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HomeMy WebLinkAboutDowntown-South-Bend-Residental-Market-Potential-Update-Exec-Summary-2021 EXECUTIVE SUMMARY An Update of Residential Market Potential The Downtown South Bend Study Area City of South Bend Saint Joseph County, Indiana February, 2021 Conducted by On Behalf of ZIMMERMAN/VOLK ASSOCIATES, INC. THE CITY OF SOUTH BEND P.O. Box 4907 227 West Jefferson Boulevard Clinton, New Jersey 08809 South Bend, Indiana 46601 ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect EXECUTIVE SUMMARY AN UPDATE OF RESIDENTIAL MARKET POTENTIAL The Downtown South Bend Study Area City of South Bend, St. Joseph County, Indiana March, 2021 This study updated the market potential and optimum market position for newly-introduced rental and for-sale housing units that could be developed within the Downtown South Bend Study Area over the next five years. SUMMARY OF FINDINGS • Over the next five years, households moving to Downtown South Bend from outside the city represent over 57 percent of the annual market potential for new housing in the Downtown. • An annual average of 3,190 households of all incomes comprise the annual market potential for new and existing housing units in the Downtown over the next five years. • Those households include: —Younger singles and childless couples (58 percent); —Empty nesters and retirees (26 percent); and —Traditional and non-traditional families (16 percent). • Excluding households with a preference for detached housing units, an annual average of 1,220 households with annual incomes above 60 percent of the Area Median Income (AMI) comprise the core market potential for new market-rate and workforce housing in the Downtown over the next five years. • Walkability is regarded as an important amenity by today’s market, and Downtown South Bend has an overall Walk Score of 67, approaching very walkable. Three individual apartment properties in the Downtown have Walk Scores over 70, where most errands can be accomplished on foot. • Based on target market housing preferences, multi-family rental housing accounts for over 70 percent of market preferences, multi-family for-sale units (condominiums) represents just under 14 percent, and single-family attached units (townhouses) comprise the remaining 16 percent. EXECUTIVE SUMMARY Page 2 An Update of Residential Market Potential The Downtown South Bend Study Area City of South Bend, St. Joseph County, Indiana March, 2021 ZIMMERMAN/VOLK ASSOCIATES, INC. • Based on the tenure preferences and the income and financial capabilities of the target households, the optimum market position for newly-developed workforce (households with incomes between 60 and 80 percent AMI for new rental and households with incomes between 80 and 100 percent AMI for new for-sale housing types) and market-rate (households with incomes above 80 percent for new rental and 100 percent for new for-sale housing types) residential units in the Downtown is shown on the following table: UNIT RENT/PRICE UNIT SIZE BASE RENT/PRICE HOUSING TYPE RANGE RANGE PER SQ. FT. MULTI-FAMILY FOR-RENT—70% Apartments $750 to 450 to $1.38 to (Workforce) $1,400 950 sf $1.70 Apartments $950 to 450 to $1.83 to (Market-Rate) $2,750 1,450 sf $2.50 MULTI-FAMILY FOR-SALE—14% Condominiums $195,000 to 800 to $229 to (Workforce) $275,000 1,200 sf $250 Condominiums $250,000 to 800 to $283 to (Market-Rate) $650,000 2,300 sf $317 SINGLE-FAMILY ATTACHED FOR-SALE—16% Townhouses $225,000 to 1,000 to $217 to (Workforce) $325,000 1,500 sf $227 Townhouses $395,000 to 1,400 to $259 to (Market-Rate) $750,000 2,900 sf $282 • A capture of between 10 and 12 percent of the annual potential market for new multi-family rentals, and between approximately five to 7.5 percent of the annual potential market for new multi-family and single-family attached for-sale units is achievable in the Downtown South Bend Study Area and is forecast on the table following this page. EXECUTIVE SUMMARY Page 3 An Update of Residential Market Potential The Downtown South Bend Study Area City of South Bend, St. Joseph County, Indiana March, 2021 ZIMMERMAN/VOLK ASSOCIATES, INC. NUMBER OF CAPTURE ANNUAL HOUSING TYPE HOUSEHOLDS RATES UNITS ABSORBED Multi-family for-rent 153 10 – 12% 15 - 18 (Workforce) Multi-family for-rent 703 10 – 12% 70 - 84 (Market-Rate) Subtotal: 85 - 102 Multi-family for-sale 25 5 – 7.5% 2 - 3 (Workforce) Multi-family for-sale 144 5 – 7.5% 12 - 14 (Market-Rate) Subtotal: 14 - 17 Single-family attached for-sale 31 5 – 7.5% 2 - 3 (Workforce) Single-family attached for-sale 164 5 – 7.5% 14 - 16 (Market-Rate) Subtotal: 16 - 19 Total: 1,220 115 - 138 units Based on these capture rates, Downtown South Bend should be able to absorb between 115 and 138 new workforce and market-rate rental and for-sale housing units per year each year over the next five years, or a total of 575 to 690 new units over the five-year timeframe. It should be noted that buildings located in the Downtown should have a Walk Score of 70 or more, nearing the level where walkability adds a premium to housing values. o ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect ASSUMPTIONS AND LIMITATIONS— Every effort has been made to insure the accuracy of the data contained within this analysis. Demographic and economic estimates and projections have been obtained from government agencies at the national, state, and county levels. Market information has been obtained from sources presumed to be reliable, including developers, owners, and/or sales agents. However, this information cannot be warranted by Zimmerman/Volk Associates, Inc. While the proprietary residential target market methodology™ employed in this analysis allows for a margin of error in base data, it is assumed that the market data and government estimates and projections are substantially accurate. Absorption scenarios are based upon the assumption that a normal economic environment will prevail in a relatively steady state during development of the subject property. Absorption paces are likely to be slower during recessionary periods and faster during periods of recovery and high growth. Absorption scenarios are also predicated on the assumption that the product recommendations will be implemented generally as outlined in this report and that the developer will apply high-caliber design, construction, marketing, and management techniques to the development of the property. Recommendations are subject to compliance with all applicable regulations. Relevant accounting, tax, and legal matters should be substantiated by appropriate counsel. o ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect RIGHTS AND STUDY OWNERSHIP— Zimmerman/Volk Associates, Inc. retains all rights, title and interest in the ZVA residential target market methodology™ and target market descriptions contained within this study. The specific findings of the analysis are the property of the client and can be distributed at the client’s discretion. © Zimmerman/Volk Associates, Inc., 2021 o