Agenda Packet 10-17-18 Work Session

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Page 5 Prepared for: City of Eugene Prepared by: PNW Economics, LLC Market & Financial Analysis of Gordon Lofts MUPTE Program Application Applicant Compared to Prevailing Comparable Projects: Unit Gross Rents Two downtown Eugene apartment projects were selected as most comparable and competitive to Gordon Lofts should it be developed: First on Broadway and Park Place. Below is a description of each project and its competitive advantages and disadvantages relative to each other and any new projects that may be built in downtown Eugene. •First on Broadway: The 16-unit mixed-use project at 39 West Broadway was renovated from commercial to residential use in 2013. The project is well-located in the center of the stretch of West Broadway that has enjoyed the highest concentration of new employment, shopping, dining, and entertainment. Because of so much new, successful downtown growth proximate to this project, rents at the project “capitalize” or are higher because renters at First on Broadway have immediate access to the combination of employers, services, dining, shopping, and entertainment. As a two-story project, however, units have no unobstructed views in any direction due to taller downtown buildings in the vicinity. As the newest project downtown, rents should further earn a relative premium as a result. First on Broadway has one vacant unit, a vacancy rate slightly greater than 5%, the key “stable” vacancy rate for an apartment project. •Park Place: The 24-unit apartment project at 877 East Park Street was renovated from commercial to residential use in 2012. Located on the east side of the Park Blocks, the project is less proximate to the aggregation of new shopping, services, and entertainment on Broadway than is First on Broadway. The concentration of convenient commercial amenities and employment at Park Place compares somewhat unfavorably in rent levels compared to First on Broadway as a result. Park Place’s competitive advantages are its greater proximity to Whole Foods on the east side of High Street and the fact that the project is four stories tall, allowing some units unobstructed views in different directions. Built a year before First on Broadway, rents should also reflect a slight, resulting discount relative to First on Broadway. Park Place has reported a vacancy rate greater than 5%. Table 2 provides a comparison of planned gross monthly rents at Gordon Lofts with the two most comparable and competitive projects in downtown Eugene, First on Broadway and Park Place. Table 2 – Gordon Lofts Apartment Gross Rents Compared to Most-Comparable Competitive Projects •The overall average gross rent at First on Broadway is $1,285 monthly, which is 10% below the average planned at Gordon Lofts. First on Park First on Park Unit Type Proposed Broadway Place Broadway Place Studio $1,171 $1,035 $938 13%25% One bedroom $1,612 $1,573 $1,200 3%34% Two bedroom $2,756 $2,245 $1,750 23%57% Subtotals/Averages $1,417 $1,285 $1,182 10%20% Gross Monthly Rent Subject Gross Rent Premium vs.: October 17, 2018, Work Session – Item 2