Due-Diligence Reviews of Non-Prime Lenders - BuckleySandler LLP
Providing real estate valuation, consulting, and due diligence services to: Individuals Lenders...
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Transcript of Providing real estate valuation, consulting, and due diligence services to: Individuals Lenders...
Providing real estate valuation, consulting, and due diligence services to:
•Individuals
•Lenders
•Corporations
•And their tax and legal advisors
Objective
Highlight trends in this market place Identify areas of risk and opportunity Bring strategic awareness to
– Market participants– Municipal leaders
Market Drivers
Office markets are driven by jobs “Jobs” are changing
- Cost reduction / Technology
- Education
- Legal/Tax structure
- Society
Definitions
• Large Floor Plate User – Corp. tenants over 15,000 SF in market• Public• Space needs decision not made here
• Small Floor Plate User < 5,000 SF• Private Companies• Professional• Owner Lives Here
Survey Parameters
• Class A & B Office with GBA > 5,000 SF• Locations – various logical office markets
– Greenwich
– Stamford
– Norwalk
– Westport/Fairfield
– Trumbull/Shelton
– Danbury LMA
What we will look at
Brief history – How we got here Where the jobs are locating currently Impact of job growth on this office market Emerging Trends Opportunity Index – graphical representation
of risk
Fairfield County- Historically
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Squ
are F
ootage A
dd
ed
<1950s 1950s 1960s 1970s 1980s 1990s 2000s
Decade
> 40k25k - 40k15k - 25k5k - 15k
Square Footage Additions
Historical Space Additions• Large floor plate buildings added in SF
1980’s - 25,000,000 1990’s - 9,000,000 2000’s - 5,000,000 Total - 39,000,000
Fairfield County- HistoricallyPersistently High Vacancy Rates Since 2001
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
1998 1999 2000 2001 2002 2003 2004
Year
Vacan
cy R
ate
Vacancy Rate Equilibrium
Big PictureDynamic Job Market
• Information based jobs are now going to the lowest cost provider
• Higher end jobs are filling in the space – just not filling in enough space
• Will there be enough jobs to fill the space?
Trailing 12 Months• Strong leasing of 2.5 million SF
• Offset by downsizing, relocations, new space – Purdue Pharma’s OxyContin issue results in 300,000 SF giveback
– International Paper’s relocation down south dumps 120,000 SF
– 901 Merritt coming on line with 375,000 SF
• 18% increase in smaller deals (10k-20k SF)
• Musical Chairs
• Investment sales are hot
Jobs
1. Who is going to occupy the current and projected future vacant space?
– Leaner, more educated workforce
2. Where will those jobs be located?– In smaller floor plate buildings
Lease Transactions by Locale% of Transactions Market Share Activity
11%
39%
16%
9%
6%
10%
6% 3%
Greenwich
Stamford
Norwalk
Danbury - Brookfield
Trumbull - Shelton
Fairfield - Westport
Bridgeport - Stratford
Mid Fairfield
Total Transactions 478
Lease Transactions by SF Group
70%
15%
7%5% 3%
0-5,000 SF
5,000-10,000 SF
10,000-20,000 SF
20,000-50,000 SF
50,000+ SF
Average SF Leased by Locale
8,266
7,766
10,1514,401
7,081
3,992
2,3004,321
Greenwich
Stamford
Norwalk
Danbury - Brookfield
Trumbull - Shelton
Fairfield - Westport
Bridgeport - Stratford
Mid Fairfield
Median SF Leased by Locale
2,915
3,060
2,850
2,110
4,250
1,968
1,8001,090
Greenwich
Stamford
Norwalk
Danbury - Brookfield
Trumbull - Shelton
Fairfield - Westport
Bridgeport - Stratford
Mid Fairfield
By Building Age50,000 SF and Greater
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
1980-1990
After 1990
145 Buildings 78 Buildings
Fairfield County Overall Vacancy Rates
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
5,000-25,000 SF
>50,000 SF
Equilibrium
293 Buildings
919 Buildings
Fairfield County Pipeline
• Approximately 5.2 million square feet of office space have a reasonable expectation of coming online over the next 10 years.
Fairfield County Pipeline
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Norwalk Fairfield Stamford Danbury Shelton Bridgeport Wilton Trumbull Monroe Ridgefield Southport
Municipality
New Development Square Footage
New Development Square Footage
5.2 Million SF Total
Periodic County Employment Growth43,000 New Jobs Added
5,000
15,000
25,000
35,000
45,000
55,000
65,000
75,000
85,000
95,000
105,000
2010-2013 Growth
2006-2010 Growth
Current Employment7,000 Jobs
7,000 Jobs
15,000 Jobs
Forecasted County Vacancy Rates
Now add the proposed space additions in:Norwalk & Fairfield
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
Year
Va
ca
ncy R
ate
Vacancy Rate Equi librium
Market Equilibrium 2012
Forecasted County Vacancy Rates
Now add the proposed space additions in:Norwalk, Fairfield & Stamford
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
Year
Va
ca
ncy R
ate
Vacancy Rate Equi librium
Market Equilibrium - 2015
Forecasted County Vacancy Rates
Now add the proposed space additions in:All Fairfield County
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
Year
Va
ca
ncy R
ate
Vacancy Rate Equi librium
Market Equilibrium Not Achieved
Alternative Workplace Strategies
• Historical Average of 195 per person
• What happens at 150 SF and 125 SF
• Why – reduced costs and lower space needs per employee
Effects of AWS
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
Year
Vaca
ncy
Rate
Equilibrium 195 SQFT Per Person 150 SQFT Per Person 120 SQFT Per Person
Assuming all pipeline additions
Opportunity Index< 5,000 SF 5,000-10,000 SF 10,000-20,000 SF 20,000-50,000 SF > 50,000 SF
Greenwich
Stamford 1,807,050
Norwalk 6,700 1,486,500
Danbury-Brookfield 40,150 16,200
Trumbull-Shelton 592,234
Bridgeport-Stratford 70,000
Westport-Fairfield 800,000
Numbers represent partial anticipated new space online in the next 10 years
•Green – Vacancy lower than 12% with a down trend
•Yellow – Vacancy 12% - 15% with up trend
•Red – Vacancy greater than 15% with up trend
For a copy of the Opportunity Index, or more information
www.AustinMcGuire.com
See client section