Retirement Oriented
Residential
Market Analysis
Fort Collins, Colorado
Prepared For:
Air Park Village, LLC
Prepared By:
THK Associates, Inc.
2953 South Peoria Street, Suite 101
Aurora, Colorado 80014
(303) 770-7201 phone
(303) 770-7132 fax
info@thkassoc.com
October 18, 2003
Table of Contents
I. Introduction......................................................................................................................... 1
II. Area Description............................................................................................................... 3
III. Employment and Growth Trends in the Two-County Market Area
A. Employment Growth Trends................................................................................. 6
B. Population and Household Growth Trends in the
Two-County Market Area.................................................................................... 11
C. Residential Construction Trends in Larimer and Weld Counties................... 15
D. Population and Household Projections for Larimer and Weld Counties...... 20
IV. Active Adult Housing Market Analysis
A. General Trends.................................................................................................... 22
B. National Demographic Trends........................................................................... 24
C. Retirement and Senior Housing Trends........................................................... 24
D. Growth Trends and Projected Active Adult Housing Demand
in the Air Park Village Primary Trade Area...................................................... 28
E. Residential Purchasing Capacity and Demand
by Price Range for the Adult (65+) Demographic
in the Air Park Village Primary Trade Area...................................................... 33
F. Residential Sales and Supply Trends............................................................... 36
V. Adult Development Potentials in the Air Park Village Primary Trade Area.............. 38
VI. Rental Apartments in the Fort Collins Vicinity.............................................................. 40
VII. Non-Residential Communities....................................................................................... 50
VIII. Conclusions and Recommendations............................................................................ 51
I. Introduction
This report provides an analysis of the market potentials for a retirement oriented community in the Fort Collins market area. For the purpose of this study, "retirement" is defined as those persons 65 years of age and older.
The first part of the study program determines whether a market exists for a retirement community and the depth of that market. The market analysis contains two parts: a demand analysis and a supply analysis. The demand side of the study determines the existing housing needs of the active adult population in the two-county market area (Larimer and Weld Counties) and projects the housing demand for the growing active adult population for the next decade.
Initially, this involves an analysis of the economic and social forces affecting the Fort Collins area's growth potentials. The demand for housing of all types, including retirement housing, is directly related to these growth potentials. THK initially examines historical population and household trends and their relationship to housing production and the housing needs of active adults. Trends in population growth in the area are projected and these projections provide the principal basis for making the housing demand projections that include the demand for retirement housing.
The economic and demographic characteristics of the Fort Collins area’s active adult population, which are the principal indicators of the demand for adult housing units, are described next. This includes an analysis of demographics including age, income, household size, and tenure. The projected demand for adult housing units is determined based upon the anticipated growth in household formations in this age group.
Next, the economic and demographic characteristics of the primary trade area are examined. This analysis includes data regarding historical adult population and household growth. Projections of adult housing demand are based upon the anticipated growth in household formations for and relocation tendencies of the 65+ population segment.
Following the demand analysis is a supply study that examines the retirement housing options that exist in the market.
Based on the supply and demand analyses, the market potentials for a retirement village in the designated trade area are quantified. Expected absorption and development potentials are shown and unit mix and community recommendations are made.
II. Area Description
The subject site consists of an approximate 135+-acre parcel of land that is located approximately ¾ of a mile north of Mulberry Street, 1.5 miles from downtown Fort Collins. Timberline Road and International Boulevard provide access to the site. The site is located a convenient three and one-half miles from Intetrsate-25, the major north/south corridor in Colorado. Cheyenne, Wyoming is located only 49 miles to the north, Greeley is located 32 miles southeast, and Loveland is located 13 miles to the south. The metro Denver area is located approximately 66 miles to the south via Interstate 25.
Land uses in the immediate area consist of an older industrial park on the south, a new industrial park to the east, a manufactured housing community, and rural farmlands further to the north. Furthermore, there are 150 acres of vacant land adjacent to the site. There are two rail lines in the vicinity of the subject site, Burlington Northern and Santa Fe. These two lines merge into one and typically service six to eight trains a day.
Fort Collins is home to Colorado State University, one of the regions largest major universities. Currently, there are 24,700 students enrolled at CSU and the university employs some 8,195 people. Other major employers in the Fort Collins area are:
The site is suitable for the development of residential and related uses. All public utilities appear to be available in the immediate area. There are no obvious detriments to the development of the site for the proposed uses.
III. Employment and Growth Trends in the Two-County Market Area
A. Employment Growth Trends
Employment trends are prime indicators of the economic growth of an area. Increases in employment generate growth for most sectors of the local economy and dictate the rate at which it will expand. This section looks at the region's various employment figures and projects their course over the next decade. The following table illustrates employment growth in the two-county market area, which includes Larimer and Weld Counties. Over a 34-year period, total employment grew from 70,577 in 1970 to 270,765 in 2003 -- an annual average increase of 6,066 jobs. Between 1993 and 2003, the two-county area added an average 7,424 jobs on an annual basis. In 1996, the market area added 12,066 jobs, the largest increase ever. Employment growth in the two-county market area has been relatively strong in recent years, although 1,581 jobs were lost in 2003.
Since 1970, the two-county market area has experienced growth in all employment sectors. In terms of growth magnitudes, the most significant contributor to the local economy has been the services industry, which averaged an addition of 1,936 new jobs per year during the 1970-2003 period. Other strong growth industries include the retail and construction sectors, which added 1,115 and 611 jobs respectively on an average annual basis between 1970 and 2003. In the time period between 1998 and 2003, an annual average of 4,841 new jobs were generated in the two-county market area. Table III-2 shows the market area's employment growth by industry from 1970 to 2003.
Fueling the two-county
market area's employment growth is an increasingly diverse economic base.
Table III-3 projects employment by industry for the market area from 2004 to
2014. The market area will continue to experience growth but at a slower
pace, with total employment averaging increases of 6,020 jobs annually. The
retail and services sectors will lead the way averaging annual gains of 1,021
and 1,945 jobs respectively. The construction sector will continue to expand,
averaging the addition of 787 new jobs per year. Due to the overall economic
climate, both locally and nationally, employment growth in the two-county
market area will stabilize at 2.0% per year in 2005 and will continue through
2014.
Total Employment in Larimer and Weld Counties Chart
Table III-3
B. Population and Household Growth Trends in the Two-County Market
Area
Trends in population and household growth are principal indicators of the potential demand for real estate development. Population growth in the two-county market area has been strong since 1970; recent data shows this trend continuing. Since 1980, the population in the two-county area has increased by 9,700 people annually from 272,620 to 505,320 in 2004. The number of households increased by 3,830 annually during the same period, jumping from 54,560 in 1980 to 188,260 in 2004. The compound annual growth rate for population in the market area over the last 24 years was 2.6% per year; households grew at a compound rate of 2.8%.
Larimer County has accounted for much of the market area's growth in population since 1980; the county grew by 5,490 persons and 2,320 households annually between 1980 and 2004, accounting for 56% of the area's population growth and 60.6% of its household growth.
Table III-4A examines historical population and household trends for the 65+ demographic. As shown this demographic experienced particularly growth during the 2000-2004 period, adding an average of 1,520 people and 930 households annually. The 65+ demographic currently accounts for close to 15% of the market area’s population and 13% of its households.
C. Residential Construction Trends in Larimer and Weld Counties
Residential housing construction by type and tenure is displayed in Tables III-5 and III-6. As shown, single-family and duplex construction has dominated historical permit activity in the market area, ranging from 81.3% of permits issued over the last 30 years to 85.5% of permits issued since 2000. Through August 2004, 4,787 residential building permits were issued in the market area; of those, 88% were for single-family and duplex units.
Table III-6A tracks the historical permit activity for the City of Fort Collins. The City of Fort Collins issued an annual average of 1,590 residential permits during the three-year 2001-2003 period.
D. Population and Household Projections for Larimer and Weld Counties
The employment participation rate, typically expressed as a decimal, has been increasing steadily during the past two to three decades. A rising employment participation rate is a good indicator of improving conditions in the regional economy. First, a large number of people are employed in the work force, which has a corresponding effect on unemployment levels. Secondly, a larger number of workers in a low wage market provide an ample labor supply for expanding firms or new firms relocating to the area. Finally, more workers earning salaries will boost the area's volume of disposable income available for new retail, housing and related expenditures.
Population, household, and employment data for the two-county market area are compared in Table III-7. In 1970, the population of the market area was 179,200 and resident employment was 70,577 for an employment participation rate of .3938. By 1980, the market area's resident employment had increased to 128,843 with a population of 272,620 for an employment participation rate of .4726. In Table III-7, the population growth of the two-county market area is projected based on the anticipated employment growth. With projected January 1, 2014 resident employment of 335,540 and estimated 2014 population of 643,010, the projected employment participation rate will be .5218. The two-county population is projected to grow by 13,770 persons per year through 2014.
Table III-7 also shows the projected trends in new household formations for the two-county market area. Historically, household size has been declining due to an increased divorce rate, delayed marriages, and the ever-larger population segment of single-parent households who formed the bulk of new household formations during the last decade. More recently, the decline in household size has been the result of smaller families (fewer children). The population per household in the two-county market area declined from 3.08 in 1970 to 2.72 in 1980; single households were among the most rapidly growing population segments. The 2004 household averages 2.62 members.
During the next decade, household size should continue to decline but at a slower rate. The divorce rate now appears to be leveling off and the majority of the "baby boom" generation will be reaching the traditional retirement age of 65. New household formations in the two-county market area are projected to grow by an average of 6,070 annually during the next decade, with the average household size declining to 2.53. Population in-group quarters, e.g., institutions, dormitories, etc., is expected to increase modestly during the decade to approximately 12,791 by 2014.
IV. Active Adult Housing Market Analysis
A. General Trends
As the population ages, smaller households are becoming the norm and the adult population is becoming more geographically dispersed. The particular housing needs of adult households depends on their age, income, household composition and health.
The active adult population by and large is dominated by married couples who are home owners. Many own their homes free and clear. For those householders that have good incomes, are mobile and in good health, the general housing market adequately meets their needs. Nevertheless, the general housing market is targeted primarily at householders under age 65 and many residential features such as walk-ups without elevators and units incorporating multi-level design are unappealing to and inappropriate for the 65+ aged market.
Still, active adults typically have many housing choices available to them including:
· remaining in their current residence, most often a single family detached unit, often owned free and clear;
· moving to a rental unit, either existing or new construction in the local area or closer to relatives;
· moving to a smaller new for-sale or resale unit in the local area or closer to relatives;
· moving to a rental or for-sale unit in a destination retirement area;
· moving to an assisted living or congregate care facility; and
· living with relatives or friends.
Because this study is geared towards determining the demand for active adult housing in the Fort Collins area, the principal market that will be targeted is the 65+ market desiring more convenient and practical independent living units. This market is generally made up of singles and couples who are looking for smaller, maintenance-free housing in a well-amenitized master planned community conveniently located near friends, family and familiar places.
The supported independence market (assisted living) is made up of older retirees -- sometimes couples with one household member in ill health, or more often single senior women. These people prefer some support services, but do not need continual care. They may desire “Meals on Wheels” to be delivered or transportation to certain events, concerts, or doctor's appointments as needed. The management assumes the responsibility for service coordination, as well as preventative maintenance and provides for a safe, secure environment which incorporates the need for personal control and privacy, as well as social interaction.
Detailed below are the typical options available to 65+ adults seeking some sort of empty-nester/retirement/age-restricted housing.
Age-Restricted Communities are typically targeted at 55+ active adults who still live independently and require no special assistance. These increasingly popular communities are usually well amenitized and are often anchored by a golf course or courses. The housing units are usually one level and may be clustered in duplex, triplex, and/or four-plex projects. For many 55+ adults, this is the preferred “retirement” option, particularly if such a community exists within close proximity of their existing home.
Apartment Houses and apartment hotels afford the 65+ demographic the ability to live independently, but provide the security and convenience of a retiree-oriented building and the opportunity for companionship with peers. This type of facility is usually a single high-rise building with studio (efficiency) and one bedroom apartments. The total number of units is typically less than 500.
Assisted Living offers private living quarters with access to the services needed by persons not totally independent, yet not in need of nursing care. Each apartment may have a kitchen or kitchenette, but there is a kitchen which provides meals for those who do not wish to cook. Activities are organized and there are a variety of services on the premises which cater to the residents such as beauty/barber shops.
Life Care facilities most often mean a retirement village or high-rise buildings with a health care facility within the development. Some provide legal services to tenants, hot meals and transportation to shopping centers. Life care typically assures the resident life long shelter and care regardless of the number of years involved. Financial stipulations vary widely between different life care communities.
Nursing Homes are for persons who require continuous health care. Normally, intermediate and skilled care are offered. Fewer than 5% of the seniors live in nursing homes at any one time but 20% of the seniors eventually enter one. According to a US Senate Report, 15% to 20% of the persons in nursing homes are misplaced, having been forced into these institutions because no other public program existed to meet their needs outside of an institution.
Again, this analysis focuses exclusively on the 65+ market, and the ensuing projections of demand only examine that portion of the 65+ demographic that lives independently and does not require “assisted living”.
B. National Demographic Trends
This country’s already significant senior population (65+) is expected to continue to grow over the next several years and then, after 2010, surge as the baby-boom generation born between 1942 and 1964 begins to hit retirement age. The U.S. census expects today’s senior population of approximately 35 million to jump to nearly 40 million in 2010 and then rocket to close to 70 million by 2030. During this time, the 85-and-over population will be growing faster than the 65-84 age group, and it’s estimated that by 2050 approximately 25% of the senior population will be 85 or older; the percentage of seniors 85 or older today is approximately 14%.
According to a recent study by the Joint Center for Housing Studies at Harvard University, the trends discussed briefly below will be crucial in shaping the housing choices of tomorrow’s seniors.
Living Longer with Spouses – Women will continue to make up a disproportionate share of the senior population, but recent trends indicate that men are closing the longevity gap. Because the presence of a spouse is critical to the ability of seniors to remain at home, this should mean less demand for assisted living communities and nursing homes than would otherwise be expected.
Higher Education Levels – Higher levels of education among seniors are likely to mean more demand for high-quality healthcare and other support services, as well as a stronger demand to live independently.
Longer Work Life – Improved health and policy changes that increase the incentive to continue working make it both possible and likely that seniors will be increasingly active in the labor force.
Greater Financial Resources – Due to social security and the expansion of private pension funds and other retirement accounts (IRA’s, 401k’s, etc.), there is good reason to believe that tomorrow’s seniors will be better off financially.
Fewer Children to Support – The availability of children to help provide care plays an important role in the choice of living arrangements for seniors. While today’s seniors tend to have larger families, the baby-boomers have smaller families, meaning that shared housing – a senior living with an adult child- is likely to become less common. The lack of children living nearby should also boost demand for alternatives like active adult communities and assisted living.
C. Retirement and Senior Housing Trends
In Tables IV-1 and IV-2, THK identifies several of the more prevalent retirement trends, focusing on those that either directly or indirectly impact senior housing demand. The statistics in Table IV-1 come from Del Webb, the nation’s leading developer of active adult communities. For years, Del Webb has been surveying people nearing retirement in order to get a better glimpse of the future of the industry. These surveys cover topics ranging from health and fitness to current affairs, and they offer a wide arrange of insight into retirement housing expectations. Many of those insights are included in Table IV-1. A couple of the more significant ones, at least as they pertain to this analysis, are: nearly 60% of those surveyed expect to move to a new home for retirement; approximately 47% of those planning to move intend to stay within three hours of their current home; and 7% of those planning to move would prefer an age restricted community. Based on these findings, THK estimates that in a typical market approximately 2% of the 65+ age group will choose to live in an active adult community.
Table IV-2 shows a breakdown of retirement housing compiled by the National Institute of Aging. This breakdown is for persons aged 70 and over and is several years old, but it does provide some useful parameters. For the National Institute of Aging, active adult/age restricted communities fall into the “unassisted communities” category.
Table IV-3 highlights migration trends into Larimer and Weld counties compiled by the Internal Revenue Service. The IRS tracks and defines migration by the change of address on a taxpayer’s tax filings. During the year from 2001 to 2002 majority of the migration which is in Larimer County, 94.2%, came from residents who lived in Colorado. More specifically, 95.3% of the migration within Larimer County came from those who already lived within Larimer County. The second highest in-state migration was from those living in Weld County. The state with the second highest migration to Larimer County was the state of Wyoming. The state of California had the second highest migration percentage to Weld County.
D. Growth Trends and Projected Active Adult Housing Demand in the Air Park Village Primary Trade Area
1. Growth Trends
Having projected population and household growth for the two-county market area, the analysis moves to the micro level. The primary trade area is the area from which a proposed project will draw much of its demand. THK has designated a trade area based on market potentials. The designated trade area assumes Larimer County as the primary trade area. Table IV-4 documents the population and household growth in the Air Park Village primary trade area.
The primary trade area added an average of 6,288 people and 2,613 households annually during the 1990-2004 period. During the 2000-2004 period, the primary trade area averaged the addition of 5,668 people and 2,473 households annually.
The primary trade area is expected to grow by an average of 7,866 people and 3,205 households annually over the next decade. The trade area, which currently contains 274,167 people and 107,054 households, is expected to grow to 352,830 people and 139,100 households by the year 2014. The anticipated growth in the Air Park Village primary trade area is profiled in Table IV-5.
Tables IV-4 and IV-5 also isolate the adult (65+) population and households in the primary trade area. As shown, this demographic has historically accounted and will continue to account for an increasing percentage of the trade area’s population and households. The adult population increased from 9.6% of the trade area’s population in 1990 to 9.7% of its population in 2004.
Similarly, the number of adult households grew at a markedly higher rate than overall households in the trade area. This trend is projected to continue, and by 2014 adult households should account for approximately 15% of the total households in the trade area.
2. Housing Demand
Once the demographics of the primary trade area have been projected, the trade area's residential demand can be estimated. However, a larger scale, such as the two county market area, needs to be projected first. Projections of the two county area are found in Table IV-6. It was found that there will be an annual demand for 6,380 housing units between the decade 2004 and 2014. 4,609 of total units demanded will be for detached single-family units and 732 units will be for attached single-family units. The following table, Table IV-7, projects the demand for new residential construction in the Air Park Village primary trade area by unit type. Over the next ten years, the trade area will experience demand for an average of 3,500 new residential units annually. More specifically, it is estimated that there will be an average annual demand for 2,530 detached single family units, 417 townhomes/condos, and 525 rental multi-family units.
A sizeable portion of the residential demand in the trade area will be generated by households headed by somebody 65 or older. In fact, the National Institute of Aging estimates that seniors aged 65 and over have a home ownership rate of nearly 80% and account for 10% of all new home purchases. Accordingly, it is expected that the bulk of that 65+ demand will be for ownership units, with a relatively significant percentage going to attached demand. It should also be noted that home owners in this demographic have typically accrued considerable equity in their existing homes, giving them significant buying power in the event that they choose to relocate.
To quantify the demand for active adult units, THK applies national and regional demand trends to the existing and projected demographics of the primary trade area. This is done in Table IV-8. Previously discussed statistics and trends from Del Webb and the National Institute of Aging suggest that somewhere between 2% and 7% of the 65+ population will choose to live in an active adult community, and it is likely that these communities will experience increasing popularity as they are introduced to more markets and gain wider exposure (Del Webb found in its most recent survey that approximately 75% of those approaching retirement know what an active adult community is). Many markets, like the greater Fort Collins market, have no true adult communities. This, however, is likely to change in the near future, as developers become increasingly cognizant of the fact that many of the 65+ households that want to live in an adult community also want to stay close to home.
In Table IV-8, THK estimates that there are currently approximately 325 households in the trade area that would relocate to a retired community. That total should jump to over 535 households by the end of the next decade as the number of 65+ households grows and the percentage of those households choosing to relocate to adult communities rises to a level more in line with national averages. As shown, it is also estimated that the bulk of the adult demand will be for ownership units.
E. Residential Purchasing Capacity and Demand by Price Range for the Adult (65+) Demographic in the Air Park Village Primary Trade Area
To better quantify the demand for new adult residential units in the primary trade area, THK breaks down the trade area's existing households by income range and then converts those income ranges to home purchasing capacity and monthly rental capacity. Home purchasing capacity is calculated using estimated monthly payments (principle, interest, taxes and insurance) based on a 30-year fixed rate mortgage with an 6.0% interest rate and a 20% down payment. In determining monthly rental capacity it's assumed - as available statistics indicate - that households that rent spend, on average, 25% of their gross income on housing. Households that own their homes typically allot 28%-32% of their income to mortgage payments. It should be noted that no allowances have been made to account for the greater purchasing capacity that may be derived from adjustable rate mortgages (ARMs) or other alternative financing mechanisms, nor has any allowance been made for the fact that many households made up of people 65 or older have greater equity to devote to the purchase of a home. Similarly, no allowance has been made for the fact that many retirees show low income, yet have high net worths. For these reasons, Table IV-9's home purchasing capacity estimates are likely conservative.
The median household income for 65+ households in the Air Park Village primary trade area is currently approximately $38,945. This suggests that the median 65+ household in the trade area can afford a $136,900 home. Nearly 30.0% of the trade area's 65+ households can afford a home priced between $165,000 and $300,000, and approximately 24.2% can afford a home priced over $300,000. A sizable portion of the trade area's households, over 37.0%, can only afford a home priced under $140,000. Again, these figures are based strictly on income; there are no adjustments to reflect existing equity or wealth.
In Table IV-10 & IV-11, purchasing/rental capacity is combined with projected residential demand in order to estimate demand by price range. As shown, approximately 32.0% of the 65+ demand for ownership homes will be for units with prices under $140,000. Another 25.0% will be for ownership homes with prices between $140,000 and $200,000. Approximately 43% of the demand for ownership homes will be for units with prices over $200,000. Table IV-11 shows that more than half of the 65+ rental unit demand will fall in the over $830 per month range.
F. Residential Sales and Supply Trends
At this time, the type of adult community being proposed – health center and supporting commercial, etc. – does not exist in the market area. The trade area does have retirement homes services and facilities, but almost all of them are smaller residences with only rental units and assisted living.
Given the lack of comparable projects, the proposed community will likely compete, at least initially, with traditional subdivisions and master planned communities, some of which offer units with the types of amenities that appeal to seniors. However, given that the demand isolated in this analysis singles out only those buyers and renters who want to be in an active community, standard master planned communities, no matter how much their units appeal to seniors, cannot be considered direct competition.
To offer a better glimpse of the depth of the residential market in the trade area, THK examined patio home and condominium sales. As shown in Table IV-9, the Fort Collins area is the most active sub-market. In Table IV-12, THK profiles the majority of the patio homes and condominiums in the surrounding area, not a one of which could be considered competition for the proposed adult community. The majority of the developments inventoried offer amenities such as a pool, park, and trails. Only one development, Loveland Good Samaritan Village, offers rental units.
V. Adult Development Potentials in the Air Park Village Primary Trade Area
The success of an adult development in the trade area will depend on a number of factors: location, physical suitability of the selected site for development, and the overall market conditions for residential sales, particularly sales to adult (65+) households. The adult market remains largely untapped in the trade area, and a strategically positioned site should be able to capitalize on that pent-up demand.
The supply and demand sides of the 65+ residential market in the Air Park Village primary trade area were evaluated in the previous sections of this report. It was established that the primary trade area has an existing demand for 325 adult units and that that demand should jump to 535 units by 2014. Approximately 88% of the units demanded are and will be ownership units. Table V-1 projects the absorption potentials for residential development at a site in the trade area.
THK's projected capture rates for adult units are shown in Table V-1. The demand by price range and tenure in the primary trade area was projected earlier based upon the projected income and demographic characteristics of the population over age 65. The capture rates show the share of each market segment that a site in the trade area should be able to capture.
The important elements to evaluate when determining capture rates are the prestige of the community and the quality and character of the immediate area. Capture rates should reflect the differences in the quality of the location and the reputation, planning and amenities of competitive developments, and they should take into account the geographic attributes of the selected site and those of competitive projects, as well as the number of competitors in a given price range within the immediate market area. However, the most significant factor in this case is the likelihood that the subject project will be the only active adult, age-restricted project marketing for-sale units in the trade area.
Because the subject project will likely be the first true adult community developed in the trade area, THK has been conservative in its projected capture rates, allowing for two competitors in each price and rent range. This allows for the possibility of additional competition coming on line in the next several years. It also allows for some leakage of demand, which often occurs in the early years of a new product and concept being introduced into a market.
Table V-1 shows that an active adult community developed at a strategic site in the trade area should be able to capture a significant portion of both the pent-up and new demand for this type of product. Again, the bulk of the demand will be for ownership units, and, as Table V-1 demonstrates, a well-ammenitized, age targeted community should be able to absorb between 40 and 70 ownership units over the next decade. Clearly, the more price ranges the project can offer product in, the higher its absorption rates will be.
VI. Rental Apartments in the Fort collins Vicinity
The following table profiles the apartment projects found within the Air Park Village Trade Area. A total of 82 apartment projects were profiled. On average, the apartment communities had 105 units.
Table VI-2 projects the demand for rental units within the trade area. This table demonstrates that a rental unit at the proposed Air Park Village Community should be able to capture between 25 and 40 rental units over the next decade. Obviously, the more rental ranges the project can offer, the higher its absorption will be.
In addition to residential potentials on the subject property, both retirement and traditional housing, there will be demand for retail/commercial users to serve the site and surrounding population and employees, support services for health care and other personal services,
Regarding retail/commercial opportunities it is expected that there will be 885 to 900 residential units of the subject property. Assuming that there are 2.0 persons per household on-site population could be 1,770 to 1,800 at build-out. In the Larimer county area it is estimated that there is approximately 12,000,000 square feet of retail space to serve a population base of 280,960, or there are 43 square feet of retail space per person. In order to serve 1,770 to 1,800 persons, there should be 80,500 square feet of retail space on-site. In addition there could be demand from adjacent employees and residents. In order to anticipate retail demand on the Air Park Village property, THK would recommend that 125,000 square feet of retail space be planned for. Assuming a coverage ratio of 22%, this space will require 13.0-acres of land.
With the anticipation of a retirement village as the anchor for the community, there will be a demand for A portion of the property should also be reserved for medical services such ahs doctors offices, clinics and related services. Given the number of hospitals and medical facilities in the Fort Collins/Loveland region, we do not see demand for a full service hospital on the property. THK has recommend that 100,000 square feet be reserved for medical and related uses on 7.5 acres of land (30% coverage ratio).
The proximity of the subject property to major roadways (Colorado 14/Mulberry St., Riverside Drive, Lincoln Avenue, and Interstate 25), surrounding businesses, there will be some demand for office and industrial uses. Based on employment projections shown earlier in this report and the percentages of employment that will be housed in office or industrial space, THK projects that there will be a demand for 461,180 square feet of office space and 723,600 square feet of industrial space annually over the next decade in Larimer and Weld Counties. The office an industrial markets in Larimer and Weld Counties are very competitive. There are numerous sites and parks that are well located along Interstate 25 and other major thoroughfares. If the subject property competes in the office and industrial markets, it is unlikely that a market capture arte of more than 2-3% would be realized. Assuming a 2.5% capture rate, there would be an annul demand for 11,530 square feet of office space and 18,090 square feet of industrial space on the subject property, or 29,620 square feet in total. With a 30% coverage ratio annual acreage demand will be for 2.3-acres. Over a decade 23-acres could be absorbed for office and industrial uses.
The property will be marketed to a national clientele with the hopes of attracting a “campus” style major employer. The probability of predicting this event is difficult when analyzing local market conditions. A portion of the site can be reserved for this use, should marketing efforts be successful. In the event that a major “campus” style employer is not found, the portion of the site reserved for that use could be converted to alternative uses, assuming entitlements can be obtained.
In summary, THK recommends that approximately 43.5-acres of land be reserved for non-residential uses which could accommodate up to 521,120 square feet of space.
VIII. Conclusions and Recommendations
As the preceding analysis makes clear, the market potentials for a retirement, adult community in the Fort Collins market area are strong. Complicating matters to a certain degree, at least as far as estimating demand, is the fact that the type of community being proposed has never been tried in the market area. However, an emerging trend that certainly goes a long way in allaying any geographic concerns is the successful introduction of active adult communities in non-traditional markets that do not necessarily have a mild climate. For example, Del Webb, the nation’s largest developer of active adult communities, has active projects in New Jersey, Illinois, and Massachusetts. These projects are a direct response to the increasingly accepted understanding that a significant portion of those looking to relocate for retirement would prefer to stay close to their existing homes. As is the case in other non-traditional markets, the close-to-home segment of the 65+ demographic will drive demand in the Fort Collins market area.
The recommendations that follow cover the key factors and issues that will need to be addressed in order to successfully develop an active adult community in the Fort Collins market area. Obviously, these recommendations will need to be further refined once design and entitlements proceed.
Size – Based on absorption potentials, THK recommends a community with 850-900 units. Of that total, 400 rental units should be included. These units would cater to all age groups.
Unit Type and Pricing – Low maintenance homes in as many price ranges as possible is the key here. Most buyers will be looking for single-story units, and zero-lot-line patio homes and casitas are common in active adult communities. Product types can range from townhome and condominium units to small lot single-family and duplex homes. In general, units should offer 2-4 bedrooms and 2-2.5 bathrooms, and total square footages should range from 1,100-2,500 square feet. Features that should be strongly considered include attached garages (two car), covered patios, energy efficient packages and low-maintenance landscaping.
Community Amenities – The traditional active adult model includes a multi-purpose clubhouse/community center. It is understood that the proposed project will not include a golf course. This will have an impact on demand, but probably not a significant one, particularly given the abundance of golf facilities in the market area. Moreover, only 22% of those responding to the Del Webb survey identified golf as a “very appealing” component of an active adult community, ranking it well below a host of other factors/amenities ranging from security and aesthetic appeal to social opportunities and fitness facilities.
The clubhouse/community center will likely prove the most crucial amenity. It will serve as the hub of activity for the community, and an experienced manager/events coordinator will be key. Below are many possible clubhouse-related amenities and services ranked in order of desirability.
Based on the preceding analysis, THK would recommend the following land use program for the 135-acre Air Park Village property.
Furthermore, THK has reviewed listings and sales of other residential properties in the Fort Collins area that may be comparable to the subject property. Key parcels identified are:
· 3836 Manhattan Avenue, a 10.4-acre parcel zoned for 30 townhome lots and an existing 8-plex. The property is listed for sale at $1,300,000. This translates into $125,000 per acre, $2.87 per square foot, and $43,333 per unit. The price includes sufficient raw water to develop the property.
· Fossil Boulevard and Conejoes Road, a fully entitled project for 92 condos and 49 townhomes. The price is $1,762,500 or $12,500 per unit. The site is approximately 10-acres. This translates into a $4.05 per square foot price.
· North Lincoln Avenue is a14-acre parcel. The asking price is $1,616,000 or $115,428 per acre, or $2.64 per square foot. This property is adjacent to the new Wal-Mart Supercenter.
· 6813 S. College Avenue is a 4-acre parcel. Planned uses are for residential and commercial. The asking price is $535,000 or $133,750 per acre. This translates into $3.07 per square foot.
· On College Avenue, at the southern edge of Fort Collins, is a 38-acre multi-family parcel offered for $3,300,000. The property is zoned for a minimum of 12 units per acre. The asking price is $115,465 per are or $2.65 per square foot.
Upon obtaining preliminary plat approval, the subject site should easily fall within the range of prices illustrated above.
