Development Potential with Example (Century Boulevard)

October 2006

Development Potential—Century Blvd. Site

Introduction

One of the most creative and exciting things that an architect and developer can do is to produce a concept plan that makes highest and best use of a site. How is that done? What steps do you take?

A site visit is a must. You need to get a feel for your site.
You need to walk the neighborhood to get a feel for the boundary conditions of the site and opportunities and challenges that will present themselves to you.
Take lots of photos.
Consider the existing zoning, height limits, setbacks, etc. for the site as set down in city By-laws but do not accept them as gospel.
Look at the height of structures in the area say about density.
Try to optimize the site not maximize the site. If the size of the project is too large, you will not only get opposition from the neighbors, it may take to long to sell out or lease and therefore it does NOT represent the highest and best use.
Take into account the views of other stakeholders—neighbors, existing tenants on site (if any), community associations, local councillors, etc.
Take in all this input, consider it and then change it to what you consider the highest and best use for the site.
Remember there are vertical rent gradients. Retail space at the ground floor is going to be more valuable and make better use of that exposure than residential units.
As you get more height, residential condo units become more valuable (until you get to a height, probably around 20 storeys, when exit times in case of fire or terrorist attack are a concern. Most fire ladders can not go past 20 storeys.)
Remember that this is a double iterative process: first, you are trying to come up with a concept plan and functional program that will meet the ROR (Rate of Return) requirements of your patron/client. Then you are also trying to come up with a form for the structures that will be adaptable to other uses as time goes on. In the former, form follows function while in the latter, function follows form. The creative process embraces both views.
You are trying to create not only successful private spaces but also add to the public room. Following neo-urbanist principles will help you create more social value as well.
Interestingly, creating more value for the public room by, for example, having ground floor space open onto the street (more eyes on the street from say retail space there with doors that open onto the street and windows that overlook the street instead of accessing the stores from an internal atrium) produces safer streets.
Safer streets means that the residential condos will sell for more and the retail space will attract more shoppers and rent for more and, guess what, the private owner thus benefits as well.

Here is an example of what I did with an architect/developer friend of mine for an inner city, brown field site last weekend:

We visited the site, walked around the area and then created a concept plan and a functional program in our mind’s eye.
Next, we created a spreadsheet that estimated the costs and benefits and ROR for the potential project.
Currently, the architect/developer and his colleague are evaluating it in terms of risk and possible changes to the functional program and spreadsheet.

Site Conditions

The site is a mid town location in a city of 1.1 million people.

It is across from a school and close to a major University and significant public transportation is available just a block and a half away..

The site fronts onto Century Boulevard, which is a busy east west artery.

The site is a corner site with high-end condos and single-family homes nearby. However, to the west there are two apartment towers in poor condition with a troubled history. Immediately south, there is social housing.

The rent gradient for the ground floor is appropriate to either a retail condition or office uses.

Question: should the upper floors be office condos or residential condos?

The height limit on the site is 18 metres. The City permits six storeys but the floor to slab heights would be just 10 feet and the units would be pretty pokey. Perhaps five storeys would make more sense and give the res. units or the office condos more volume and a loft feeling.

12 foot ceiling heights on the ground floor are a minimum and the ceilings will be open and have exposed HVAC and electrical raceways as well as lighting.

The upper four floors will be a minimum of 10 feet also with exposed ceiling. However, by deleting a floor, the yield in terms of total unit count is significantly reduced. However, the units that remain should sell for more per sq. ft. because of the loft feeling... They are not truly lofts—there are no upper bedroom nooks or office/recreation room/music room spaces suspended over the main floor area. However, the 10 foot ceiling heights do allow more light to enter the rooms, and the wall space is such that art collections will show well or floor to ceiling bookshelves or cupboards will be huge. Vertical storage space will be much greater…

The site itself is 60 feet along Century Blvd. and 90 feet deep along Neelam Street. Because of the social housing on Neelam, the entrance for the upper level residential or office condos will be on Century Blvd.

The retail or office uses on the ground floor will have access to and open onto both Century and Neelam. Bays sizes will be around 1,200 s.f. because that size is in most demand and represents the highest and best use.

There is an ambulance dispatch centre across the street from this site, which is a plus because the paramedics and their vehicles are there 24/7 providing eyes on the street and a safer environment.

The ambulances do not turn on their sirens when they leave the depot, which is also a plus.

A negative is that the res. units if they are built must face north and east in a northern shelf city, which are not the best views or capture the most sun.

The buildings to the south are too tall to look over.

There is granite in the ground so only one floor of below grade parking is economically doable.

The double lot has two existing buildings on the land but neither have heritage value or are salvageable. Currently, the buildings are vacant. A demolition permit will be required before the project may proceed. The buildings and land are available for $400,000 or approximately $74 per s.f. on favorable terms. Land just blocks away is trading for more than $200 per s.f. in this successful city.

The reason that this land is available so inexpensively (relatively speaking) is that the nearby social housing and two towers with a sketchy history have depressed values in the immediate neighborhood. However, there are signs of gentrification in the area and it is a near core area so there is demand for small res. condos.

Crime statistics for the area show that it is actually safer than the hottest area for condos in the city—another near downtown location that is also the entertainment district of the city.

Another lot is available for sale next door immediately to the west of the site for $400,000. It would make for a larger project and possibly better one but it would be too big a bite for the architect/developer at this time. Development is like politics in that sense—it is the art of the possible.

During a site visit by the architect/developer and his realtor (the only way to do these things is to be on site and to walk the area to get a true sense of the community), they decide as follows:

1. The building will be only five storeys rather than six to give each unit a loft feeling.

2. Floors 2 to 4 will have one bedroom res. units of approximately 625 sq. ft. each but done at a high level of finishes.

3. The Penthouse will have two bedroom units of 825 sq. ft. These res. units will appeal to a young demographic or empty nesters.

4. Only the ground floor will have commercial (retail or office) uses. The building is too small to have more than two types of uses. In other words, the complexity of say having ground floor retail, 2 floors of office above and two floors of residential above that is too great-- that would mean having three separate building envelopes.

5. The attached spreadsheet gives an idea of the costs and benefits that flow from this functional program.

6. A minimum of 50% of the res. condos must be sold before construction can begin. This is to satisfy the construction lender and to reduce the risks for the architect/developer.

7. His commercial realtor can sell the ground floor retail/office condos but recommends that the architect/developer engages a res. specialist that he can trust to sell the res. condos.

8. The architect/developer may decide to keep one or two of the retail/office condos for his own long-term portfolio.

A go/no go decision must be taken in the next 6 weeks. To have a look at development potential costs and benefits, GO GET THE SPREADSHEET. I have loaded it to my server in .xls format so you can download it to your PC, save a copy and then fool around with it yourself and apply it to your own projects.

Dr. Bruce M. Firestone, B. Eng. (Civil), M. Eng.-Sci., PhD., Real Estate Sales Representative, Metro Suburban Realty Ltd., tel. (613) 723-2222 ext. 229 w, (613) 270-9629 direct, (613) 723-2345 fax Email: bfirestone (at) metro-sub.com