Economic Development Update for Crystal City AED Presentation to - - PowerPoint PPT Presentation

AED Presentation to CCCRC June 27, 2016

Economic Development Update for Crystal City

Source: CoStar, AED

10% 15% 20% 25% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

12. 12.6% 21.7% 20.1%

Vacancy Rate: 2012-2015

12.6%

∆ = 1.6% 2

Ar Arlington’s C ’s Commer ercial O Office Va e Vacancy R Rate

3

Why d did d the o

• ffice vaca

canc ncy r rate c e climb? b?

BRAC Regional Economy Increased Competition Space Utilization Old and New

4

Cr Crys ystal Ci City ty O Offi ffice M Mar arke ket T Trends

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

• 500,000
• 400,000
• 300,000
• 200,000
• 100,000

100,000 200,000 300,000

2011 Q1 2011 Q3 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2015 Q3 2016 Q1

Quarterly Office Net Absorption and Vacancy Rates in Crystal City, 1Q2011 to QTD

Net Absorption Vacancy Rate

Source: CoStar, AED

5

Se Selected Office M Mark rket Ava vaila ilabilit ility i in Cry rystal C l City

B uilding Addres s B uilding Name Available S F

2511 Jefferson Davis Hwy Presidential Tower 278,720 2200 Crystal Dr Crystal Plaza 4 252,974 1750 Crystal Dr Crystal Square 3 240,702 3550 S Clark St National Gateway II 193,678 1400 Crystal Dr 1400 Crystal 183,914 1225 S Clark St Crystal Gateway 2 167,645 241 18th St S Crystal Square 4 155,665 2733 Crystal Dr Two Potomac Yard - North Tower 155,116 1550 Crystal Dr Crystal Square 2 142,917 2011 Crystal Dr Crystal Park One 140,544 2451 Crystal Dr Crystal Park Five 120,060 1401 S Clark St Jefferson Plaza 109,826 2450 Crystal Dr Century One at Century Center 101,941 2461 S Clark St Century Two at Century Center 89,456 2001 Jefferson Davis Hwy Crystal Plaza 1 85,260 1235 S Clark St Crystal Gateway 1 81,589 2900 Crystal Dr Potomac Gateway South 80,883 2611 Jefferson Davis Hwy Airport Plaza 2 78,890

6

Multif ifamily ily D Deliv iverie ies i in Arl rlin ington

Source: AED

• 500

1,000 1,500 2,000 2,500

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Residential Units

Apartment Condo

1,449 = 10-year average of Units Delivered

7

Crysta tal C City M Multifa family A Apartm tment M t Market T t Trends

Source: Costar, AED

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%

• 200
• 100

100 200 300 400 500

2011 Q1 2011 Q3 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2015 Q3 2016 Q1

Crystal City MF Apt Net Absorption and Vacancy Rate, 1Q2011 to QTD

Net Absorption Vacancy Rate 507 net apartments absorbed since 2011

A St Strat ategy o

• n Focu

cused D Diversifica cation an and Tar arget I Industries

• 1. Education IT
• 2. Healthcare IT
• 3. Cybersecurity
• 4. Data Analytics
• 5. Energy

Ar Arlington’s E ’s Econo nomic D Dev evel elopmen ent S Strateg egy

8

42

CLOSED and Announced Deals

1,840,000

SQ FT of Real Estate

9,300 JOBS New

• r Retained

34 Deals with Business Investment Group (“BIG”) Assist 8,400 Jobs with BIG Assist 1,610,000 SQ FT with BIG Assist

Source: AED, CoStar Fiscal Year 2016 YTD (July 1, 2015 - Feb. 22, 2016)

3 of34

Received INCENTIVES

FY 2016 Outcome

9

Ar Arlington’s E ’s Econo nomic D Dev evel elopmen ent S Strateg egy

Cryst stal C City E Econo nomic D Dev evel elopment Hi Highlights

• Crystal City is becoming an emerging tech hub with

1776, Eastern Foundry, Tech Shop & WeLive/WeWork

• German grocer LIDL establishes North American

headquarters acquiring over 200,000 square feet at National Gateway I

• The DoD renews 912,000 square feet in the Polk and

Taylor buildings

• Retention & expansion of the U.S. Marshals Service
• ccupying over 300,000 square feet
• Resurgence of non-profits with new move-ins

including American Diabetes Association, Association for Professionals in Infections Control, Society of Manufacturers and Affiliates, American Intellectual Property Law Association

Redevel elopm pment ent and R nd Reinves estment ent M Moving F Forward

Redevelopment Economics and Community Benefits

• Even older, vacant buildings have a value, or going-in basis
• The value of the existing asset essentially becomes the residual land

value under a redevelopment scenario

• Additional density can “write down” that residual land value to a number

that is supportable financially

• Future redevelopment opportunities should consider the impact of the

cost of extraordinary community benefits on project viability

Under this scenario, the project can not support additional community benefit costs Additional density of X4 required to write down going-in basis to market supported level Existing asset considered for redevelopment has value of $200/SF Financially supportable land values at $50/FAR SF

Strateg egic P Public I Inves estment ents

FY 2015 FY 2016 FY 2016 FY 2017 ACTUAL ADOPTED RE- ESTIMATE PROPOSED ADJUSTED BALANCE, JULY 1 Construction Reserve $6,828,6 94 $5,997,626 $8,915,876 $10,823,046 Reserve

• 350,000

350,000 450,000 TOTAL BALANCE 6,828,694 ,347,626 6 ,265,876 9 ,273,046 11 REVENUES Tax Increment Area 3,332,465 3,096,740 4,207,170 4,812,420 State Transportation Grant Revenues 50,225

• NVTC Revenues1

84,599

• TOTAL REVENUES

3,467,289 3,096,740 4,207,170 4,812,420 TOTAL REVENUES & BALANCE 10,295,983 9,444,366 13,473,046 16,085,466 EXPENSES Capital Projects - Current Year 1,030,107 3,096,740 2,000,000 4,812,420 Capital Projects - Carry-Over

• 431,341
• ,787,580 3

Contingency

• 352,808

200,000 860,000 TOTAL EXPENSES 1,030,107 3,880,889 2,200,000 9,460,000 BALANCE, JUNE 30 Construction Reserve 8,915,876 5,213,477 10,823,046 6,125,466 Reserve 2 350,000 350,000 450,000 500,000 TOTAL BALANCE $9,265,876 $5,563,477 $11,273,04 6 $6,625,466

Redevel elopm pment ent and R nd Reinves estment ent M Moving F Forward Maximizing investment

• pportunities

Continue to invest in ground plane/retail Flexibility

• n building

use and footprints Supporting adaptive reuse/ innovation