tulsa roi training presentation 111209
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Envision Tomorrow:Envision Tomorrow: Return on Investment ModelReturn on Investment Model
Tulsa, OklahomaTulsa, OklahomaTraining PresentationTraining Presentation
20092009
What is Prototyping?What is Prototyping?
Approach used by innovation leaders Approach used by innovation leaders around the worldaround the world–– IDEO approach: IDEO approach: ““Right, Rapid & RoughRight, Rapid & Rough””–– In developing prototypes In developing prototypes ““creating epiphanies creating epiphanies
and model building go hand in handand model building go hand in hand”” –– The The Art of InnovationArt of Innovation
–– "We make lots and lots of prototypes: the "We make lots and lots of prototypes: the number of solutions we make to get one number of solutions we make to get one solution is quite embarrassing, but it's a solution is quite embarrassing, but it's a healthy part of what we do."healthy part of what we do."
Apple Chief Designer Jonathan Apple Chief Designer Jonathan IveIve
Prototyping is Like Using a Crash Prototyping is Like Using a Crash Test DummyTest Dummy
Creating Building Prototypes:Creating Building Prototypes: Envision Tomorrow Process OverviewEnvision Tomorrow Process Overview
Building Types
Development Types
Scenario Development
Evaluation
Creating Prototype BuildingsCreating Prototype Buildings Building Envelope and FinancialsBuilding Envelope and Financials
Square Footage by UseSquare Footage by UseUnitsUnitsRentsRentsSales PricesSales PricesCostsCostsBuilding ValueBuilding ValueEmploymentEmploymentParkingParking
…Create a Range of Buildings
Using ROI Model…
Building Prototype ModelingBuilding Prototype Modeling
Prototype ExamplesPrototype Examples
Mixed-Use Office 4 Story
Mixed-Use Residential 4 Story
Mixed-Use Rehabilitation
Mixed-Use Office 2 Story
Mixed-Use Residential 2 Story
Restaurant and Hotel
Prototype LibraryPrototype Library
250+ buildingsand growing
ROI ModelROI Model
The ROI model is a way to physically and The ROI model is a way to physically and financially model potential developmentfinancially model potential developmentThe goal is to model feasible development The goal is to model feasible development –– or to see where existing regulations or to see where existing regulations could be optimizedcould be optimized
Overview PageOverview Page
PhysicalPhysical
Parking LayoutsParking Layouts
Parking ParametersParking Parameters
FinancialFinancial
Detailed FinancialDetailed Financial
SummarySummary
Brainstorm: TulsaBrainstorm: Tulsa’’s Prospective s Prospective ROI Model Users and UsesROI Model Users and Uses
UsersUsersCity of TulsaCity of TulsaUniversitiesUniversitiesBusiness improvement Business improvement districtsdistrictsCDCsCDCsMain Street programMain Street programNeighborhood associationsNeighborhood associationsProperty ownersProperty ownersRE developersRE developersBanks/lending institutionsBanks/lending institutions
UsesUsesEvaluate zoning codeEvaluate zoning codeHeath deptHeath deptUse together in a Use together in a database format/ shared database format/ shared webwebEducate users re needed Educate users re needed incentivesincentivesAssist in financing Assist in financing especially in MU especially in MU developmentsdevelopments
Tulsa Example:Tulsa Example: 22 Prototype Buildings22 Prototype Buildings
Original StandardsPrototypes
ApartmentSingle Family Home 5-8K LotSingle Family Home 8-15K Lot
Business ParkMid-Rise Business ParkRetail MallStrip CommercialHeavy IndustrialLight Industrial
New StandardsPrototypes
Cottage Home Townhome Live / Work Neighborhood Grocery (1 Story)Neighborhood Retail (1 Story)Mixed Use Apartments & Retail (2 Story)Mixed Use Retail & Office (2 Story)Mixed Use Retail & Office (3 Story)Mixed Use Residential & Retail (4 Story)High Density Condo or Apartments (5 Story)Office Retail (3 Story)Office Retail (5 Story)Office Retail (10 Story)
New Prototypes: A Richer PalateNew Prototypes: A Richer Palate
The following prototypes The following prototypes were dubbed the were dubbed the ““illegalillegal””usesusesUnder current regulations, Under current regulations, they canthey can’’t really be builtt really be builtHave a broader range of Have a broader range of uses and densities, tend to uses and densities, tend to have smaller footprints, and have smaller footprints, and have lower parking have lower parking requirementsrequirements
Prototype examplePrototype exampleShuttered commercial building
Parcel Size: 14,500 SQFT
New mixed-use building: Three stories of residential over retail, parking in the back
Total area: 37,000 sf
Retail: 3,500 sf
Residential: 11,000 sf (gross) per floor x 3 floors = 33,000 sf (gross)
32-36 total units (800 sf avg.)
Surface parking: 33 stalls
Prototype example Prototype example
Prototype example Prototype example
Prototype example Prototype example
A close-up example along Cherry Street(HP-zoned properties are screened out)
Cherry Street
Example: Cherry Street
Land values by square foot
Selected New Prototypes are applied to test whether redevelopment would occur under new zoning conditions
Property values that are low enough to be feasible will “tip”– indicating that regulatory improvements can help spur infill development
AcresAcres UnitsUnitsLive WorkLive Work 77 4343Condo/AptCondo/Apt 2.82.8 460460Mixed Use Mixed Use ResidentialResidential
11 5050
Office over Office over RetailRetail
1.51.5 44,000 SQFT44,000 SQFT
TotalTotal 12.312.3
Count up potential development sitesCount up potential development sites
$0$2,000,000,000$4,000,000,000$6,000,000,000$8,000,000,000
$10,000,000,000$12,000,000,000$14,000,000,000
Trend
Workshop
Scenario C
Scenario D
Value Addedfrom AllConstruction
Value of Total New ConstructionValue of Total New Construction
Each scenario indicates a different level of new Each scenario indicates a different level of new investment the city will needinvestment the city will need
Vetting the PrototypesVetting the Prototypes
Vetting the PrototypesVetting the Prototypes
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
Trend Workshop Scenario C Scenario D
Retail
Office
Industrial(warehouse,flex space,etc.)
New Employment Construction New Employment Construction (Square Feet)(Square Feet)
But Workshop, C, and D will see much greater volumes of But Workshop, C, and D will see much greater volumes of developmentdevelopment
$0$2,000,000,000$4,000,000,000$6,000,000,000$8,000,000,000
$10,000,000,000$12,000,000,000$14,000,000,000
Trend
Workshop
Scenario C
Scenario D
Value Addedfrom AllConstruction
Value Addedfrom Mixed-UseConstruction
Value added from mixedValue added from mixed--use use constructionconstruction
For example, mixedFor example, mixed--use development accounts for nearly use development accounts for nearly 50% of new investment in Scenario D50% of new investment in Scenario D
Vetting the PrototypesVetting the Prototypes
Portland and the Envision Portland and the Envision Tomorrow ProcessTomorrow Process
Created 30 building prototypesCreated 30 building prototypesCapacity analysis of PortlandCapacity analysis of Portland’’s general s general plan is underwayplan is underway–– Testing city redevelopment model Testing city redevelopment model
assumptionsassumptions–– Comparing capacity with MetroComparing capacity with Metro’’s 2035 s 2035
forecastforecast
Building Prototypes Grounded in RealityBuilding Prototypes Grounded in Reality
Eight Portland developer/expert Eight Portland developer/expert interviews were used to calibrate interviews were used to calibrate the ROI Modelthe ROI ModelPrototypes were created based on Prototypes were created based on successful recent development in successful recent development in PortlandPortland
MixedMixed--UseUse
Office (Small Lot)Office (Small Lot)Office (Neighborhood)Office (Neighborhood)Residential (Point Tower)Residential (Point Tower)Residential (Small Units)Residential (Small Units)Residential (FamilyResidential (Family--Sized Units)Sized Units)Residential (Small Lot)Residential (Small Lot)Residential (Perimeter Block)Residential (Perimeter Block)Live/WorkLive/Work
ResidentialResidential
Single Family (Infill and MultiSingle Family (Infill and Multi--Lot Lot Subdivision)Subdivision)TownhomeTownhomeCourtyard HousingCourtyard HousingSkinny HouseSkinny HouseApartment (Small Site)Apartment (Small Site)Neighborhood Corridor ApartmentsNeighborhood Corridor Apartments
Retail and OfficeRetail and Office
High Rise OfficeHigh Rise OfficeMid Rise OfficeMid Rise OfficeLow Rise OfficeLow Rise OfficeRehab/Adaptive ReuseRehab/Adaptive ReuseSmallSmall--Scale RetailScale RetailLarge Format/Big Box RetailLarge Format/Big Box Retail
IndustrialIndustrial
Flex SpaceFlex SpaceIndustrial (1Industrial (1-- and 2and 2--levels)levels)
Portland Portland Tipping Point Tipping Point Analysis Analysis Example:Example:
Gateway AreaGateway Area
““Tipping PointTipping Point”” Redevelopment Redevelopment Opportunity SitesOpportunity SitesParcels with assessed value of less than $750,000 per acre
Approximately 50 acres
< $750,000 per acre
““Tipping PointTipping Point”” Redevelopment Redevelopment Opportunity SitesOpportunity SitesParcels with assessed value of between $750,000 and $1.2 million per acre
Approximately 50 acres
Between $750,000 and $1.2 million/acre
““Tipping PointTipping Point”” Redevelopment Redevelopment Opportunity SitesOpportunity SitesParcels with assessed value of more than $1.2 million per acre
Approximately 150 acres
> $1.2 million/acre
Making Residential Development Making Residential Development Work in GatewayWork in Gateway
We looked at areas in We looked at areas in the CX, RX and EX the CX, RX and EX zoneszonesTypes of feasible Types of feasible buildings given:buildings given:–– Current regulationsCurrent regulations–– Market conditionsMarket conditions
PrototypesPrototypes
Created four basic housing prototypesCreated four basic housing prototypes–– 2 Story Residential2 Story Residential–– 3 Story Residential3 Story Residential–– 6 Story Residential6 Story Residential–– 10 Story Residential10 Story Residential
Rapid prototyping allows us to hone in on Rapid prototyping allows us to hone in on the variables that affect the feasibility of the variables that affect the feasibility of new development in the areanew development in the area
Sample Gateway Prototype: 6 Story ResidentialSample Gateway Prototype: 6 Story Residential 85 units/acre; 1.67 FAR85 units/acre; 1.67 FAR
Option 1:Option 1:SubsidySubsidy
Option 2:Option 2:No subsidy; raise No subsidy; raise rents/sales pricesrents/sales prices
Option 3:Option 3:No subsidy; No subsidy; reduce reduce construction construction costscosts
RentRent $0.90/sf $0.90/sf ($700/month)($700/month)
$1.18/sf (+31%)$1.18/sf (+31%) ($902/month)($902/month)
$0.90/sf $0.90/sf ($700/month)($700/month)
Sales PriceSales Price $151/sf $151/sf ($116,000/unit)($116,000/unit)
$205/sf (+36%)$205/sf (+36%) ($157,000/unit)($157,000/unit)
$151/sf $151/sf ($116,000/unit)($116,000/unit)
Construction Construction CostsCosts
$100/sf$100/sf $100/sf$100/sf $67/sf ($67/sf (--33%)33%)
Subsidy (total)Subsidy (total) $2.8 million$2.8 million $0$0 $0$0
Subsidy (per Subsidy (per unit)unit)
$33,000/unit$33,000/unit $0$0 $0$0
Comparing Per Unit Subsidies by Comparing Per Unit Subsidies by PrototypePrototype
$41,000 $37,000$33,000
$51,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
2 Story 3 Story 6 Story 10 Story
Subsidies required per unit increase significantly when buildingSubsidies required per unit increase significantly when building above 6 stories and above 6 stories and wood frame construction is not possiblewood frame construction is not possible
Conclusion: Conclusion:
Even development at a lower Even development at a lower scale than the zoning allows scale than the zoning allows would significantly increase would significantly increase GatewayGateway’’s housing bases housing base
For example, if the 3 For example, if the 3 story prototype was story prototype was developed on the sites developed on the sites currently valued at less currently valued at less than $750,000/acre than $750,000/acre (about 50 acres of land (about 50 acres of land within analyzed zones), within analyzed zones), about about 2,500 new units2,500 new units could be developedcould be developed
Guided InputsGuided Inputs
Tulsa YMCA Adaptive Reuse ExampleTulsa YMCA Adaptive Reuse Example