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HomeMy WebLinkAboutA022 - Report from Market firm, Somerset Subdivision ♦A [i . AIN Memo Department of Planning & Housing Caring People Qualify Programs Exceptional Service n (� NOV 'L 12000 TO: Mayor, City Counc' CITY t'C;EiIK CITY OF AMES,IOWA FROM: Brian P. O'Connel , hector DATE: November 22, 2000 SUBJECT: Report from Marketing Firm Regarding Somerset Subdivision When the City Council was asked to consider granting Urban Revitalization Tax Abatement for the Somerset Subdivision, it was indicated that there would be a number of strategies utilized to enhance the pace of sales of single-family homes in Somerset. This was repeatedly referred to as a package of techniques involving both the developers of the subdivision and the City. One of the components of this strategy was to retain the services of a marketing and real estate research firm to assist in analyzing the Somerset Subdivision to determine what might be contributing to the slow pace of single-family home sales. Attached to this memorandum is the initial findings of the firm of ZimmermanNolk who specialize in analyzing the market potential and development strategies for Traditional Neighborhood Development and other mixed use real estate development projects. The report has been provided to the developers of Somerset. Staff expects that more guidance will be obtained from this firm to assist with the continued development of the Somerset Subdivision. The conditions in the Urban Revitalization Plan indicate that continuous involvement with a marketing firm to assist in the development of the subdivision will occur as a condition to receiving the abatement incentive. BPO:clh Attachment c: Steve Schainker, City Manager John Klaus, City Attorney Diane Voss, City Clerk s:\bpo\somersetmemon22 ZIMMERMANNOLK ASSOCIATES, INC. _ RECEIVED 17 East Main Street Clinton, New Jersey 08809 OCT 272000 908-735-6336 • 908-735-4751 facsimile CITY OF AMES IOWA Research & Strategic Analysis DEPT.OF PLANNING&HOUSING M EMORANDUM DATE: October 23, 2000 PROPERTY: Somerset City of Ames Story County, Iowa RE: Performance Assessment FOR: City of Ames We have reviewed the Somerset landplan (both Duany Plater-Zyberk's original post-charrette neighborhood plan and the subdivision plan as recorded), subdivision maps, unit designs, unit pricing, completed unit photographs, and City Assessor's sales data. We have also taken the first steps toward determining the market potential for housing within a traditional neighborhood development in Somerset's location. The information we have appears to be incomplete; ideally, we would like to have lot-by-lot data. However, with the information provided to date, it appears that at least 26 units have been sold: two eight-plex apartment buildings, 13 rowhouses, two duplex units, and nine detached houses. It also appears that at least 22 additional buildings have been completed, but remain unsold: three eight-plex apartment buildings, seven rowhouses, and 12 detached houses. Based on our initial market analysis, and the information provided to date, we feel reasonably confident that the reason for slow sales is not the lack of market potential for housing within a genuine traditional neighborhood but rather the development's execution and positioning. MEMORANDUM Page 2 Somerset City of Ames, Iowa October 23,2000 Your description of the sales history—"that initial pace of construction and home sales was quite impressive," yet "more recently home sales have dramatically declined"—also indicates that the problem is not one of market potential. The typical sales trajectory of a well-conceived and well-executed traditional neighborhood is just the opposite of what Somerset has experienced. Initial sales pace is usually on a par with conventional subdivisions; however, once both sides of a single street have been completed, the sales pace and/or sales prices rise, often dramatically. The increased value is generated by the enhanced public realm that buyers can only perceive when there is a built example the first completed street. Based on this review and preliminary analysis, we have reached the conclusion that the poor sales are likely attributable to three interrelated factors: ill-conceived modifications to the plan, poorly-executed house designs, and inefficient phasing. • The plan has been modified to blend both traditional neighborhood elements and conventional subdivision elements. The unintended consequence is that the plan now combines the disadvantages of both forms. The modifications to the original plan, then, have actually hampered the marketability of units within Somerset. — The elimination of alleys without the corresponding increase in lot widths has yielded streetscapes that must look like dense versions of a conventional subdivision. — The addition of the typical Midwestern empty-nester duplex (garage forward, hidden front door, lower-level walkout) must reinforce the impression of a conventional subdivision. (This may be emblematic of the problem, since it appears that HCS is selling similar units in Story City for at least $75,000 less.) — Several streets have houses on one side of the street facing the garages of the units on the other side of the street. ZIMMERMANNOLK ASSOCIATES,INC. a MEMORANDUM Page 3 Somerset City of Ames, Iowa October 23,2000 • The traditional design elements of the building elevations are in many cases so poorly executed that they actually detract from the value of the unit. A good example is 2424 Camden, a house with a portico so poorly designed that it not only devalues the unit itself, but may well reduce the market values of the houses across the street. • Phasing (the staging of land development and product offerings) has not taken advantage of the efficiency of the traditional neighborhood form. — Phasing has not achieved the first marketing objective of traditional neighborhoods: the completion of both sides of a single street as quickly as possible to demonstrate the superior public realm. (We can't be positive this is the case, because we don't have enough information to reconstruct sales and construction on a lot-by-lot basis. However, it appears as though Camden Drive has a concentration of houses, but with several gaps on each side of the street.) — The scattered phasing has also contributed to a very high ratio of infrastructure cost to housing sales revenue, since the premium that should be in place after three years is still absent. — It also appears as though unnecessary infrastructure has been completed. Before going any further and incurring more costs to the City of Ames, we think it would be fruitful to discuss the most appropriate course of action. The completion of our Market Position Analysis would be fundamental to any further recommendations. The results of the Market Position Analysis would provide: ZIMMERMAN/YOLK ASSOCIATES,INC. MEMORANDUM Page 4 Somerset City of Ames, Iowa October 23,2000 • Any proposed changes to the plan that would improve the saleability of the units; • Any changes in the mix of housing types; • The proper proportionate mix of housing types; • Modifications and/or additions to specific models; • An effective phasing plan; and • Advice on marketing. ZIMMERMAN/VOLK ASSOCIATES,INC.