Real Estate Development Metrics
Multifamily Rent Rates* |
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| 10 Most Expensive | 10 Least Expensive | ||
| New York | $2,720 | Wichita, KS | $470 |
| San Francisco | $1,760 | Oklahoma City | $490 |
| Fairfield Cnty, CN | $1,760 | Tulsa, OK | $520 |
| Boston | $1,590 | Knoxville, TN | $560 |
| Orange Cnty, CA | $1,490 | Dayton, OH | $570 |
| Long Island, NY | $1,480 | Chattanooga, TN | $580 |
| San Jose, CA | $1,470 | Greenville, SC | $580 |
| Northern NJ | $1,440 | Lexington, KY | $600 |
| Ventura Cnty, CA | $1,400 | Louisville, KY | $600 |
| Los Angles | $1,380 | Little Rock, AR | $600 |
| * Monthly Rental Figures
for properties +40 units (+20 for CA), blended average rates
including landlord concessions Source: Reis, Inc., Wall Street Journal, Jan 15, 2008 p D3 |
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Hotel Rule of Thumb
charge at least $1 in room rate for each $1,000 in cost to build the room. At today's prices, the average luxury hotel costs an average of $700,000 per room.
Today, 95% of luxury hotels are being built as a part of a larger real-estate development (up from 10% in the 1990's.)
| SMA Population | July 1, 2006 | April 1, 2000 | change | percent |
| Oklahoma City | 1,172,339 | 1,095,421 | 76,918 | 7.0% |
| Tulsa | 897,752 | 859,530 | 38,222 | 4.4% |
| DFW | 6,003,967 | 5,161,518 | 842,449 | 16.3% |
| Denver | 2,408,750 | 2,179,320 | 229,430 | 10.5% |
| Kansas City | 1,967,405 | 1,836,420 | 130,985 | 7.1% |
| San Antonio | 1,942,217 | 1,711,716 | 230,501 | 13.5% |
| Fayetteville- Rogers | 420,876 | 347,045 | 73,831 | 21.3% |
| Source: US Census | ||||
| Type | Description |
| Premium Market
9% to 12% appreciation over 10 years |
Does not produce positive cash flow when property is leveraged sufficiently for normal Rates of Return on Equity. Typically requires significant down payment. Usually, lower vacancy rates because of high population growth coupled with limitations on new development |
| Growth Market
7% to 9% appreciation over 10 years |
Typically does not initially produce positive cash flow when property is leveraged sufficiently for normal Rates of Return on Equity. Lower vacancy rates because of high population growth, with potential for rent increases leading to later positive cash flow. These markets may have significant swings due to over- building/ under-building through the business cycle |
| Stable Market
5% to 7% appreciation over 10 years |
Typically break even on cash flow when property is leveraged sufficiently for normal Rates of Return on Equity. Renters tend to be working class families or low income tenants with credit problems. |
| Cash Flow Market
3% to 5% appreciation over 10 years |
Typically will have positive cash flow when leveraged sufficiently for normal Rates of Return on Equity. New investors in these markets may have unrealistic expectations of the appreciation over 10 year period. |
Megapolitian Area
A term proposed by staff at the Metropolitan Institute at Virginia Tech and others for a multi-regional agglomerations is “Megapolitian Area.” Researchers have identified 10 Megapolitian areas around the country where a string of cities and suburbs blend into one large area. It is estimated that the majority of the US population growth during the next 25 years will occur in these areas.
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Megapolitan Population and Growth |
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| Megapolitian Area | States | 2003 Pop (Millions) | % of US Population | 2000- 2003 growth | % of Urbanized Population |
| Northeast | Conn, Del, Me, Md, NH, NJ, NY, VA | 50.4 | 17.3% | 2.5% | 89.3% |
| Midwest | Ill, Ind, Mish, Pa, Wisc | 40.1 | 13.8% | 1.5% | 83.0% |
| Piedmont | Al, Miss, SC, NC, Tenn | 19.3 | 6.6% | 5.0% | 67.3% |
| Peninsula | Fla | 13.7 | 4.7% | 6.8% | 92.0% |
| Gulf Coast | Tx, La, Miss, Al, Fla | 12.1 | 3.7 | 4.6% | 83.7% |
| I-35 Corridor | Tx, Okla, Mo, Neb | 15.3 | 5.3% | 5.9% | 83.5% |
| Valley of the Sun | AZ | 4.4 | 1.5% | 9.5% | 94.1% |
| Southland | So Calif, Nevada | 22.2 | 7.6% | 5.8% | 98.2% |
| Nor Cal | No Calif | 12.0 | 4.1% | 3.9% | 93.3% |
| Cascadia | Wash, Ore | 7.4 | 2.6% | 4.2% | 84.5% |
| Megapolitan Total | 197.0 | 67.8% | 3.9% | ||
| US Total | 290.1 | 3.3% | |||
| Source: Metropolitan Institute at Virginia Tech: Retail Traffic October 2006 | |||||
Commercial Lending
Community (assets under $5 billion) and Mid-Sized banks (assets between $5 and $25 billion) have an increasing concentration of commercial real estate loans. Banks with less than $25 billion in asses had commercial real estate loans outstanding averaging just under an average of 300% of bank assets, in the second quarter of 2006; as apposed to just under 140% during the forth quarter of 1993. During the same time the percentage at larger banks rose from just under 120% in 1993 to just over 125% in 2006.
Federal regulators are proposing new rules that would call for enhanced risk management programs and greater capital requirements when an bank's construction lending grows larger than 100% of assets, or when all commercial real estate loans exceed 300% of assets.
Source: National Real Estate Investor, October 2006
Industrial Notes
Standard distribution warehouse size is 400,000 to 800,000 sf with 36 ft ceiling heights. This change reflects the changing way that companies think about distribution; nationally demand is expected to outpace supply until 2008. Nationally, rents should increase 3.5% to $5.10 / sf.
Source: Commercial Investment Real Estate Nov.Dec 2006:
Average National Real Estate Prices adjusted for Inflation |
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| Office | Industrial | Retail | Apartments | |
| 1985 | $163.33/sf | $31.78/sf | $97.50/sf | $52.81/sf |
| 2006 | $145.62/sf | $30.65/sf | $92.49/sf | $75.82/sf |
| % Change | -14.1% | - 7.0% | - 8.8% | 43.6% |
| Source: National Real Estate Investor Oct 2006: Global Real Analytics | ||||
Land Use Density and Clustering
Density refers to the number of people or jobs in a given area. Clustering refers to land-use patterns in which related actives are located close together. The implementation of clustering concepts in a planned development will tend to reduce automobile use, especially when other Transportation Oriented Development concepts are implemented.
Definition |
Population Density |
Typical Housing |
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Rural |
Less than 0.5 residents per acre. |
Houses on large lots (>5 acres) |
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Low-Density – Suburban |
0.5-5 residents per acre |
Houses on lots 0.5 to 5 acres |
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Mid-Density – Suburban Cluster or Urban |
5-12 residents per acre |
Houses on lots 0.2 to 0.5 acres (2-5 houses per acre) |
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Compact – Urban |
More than 12 residents per acre |
Various combinations of detached houses on small lots, duplexes, townhouses, and low-rise (under 4 story) apartments and condominiums |
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High-density |
More than 20 residents per acre |
Low- and high-rise (more than 4 story) apartments and condominiums |
Source: www.vtpi.org
Oklahoma Metrics
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the Characteristics of these other Developments:
