Agenda Packet 10-17-18 Work Session

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Page 6 Prepared for: City of Eugene Prepared by: PNW Economics, LLC Market & Financial Analysis of Gordon Lofts MUPTE Program Application • Unit rents at First on Broadway range from 3% less expensive than Gordon Lofts for One- bedroom units to 23% less expensive than Gordon Lofts for Two-bedroom units. • Rents at Park Place, unsurprisingly, are at an even greater discount than planned rents at Gordon Lofts, with an average discount of 20% across all units. • Park Place discounts relative to planned rents at Gordon Lofts range from 25% for Studio units to a remarkable 57% for Two-bedroom units. Competitive Gross Monthly Rent Conclusions Gordon Lofts planned, gross monthly rents overall appear to have an appropriate premium over First on Broadway, the newest and most competitive project in downtown Eugene. Though we find that Gordon Lofts planned Two-bedroom unit gross rents are probably too high relative to market. • Gordon Lofts’ new delivery will tend to earn a 6% to 10% premium over the most recent, existing competitive project in the experience of PNW Economics. The greater the age of the existing, competitive project, the premium will push closer to 10% frequently. This tends to reflect renters’ greater enthusiasm for new apartments that have taken longer to be delivered in a growing market. • Relative to First on Broadway, Two-bedroom units at Gordon Lofts appear to have a somewhat high gross monthly rent premium (23%), while Gordon Lofts One-bedroom units can conceivably earn a greater “new unit” premium than planned (3%). • Relative to Park Place, Gordon Lofts may be expecting too-high of a rent premium for Two- bedroom units (57%) or over $1,000 higher rent per month. Although a detailed analysis of rents is beyond the scope of this report, the following factors should also affect rent at Gordon Lofts: • Located north of the 6th Avenue/7th Avenue one-way couplet, the site is more distant to central downtown Eugene, its employers, and new concentration of continuous, new retail and services. This would tend to affect achievable rent unfavorably. • Gordon Lofts is, however, located proximate to 5th Street Public Market and the nearby commercial district with boutique retail and services which would reflect positively on rents. The district is, however, lacking in basic grocery and other day-to-day services, employment, and entertainment that the concentration on Broadway does have, including nearby Whole Foods and The Kiva for day-to-day essentials. • Gordon Lofts commercial district premiums are currently at best uncertain due to the speculative nature of retail and services that could locate in the first floor of the building as well as the planned market building to the south. • Gordon Lofts should achieve some rent premiums due to unobstructed views in all directions given the planned seven stories for the structure. October 17, 2018, Work Session – Item 2