03/27/2006 CONF MTG - 6094�
�
CRY OF
FRIDLEY
INFORMATIONAL ITEM
COUNCIL / HRA Work Session
March 27, 2006
Date: March 21, 2006 �
To: William Burns, City Manager �
From: Paul Bolin, Asst. Executive HRA Director
Scott Hickok, Community Development Director
Subiect: Gatewav Northeast M-06-37
In late December, staff received a call from Harvey Goldstein, owner of the now-vacant
Carquest building located at 6005 University Avenue. He had called and asked if the
CitylHRA might be interested in purchasing his building. He noted that it seemed we
had a desire to improve the image along University Avenue based on our Gateway East
& West projects.
This call generated a brief brainstorming exercise where staff determined that the area
from the Sinclair Station south to the Carquest building would provide an opportunity to
further improve the City's image along this corridor. Because of the location along
University Avenue, this area may provide a redevelopment opportunity without much
opposition. Residential, commercial, or a mixed-u�e development would provide a nice
"book end" to the east side of University Avenue.
At this time, the Carquest building is for sale (2006 taxable value -$365,100) and the
old Van-O-Lite building at 6041 University is for sale at $525,000 (2006 taxable value -
$371,300). Additionafly, the Sinclair Station at 6071 University has quit seiling gas,
recently changed hands, and has been improperly used for heavy vehicle repair (2006
taxable value -$246,100) and the Tae-Kwan-Do gym at 6061 University never seems
to have many users (2006 taxable value -$243,600) which may make them willing
sellers. With a tota! market value of $1,226,100 for all four properties, the Council/HRA
may want to consider acquiring some or all of the properties for a future project that
would greatly enhance Fridley's image along this well traveled corridor.
The Citgo station at 6101 University Avenue very recently, and very quickly, closed
down. Though the property is separated from the other four properties by 61St Avenue,
with a value of $284,100, it should also be considered for acquisition.
Unless otherwise directed, City and HRA staff will work with Dan Wilson to determine a
realistic purchase price and relocation benefit packages for these properties. Staff will
complete the work within 30 days and report back to both the Council and the HRA
before moving forward with any acquisition.
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�
Cf1Y OF
FRIdLEY
INFORMATIONAL ITEM
COUNCIL / HRA Work Session
March 27, 2006
Date: March 21, 2006 �
To: William Burns, City Manager ��
From: Paul Bolin, Asst. Executive HRA Director
Scott Hickok, Community Development Director
Subiect: Islands of Peace Proiect Area M-06-36
There have been no opportunities for a group discussion on the Islands of Peace since
we last met with the Developer in mid-November. At that time it became evident that
Bancor's vision for the site (rehabbed apartment units, low rise condominiums, and
expansion east of East River Road) was not matching that of the Council and HRA.
Based on comments made by the Council and HRA members during that November
meeting, it was apparent that all new construction was preferred to rehabbing of rental
units. It also appeared that the consensus of the group was to construct high-end,
high-valued, multi-story condominiums. There also did not appear to be support for
purchasing the Tri-star Insulation and Longview Fiber properties to expand the project
to the east side of East River Road.
Because of the different visions, the HRA hired Sam Newberg of Dahlgren, Shardlow, &
Uban to provide an independent analysis on the marketability of the Islands of Peace
site for different types of housing. Sam's research indicates that the Islands of Peace
would not be a desirable location for constructing upper-end, multi-story
condominiums. His research indicates that a mix of townhomes and
condominiums priced between $175,000 to $250,000 would be the most
marketable on the site.
A final draft of the market study has been provided for your review. Sam Newberg will
give a brief presentation, take comments, and then fie{d questions during next
Monday's meeting.
Staff Recommendation:
If it is the Council and HRA Commissioners vision to construct multi-story, high
value condominiums on this site, City and HRA staffs jointly recommend that the
City not actively pursue a large redevelopment project in the Islands of Peace
neighborhood at this time. The timing is not right for the area to be redeveloped into
the Council/HRA vision of multi-story, high-end condominiums as the area lacks the
amenities to make this a high demand site. It is possible that once the Northstar station
site is developed and the JLT site is redeveloped that the Islands of Peace
neighborhood may become more attractive for multi-story, high-value condominiums.
Mary Smith, City Assessor, has received some phone calls from an individual in San
Francisco inquiring about the values of the properties in the Islands of Peace
neighborhood. This individual has expressed an interest in purchasing the properties
and converting them to condominiums. We don't have enough information on the
individual to determine if he has a real interest in turning the apartment units into
condominium units or if he has "caught wind" of a possible City project in the area and
is hoping to cash in by purchasing all the property before the City does and holding the
City ransom if we want to move forward with a project.
Additionally, staff would not recommend acquiring the properties in the Islands of Peace
neighborhood even if they become available through voluntary sales. The HRA/City
would most likely need to continue to rent the buildings out until all the pieces were
acquired in order to create a TIF District. Owning and managing aged/unkept buildings
would be breaking new ground for the City.
Therefore, staff would recommend that the Council / HRA not pursue an Islands of
Peace project until the market conditions can support the vision of high-end, multi-story
condominiums on this site.
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January 25, 2006
NIr. Paul Bolin, AICP
Assistant Executive Director
Fridley HRA
6431 University Avenue
Fridley, MN 55432
Dear Mr. Bolin:
Attached is our report assessing the maxket potential for condominium development on the Islands
of Peace site in Fridley. We thank you for the opportuniry to complete this assignment. This is an
important site for the City of Fridley, and we enjoyed working on it.
We believe there is an opportunity to develop for-sale housing on the Islands of Peace site.
However, current market conditions do not justify the construction of condos gxeater than four
stories in height. We envision a combination of for-sale townhomes and condominiums on the site.
A significant amount of competition exists, as a variety of townhomes and condominiums have hit
the market in recent years, or are slated to do so in 2006. Thus, for-sale housing marketed on the
site will need to be well designed and price sensitive. We recommend that the City and development
team closely monitor the competitive environment and make adjustments accordingly as market
conditions warrant.
The site can be greatly improved for the marketing of for-sale housing through a variety of ineans,
including the demolition and/or replacement of e�cisting housing on the site, better connections to
the proposed commuter rail station, and improved design of the Islands of Peace Park.
We thank you again for the opportuniry to work on this assignment, and hope the information
proves valuable. Do not hesita,te to call with any quesrions you have.
Sincerely,
Sam Newberg
Senior Market Analyst
DSU Reseaxch
(G12) 312-2104
Housing Study
Islands of Peace Site
Fridley, Minnesota
DSU Research
a division ofDablgren, Sbardl'ow aad Uban, Inc.
Acl�nowledgtnetits:
Sam Neivberg »�rote thi.r rejiort, based on market re.rearch and fieldrvork.
Hon,yi Duan�iroduced all of the report'.r maps u.rrngArcVieav GIS software.
The followingpeople and organizations pmvided data fot this report
The City of Frzdley HBA
Bureau of the Census
Martin e's'A.crociate.r
North.ctar Multipk Li�'ting Serr�ice (MLS)
The Urbart Land In.rtitute
Sale.r Agent.r and rvebsite.c a�liated nrith competitzve pr ject.r
Fmnt Cover Imave.r.• DSU I�erearch, Sam NewGerg
DSUReseatch
a division ofDablgren, Shatdlow and Uban
Table of Contetits
Islands of Peace Hou.ring Market Study, Fridley, MN
January 25, 200G
EXECUTIVESUMMARY ......................................................................................................................
Introduction....................................................................................................................................
INTRODUCTION AND PROJECT DESCRIPTION ............................................................................
Introduction....................................................................................................................................
ProjectDescription ........................................................................................................................
SITE ANALYSIS, NEIGHBORHOOD ANALYSIS AND SITE POSITIO1vING IN AREA ................
Introducdon....................................................................................................................................
SiteOverview/Description ...........................................................................................................
NeighborhoodAnalysis .................................................................................................................
SitePositioning in Area .................................................................................................................
SiteRanking Among Condo Comps ...........................................................................................
Summary..........................................................................................................................................
DEMOGRAPHICANALYSIS ................................................................................................................
Introduction....................................................................................................................................
Characteristics of the Home Sa1es Maxket ..................................................................................
COMPETI'I'IVE MARBET ANALYSIS .................................................................................................
Introduction....................................................................................................................................
Characteristics of the Home Sales Maxket ..................................................................................
Recent Townhome Developments in the Area .........................................................................
Recent Condominium Developments in the Area ....................................................................
PendingProjects .............................................................................................................................
CompetitiveSummary ...................................................................................................................
Timingof Competitors ..................................................................................................................
CONCLUSIONS AND RECOMr�NDATIONS ...................................................................................
Introduction....................................................................................................................................
Conclusions.....................................................................................................................................
Recommendations..........................................................................................................................
Ma.rketing Considerations .............................................................................................................
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EXECUTIVE SUMMARY
DSUResearch
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Itittoduction and PtojectDescription Page 2
Islandr of Peace Hou.cing Market Study, Fridley, MN
�anuary 25, 2006
• The Fridley HRA seeks to know and understand the maxket for condominiums on the Islands of
Peace site, located along East River Road, north of Interstate 694 in Fridley. This report
contains a maxket assessment by DSU Research on the feasibility of multifamily housing on the
site.
• We support the concept of multifamily for-sale housing on the site. We recommend a price-
sensirive range of offerings, with a majoriry of initial units priced below $250,000. Because of
the difficulry much of the competition is having selling units above the $250,000 maxk, we do
not recommend pushing prices significandy higher.
• The Islands of Peace site is suited for moderately priced condos or townhomes. It contains
amenities such as the adjacent Islands of Peace Park and a regional bicycle trail, but also suffers
from a location near industrial uses, and is cut off from nearby shopping and surrounding
neighborhoods. Improvements can be made to the site and surrounding properties that would
enhance the attractiveness of housing on the site.
• The proposed Northstar Commuter Rail line, with a station to be located one-quarter of a mile
from the site, gready enhances the site's use as housing. Improving pedestrian connections to
the rail station would benefit the marketing of housing on site.
• Demographic trends indicate long-term demand for condominium housing, due to growth
amo�g echo-boomers (born 1977-1995) and baby-boomer households. A wide variety of
household types, primarily empty-nester households, but also younger singles and couples, will
drive demand fox townhomes and condominiums on the site.
• A significant amount of competition exists in the Fridley area., including both townhomes and
condominiums. However, very few projects will direcdy compete due to location, as each
competitive project seems to hane its own market niche. Park View (toumhomes) and Grand
Central Lofts (condominiums) iri Columbia Heights each present probably the greatest
competition in the area. However, all projects listed herein should be monitored for sales pace
and pricing changes.
• We recommend a development concept that includes a variety of townhomes and
condominiums. It is important that units be kept below $250,000, on avexage, particularly in the
first phase of development. We recommend initial pricing in the $175,000 to $250,000 range.
• We recommend a well-designed and attractive site plan that includes quality architecture and
building materials, walkability and good connections to the Islands of Peace Park. Most
importandy, the fox-sale townhomes and condos must stand out and be differentiated in the
highly competitive market.
DSUResearcb
a divrsion ofDablgrea, Sbardlow and Uban
Introductioa and PtojectDesctiption Paoe 3
Lrlands of Peace Hau,ring Market Study, Fridley, MN
�an�rary 25, 2006
We do not recommend mid- or high-rise condos on this site, as the current market conditions in
the area provide no indication that the high prices necessary to justify construction costs can be
supported. The only recent or planned mid- and high-rise developments we are aware of are
located in the core cities (Minneapolis and St. Paul) and well-to-do suburbs such as Edina.
Despite its location adjacent the Mississippi River, the Islands of Peace site is not currendy
suitable for mid- or high-rise housing.
• This market study does not consider the market for affordable housing on the site. We believe,
however, that the e�sting housing on the site, in its current condition, detracts from the
maxketabiliry of new, market rate, for-sale housing. Renovated or newly constructed affordable
housing on the site could help make the redevelopment effort successful.
• We believe the site could be enhanced by a number of ineasures, including the redesign of the
Islands of Peace Park, and a master plan for the area that includes the site and surrounding land
uses, including the commuter rail station area.
• If possible, renovate or build new affordable housing in phase one of the project, with the for-
sale portion to follow in phase two and beyond. This would allow fox the for-sale market to
"setde out" and for units currendy on the market to sell. This strategy would also provide
considerably more insight as to what types and prices of housing in the market area (Park Vizw,
Grand Central Lofts and Northwest Quadrant) are most successful.
• We would also recommend invesrigating the feasibility of market-rate rental housing on the site,
as that is likely to be an attractive option due to its proximity to a commuter rail station. Market
rate rental housing could perhaps be integrated with newly-constructed affordable rental units.
DSUReseatch
a division ofDahlgren, Sbardlow and Clban
Paae 5
INTRODUCTION
AND
PROJECT DESCRIP'TION
DSUResesrch
a divrsion ofDahlgrea, Shardlow and Ubaa
Inttoduction and PiojectDescription Page 6
Islands of Peace Hou.ring Market Study, Fridley, MN
� nnvn �� ZS, 200G
INTRODUCTION
This report provides a market assessment for the development of for-sale multifamily housing
(condominiuxns and townhomes) on a site along East River Road in Fridley. DSU Reseaxch, the
market reseatch arm of Dahlgren, Shardlow and Uban, Inc., was retained by the Fridley HRA to
complete research and provide an opinion on the viability of condominiums and townhomes as part
of the overall redevelopment of the site, known as the Islands of Peace site.
Nationwide, laxge-scale condominium development continues to occur in most majoi cities, as
increasing numbers of households demonstrate their preference for maintenance-free living, in both
central ciries and suburban areas. Locally, the Twin Ciries saw over 3,700 condominiuxn units open
for occupancy in 2005, another substantial increase over the 2,100-plus units reported in 2004. As
the market gets increasingly competitive, howevex, developers must step up efforts to distinguish
their product from other offerings.
Several possible iterations and layouts of condominium and townhome development have been
suggested for the site, including the possibility of high-rise condos. As well, some or all of the 144
existing rental units on the site, which are considexed to be affordable housing, would be retained,
reconfigured, and/or rehabilitated as part o£ the redevelopment. This section provides an overview
of the redevelopment possibiliry on the site.
PROJLCT DESCRIP'I'ION
The Fridley HRA is considexing the xedevelopment of a site that is presendy used as rental housing,
three for-sale homes, and a city park. Undex various redevelopment scenarios, the site would retain
and perhaps improve the park, and replace some or all of the rental housing on the site with for-sale
multifamily product of some kind.
An RFQ was issued by the Fridley HR.A in June 2005 for developers interested in the site. A group
that includes The Bancor Gxoup, Inc. and the Central Community Housing Trust (CCH'I� were
selected by the HR.A. They have pxoposed a combination of scenarios for redevelopment of the
site, including renovating some of the existing rental units on the site, developing new affordable
housing, and developing a substantial number of market rate townhomes or condominiums on the
site.
None of these concepts have been pursued in detail, as there are varying opinions within the City of
Fridley and the HR.A as to whether or not affordable housing should be maintained on the site, as
well as the notion that the site, as a riverfront parcel, cauld be developed with high-rise condos.
'This report seeks to assist the Fxidley HRA with understanding the feasibiliry for various types of
market rate, for-sale multifamily product that could be developed on the site, and what affect future
current and future uses on the site and the site's surrounding area may have on the marketability of
housing.
DSUResearch
a divisron ofDablgren, Shardlow and Uban
Page 7
SITE ANALYSIS,
NEIGHBORHOOD ANALYSIS
AND
SITE POSITIONING IN AREA
DSUReseatch
a division ofDahl�ren, Sbardlow and Ubaa
Site Analysis, Neighborhood Analysis and Site Positioning tn Atea Page 8
Islands of Peace Hou.ring Market Study, Fridley, NIN
january 25, 2006
INTRODUCTIOI���
This section provides an analysis of the site and neighborhood as it pertains to, and affects
development of, housing proposed on the Islands of Peace site. Several neighborhood and site
factors affect development on the site, including surrounding land uses such as industrial uses and
railroad tracks to the east, the Mississippi River to the west, and Intexstate 694 to the south.
Existing uses on the site, specifically what buildings are removed or renovated, also factor in to the
redevelopment potential for the site.
SI'I'I; OVl?12�'IE\V��DESCRIP'TION
T'he proposed housing xedevelopment site, which is 10 acres size, is located along the west side of
East River Road, approximately one-quarter mile north of Interstate 694. A map of the site is
shown on the following page. The following bullet points discuss the present uses of the site, and
the positive and negative attributes thereof.
• The site cuxYently consists of a
variety of small rental housing
buildings, three single-family
homes and a park that foxms the
site's western edge. A total of 11
rental buildings are scattered
throughout the site, with 10 to
15 units each, for a total of 144
units. The rental buildings were
primarily built in the 1960s and
70s, and appear to be in fair to
average condition, with some
deferred maintenance and low
curb appeal. The�e and
condition of the buildings result
in rents that are considered to be
affordable in the current rental
market.
The buildings on the site are of an age and condition that they may be a deterrent for the
maxketing of new for-sale housing on the site. As well, police calis are a small but increasing
problem at select buildings on the site, a phenomenon that can tarnish the site's reputation,
making new housing even more difficult to sell. Renovated or new well-managed affordable
housin would neutralize this negative im�act and would likelv enhance the site's image and
marketabilitT
DSUResearch
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Site Analysis, Neighborhood Analysis and Site Posit7oning tn Atea Page 10
Island.c of Peace Hou.cing Market Study, Fridley, MN
� ns»in � 25, 2006 �
• The site is bordered by Louis Stevenson elementary school to the north, East River Road to the
east, the Georgetown apaxtments to the south, and a park and the Mississippi River to the west.
• In general, the two buildings at the northwest corner of the site appear to be in better shape, and
have more curb appeal, than the remaining buildings on the site. However, because of its
proximiry to the river and park, and distance away from East River Road, this is also the best
location on the site, where newly-built units could achieve the highest prices.
• The site is accessed off of East River Road, which is a four-lane divided highway with a posted
speed limit of 40 miles-per-hour that runs north/south along the eastern edge of the site.
Whereas the Mississippi and park are site assets, the East River Road is somewhat of a negative
due to relatively high posted speed limits and noise, further xeinforcing that the nicest location
on the site is farther from the road.
• Chaxles Street and Island Park Drive provide access to the site. Charles Street has a stop sign at
East River Road, but has full access, whereas Island Park Drive also has a stop sign, but, due to
the presence of a centex island, is right-in/right-out only.
• The Mississippi River, which runs along the western border of the site, together with Islands
of Peace Park, forms the western edge of the subject site, and are a major recreational amenity
for existing and/or proposed
housing on the site. The site is
located on a low bluff, which
is about 30 feet above the
river. Views of the river are
somewhat shielded by the
presence of substantial foliage
along the riverbank and bluff,
including tall trees. Our
estimate is that new buildin�s on
the site would need to be eight.
or �erh�s even 10 to 12 stories
in hei�ht for an� units to have
views above the trees of the
river be.yond. The housin�
market in the area doesn't
su�t�ort a condo building of this
he,4�ht.
� The park is accessible via a footbridge with a paved trail (and thus is ADA accessible) to the
island, which is peYhaps one-quarter mile from north to south and 200 yards wide. While the
location next to the xiver and the park does add value to housing on the site, the park should be
DSUResearch
a division ofDahlgrea, Sbardlow and Uban
Site Analysis, Neighborbood Analysis and Site Positioniag in Atea Page 11
Islanc�r of Peace Hou.ring Market Study, Fridley, MN
january 25, 200G
enhanced and upgraded. A trail circles the perimeter of the island, and there are benches and
grills for public use, but those are old and some are in disrepair. The park in general is not well
marked, as the parking lot is one block west of East River Road, and is an underused asset for
the ciry. It is our o�inion that the �ark could be u�dated and reconfigured to be better
incor�orated into a redevelo�ed site which would add to the site's overall value.
• To summaxize, the site is appropriate for housing redevelopment, although better housing sites
are found on the western half of the site. Improvements to Islands of Peace Park would add
value to housing on the site.
NLIGH1301iHOOD ANAL�"SISi
The neighborhood is bordexed by the Mississippi River on the west, Intexstate 694 on the south,
railxoad tracks on the east and Mississippi Stseet on the noxth. In genexal, the neighborhood
contains a variety of uses, with resideniial, industrial and public uses, an elementaxy school and
parkland. A neighborhood map is shown on the following page.
• The neighborhood is split by East River Road, which provides a connection between northeast
Minneapolis and Coon Rapids. The northern half of the neighborhood consists of single-family
homes, built over a broad range of time, from the 1950s to the 1980s. The southern half of the
neighborhood contains industrial uses along the east side of East River Road, and an elementary
school, apartments, a park, and the subject site along the west side.
• The subject site is located in the southern half of the neighborhood, south of the Louis
Stevenson Elementary School and north of The Georgetown apartments, west of East River
Road.
• Neatby shopping is located to the east of the neighborhood, at the northwest quadrant of I-
694 and University Avenue. Cub Foods and The Home Depot are the anchor tenants, and a
CVS pharmacy is planned on the site of the former Stuart Anderson's Cattle Company. These
uses are accessible via l-694.
• Whereas the Mississippi River is a major ameniry for the neighborhood, the railroad tracks are
the defining featuxe. They are hea�ily used for freight traffic by Burlington-Northern Santa
Fe (BNS� Railroad, and separate the neighborhood from the main section of Fridley to the
east. Access to the east can be made at an underpass at Mississippi Street on the northern edge
of the neighborhood, and on I-694 on the south end. Reduced access to the neighborhood is a
negative for the area.
DSUResearcb
a division ofDahlgten, Sbardlow arld Uban
Site Analysis, Neighbothood Analysis and Site Positioning in Area
Islands of Peace Hou.ring Market Study, Fridley, MN
January 25, 2006
Page 92
�ite Context
Isiands of Peace Market Study
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Site Analysts, Neighbothood Analysis ar�d Site Positioning in Area Paoe 93
Islanda' of Peace Hou.ring Market Study, Fridley, MN
�anuary 25, 2006
Several industrial uses are located along the east side of East River Road and north of I-
694. Users include Tito Industries, which is a vacant building owned and ptesently marketed
by JLT for redevelopment as a retail site. Other industrial uses include Longview Fibre
Company and Tri-Star Insulation. These uses are located direcdy across East River Road
from the site and detract somewhat from the desirability of housing on the site, especially on
the portion of the site that is closest to East River Road.
The character of the neighborhood will change considerably when the Northstar
Commuter Rail service begins, using the BNSF tracks. The service will connect Big Lake,
Elk River, Ramsey, Anoka., Coon Rapids and Fridley with dovcmtown Minneapolis, providing a
very attractive option for commuters. One of the proposed commuter rail stations will be
located halfway between Mississippi Street and I-694, next to an existing vacant parcel of land at
approximately 615` Way. At a minimum, a park-and-ride lot will be built on the vacant parcel,
and would accommodate 200 cars. This would complement a 300-caz paxk and-ride lot on the
east side of the ttacks and platform. A pedestrian underpass would connect the two.
• Significant additional development could occur at and around the proposed commuter rail
station, including a combination of housing, structured parking and a small amount of retail.
The proximity of a commuter rail station enhances the development potential foc
housing on the subject site. Provided appropriate pedestrian connections can be
made/maintained, the site could provide an attsactive housing optton for dovmtown
Minneapolis woxkers.
SI"1'F, POSITIONING IN AR1:A
The following bullet points provide a list of notable uses in the neighborhood, specifically as they
pertain to the development of condominiums and othex housing on the subject site.
• Northstat Commute= Rail
service could begin as soon as
2008, and will contain a station
across East R.iver Road,
appro�umately one-quarter mile
noYtheast of the site. Residents
living on the site will be able to
access the rail station via the
Mississippi River Regional Trail
Corridor, a sidewalk/trail that
runs parallel along the west side
of East River Road, and crosses
at a signalized intersection at 61s`
Way, connecting to the station
area. The �resence of a
DSLT Research
a division ofDahlgiea, Sbardlow and Uban �
• ! C
Site Analysis, Neighborbood Analysis and Site Positioning in Atea Paae 14
Lrlands of Peace Housing Market Study, Fridley, MN
january 25, 200G --
commuter rail station located in such vicinit� to the site im�roves its use as a housin� site
si �ficantl,L Other develo�ment related to the transit station combined with redevelonment on
the sub�,ect site could create develo�ment momentum and connectivitv, whtch could be
mutuallv beneficial.
The Mississippi River
Regional Trail passes through
the site, connectirig Coon
Rapids Dam and the portion of
the Islands of Peace Park
located south of Interstate 694.
Much of the trail follows
alongside the BNSF Railroad
right-of-way, with a separated
grade cxossing at Mississippi
Stxeet (shown at right). The trail
provides a valuable recxeational
ameniry for housing on the site
and residents of Fridleq in
general. However, the trail
routing wanders in a very non-
direct xoute through and near
the site, including following along the East River Road service road in front of the sites to the
notth and south of the subject site, and a road crossing at the traffic signal at 61 s` Way north of
the site. Overall�the trail �rovides an asset for housing on the site.
The site is located close to the existing Twin Cities freeway system, with an interchange at East
Rivex Road and I-694, located one-quaxter mile south of the site. From there, access to
em�lo�ment centers along I-694 downtown Minnea�olis and elsewhere is convenient. The
Northstar Commuter Rail will provide rail access to employment in downtown Mtnneapolis.
Currently, public transportation is provided by Metro Transit, served by Route 852, which
pxovides hourly e�xess service to downtown Minneapolis, and local service north to Northtown
Mall and Coon Rapids beyond. Commuter tsain service wi11 greadv enhance transit connections
for the site.
• Employment centers near the site include several concentrations to the east and west along
Interstate 694, as well as downtown Minneapolis. Notably, Medtronic headquarters are located
one mile east of the site, at the Central Avenue/I-694 interchange. The location of the subject
site with regard to nearb� em�loyment is good.
• As mentioned, neatby retail includes Cub Foods and The Home Depot, located one-half
mile southeast of the site, but accessible only via a circuitous route using East Rivex Road, I-694
and University Avenue. A CVS Pharmacy is due to be added to this retail node in 2006.
Tatget and Menards axe located one mile east at the Central Avenue/I-694 interchange.
DSUReseatcb
a divrsion ofDahlgten, Sbatdlow a.ad Uban
Site Analysis, Neighborhood Analysis and Site Positioning in Area Page 15
I.rlands of Peace Hou.cing Market Study, Fridley, MN
January 25, 2006
Northtown Mall is located three miles north of the site at Counry Road 10 and University
Avenue. It is a major regional mall with ancillary retail space totaling over 2 xnillion square feet.
Major retailers include Wal-Mart and K Mart. The Northtown Mall itself is in the process of
replacing key anchor tenants that have vacated in the past couple yeaxs, and is somewhat in
transition. Retail o�tions for residents on the sub�ect site are considered to be averaee.
• The in ustrial uses in the neighborhood aze somewhat of a deterrent for housine on the site.
Lon -term redevelo ment of all thre industrial buildin s as oth r u es would enhance th
overall ne�hborhood as a transit node.
jSrTL R�Ni�NG ���oNG Co�;vo Co�zPs
Chart 1 shows a scatter�lot ranki�� of the site on 10 key sitejneighborhood characteristics that we
believe are important to condominium buyers. The scatterplot is based on a spreadsheet that
com�ares the site to the other com�axable �xoiects in the greater Fridley area that are introduced
later in this report. They generally represent as ects of the ��,iect that axe tied to location_ and
nei hborhood and are out of the control of the develo er but some of which are in the control of
the ci . We developed this list over time, based on our work on many condo projects, and our
interviews with Realtors.
We gave each project a score of 0-10 on each characteristic (10 being the best score). We then
summed the scores for each project (with 100 representing a"perfect" score). "I'he racLk��g urr cess
is sub�ective, and is based on our assessment/knowledge/attitudes of how the sites compare to one
another. Other people completing this analysis would likely come up with different numbers, but
the overall position of the pxojects against one anothex would not likely change that much.
The Y-axis shows our xanking numbers, from a less-than average site (with a score of 0, or the
presence of no quantifiable characteristics) to a great site (with a score of somewhere near 60, or
above). The X-axis shows the projects distributed by estimated price-per-square foot (overall
average). The left side of the chaxt reptesents a lowez-end maxket price of $150 ox so, while the
right side of the chart represents middle to upper-middle pricing of $300.
We also overlaid lines at the $225 per-squaxe-foot threshold (the rough point between low- and
middle-price) and a ranking score of 30 (the rough point between average and above average
location characteristics).
Overall, we believe the site falls into the low ranee in terms of location/site amenities. It received a
score of 15, which is just below the median score of the site rankings. The site ranks average with
regard to employment proximiry, and poorly in other categories. There are good nearby shopping
options, although they are hard to get to. There are few neatby restautants. The immediate
neighboxhood suffers fxom poor walkability and little or no "cache." Therefore, from a locational
pexspective, the site is below average, which frankly calls int aues "on how successful condos could
be in the site without other land use changes or im�rovements to the site and area.
DSUReseatcb
a division ofDablgren, Sbardlow and ITban
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Site Arlalysis, Neighbotbood Analysis and Site Positioning in Atea Page 9 7
Zrland.r of Peace Hou.ring Market Study, Fridley, MN
Tanuary 25, 2006
Based on the ranking in Chart 1, the site should fall in a low- to middle-market position. This means
that appropriate avexage pricing would be in the $175 to $200 per-square-foot across all units. This
falls in the very low end of known condos in the Twin Cities, and while othex factors can influence
the value of units built on the site, it does suggest that perhaps the site is more suitable to
townhomes, which are generally less per square foot in construction costs and sales prices.
Future commuter rail service however would greatly increase the site's score and rankine. as the
employment proximiry would rise through the transit connection to downtown Minneapolis. The
score could also rise if nearby sites are redeveloped as housing oi small scale retail uses, particulasly
in the station area. Also increasing,the site's score would be im�rovements to the Island of Peace
Park and better tiedestrian connections to the commuter rail station itself. Removal of nearbv
industrial uses would have a�ositive im�act on the site as would a formal road connection under
the railroad tracks at the commuter rail station which would �rovide better connections to the retail
uses and other�arts of the cit�. In all, the site's score could perhaps double if all of the above
improvements were made, greatly improving the site as a location for condos. Most of these
improvements could occur under a coordinated planning effort.
Sunzn�x�
Islands of Peace Park is an asset that should be improved to increase the site's value. Existing
housing on the site should be removed or renovated to enhance the site's image and maxketabiliry.
The neighborhood contains a number of uses that could be redeveloped or better connected to
improve the marketability of the site and other areas in general. Most importantly, a master plan
that includes the commuter rail station and the subject site would have long term benefits for the
ciry.
In general, we believe the site would be attractive to a numbex of local and national homebuilders
seeking infill housin�sites within reasonable �roximity to em�loyment and transit.
DSUResearcb
a drvision ofDahlgren, Sbardlow aad Uban
Pade 99
DEMOGRAPHIC
ANALYSIS
DSUResearch
a division ofDablgten, Shardlow and Uban
DemogtaphicAnalysis Page 20
Lrlanr,�r of Peace Housing Market Study, Fridley, MN
January 25, 200G —
IN'TRODti CTION
This section analyzes current and projected demographic trends, such as changes in population,
households and age distxibution, as they pextain to the development of condominiums. Our analysis
includes a survey of national and state demogxaphic trends and forecasts, and relates these trends to
the demand for condonvniums on the subject site in Fxidley.
Btoader Tteuds Driving Condominium Demand
Fox several decades, there has been a consistent shift away from the traditional nuclear family — a
married couple with their own children — and toward households of all rypes and structures. In fact,
between 1970 and 2000, the percentage of nucleax families among all U.S. households dropped from
43% to 24%, pushing aside the era of communities centexed on kids and schools, and propelling in
an era of diverse communities with a wide range of household types — single professionals,
permanendy-cliildless couples, active retirees, single parent households, divorcees, and more.
As this gradual, consistent shift away from the traditional child-centered community has occurred in
many cities, "lifesryle" housing has emerged with great momentum. Condos axe perhaps the best
example of this trend, allowing residents the opportuniry to live in exciting urban ateas, near a
variety of conveniences, without the burdens of yaxd work, snow shoveling and other exterior
chores.
Ovex the course of this decade, the shift away from the nuclear family will intensify as the
leading edge of the baby-boom cohort ages past 60, the child=en of boomers forrn their own
households, and many "older-boomer" households become empty nesters. �As 2010
projections from the national consulting firm of Martin and Associates reveal, remarkably, U.S.
households with children aze expected to decline by about 87,000, while households with no
children — including childless couples, singles and xoommates — are expected to swell by nearly 12
million (see Table 1). This growth pattern has profound implications on housing demand, and
presents substantial potential for low-maintenance, amenity-laden housing products such as condos.
Total
Household
Change
11,732,000
Bureau
Table i
Emerging Housiag Opportunities in the United States, 2000-2010
Growth by Household Type
Married
without
Children
5,276,000
Household Type
Without Children With Children
Adult
Belatit�e.r
Ifving
Single Perrora Together
4,948,000 1,023,000
11,819,000
+A,crociate,r, DSU Iiereanh
Iioommatea
572,000
Married with
Sfngle-Pannt.r Cbildrrn
(11,000) (76,000)
� �
ti
(87,000)
DSUResearch
a division ofDahlgren, Shatdlow ar�d Uban
.. .
Demogtaphic Analysis Paae 2 �
Islands of Peace Housing Market Study, Fridley, MN
anua 25, 2006
Household Age Trends
Table 2 shows the estimated nationwide growth of households by age of householder, between 2000
and 2010. 'I'he estimates are based on the U.S. Census, and were generated primarily by Martin &
Associates, but modified by DSU Research. These estimates are national in scope, but they provide
insight into trends that will occur locally as well, as the decade progresses.
"The table shows Table 2
overwhelmingly that Households in the United States by Age of Householder
the nationwide 2000-2010
change by age of � �
householder will Segment Age Range
result in an increase
of middle-age and Older Adults 55-G4 14,247,057 20,391,000 G,143,943 43%
older adults, age 45 �Ider/Middle 45-54 21,292,G29 24,380,000 3,087,371 14%
to 64, in the coming
Older Seniors 75+ 10,633,192 12,722,000 2,OS8,808 20%
years. Fully 81% of �'oung Seniozs G5-74 11,507,5G2 13,127,000 1,G19,438 14%
First Householders 15-24 5,533,G13 6,137,000 G03,387 11%
household growth I,o�g 25-34 18,297,815 18,390,000 92,185 1%
nationwide (9.2 young/Middle 35-44 23,9G8,233 21,765,000 -2,203,233 -9%
million households)
will be driven by � Segments 105,480,101 116,912,000 11,431,899 il%
households age 45 to
64, the top two Sourcer: US Cen.ru.r, Martin anrlA.uociater, DSU Besearch
categories shown in
the table. Growth among persons in this age range is xelated to the baby-boom generation, whose
members are currendy 40 to 58 years old, but will age into their late 40s through earlp 60s by the end
of the decade. This age cohort will experience dramatic changes in its household makeup as well, as
children age into adulthood, and leave home.
Household Ag+e aad Smrctrrre 7'rends, and Market Oppottunrties
Table 3, created by Martin & Associates and adjusted by DSU Research, shows household growth
by household type during the present decade. Circled and in bold are nine market segments that
show strong promise for housing developers, and two that are declining.
What Table 3 mainly shows is the strength of the housing market for all childless households. The
most substantial growth in households nationwide will be married couples without children (either
empry-nesters or those who never had children) and single-person households.
To summarize Table 3, national growth is foxecast to be highest in these top ten age/household tppe
cohorts:
DSUResearch
a divisiori ofDahlgrea, Sbatdlow and Ubarr
Demogtapbic Analysis Paae 22
Lrlandc of Peace Housing Market Study, Frzdley, MN
anua 25, 2006
• Age 55-64 / Maxried without Children <18
• Age 55-65 / Single, Living Alone
• Age 45-54 / Maxried without Children <18
• Age 45-54 / Single, Living Alone
• Age 45-55 / Married with Children <18
• Age 65-74 / Married without Children <18
• Age 75+ / Single, Living Alone
• Age 65-74 / Single, Living Alone
• Age 55-64 / Adult Relatives Living Together
• Age 75+ / Married without Children <18
Age
15-24
25-34
35-44
45-54
55-G4
G5-74
75+
Total
Growth/
Decline
734,000
321,000
(2,G05,000)
3,723,000
6,482,000
1,775,000
1,302,000
Total 11,732,OOQ
3,115,000 new households
2,287,000 new households
1,169,000 new households
1,063,000 new households
855,000 new households
806,000 new households
801,000 new households
777,000 new households
540,000 new households
378,000 new households
Table 3
Macket Opportunity Analysis
Household Growth by Household Type
United States, 2000-2(I10
Households by Type
Without Children
Married Other
w/o Single Other Non-
Children Person Family Family
96,000 1G5,000 50,000
2G,000 128,000 5,000
(314,000) (273,000) (101,000)
282,000
144,000
378,000 103,000
48% growth
35% growth
30% growth
28% growth
23% gtowth
4G% growth
G2% growth
44% gtowth
8% growth
10% gtowth
With Children
Single- Married w/
Parent Children
1 G2,000 142,000 119,000
61,000 30,000 71,000
(73,000
16G,000 188,000 �„`�
209,000 G2,000 269,000 I
29,000 3,000 1 G,000
18,000 1,000 1,000
5,276,000 4,948,000 1,023,000 572,000 (11,000) (76,000)
�� High Growtb Market.r
Souner. US Ce�uu.r, Marlin ¢3'A.aodatet, DSU Bereanh
� Imge Detlimng Marketa
These national growth patterns, which also apply to the Twin Cities, clearly show why the demand
for low-maintenance, lifestyle-oriented condos has been so stxong in xecent years. These patterns
also likely indicate sustained condo demand thzoughout the rest of the decade.
Information recendy released by the U.S. Census Bureau and the Minnesota State Demographer
reinforces the Martin and Associates projections at the locallevel. The chart on the next page
DSUResearcb
a divrsion ofDablgten, Sbardlow and Uban
Demographic Analysis Page 23
Zrlanc�r of Peace Housing Market Study, Fridley, MN
January 25, 200G
shows the estimated change in Minnesota's population, by age, between 2000 and 2004. The two
red circles on the chart point out the two demographic groups driving the current and projected
demand for condominiums: baby-boomers (ages 45-59) and the echo-boomers (ages 20-29).
' Under 5
I5to9
10 m 14
L5to19
20 to 24
Z5 to 29
30 to 34
35 m 39
40 m 44
45 m 49
50 to 54
55 w 59
60 to 64
65 to 69
70 to 74
75 to 79
80m84
85 and ove�
Populatio� Growth/Decline By Age
State of Minnesota
2000-2004
Popolstion Loes Population Gnin
� � � � � � �
U..S. Ce�r,•Mie�.rota Staa Dn�ber; D.S'U Rare�b
DSUResearch
a division ofDablgren, Sbardlow and Ubaa
Demographic Analysis Pade 24
X.clands of Peace Housing Market Study, Fridley, MN
anua 25, 2006
Other national and local (Twin Cities) trends in condo demand that apply to the subject site include
the following:
• Financially successful "Gen Xers" (born between 1965 and 1976 and currendy between the
ages of 29 and 41) make up a significant component of demand, especially for moderate to
mid-priced units ($200,000 to $300,000 in the Twin Cities) in exciting urban neighborhoods.
• Single females are one of the fastest-growing market sub-segments as condos offex an
affordable and safe homeownership option. In particular, many condo buyers in their 40s
and up are divorcees, or are on their second marriage, without children. As well, many
younger single women choose condos over single-family homes.
• First-time bupers, including singles, couples without children, or couples with very young
childxen, see condos as a great way to gain affordable ownetship housing before they settle
into single-family housing.
• Changing housing expectations among young adults (25 and under) — namelp that rental
housing isn't the only option — is helping driving young professional households to condos
and townhomes.
• Condo units with convenient connections to employment centers and airports work very
well fox traveling professionals.
SL� n�nv�x�
The dxamatic increases in the number of echo-boomer and baby-boomex households both play a
role in demand fox condominium development. With regard to the subject site, both groups will
likely be attracted to condos developed thexe, although the target market may tend slighdy toward
buyers over 45 years of age. We believe that a wide variety of household types, including empty-
nesters, professional singles and couples, divorcees, and longtime area residents could be attracted to
the site.
DSUResearcb
a dl"vision ofDahlgren, .Shacdlow and Uban
Pade 25
COMPETITIVE 1VIARI�E'I' ANAI-YSIS
DSUResearch
a division ofDahlgt'ea, SbatdJow and Ubaa
Competi[ive MatketAnalysis Page 26
Islands of Peace Housing Market Study, Fridley, MN
anua 25, 2006
IIN1'RODL� C'TION
This section presents our analysis of the competitive market for condominiums in the Fridley area.
It begins with an overview of recent pricing for single-family homes and multifamily units
(townhomes and condominiums) (sold in 2005) in Fridley. The main focus of this section, however,
is a detailed analysis of townhome and condominium developments in the Fxidley area. This
analysis includes descriptions of other recently developed or ci�rendy ma.rketing tovmhome and
condominium projects in the area, and our comments on how the competitive market will affect the
proposed project on the subject site.
C�in�c��Lxls'rics or- �i��ii. Hon2r, S�i.i;s n�l�iuiL��'�
Recent Multifamily Home Sales Pricing and Volume
Table 4 shows single-family and multifamily homes sold in 2005 by pxice bracket. The table shows
sales of all housing units, tega=dless of unit age, as a means of establishing a snapshot of the
entire Fridley housing market. We analyzed sales in the Multiple Listing Service (ML.S) axea 768,
which includes all of Fridley.
We broke down pricing in to five bxackets:
• undex $150,000
• $150,000 to $199,999
. $200,000 to $249,999
. $250,000 to $299,999
• $300,000 and above
Table 4 shows these five price brackets in terms of units sold in 2005.
Table 4
Housing Buyers by Price Point
Fridley
2005
purchase Price New and Resale Units)
under $I50,000- �6200,000- �250,000- Ovei
5150_000 9S1 9999 �249 99 9 99 $300_00 . Total
Single-Family Homes 8 81 144 33 17 283
Townhomes
3% 29%
IG 42
24°/a 62%
Source.r: NorthatarMI..S, DSU Re.cearcb
S1% 12%
10 0
15% 0%
6% f00%
0 6S
0% 100%
I • - , 1):11 �I i il�i�'�
. . . , . � . , , , , . . . � . , , . . � S� �:�'�I��.)'��\�'
" t�� i> L; i3:'�ti
Competitive MarketAnalysis Page 27
Islands of Peace Housing Market Study, Fridley, MN
january 25, 200G
The following bullet points summarize the information contained in Table 4.
Thexe were 283 single-family homes that sold in 2005 in the Fridley MLS Area (768). A vast
majoriry of units (82%) sold for under $250,000. T'he price bracket with the most sales was
the $200,000 to $249,999 range, which had 51% of all sales. The median sale price for
single-family homes in Fridley in 2005 was $217,000.
• Thexe were 68 townhome/condo units that sold in 2005 in Fridley. Every unit sold for
under $250,000.
� A majority of townhome/condo units sold (86%) for under $200,000, with just 10 uriits
selling for over $200,000. The price bracket with the most sales was the $150,000 to
$199,999 xange, which had 62% of all sales. �
The information contained in Table 4 is an example of the overall modetate pricing of the Fridley
housing market. Most for-sale housing stock in the area is single-family in nature, and, due in part
to the somewhat older average age of the housing stock, very few homes are priced above $250,000.
The few townhomes that have sold recendy were at prices below $250,000. As will be shown in
Tables 5 and 6, some newer projects in the Fridley area are pushing prices significandy higher, but
Fridley overall remains a low- to mid-priced market, and a large share of buyers desiting to
live there are seeking value in their housing. The information shown in Table 4 indicates that
new housing built on the site should have an average unit �rice in the low- to mid-�200.00Os.
RECENT TO��'1\T1IOD11-; DL:�'E;LOPD11?NTS IN TI31: fi1tL:A
Several townhome developments have been completed in recent years in the general Fridley area.
Three of the projects are located in Fridley, three in Columbia Heights, two in Spring Lake Park, one
in New Brighton, and one is located on a site overlooking the Mississippi River in north
Minneapolis. Table 5 shows these recent townhome developments.
• A total of 312 units are shown in Table 5. Of these 312 townhome units,164 units have
sold or are under purchase agreement (53%), including a number of smaller projects that
were completed and sold out a few years ago. Only 37 units are located in Fridley, at three
separate projects.
� Pricing at the comparable projects in Table 5 range fxom $135,000 to �755,000, although
very few units are priced above $250,000. A numbet of pmjects with units above
$250,000 have experienced slow sales. Based on Table 5, the most successful projects
tend to be those with units priced below $250,000.
DSUResearch
a division ofDahlgrer� Shatdlow and Uban
Competitive MatketAnalysis Page 28
Island.r of Peace Hou.ring Market Study, Fridley, MN
anua 25, 2006
Table 5
Newer Ow�eo-Occupied Townhome Developa►ents
Fridley Area
Janua��' 2006
Year Toffii
Compie�c Name/Address Built Units
Grend Centra(1�fts - Tovunlwmes �-05 21
Centrnl & 49th A��enue
c'Ahunbia Hei�ce
Pazk V'iew
39th Aven�re/Bhvn LJmc'. & Ce�cral
Columbia H��us
5th Street Townhon�s
5th Street and Lake Pointe Drive
Fridley
Rive�vieav Iiames
?300 Wc�t Ri�re� Raid
Mmnc�polis
Carriage �'el�
Centxal Ave NE & Osbome Rd. NE
Spring I ace Pazk
C�teway Townhomes
Univec�ry A�•e. & 57di Ave. NE
Fridley
Iindsey Gouct
27th Ave NW & Iinden Ik.
New Brig}�ton
ZOpS- 123
2006
2005 4
2003 29
2004
ZOD2-
�003
2001-
2002
2003
44
LTnits
Sold I.ovv �Ii��h � Comments
0 $329,900 -$359,900 Deve]opec New Height+ LL.0 (Nede�attn
Bldg Type 1& 2-Stcxy Tavnha�r�e.c/Side-bY-Side
Size/Type 1,381 to 2,350 SF/1 & 2 Story
Ah,omdon: Sal� Office Opened 11 /04
17 Yr�D6.990 -$?44,990 Devela�er: Ryland fiome�
Ufnt T}�: 2& 3Stcxy Trnvnliomes/Sid�bySide
Size Range 1,595 to 1,947 SF
Aheo�ption: 17 Sales Since Octobec 2005
4 $179,900 - i189,900 De��elaTet: N/A
Unit T}pcs: 2-Story C�ad
,'y'ze R,� 1,344 ,i`F
Ab,�tioa 4 Um�c in 2005
23 $370,000 - $755,000 Develqxr. )t1DT
Llnit Ty�cv. 2Story Tawnhom�/�de-bY-�ade
�� i,724 and 2,410 SF (2 ucrit plans)
AhSO�paoa 23 Sales 5ince Augu.ct Z(l03
44 �160,900 - $173,000 Develo[ier. V�hllansm Constzuclian
Unic Typ�: 2-Srory Tanvnhodx�e.+/Side-by-S�de
Size Range: 1,300-1,400 SF
Abwtption: 1�Month Buildwt (24 ucrits/ma►t�►)
27 27 $140,000 -$193,000 Develohec. Gatetvay Fa.� Pa�csl�ip
Umt Typcc: 2 Stary Tonvciliomes/Sade--by-Side
Size IL�nge 1,490-1,600 SF
Ah�cxpba,: Sold as Fast as Caild be Builc (3/Monch)
17 14 $6259,900 -�303,`.�00 D�'�aP� N�� COn'�ction
Umt TyPes: 1& 2:S�y Tavvnhomes/5ide-by-5ide
Size Range 1,235 to 1,900 SF
Alxcomdon: Since OPen (3/03), Slrnv Scd�
Pazl�ide Village
2003 20 8 5219,900 -$271,000 L�evelapec Nedegz�d Con.muction/Ubome &rilders
51st Ave. NE & P:u�CSide Ir. Utut Type.c 1& 2-Stcxy Tavnhomes/Side-bY Side
,'yze Rv�ge 1,900 S'F
Cohmibia Haghtc
Alacoaption: S�►a O(xn (3/03), Very S7rnv Sales
gpring Pines Tovvnho�es 1999- 21 21 $135,000 -�178,000 I)evelc�ec: H.w4tad ��
1150 -1170 79th Ave. NE 200p Ucrit Typec: 1-�tary & 1-level+�v/o baseme��t
5ize Range 1,400 (1-soozY) & 2,00�-r,200 (�v/o) SF
SP°�'g �� Ahwmtioa: Aeg. l Umt/Month
Talia's Townlyomes Z000- G 6 �151,000 -$1G6,000 Developec: Tim Ja�vor
7411-7421 Umvec�ry Ave. NE a002 Llnit Typ�: 2-Story Townhomx/Side-by-Side
,'y'ze Range 1,300-1,350 SF
I'ridlci' �b,.o��ion: AverAge 90IYays Ii�ted cxi MLS
Sourrer N�tlutarMLS,•DSTJReatmtb
DSUReseatcb
a divrsion ofDahlg�en, Sbardlow and Uban
Competitive MatketAnalysis Page 29
Island.c of Peace Hou.ring Market Study, Fridley, MN
January 25, 200G
A number of the projects were built and sold out several years ago. All recent townhome �rojects in
Fridle� have been�riced under $200,000. Although we don't go into great detail, we include them
to better assess the kind of pricing townhomes built on the subject site could receive. There are
several notable projects currently marketing, with a discussion of each in the following paragraphs.
Park View
• Schafer Richatdson and
Ryland Homes have entered
into an agreement with the City
of Columbia Heights to be the
master developer for the
redevelopment of a former
industrial park located between
Central and University Avenues
and north of 37`h Avenue. The
29-acre redevelopment, called
Park View, will be developed in
phases, and will eventually
contain 548 multifamily units.
Ryland Homes recendy began marketing Phase I, a 123-unit townhome project consisting of
two- and three-story units. Because Columbia Hei,ghts is a moderatel� �riced housing market
consistin� of mostly older homes R�land decided to offex a middle-�n•c�d �roduc �t twe, and not
to risk pushing the market with higher-priced homes. This strategy seems to be paying off, as
sales began in October 2005, and R��land has sold 17 units to date. with sales sglit rou�hiv even
between the two- and three-story units. Future phases by Ryland and Schafer Richardson will
likely provide other types of housing, including condominiums, with styles and pricing to be
deterxnined at a later date.
Grand Central Lofts Townhomes
As part of the Grand Central
Lofts pxoject, located at 47``' and
Central Avenues in Columbia
Heights, New Heights LLC, a
subsidiary of Nedegaard
Homes, 21 townhomes are
being developed in addition to a
planned 210 condos. The units
are one- and two-story in design,
with pricing from $329,900 to
$359,900.
DSUResearch
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Competitive MatketAnalysis Pade 30
Island.r of Peace Hou.cing Market Study, Fridley, MN
January 25, 2006
Sales to date have been non-e�cistent, with little interest and no purchase agreements. The
developer believes this is due to the �ricing being too high. We agree, due to the moderately
priced housing market in the area, and the fact that this stretch of Central Avenue has little
character and a number of oldet blighted �xo�erties. We believe that as each phase of the
condos on the site are built over the next several years (as planned), the townhomes will
gradually begin to sell.
R.iverview Townhomes
JADT is developing a several
phase housing project on the
site of the formex Riverview
Supper Club, located along West
River Road, north of Broadway
Avenue in noxth Minneapolis.
When complete, Riverview
Homes will include 29
townhomes (I'hase �, 59
condomixiiums (Phase I�, 45
senior cooperative units and 45
senior rental units (I'hase II�
and 163 additional condos
(Phases IV and �. We include
this project only because of its
pro�mity to the Mississippi
R.iver, as its location so near to
downtown Minneapolis reduces its competiriveness with the subject site.
Bivervieav Toumhome.c
Phase I contains 29 two-story townhome units located above garages. 'There are two unit styles
offered, a 1,724 square-foot model and a 2,410 squaxe-foot model. Some of the units have views
of the Mississippi River and Downtown Minneapolis. In fact, this is the onl� other com�arable
analyzed in this re�ort with immediate �roximitv to the Mississi��i. The key difference is the
Riverview Homes site has an unobstructed view of the river and downtown Minnea�olis (a
"wow factor"� whereas the subject site has an obstructed view due to trees. The site is also
located close to downtown Minneapolis, which increases its desirability (and pricing)
considerably.
'I'he Phase I townhomes were built in 2003 and 2004, and 23 of the 29 units have sold to date.
The pricing of the units, from $370,000 to $755,000, is notable for this industrial area of
Minneapolis, an area not known for uppex-end housing, and a testament to the desirabiliry of
housing with a river and/or skyline view as well as the value created by rivexfront paxk
improvements. However, the toumhomes have been marketing for well ovex two years, and
have yet to sell out, which is slower than the developer had hoped, but not surprising
considering its pioneering location.
DSUReseatch
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Competrtive MatketAnalysis Page 3 �
Island,r of Peace Hou.ring Market Study, Fridley, MN
; anuaty 25, 2006
Two additional developments that have sold slower than expected are Parkside Village and
Lindsey Court, located in Columbia Heights and New Brighton, respectively, and both of which
are small infill projects by Nedegaard. Both projects began marketing in 2003, and have yet to sell
out, due for the most part to being uriced too hieh in xelation to the housing market in the
immediate area. They also lack a sophisticated marketing campaign such as Park View and Grand
Centtal Lofts. Furthermore, the townhomes at Parkside Village axe built on a very confined street
surrounded on all sides by garage facades, which is aesthetically unappealing. Attraclive architecture
and streetsca�es can add substantial value to residential develogment.
R�cLIVT CoNnonziNlt.�7 DL����.o1�niLNrs IN �rrir Aa��
Competirive Ptoject Comparison
There are no condominium projects currently marketing in Fridley. However, five condominium
projects are under construction andJor currendy marketing in the area around Fridley. Detailed
descriptions of these five comparables follows Table 6.
Table 6
Condominium Developmente Curnntly Marlaeting
(Completed, Under Conetruction, or Taldng Reservations) - Pridley Area
J��Y �
Date Total Units ��
Complex Name/Addrese O n Units Sold Low 'I-ii� Comments
Main Street Village Jun-06 125 32 $1�,000 -$299,900 Developer: Dominium
Old Hwy. 8/Main Street Bldg Type: 4Story Condo Com�enion
New Brighton Siu/Type 802 to 1,662 SFJFL1uc and 2-StoryTi-L.
Absomdon: Ficsc Uni� M.�ciceced Summer 2005
s�� r.� v�
39th Av. Fast of Srinson
�t Andiony
Grand Cxntral Lofts
Central & 49di Avrnue
Columbia Heighte
Riverview Homes Condos
2300 West Rivez Road
North Minneapolis -
Hanson Station
Hu�son Boulevazd
Coon Rapidc
J�-o6 2�0
Sep-05 210
Jun-06 58
Sep-06 48
42 $175,000 - $425,000
(5 re,serve�
21 i200,000 - $�,000,000
(2 resen�
17 �190,000 - $475,000
12 $165,000 - $ZO5,000
,,,.. , , . .
i
e
Y z (�. i =
�� � �xm � �.
(7 t�en'e�
Sourcer. Project Saler Offurs,• Norlb.rtar111I_C; DSIJ Renarrh
Developer. Hunt Associates
Bldg Type: 4story Condos (4 Buildings)
Size/Type 802 to 1,921 SF/FL1Cc
Ah,oipdon: Saler. Office O�ened 9/04
Develq�er. New Heights LLC (Nedegear�
Bldg Type 4Story Condos (3 Buildu�gs)
Size/Ty� 1,032 to 3,793 SF/F1aGc & 2-Story
AbsoxPtian: 5a1es Office Opened 11 /04
Dec�elq�er. JADT
Bldg Type: 4titory Condo
SizejTypc 871 m 1,947 SFiFIa� & 2-Story
Abso�pdon: Markeung Began 3/05
Uec�eloPer. Select Development Co�oration
Bldg Typa 3-Story Bnilding (2 Buildings)
Size/Type 8A0 m 1,280 SF/FIaG+
Al�..omtion: Marketing Be�n 9/05
DSUReseatch
a divisioa ofDah/gien, Sbatdlow aad Uban
Competitive MatketAnalysis Pade 32
I.clands of Peace Housing Market Study, Frzdley, MN
january 25, 2006
• The five of the comparables are located in five separate cities; Coon Rapids, north Minneapolis,
St. Anthony, New Brighton and Columbia Heights. One project, Main Street Village, is a
condo conversion of an apartment project that was built in 2004 and was never fully leased. The
others are new construction, low-xise condominiums.
• Silvet Lake Village and Gtand Central Lofts are several-phase projects, with initial phases
currendy being marketed. The first two buildings of Silver Lake Village, with 130 units, are
currenfly being marketed, and the first 67-unit building at Grand Central Lofts is also being
marketed.
• Only one of the five compatable projects has opened for occupancy: Grand Central Lofts.
Silver Lake Village is under construction, Main Street Village is currently open as a rental
building and is being marketed as condos, and Hanson Station and R.iverview Homes are
pxesently marketing.
� Of these 701 condo units entering the market in the near term,124 units have sold or are under
purchase agreement (18%). Over half of the sales that have occurred are at Silver Lake Village
and Main Street Village. Grand Central Lofts opened for occupanry in October 2005, and has
21 closed sales, to-date the only closed units in the Fridley area. With 701 units marketing, there
is sevexal �eaxs of su�lv� already on the market.
• Pricing at the comparable projects in Table 6 range from $120,000 to $1,000,000, although very
few units are priced above $400,000. Most projects have a number of units offered below
$200,000, usually in an effort to attxact buyers out of homes in surrounding areas that have
median prices near or not much above $200,000.
• None of the projects listed in Table 6 are taller than four stories. Buildings taller than foux
stories must begin to incorporate concrete ox steel construction for struciural xeasons, as
opposed to wood construction, which can support a maximum of four stories. Concrete or steel
construction drives up the cost of construction on a per-square-foot basis (around $300 per-
square-foot or greater), and developers only develop it when sales prices justify this price
increase. As is shown in the following detailed discussion of condo comps, all p=ojects
analyzed have a pet-square-foot price of less than $250. Very few condos built outside
downtown Minneapolis and St. Paul are greater than four stories, as the market does not justify
the added per-square-foot cost of construction. We do not believe the Fridle,Lcondo market
iustifies the added cost of a buildin�constructed with concrete or steel.
Competitive Project Details
The comparable recent condominium developments shown in Table 6 are analyzed in greater detail
in the following pages. Included is a detailed unit mix and pricing table (if ava.i�able), a description
of the project, timing, location, target market, and sales performance, and a photo or rendering of
the project (if available).
DSUReseatch
a division ofDablgtea, Shardlow and Ubaa
, ...
Competi[ive MarketAnalysis Page 33
I.cland.r of Peace Hou.ring Market Study, Fridley, MN
January 25, 2006
Silver Lake Villaee
Silver Lake Village is a 260-
unit, four phase condominium
project in St. Anthony,
developed by Pratt Homes and
Hunt Associates. It is part of
the Silver Lake Village
redevelopment project that
includes the development of a
Main Street "town center," a
Wal-Mart stoYe, new apartments
developed by Dominium, and
public open space.
The first building (Phase I), a
60-unit, four-story structure is under construction, with a scheduled completion of January
2006. The second 60-unit building is also under construction, and expected to open in late
2006. Phases III and N will occur as sales dictate. Marketing began in September 2004, and 42
units in both buildings are presendy under purchase agreement, with an additional five reserved
(most sales to date have been in the first building). Units facing the new �ark, which was
recentl�com�leted have sold slightiv better than the rest of both buildinQS.
• Pricing ranges from $175,000 for an 875 square foot unit, to ovex $400,000 for a 1,921 square
foot unit. (Exact pricing for certain units was unavailable from the sales office.) Since
marketing began in fall 2004, some units have had $2,000 to $3,000 price increases.
• Buyers range across all age groups, but are weighted slighdy to older, empry-nesters. Buyers
genexally have been fxom noYtheast Minneapolis, St. Anthony, Columbia Heights, Fxidley,
Shoreview and Roseville. Thus, this project has a decided orientation towaxd the older suburbs.
Buyers of condos on the subject site would also likely be drawn from areas within close
proximity to the site.
• The sales agent at Silver Lake Village indicated that buyers at the project would not ]ikely
consider condominiums closer to Downtown Minneapolis, because they are seeking to be "near
the city without being in the city," and the Silver Lake Village provides that opportuniry.
• Silver Lake Village ptovides a lesson in "place-making," as it is part of a master-planned
development that included substantial city involvement. It replaces a vacant mall and
several other blighted properties. The condos benefit from significant improvements in the
overall area, as opposed to being a stand-alone project. This has no doubt helped with sales.
The lesson is imnrovements to the subject site could be enhanced by other redevelogment in the
area gaxticularl�at the oronosed Northstat Rail station.
DSUResearch
a divrsion ofDahlgren, Sbardlow and Uban
Competitrve MarketAnalysis Page 34
Islands of Peace Hou.ring Market Study, Fridley, MN
january 25, 2006
39th Ave, East of Stinsoa
Hunt Associates, Pratt Homes
Unit Name
A
A1
B, Bl
C, Cl
D, DI
E, EI
F, Fl
G, Gl
H, Hl
I
I1
J, J1
K, Kl
L
LI
M, Ml
Q
R
T
Total/Average
3L_.��
Count
3
1
4
4
4
4
4
4
3
3
Y
4
4
3
1
4
5
2
2
60
Range
+ - Den or Sunporch
++ - Den and Sunporch
Sourre: DSU Iieseartb
Grand Central Lofts
Bedrooms
i
1
1+
1+
1+
1+
1
1+
2+
2
2
2+
2+
2+
2+
2++
1+
1
1
Unit
�'n'ished Sales Price Per S.F.
aths Size �w. Hi �B �
1 840 $182,900 $191,400 $218 $228
1 802 f189,900 $189,900 $237 $237
1.5 1,147 $249,400 g280,900 $217 $245
2 1,152 ;239,900 $2G3,900 $208 $229
1.5 1,132 �2G0,400 �2G6,400 �230 i235
2 1,18G $24G,900 $271,400 $208 $229
1.5 1,193 $253,400 $280,900 $212 $235
2 1,394 �287,900 $31G,900 $207 $227
2 1,348 $2G9,600 �296,5G0 $200 �220
2 1,432 $308,900 $333,400 $21G $233
2 1,500 $343,900 $343,900 $229 $229
Z 1,508 $320,900 $352,400 $213 $234
2 1,GG2 $347,900 $381,900 $209 $230
2 1,G10 $373,900 $408,400 $232 �254
2 1,54G $3G8,400 $3G8,400 $238 $238
Z 1,921 $425,400 $4G0,500 $221 $240
1 928 $194,400 �211,900 $209 $228
1 875 $174,900 E189,900 g200 $217
1.5 _.4�4 �219,900 $241,400 $209 $229
1,287 E277,790 $225
Unit Size Sales Price Price PSF
S02 1,921 �174,900 $460,500 $200 $245
• New Heights LLC, a development company
with roots in Nedegaard Homes, is
developing the 210-unit Grand Cenual
Lofts on the site of a foxmer K-Mart at 49'''
and Central Avenues in Columbia Heights.
• An initia167 units (Phase n are presendy
being marketed on the site. The building is
complete, with first move-ins occurring in
October 2005. A model unit opened in
May 2005.
DSUResearch
a division ofDablgren, Sbardlow and Ubaa
Competitive MarketAnalysis Page 35
I.rlanr,�r of Peace Hou.ring Market Study, Fridley, MN
� C.;<"^ y 2S, 2006
• Units range in size from just over 1,000 square feet to two large penthouses of neaxly 3,800
square feet (for the penthouses, buyers bought several units and combined them into one large
unit). Pricing ranges from $189,900 to $355,425 for non-penthouse units. Pricing for the
penthouse units was unavailable from the sales office, but are estimated to be between $750,000
and $1,000,000.
• Buyers axe reportedly from a range of areas around the Twin Cities, although a significant
number axe long-time homeowners currendy living in Columbia Heights and Fridley. Grand
Central Lofts could be c�uite com�etitive with condos on the subject site due to its relative close
�roximitv and moderately overla��ing draw_area.
Columbia Heights
New Heights LLC
Unit Name
Aspen
Birch
Black Spruce
Cedaz
Chesry
Green Ash
Hemlock
Hickory
Highlandez
Hilltop
Marle
Mulbeiry
Red Cedar
Red Maple
Red Oak
Scotch Pine
Spruce
Tamazack
Walnut
White Oak
White Spruce
Yellow Bizch
Penthouse
Penthouse
Total/Average
Units
2
2
2
3
2
2
4
4
4
2
7
4
2
1
2
2
3
7
2
3
4
1
1
1
67
Range
* - E�timated Piicing
Source: DSU lie.reanb
�
Flat
Flat
Lofr
Lofr
Flat
Loft
Flat
Flat
Flat
Flat
Flat
Flat
Lofr
Flat
Flat
Flat
Loft
Flat
Lofr
Flat
Loft
Flat
Flat
Flat
Unit
Bedrooms �ths iz Sales Price Ran e Per S.F.
2 Z 1,375 E267,000 $267,100 $194 $194
1+Den 2 1,032 $209,900 $214,100 $203 #207
2 3 1,616 $314,000 $323,400 i194 E200
z 3 1,350 $2G2,250 $283,400 �194 $210
1+Den 2 1,032 $192,000 �200,500 �186 �794
2 3 1,434 �278,500 $288,800 $194 �201
I+Den 2 1,032 $192,000 �6214,100 $186 �207
I+Den 2 1,047 $192,000 $221,000 $183 $211
2 3 1,100 $21G,800 E248,300 $197 $226
1 2 ],091 $217,250 f237,300 $199 ;218
2 2 1,278 l248,250 $2G9,350 �144 �211
1+Den 2 1,032 $189,900 $221,000 $184 g214
2 3 1,390 $270,000 f280,400 $194 f202
1+Den 2 1,207 $293,300 $293,300 $243 $243
g 2 1,036 $237,300 $304,400 �229 $294
2 2 1,308 $254,100 ;290,300 $194 f222
2+Den 3 1,G90 �334,500 �345,500 �198 ;204
7 2 1,092 $212,100 $238,900 $194 �219
2 3 1,371 ;2G6,300 �304,400 ;194 i222
2 2 1,292 $251,000 $272,900 �194 i211
2 3 1,434 $278,500 g289,300 $194 $202
2 2 1,381 ;355,425 �355,425 $257 $257
4+Den 4 3,793 N/A N/A N/A N/A
3+Den 3 3.680 N/A �i[$ I`�� L�1.�0
1,462 5244,866 5200
Unit Size price PSF
1,032 3,793 $189,900 53,000,000* SI84 5294
DSUReseatch
a divisiott ofDahlgren, Sbatdlow and Uban
Competitive MatketAnalysis Pade 36
Islands of Peace Hou.ring Market Study, Fridley, MN
%anuary 25, 200G
� Grand Central Lofts has sold just 21 of the initia167 units in Phase I, a small total given the
project is Columbia Heights' first significant housing project in years. Typically, new projects in
long-neglected axeas start fast with sales. As well, we believe that this project should have many
more sales given this it has had a dedicated maxketing effort since November 2004. The sales
office indicates that while pricing is pushing the limits of existing area homeowners, sales have
occurred since the model opened in May 2005, and also since the building opened in October
2005.
Our opinion is that, due to the site's location in a blighted corridor of Central Avenue, it is
simply not overly attractive to condo buyers, especially given the choices in othex areas with
more attractive surroundings (the Silver Lake Village redevelopment, for example). A xetail
building on the site will open in late 2006 facing Central Avenue, and will include office space
and a coffee shop. The City of Hilltop, located across Central Avenue is in the process of tr.ying
to redevelop key sites along the coxridor, and Coluxnbia Heights is also beginning the planning
process fox the same thing. Over time, we believe these efforts will improve sales of various
housing product, a strategy that likely needed to spur sales on the subject site as well. Fox now,
though, the area around Grand Central Lofts is a negative, and is likely affecting sales.
Riverview Homes Condos
The Riverview Homes project
was introduced in Table 5, as
Phase I of the project consisted
of 29 townhomes, most of
which have been sold and are
occupied. Phase II includes a
59-unit condominium building
that began marketing in March
2005.
• Pricing is listed itom $210,960
to $480,000 for units between
871 and 1,947 square feet.
Units have been marketing fot
nearly a year. Construction has
yet to begin, due to slower than
expected sales (50% presales are
required to begin construction). The original sales agent is no longex working with the
developer, who reports that the sales campaign is currendy on hold as a new sales agent is
identified. This has delayed the completion date to late 2006 or some time in 2007. Three
additional phases are planned after Phase II. Due to the current uncertainty, the timing of future
phases is not known at this time.
DSUReseatcb
a division ofDablgreti, Sbatdlow and Uban
Competittve MatketAnalysis Page 37
Islands of Peace Housing Market Study, Fridley, MN
anua 25, 2006
West River Parkway, aorth of Broadway
JLT Group
Unit Name
A1
N/A
N/A
N/A
A2
N/A
A3
N/A
A4
B
C
D
�
CT
N/A
100
101
Total/Average
Range
Source: DSU Iierearzb
�
Count
2
2
1
1
3
1
3
1
3
4
20
10
2
3
1
1
1
59
Main Street Villa�e
Bedrooms
i
1
1
i
1
1
1
1
1+Den
1
2+Den
2
i+Den
2
3
2
2
Unit
Finished Sales Price Per S.F.
Ba S�e I ! �1� �' teh
1 1,009 �2G0,000 $266,920 $258 �2G5
1 1,039 $249,3G0 �254,000 �i24� $2`�
1 1,049 $2G3,844 �62G3,844 �252 $252
1 1,0G9 $261,905 $2G1,905 $245 $245
1 948 $232,2G0 $250,280 g245 $2G4
1 949 $237,250 $237,250 $250 $250
1 871 $213,395 $229,949 �245 $2G4
1 879 $210,9G0 $210,9G0 �240 $240
1 941 $230,545 $245,000 ;245 $2G0
1.5 1,947 $4G5,000 $475,000 ;239 $2�
2 1,37G $330,240 $3G3,2G4 �24U �2�4
2 1,17G $282,240 g311,640 $240 $265
2 1,G55 $455,000 $477,750 $275 $289
1.5 1,405 $337,200 $347,040 #240 $247
2 1,751 $420,240 $420,240 $240 $240
1.5 7,958 $480,000 $480,000 �245 $245
1.5 1•342 N/A N/A N/A N/A
],270 5313,328 5247
� '� Sales Pris� Price PSF
871 1,958 $210,960 �48U,000 $239 5289
• Main Stteet Village is a condo
conversion in New Brighton. It was
originally opened as a 125-unit rental
building in 2004, but the developer,
Dominium, decided to convert the
building to condos in 2005 in light of a
weak apartment market.
• Pricing at Main Street Village xanges
from $120,000 for a 574 squaxe foot
studio to $299,900 for a 1,662 square foot,
two-story unit.
DSUResearcb
a division ofDahlgtea, SbassdJow and Uban
Competitive MatketAtialysis Page 38
Lclandc of Peace Hou.ring Market Study, Fridley, MN
jnvrsin � 25, 200G
• Marketing began in late summer of 2005, and to date, 32 units are under purchase agreement.
Current residents have the option of purchasing their unit. However, no closings can occur until
50% of the units are sold. Thus, it is uncertain when first closings will occur. Regardless of
the timuig, this project is not overly competitive with the subject site due to its distance. Its
middle range tiricing seems to be attracting buyers, however, which can serve as a lesson for
develo,�ment on the subject site.
Old Highway 8/Main Street
Dominium
iJnit Name
Studio
Studio
1 A.1 / 1 BR Hcp.
1A.2
lA
1B.1
IB.2
IE
1D
1C
ID.S
2A
2B
2A.3S
2BR TH
2BR TH (a)
2BR TH (b)
3 BR TH
Total/Average
Range
Sourcc. DSU Be.rearch
Hanson Station
Unit
� 'Fmished Sales Price Per S.F.
Count S,g� Berlrooms Baths � I.B� � �.� �
2 0 0 1 574 �120,000 $120,000 �209 $209
2 1 0 1 672 �125,000 $125,000 $18G $186
12 2 1 1 725 $131,500 $144,000 ;181 �199
2 1 1 1 740 $134,000 �134,000 $181 $181
� 2 1 1 777 $134,500 $142,000 $173 $183
18 G 1 1 783 �138,500 $146,400 $177 $187
4 2 1 ] 807 $142,500 $143,400 ;177 $178
2 1 1 1 889 $144,400 �]44,400 �1G2 $1G2
1 0 1 1 931 �154,400 $154,400 $1GG �1G6
6 1 1 1 941 $1G1,000 �163,500 ;171 $174
1 1 1 1 1,026 $175,000 $175,000 �171 $171
26 g Z 2 1,134 $187,000 �193,500 $165 $171
12 4 2 2 1,202 $203,900 ;227,500 �170 $189
2 p 2 2 1,229 $215,000 $217,500 �175 $177
23 1 2 2.5 1,380 �225,000 y�239,500 �r1G3 $174
1 1 2 2.5 1,427 $244,500 j244,500 $171 $171
1 0 2 2.5 1,462 $249,500 ;249,500 ;171 $171
4 0 3 2.5 1,� $299,900 ;299,900 $180 �180
�5 1,053 $183,767 $174
Unit Size Sales Price Price PSF
574 1,662 $120,000 $299,900 �162 $209
• Hanson Station is a 48-unit, two-building condo project in Coon Rapids. Each building will be
three stories, and a majoriry of the units will have two bedrooms. This is the only condo project
cuxrendy marketing in Coon Rapids.
• Unit sizes range from 800 to 1,270 square feet, and pricing ranges from $139,900 to $205,900.
Most units are priced under $200,000, and average $163 per-squaxe-foot, which put them in a
fairly cornperitive price range against other multifamily housing on Coon Ra.pids.
DSUResearch
a division ofDahlgr+eb, Sbardlow and Uban
Competitive MarketAnalysis Pade 39
Islands of Peace Hou.ring Market Study, Fridley, MN
January 25, 200G
Groundbreaking is
expected to occur in
January 2006, with first
move-ins occurring in late
summer 2006. To date, 12
of the 48 units have sold,
an indication of positive
demand for condos in
Coon Rapids. Although
the project is called Hanson Station, a reference to Northstar Commuter rail pro�mity, and
marketing materials show a train on the logo, the site is not located within walking distance of
either of the two planned Coon Rapids stations. Housing marketing on the subject site would
benefit from actuall� bein�within walking distance of the Fridley station.
Hanson Boulevard, South of Highway 10
Select Development Corporation
Unit Name
Belmont
Carleton
Windsor
Cambridge
Stratford
Kingston
Wellington
Total/Average
Range
Unit
ouss Bedrooms
Source: DSU Be,rearch
2 1
4 2
12 2
6 2
6 2
6 2
12 2
48
�
Finished �Sales Price Pe: S.F.
Baths Size I. w H4h L�v H4h
1 800 �139,900 $139,900 $175 $175
1 9G5 $164,900 $168,900 $171 $175
2 1,145 $186,900 $203,900 �1G3 $178
2 1,215 $187,900 �202,900 $155 �167
2 1,220 $189,900 $199,900 $156 $164
2 1,250 �189,900 $204,900 $152 $1G4
2 1270 $189,900 $205,900 $150 $1G2
1,178 $191,525 $163
Unit Size Sales Price ' e PS
800 1,270 $139,900 $205,900 $150 $178
Several projects are in various stages of planning or approvals in the greater Fridley area, and many
of them could provide additional competition for condominiums on the subject site. These projects
axe listed and described in the following bullet points.
• The City of New Brighton has entered into a development agreement with Sherman
Associates and David Bernard Homes (a division of Rotdund Homes) to construct up to 750
housing units in the Northwest Quadrant of Interstates 35 and 694. Included on the site will
DSUReseatcb
a divisron ofDahlg�ret�, Sbardlow and Uban
Competitive MarketAnalysis Page 40
Islandr of Peace Hou.ring Market Study, Fridley, MN
� ntirvn y 25, 200G
be a combination of various townhome and condominium product, examples of which can be
found in Blaine at The Lakes and in St. Louis Park at Village in the Park. Pricing will sta.xt at
$180,000 for some units and styles, with a majority of units priced somewhere between $200,000
and $300,000. David Bernard intends to begin marketing condos in spring 2006, and expects
demand to be stronger from empry-nesters than from younger buyers. This groject will be c�uite
hi�,gh nrofile in nature and could grovide comgetition with the subiect site. Moxe imnortanflv. it
could also grovide lessons in�hasing nr_,r oduct ty�e and �xicing for housine on the site.
The City of Coon Rapids has entered into a development agreement with Shamrock
Development and Rottlund Homes to redevelop a blighted commercial corridor along Coon
Rapids Boulevard, southeast of Egret Boulevard. With Shamrock acting as master developer,
Rottlund is planning 306 townhomes and condos on the site. The exact unit mix for the
project, which is called Port Rivetwalk, is unknown at this time, but sales and marketing are
expected to begin in fall 2006, with first units delivered early in 2007 and sellout withixi two
yeazs. Pricing is expected to range from $180,000 to $250,000. This.,�ro�ect could also gose
moderate comuetition with housing on the site.
Town Center Development is proposing to construct a 54-unit senior condo building at the
southwest quadrant of Central Avenue and Mississippi Street in Fridley. The development,
called Town Center, is expected to begin marketing in February 2006. Units will be mostly two-
bedroom in design, and range from $230,000 to $300,000. This �ro�,ect could be quite
com�etitive with the sub�ect site as it will attract older em�ty-nester buvers. However, its
�ricing is hi�her than that which we recommend for the�ubiect site, whtch could be an
advanta,.ge for marketing of units on the site.
• A second project, Spring Valley Estates, is proposed for the southeast quadrant of Cenual
Avenue and Mississippi Streets, across Central from the Town Center project. The developer,
Jon Demello, is plaxining a spring 2006 groundbreaking for the 71-unit ptoject, which will also
be senior condos. Units will be a combination of one- to three-bedxooms, although pricing is
not available. This�roiect would also �ose com�etition for the subject site, althou�h the two
jI'own Center and Sprin�Valle�Estates) would clearl�� be more comvetitive with each other. as
the�.are both senior condos.
• Redevelopment along the Central Avenue Corridor in eithec Hilltop or Columbia
Heights. Both cities are working towards redeveloping various parcels along the corridor, and
housing could very well be one of the uses proposed. No development has been proposed ox is
pending at this time, but it is possible that housing of some sort, eithex multifamily for-sale or
rental units, could be developed in the next five years.
DSUReseatch
a divrsion ofDahlgren, Sbardlow and Uban
Competitive MarketAnalysis
Zrlanr.�r of Peace Housing Market Study, Fridley, MN
January 25, 200G
Page 41
Major Competitive TownhomelCondo Dev+�iopments
Islands of Peace Mark�t Siudy
N
n�aa ;.r�a o a� �a•� �j ,� �.; Open V+tater Kx�,�,�� �
1�
DSUReseatch
a drvision ofDablgren, Sbardlow and Uban
Competitrve MarketAnalysis Pade 42
I.rlanrZc of Peace Housing Market Study, Fridley, MN
January 25, 2006
The chart on the following page shows a summary of unit supply for units listed in Tables 5 and 6
and those pending in the Fridley area. The chart shows units sold (left side of the chart) and those
unsold (right side) at each development, as of January 2006.
The chart indicates that, while 288 units have sold in the area, over 400 are unsold and 1,500 could
hit the market. Presendy, Park View, Grand Central Lofts, Silver Lake Village, and Main Street
Village all are marketing, and have a significant numbex of unsold units. Lindsey Court is close to
being sold out, and Parkside Village has very few units xemainuig, but these two projects are very
small and do not provide much competition to the subject site.
Several additional projects, or future phases of current projects, are likely to begin marketing,
including:
• Park View in Columbia Heights. This project has multiple phases, starting with 123
middle-market priced toumhomes. The second phase will include 158 more toumhomes,
with future phases that include condorniniums. Any one of the phases at Park View could
create competition for the subject site. Its sales �ace and �ricing will be major indicators of
the �otential for success on the subject site.
• The first phase of Grand Central Lofts in Columbia Heights has sold slowly, due
partially to pricing that is slightly high for the immediate area, but also due to a lack of
development momentum in the area. The rate of sales and pricing should be monitored as
an additional 140 units in two future buildings begin marketing, which, depending on their
timing, could present competition for the subject site.
• The Northwest Quadrant in New Brighton will present the least direct competition
among planned development in the greater Fridley area, but the sheer number of units (750)
will provide a substantial, long-term choice for multifamily buyexs looking for housing in
the general area. Its sales ,�ace will offer lessons fox the subject site.
• Silver Lake Village is planning a third and fourth building in St. Anthony, consisting of an
additional 130 units. This project is likely to be maxketing at the same time as the subject
site, and will likely present competition.
• Port Riverwalk;will provide competition for the subject site, as units there will be priced
competitively with other new townhome projects in the general area.
• Town Center and Spring Valley Estates will present competition for the site, although
the two will likely compete more with eachother, as they are located across the street from
one another.
DSUResearch
a division ofDahlgren, Sbardlow and Uban
Compe[itive MarketAnalysis Page 43
Islands of Peace Hou.rirtg Market Study, Frzdley, MN
January 25, 2006
Chart 2 - Sold/Unsold Cornparisori
Fridley Area Multifamily Development
. J��y aoa�
5old,t'P�Lase Ag�+eemexts Unsold/R�eseasRations
Parlaide Villa�
�
Riseeivi�ewTowrnkomes , �
Fark Viem 1 =
E
Grand Cex�al Lofes THi
Lixdsep GourE �
14lain 5treet V�71age,
�. �
Silver Ls1oe V�lage:l & $ �
S
Craa��d Cen�al Loft� 1 ;
3
Riveaviea Hoines Gondbs � � �
�
HaxsoxSyatisx ,
'I'own 5quart ; , `
Sgrixg Valley�sl��es
Park View 2 ,
Silver La1�e V�lage; 3 8s �
Ctiaand Cextral Lof� 2 & �i �
f
p OTt R1:IlT�iuC � .
� OPL�liY2Ti Q,7��Y� x .
�
f
E
f
;
�
:
3
E
� s 3 I
150 13S f00 75 50 2S 25 50 ?5 100 lYi 15@ 175 300
td'm��� iR o�r /aa�e r�af�e� bg� Mserke�
_- Fbrf i�r�at�E we7lbr fQG saett
xx . Norilawej� �,.i�ad�nf midd mn� �g+ �0 7�SQ u�oii�.
Sou�ee• DSU3ielerix�4
DSUReseatch
a division ofDahlgrerr, Sbardlow and Uban
Competrtive MatketAnalysis Page 44
Island.r of Peace Hou.ring Market Study, Fridley, MN
January 25, 200G
�TID7ING OF CODIPETITORS�
Chart 3 on the following page shows the timing of the projects shown on the previous chart. This
xeinforces the impression that a number of projects will be likely marketing at the same time as the
project on the subject site. Not all projects from the previous chart are shown, as many are likely to
be sold out by the time housing could begin marketing on the site, or simply because they are too
small in size to present substantial competition.
The bars represent the marketing time of each competitive project in the Fridley area, from the start
of marketing to final occupancy/sellout. The blue bars represent the time between the start of
marketing and the occupancy of the first units, and the red bars indicate the remainder of the
marketing tirne, which lasts until the final unit is sold and the project is fully occupied.
We note this chart repxesents development timing, not project size ar absorption rates, as the last
chart did. The timing of project completion could change, depending on sales pace of each
comparable. Also, the timing of final occupancy will likely change, as it is based on our estimates,
and in many cases is essentially unknown.
The subject site could have housing development that is marketing against a number of pxojects in
the general area. A number of them could pxesent competition with housing on the site, particularly
because they are later phases of well-known and established projects.
A substantial number of units are likely to be actively marketing on infill sites in nearby cities in the
next few years, undoubtedly presenting competition for the subject site. We believe that
appropriately priced housing on the site, in addition to high-quality landscape design and
architecture, can mitigate much of the competition, and create an attractive option in the
maxketplace.
However, due to the sheer number of projects already marketing, or due to come online in 2006 in
the Fridley a.rea, and that they have similar product types as that which is recommended for the
subject site (a combination of townhomes and condominiums), we don't see a particular advantage
in rushing units to market. There is likely to be substantial competition for the next couple years,
which leads us to believe it may be wise to wait a year or two before finalizing a for-sale concept and
phasing plan. This will provide a much better indication of how well currendy marketing ox soon-
to-be-marketing product in the area will fare, and to identify possible market niches.
DSUReseatch
a division ofDablgren, Sbatdlow and Ubaa
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Page 47
CONCLUSIONS
�� �
RECOMMENDATIONS
DSUResearcb
a divrsion ofDahlgrea, Shatdlow and Uban
Conclusions and Recommendations Pade 48
Island.c of Peace Hou.cing Market Study, Fridley, MN
January 25, 2006
This section provides conclusions and recommendations fox the housing potential on the Islands of
Peace site. This section includes a reaction to the preliminary development concepts, conclusions
based on the current multifamily for-sale housing market, and recommendations as to the type of
development that is most likely to be successful on the site.
Co�vci.t ��o�v�
Overall Conclusions
In general, we believe the site is average as a location for housing, as there axe a combination of site
advantages and drawbacks to site's location that affect development potential and attractiveness.
The condo market is unproven in Fridley, but we believe there is demand for a combination of
��ro�riatel�priced townhomes and condos on the site.
Very little new housing has been marketed and sold in the past decade in the general Fxidley area.
However, the pace of housing development in the broader region has increased recently, with
several notable townhome and condo projects opening or marketing.
Key Conclusions
• The site ranks avera�e for the develo�ment of condominiutns. Amenities such as the
adjacent Islands of Peace Park and Mississippi River are mitigated by nearby industrial land
uses and poox connections to adjacent neighborhoods and retail. In general the site, when
compared to the location of other condominium developments, is average to below average,
precluding it from the development of mid- or high-rise condos. Furthermore, the site's
ranking may preclude condominiums altogether, especially in the uutial phases of
development, when townhomes may be more appropriate due to their lower per-square-foot
construction costs.
National research indicates housing located adjacent to rail stations (light rail or commuter)
is popular, often garnering higher sale or rental prices than comparable non-transit adjacent
housing. Thus, we believe the �lanned Northstar Commuter rail line. with a nearby station
location �,reatl�enhances the site's a�geal among buyers, especially those working in
downtown Minneapolis. Furthermore, improvements to the area, and perhaps a
redevelopment master plan that includes the site and station area, would increase the value
of housing marketed on the site.
• Long=term demogratihic trends favor the construction of condos and townhomes in the
larger housin�market, as the number of empty-nester and single person households
DSUReseatch
a division ofDablgren, Shardlow and Uban
Conclusions and Recommendations Page 49
Lrlands of Peace Housing Market Study, Fridley, MN
Lanuary 25, 2006
continues to increase in the coming years. We believe the site could be attractive especially to
existing residents of the area that are considering alternatives to their single-family home.
• Very litde new housing has been built in Fridley in recent years. However, a si � c t
amount of multifamil�for-sale housing. including both condos and townhomes. has come to
the maxket in recent ve,� ars. Sales at a variety of projects have been slow but steady, as the
product is mosdy appealing to buyers, but there is considerable �rice sensitivitn in the area.
There are a considerable number of condo projects currentlq marketing in the region, and
although none present direct competition with the site, there is a several year su�ly of
condominiums in the greater Fridley area. This limits the amount of condos that should be
marketed on the site in the near term. By comparison, townhomes seem to be as or more
attractive in the marketglace, and although there are also a considerable number on and soon
to enter the market, we believe there is an opportuniry for townhomes on the site.
• We do not believe the market would su��ort the develo�ment of mid- or high-rise condos
on the site. The area condo market, which does not have a project averaging over $250 per-
square-foot, does not match the high per-squaxe-foot cost of construction required for mid-
to high-rise construction materials (concrete or steel, as opposed to wood framin�, which is
$300 or higher.
• Despite the competitive market in the greater Fridley area, there could be demand for
additional townhomes and condominiums on the site, o�ver a phased development approach.
Due to the price sensitivity of the area, it is important that unit pricing be appropriate for the
marketplace. We recommend that gricing of units not exceed $250.000 on average (in 2006
dollars�,, uar��with the fitst �hase of construction.
General Concept
We recommend a phased development plan that includes a combination of townhomes and
condominiums in a phased development. Ideally, townhomes would be marketed in the first phase,
with a combination of the two to follow.
Offer a variety of unit styles and price points, while maintaining price sensitivity.
The target market is likely to be over 40 years of age, and be from the general area. The
median sale price of a single-family home in Fridley in 2005 was $217,000. We believe
buyers may have a high percentage of equity in their current home, but not necessarilp high
value, and therefore it is important that pricing not exceed the target market. The initial
phase of development should include townhomes, and perhaps condos, but with a large
number of units priced around or below $200,000. Future phases can be offered at highex
prices as the market allows.
DSUReseatch
a division ofDablgten, Sbarrilow and Uban
Conclusions at�d Recommendations Page 50
Islands of Peace Housing Market Study, Frzdley, MN
january 25, 2006
• Due to the competitiveness of townhomes and condominiums in the greater Fridley area,
we recommend the creation of a site plan that is different &om competing offerings,
particularly one that takes advantage of Islands of Peace Park and the commuter rail
station. Furthermore, we recornmend reputable Iocal and/or national buildexs with a
corrunitment to high-qualiry design of both the site and architecture.
• A majority of the existing apartment buildings on the site would likely pose a problem for
new toamhomes or condos marketing on the site. However, significantly renovated or
newly-consttucted affordable apartments should not detract from the marketing of
for-sale housing on the site. If the Fridley HRA and City of Fridley supports continued
affordable housing on the site, we strongly recommend renovation or replacemen/new
consmxction.
• We strongly recommend upgrades to Islands of Peace Park. Although the site is not
likely to have units that have views of the Mississippi River, we believe the Islands of Peace
Park can be a strong amenity for potential buyers. Its current condition and access only
marginally add value, and we believe they can be improved significandy.
• The promise of future commuter rail service greatly enhances the attractiveness of the site
for both for-sale and rental housing. �e recommend the Ciry of Fridley create enhanced
pedestrian connections between the site and the planned commuter rail station. As well, the
City should consider creating a master plan for the entire station area and subject site. This
will enhance the matketability of all parcels for a variety of uses.
We recognize that the ma.rketing of for-sale housing on the site may not be +mminent, and
that it may take a considerable amount of time to acquire most or all of the properties on the
site. Considering the current market for townhomes and condos, we don't recommend
rushing product to market. It may indeed be wise to wait and see how Park View,
Port Riverwalk, Grand Central Lofts and the Northwest Quadrant petform before
preparing the site for matket-rate housing.
• Waiting also allows for other improvements to the site and area to occur, such as park
improvements ox changes to uses of adjacent sites. It would also mean the start date of
commuter rail service would be closer to reality, which would assist the maxketing effort. It
may be worth considering, if feasible, to deal with the renovation, removal or new
construction of affordable housing on the site in the first phase of development, with for-
sale housing occurring in subsequent phases.
• If the timing of the previous suggestion is problematic for the Ciry or development team, we
recommend investigating the general-occupanry rental market as a possible component to
this project, as this use would certainly also be an attractive option near a commuter rail
station.
DSUReseatch
a division ofDahlgren, Sbardlow and Uban
Conclusions and Recommendations Page 51
Zrlanc�r of Peace Hou,ring Market Study, Fridley, MN
january 25, 2006
Target Market
• We believe the main target market will be empty-nester households from the nearby area of
Fridley and surrounding communities. Buyers will primarily be looking to stay in the area
and be part of an attractive new development that is priced within their means.
• Youngex buyers, including singles and couples, will be a secondary market, particulatly those
drawn to the proximity to commuter rail. An emphasis on area amenities, improved
connections, and a quality site plan will be especially important to attract this type of buqer,
since there are a number of options from which to choose.
• Younger single women are an increasing share of the housing maxket, and aze attracted to
condos for the security and limited access.
We include the following list of key considerations when formulating a marketing plan for the new
residential units on the Islands of Peace site.
• Several planned projects attd future phases of existing projects will create formidable
competition. We identified numerous projects that are already marketing or likely to in the
near future, and believe product di�'erentiation is key to successful project sellout,
especially since many competitive projects will be siinilar in sryle and price.
• Work with a professional marketing team to refine project posidoning. A sttong line
of positioning is unique relative to the competition, and meaningful to potential buyers.
• Emphasize future commutet rail. The site is located within wall�ing distance of the
commuter rail station, a�d that should be pointed out in marketing materials and slogans.
Maximize marketing efforts to commuters on East River Road. Emphasize that this location
is closest to dovcmtown among all commuter rail stations. Maxket this site to downtown
Minneapolis workers.
� Create an attractive sales office as early in the marketing process as possible, and roll
out the product with a cootdinated effort between developer, sales staff and other related
parties.
� Participate in marketing campaigns, such as Parade of Homes and townhome or
condominium tours of any kind, to incxease traffic through the sales office. �
DSUResearch
a division ofDahlgren, Shardlow and Ubar�