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2003-MARKET STUDY i ,ii IL, a 71 kL ` 4 4140 0000000 ,,»„x�:, „ ,�r�'e:..0 P 000 .. s� �w a „,0 0 0 ,�:'rte. w 0 e 00 m«re,r 0,r ,r�€„„„,,0 v 0,.�a a,. r „ aha �� as, aw. ii ho I` Ai4arket i easib11ity Study kkk w -'amm '. for Senior Housing in MIA or .11,W- 07 ILI or age RI 414 910 Fridley, Minnesota wI 5q ApilNil MI Amy'IIN kk gym_ xP Aka, ti ice” s `5 a N env� e l M-51,�w 00- 1 0 0 NI s e1 jr y voistssig 7 I s aced for: larOw ittihn Demello New Brighton, Minnesota I August 2003 III I I I AI / . xfield I Research Inc. 615 First Avenue NE Suite 400 Minneapolis, MN 55413 I 612.338.0012 I Aii xfield iii ♦IiResearch Inc. 1 �. r I 1 August 14, 2003 Mr. John Demello I 2872 17`h Terrace NW New Brighton, MN 55112 IDear Mr. Demello: We are pleased to present our study titled"A Market Feasibility Study for Senior Housing in I Fridley, Minnesota." Based on an analysis of older adult and senior household growth and income trends and an analysis of the current and proposed supply of senior housing in the Fridley Market Area,we believe demand is sufficient to support a 70-unit age-restricted condominium Ibuilding on the subject site. Although significant demand is available for your proposed project at this time, a number of Iplanned and proposed senior projects could potentially absorb future demand for senior housing in the Market Area. If you proceed with development at this time,however, your project should be well-received and experience a fast absorption period. Detailed recommendations on the Iproposed unit mix,unit sizes, amenities, and purchase prices are found in the body of the report. We have enjoyed working on this project with you. We are available if you have any questions Ior require additional information. ISincerely, MAXFIELD RESEARCH INC. I 40,27 � I Mary C. Bujold / Jay M. Demma President Senior Research Analyst IAttachment I I I I (phone) 612.338.0012 (fax)612.904.7979 615 First Avenue NE, Suite 400, Minneapolis, MN 55413 I ITABLE OF CONTENTS I Page I EXECUTIVE SUMMARY I Study Impetus 1 Site Analysis 1 I Demographic Review 1 Competitive Market Review 3 Conclusions and Recommendations 4 IProjected Absorption and Marketing Considerations 5 SITE ANALYSIS 6 I Site Description 6 Surrounding and Nearby Land Uses 7 Access and Visibility 10 IAppropriateness of the Site for Senior Housing 10 DEMOGRAPHIC ANALYSIS 11 I Introduction11 Primary Market Area Definition 11 Population, Household and Employment Growth Trends 11 11 Older Adult Population and Household Growth Trends 15 Senior Household Incomes 17 Older Adult Household Tenure 19 IHome Values 20 COMPETITIVE MARKET ANALYSIS 23 IIntroduction 23 The Evolution of Senior Housing Alternatives 23 I Types of Senior Housing on Today's Market 24 Competitive Market Area Independent Senior Projects 26 Recent Senior Condominium Developments 35 IPending Senior Housing Developments in the Market Area 37 CONCLUSIONS & RECOMMENDATIONS 41 I Introduction 41 Independent Senior Housing Demand Estimates 41 Recommended Development Concept 43 IIProjected Absorption and Marketing Considerations 46 I I I A 1 LIST OF TABLES 1 Table Number and Title Page 1 Population Trends, Fridley Market Area, 1990 to 2010 13 2 Household Trends, Fridley Market Area, 1990 to 2010 14 3 Employment Trends, Fridley Market Area, 1990 to 2010 15 4 Older Adult Population Age Distribution, Fridley Market Area, 1990 - 201016 5 Older Adult Household Age Distribution, Fridley Market Area, 1990 - 2010 16 6 Older Adult Income Distribution, Fridley Market Area, 2003 & 2008 18 7 Older Adult Household Tenure, Fridley Market Area, 1990 and 2000 20 8 Single-Family Home Resales for Homes 15+ Years Old, Fridley Market Area, 1999 through 2003 21 9 Competitive Independent Senior Projects, Fridley Market Area, August 2003 28 10 Amenity Comparison, Competitive Independent Senior Projects, Fridley Market Area, August 2003 31 11 Services Comparison, Competitive Independent Senior Projects, Fridley Market Area, August 2003 33 12 Comparable Senior Condominium Projects, Twin Cities Area, August 2003 36 13 Independent Senior Housing Demand, Fridley Market Area, 2003 & 2008 42 14 Recommended Pricing, Proposed Senior Condominium Project, Fridley, Minnesota, August 2003 44 I 1 I 1 I i 1 I I 111 EXECUTIVE SUMMARY Study Impetus etus Maxfield Research Inc. was engaged by John Demello to study the market feasibility of develop- ing independent senior housing on a site located at the intersection of Central Avenue NE and Mississippi Street in Fridley, Minnesota. The scope of this study includes an evaluation of the Site; a review of demographic trends and characteristics; the collection and analysis of competitive market data; an estimation of demand for senior housing at the Site, and penetration and absorption rates for the proposed project based on a recommended concept prepared by Maxfield Research Inc. This report includes both primary and secondary data. Secondary data is credited to the source when used and, in most cases, is U.S. Census data. Data on existing senior housing facilities as well as proposed competitive developments was collected by Maxfield Research Inc. and is +� accurate to the best of our knowledge. Site Analysis • The subject property is located at the southeast corner of the intersection of Central Avenue NE and Mississippi Street. The approximately 3Y2-acre property has frontage along both Central Avenue NE and Mississippi Street and currently contains several land uses including a single-family home and detached garage, a flat-roofed garage with asphalt parking area, and two heavily-wooded parcels. • The Site of the proposed project is very good for senior housing. It has excellent visibility and is in an established residential neighborhood with convenient access to shopping, activities, and health care. Overall, the Site should be well-received by prospective residents. Demographic Review • Thep rimary draw area (the "Market Area") for the proposed project consists of Fridley, Blaine, Coon Rapids, Columbia Heights, Hilltop, Mounds View,New Brighton, St. Anthony, ' Spring lake Park, and the portion of Minneapolis north of Broadway Street NE. The Market Area is expected to account for 80 percent of the demand for the proposed project. Another 20 percent of the demand is expected to come from outside the Market Area,particularly from seniors who would move to be near adult children living in the Market Area. • The Fridley Market Area had an overall population of 235,049 persons in 2000. This popula- tion was an increase of 13,780 persons from 1990 (a 6.2% increase during the 1990s). It is anticipated that the Market Area will add nearly 17,000 people between 2000 and 2010 (a gain of 7.5%). Because of an ample supply of available land for development, Blaine is ex- pected to account for a large proportion of the Market Area's growth during this decade (a projected increase of roughly 12,000 persons). I MAXFIELD RESEARCH INC. 1 EXECUTIVE SUMMARY • In 2000, Market Area older adults ages 55 and over numbered 44,976 people (19% of total population) and seniors ages 65 numbered 24,325 (10% of total population). Focusing on households instead of population, which is a better indicator of housing demand, older adults, ages 55 and over, numbered 28,282 in 2000, or 31 percent of the total household base. Sen- ior households, ages 65 and over, numbered 16,005 households (17% of total households). The Market Area experienced substantial growth in its older adult and senior base during the 1990s—a growth of 8,342 persons (23% growth) and 5,479 households (24% growth). ' • Population and households among adults ages 55 and over are expected to continue to see strong growth between 2000 and 2010, as projections call for an increase of 16,791 persons (37%) and 10,569 households (37%). • income of would be required to afford monthly rents for most Typically, a minimum $25,000q 111 market rate independent senior housing (based on an income allocation of 40%to 50%,this would result in an affordable monthly rent of$830 to $1,000). In 2003, 12,005 older adult households (87%) and 10,232 senior households (58%) in the Market Area had incomes greater than$25,000, and would be able to afford monthly fees for market rate independent senior housing. It is important to note that the data presented here does not account for the asset base of senior households, nor supplemental income that a senior household could gain from the sale of a home or that they may receive from family members. Households with incomes between $20,000 and $25,000, coupled with the sale of a home, are also a potential market for market rate senior housing. • As seniors age, they may no longer desire, or be able, to maintain their single-family homes. They may prefer to move to housing that offers them greater freedom from maintenance and/or offers them support services. Seniors typically begin to consider moving into rental housing in their early 70s. In 2000, 86 percent of households age 65 to 74 owned their hous- ing and 69 percent of households ages 75 and over owned their housing. These percentages are an increase over 1990, despite the addition of new senior rental units in the Market Area during the decade. Therefore, this suggests that even though seniors are more likely to rent than their younger counterparts there remains a strong propensity to continue to own their housing. • Proceeds from a home sale, minus Realtor fees, can be invested to produce supplemental ' income to support senior housing payments. The median sale price of homes 20 years old or older in the Market Area was $179,000 for the first six months of 2003. Therefore, a Market Area senior who sold their home for$180,000 could earn roughly $560 per month,which could be contributed to fees for senior housing (based on a sale price of the above sale figure and less seven percent Realtor fees, and a four percent annual return on their investment). If a senior was interested in converting 90 percent of the sale equity into a condominium, we would anticipate that they would be in the market for condominium around $165,000,pro- vided it had adequate space and features they considered necessary. I I MAXFIELD RESEARCH INC. 2 EXECUTIVE SUMMARY Competitive Market Review • Maxfield Research identified 18 market rate and affordable independent developments with a total of 1,484 units. Some units at the surveyed projects, though, are restricted to households with low- to moderate-incomes. Market rate units account for 1,030 of the total units, whereas"affordable" units account for 454 of the surveyed units. Overall, a survey of the independent facilities conducted in August 2003 found 30 vacant units, which translates to a vacancy rate of 2.0 percent. Generally, a healthy senior housing market will typically have a vacancy rate of around 5.0 percent in order to allow for sufficient consumer choice and unit turnover. Vacancy rates well below 5.0 percent typically indicate some pent-up demand. • All but three of the independent projects in the Market Area are "adult" housing projects—or projects where services are only available to residents through third-party providers. These "congregate" projects account for 255 of the Market Area's 1,454 independent senior units, and would not be directly competitive with the subject property. Of the 15 projects classified as "adult" with few services, three are owner-occupied developments in which residents own titled deed to the unit and belong to a common association (condominium) or own a share in the corporation that owns the mortgage to the entire building (cooperative). • Although most of the "affordable" units surveyed have income restrictions liberal enough for many to still afford market rate projects, the majority of the units are occupied by lower- income seniors who could not afford market rate senior housing. Thus, these affordable units would not be highly competitive with the proposed project. We project that one-quarter of the affordable units in the Market Area are occupied by seniors who are also potential candi- dates for a market rate project. • Combined, the unit mix at the independent senior projects in the Market Area is one percent efficiency, 55 percent one-bedroom, eight percent one-bedroom plus den, and 37 percent two-bedroom units. One-bedroom unit sizes average 751 square feet. Two-bedroom units average 1,050 square feet. Owner-occupied projects have much larger sized units than rental projects. The average one-bedroom unit is 844 square feet, and the average two-bedroom unit is 1,233 square feet. • The average market rate monthly fee at the"adult" senior projects in the Market Area in August 2003 was $802 for a one-bedroom unit and $1,035 for a two-bedroom unit. It should be noted that since these averages are for"adult"projects, these average fees do not include meals or other services. • Although we identified 11 proposed senior projects in the Market Area, many are in the very early planning stages, including a proposal for a senior housing project across the street from the subject property on the southwest corner of Central Avenue and Mississippi Street. Ac- cording to a Fridley City official, though, this particular site has been discussed by no fewer than six different parties over the last two years. The most recent proposal has been from Town Center Development of Maple Grove. No specific plans have been submitted for re- view, though. I MAXFIELD RESEARCH INC. 3 IEXECUTIVE SUMMARY I • The most likely planned developments to move forward in the Market Area include two projects in Blaine and one in Northeast Minneapolis. One of the Blaine projects is being I proposed by Randy Noecker and will be located near the intersection of Highway 65 and highway 242 in the extreme northern portion of the Market Area. The other Blaine project is proposed by Sherman and Associates and will be located near Radisson Road and 109th Ave INE. The third project is being developed by Volunteers of America and will be located at Central Avenue and 19th Avenue NE in Minneapolis. I Conclusions and Recommendations I • Based on information derived from our demographic and competitive market analyses, we calculated demand for adult rental and for-sale senior housing in 2003 and 2008. After sub- 111 tracting out existing projects,we found excess demand in the Market Area for 204 rental units and 186 for-sale units in 2003. After accounting for pending projects, we found that excess demand would significantly decrease for rental housing to 7 units and slightly in- Icrease for for-sale housing to 189 units. • Given the competitive situation in the marketplace, the quality of the subject Site, and the I lack of for-sale product within three miles of the property,we believe a senior condominium project would be the most marketable product at the Site. Because no one project or site is able to capture all of the calculated demand, we recommend a project no larger than 70 units. 1 Based on the latest trends in age-restricted condominiums, the following chart displays our recommended unit mix, sizes, and pricing. I RECOMMENDED PRICING PROPOSED SENIOR CONDOMINIUM PROJECT FRIDLEY,MINNESOTA 1 August 2003 Unit Mix Unit Size Recommended Price per IUnit Type #of Units %of Units (Sq.Ft.) Purchase Price Square Foot 1BR/ IBA 6 9% 825 - 850 $140,000 $145,000 $170 1BR+D/ 1.5BA 12 17% 950 -975 $157,000 - $161,000 $165 2BR/1.75BA 44 63% 1,025 - 1,075 $169,000 - $177,000 $165 2 BR+D/ 1.75BA 8 11% 1,275 1,325 $204,000 - $212,000 $160 70 100% IRecommended sale prices are quoted in 2003 dollars and include one underground parking stall.Residents would be resposible for their electricity/heat,homeowner insurance,telephone,and cable. IA building association fee of$200 per month should also be insituted to cover reserves,building insurance,management,building common area and grounds maintainence. ISource: Maxfield Research Inc. I MAXFIELD RESEARCH INC. 4 EXECUTIVE SUMMARY • More detailed, recommendations, including recommendations on unit and building amenities, can be found in the Conclusions and Recommendations section at the end of this report. Projected Absorption and Marketing Considerations • Provided no other similar project is marketing simultaneously, we believe that the proposed project should experience relatively rapid absorption of units. We estimate that approxi- mately 40 percent (28) of the units would be required to be pre-sold before construction be- gins. During this pre-sale period, we anticipate that units would be sold at a net rate of three to four per month, which translates to eight to ten months. Once construction begins,we would anticipate that the sales rate would drop slightly to two net units per month. There- fore,by the time the first units are available for occupancy, we would expect that 52 units (roughly 75%)will have been sold. Once the building is available for occupancy, the re- maining 18 units should sell at a net rate of about four units per month, which translates to an additional 4'/2 months before the building is completely sold-out. • The aforementioned sales absorption rates assume a spring or summer occupancy and a professional marketing campaign, including appropriate signage, collateral materials, and a campaign directed by someone with experience in marketing for-sale housing restricted to seniors. Should there be an opening in fall or winter, a longer absorption period may result. I I I I 1 I MAXFIELD RESEARCH INC. 5 SITE ANALYSIS 111 Site Description IThe subject property is located onthe southeast corner of the intersection of Central Avenue NE ("old" Central Ave) and Mississippi Street in Fridley, Minnesota. The intersection is governed I by a four-way stop sign. The approximately 31/2-acre site currently consists of five contiguous parcels of varying land uses. Two adjoining parcels, which form the southern half of the prop- erty, are undeveloped wooded lots. The parcel that abuts both Central Avenue and Mississippi I Street contains a small flat-roofed garage that is approximately 500 square feet in size. There is an asphalt-paved surface area in front of the garage with access to both Central Avenue and Mississippi Street, which can accommodate roughly three to four parked cars. The parcel that I forms the northeast corner of the property, which abuts Mississippi Street, contains a modest single-family home with detached garage that was built in 1948. The fifth parcel, which is vacant and clear, is sandwiched between the wooded parcels on the south end of the property and Ithe parcel with the flat-roofed garage. r _ r ti: w is 1 A • _ — — _ . � a� —_-_-_---------,:_-__I-:,---- _' - � �it's Y IView of the property looking south from Mississippi Street. 1 Given the current land use and flat topography of the Site, it appears the property could be easily developed as a multistory structure containing either residential housing units or a mix of resi- dential housing and retail space—barring any potential soil contamination or drainage issues. I According to the City of Fridley's zoning map, which is posted on their website, only the portion of the property that is within roughly 200 feet of Central Avenue is zoned for uses other than single-family residential. Therefore, depending on the layout of the proposed project, a zoning variance or amendment may be required. I I MAXFIELD RESEARCH INC. 6 I SITE ANALYSIS k L f L 1 ! I View of the wooded parcels looking south and east from Central Avenue. The City of Fridley is a fully-developed inner-ring suburb of the Twin Cities Metro Area that is located approximately seven miles north of Downtown Minneapolis. Although key intersections in the City have served as commercial nodes for trade between the Cities of Minneapolis and St. Paul and their hinterland for nearly 150 years, the City did not begin to be developed on a large scale until after WWII. Most homes in the City were built between 1950 and 1970. Therefore, many of the original homeowners in the City are recently retired or nearing retirement age. SurroundingNearby and Land Uses The Site is located in a neighborhood consisting predominantly of modest post-WWII single- family homes. Along the eastern and southern border of the property are single-family homes. Tracts of single-family homes extend east for several blocks. To the north of the Site, across Mississippi Street are two small single-story commercial buildings. The building occupying the northeast corner of Central Avenue and Mississippi Street contains the 4 Corners gas and con- venience store and a beauty salon. The second commercial building, which has access along Central Avenue and is just north of the convenience store, contains a home remodeling business and a towing service. The neighborhood lying further to the northeast consists of single-family homes, but also contains the Rice Creek Park West Trail, a trail system maintained by the Anoka County Park system that links with Locke County Park to the west. MAXFIELD RESEARCH INC. 7 I SITE ANALYSIS I z t_ a Ir+ s. - r l .,.c„.„ c :7....;:::.....;;..........--;— View of the 4 Corners Gas& Convenience Store looking northeast. 1 _ — d , I k I Y 4. IView of the commercial building just north of 4 Corners Gas & Convenience Store. IOn the northwest corner of the intersection is a very small office building that contains a chiro- practic firm The neighborhood lying beyond this corner of the intersection is a mix of single- family homes and multifamily duplexes, twin homes and townhomes. I MAXFIELD RESEARCH INC. 8 1 SITE ANALYSIS I I i s I if I I L' a J- -- __-.'• .. View of the Central Avenue and Mississippi Street intersection looking 1 northwest from the subject Site. Across Central Avenue from the Site on the southwest corner of the intersection is Sandee's I Restaurant, a longstanding facility that predates most of the area's development. On the west side of Sandee's is a converted residential structure that contains the offices for Tamarisk House, a hospice service. Both the Sandee's Restaurant and Tamarisk House sites have been eyed by I various developers in recent years for redevelopment. According to City officials, though, no defmite plans have been submitted to the City for review at this time. I , . I II® ., I ii` �-. - -151im iv .e Nill_ P i _____ I View of Sandee's Restaurant looking southwest. 1 1 MAXFIELD RESEARCH INC. 9 SITE ANALYSIS To the south of the Site along both sides of Central Avenue is a mix of commercial, governmen- tal, and residential uses. Approximately two blocks south of the property, on the east side of ' Central Avenue, is a City of Fridley fire station and a bank. On the west side of Central Avenue, starting about two blocks from the Site, there is a carpet cleaning service, a car wash, and the rear entrance to a strip mall along Moore Lake Drive. The strip mall includes a branch of the ' Northwest Health Club chain as well as numerous neighborhood based shops and restaurants. This retail node at Moore Lake Drive would easily be within walking distance of the subject Site. Also, further south along Central Avenue about '/2 mile from the Site is Moore Lake Park, which ' includes a walking path as well as several picnic areas and open spaces. Although not as important for younger, more active seniors, the closest hospital is Unity Hospi- tal, which is located about three miles northwest of the Site on Osborne Road NE in Fridley. Access and Visibility ' The proposed project would have excellent visibility to the"old" Central Avenue and Missis- sippi Street motorist. Traffic counts indicate Average Annual Daily Traffic ("AADT") of 7,800 to 9,000 on Central Avenue in 2000. Mississippi Street AADT traffic counts range from 4,800 east of Central Avenue,to 6,500 west of Central Avenue. Traffic counts in this range are a good compromise for a multifamily development. On the one hand, traffic is high enough to support marketing efforts and get the project noticed. On the other hand, traffic is not too high to deter ' prospects who prefer a more residential setting. This is especially true among more active, independent seniors who want a lifestyle change,but are not entirely dependent on a location that must be served by nearby or adjacent services. ' Access to the Site is excellent. Central Avenue intersects with Highway 65, a major state highway, approximately one mile south of the site. At this intersection, there is access to Inter- ' state 694, which is the main east-west beltway through the northern suburbs of the Twin Cities Metro Area linking the Fridley area with suburbs west of the Mississippi River as well as sub- urbs north of St. Paul to the east. Highway 65 also provides direct access into Northeast Min- neapolis and Downtown Minneapolis. Approximately 1/4 mile west of the Site, Mississippi Street also intersects State Highway 65. From this intersection, Highway 65 provides convenient access to points north of the Site, including the developing areas of Blaine and, via Highway 10, ' Coon Rapids. Primary access to the site would be via either Central Avenue or Mississippi Street. Appropriateness of the Site for Senior Housing The Site of the proposed project is very good for independent senior housing, either owner- occupied or rental. There are no incompatible land uses adjacent to the Site or nearby, and it is ' located in an established residential neighborhood that has convenient access to neighborhood- based retail shopping along Moore Lake Drive, activities, and other area amenities. Overall, the Site should be well received by prospective residents and purchasers. MAXFIELD RESEARCH INC. 10 ' DEMOGRAPHIC ANALYSIS Introduction I !IIIII I This section of the report examines factors related to the demand for senior housing with basic support services, including congregate and for-sale senior housing. It includes a review of overall growth trends and an analysis of the demographic and economic composition of the senior population and household base for a Market Area defined as the primary draw area for senior rental housing and senior condominiums located in Fridley, Minnesota. Primary Market Area Definition I In order to assess the market potential for market rate senior housing at the subject Site in Fridley, Minnesota, we have examined growth trends and demographic characteristics for an area considered to be the primary draw area(herein referred to as the "Market Area") consisting of I the following municipalities: Blaine, Columbia Heights, Coon Rapids, Fridley,Hilltop, Spring Lake Park, St. Anthony, Mounds View, New Brighton, and the portion of Minneapolis north of Broadway Avenue NE (Census Tracts: 6.01, 6.03, 11, 17, 24, 1005, 1012, 1018, 1019, 1025, and I1026). A map of the Market Area is shown on the following page. The Market Area was determined by examining transportation patterns, community orientation, 1 geographic and municipal boundaries, and the experience of other similar developments near the Site as well as our knowledge of the draw areas for senior housing. The Market Area is expected to account for 80 percent of the demand for the proposed project with the balance coming Iprimarily from elsewhere in the Twin Cities Metro Area. The remaining portion of the demand (at least 20%) for the subject development will come from Ill outside the defined Market Area. These individuals will include persons currently residing just outside the Market Area who have an orientation to the area(i.e., church, doctor, etc.), persons who once resided in the area that desire to move back to be near friends and family, as well as Iparents of adult children living in the Market Area. IPopulation, Household and Employment Growth Trends I Tables 1, 2, and 3 present overall population,household, and employment trends and projections for each community in the Market Area. The 1990 and 2000 population and household figures are from the U.S. Census Bureau; while the 2010 figures were provided by the Metropolitan I Council, a government agency that provides planning services for the seven-county Twin Cities Metro Area. Total employment figures for all years were estimated by the Metropolitan Council. The following bullet points summarize growth trends in the Market Area. I • Fridley's Market Area had an overall population of 235,049 persons in 2000. This popula- tion was an increase of 13,780 persons from 1990 (a 6% increase). It is anticipated that the I Market Area will add at least another 17,695 people by 2010, a gain of 8%. 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I 0,1.11 000 itit::•• .06 I.E. .:, !...r I III;II,..,1 ,i., ..!.."71,-..:101,11ouvr, iliti lagor.-hti ling,w_tliilt: ggf-;l',13,111.111It'illli ill le iiiiiT Li 33;;nr - . , 4,-_-.:1- --..F.r.,•ii 1,b I !..-.1113P19! kg Mil - :111!4-Wort I c.ri' -1111,V1114.11.-_-_111.1arr112.11-411"..f.M.-_r..)--2'217-.1'14 EFA;11gIri .,.,..1„.._ - _ii. . .ar,, I i ii MIL.,NI inli. IN slAi.."pi!mill it'6111 , 1 1 p.:ri c..Jtj r r.IQ rall2n.:! :rei ii Ro4 tar,,..:1 ill ifillfragatil isulait4rm „4 1 Mk%igi 1. il n• I _TTif ...........:.v..r.11.•-I Nik '1' L1.-11311' •' - .ariusollpili -um IAN-- Imti , , , 11!":"T'•;21' 71-- --...)- -Itri'',.- gl:,.,4.4u1 7.. ,,,,„. , .., ,,,„ /MINIMUM=ll ta kiltillTiE, ,..sir'-iiiriggillitraill W Nos two : r.H...v4ilut -vit.--- --N-7-0 '-,,.;• :au,.. li.weinirll..1, Ittl ,...... .....:••••t' iIRMI lit ,-,--- a..,,o ,,,waitirdj It-.4,11,,...„...r. bv,,,,,, P A vil ..,,..2i.Repoli,,.,_ , .1.......,.. Illgin LI,. I ..„ A . c No ir,,IFfitagu...41F iiii,'. ....11.....17,s,...:',., i-47,ri_jc. 41, .kr-"".s._-se', un*, -. -4.-.w. 4 . H------r, rz:.... ----.:,:____. - --- ,i ., . 'WI.,"ta.--.1 Li.. .- : .45 57,4 riii.;41114=111111nasi ,11 a,.- .....11 a7.70,r,- tri. --Irg4-II ' . Ma/cEeld Research Inc. • The majority of the Market Area's numerical growth during the 1990s was concentrated in I two communities-Blame and Coon Rapids. Growth in these communities is attributed to the availability of land. Market Area communities closer to the core of the Twin Cites have exhausted most of their supply of available land for new development, including Fridley, and I thus,have notexperienced the same rates of population growth as the developing communi- ties. In someinstances, these communities have experienced modest declines in population due mainly to an aging population and declining household sizes. I 1 MAXFIELD RESEARCH INC. 12 IDEMOGRAPHIC ANALYSIS 1 TABLE 1 POPULATION TRENDS 1 FRIDLEY MARKET AREA 1990 to 2010 Population Change Census Met 1990-2000 2000-2010 Council ICity 1990 2000 2010 No. Pct. No. Pct. Blaine 38,975 44,942 57,000 5,967 15.3 12,058 26.8 Columbia Heights 18,910 18,520 19,200 -390 -2.1 680 3.7 I Coon Rapids 52,978 61,607 65,000 8,629 16.3 3,393 5.5 Fridley 28,335 27,449 27,000 -886 -3.1 -449 -1.6 Hilltop 749 766 770 17 2.3 4 0.5 I Spring Lake Park 6,429 6,667 6,700 238 3.7 33 0.5 St.Anthony 7,727 8,012 8,650 285 3.7 638 8.0 Mounds View 12,541 12,738 12,900 197 1.6 162 1.3 I New Brighton 22,207 22,206 22,700 -1 0.0 494 2.2 Minneapolis(pt.) 32,418 32,142 32,824 -276 -0.9 682 2.1 Market Area Total 221,269 235,049 252,744 13,780 6.2 17,695 7.5 iMetro Area Total 2,288,721 2,608,990 2,838,730 320,269 14.0 229,740 8.8 Sources: U.S. Census;Metropolitan Council;Maxfield Research Inc. • There were 92,809 households in the Market Area in 2000, an increase of roughly 10,200 households (12.3%) from 1990. Over the next decade, household growth will remain strong, with a projected increase of about 10,400 households. Blaine and Coon Rapids are projected to lead the Market Area in household growth during this decade, by adding a projected 8,500 Ihouseholds (82% of Market Area growth)between the two municipalities. I • The Market Area's rate of household growth was slightly slower than the Metro Area's during the 1990s (12.3% compared to 15.5%). The Market Area's growth rate, however, is projected to decline only about one percent during this decade (11.2%), whereas the Metro Area is expected to decline nearly three percent (12.6%). I I I I MAXFIELD RESEARCH INC. 13 IDEMOGRAPHIC ANALYSIS ITABLE 2 HOUSEHOLD TRENDS FRIDLEY MARKET AREA I1990 to 2010 I Households Change Census Met 1990-2000 2000-2010 Council I City 1990 2000 2010 No. Pct. No. Pct. Blaine 12,825 15,898 22,000 3,073 24.0 6,102 38.4 Columbia Heights 7,766 8,033 8,300 267 3.4 267 3.3 I Coon Rapids 17,449 22,578 25,000 5,129 29.4 2,422 10.7 Fridley 10,909 11,328 11,600 419 3.8 272 2.4 Hilltop 410 400 400 -10 -2.4 0 0.0 I Spring Lake Park 2,302 2,676 2,750 374 16.2 74 2.8 St.Anthony 3,453 3,697 3,950 244 7.1 253 6.8 Mounds View 4,702 5,018 5,350 316 6.7 332 6.6 New Brighton 8,523 9,013 9,400 490 5.7 387 4.3 Minneapolis(pt.) 14,283 14,168 14,423 -115 -0.8 255 1.8 Market Area Total 82,622 92,809 103,173 10,187 12.3 10,364 11.2 iMetro Area Total 875,504 1,011,050 1,138,120 135,546 15.5 127,070 12.6 Sources: U.S. Census;Metropolitan Council;Maxfield Research Inc. I Employment Trends 1 • The Market Area experienced substantial (20.8%) employment growth during the 1990s. The Market Area is estimated to have added about 18,832 jobs, for a total of about 109,466 L jobs in 2000. Coon Rapids and Blaine led the Market Area by adding about 5,000 jobs each during the decade, followed by Fridley with 2,100 jobs. i • During this decade, Fridley is projected to add the most jobs (4,243 jobs),while Coon Rapids,Blaine, and New Brighton are each projected to add between 2,300 and 2,700 jobs. i • Total Market Area employment is projected to grow by an additional 15,077 jobs (13.8%) between 2000 and 2010. This is a faster rate of growth than that of population and Ihouseholds. While there is no direct correlation between employment trends and demand for senior housing, I it can affect the demand indirectly. A strong and diverse local economy will create demand for seniors' homes from younger households seeking to reside near employment. This depth of demand for seniors' homes will also influence the value of seniors' homes and the amount of I equity they are likely to receive upon sale. Furthermore,when the time comes for seniors to move into retirement housing,many will choose a locale near their adult children(and grand- children). Thus, a strong economic base could assist in attracting seniors to the Market Area. I MAXFIELD RESEARCH INC. 14 IDEMOGRAPHIC ANALYSIS ITABLE 3 EMPLOYMENT TRENDS I FRIDLEY MARKET AREA 1990 to 2010 Employment Change II Census I Met I 1990-2000 I I 2000-2010 I Council I City 1990 2000 •2010 .. .111 , No. Pct. 1•111No. Pct. 1=1111 .1111 MIIII • Blaine 11,401 16,298 18,700 4,897 43.0 2,402 14.7 I Columbia Heights 4,536 6,419 6,600 1,883 41.5 181 2.8 Coon Rapids 16,449 21,462 24,200 5,013 30.5 2,738 12.8 Fridley 23,821 25,957 30,200 2,136 9.0 4,243 16.3 Hilltop 250 254 350 4 1.6 96 37.8 I Spring Lake Park 3,019 4,287 4,600 1,268 42.0 313 7.3 St.Anthony 3,650 3,382 4,350 -268 -7.3 968 28.6 Mounds View 3,142 4,382 5,900 1,240 39.5 1,518 34.6 I New Brighton 9,779 10,542 12,850 763 7.8 2,308 21.9 Minneapolis(pt.) 14,587 16,483 16,793 1,896 13.0 310 1.9 Market Area Total 90,634 109,466 124,543 18,832 20.8 15,077 13.8 It (Metro Area Total 1,273,000 1,527,070 1,709,920 254,070 20.0 182,850 12.0 Sources: Metropolitan Council;Maxfield Research Inc. IOlder Adult (Age 55+) Population and Household Growth Trends I Tables 4 and 5 show the age distribution of persons and households aged 55 and older in the Fridley Market Area in 1990 and 2000 with projections for the year 2010. The 1990 and 2000 figures are from the U.S. Census while the projections are calculated by Maxfield Research Inc. based on forecasts provided by the Metropolitan Council. • In 2000, the Market Area had 44,976 personsage 55 and older, 24,325 persons age 65 and11 older, and 10,730 persons age 75 and older. Between 1990 and 2000, the Market Area's older adult (55+)population grew by 8,342 persons (22.8%), the senior(65+)population in- creased by 5,108 persons (26.6%), and the number of older seniors (75+) grew by 3,130 per- ilsons (41.2%). • Between 2000 and 2010, the Market Area's older adult (55+) population is projected to increase by roughly 16,800 persons (37.3%), to 61,767 persons in 2010. The majority (roughly 53%) of the growth, however, will be among persons age 55 to 64 (an increase of about 8,950 persons), as the leading edge of the baby boom ages into their late 50s and early I 60s. Meanwhile,persons age 65 to 74 will increase by 4,350 persons (32.0%) and older sen- iors (75+)will increase by 3,500 persons (32.6%) over the decade. I MAXFIELD RESEARCH INC. 15 IDEMOGRAPHIC ANALYSIS I • Senior household trends closely parallel the population trends summarized above. Increases among each age cohort that Ioccurred during the 1990s are projected to continue through 2010. Between 2000 and 2010, it is projected that the Market Area will add 5,200 house- holds age 55 to 64, 2,700 households age 65 to 74, and 2,650 households age 75+. I TABLE 4 OLDER ADULT(55+)POPULATION AGE DISTRIBUTION FRIDLEY MARKET AREA I 1990-2010 Chanle Number of Persons - e A e 1990 2000 2010 i 1990-2000 2000-2010 60 to *16 4 7,980 9,012 13,538 1,032 12 9% 4,526 50.2% li 70 to 74 5,018 6,159 7,633 1,141 22.7% 1,474 23.9% 1 ,' 1 4 7' ' . ,_ s s g y °,, 1 , a' 80 to 84 2,220 3,276 4,314 t;',1,1,0!":„4,,,,47,.6% 1,038 31.7% 55+ 36,634 44,976 61,767 8,342 22.8% 16,791 37.3% Percent 16.6% 19.1% 24.4% 75+ e 7,600 10,730 14,225 3,130 41.2% 3,495 32.6% Percent 3.4% 4.6% 5.6% 11 Total Po.. 221,2691 235,0491 252,744 113,780 6.2%I 17,695 7.5% Sources: U.S.Census;Metropolitan Council;Maxfield Research Inc. I TABLE 5 OLDER ADULT(55+)HOUSEHOLD AGE DISTRIBUTION FRIDLEY MARKET AREA I1990-2010 MRNumber of Households Chante 1990 2000 2010 1990 2000 2000-2010 65 to 74 1'1'14:547 8,720 11,437 1,173 15.5% 2,717 31.2% kie 55+ 22,803 1 28,282 II 38,851 5,479 24.0% 10,569 37.4% Percent 27.6% 30.5% 37.7% ,-,..,:,0:,,thrfgetif iatili: 'er441,:.,4tero.:,:..„;, r:-Netr!.:,,,ly -.:‘,.:„.,- 75+ ''',,i,";54 II' 7,285 9,941 2,531 53.2% 2,656 36.5% Percent 5.8% 7.8% 9.6% Total HH. 82,622 1 92,8091 103,173 110,187 12.3%I 10,364 11.2% Sources: U.S.Census;Metropolitan Council;Maxfield Research Inc. I • The Market Area's senior base should continue to see substantial increases over the next two decades as the leading edge of the baby boom begins entering their senior years (65+) shortly Iafter 2010. 16 MAXFIELD RESEARCH INC. • DEMOGRAPHIC ANALYSIS 1 • Typically, seniors age 70 and older have the highest propensity to move into age-restricted II housing. However, we currently see a trend in which active adult projects are attracting per- sons in their late 50s or early 60s, especially in projects with an ownership structure such as townhomes, condominiums and cooperatives. The substantial increases in younger seniors Ihave and will continue to fuel demand for additional senior housing in the Market Area into the foreseeable future. 111 Growth in Target Market Households Fridley Market Area 1 1990-2010 25,000 ■Households 55-64 1 O Households 65+ . 20,000 11,378 4 i 0 15'_ -Foos m S -_— -- 12001 _ . xo 10,000 111 5>000 MI 0 1990 2000 2010 t ISenior Household Incomes An analysis of household incomes among four age groups was also completed and is summa- II rized in Table 6. As seen in this table, incomes among age 55 to 64 households are high with an estimated median income of$61,440 in 2003. This figure is projected to increase to $73,967 in I 2008. Among this age group,nearly 87 percent of households have incomes above $25,000 (12,005 households) and nearly 77 percent have incomes above $35,000 (10,660 households). Each of these groups is projected to increase significantly through 2008 in both number and in relative terms(not adjusted for inflation). In that year, 89 percent of age 55 to 64 households will have incomes above $25,000(14,699 households) and 82 percent will have incomes above $35,000 (13,424 households). I I I MAXFIELD RESEARCH INC. 17 IDEMOGRAPHIC ANALYSIS ITABLE 6 OLDER ADULT INCOME DISTRIBUTION I FRIDLEY MARKET AREA 2003&2008 rEw,, .. ,; Ac.* r,:e 417746)d : if-. 'I''',,._e;i4i,..' . I 55-64 65-74 75+ 65+ No. Pct. No. Pct. No. Pct. No. Pct. 2003 ILess than$15,000 903 6.5 1,379 14.5 2,288 28.3 3,668 20.8 $15,000 to$24,999 928 6.7 1,494 15.7 2,224 27.5 3,718 21.1 $25,000 to$34,999 1,345 9.7 1,668 17.5 1,229 15.2 2,896 16.4 I $35,000 to$49,999 2,144 15.5 1,580 16.6 1,162 14.4 2,742 15.6 $50,000 to$74,999 3,491 25.2 1,999 21.0 621 7.7 2,620 14.9 $75,000 to$99,999 2,691 19.4 691 7.3 273 3.4 965 5.5 I $100,000 or more 2,334 16.9 724 7.6 285 3.5 1,009 5.7 Total 13,836 100.0 9,535 100.0 8,082 100.0 17,617 100.0 I lA'iyy'` QCs 0 �`� �°a.. . %.7,1::(..C, . . r49 4 «..:2°1,20:::-::71,'d£h _ & 5,_fti�� u'3 b k Metro Median $68,888 $42,995 $28,005 $35,187 I 2008 Less than$15,000 857 5.2 1,303 12.0 2,141 22.8 3,444 17.0 $15,000 to$24,999 879 5.4 1,411 13.0 2,081 22.1 3,492 17.2 $25,000 to$34,999 1,275 7.8 1,576 14.5 1,004 10.7 2,580 12.7 $35,000 to$49,999 2,033 12.4 1,493 13.7 2,564 27.2 4,057 20.0 i $50,000 to$74,999 3,310 20.1 3,242 29.8 853 9.1 4,095 20.2 $75,000 to$99,999 1,893 11.5 912 8.4 375 4.0 1,288 6.3 $100,000 or more 6,188 37.7 956 8.8 391 4.2 1,347 6.6 I Total 16,435 100.0 10,894 100.0 9,410 100.0 20,304 100.0 1423:4:$":"4-4 \' 4,6'° '' :,_ 4 ,,, � ;Na • D ,S e i b' a . s" b C ,,.K. i- 6 e ,•...,> .::, >kf :± 4(.,..rs'3' Metro Median $83,358 $52,128 $33,956 $42,661 I Change(2003-2008) Less than$15,000 -47 -1.3 -76 -2.5 -147 -5.6 -223 -3.9 $15,000 to$24,999 -48 -1.4 -82 -2.7 -143 -5.4 -225 -3.9 I $25,000 to$34,999 -70 -2.0 -92 -3.0 -225 -4.5 -317 -3.7 $35,000 to$49,999 -111 -3.1 -87 -2.9 1,402 12.9 1,315 4.4 $50,000 to$74,999 -181 -5.1 1,244 8.8 232 1.4 1,476 5.3 I $75,000 to$99,999 -798 -7.9 221 1.1 102 0.6 323 0.9 $100,000 or more 3,855 20.8 232 1.2 107 0.6 338 0.9 Total2,599 0.0 1,359 0.0 1,328x^ 0.0 2,687 0.0 I $ 1 )1➢T' F. kRn' k:a 6 '+ Y 8. ,,i,i 'q*, 1:, % CS `1 u�of,: A (F n ®: . 4 .91 /lelC' '�', . " a a n g,.. ;''''.'.';,'2,1i:, , -g 1 Sources: U.S.Census;Maxfield Research Inc. IMAXFIELD RESEARCH INC. 18 DEMOGRAPHIC ANALYSIS While still relatively high, incomes among households between the ages of 65 and 74 are signifi- cantly lower than for the 55 to 64 age cohort as most households have reached retirement age. The median income among the 65 to 74 age group in 2003 was estimated at $37,153—a figure that is projected to increase to $46,619 through the year 2008. Just under 70 percent of house- holds in this age group had incomes above $25,000 in 2003 (6,662 households), while 52 percent had incomes above $35,000 (4,994 households). Through 2008,the number of households in this age group with incomes above $25,000 is projected to increase by more than 1,500 (23%) while the number with incomes above $35,000 is projected to increase by nearly 1,609 house- holds (32%). Among age 75+households, the 2003 median income was estimated at $22,879 with nearly 45 percent of households in this age group having incomes over$25,000(3,569 households), and 29 percent of the households having incomes above $35,000 (2,341 households). The median income among this group is projected to increase to $29,808 through the year 2008, with 55 percent of households having incomes above $25,000 and approximately 45 percent having incomes above $35,000. The 2003 median income for all of the Market Area's age cohorts was slightly below the Metro Area's median income. The 55 to 64 age group has a median income of $61,440 compared to the Metro Area's $68,888;the 65 to 74 age group has a median income of $37,153 compared to the Metro Area's $42,995; and, seniors 75+have a median income of $22,879 compared to the Metro Area median income of$28,005. HOUSERHOLD INCOME COMPARISON OLDER ADULTS (Age 55+) 2003 $80,000 0 Metro Area $70,000 ■Market Area $60,000 $50,000 C $40,000 = ... $30,000 $20,000 $10,000 $- 55-64 65-74 75+ Age Cohort I Older Adult (Age 55+) Household Tenure Table 7 shows the number of older adult households that owned and rented their housing in the Market Area in 1990 and 2000, according to the U.S. Census. This information gives an I MAXFIELD RESEARCH INC. 19 DEMOGRAPHIC ANALYSIS indication of the propensity to rent among the older adult household base. The data is also useful in that it lends insight regarding the number of households that may still have homes to sell, and could potentially supplement their incomes from the sale of their homes to support monthly fees for senior housing or to reinvest in a senior condominium. TABLE 7 OLDER ADULT(55+)HOUSEHOLD TENURE FRIDLEY MARKET AREA 1990 and 2000 "tam 5stom ', mw.> )1'"r 41. , 410a' `` Own Rent Own Rent Own Rent No. % No. % No. % No. % No. % No. % = V ;:2000 ,1 ' 1 Market Area 10,684 87.0 1,593 13.0 7,458 85.5 1,262 14.5 5,035 69.1 2,250 30.9 Metro Area 102,583 84.9 18,205 15.1 68,030 82.4 14,491 17.6 53,673 66.3 27,236 33.7 A Market Area 9,216 87.8 1,286 12.2 6,132 81.3 1,415 18.7 2,983 62.7 1,771 37.3 Metro Area 81,834 83.6 16,081 16.4 62,948 78.0 17,753 22.0 38,427 60.2 25,379 39.8 hiI1W490Vf01}Q o' art5 • Market Area 1,468 15.9 307 23.9 1,326 21.6 -153 -10.8 2,052 68.8 479 27.0 Metro Area 20,749 25.4 2,124 13.2 5,082 8.1 -3,262 -18.4 15,246 39.7 1,857 7.3 Source: U.S.Census;Maxfield Research Inc. • In 2000, 87 percent of the Market Area's older adult households (ages 55 to 64) owned their homes. This is a slight decline from 1990 when just under 88 percent owned their housing. • As seniors age, theylonger desire, or be able, to maintain their single-family homes. g � may no g They may prefer to move to housing that offers them greater freedom from maintenance and/or offers them support services. Seniors typically begin to consider moving into rental housing in their early 70s. In 2000, 86 percent of Market Area households age 65 to 74 owned their housing and 69 percent of households age 75 and over owned their housing. • Although homeownership rates decrease as seniors age, there is still a very strong propensity among seniors to remain homeowners. Between 1990 and 2000, the percentage of house- holds age 65 to 74 that owned their housing increased from 81 percent to 86 percent and for households age 75 and older it increased from 63 percent to 69 percent. I Home Values Home values in the Market Area will be important for appropriately pricing and positioning the subject properties. They will dictate the amount of equity a senior will derive upon their sale that can be utilized toward the purchase of a unit (in a cooperative or condominium). Additionally, many residents of senior housing utilize investment proceeds from the equity gains in their homes to supplement their incomes and afford a senior housing environment. Thus, home values will also play a significant role in qualifying potential residents. MAXFIELD RESEARCH INC. 20 IDEMOGRAPHIC ANALYSIS I Table 8 presents home resale data for homes 15 years and older in the Market Area over the last I four and a half years from the local Multiple Listing Service. To better gauge the likely equity that area seniors would be able to command, we have examined sales data only for homes 15 years and older to account for the fact that most seniors' homes will be older and to discount the I large number of new homes that have been built in the Market Area over the last decade and a half, especially in the northern portion of the Market Area. I • As of the first six months of 2003, the average home value in the Fridley Market Area is just over$185,000, while median sale price was $179,000. It is important to note that median I sale prices are generally a more accurate portrayal of the likely home equity since average figures can be skewed by a few very high- or low-priced homes. TABLE 8 III SINGLE-FAMILY HOME RESALES FOR HOMES 15+YEARS OLD FRIDLEY MARKET AREA 1999-2003* I Avg. Market Sale Price Distribution #of Time Median % Average % 111 Year Resales (Days) Sale Price chg. Sale Price chg. 1999 2,311 26 $120,500 --- $123,317 --- 2000 2,122 23 $136,000 13% $140,669 14% i 2001 2,294 26 $154,900 14% $158,934 13% 2002 2,356 31 $169,900 10% $176,216 11% 2003* 994 32 $179,000 5% $185,122 5% I *Through June 2003 Sources: Regional Multiple Listing Service of Minnesota(MLS); IMaxfield Research Inc. • Home values have appreciated significantly in the Market Area over the last four years with 1 the average and median sales price increasing by about 12 percent each year since 1999. • Since 1999, the average length of time a home remained on the market has been relatively I stable averaging about 26 or 27 days. Although sales times over the last year and a half ap- pear to suggest a slight lengthening in market times, this is still a relatively quick turn around time for the sale of single-family homes. An average sales period of just over a month still Iindicates the market remains a sellers market and that seniors would be able to sell their homes in a reasonably short period of time should they decide or need to sell their homes. I • Since a significant majority of senior homeowners will own their homes outright, they will have access to a sizeable financial resource in the form of the equity they can realize from the sale of their homes. For example, a senior who owns their home outright for$170,000 would likely be able to derive approximately$158,000 after factoring in marketing/real estate commissions and moving costs. Should this equity be invested in an interest-bearing account 1 IMAXFIELD RESEARCH INC. 21 DEMOGRAPHIC ANALYSIS with a four percent return, it would produce an income of$6,320 annually(or$527 per month). I I I I I I I I I I I I I I I MAXFIELD RESEARCH INC. 22 1 COMPETITIVE MARKET ANALYSIS Introduction The preceding demographic analysis examined factors relating to the demand for senior housing in the Fridley Market Area. This section provides an overview of independent senior housing alternatives available in the Market Area and then assesses the current supply of independent senior housing in the Fridley Market Area. Finally, this section identifies any planned or pro- posed senior housing developments in the Market Area as well as assesses the impact they may have on short-term demand for the proposed development. The Evolution of Senior Housing Alternatives Development housing specifically ment of s ecifically for the elderly emerged in the 1960s,with large-scale construction of rental housing for low-income seniors occurring in the 1970s. Funded by the Federal Government, these projects offered housing to seniors with low and moderate incomes. Rents were based on the resident's ability to pay through a sliding scale fee (typically 30% of their adjusted gross household income). The housing product was very basic, with modest-sized units, few amenities and offering limited, if any, services. Many of these older,pre-1980 pro- jects are staying full despite their advanced age, lack of amenities and very small units due, in part, to increasing senior populations. Given a choice between a smaller, basic unit in an older building and remaining in their single-family home, however, seniors will often opt to remain in their homes, receiving home health care and other in-home services. Seeing a need for alternative housing for seniors with higher incomes, several health care organi- zations and private developers introduced market rate senior housing options in the early 1980s, both rental and for-sale product, primarily in large metropolitan areas. These projects offered a wide variety of services, although the target market was not necessarily seen as frail seniors. Based on their cost and the level of support services provided (either optional or included in the rent), these developments did, however, attract primarily older, less independent residents. Many non-profit organizations and private developers misread the market, thinking that many seniors in their 60s and early 70s would move to these projects. Initial success of selected projects in the early and mid-1980s spurred additional development, which lead to an oversupply in the late 1980s across the country, especially in large metropolitan areas. Many smaller,rural cities did not experience this market saturation because there was little or no development of market rate senior housing, or there was only one project in the community, which survived by capturing the upper-income, need-driven segment of the senior market. Senior housing development tapered-off significantly in the early 1990s and demand caught up with the supply by mid decade. While the majority of the development in the 1980s consisted of ' congregate housing with limited support services, development during the second half of the 1990s concentrated on opposite ends of the senior housing spectrum with most development geared either to active adults or very frail seniors. Adult and assisted living housing develop- ment has created a wide variety of product that when combined with congregate housing,pro- vides a spectrum of senior options that meet virtually every market niche and has created a new boom in senior housing development over the last several years. MAXFIELD RESEARCH INC. 23 COMPETITIVE MARKET ANALYSIS Types of Senior Housing in Today's Market For analytical proposes, Maxfield Research Inc. classifies market rate senior projects into four categories based on the level and type of services offered: Adult projects are similar to a general occupancy apartment or condominium building, in that they offer virtually no services but have age-restrictions (typically 55 or 62 or older). Organ- ized activities and a transportation program are usually all that are available at these projects. Because of the lack of services, Adult/Few Services projects typically do not command the rent premiums of more service-intensive senior housing. This product has been one of the most popular types of senior housing developed in recent years because it appeals to seniors who do not need services, but desire to downsize their housing and/or rid themselves of home maintenance. Unlike other more service-intensive senior developments which are primarily rental, adult projects come in a variety of forms: single-family homes in an age-restricted subdivision, age-restricted townhome communities, condominiums, cooperatives and apartment buildings. 0 Congregate projects offer support services, such as meals and/or housekeeping. In some buildings, the services are available on an optional basis so those residents who do not need them do not have to pay for them. In others, services are included in the monthly rents. These projects generally have more common areas and usually attract a slightly older, frailer population than"adult"housing. The typical residents are persons in their late 70s or early 80s. They tend to have higher monthly costs (due to the service component) and sometimes require an entry fee. Sponsorship by a religious or health care organization is common. In recent years, some congregate projects have added the availability of personal care services to accommodate an aging resident population. The majority of congregate developments are positioned as rentals since most prospective residents (and their families) do not wish to have the commitment of home ownership. A few condominiums and cooperative developments do offer some limited supportive services,however, typically on an optional basis. These services are usually added as the development's population ages in place. The independent tcomponent of the proposed Village on the Ponds development will include 90 units and will fall into this category. i ► Assisted Living facilities come in a variety of forms,but the target market for most is very frail seniors, generally age 80 or older(but can be much younger, depending on their health situation), who are in need of extensive support services. Absent an assisted living option, these seniors may otherwise need to move to a nursing facility. At a minimum, assisted liv- ing projects include two meals per day and weekly housekeeping in the monthly fee, with the availability of a third meal and personal care (either included in the monthly fee or for an ad- ditional cost). Assisted living facilities also have either staff on duty 24 hours per day or at least 24-hour emergency response. The proposed Village on the Pond development will con- tain 53 units of assisted living. Some assisted living facilities offer self-contained dwelling units similar to a regular senior apartment building with full kitchens and spacious rooms. Projects offering kitchens in the MAXFIELD RESEARCH INC. 24 COMPETITIVE MARKET ANALYSIS units may include only two meals per day while those without kitchens in the units generally provide three meals per day. Other projects do not have kitchens and are merely updated versions of board-and-care facilities with sleeping units and communal living spaces. Monthly fees vary depending on the number and type of services included, and the size of the units, but most facilities have fees starting at roughly$2,000 per month. Virtually all assisted 111 living housing is rental. Memory Care facilities, designed specifically for persons suffering from Alzheimer's Dis- ease or other dementias, are one of the newest trends in senior housing. Most facilities con- sist of suite-style or studio apartment units (although usually with no kitchen facilities), and large communal areas for activities and programming. In addition, staff typically undergoes specialized training in the care of this population. Because of the greater amount of indi- vidualized personal care required by this population, staffing ratios are much higher than tra- ditional assisted living. Thus, the costs of care are also higher. Typical monthly fees for memory care units start at about $3,000 per month. However, unlike conventional assisted living, which deals almost exclusively with widows or widowers, a higher proportion of per- sons afflicted with Alzheimer's disease are in two-person households. That means the deci- sion to move a spouse into a memory care facility involves the caregiver's concern of incur- ring the costs of health care at a special facility while continuing to maintain their home. The proposed Village on the Ponds development includes 18 units of memory care. 111 As Figure 1 shows below, the senior housing products available today,when combined with long-term care facilities, form a full continuum of care, from virtually no services to an intensive service level. Often the services offered at these projects overlap with one another, making these definitions somewhat ambiguous. In general, "Adult"projects tend to attract younger, more active seniors, who merely wish to rid themselves of home maintenance; Congregate projects serve independent seniors that desire basic support services (i.e., meals, housekeeping, transpor- tation, etc.)while Assisted Living projects tend to attract older, frailer seniors who need assis- tance with daily activities,but not the medical care of a Skilled Nursing Facility. FIGURE 1 CONTINUUM OF HOUSING AND SERVICES FOR SENIORS Single-Family Townhome or a' « p � e® _ °dx I 1 t Nursing Facilities Home Apartment Pz y Fully Independent Fully or Highly Lifestyle Dependent on Care Senior Housing Product Type Source:Maxfield Research Inc. I I MAXFIELD RESEARCH INC. 25 111 COMPETITIVE MARKET ANALYSIS Competitive Market Area Independent Senior Projects Maxfield Research identified 18 market rate and affordable independent senior developments in the Market Area that may potentially be competitive with the proposed project. Based on varying levels of service provided and optional amenities and features, we categorize all but three of the projects as Adult/Few-Service. We further broke down the Adult/Few-Service projects as either owner-occupied or rental projects. There were three owner-occupied develop- ments and 12 rental developments surveyed. Site photos of the competitive projects are illus- 111 trated in the Appendix. The projects surveyed range in size from 30 to 150 units, and altogether contain 1,484 units. A survey of these facilities conducted in August 2003 found 30 units vacant, which translates to a vacancy rate of 2.0 percent. Generally, a healthy senior housing market will, typically,have a vacancy rate of around 5.0 percent in order to allow for sufficient consumer choice and unit turnover. Vacancy rates well below 5.0 percent typically indicate pent-up demand. Information regarding age of structure, number of units, vacancies, unit mix and sizes, and monthly rents/fees are displayed in Table 9. A comparison of amenities is presented in Table 10 and a comparison of services is presented in Table 11. Key findings from Tables 9, 10, and 11 are as follows: • All but three of the independent projects in the Market Area are "adult"housing projects—or projects where services are only available to residents through third-party providers. These projects account for 1,229 of the Market Area's 1,484 independent senior units. The pro- posed"adult" project would offer few services and would also be marketed to an active adult community. • Nine of the"adult" rental projects received financing assistance through a government entity and, thus, have all or a portion of their units reserved for low- and moderate-income seniors. Combined, 454 of the Market Area's 1,484 independent senior units have income restric- I tions. Most affordable projects were financed using the Low Income Housing Tax Credit (LIHTC)program and have a maximum income-limit of$32,220 for one-person households and $36,840 for two-person households. While most Market Area seniors would income- qualify for these "affordable" units, the majority of the affordable units are occupied by lower-income seniors who could not afford market rate senior housing. Thus, these afford- able units will not be highly competitive with the proposed project. We project that only about one-quarter of the affordable units in the Market Area are occupied by seniors who are also potential candidates for a market rate project, or 114 units. I I MAXFIELD RESEARCH INC. 26 1 COMPETITIVE MARKET ANALYSIS ITABLE 9 COMPETITIVE INDEPENDENT SENIOR PROJECTS FRIDLEY MARKET AREA I August 2003 Year No.of No. Unit Sizes Monthly Rent Per Project Name Opened Units Vac. Unit Mix (Sq.Ft.) Rents/Fees Square Foot i AiiiiltiOarii4Oec iiikd k' .WOW,,, 'M MM1 14e,,-, 'M , 4;-;.. movooko,. :ewe Amoms, Realife of Coon Rapids' 2002 100 0 6 -IBR 805 -1,091 $575 -$810 $0.74-$0.74 Coon Rapids 52 - IBR/D 965 -1,200 $705 -$935 $0.73 -$0.78 42 -2BR 1,142 -1,512 $845 -$1,100 $0.73 -$0.74 I Realife Coop of Mounds View' 1999 74 0 21 -IBR Mounds View 53 -2BR 792 -827 $604-$631 $0.76-$0.76 984 -1,460 $702-$1,092 $0.68 -$0.77 Kenzington of St.Anthony' 1986 150 2 83 -IBR 728 -937 $180-$300 $0.19 -$0.25 I St.Anthony 35 - IBR/D 938 -994 $265 -$300 $0.28-$0.30 29 -2BR 1,011,4-1,221 $268-$339 $0.28 -$0.27 3 -2BR/D 136 $380 $0.26 I Total Adult/Owner-Occupied Units 324 2 0.6%1 WaultYReutalAt .,i%w`sn WWWWW* �_, W. f _ . tt*" Is*Agt.geteoggatwr,,v`:. fg.. i ...; it Redwood Terrace 2000 54 2 6 -1BR(AFF) 738 -769 $759 $0.99 -$1.03 I Coon Rapids 8 -IBR 738 -769 $839 $1.09 -$1.14 14-2BR(AFF) 915 -980 $819 $0.84-$0.90 26 -2BR 915 -980 $919 $0.94-$1.00 Cloverleaf Courts 2000 102 0 9 -EFF(AFF) 566 -579 $452 $0.78-$0.80 I Blaine 43 -IBR(AFF) 706 -725 $597-$631 $0.85 -$0.87 28 -1BR 725 -830 $764-$821 $0.99-$1.05 22 -2BR 886 -1,030 $962-$1,060 $1.03 -$1.09 Banfill Crossing 2000 110 3 44-IBR(AFF) 697 $729 $1.05 I Fridley 28 -1BR 790 $888 $1.12 38 -2BR 947 -1,205 $989-$1,270 $1.04-$1.05 Loftus Centre 2000/ 30 3 1 -EFF 560 $625 $1.12 Coon Rapids 1987 27- IBR 600 $650 $1.08 I Oak Crest' 2 -2BR 830 -900 $735 -$800 $0.89 -$0.89 1997 111 3 76-1BR 725 -883 $721 -$947 $0.99-$1.07 Spring Lake Park 35 -2BR 1,002 -1,219 $991 -$1,211 $0.99 $1.06 (45 affordable,66 market rate) Cottgages of Coon Creek 1997 47 0 15 -IBR(AFF) 700 $520-$710 $0.74-$1.01 Coon Rapids 32 -2BR(AFF) 882 $758-$865 $0.86-$0.98 Silver Lake Point 1995 83 1 51 -IBR(AFF) 719 -731 $645 $0.88-$0.90 I Mounds View 23 -2BR(AFF) 934 $763 $0.82 9 -2BR 1,119 $939 $0.84 Epiphany Pines 1994 107 2 75 -IBR 604 -897 $697-$950 $1.06-$1.15 I Coon Rapids 32 -2BR 918 -1,105 $973 -$1,103 $0.99-$1.06 Cottages of Spring Lake Park 1993 86 3 30-1BR(AFF) 730 $665 $0.91 Spring Lake Park 56 -2BR(AFF) 950 $765 $0.81 Blaine Court 1991 43 0 32 -IBR(AFF) 696 -835 $511 -$537 $0.64-$0.73 I Blaine Golden Pond° 1989 82 0 1158 ..- -2BRIBR(AFF) 833 -933 $614-$631 $0.68 -$0.74 695 -799 $580-$650 $0.81 -$0.83 New Brighton 24-2BR 1,004 -1,112 $750-$860 $0.75 -$0.77 I (43 affordable,39 market) Autumn Woods 1989 50 0 25 -IBR 842 -932 $935 -$975 $1.05 -$1.11 St.Anthony 25 -2BR 1,034 -1,256 $1,070-$1,150 $0.92-$1.03 ITotal Adult/Rental Units 905 17 1.9% (Continued) I MAXFIELD RESEARCH INC. 27 IIICOMPETITIVE MARKET ANALYSIS ITABLE 9 COMPETITIVE INDEPENDENT SENIOR PROJECTS FRIDLEY MARKET AREA I August 2003 (Continued) Year No.of No. Unit Sizes Monthly Rent Per I Project Name Opened Units Vac. Unit Mix (Sq.Ft.) Rents/Fees Square Foot d iiiit :aMit•, ..`ik biffl.." M N�„ �t,e ;.41- MAINA,,,, ... . `• ;r��," ,,,i....:,.:.Jnr etal5r 'w Meadowood Shores 2000 106 3 55 -IBR 687 -855 $1,012-$1,292 $1.47-$1.51 New Brighton 25 -1BR/D 937 -1,127 $1,280-$1,447 $1.28-$1.37 I 26 -2BR 1,122 -1,184 $1,430-$1,505 $1.27-$1.27 Margaret Place 1987 72 2 48 -IBR 641 -652 $870 $1.33 -$1.36 Coon Rapids 24 -2BR 849 -898 $990-$1,010 $1.12-$1.17 I Boulevard Apartments 1984 77 6 55 -1BR 660 $933 $1.41 Columbia Heights 22 -2BR 850 $1,216 $1.43 ITotal Congregate Units 255 11 4.3% Total Independent Units 1,484 30 2.0% J Note:Adult/Rental projects that have"(AFF)"notated in the unit type indicate that these units are restricted to households below a certain level,often 50% or 60%of the County median. Because rents for these units are typically just below market rate levels,we have included them in our analysis for comparative purposes. In calculating demand,though,only a portion of these units are considered competitive because few target market households would qualify for residency. I (1)Realife Coop of Coon Rapids shares range from$21,000 to$43,000 (2)Realife Coop of Mounds View share fees range from$21,464 to$38,698 (3)Kenzington of St.Anthony condominium prices range from$78,000 for the smallest 1BR unit to$150,000 for the largest 2BR/D unit. (4)Affordable units can be located anywhere in the building and are not differentiated by rent. ISource: Maxfield Research Inc. • Table 9 also includes three owner-occupied developments, including two senior cooperatives, I Realife Cooperative of Mounds View and Realife Cooperative of Coon Rapids, and one senior con- dominium,Kenzington of St. Anthony. All three projects are considered market rate adult/few- Iservices facilities. The unit mix, unit sizes,pricing, and monthly fees are shown below. Realife Cooperative of Coon Rapids Year Units Unit Mix Size Share Cost Monthly Fee I 2002 100 6 - 1BR 805 - 1,091 $21,000 - $33,000 $575 - $810 52 - 1BR/D 965 - 1,200 $29,000 - $37,000 $705 - $935 42 -2BR 1,142 - 1,512 $34,500 - $43,000 $845 - $1,100 IRealife Cooperative of Mounds View Year Units Unit Mix Size Share Cost Monthly Fee I 1999 77 21 - 1BR 792 - 827 $21,464 - $22,528 $578 - $604 53 -2BR 984 - 1,460 $26,818 - $38,698 $672 - $1,045 I Kenzington of St.Anthony Year Units Unit Mix Size Unit Price Assoc.Fee 1986 150 83 - 1BR 728 -937 $78,000 - $105,000 $180 - $300 1 35 - 1BR/D 938 -994 $100,000 - $118,000 $265 - $300 29 -2BR 1,011 - 1,221 $106,900 - $136,200 $268 - $339 3 -3BR 1,436 $150,000 $380 I 1 MAXFIELD RESEARCH INC. 28 III COMPETITIVE MARKET ANALYSIS I • Illustrated below are the number of affordable units and market rate units for each independent project in the Market Area. Affordable units have maximum income limits that restrict residency Ito low- and moderate-income seniors while market rate units do not have any maximum income limits. Overall, 454 of the Market Area's independent units are affordable and 1,030 are market rate. I Income-Restricted Market Rate "Affordable"Units Units Total Units Realife of Coon Rapids 0 100 100 I Realife Coop.of Mounds View 0 74 74 Kenzington Of St.Anthony 0 150 150 Total Adult/Owner-Occupied 0 324 324 IRedwood Terrace 20 34 54 Cloverleaf Courts 52 50 102 I Banfill Crossing 44 66 110 Loftus Centre 0 30 30 Oak Crest 45 66 111 1111 Cottages of Coon Creek 47 0 47 Silver Lake Point 74 9 83 Epiphany Pines 0 107 107 I Cottages of Spring Lake Park 86 0 86 Blaine Court 43 0 43 Golden Pond 43 39 82 Autumn Woods 0 50 50 I Total Adult/Rental 454 451 905 Meadowood Shores 0 106 106 I Margaret Place 0 72 72 Boulevard Apartments 0 77 77 Total Congregate 0 255 255 iTotal Independent 454 1,030 1,484 I • The proposed project would compete most directly with the market rate projects. Although many seniors who are a potential market for the proposed market rate project would also in- come-qualify for residency in affordable units, a large portion of the affordable units are oc- icupied by lower- and moderate-income seniors who could not afford market rate units. • Banfill Crossing is the Market Area's only independent senior project located in Fridley. It consists of 66 market rate units and 44 "affordable" units. The closest project to the subject Site is Meadowood Shores, which is located about 11/2 miles east of the Site in New Brighton. Although it is a large project with over 100 units, only three units are currently vacant and Ithe project offers various support services such as meals and housekeeping. Therefore, it at- tracts an older and frailer population, which is normally not the target market for owner- Ioccupied housing or rental housing with few services. • The closest owner-occupied development is the Real Life Cooperative of Mounds View, which is located about 21/2 miles northeast of the subject property. It consists of 74 units and MAXFIELD RESEARCH INC. 29 COMPETITIVE MARKET ANALYSIS has been fully occupied since it opened in 1999. The other two owner-occupied develop- ments in the Market Area are located either 10 miles to the north in Coon Rapids or five miles to the south in St. Anthony. • Combined, the unit-mix at the independent developments is one percent efficiency, 55 percent one-bedroom, eight percent one-bedroom plus den, and 37 percent two-bedroom units. One-bedroom unit sizes average 751 square feet, and two-bedroom unit sizes average 1,050 square feet. • For owner-occupied projects, unit sizes are much larger than rental units. The average unit size for a one-bedroom unit is 844 square feet and for a two-bedroom unit it is 1,233 square 1 feet. Moreover, owner-occupied developments also feature a significant number of one- bedroom plus den units, whereas this unit type is almost non-existent at Market Area rental projects. 111 • Basic monthly fees for market rate rental units average $802 for one-bedroom units and $1,035 for two-bedroom units. Pricingin senior housingis driven primarilyby the inclusion of services, however, unit features and building amenities also play a key role in a project's market positioning. Table 10 presents a breakdown of the Market Area projects' features and amenities. Key points from the table are: • The owner-occupied projects tend to have more unit features than the rental projects. All three owner-occupied developments include an emergency call system, central air condition- ing, dishwasher, garbage disposal, and balcony in each unit. In the rental projects, the most common unit feature was a garbage disposal, which was found at 10 of the 15 projects. • As the name implies, adult/few-service developments usually offer limited, if any, services and amenities to residents. Among the 15 adult projects surveyed, the most common build- ing amenity is a community room, which was found at 14 projects. Other building amenities found at most projects include a library and storage space. At some of the larger projects, separate activity rooms, beauty salon/barber shop, terrace, and even a game room can be found. • Garage parking (either underground, attached or detached) is available at all of the projects. In most cases, the garages are available to residents for$35 to $50 per month. • Table 11 presents services available to residents at the independent projects in the Market Area. 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C) cDia: cal li-3 a .. ,::, P. 49. > (NI t 0 a. ,... 2 0 E 4° , 4 `I 4 7 16 bo -0 Ea.) . , .0 I w a., 0 ,' °a) ,, r„ = .3.) 0...o .o o. ,- . o ., 0 cl. u D. 0 .,5, g - ..= 3 g ,., ..0 ,0 .0 0 0.. u 0 ' '' u Z Et. o cnA -o .S „. r ,.. A. , 1.) I ci) ik. a. . .. '1. c'-. . , ) 7, 7n. 0,7, tr, al ;'.3 8 `,,-; 8 r, 8 .._,;) iii .._ 0 t t - 4 t I .1 ,VI;':::, p.4 1. E1 kt + t Ca3 1E. 7 1 I. ro 0 C) ,.. co >, V) 71 7 CU i... IA kr, 7 6 1 1. 7 C) r,l'''4 11''''' e›,&' ,-I ...r. , , tee In in in in •,* : , 0 .4, .0I V , • .w ..v, ,,..„ , 'a . a. co 0 oc t:: W ;$, oh t t , C) ,..° YI T. 10 a) 7 "t v al E* CV 0.. 0 At 0 = g .... F.)- * , ., -0 0 -4-., 4,, = 2 ›. 2 W )-I ra. 17: 5 8 a.) 0 8 E 7i E 0 S II ' 4-• I COMPETITIVE MARKET ANALYSIS • The average age of residents ranged from age 68 at Realife of Coon Rapids and Redwood Terrace to age 85 at Boulevard Apartments. The lack of services at a project combined with an owner-occupied structure clearly attracts younger seniors. The average age at the owner- occupied projects is 72, which is slightly younger than average age at the adult/rental projects (age 75) and significantly younger than the congregate projects (age 80). • None of the Market Area's independent projects offer health and personal care services other than an occasional blood pressure check. Similar to general occupancy apartments, residents ' can purchase these services through home health care agencies. Our interviews with property managers revealed that very few residents actually receive home health care at any given time. In most cases, those that do receive home health care usually do so because they re- 1 turned home from a hospital stay and it is usually only for a short time. • Slightly over half of the projects have in-house scheduled transportation services to shopping ' and other activities. • Surprisingly, half of the projects have activities that are planned by management,but only ' three of these facilities have a part- or full-time director. A third of the projects coordinate their activities through a resident council or committee. Two projects, however, do not fea- ture any kind of activities program. Recent Senior Condominium Developments Maxfield Research identified seven recently completed or actively marketing senior condomini- urns outside of the Market Area for comparison purposes with the proposed project. The projects surveyed range in size from 28 to 80 units, include 402 for-sale units, and were available for occupancy no sooner August 2000. Unit sizes range from 800 square feet to 1,095 square feet 1 for a one-bedroom, and from 980 square feet to 1,570 square feet for a two-bedroom unit. Base prices for a one-bedroom started at $86,500 at Cameron Woods in Farmington, which is ' over three years old, and range to $142,900 at Lakefront Plaza in Prior Lake. On a per square foot basis, prices for a one-bedroom unit range from $108 at Cameron Woods in Farmington, a project over three years old located in the developing fringe, to $175 at Lakefront Plaza in Prior Lake. Two-bedroom units start at$107,900 at Cameron Woods and range to $253,900 at Bard's ' Crossing in Rosemount. On a per square foot basis, units range from $104 to $175. Association fees range from $150 at Roseville Commons and Oak Hill to $250 at Lakefront Plaza and Wachter Lake. Association fees for most of the projects include water, gas, garbage, outside ' maintenance, and building insurance and reserves. ' Information regarding age of structure, number of units, purchase price, unit mix and sizes, and monthly association fees are displayed in Table 12. 1 MAXFIELD RESEARCH INC. 35 I i - - en N N N N 0 NN N N - kel VO — w o 0 0 0 0 0 0 0 0 0 0 0 o" d d d °\ v; �' 69 69 M 69 69 �-, 69 N 69 69 69 69 69 1 z z z o r, o o o d 69 O •-• O\ 69 d' .N. 69 00 69 01 O O\ 00 a~i N N O N a+ O O O O O O O O O O O O 69 69 64 69 69 69 69 69 69 fA 69 69 O O co O O ' co 0 0 7+ N N N N N — N N N .-. .�. w 000 69 64 0 69 69 0 69 069 69 69 69 69 G g 0a as 0a � � -. , , N - , N , , , , , 111 o o E-• F E4 69 69 69 v, Vl 69 0 0 69 0 69 o O O o 0 w oo N v1 u> V O N O .�. d N N N N N 69 6R 6R 69 69 6R 69 69 69 69 IVI V1 V) ON d' N O 00 Vl O o in O\ O '1' O wen r- o\ \O M_ V1 M V' r-- in �_ M O •-+ M M a) 69 64 69 64 69 69 64 69 69 69 69 00 64 N 69 69 69 69 69 O CO N ' O 01 00 r 9-. 0, 00 01 6 .-. 69 .-. 'Cl V 00 ) o I Q. y CO in oo "t N M N M CO M M Ln N O O N N 69 69 69 69 69 69 69 69 69 69 69 69 69 6R 69 69 69 F4 U �-, 000 000 00 000 co 0 o0 00 C co o co co o co co co 0 0 0 0 0 0 0 co co awrna, o\ ONON 0101 C11 GIN Cs, C C:71 ON C71 gU M M N CO \ C, Q\ N O D; oo Q\ Q\ Q\ Pi ' _M In M_ O O M d' v") C) p 00 p --' M_ O M 73 Q. N N N N �•-� �-+ N p N p ."' r. — .-. 69 69 69 69 69 69 69 69 69 69 69 Q1 69 V7 69 69 69 69 69 m III III II $ I I Q\ I M a II II ~ O co O O co co co O O O O O M O O O O O 4 Q p 0 oo 0 0 0 0 0 0 0 0 0 0 0 C 0 0 0, 0, 01 CIONO 0101 O\ O\ C a^ � rn o, o� O a o; o VI �o a; a v �o a\ oo ,o O; O\ Q M N — N - N - 01- en ,--400 N N 00 0 09 N Nr. N ,-. .--t N ,-. WZ W N 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 I ~ y 00 U H O co O O o in r. 00 r- './- O M In M O y in V7 [� a1 O 'Ch N M M O 00 F g4 U O a) ^ 7 M V? r'1, O M O a1 N O N O Y C 4 Q w N .-. r. O .-. —, —, CO .. .. ON .. ,- 00 ,-. 6' 1 i 1 . 1 i 1 1 M 1 0 1 i i i ON I W , ❑ oo n oo o o °° o 0 0 . o v o o u co O\ 00 O\ O 00 V1 N 00 00 co 00 O M r� O N O N 00 O\ 00 ca,, 01 00 0 00 co.., W r. r. 00I Po aa � 0a a = �a = Z) a� aa � = ata aa � oaf aa � l ' •Kr co N r 1- O 00 .1-.1- d' N O M M M N CA CA 0 I <.• 4 z In N oo 000 N N OM rqo I 5F „u', .,.0.Vt..), 0 0 0 0 0 0 0 0 Z � ¢. N o 0 0 0 0 0 0 x Vim/ 0 h+y COI 0 Q' W . w C C P4. 0 y , O b CID ISI bD N E 't7 b E y y N a, E 3 N 3 O y A I0. V b x s ,, ca a.) .n ',.. a) .cz •••^ y 'ti a>i c1 w Q • •o 41 o c O e� o cue •'C CO • CO•2.4 0 5 o '5 0 0 0 0 O o U a" 0204 Oz 304 aa, ave UO2w UO2w 0“..) 04 F c, I COMPETITIVE MARKET ANALYSIS Pending Senior Housing Development in the Market Area ' Our interviews with representatives of the Market Area communities revealed the following pending senior rental housing developments in the Market Area that are scheduled to come on- line in the near or distant future. ' There are currently several projects planned,pending or under construction in the Market Area. The following are description of these projects. Fridley ' • Town Center Development of Maple Grove has been the most recent party to approach the City of Fridley regarding the possibility of developing senior housing on the south- west corner of the intersection of Central Avenue and Mississippi Street. This site is di- rectly across Central Avenue from the subject property. No formal plans for review have been submitted to the City by Town Center Development. Although the developer did not return Maxfield Research's calls, we learned from a representative of the City that ' this particular site has been discussed by no fewer than six parties over the last two years and no definite plan has yet to come to fruition. The City official also indicated that the zoning regulations governing the site require that some commercial component,prefera- bly retail, be incorporated into the plans that directly benefits seniors residing in the hous- ing component. Due to the very tentative nature of proposals brought forth to the City regarding this site, we do not account for them in our demand calculations. It should be noted, though, that if plans for senior housing were to move forward at this site, it would impact the subject project only if it were a similar concept and were to undergo market- ing efforts at the same time. Blaine • Randy Noecker has plans to develop a 60-unit senior condominium and a 92-unit inde- pendent rental building near the intersection of Highway 65 and County Road 242. Both projects will be located on the same site, but will consist of two separate buildings. The condominium will have units that range in price from roughly$130,000 for an 850 square foot one-bedroom unit to $190,000 for a 1,300 square foot two-bedroom unit. The inde- pendent rental building will have monthly rents that range from $855 for a 700 square foot one-bedroom unit to $1,325 for a 1,130 square foot two-bedroom unit. The devel- oper will likely proceed with the condominium building first. Financing for both projects ' is still being secured, therefore, the earliest either project would begin construction would be Fall 2003. • Sherman and Associates is planning a mixed-income senior development at the site of the new Blaine Town Center, at the intersection of Radisson Road and 109th Avenue NE. The proposed project will include 83 market rate units and four affordable units. The ' preliminary unit mix calls for 15 one-bedroom units, 12 one-bedroom/den units, 42 two- bedroom units, and 18 two-bedroom/den units. Market rate monthly rates are proposed to range from $800 to $910 for a one-bedroom unit, $820 to $850 per month for a one- MAXFIELD RESEARCH INC. 37 1 COMPETITIVE MARKET ANALYSIS Ibedroom/den unit, $1,010 to $1,220 for a two-bedroom unit, and from $1,260 to $1,275 for a two-bedroom/den unit. It is anticipated the project will break ground in 2003. I • Crestview Corporation is planning a mixed senior development with independent con- gregate units, assisted living units, and a memory care component. The development, as I proposed, would be 140 total units with 80 units allocated to congregate, 42 units of as- sisted living, and 18 memory care units. Independent with services units will range from 720 square feet to 1,350 square feet and rent from $840 to $1,690. Assisted living units I range from 500 to 1,050 square feet with rents from $2,275 to $3,200 and memory care units will range from 500 to 900 square feet with monthly rents from$3,200 to $4,400. A site has not yet been selected and no plans have been submitted to the City of Blaine. I This project is considered tentative and, therefore, its units are included in our demand calculation. In addition, the high level of service proposed for this project further pre- cludes the development from being considered as competitive with the subject project. I • Way of the Cross Church has proposed the development of independent senior housing and between 20 and 30 for-sale townhomes in Blaine, which may or may not be' age- restricted. The project is still in the early planning stages and is tentative at this time. Therefore, it is not included as a pending project in demand calculations. Also, discus- I sions with the City have indicated that rezoning of the site for higher residential densities would be a challenge. • Augustana Homes and Peace Lutheran Church are in a preliminary discussion about a 45-unit senior cooperative development in Blaine, located at North Town Drive and Uni- versity Avenue along the Coon Rapids/Blaine Border. This project would not come Ionline until late 2004 or early 2005 and is still very tentative. • Rottlund Homes and Tradition Development have been discussing age-restricted condo- I miniums on a site adjacent to the Club West development in Blaine. According to the City of Blaine,however, Rottlund Homes now plans to subdivide the property and con- struct for-sale general occupancy townhomes on the site. 1 Coon Rapids I • Anoka County and the City of Coon Rapids are exploring the possibility of developing senior housing as a component of a larger multifamily development near the future Northstar Commuter Rail stop at Riverdale Commons (located just south of Highway 10, I near Round Lake Boulevard). Initial proposals are for a first phase of 80 independent market rate senior rental units, approximately 50 for-sale general-occupancy townhomes, and 107 general-occupancy rental apartments (affordable and market rate). This project I is very preliminary, and the exact number of units is still undetermined. No developer has been selected and the timing and likelihood of the project is uncertain. I I MAXFIELD RESEARCH INC. 38 COMPETITIVE MARKET ANALYSIS ISpring Lake Park • Spring Lake Commons LLC. is planning to build an age-restricted independent living apartment building. It will consist of 90 market rate units and be located at the intersec- tion of Osborne Road and Madison Street in Spring Lake Park on the border of Fridley. ' Construction was tentatively scheduled to begin in the spring of 2003. At this time, how- ever, it is unclear whether the development will proceed. Several attempts to contact the developer were unsuccessful. According to the City of Spring Lake Park, the developer is waiting on financing and estimates building permits will be applied for late this sum- mer. Minneapolis • Volunteers of America is about to break ground on a 51-unit independent senior project at ' the intersection of 19th Avenue NE and Central Avenue. The building will include 40 market rate and 11 affordable units. The market rate rents will range from$820 to $980 per month, and the affordable rents will range from $685 to $797 per month and be re- stricted to households with incomes at or below 50 percent of the Metro Area median in- come. This building will not include any services. • Catholic Eldercare has two pending projects located in Northeast Minneapolis that may potentially compete with the subject development. The first project is located next to St. Hedwig's Catholic Church on 29th Avenue NE. The project is under construction and will be called River Village. It will consist of a total of 107 units that will include 35 subsidized independent units and 72 assisted living units. The independent units are slated to open early 2004. Because the independent units will be subsidized, this project is not considered competitive. The other pending project,which is located just outside the Market Area, is near Catholic Eldercare's existing Main Street Lodge assisted living facility near Broadway and Main Street. Plans are preliminary but call for up to 70 units of congregate housing that would include optional services. Due to the level of service proposed for this project and its location, it is not considered competitive with the pro- posed project. Although there is a significant amount of senior housing proposed for sites within or near the I Market Area, a number of these developments' units are not factored into our demand analysis because they are still too tentative or are not directly comparable with the subject project because they include a higher degree of support services. The chart on the following page depicts which of the above pending projects and how many of their units have been included in our demand analysis. i I I MAXFIELD RESEARCH INC. 39 ICOMPETITIVE MARKET ANALYSIS 1 #of Competitive #of Competitive Planned Income-Restricted Market-Rate Occupancy I "Affordable"Units Units Date Volunteers of America 3 40 2004 Spring Lake Commons 0 90 2004 ' Sherman&Associates 1 83 2004 Granite Crossings* 0 69 2005 Granite Gardens* 0 45 2005 I Way of the Cross 0 60 2005 Augustana Homes 0 45 2005 Total Pending 4 432 I * Because project is located near periphery of Market Area,only 75%of units are considered competitive. I I I I I I I I I I I I MAXFIELD RESEARCH INC. 40 CONCLUSIONS & RECOMMENDATIONS ' Introduction ' The impetus for this study was to assess the market potential for senior housing, including "adult"rental and for-sale senior housing in Fridley, Minnesota. Earlier sections of this report examined the Site of the development, growth trends and demographic characteristics of Market Area seniors, current senior housing market conditions as well as an inventory of pending senior projects. This section of the report forecasts demand for both independent senior housing and for-sale ownership senior housing, and, based on that demand, draws conclusions and offers 1 recommendations regarding the most appropriate project concept, including number of units, pricing, unit mix as well as features and amenities. Independent SeoHousing Senior Demand Estimates ' Table 13 on the following page presents demand estimates for independent senior housing in the Fridley Market Area for 2003 and 2008. The table calculates demand based on senior house- holds with incomes above $25,000, including those households whose incomes would rise to this level based on proceeds gained from the sale of their single-family homes. We have estimated this proportion based on the homeownership rates for each age cohort. • In order to arrive at the potential age-income qualified base for market rate independent housing, we have included all senior households with incomes of$25,000 or more plus households with incomes of between$20,000 and $25,000 who would qualify with the pro- ceeds from a home sale. We estimate the number of age/income-qualified senior households in the Market Area in 2003 to total 24,049. • Adjusting to include appropriate short-term capture rates for each age cohort (1.5%of age 55 to 64 households, 6.0% of 65 to 74 households, and 16.0% of 75 and over households)results in a local short-term demand potential for approximately 1,318 market rate independent units. • Additional demand will come from outside the Market Area. This demand will consist primarily of seniors living just outside of the Market Area, seniors who previously lived in the Market Area and would move back, and parents who would move to be near their adult children living in the Market Area. We estimate that 20 percent of the demand will be gener- ated by seniors currently residing outside the Market Area. Together, the demand from Mar- ket Area seniors and demand from seniors who would relocate to the Market Area results in a total unmet demand for 1,648 independent senior units as of 2003. • A portion of the overall independent senior demand would likely only be satisfied by housing with limited or no services and would appeal to younger, more active seniors who are primarily looking to rid themselves of homeownership responsibilities. We have estimated that this group would account for the remaining 75 percent of the Market Area's overall local independent senior housing demand, or 1,236 "adult" units in 2003. I MAXFIELD RESEARCH INC. 41 ' CONCLUSIONS & RECOMMENDATIONS ITABLE 13 INDEPENDENT SENIOR HOUSING DEMAND FRIDLEY MARKET AREA 1 2003&2008 2003 2008 Age of Householder Age of Householder -74 75+ 55-64 65-74 75+ I 55-64 65 #of Households w/Incomes of>$25,000/$30,000 12,005 6,662 3,569 14,062 7,392 4,686 I (plus) + + #of Households w/Incomes of$20-$25K1$25-30K 464 747 1,112 637 789 502 (times)Homeownership Rate x 87% 86% 69% x 87% 86% 69% (equals)Potential Market = 404 642 767 = 554 679 346 I (equals)Total Potential Market Base = 12,409 7,304 4,336 = 14,616 8,071 5,032 (times)Potential Short-Term Capture Rate x 1.5% 6.0% 16.0% x 2.0% 7.0% 18.0% (equals)Potential Demand = 186 + 438 + 694 = 292 + 565 + 694 Total Local Short-Term Demand Potential = 1,318 = 1,551 (plus)Demand from Outside Market Area(20%) + 330 + 388 I (equals)Total Demand Potential = 1,648 = 1,939 (times)Adult Share of Net Demand x 75% x 75% ('equals)-Total Adult Demand ?oteziilal ,;%, . 4,h` 1 :.. . 1236 ..`a;;.. 41 ;.''A'AVx•._.1;,454'.VVAIVI, l (times)Share of Demand f/Rental x 60% x 60% (equals)Total Local Rental Demand = 741 = 872 (minus)Existing Competitive Units* 537 - 865 I (equalx)YAdultsRetital Demands ,;*:L , uZt,: , •„ (times)Share of Demand f/Ownership x 40% x 40% I (equals)Total Local Ownership Demand = 494 = 582 (minus)Existing Competitive Units* 308 393 ecgualWA.duit:Osvnershiji)Demand_ W 14-,A..: .I ., A.86' r4,01_ : 4 .. ,. .. :,.y 185 a.. --,-,4,A I *Existing Competitive unit counts reflect the estimated number of units that will be competitive based on position in the Market Area,less a 5%vacancy rate. 25%of affordable units have been included in the total competitive market. Source: Maxfield Research Inc. I • We have estimated that 60 percent of this demand would be for rental housing, resulting in total local demand for 741 units of rental housing. Next, existing competitive rental units I serving the Market Area are subtracted (minus a vacancy factor of 5% to allow for sufficient consumer choice and turnover),resulting in net demand for 204 rental units. We have estimated that 40 percent of the total adult demand potential would be for senior ownership I units, resulting in total demand for 494 units of ownership housing. Subtracting out existing competitive senior for-sale ownership projects, results in a net demand for 186 ownership units in 2003. 1 • The net demand for rental units in the Market Area is projected to decrease to 7 units to 2008, assuming that the large number of pending projects are built as planned. Applying the I same methodology for 2008, the demand for homeownership units will increase to 189 units. Again, these demand estimates assume all pending projects will proceed with development. It is likely, however, that not all the projects will proceed. The following charts illustrate I MAXFIELD RESEARCH INC. 42 CONCLUSIONS & RECOMMENDATIONS Iexisting units,planned product, and excess demand in the Fridley Market Area. Should planned projects fail to be developed, the excess demand would increase significantly in the IFridley Market Area. Market Rate Adult Rental Demand IFridley Market Area,2003-2008 1 1,000 -- .._ 800 .-7 II u 111 600 II ■ 111 I a 400 ® - '® ® 739 865 200 .537 ; I -200 = _ _ 2003 2004 2005 2006 2007 2008 I0 Existing Units 0 Pending Units •Excess Rental Demand I Adult Ownership Demand dley Market Area,2003-2008 U 600 5(X) 400I ill MIII ■ III 300 1 ® ■ ■ ■ ■ I 200 1 308 100 0 2003 2004 2005 2006 2007 2008 17 Existing Units 0 Pending Units ■Excess Ownership Demand 1 It is important to note that the above referenced demand figures assume all identified pending projects are built as planned and represent a`worse-case" scenario. It is quite possible that not Iall of these projects will be built or they may be delayed. 1 Recommended Development Concept I Based on our research and the quality of the proposed Site, we believe that the subject Site could best support an age-restricted owner-occupied development such as a condominium or coopera- tive up to 70 units in size. Although we measured demand for approximately 185 units of for- sale housing, we would not recommend building much beyond 40 percent of the calculated MAXFIELD RESEARCH INC. 43 1 1 CONCLUSIONS & RECOMMENDATIONS Idemand because no single site can absorb all the pent-up demand in a Market Area. We also recommend developing a condominium as opposed to a cooperative. Although senior coopera- I tives have established themselves throughout the Twin Cities Metro Area, they are a concept that requires significant marketing expertise and prospect education and are best left to developers who have experience in creating the management structures necessary for such ventures. IGiven the amount of calculated demand for adult rental product in the Market Area, considera- tion was given to the proposed Site being developed as an adult rental project with few services. ' Based on the number of pending adult rental projects, we believe the market will become much more competitive for this product type in the next two to three years. Furthermore, the overall lack of owner-occupied product in the Market Area, especially within three miles of the Site, Isuggests that an ownership project will be well received. Our recommended purchase prices are presented in Table 14, which is based on a development I concept we believe would be the most marketable at this Site. The recommended fees are quoted in 2003 dollars and can be trended upwards by three percent annually until opening. All recom- mended prices are averages and individual units should be adjusted for premium views, or I discounted for lack of views. TABLE 14 I RECOMMENDED PRICING PROPOSED SENIOR CONDOMINIUM PROJECT FRIDLEY,MINNESOTA I August 2003 Unit Mix Unit Size Recommended Price per I Unit Type #of Units %of Units (Sq.Ft.) Purchase Price Square Foot 1BR/ IBA 6 9% 825 -850 $140,000 - $145,000 $170 1BR+D/ 1.5BA 12 17% 950 -975 $157,000 - $161,000 $165 2BR/ 1.75BA 44 63% 1,025 1,075 $169,000 - $177,000 $165 2 BR+D/ 1.75BA 8 11% 1,275 1,325 $204,000 - $212,000 $160 70 100% I Recommended sale prices are quoted in 2003 dollars and include one underground parking stall.Residents would be resposible for their electricity/heat,homeowner insurance,telephone,and cable. IA building association fee of$200 per month should also be insituted to cover reserves,building insurance,management,building common area and grounds maintainence. I Source: Maxfield Research Inc. Unit Mix, Sizes, and Pricing I We recommend that the unit mix contain six one-bedroom units, 12 one-bedroom plus den units, ' 44 two-bedroom units, and eight two-bedroom plus den or three-bedroom units. Most condo- minium buildings have larger units then their rental counterparts. Market trends indicate units should range in size from 825 to 850 square feet for one-bedroom units, 950 to 975 square feet I 1 MAXFIELD RESEARCH INC. 44 CONCLUSIONS & RECOMMENDATIONS ' for one-bedroom plus den units, 1,025 to 1,075 square feet for two-bedroom units, and 1,275 to 1,375 for two-bedroom plus den units. The recommended pricing structure reflects base prices without upgrades to the units. Keep in mind, though, that some units may command premium purchase prices given preferred locations ' within the project (e.g., top floor with view, view of wooded area adjacent to the Site). Recom- mended sale prices are quoted in 2003 dollars and include one underground parking stall. The proposed unit prices are calculated based on a median price per square foot. At a median per ' square foot price of$160 to $170, unit prices would begin at $140,000 for a one-bedroom unit and range to $212,000 for a two-bedroom plus den unit. ' Residents would be responsible for their electricity/heat, homeowner insurance, telephone, and cable. A building association fee of$200 per month should also be instituted to cover reserves, building insurance, management, building common area and grounds maintenance. ' Unit Features All of the units in the condominium component should include: • Individually controlled heating and air conditioning(such as Magic Pak); • Full kitchens incorporating a double sink, refrigerator, electric range, garbage disposal and dishwasher; ' • Walk-in closets; • 1.5 baths in one-bedroom plus den units and 1.75 baths in two-bedroom units; • Lever door handles, neutral decor, raised electrical outlets; • Ample cabinetry(consider a pantry cabinet); • Bay windows or balconies; • Open floor plans; • In-unit washer and dryer; • Minimum of one underground, heated parking space per unit, with the option to pur- chase an additional space (the underground garage should include roughly 1.5 stalls 111 per unit); and • Extra storage space for seasonal items outside of unit, preferably in the garage area. Building Features &Amenities The building should be designed with a residential appearance and include a wide variety of common areas to encourage socialization and to allow for delivery of services. We recommend that the following common areas be incorporated into the project: f • Centrally-located elevator; • Party/community room with serving kitchen (consider a fireplace); ' • Dining room; • Multiple community/activity rooms (i.e., card room, library, TV lounge, creative arts, etc.) to encourage socialization; MAXFIELD RESEARCH INC. 45 CONCLUSIONS & RECOMMENDATIONS ' • Barber/beauty shop; • Wellness/fitness center; ' • Landscaped outdoor terrace and raised garden plots for resident use; • Separate entrance with lobby/waiting area and administrative offices and portico; • Underground heated garage with car wash area, storage lockers, and workshop; • Walking paths; and • Community restrooms near community area for resident and guest use. In addition, upgrading cabinetry, flooring and fixtures and appliance packages should be made available as well as optional features such as electric fireplaces, soaking tubs, laundry tubs, built- in shelving, screened porches, etc. Other Considerations ' It is our understanding that the proposed development may include a ground floor retail compo- nent. Although this study does not address the feasibility of retail at the subject property, there are some important considerations we believe should be noted. Based on the most recent traffic ' counts from the Central Avenue and Mississippi Street intersection and a review of surrounding and nearby land uses, it appears that the opportunity for retail at the Site would be limited to ' neighborhood retail, such as a small deli, beauty salon, or coffee shop. In regards to how a retail component may impact senior housing on the Site, it depends largely ' on the type of retail and how it is incorporated into the project. If done appropriately, a retail component may enhance the marketability of the housing component. For example, retail uses that older adults would perceive as using, such as a coffee shop, a small restaurant, or a dry- cleaner would enhance the desirability of the location. ' Projected Absorption and Marketing Considerations Based on our review of the current and projected housing needs of senior households in the ' Fridley Market Area and our assessment of the existing competitive market, we believe that the proposed project may experience rapid absorption of units if the project is able to break ground prior to any of the planned for-sale projects in the Market Area. It is important to note, though, ' that if the site on the west side of Central Avenue is developed as senior housing before the proposed project is fully absorbed, it may lengthen the absorption period of the subject project. ' Based on the findings and conclusions of this report,we estimate that approximately 40 percent (28) of the units would be required to be pre-sold before construction begins. During this pre- sale period, we anticipate that units would be sold at a net rate of three to four per month, which ' translates to eight to ten months. Once construction begins, we would anticipate that the sales rate would drop slightly to two net units per month. Therefore, by the time the first units are ' available for occupancy, we would expect that 52 units (roughly 75%) will have been sold. Once the building is available for occupancy, the remaining 18 units should sell at a net rate of about four units per month, which translates to an additional 4%2 months before the building is corn- ' pletely sold-out. MAXFIELD RESEARCH INC. 46 CONCLUSIONS & RECOMMENDATIONS ' four units per month, which translates to an additional 41/2 months before the building is corn- pletely sold-out. The above absorption rate assumes that no other competitive product is marketing simultane- ously with the subject property and that the building opens in spring or early summer. Addi- tional competition and/or a winter opening could extend the absorption period somewhat. In order to achieve the above absorption rates, we recommend that you provide prospective 1 buyers with a full brochure detailing important items such as projected association fees, standard features and construction materials, and options for upgrades. The brochure should include floor plan layouts, a building layout and exterior schematic design. ' We recommend that a marketing campaign be prepared that is directed by someone with experi- ence in for-sale housing that is restricted to seniors. Ideally, the marketing director will be ' knowledgeable about the neighborhood. A plan should be in place to turn the property over to homeowners once the building is sold out ' and some general information on the timeframe involved in this can be communicated to pro- spective buyers if they ask. We do not recommend that this information be detailed in the brochure. We recommend advertising in local publications in the immediate area as these will provide the ' best value and are more likely to reach the targeted clientele. If there are neighborhood organi- zations in the community or in adjacent communities, we recommend publicizing the develop- ment with these organizations. We recommend that advertising dollars be kept to a minimum initially as we believe that the majority of buyers will be drawn from the surrounding area. Many are likely to be generated from drive-by traffic. 1 i I I MAXFIELD RESEARCH INC. 47