Presented at the Congress for the New Urbanism in Atlanta, May 2010

1. In Search of Good News
Assessing the New Urbanism in the Face of the Recession
Jonathan Bartlett – jbartlett@rclco.com | CNU18 May 2010

2. ABOUT OUR FIRM
SERVICES
 Management Consulting
 Market & Economic RCLCO is a real estate
Consulting
 Real Estate Strategy
advisory firm providing market
y p g
Planning intelligence, strategy, and
 Valuation Services
 Acquisition & Disposition
implementation solutions since
Strategies 1967
196
 Workouts & Restructuring
 Transaction, Structuring &
Investment Analysis
 Development Services
Austin  Atlanta  Los Angeles  Orlando  Washington, DC
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3. THREE BITS OF GOOD NEWS, AND A CHALLENGE
• A demographic shift is in progress that will create
extraordinary opportunities for developers and the
professionals hi d t d th i thi ki
f i l hired to do their thinking.
• Green, whatever it means, is a big deal, and people have
started to expect it
it.
• TND projects have earned the right to fail for the same
reasons as their more conventional counterparts
counterparts.
• More than ever before, empirical evidence shows that the
traditional model of suburban development is broken Can
broken.
you provide a scalable, inclusive alternative?
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4. Boom . . . Boom!
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5. GEN Y, BOOMERS CALLING THE SHOTS
2010 U.S. Pop.
Gen Z (?)
10% - 30M
Eisenhowers
17% - 51M
Gen Y
27% - 81M
Baby Boomers
B b B
27% - 78M
Gen X
18% - 52M
SOURCE: Claritas, National Center for Health Statistics, US Census
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6. GEN Y MAKING ITS MARK TODAY
SHAPING POST-RECESSION PLACEMAKING EFFORTS
RCLCO Consumer Research shows:
 41% of Generation Y plan to rent for at least three years
 77% of Generation Y plan to live in an Urban Core
4,200,000 Largest group began graduating in 2009 –
4,100,000 Greatest demand for rental housing in this
period
4,000,000
If this group rents for at least three years,
3,900,000 there will be more first-time homebuyers
3,800,000 in the market in 2013-2018 than ever
before
3,700,000
, ,
3,600,000
3,500,000
3,400,000
3 400 000
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Number of 22 Year Olds Same 22 Year Olds Turn 25
NOTE: Number of 22-year olds is based upon birth rate and does not factor in death rates and migration.
SOURCE: U.S. Centers for Disease Control and Prevention
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7. GEN Y WILL PAY FOR WALKABLE, MIXED-USE
CHALLENGE IS PROVIDING PRODUCT THEY CAN AFFORD
• Driven by convenience, connectivity, and a
healthy work-life balance to maintain
relationships
• 1/3 will pay more to walk to shops, work,
and entertainment
• 2/3 say that living in a walkable community is
important
• More than 1/2 of Gen Y would trade lot size
for proximity to shopping or to work
• Even among families with children, one-third
or more are willing to trade lot size and “ideal”
homes for walkable, diverse communities
SOURCE: RCLCO Consumer Research
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8. > 85% OF GROWTH IS HOUSEHOLDS WITHOUT CHILDREN
DIFFERENT HOUSEHOLD LANDSCAPE BY 2025
Absolute Change in Households, United States
1980–2005
Married with
children, 1,376,788
children 1 376 788
Married, no
children, 5,476,979
One-person
Single male with households,
children, 2 165 939
hild 2,165,939 11,825,702
11 825 702
Single female with
children, 4,680,913 Nonfamily,
Other Family,
3,416,246
1,758,377
, ,
SOURCE: US Census
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9. FORGET ABOUT EQUAL PAY…
WOMEN POISED TO OUT-EARN MEN – ARE YOU READY?
Data from 2003-2004 shows a dramatic reversal from only a few decades ago – whereas 60% college graduates were men
in 1978, today almost exactly the reverse is true.
These Gen Y women will begin to outpace their male counterparts with respect to earning and purchasing power.
Degrees by Sex: 2003 – 2004
47.66%
57.46% 58.93%
52.34%
42.54% 41.07%
Bachelor's Master's Doctorate
Male
M l Female
F l
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10. Green Research Shows Importance of Messaging
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11. “GREEN” COMPETES IN A CROWDED FIELD
SCHOOLS, SPACE, SIZE STILL MOST IMPORTANT FACTORS
Most Important Factors When C
Choosing a New Home
Excellent school system
Seclusion and space from neighbors
First-floor master bedroom
Reduced electricity bills
Indoor parking for at least tw o vehicles
Use of materials that do not contain potentially hazardous chemicals
A larger home w ith more square footage
Costs more today but saves energy and has reduced energy bills over time
Appliances that use less w ater and less energy
Additional storage space
Improved indoor air quality
A smaller home w ith less square footage
Uses the sun for home heating/energy
Energy Star certification
Pedestrian-friendly location
Proximity to major highw ay or thruw ay
Hardw ood floors
Walking distance to transit
Community amenities such as pools, basketball courts, and clubhouses
Large law n
Finished basement
Fireplace
Walking distance to w ork
Use of renew able materials
Ten foot ceilings or higher
NAHB Model Green Home certification
Golf course
Luxury appliances, such as Viking and Miele
Surfacing h
S f i that minimizes runoff
i i i ff
Formal dining room
LEED certification
Stainless steel appliances
Berber or other luxury carpet flooring
Granite countertops
N=1,011 Use of low -w ater usage landscaping
Uses less w ater
SOURCE: RCLCO Consumer Research 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
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12. THREE PRIMARY MOTIVATIONS
Green homes are better
for “the environment”
Green homes save energy
(and have lower utility bills)
Living in a g
g green home is better for
my health and
that of my family
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13. WHAT’S IN IT FOR ME?
HOOK TO SELL SMART LOCATIONS IS “ME”, NOT “WE”
If their green investment may not pay them back over time, buyers are
willing to spend more money on their home if….
50%
45%
41%
40%
35%
30%
24%
25%
18%
20%
15%
10%
5%
0%
It Saves Energy It Provides Health Benefits It’s Good for the
Environment
E i t
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14. “BRANDING” THE GREEN BUILDING
ENERGY STAR IS THE BRAND THEY KNOW AND TRUST
For those who answered ‘MORE INCLINED TO STAY’ in CQ27, please indicate your
willingness to pay a higher rent for one or more of the following certifications:
None
Specify
Other
National Audubon Society
Built Green
Model Green Home
Healthy Home or HealthHouse1
y
Green Globes
EarthCraft
Energy St
E Star
LEED
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Not Willing to Pay any more Rent Willing to Pay more in Rent
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15. A Tale of Two Suburbs
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16. OLD MODEL VERSUS THE NEW
Telfair (#4) Daybreak (#6)
Metro Area Houston Salt Lake City
Metro Area Population 5.9 million 1.2 million
MPC Gross Acreage 2,018 4,126
Market Positioning Primary Home Primary Home
Active Adult
First Home Sale June 2006 June 2004
Units Sold to Date 1,452
1 452 2,423
2 423
Units Sold in 2009 450 (2.4% of market) 375 (16% of market)
Lots Sold in 2009 404 355
Most Popular Amenities Walking Trails/Parks Walking Trails/Parks (51)-
(15), Lifestyle Center, -70% of kids walk to
Resort-Style Water Park school--, Community
Gardens, future rail
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17. DISTRIBUTION OF HOME SALES IN 2009
Telfair Daybreak
13% Large Lot
SFD
27% C d /MF
Condo/MF
100%
Large Lot
33% Small Lot
SFD
27% Townhome
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18. IS THERE ARE SMART GROWTH PREMIUM?
(*even in a downturn)
Source: Eppli and Tu
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19. If you prefer quick and easy exurban development,
development
please raise your hand.
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20. But New Urbanism Creates Long
Long-
Term Value!!
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21. CONTACT US
JONATHAN BARTLETT
Vice President - Atlanta
jbartlett@rclco.com
ATLANTA (As of June 1)
1168 Howell Mill Road, Suite F ORLANDO
Atlanta, GA 30318 964 Lake Baldwin Lane
(404) 365 9501
365-9501 Orlando, FL 32803
(407) 515-6592
LOS ANGELES
1880 Century Park East, Suite 250 WASHINGTON, DC
Los Angeles, CA 90067 7200 Wisconsin Avenue, 7th
(310) 914 1800
914-1800 Floor
Bethesda, MD 20814
AUSTIN (301) 907-6600
106 E. Sixth Street
Suite 900
Austin,
Austin TX 78701
(512) 215-3156 Phone
WWW.RCLCO.COM
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