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MARKET ANALYSIS

MARKET ANALYSIS. 1A. Overall Economy Economic recovery continues slowly, though potential setbacks abound Inexpensive capital, uncertain stock returns driving real estate investment. 1. Executive Summary. 1B. Product Assumptions Residential property Hotel / Extended Stay.

candice-marsh
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MARKET ANALYSIS

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  1. MARKET ANALYSIS

  2. 1A. Overall Economy • Economic recovery continues slowly, though potential setbacks abound • Inexpensive capital, uncertain stock returns driving real estate investment 1 Executive Summary • 1B. Product Assumptions • Residential property • Hotel / Extended Stay • 1C. Market Risk • Oversupply • Uncertainty about the area (Time and Competitors)

  3. 2A. Historical Analysis of Boston’s Economy • All indicators show steady growth until 2001, then a substantial drop and rebounded in 2003 and 2004 • Boston’s data corresponds to national trends, although slightly more depressed than overall U.S. 2 Market Overview 2B. Future Trends for Boston’s Economy • Boston’s slow growth continues but with certain segments showing stronger performance (special attention in our case for Professional & Business Service and Hospitality & Leisure)

  4. 3A. Market Area 3 Demand Analysis • Assumption 1: • Multi-Family Housing • - Geography: 3-mile radius • User: Primarily CBD and Convention • Center white-collars • - Price: Medium • Assumption 2: • Hotel / Extended Stay • - Geography: 5-mile radius • User: Conventioneers, tourists, • business travelers • - Price: Medium

  5. 3B. Demand Drivers • Market continuing to recover slowly, with tepid job growth • Boston’s economy historically shows similar trends as national scenario 3 Demand Analysis Assumption 1: Multi-Family Housing - Employment sectors with highest projected growth rates are over-represented in S. Boston as compared to MSA. Therefore, demand growth in S. Boston is expected to outpace the overall region Assumption 2: Hotel / Extended Stay - Employment Growth - Masterplan “The Seaport Public Realm Plan” (Convention Center)

  6. 3C. Absorption 3 Demand Analysis Assumption 1: Multi-Family Housing - Employment growth Assumption 2: Hotel / Extended Stay - Masterplan “The Seaport Public Realm Plan” (Convention Center) Occupied Room Nights / Year

  7. 4A. Existing Inventory and Near-term Inventory • Stock growth of 6.5% over last 10 years, outpaced employment growth by 1.5%. • Recent employment spike driving absorption and vacancies. • Vacancy rate at LT avg, expected to trend slowly upwards over 5 years. • - 2005 completions 50% over LT avg, will decline beginning in 2006, but remain ahead of absorption going forward. 4 Supply Analysis Vacancy rate

  8. 4B. South Boston Supply Pipeline Project location 505 Congress St. 5.5 MSF including 1,559 residential units planned or under construction 6.2 MSF including 2,500 residential units in pre-planning 4 Supply Analysis 744 units planned or under construction S. Boston stock = 4% of MSA stock S. Boston pipeline = 29% of MSA’s projected 5 year net absorption Convention Center Hotel under construction 800-rooms + 320 second phase

  9. 4C. Business / Building Cycles • CA/T opportunity for redevelopment • BCEC since 2004 • Fort Point Channel, “100 acres development” • Fan Pier, ICA • Pier 4 • World Trade Center • South Station Tower (Office + Hotel) • Silver Line 4 Supply Analysis

  10. 5. Site Analysis (Outstanding Attributes) • Cons: • - Poor Geometry • Limited Vehicular Access • - Heavy Traffic Flow (noise and visual pollution) • - Tunnel Exhaust Stacks at neighbor site • Pros: • Substantial Investments in Infrastructure • Strong potential for competition or beneficial development of new neighborhood • Good Public Transportation Linkage (Silver Line to the Airport) • Good linkage to Convention Center, Waterfront and CBD 5 Site Analysis

  11. 6A. Opportunity - Multi-Family Housing >> opportunity to attend particular demand for single, mid-income employees from CBD and Convention Center (employment rate growth) - Hotel / Extended Stay >> opportunity to attend particular demand for conventioneers and business travelers from CBD 6B. Risks • Exceeding Current and Projected Supply for above mentioned uses • Uncertainty about neighborhood development timeline 6C. Initial Conclusions 6 Conclusion - Employment growth will spur residential demand over coming years. However, substantial available land in the market area will require careful product differentiation in order to produce an acceptable capture rate

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