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LOC CONSULTING Market Analysis for Downtown Redevelopment City of Centerville Economic Development Authority April 3, 2023 5.1 Profiled Mixed -Use Properties in the Downtown Centerville PMA Property The Lighthouse Lofts 220 Lake St N Forest Lake Boatworks Commons 4495 Lake Ave S White Bear Lake Year Opened Units 2018 103 Residential Commercial Commercial Build. Type Space Type Height Acres Market -Rate 9,761 Retail 5 2.40 Rental 2015 85 Market -Rate 4,000 Retail 4 1.40 Rental Park Place 2004 12 For -Sale 61,363 Office/ 3 0.59 25 North Lake Street Condominium Retail Forest Lake Units Source: Interviews, Costar; Northstar MILS, LOCI Consulting LLC ■ All of the projects have higher end features and amenities. All have parking ratios that exceed one parking stall per residential unit. ■ Projects typically offer balconies, in -unit washer and dryer, community rooms, and community terraces. Most projects offer a fitness center, and some offer a business center. We expect that business centers will become increasingly popular. ■ Only one project is leasing commercial space currently. That space is listed for $15 per square foot, triple net. (In triple net rental agreement, the tenant is responsible for all expenses and taxes.) ■ Parking is made available onsite for commercial tenant customers. Interviews LOCI Consulting interviewed several sources familiar with mixed -use developments. Key points from those interviews follow. Sources said that these projects work because they are integrated with the neighborhood and linked to the lakes. ■ One developer said that his project would not work if it was not on the lake. ■ Residents are attracted to commercial amenities in mixed -use developments. They like to be in an area with retail, restaurants, and services. ■ The developer of The Lighthouse Lofts said residents are attracted to the trail access as well. These projects can be financially difficult and likely require public financing, such as Tax Increment Financing (TIF). ■ Even with public subsidies, these projects are challenging. "No developer is going to build and get a 0% return," said one developer. "These projects aren't going to getyou a 30% return, but, with TIF financing, a developer might get an 11% return." ■ One developer said that some residential TIF programs require that a certain number of units be affordable and that can present some financial challenges as well. Parking is critical for the success of mixed -use projects. ■ Underground parking is sometimes expected for residential units at higher rents and this expense can really add to the overall project cost Page 75