greenstreetltd.com
Parkview Randallia Campus
Good Morning!
2
Founded in 2004, Greenstreet Ltd. is an Indianapolis-based real estate development, brokerage and consulting firm which leverages sustainable strategies in the planning, development, marketing and disposition of urban mixed-use assets throughout the United States.
Agenda
About the Audience
Chapter 6 Development Defined The Basic Real Estate Development Process Dealing with Environmental Contamination Public Participation in Development
Roundtable Discussion about Development & Reuse Strategies
IN Economic Development Conference | © Greenstreet Ltd.
Types of Development
3
Build-to-Suit
Speculative Development
Greenfield Development
Redevelopment, Reuse, Brownfield Development
IN Economic Development Conference | © Greenstreet Ltd.
Lots of projected growth…
4
US Growth Projections 2000-2030:+ 82 million more people (27 million between 2000 and 2010)+ 55 million new housing units
IN Growth Projections 2000-2030:+ 718,000 more people (400,000 between 2000 and 2010)+ 481,000 new housing units
Source: U.S. Census Bureau
IN Economic Development Conference | © Greenstreet Ltd.
Neighborhood Preference Studies
5
Source: Arthur C. Nelson; RCLCO; National Association of Realtors
Nelson RCLCO NAR
Housing Type 2006 2008 2011
Attached 38% 38% 39%
Detached 62% 62% 61%
The National Association of Realtors completed a major national survey on neighborhood
preference in February 2011 (95% confidence level)
IN Economic Development Conference | © Greenstreet Ltd.
Neighborhood > House
6
Source: National Association of Realtors
Downtown 8%
City-Residential Area 11%
Suburb-Mixed-Use 28%
Suburb-Housing Only 12%
Small Town 18%
Rural Area 22%
Do our land use policies support the fulfillment of nearly half of demand?
• 88% favor neighborhood over home size
• 59% would buy a smaller house on a smaller lot in exchange for a shorter commute to work
• Most important factors in purchasing a home:1. privacy from neighbors2. short commute to work3. high quality public schools4. access to sidewalks5. places to walk to
IN Economic Development Conference | © Greenstreet Ltd.
Where will growth occur?
7
US Growth Projections 2000-2030:+ 82 million more people+ 55 million new housing units
IN Growth Projections 2000-2030:+ 718,000 more people+ 481,000 new housing units
Greenfield ~60-65%
Suburban Densification ~15-20%
Urban Infill~15-20%
Source: ULI, ‘Developing Greenfields without Sprawl,’ 2004
IN Economic Development Conference | © Greenstreet Ltd.
Trends Redefining the American Dream
8
Source: MPO-MIBOR Consumer Preference Survey
IN Economic Development Conference | © Greenstreet Ltd.
% Owner Occupied 1990 2000 2010 2040
Indianapolis MSA 64% 69% 66% ? %
U.S. 64% 66% 65% 60%
Drivers:• Single-person households already outnumber family households
• The sub-prime mortgages that enabled growth in ownership between 1990 and 2000 are history
• Fannie Mae and Freddie Mac may disappear
• 20% down payments will become conventional
• The next generation of homebuyers is the most educated generation ever, but also the poorest generation since the Great Depression - submerged in debt, no savings or liquid assets
Central Indiana Reflects National Trends
9
Source: MPO-MIBOR Consumer Preference Survey
IN Economic Development Conference | © Greenstreet Ltd.
Massive Supply-Demand Inbalance
10
Source: MPO-MIBOR Consumer Preference Survey
IN Economic Development Conference | © Greenstreet Ltd.
Suburban Housing-Only Neighborhood
Suburban Mixed-Use
Urban Neighborhood
Downtown
25% of regional Consumer Preference
88% of the regional Construction Pipeline
75% of regional Consumer Preference
12% of the regional Construction Pipeline
Evolution toward Smart
11
Source: Urban Green
IN Economic Development Conference | © Greenstreet Ltd.
Paying the Way
12
Sources: U.S. Source: Growing Cooler, Urban Land Institute; Smart Growth & Conventional Suburban Development: Which Costs More? U.S. EPA
Smart growth development patterns reduce infrastructure costs from 32% to 47% vs.
conventional development patterns.
IN Economic Development Conference | © Greenstreet Ltd.
Green is the New GraniteGen Y and the Baby Boomers have a strong preference for green amenities… and they’re the largest generations in history. Serving these 50 million potential homebuyers over the next 10-20 years will dominate the U.S. economy.
Nationally, consumers are paying premiums of 1.5 to 5% for green development. Surveys are indicating that green is the fastest way to sell a home, and that the neighborhood is more important than the house.
Is green the new granite countertop? (Atlantic Monthly)Source: The Atlantic Magazine, Joe M. McIlwain
Green Building MegatrendsU.S. Trends
1. Green building growth to rebound2. Federal momentum has slowed3. LEED-EBOM will gain momentum4. Water issues grow in importance5. Zero net energy to gain traction
Global Trends
6. Green building movement will continue to grow7. Performance disclosures8. Global carbon ratings9. Solar power stalls10. Building management goes into the Cloud
Source: Hanley-Wood Builder online
Real Estate Development Process
15
Pre-development
Market, financial and political feasibility
Site and engineering analysis
Financing
Contractor negotiations and public approvals
Construction
Marketing
Building occupancy and management
IN Economic Development Conference | © Greenstreet Ltd.
Dealing with Environmental Contamination
16
Indiana defines a brownfield as:
“a parcel of real estate that is abandoned or inactive; or may not be operated at its appropriate use; and on which expansion, redevelopment, or reuse is complicated; because of the presence or potential presence of a hazardous substance, a contaminant, petroleum, or a petroleum product that poses a risk to human health and the environment.”
Source: Indiana Code 13-11-2-19.3
IN Economic Development Conference | © Greenstreet Ltd.
Challenges in Brownfield Redevelopment
17
Environmental Liability ConcernsDevelopers and property owners want to manage past and future liabilities associated with the property’s environmental history.
Financial BarriersPrivate lenders are often reluctant to give loans for potentially impaired lands. In some cases, cleanup costs for a property may ultimately be more than the property’s value.
Cleanup ConsiderationsA brownfield redevelopment timeline may take longer than typical development due to environmental assessment and cleanup activities.
Reuse PlanningA reuse plan based on community goals or sound economic and environmental information (e.g., market potential) may be lacking.
IN Economic Development Conference | © Greenstreet Ltd.
Typical Brownfield Redevelopment Process
18IN Economic Development Conference | © Greenstreet Ltd.
19
Brownfield Redevelopment Process
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Public Sector Partnership in Development
20
• Bond Financing
• Loan Guarantees
• Revolving Loan Funds
• Tax Credits
• Tax Increment Financing
• Sale-Leasebacks
• Tax Abatement
• Grants
RegulatorEstablishing rules of the game
FacilitatorHelping catalyze development
InitiatorLead role in some capacity
IN Economic Development Conference | © Greenstreet Ltd.
Brownfield Toolbox
21
FederalSite (property) assessment grants
Site cleanup grants
Grants to establish Revolving Loan Funds
Job training grants
Funds for state brownfield programs
IndianaGrants for site assessments
Grants for remediation of petroleum contaminated sites and hazardous substances
Grants to match federal funding
Low interest loans for assessment or remediation activities
Tax credits for voluntary remediation
IN Economic Development Conference | © Greenstreet Ltd.
Public Sector’s Role in Development
22
Type I Type II Type III
Industrial
Used more in the past; less frequent now
Common Rare
Office Rare Commonly used as initial catalyst for development
Used occasionally
Retail Used more in the past; less frequent now
Common Rare
Residential
Common Common Rare
Hotel Rare Used to stimulate convention business
RareType I - No market demand, requiring subsidy with little potential for
value recapture
Type II - Little current market demand, but potential support if built
Type III - Publicly owned/controlled land with market demand and
development potentialIN Economic Development Conference | © Greenstreet Ltd.
Homan Square, Chicago, IL
23
• Urban mixed-use redevelopment of former Sears, Roebuck and Co. Headquarters (1907 to 1973)
• 55 total acres
• 14 acres of open space (25%)
• 308 for-sale and rental homes
• One million sf of adaptive reuse of commercial and institutional space to serve as “vessels for jobs” and community services
• Development: 1994 to 2000
• Developed as a venture of The Shaw Company, Sears, Roebuck and Co., and the City of Chicago
IN Economic Development Conference | © Greenstreet Ltd.
Vacancy to Vibrancy
24
U.S. Census 1990 2000 2010Unemployment 24% 21% 18%Single-Parent Households 45% 43% 28%Families in Poverty 51% 31% 22%Home Ownership 20% 32% 32%
1990 2005
Sources: U.S Census Bureau for the four census tracts around Homan Square (2715, 2716, 2904, and 2905)
IN Economic Development Conference | © Greenstreet Ltd.
Redevelopment Strategy
25
• Jobs: One million sq. ft. of adaptive reuse of commercial and institutional space to serve as “vessels for jobs”
• Community Services: Integrate new community center services with existing facilities and programs
• Diverse Housing: Mixed-income for-sale and rental homes
IN Economic Development Conference | © Greenstreet Ltd.
IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
Site Plan
26
IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.27
Administration Building
Economic Development
28
• Adaptive reuse of commercial buildings for non-profit and business incubator space
• Chicago Police Training Facility
• Henry Ford Academy: Power House Charter High School
• Holy Family Lutheran School
• 3,000 jobs generated
• Spurred development of new grocery anchored community shopping center
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29IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
Community Center
Community Services
30
• Chicago Park District Recreation Center
• North Lawndale YMCA
• Robert Crown Center for Health Education
• Lawndale Christian Health Center
• Family Focus of North Lawndale
• Neighborhood Technology Resource Center
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31IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
Mixed-Income Housing
32IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
Mixed-Income Housing
New Life for North Lawndale
33
• 308 units of mixed-income housing
• 50% owner-occupied housing from $90,000
• 50% rental housing from $395 per month
• Integrated housing products
• Housing for families earning between $15,000 to over $75,000 (1999)
• Decreasing subsidy over time – market rate homes sold for $185,000 (1999)
IN Economic Development Conference | © Greenstreet Ltd.
Public – Private Partnership
34
Private SectorSears, Roebuck and Co. LIHTC Equity InvestorsThe Shaw Company
Federal/StateHOME CDBG
City of ChicagoInfrastructure New Homes for ChicagoChicago Park District
IN Economic Development Conference | © Greenstreet Ltd.
Homan Square: Lessons Learned
35
• Committed founders and patient capital
• Compelling vision to inspire partnerships
• Community that is vested in the result
• Sustainable organization (strong HOA)
• Homes + Jobs + Community Services
• Homes vs. “affordable” or “workforce”
• Design for safety and securityorientation, fencing, security, police
• Creating value by designopen space, green building, architecture
IN Economic Development Conference | © Greenstreet Ltd.
Prairie Crossing, Grayslake, IL
36
• Greenfield, 40 miles northwest of Chicago
• Surrounding landowners partnered to buy the site after an intense legal battle that would have allowed 2,500 units
• Zoning allowed up to 1,600 units
• 678 acres total
• 470 acres Open Space (69%)
• 395 units (.58 UPA Gross)
• 9% attached product
• 73 acres of commercial including TOD with commuter rail to Chicago and O’Hare
• Charter School
• Community Barn
• Community Supported Agriculture
• Boarding Stable
• 10 miles of trails
IN Economic Development Conference | © Greenstreet Ltd.
Conventional vs. Sustainable Development
37
667 acres1,600 units
2.4 units per acre
667 acres 395 units
.4 units per acre
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38IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
39IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
40IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
41IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
42IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
43IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
44IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
45IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
46IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
Prairie Crossing: Lessons Learned
47
Price premium above market increased over time:
1995: 15% premium
2000: 33% premium 19% is the home 14% is the
community
2005: 100% premium
LID practices yielded savings vs. conventional infrastructure:
Reduced Road Width:$178,000
Curb & Gutter:$339,000
Storm Sewer:$210,000
Sidewalk Alternatives:$648,000
_______________________________Total Savings
$1,375,000
A 2,000 sq. ft. home is:$250,000 in Grayslake, IL$500,000 in Prairie Crossing
IN Economic Development Conference | © Greenstreet Ltd.
Creating a Dynamic Life Sciences Campus
In the Heart of Fort Wayne, Indiana
Randallia CampusFuture Use Plan & Economic
Development Strategy
While space programming and configuration activities are on-going, commitments of Parkview Health System to the Randallia Campus include:
• At least a 120-Bed Main Hospital Facility with a mix of inpatient acute care, post acute care and rehabilitation services, including skilled nursing facilities
• Full Emergency Room Services• Family Birthing Services• Outpatient Services• Physician Practices• Surgery Suites• Parkview Behavioral Health
(Will continue to be located on Beacon St.)
These services will remain at the Parkview Randallia
Campus after the opening of the Parkview Regional
Medical Center in 2012.
Understanding Parkview’s Projected Services at Randallia
HO
BSO
N R
OA
D
PARKVIEWMAIN HOSPITALCOMPLEX
ST. ANNE’SRETIREMENTCOMMUNITY
VETERANS ADMINISTRATIO
NHOSPITAL
PARKVIEWBEHAVIORAL
HEALTH
CROSSROADCHILDREN’SHOME
PARKVIEWCAREW MEDICALPARK
PARKCENTER
Parkview Hospital in the Context of a Neighborhood of Institutions and
Organizations
IN TOTAL, A HEALTH AND
MEDICAL CAMPUS OF
APPROXIMATELY 150 ACRES
ALREADY EXISTS IN
THIS LOCATION.
PARKVIEW OWNS
APPROXIMATELY 65 ACRES.
VARIOUS PARKVIEW SUPPORT BUILDINGS
Senior Care
Behavioral Health
Rehabilitation
Ort
hope
dics
&
Bio
Mec
hani
cs
Health Technology
Life SciencesEducation & Research
HEALTH CAREDELIVERY
EDUCATION &RESEARCH
A CAMPUS POSITIONING STRATEGYBeyond a continuedParkviewHospital presence…
WHAT IS OUR NICHE
?Parkview Health
believes that the Randallia Campus, in
association with neighboring
institutions, can become a
National Center of
Excellence in Senior Care,
Rehabilitation and Behavioral
Health Services.
THE FUTURE:A Center of Life Science Activity…• Major
Employment in higher paying jobs.
• Significant Education and Research Opportunities
• Focus on niche Areas and Themes for National Success
• Significant land for future Economic Development
An Artist’s Conceptualization of a 20-30 Year Vision of a Fort Wayne
Life Sciences Campus
Indiana’s $69 billion health industry, defined as biopharmaceuticals, medical devices and instruments, healthcare delivery, laboratories and payors – accounts for over 20 percent of Indiana’s total state taxes and almost 10 percent of the state’s employment.
Indiana is one of the nation's
top four life sciences leaders as defined by number and concentration of life sciences-related jobs
Getting in Alignment with Indiana Economic Development Strategy:An opportunity to tap the momentum and resources committed to Indiana’s Health and Life Science initiatives, such as BioCrossroads and OrthoWorx.
Getting in Alignment with Indiana Economic Development Strategy:An opportunity to expand the R&D capacity of Indiana’s Life Science initiatives
1
2, 3
4, 5, 6
7
54% of total university research in Indiana is in life sciences
As the home to some of the best research institutions in the U.S., Indiana is unearthing innovative research, discovering the healthcare solutions of tomorrow. But, there is opportunity in Northeast Indiana.
“Medical innovation has significant positive outcomes for the health of the nation, the health of the economy, and the health of Americans.”
Battelle Institute
Indiana Adults with a College Degree:
Indiana 2008
33.4%
Lumina Foundation Big Goal for 2025
60%
Additional number of degrees needed to meet workforce needs in 2025
877,737
Institutions can address these converging trends, with a more sustainable, cost-effective, public-private partnership model that integrates institutions into communities and leverages economic development strategies.
Increasing Demand for Higher EducationA State and National Challenge
Getting Started:Creating a Culture of Education and
Research
The Life Science Education and Research Consortium of Northeast Indiana
• In July 2011, 5 area education and research institutions agreed to form a consortium to create a culture of education and research at the Randallia Campus.
• Each institution is collaborating with each other to create dynamic and unique career paths or “ladders” for students – from K-12 through doctoral programs.
• The physical presence of the Consortium at the Randallia Campus will give unparalleled access for students, faculty and researchers to not only Parkview Hospital, but the tremendous health care assets of its neighbors, including the VA Hospital.
• Near-term activities are anticipated by Fall 2012, with full occupancy possible by 2013.
Reuse of Existing Buildings Provides Vessels for Jobs:
Driving High Growth, High Wage Employment
Source: Indiana Department of Workforce Development, 2011
High Growth and High Wage Employment: The Randallia Campus is an opportunity to align and support the implementation of local, regional and state economic development initiatives around life sciences.
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
Registered Nurse
Licensed Prac-tical Nurse
$555
Social Worker
$431
Health Care Manager
$248
MechanicalEngineer
PhysicalTherapist
Projected Annual Employment Growth : Indiana : 2008-2018
Ave
rag
e A
nn
ua
l S
ala
ry :
In
-d
ian
a :
20
09
$33,176 2009 Median Wage
• Today, financing is always creative and the capital stack is getting taller
• Today, catalytic development is always a public-private partnership
• Make infrastructure work harder
• Do your own homework; know the market, ask the right questions
• Become a student of ‘best-practices’ – financial, regulatory, development
• You’ll always get what you always got if you always do what you’ve always done; if necessary, go outside your community to get what you want
• One size does not fit all; focus incentives by project to improve the developer’s return and/or reduce their risk
Takeaway Thoughts on Redevelopment
58IN Economic Development Conference | © Greenstreet Ltd.
Discussion Questions
59IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.
• When it comes to development, what type of community are you (proactive, reactive, supportive, or anti-growth)? What type of community should you be? Is a government's support for growth and development something that should be considered at a regional, rather than a local level?
• What are some ways that communities can make their infrastructure work harder, or more efficiently? In an era of limited resources, can long-term benefits outweigh the short-term costs?
• What type of development do residents of your community want? What type of housing choices do they have? Do your community's policies and incentives match up with local demand?
• Where does your community look for best practices? Within your region, the state, or nationally? What are some ways that you've brought attention to best practices, and how have you educated decision makers and the public?
• How does your community handle brownfields? Do you document them, help developers get funding, actively purchase and hold property, incentivize development, or help actively plan the site?
• Urban Land Institute (Case Studies) : www.uli.org
• US EPA : www.epa.gov/brownfields/index.html
• IN Brownfields : www.in.gov/ifa/brownfields
• IN Department of Environmental Management : www.in.gov/idem/
• New Markets Tax Credits : www.cdfifund.gov
• Historic Tax Credits : www.nps.gov/hps/tps/tax
• LIHTC : www.hud.gov/offices/cpd/affordablehousing/training/web/lihtc/basics/
• CDBG : www.in.gov/ihcda/2529.htm
• HOME : www.in.gov/ihcda/2530.htm
• NSP : hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/
Resources
60IN Economic Development Conference | © Greenstreet Ltd.