Selecting an assemblage for development is a strategic decision. My selection landed on the assemblage least impacted by a 10-foot storm surge. Why? Simply because it eliminates worries related to Sea Level Rise and material decay from extreme salt exposure, two factors that can pose significant challenges to development.
Following this, it was essential to confirm the lot’s vacancy status. A quick check on Google Street View affirmed that the lot was vacant. This discovery was a win, as it also hinted at a potential opportunity for a larger assemblage. Notably, an adjacent, expansive vacant lot is at the corner of NE 2nd and NE 1st.
Maximizing Unit Potential and Navigating Parking Reduction
Next, I aimed to make the most out of the permissible 344 units. To achieve this, I adjusted the required setbacks in the front and leveraged the Transit-Oriented Development (TOD) parking reduction, which I’ll elaborate on in a future post. This reduction allowed me to keep the parking structure within the first eight floors of the building.
Balancing Return on Cost (ROC) and Market Feasibility
Initially, the projected Return on Cost (ROC) was not as favorable as I had hoped (3.62%). To improve this, I made a few strategic changes. I downsized the units from 1,040 SF to 900 SF – still comfortably large, reduced the amenities from 14k SF to 10k SF, and increased the rents. The rent was raised from the initial $2,600 to $3,800, resulting in a 5.83% ROC, and then further to $4,200 for a 6.43% ROC.
However, a reality check with Zillow showed that while our initial rent was on the lower end but still realistic, the proposed $4,200 rent appeared unreasonable. This figure was too high-end, especially considering the luxury that my construction cost assumptions could afford.
More will be revealed,
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