Agenda Packet 10-17-18 Work Session

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Page 7 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 Rents per Square Foot Table 3 provides a final comparison of Gordon Lofts planned unit rents compared to competition, rents-per-square-foot. • Because average unit sizes at Gordon Lofts (568 square feet) are actually larger than First on Broadway (533 square feet), rent per-square-foot at Gordon Lofts earns lower premiums than do gross rents. In fact, it is somewhat unusual for new apartment units in a market to trend larger and more common for units to trend smaller. • On a per-square-foot basis, Studio units at Gordon Lofts could conceivably charge greater rent to reflect some type of positive premium at least for being the newest product on the market and featuring views of greater quality depending upon floor level. • Units at Gordon Lofts are 4% smaller on average than Park Place, therefore rent per-square- foot premiums for Gordon Lofts seem mostly appropriate. Table 3 – Gordon Lofts Apartment Rents Per Square Foot Compared to Most-Comparable Competitive Projects Competitive Monthly Rents Per Square Foot Conclusions Average rents per square foot planned at Gordon Lofts appear market-consistent if not a bit low due to the new status of the project at delivery as well as views that will allow premiums at Gordon Lofts. Studio unit rents per-square-foot relative to First on Broadway definitely have room to be somewhat higher in our view. In general, however, we would caution that there is a ceiling to what additional rent Gordon Lofts could plan to charge: • Vacancies do exist at both First on Broadway (one unit or 6% vacancy) and Park Place (two units or 8% vacancy). Though vacancy is not significant, the market for these projects at stated rent levels is not absolutely “tight” and indicates that significantly higher rent levels may likely experience greater operating vacancy. • We ultimately view the First on Broadway location to be the strongest in the current market and stronger than the Gordon Lofts location given the West Broadway concentration of amenities and employers proximate and with unobstructed pedestrian access. Future commercial features at the Gordon Lofts site are either boutique (5th Street Public Market) rather than day-to-day or speculative due to undeveloped status. First on Park First on Park Unit Type Proposed Broadway Place Broadway Place Studio $2.50 $2.54 $2.14 -2%17% One bedroom $2.51 $2.29 $2.05 10%22% Two bedroom $2.35 $2.23 $1.79 6%31% Subtotals/Averages $2.49 $2.46 $2.01 1%24% Monthly Rent per Square Foot Subject Rent Per Sq. Ft. Premium vs.: October 17, 2018, Work Session – Item 2