An Analysis Of Residential Market Potential - Downtown Mobile

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 6The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018CITY-WIDE AVERAGE ANNUAL MARKET POTENTIALAnalysis of migration, mobility and geo-demographic characteristics of households currently livingwithin defined draw areas is integral to the determination of the depth and breadth of the potentialmarket for new housing units within the City of Mobile and the Downtown Study Area.An understanding of these mobility trends, as well as the socio-economic and lifestyle characteristicsof households currently living within defined draw areas, is the first step in the analysis. The drawareas are derived primarily through household migration analysis (using the latest taxpayer dataprovided by the Internal Revenue Service). To refine the draw area for the city, theIRSmigrationdata have been supplemented by population migration and mobility data for the City of Mobilefrom the 2015 and 2016 American Community Surveys.The most recent Mobile County migration and mobility data—from taxpayer records compiled bythe Internal Revenue Service from 2011 through 2015 and from the 2016 American CommunitySurvey for the City of Mobile—shows that the draw areas for new and existing housing units in thecity and the Study Area include the following: The local draw area, covering households who live within the Mobile city limits. The county draw area, covering households with the potential to move to the City ofMobile from the balance of Mobile County. The regional draw area, covering households with the potential to move to the Cityof Mobile from Baldwin County. The national draw area, covering households with the potential to move to the Cityof Mobile from all other U.S. cities and counties, particularly those in Alabama andthe South.As derived from the migration, mobility and target market analyses, the draw area distribution ofmarket potential (those households with the potential to move within or to Mobile each year overthe next five years) is as shown on the table following this page:ZIMMERMAN/VOLK ASSOCIATES, INC.

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 7The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018Average Annual Market Potential by Draw AreaCity of Mobile, Mobile County, AlabamaCity of Mobile (Local Draw Area):Balance of Mobile County (County Draw Area):Baldwin County, AL (Regional Draw Area):Balance of US (National Draw Area):57.7%21.6%2.6%18.1%Total:100.0%SOURCE: Zimmerman/Volk Associates, Inc., 2018.As determined by the target market methodology, which accounts for household mobility within theCity of Mobile, as well as migration and mobility patterns for households currently living in all othercities and counties, an annual average of 14,290 households represent the potential market for newand existing housing units within the city each year over the next five years.ZIMMERMAN/VOLK ASSOCIATES, INC.

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 8The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018AVERAGE ANNUAL MARKET POTENTIAL FOR THE DOWNTOWN STUDY AREAThe target market methodology identifies those households that prefer living in downtowns andwalkable urban neighborhoods. After eliminating those segments of the potential market that havepreferences for new or existing housing in more suburban neighborhoods and focusing on thosehouseholds with incomes above 50,000 per year (those who can afford new and existing marketrate dwelling units), the distribution of draw area market potential for new housing units in theStudy Area is summarized on the following table:Average Annual Market Potential by Draw AreaHouseholds With Annual Incomes Above 50,000THE DOWNTOWN MOBILE STUDY AREACity of Mobile, Mobile County, AlabamaCity of Mobile (Primary Draw Area):Balance of Mobile County (Local Draw Area):Baldwin County, AL (Regional Draw Area):Balance of US (National Draw Area):55.4%11.7%1.2%31.7%Total:100.0%SOURCE: Zimmerman/Volk Associates, Inc., 2018.Based on the target market analysis, then, an annual average of 3,250 younger singles and couples,empty nesters and retirees, and compact families with annual incomes at or above 50,000 representthe annual potential market for new and existing market-rate housing units of every kind within theStudy Area each year over the next five years (see Table 1 following the text).The tenure (rental or ownership) preferences of these 3,250 draw area households who represent theannual potential market for new housing units in the Study Area indicate that approximately 47.7percent of these households (or 1,550 households) comprise the potential market for new rentalunits and the remaining 52.3 percent (1,700 households) comprise the market for new for-sale(ownership) housing units.ZIMMERMAN/VOLK ASSOCIATES, INC.

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 9The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018The combined tenure and housing type propensities of the target 3,250 renter and ownerhouseholds are outlined on the following table (see again Table 1 following the text):Tenure/Housing Type PropensitiesAverage Annual Market Potential for New Housing UnitsHouseholds With Annual Incomes Above 50,000THE DOWNTOWN MOBILE STUDY AREACity of Mobile, Mobile County, AlabamaNUMBER OFHOUSEHOLDSPERCENTOF TOTALMulti-family for-rent(lofts/apartments, leaseholder)1,55047.7%Multi-family for-sale(lofts/apartments, condo/co-op ownership)35010.8%Single-family attached for-sale(townhouses/live-work, fee-simple/condominium ownership)43013.2%Single-family detached for-sale(houses, fee-simple ownership)92028.3%Total3,250100.0%HOUSING TYPESOURCE: Zimmerman/Volk Associates, Inc., 2018.Excluding households with preferences for single-family houses in suburban or rural neighborhoods,an annual average market potential of 2,550 households currently living in the defined draw areasrepresent the pool of potential renters and purchasers of new housing within the Downtown MobileStudy Area each year over the next five years (see again Table 1).Based on the tenure and housing preferences of those 2,550 draw area households, the distributionof rental multi-family, for-sale multi-family, for-sale single-family attached, and urban single-familydetached housing types is shown on the table following this page:ZIMMERMAN/VOLK ASSOCIATES, INC.

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 10The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018Average Annual Market Potential For New Housing UnitsHouseholds With Annual Incomes Above 50,000THE DOWNTOWN MOBILE STUDY AREACity of Mobile, Mobile County, AlabamaHOUSING TYPE. . . . . . . . . HOUSEHOLDS . . . . . . . .NUMBERPERCENTMulti-family for-rent(lofts/apartments, leaseholder)1,55060.8%Multi-family for-sale(lofts/apartments, condo/co-op ownership)35013.7%Single-family attached for-sale(townhouses/live-work, fee-simple/condominium ownership)43016.9%Single-family detached for-sale(houses, fee-simple ownership)2208.6%Total2,550100.0%SOURCE: Zimmerman/Volk Associates, Inc., 2018.ZIMMERMAN/VOLK ASSOCIATES, INC.

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 11The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018TARGET MARKET ANALYSISThe aftermath of the housing crash has seen a measurable shift in market preferences from homeownership to rental dwelling units, particularly among younger households, yielding a higher shareof consumer preference for multi-family rentals even among relatively affluent consumers thanwould have been typical a decade ago. At the same time, there has been a significant shift inneighborhood preferences from single-use subdivisions toward mixed-use, walkable, transit-orientedneighborhoods.This shift has been driven by the convergence of the preferences of the two largest generations in thehistory of America: the Baby Boomers (currently estimated at 74 million), born between 1946 and1964, and the estimated 88 million Millennials, who were born from 1977 to 1996 and, in 2010,surpassed the Boomers in population. The convergence of two generations of this size—simultaneously reaching a point when urban housing matches their lifestage—is unprecedented.In addition to their shared preference for urban living, the Boomers and Millennials are changinghousing markets in multiple ways. In contrast to the traditional family (married couples withchildren) that comprised the typical post-war American household, Boomers and Millennials arehouseholds of predominantly singles and couples. As a result, the 21st century home-buying marketnow contains more than 63 percent one- and two-person households, and the 37 percent ofhomebuyers that could be categorized as family households are equally likely to be non-traditional astraditional families. A major consequence of this evolution is that urban mixed-use development,particularly in close proximity to transit, is now the preference for many more households than whenfamilies and suburban single-use preferences dominated the housing market.As determined by the target market analysis, and reflecting national trends, the annual potentialmarket—represented by lifestage—for new rental and ownership housing units in the DowntownMobile Study Area is characterized by lifestage as shown on the table following this page (see alsoTable 2 following the text):ZIMMERMAN/VOLK ASSOCIATES, INC.

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 12The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018Annual Market Potential By Lifestage And Housing TypeHouseholds With Annual Incomes Above 50,000THE DOWNTOWN MOBILE STUDY AREACity of Mobile, Mobile County, AlabamaHOUSEHOLD TYPEPERCENTOF TOTAL. . . MULTI-FAMILY . . .FOR-RENT FOR-SALE. . . SINGLE-FAMILY . . .ATTACHED DETACHEDEmpty-Nesters & Retirees23%15%34%35%36%Traditional &Non-Traditional Families18%13%13%23%52%Younger Singles & RCE: Zimmerman/Volk Associates, Inc., 2018.Younger singles and couples represent 59 percent of the market for new dwelling units in theDowntown Study Area. The younger market includes a variety of white-collar professionals, youngentrepreneurs, artists, and knowledge workers, as well as entry-level office employees, waiters andwaitresses, and other retail workers—New Power Couples, New Bohemians, Cosmopolitan Elite, TheVIPs, Fast-Track Professionals, Suburban Achievers, Small-City Singles, and Twentysomethings. Theseyounger singles and couples prefer to live in downtowns and urban neighborhoods for theirdiversity, and for the availability of employment, entertainment, and cultural opportunities withinwalking distance of their residences. Among the other principal factors in the largest share of themarket held by younger singles and couples are: Their higher mobility rates—young people tend to move much more frequently thanolder people;Their strong preference for rental apartments, in part because they have not savedsufficient funds for a down payment and in part because the collapse of the housingmarket during the Great Recession has made many of them skeptical about the valueof owning versus renting; andThe continued reduced mobility of empty nesters and retirees.Two-thirds of the younger singles and couples that represent the market for new housing units in theStudy Area would be moving from elsewhere in the city; approximately 3.6 percent would bemoving from the balance of Mobile County; and approximately 29 percent would be moving fromelsewhere in the United States.ZIMMERMAN/VOLK ASSOCIATES, INC.

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 13The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018At 23 percent of the annual potential market for new housing units in the Study Area, olderhouseholds (empty nesters and retirees) represent the second largest share of the market. Most ofthese households have adult children who no longer live in the family home; many are enthusiasticparticipants in community life and are still actively involved in well-paying careers in the banking,legal and medical professions. These target groups range from the wealthiest households—SmallTown Patriarchs, the One Percenters, Old Money, and the Social Register to the well-to-do Pillars of theCommunity, New Empty Nesters, Affluent Empty Nesters, Urban Establishment, Second CityEstablishment and Suburban Establishment to the financially-comfortable Traditional Couples, MultiEthnic Empty Nesters, Cosmopolitan Couples, RV Retirees, Blue-Collar Retirees, Country Couples,Mainstream Empty Nesters, and Middle-American Retirees.Nearly 44 percent of the empty nesters and retirees would be moving from elsewhere within the Cityof Mobile; 20.7 percent would be moving from the balance of Mobile County; just under fourpercent live in Baldwin County; and the remaining 31.5 percent would be moving from elsewhere inthe South and the rest of the U.S.Family-oriented households represent 18 percent of the market for new dwelling units in theDowntown Mobile Study Area. Households with children are now increasingly diverse and in manyurban areas are largely non-traditional families. Heads of these households have banking careers andupper-middle management jobs, or are professionals in the medical and legal sectors. Thesehouseholds include e-Type Families, Unibox Transferees, Fiber-Optic Families, Late-Nest Suburbanites,Full-Nest Suburbanites, Uptown Families, and Multi-Cultural and Multi-Ethnic Families.Over 42 percent of the family households are already living in the City of Mobile, 18.6 percent livein the balance of Mobile County, and the remaining 39 percent would be moving from elsewhere inthe U.S.APPENDIX TWO, TARGET MARKET DESCRIPTIONS, contains detailed descriptions of each of these targetmarket groups and is provided in a separate document. The METHODOLOGY document describes howthe target market groups for the Study Area are determined.ZIMMERMAN/VOLK ASSOCIATES, INC.

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 14The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018THE CURRENT CONTEXTSummary supply-side information for the Downtown Mobile market area (covering multi-familyrental properties, and for-sale condominiums, townhouses and single-family detached units) isprovided in tabular form following the text: Table 3, Summary of Selected Rental Properties, City ofMobile, Mobile County, Alabama and Table 4, Summary of Selected For-Sale Multi-Family andSingle-Family Attached and Detached Developments, City of Mobile, Mobile County, Alabama.In February 2018, Zimmerman/Volk Associates compiled data from a variety of sources, includingtelephone interviews and individual property and rental websites, on 28 selected rental properties,representing nearly 5,500 rental apartments in the City of Mobile. (See Table 3 following the text.)Walk Score, a number between 0 and 100 denoting the walkability of a specific address orneighborhood, has grown in importance as a value criterion. Walk Scores above 90 indicate a“Walker’s Paradise,” where daily errands do not require a car. Walk Scores between 70 and 90 areconsidered to be very walkable, where most errands can be accomplished on foot, and Walk Scoresbetween 50 and 69 are regarded as somewhat walkable, where some errands can be accomplished onfoot. Walk Scores below 50 indicate that most or almost all errands require an automobile.The only properties in the survey with Walk scores above 75 are located in the Downtown/Midtownarea of Mobile: Temple Lodge Lofts, a new property in Downtown that has not yet opened, scored78, the highest score in the survey; the Tower on Ryan Park in Downtown and the Bel AirApartments in Midtown both scored 76; and Marine Street Lofts and St. Charles Place, both locatedjust outside the CBD rated a 75. Staples-Pake, in a new residential development in Downtown score74.—Multi-Family Rental Properties—Table 3 provides detailed information on the 28 surveyed rental properties and is summarized below. —Studios (4 properties)—Rents for studios range between 550 per month at the Tower on Ryan Park on St.Michael Street and 800 per month at the Broad Street Loft, a recently-developedproperty located on South Broad Street.ZIMMERMAN/VOLK ASSOCIATES, INC.

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 15The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018 Studios contain between 440 square feet at the Tower on Ryan Park and 650 squarefeet at St. Charles Place on Government Street. The studio rent per square foot ranges between 1.04 at St. Charles Place and 1.43at the new Staples-Pake development on North Royal Street. —One-Bedroom Units (24 properties)—Rents for one-bedroom flats range from 450 per month at the Palmier Apartmentson Westwood Street to 1,205 per month at Timber Ridge Apartments on WallStreet. The one-bathroom lofts at the Temple Lodge lofts run from 1,350 to 2,095 per month. One-bedroom flats range in size from 500 square feet at Manchester ParkApartments on Spring Hill Avenue to 1,035 square feet at Marine Street Lofts onGovernment Street. The Temple Lodge Lofts contain between 850 and 1,150 squarefeet. One-bedroom rents per square foot range between 0.59 at Washington PlazaApartments at 410 South Washington Avenue to 1.29 at the Broad Street Lofts.Rents per square foot range between 1.59 and 1.82. —Two-Bedroom Units (26 properties)—Rents for two-bedroom, one- or two-bathroom units range from 495 per month atthe Palmier Apartments, to 1,600 per month at the Marine Street Lofts. Twobedroom/one- to two-bath townhouses lease for 640 per month at the Hamptons atPine Bend on Montlimar Drive to 749 per month at Midtown Oaks Townhouseson Dauphinewood Drive. Two-bedroom flats range in size from 700 square feet at Manchester ParkApartments, to 1,830 square feet at Marine Street Lofts. Two-bedroom townhousescontain between 750 square feet of living space at Edgewood Villas Apartments onNeshota Drive to 1,300 square feet at Midtown Oaks Townhouses. Two-bedroom rents per square foot for flats fall between 0.56 at South BayApartments on South Washington Avenue and 1.41 at Broad Street Lofts. TheZIMMERMAN/VOLK ASSOCIATES, INC.

AN ANALYSIS OF RESIDENTIAL MARKET POTENTIALPage 16The Downtown Mobile Study AreaThe City of Mobile, Mobile County, AlabamaMay, 2018rents per square for two-bedroom townhouses ranges between 0.57 at MidtownOaks Townhouses and 0.97 at Edgewood Villas. —Three-Bedroom Units (17 properties)—Rents for three-bedroom flats range between 645 per month at Azalea PointeApartments on Azalea Road and 1,850 per month at Legacy Oaks at SpringhillApartments on Du Rhu Drive. Three-bedroom townhouses start at 745 per monthat Edgewood Villas and lease for as much as 860 per month at Estates at LafayetteSquare on Downtowner Boulevard. Three-bedroom flats contain between 980 square feet at Azalea Pointe Apartments,and 1,756 square feet at Legacy Oaks at Springhill. Three-bedroom townhousesrange in size from 850 square feet of living space at Edgewood Villas to 1,371 squarefeet at Estates at Lafayette Square. Three-bedroom rents per square foot for flats fall between 0.60 and 1.18 atTimber Ridge Apartments on Wall Street. Rents per square foot of three-bedroomtownhouses range between 0.61 at Midtown Oaks Townhomes to 0.94 atEdgewood Villas.Most of the rental properties are in initial lease-up or at functional full occupancy (less than fivepercent vacancy rate); just five properties are below 95 percent occupancy. Nearly all of theproperties provide a range of community amenities, typically fitness centers, clubhouses or residents’lounges, and business centers.—Multi-Family and Single Family Attached and Detached For-Sale Properties—Table 4 provides pricing and unit sizes and configuration information for several for-sale listings

An Analysis of Residential Market Potential The Downtown Mobile Study Area City of Mobile, Mobile County, Alabama May, 2018 Conducted by On Behalf of the IMMERMANZ /VOLK ASSOCIATES,INC. DOWNTOWN MOBILE ALLIANCE P.O. Box 4907 261 Dauphin Street Clinton, New Jersey 08809 Mobile, Alabama 36602 .