CM-06-09-186CAPITOL
MARKET
RESEARCH
Real Estate Research, Land Development Economics & Market Analysis
September 7, 2006
Mr. Jim Nuse
City Manager
City of Round Rock
211 E. Main Street
Round Rock, Texas 78664
RE: Market Analysis and Highest and Best Use for a master planned community covering
approximately 245 acres (106 net usable) at FM 1431 and Sam Bass Road in Round Rock, Texas
Dear Mr. Nuse:
Based on our conversation yesterday and a description of the property you provided, I have prepared a
proposal to conduct a market analysis and Highest and Best Use for approximately 106 (net) acres
located at FM 1431 and Sam Bass Road in Round Rock, Texas. This analysis will determine the
absorption potential and estimate values for residential and commercial uses at the subject location.
PURPOSE OF THE CONSULTATION
The purpose of this study is threefold: (1) to prepare a market analysis, which will result in an absorption
forecast for the 106 (net) acres contained in the proposed mixed-use development, (2) to provide
assistance in determining the mix of uses at the "conceptual design phase" and (3) to provide a report
that can be used to assist the City staff and City Council to determine if the sale of the parcel is an
appropriate course of action. We will assume that market demand will result in land sales and
development, and that appropriate subdivision and zoning approvals will be implemented by the City to
coincide with the demonstrated demand. The study will determine the absorption potential for single
family, multifamily and retail development at the subject location.
METHODOLOGY
The analysis will begin with a determination of the absorption potential for a proposed mix of residential
uses based on the competitive position of the subject and a demographic forecast of the growth potential
in the Round Rock market area. This approach will include the identification and analysis of existing
and planned competitive projects within the market area with a particular emphasis placed on
determining the status of any identified planned projects that might affect the potential absorption for the
subject.
Capitol Market Research, Inc.
605 Brazos, Suite 300
Austin, Texas 78701, (512) 476-5000
cheimsath@cmraustin.com
Mr. Nuse
September 7, 2006
Page 2
The specific tasks we will perform include the following:
Task 1: Client and project team meetings
a. Initial meeting to prepare "conceptual" land use plan to test against market conditions
b. Additional progress meetings with city staff (as needed)
Task 2: Evaluate the "succession" aspects or market area trends that will have an influence on
the development potential for the site.
a. Identify neighborhood and regional employment and demographic trends and assess the
implications for the subject tract
b. Identify the potential land use, access and visibility changes that may result from planned
roadway improvements in the immediate area.
c. Identify the potential land use, access and visibility changes that may result from the
construction of water and wastewater infrastructure improvements.
Task 3: Analyze Demographic Trends
a. Obtain and analyze census income data (1990-2000)
b. Determine income stratification for the market area
c. Obtain and analyze (owner/renter) tenure split for the market area
d. Obtain and analyze Claritas Demographic profiles for the target market area
e. Determine tenure by income group
f. Determine buyer profile based on demographic data for the market area
g. Determine unit preference based on a detailed demographic profile of the potential
buyers.
Task 4: Market Area Supply
a. Identify single-family inventory by type of unit and project, and obtain "sales" data for
available units in the Round Rock market area.
b. Identify new townhome/condominium and small lot single-family development with
comparable "price points" and obtain relevant data on sales prices and absorption.
c. Review city building permits and zoning applications to identify new projects proposed
in the market area.
d. Contact area brokers and landowners to determine availability of competitive parcels.
e. Forecast new unit construction based on market area analysis, and review of city
information and developer plans.
Mr. Nuse
September 7, 2006
Page 3
Task 5: Market Feasibility Analysis
a. Combine demand and supply analysis and forecast absorption for subject.
b. Verify market area analysis with single family, townhome, condominium and small lot
single family comparables from other market areas.
c. Respond to specific questions from client regarding
1. Desirability of the location for a mixed-use, master planned community
2. Depth of demand for single family, townhome/condominium and small lot single
family housing
3. Impact of other planned projects on demand
4. Amenities and product features desired/required by buyers
5. Suggested average unit size, price and mix of unit types
6. Suggested product delivery timing
Task 6: Apartment Market Analysis
a. Market Area Demand Analysis
1. Delineation of the Round Rock Market Area
2. Analysis of historical population growth and market area trends
3. Market area employment and recent growth trends
4. Preparation of MSA apartment demand forecast
5. Calculation of market area capture rate
6. Ten-year forecast of market area demand
b. Market Area Supply Analysis
1. Identification of market area inventory (supply) by type of project
2. Current occupancy and rent analysis for each project
3. Summary of current and historical market area rent and occupancy trends
4. Review of city building permits, site development plans and zoning applications to
pick-up new projects (if any).
5. Contact area brokers and landowners to determine current status of zoned
competitive parcels.
Mr. Nuse
September 7, 2006
Page 4
6. Forecast new unit construction (if any) based on the market analysis, and review of
city and developer plans.
c. Subject Tract Market Feasibility Analysis
1. Evaluate the subject tract against competitive sites
2. Combine market demand and supply analysis and forecast absorption for the
subject tract
3. Estimate gross and sq. ft. rental rates
Task 7: Retail Market Analysis
a. Market Area Demand Analysis
1. Delineation of Market Area using zip code boundaries
2. Analyze historical population growth and market area household income from
1990 and 2000 census
3. Calculate recent growth through June 2006 based on new housing starts
4. Calculate market area capture rate based on historical growth and recent market
trends
5. Forecast market area retail demand for ten years
b. Market Area Supply Analysis
1. Identify and locate market area retail inventory (supply)
2. Conduct current occupancy and rent analysis for each multi -tenant shopping center
3. Prepare summary of current and historical market area rent and occupancy trends
for area shopping centers
4. Review city building permits site development plans and zoning applications to
identify new projects (if any).
5. Contact area brokers and landowners to determine availability of zoned
competitive parcels.
6. Forecast new shopping center construction (if any) based on the market analysis,
and review of city and developer plans.
c. Subject Market Feasibility Analysis
1. Evaluate the subject tract against competitive sites
2. Combine market demand and supply analysis and forecast retail absorption for the
subject tract
Mr. Nuse
September 7, 2006
Page 5
3. Review recent land sales and retail land listings in the area and compare sales with
the subject
Task 8: Prepare Subject Build -out and Valuation Analysis
1. Using the absorption forecasts above and property value estimates generated by
Capitol Market Research, estimate annual assessed values by land use category
(through 2015) for the subject 106 acres.
2. Based on the financial objectives (rate of return) set forth by the client, describe the
development options and make highest and best use recommendations regarding
product phasing by land use category.
Task 9: Prepare Subject Build -out and Valuation Analysis
1. Prepare final report with recommendations for development mix and timing.
2. Present report findings to the client.
PRODUCT AND DELIVERY DATE
The data will be presented in a narrative report (electronic file and 3 hard copies) providing a description
of our analysis and results along with appropriate maps and report graphics. Delivery of the report will
be 60 days from receipt of a signed copy of this letter agreement and the specified retainer.
CONSULTATION FEE
The fee for the analysis identified above will be $18,000, including all data collection and expenses. A
retainer of $6,000 is required upon initiation of the research. Progress billings based on the percentage
complete, by task, will be submitted on a monthly basis. The balance of the fee is expected at the
completion of the assignment. Additional services, including presentations to community groups and
other interested parties will be billed at standard CMR billing rates of $250.00 per hour for principals
and $100.00 per hour for associates.
If you are in agreement with the conditions above and wish for us to undertake the assignment on this
basis, please return a signed copy of this agreement and we will begin work immediately.
If you wish to modify the scope of work or discuss the approach that I have suggested, please don't
hesitate to call.
Respectfully submitted,
CAPITOL MARKET RESEARCH, INC.
CIE 4. 4.„4.
Charles H. Heimsath, AICP
President
}le e A7us eC'.
September 7, 2006
Date
Date
Mr. Nuse
September 7, 2006
Page 6
CHH/mjm
DATE: September 18, 2006
SUBJECT: City Manager Approval - September 22, 2006
ITEM: Consider City Manager approval to execute a consulting contract with
Capitol Market Research to conduct a market analysis and best use for
Mayfield Park.
Department: Administration
Staff Person:
Justification:
Jim Nuse, City Manager
This consulting work will help the city receive the highest and best
value for the parkland. Proceeds will be used to improve the park
system.
Funding:
Cost: $18,000
Source of funds: General Self -Financed Construction Fund
Outside Resources:
Background Information:
Public Comment:
Blue Sheet Format
Updated 01/20/04
Capitol Market Research
A portion of the 245-arce park on FM 1431 could yield
significant funding for park improvements. This issue
will go to the voters after this due diligence is
complete.
N/A