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Home My WebLink About01/28/2016 Informal Meeting Location: Municipal Center City of 7100 147th Street West Apple Valley, Minnesota 55124 NOTICE: The Apple Valley Planning Commission will hold a special informal meeting at the Municipal Center, on Thursday, January 28, 2016, at 7:00 p.m. to consider the items listed in the following agenda: JANUARY 28, 2016 SPECIAL INFORMAL PLANNING COMMISSION TENTATIVE AGENDA 7:00 P.M. (immediately following the City Council meeting) This agenda is subject to change by deletion or addition to items until approved by the Planning Commission on the date of the meeting. 1. Call to Order 2. Update on Mixed Business Campus 3. Adjourn City of Apple ValleV MEMO Community Development TO: City Council, Economic Development Authority, Planning Commission FROM: Bruce Nordquist, Community Development Director, AICP DATE: January 28, 2016 SUBJECT: Market Analysis of the Active Mining Area As you are aware, we are planning an informal meeting/work session for Thursday, January 28, 2016 immediately following the regularly scheduled City Council meeting which begins at 7:00 p.m. A presentation on the "Market Potential Analysis for the Fischer Aggregate Properties" is planned. Maxfield Research and Consulting has prepared a 147 page report and attached is an executive summary. A complete copy is available at the department office. On the advice of the City Attorney, the proper body to convene this informal meeting is the Planning Commission. Any potential land use applications from the landowner would first go through the Planning Commission, so the market potential information is best shared with the Planning Commission. Members of the City Council and Economic Development Authority may be present at the meeting, but should take no role in the discussion. The City Attorney further suggests that this informal meeting be a listening session only. No positions in support or opposition are to be shared. Limited questions may be asked to help clarify the content being presented. Each Council Member and Commissioner must reserve their positions to be addressed at a later date if and when land use and/or financial assistance applications are submitted and reviewed. This presentation and informal meeting has been announced to the public via postings and the City's website. The informal meeting is being held by the Planning Commission and is noticed as their meeting. The City Council and Apple Valley Economic Development Authority have posted notice that they intend to attend the Planning Commission informal meeting. Representatives from the Apple Valley Chamber of Commerce have also been invited to attend. AAnUpdaateDemandPotenttialAnaalysisfoorthe FFisherAAggreggatesPropertiesin ApppleValley,Minnesotta 7575GooldenValleyRoad Suite3885 Minneapolis,MN555427 88.0012 612.33 www.maxfieldreseaarch.com December10,2015 Mr.GerryDuffy MonroeMoxnessBergPA 8000NormanCenterDrive,Suite1000 Minneapolis,MN55437 DearMr.Duffy: Attachedistheanalysistitled,͞MarketPotentialAnalysisfortheFischerAggregateProperties inAppleValley,DŝŶŶĞƐŽƚĂ͘͟Thisanalysisprovidesanestimatedabsorptionanddevelopment timingscheduleforallphasesofredevelopmentontheidentifiedpropertiesandconsidersthe typesofproductsthatwouldbemostlikelytodevelopgivenmarketdemandandtheavailable land. BasedonprojectedgrowthfortheAppleValleyMarketArea,changingdemographicpatterns, andprojectedmarketconditionsforresidential,retail,andoffice/industrial,Maxfieldestimates absorptionforthevariouspropertiesandprovidestwoalternatedevelopmentconceptsfor propertylocatedbetweenFlagstaffAvenueandPilotKnobRoad. Detailedfindingsandrecommendationsforeachofthephases(parcels)isfoundintheConclu sionsandRecommendationsattheendofthereport. youhavequestionsorrequireadditionalinformation. Pleasecontactusif Sincerely, MAXFIELDRESEARCHINC. MaryC.Bujold President Attachment 6123380012(fax)6129047979 7575GoldenValleyRoad,Suite385,GoldenValley,MN55427 www.maxfieldresearch.com a EXECUTIVESUMMARY PurposeandScope MaxfieldResearchandConsulting,LLCwasengagedbyMonroeMoxnessBergP.A.toupdate thepotentialdemandfordevelopmentthatwouldoccuronpropertythatisplannedtobe restoredfromaggregateminingoperations.ThepropertyislocatedsouthofCountyRoad42 betweenFlagstaffAvenueandPilotKnobRoadinAppleValley.Aportionofthe571.8acreshas alreadybeenredeveloped.Remainingisapproximately320acresofproperty.Theacreageis containedinessentiallyonelargeparcel.PlansareforJohnnyCakeRidgeRoadtobeextended throughthepropertyasredevelopmentnecessitates. ProposedPhasingandDevelopmentTiming ThesubjectpropertyislocatedsouthofCountyRoad42andbetweenFlagstaffAvenueand PilotKnobRoadinAppleValley.Thepropertyhasbeenidentifiedwithaphasingplan,however thecurrentphasingmaybeadjustedtosomedegreedependingontherelocationofexisting miningoperations,easeof restorationofthepropertyandmarketinterestinredevelopment. Forexample,ParcelDwasoriginallyconsideredasthefinalphaseofredevelopment,butthe th openingofthetransitstationat157Streetandnearbyretaildevelopmenttotheeastacross PilotKnobRoadgeneratedmarketdemandforParcelDearlierthanwasoriginallyanticipated. Assuch,PhasesaretitledasParcelsandsomeadjustmenthasbeenmadeintheanalysis regardingpotentialdevelopmenttiming. Phase1(ParcelB) Approximately120acreslocatedsouthofCty.Rd42andwestofPilotKnob Road; Phases3&4(ParcelC) Approximately240acreslocatedsouthofCty.Rd.42,westofJohnnyCakeRidge RoadandeastofFlagstaffAvenue; parcelnameshaveremainedthe Toretaincontinuityfromthepreviousanalysistothisone,the same. 1 MAXFIELDRESEARCHANDCONSULTING,LLC EXECUTIVESUMMARY SiteCharacteristicsandLocation Thepropertythatwillberestoredwillbeenhancedtopographicallybecauseofthefillbrought tothesites.ForParcelA,whichhasalreadybeenredeveloped,therestorationcreatednatural bermsandrollingtopographythathaveprovenveryattractiveforlowdensityresidential development.ExamplesalsoexistnorthofthecurrentminingoperationsSitewhereresidential neighborhoodshavebeendevelopedfromrestoredminingsites.Theseneighborhoodsremain highlydesirableandwerewellreceivedinthemarket.Itisexpectedthatsimilarcharacteristics willbedevelopedinsubsequentparcels.Whilerollingtopographyandbermsandnotneces sarilysoughtafterforcommercialandindustrialdevelopmentandhighdensityresidentialuses, portionsofthepropertiesarelikelytobenefitfromsitequalitiesthatenhanceitsvisualappeal. GrowthTrendsandDemographicCharacteristics TheMarketAreaincludesAppleValley,Burnsville,Eagan,Farmington,Lakeville,Rosemount andEmpireTownshipinDakotaCounty.ThecommunitiesthatcomprisetheMarketAreahave enjoyedhealthygrowthoverthepast20yearsastheMetroAreahasexpandedoutward. Despitetherecentrecession,thesecommunitiesarestillprojectedtogrow,albeitmoremod estlyoverthenext20yearsthanovertheprevious20years.Growthratesforpopulationand householdsareexpectedtoexceedthoseoftheTwinCitiesMetroAreaduringthe2010sand intothe2020s. AlthoughtheMarketAreahasbeenheavilydominatedbyfamilieswithchildren,household typesareshiftingduetotheoverallagingofthepopulationandchangesinsocialtrends.Over thenext10to20years,thenumberoftraditionalfamilieswithchildrenisexpectedtodecrease whilethenumberofpeoplelivingaloneandfamilyhouseholdswithoutchildrenareexpected toincrease.Thiswillhaveimplicationsregardingthetypesofhousingproductsthatwillbe developedinthefuture.Someofthefuturetrendsanticipatedincludemoremodesthome sizes,increasedamenities,fewerbedrooms,moreleisurespace,connectionstorecreational amenitiesandretailshoppingdistricts,andmorepedestrianorienteddevelopment. AppleValleyismoreaffluentcomparedtotheTwinCitiesMetroAreaasawhole.Incomedata revealsthatthe2015medianhouseholdincomeinAppleValleyis$80,319comparedto $67,795intheTwinCitiesMetroArea.ThemedianhouseholdincomeinAppleValleyispro jectedtoincreaseto$92,193by2020. AmajorityofhouseholdsinAppleValleyandinDakotaCountyowntheirhousing.Asof2013 (AmericanCommunitySurvey),anestimated80.7%ofhouseholdsinAppleValleyand77.1%of householdsintheMarketAreaownedtheirhousing.Thiscomparesto69.3%fortheMetro Area. 2 MAXFIELDRESEARCHANDCONSULTING,LLC EXECUTIVESUMMARY Employment DakotaCountyhas,ingeneral,experiencedhighergrowthinemploymentthantherestofthe TwinCitiesMetroArea,resultinginrelativelylowunemployment.AsofOctober2015,the unemploymentrateinDakotaCountywas2.8%.ApplesĂůůĞǇ͛Ɛunemploymentratewasslightly lowerthanDakotaŽƵŶƚǇ͛Ɛat2.6%.Theselowunemploymentratessuggestthatsomejobs aregoingunfilledasaresultofascarcityoflabortofillcertaintypesofpositions. IncreasesinemploymentinAppleValleyhavebeenconcentratedinEducationandHealth Services,LeisureandHospitality,FinancialActivitiesandTrade,TransportationandUtilities. DakotaCountyexperiencedstrongemploymentincreasesinEducationandHealthServices, Trade,TransportationandUtilitiesandFinancialActivities. CommutingPatternsofAreaWorkers Asof2013(mostrecentdataavailable),11%ofresidentsinAppleValleybothliveandworkin AppleValleywhilecommutetojobselsewheresuchas:Minneapolis(13%),Bloomington(9%), Eagan(8%),Burnsville(8%)andSt.Paul(7%). HousingMarketConditions HousingConstruction Thenumberofhousingunitsaddedfrompermitsissuedreachedalowin2009withonly4,462 unitspermitted.Thereafter,thenumberofresidentialpermitsincreasedineachsuccessive year.Asof2014,atotalofnearly5,300housingunitshadbeenpermittedintheMarketArea. Lakevillesurpassedallothercommunitiesinthenumberofnewhousingunitsaddedoverthe pastfiveyears,withEagansecondandAppleValleythird.AdditionallandareainAppleValley createdthroughtherestorationofaggregatesitesisexpectedtospuradditionalresidential developmentinthecommunity. RentalHousing rd TheoverallrentalhousingvacancyrateinAppleValley/Rosemountasof3Quarter2015was atoneofitslowestpointsinmorethaneightyearsat1.6%.Rentspersquarefootfornew productarehighestatthetwonewestdevelopmentsinEagan,FlatsatCedarGroveandCity Vue(weightedaverageoverallrentsof$1.93and$2.02persquarefoot,respectively).InApple Valley,persquarefootrentsarehighestatHearthstoneandPalaminoEastat$1.11each. However,whenParksideVillageopensin2016,itwillsetanewrentlevelforAppleValley.The recessionincreasedthedemandforapartmentrentalsthroughouttheTwinCitiesandinthe 3 MAXFIELDRESEARCHANDCONSULTING,LLC EXECUTIVESUMMARY MarketAreaasaslightlyhigherproportionofhouseholdshavebeenchoosingtorentrather thanbuytheirhousing. SeniorHousing SeniorhousingisplentifulintheMarketArea.Thenewestpropertiestohaveopenedinthe MarketAreaareFountainsatHosanna(Lakeville)andKingsleyShores(Lakeville).Thereare twoseniorcontinuumofcarecampusesinEagan,onewhichhasjustopened(SouthviewSenior LivingofEaganʹ154units)andanotherwhichisintheplanningstages(Stonehavenʹ138 units).FountainsatHosannaandKingsleyShoreshavebothreachedstabilizedoccupancy havingopenedin2013.Theoverallsenior housingvacancyrateintheMarketAreais3.0%. MultifamilyForSaleHousing Demandformultifamilyownedhousingwasstronginthemid2000sassinglefamilyhome pricesrampedupdramaticallyandmorehouseholdsturnedtoamultifamilyproductasa steppingstonetoasinglefamilyhome.Aspricesdecreased,householdsthatpreferreda singlefamilyproducthadmoreoptionsavailableanddemandfortownhomeproductbecame extremelysluggish.Despitethefactthatmultifamilyproductstendtoappealtobusyhouse holdswithlimitedtimeforupkeep,marketsalesoftheseproductshaverebounded,butbuild ersare continuingtofocusonsinglefamilyhomes.Asthemarketregainsitsstrengthandas thedemographicshiftbecomesfurtherentrenched,itisexpectedthatdemandformultifamily ownedproductswillincrease.Mostofthedemandislikelytocomefromentrylevelhouse holdsandthoselookingto͞ƌŝŐŚƚƐŝǌĞ͟theirlivingarrangements(emptynesters/seniors). SingleFamilyHousing Marketactivityforsinglefamilyhousingcontinuestoincreaseduringtherecovery.Buildersare developingnewsubdivisions(K.HovnanianatRegencyPointʹAppleValley,MattamyHomes AvonleaʹLakevilleandLennarʹFalmoorGlenRosemount).Valuesofexistingsinglefamily familyhomesarerising,increasingthedesirabilityofnewconstruction.Monthsofsupplyfor singlefamilyhomes(existing)intheMarketAreaislessthansixmonths,indicatingaƐĞůůĞƌ͛Ɛ market.Pricingfornewconstructionappearstohavestabilizedsomewhatandthemostrecent focushasbeenentrylevelandmoveuphousing. Asurveyofactivelymarketingsinglefamilysubdivisionsrevealedthattherewere8,161lotsin MarketAreasubdivisionsidentifiedas͞ĨƵƚƵƌĞůŽƚƐ͕͟meaningtheselotshavebeenplattedbut havenoinfrastructure.Another2,758lotshavebeenplattedanddevelopedandofthose, 1,858havebeensold(67%)in 54subdivisions.AppleValleyhas11activesubdivisionswitha totalof168unsoldlotsand1,867vacantfuturelots.Givencurrentabsorptionrates,the availablesupplyofvacantdevelopedlotsislessthantwoyears.Thisincreasesto12years whenaccountingforallofthevacant,plattedlotsintheMarketArea.However,absorptionof singlefamilyhomesisanticipatedtorise,soa12yearssupplyislikelygenerous.ForApple Valleyalone,thesupplyismuchless,15months.AppleValleyisestimatedtohaveafuturelot 4 MAXFIELDRESEARCHANDCONSULTING,LLC EXECUTIVESUMMARY supplyof1,864lotsorabouttenyears.Again,weanticipatethatabsorptionwillincreasein AppleValleysothatthesupplyofplattedsinglefamilylotswilllikelybelower. HousingDemand Theanalysisidentifiedapotentialdemandfor4,714forsalehousingunitsintheMarketArea to2020.Ofthattotal,AppleValleyisestimatedtocaptureaportionofthatdemand(single familyandmultifamily)inaproportionalbreakdownof70/30. Inaddition,theanalysisidentifiesdemandforapproximately2,020rentalunitsofwhichap proximately1,200unitswouldbemarketrateand800wouldbeaffordable. Thesignificantsizeofthesubjectpropertiesandtheirlocationamenitieswillenablethemto captureaportionoftheMarketAreademandovertime.Weestimatethatthesubjectproper ty inAppleValleycouldcapture15%ofthetotalidentifiedforsaledemandor1,018forsale unitsand20%oftheidentifiedrentaldemandor656rentalunits.Estimatedabsorptionfor variousresidentialcomponentsonthepropertiesisshownintheabsorptionscheduleonTable 49. CommercialRetail TradeAreahouseholdsspent$4.3billiononretailgoodsandservicesin2015,excludinghous ingandfinance/insuranceexpenditures.Averageannualexpendituresareestimatedtobe $39,730perhousehold,approximately10%higherthantheMetroArea.Thiscomparestoa MetroAreaaverageof$35,743perhouseholdin2015. Householdsareexpectedtoincreaseto116,200by2020,generatinganadditional$368million inretailgoodsandservicesexpendituresannually,notfactoringininflation. Aretailgapanalysisidentifiedanaverageretailmarketleakageoverallcategoriesof9.6%. Mostretailcategorieshaveretailleakagepercentagesunder30%andreflectthehighconcen trationofretailthatexistsintheMarketArea.Amodestamountofretailsalesareleavingthe areaforotherlocationssuchasMallofAmericaandotherlocationsintheTwinCitiesor outsideoftheTwinCities.However,aportionofretailsalesisalsocomingintotheMarket AreafromhouseholdsthatcurrentlyliveoutsideoftheMarketAreabuttraveltherebecauseof thehighconcentrationsofretailthatexistinAppleValley,BurnsvilleandEagan. ReviewingretailspacevacancyandabsorptioninDakotaCountyidentifiedthatvacancieswere lowestinneighborhoodcenters(11.3%)andinmixedusebuildings(10.9%)andhighestinbig box(79%)andrestaurantspaces(100.0%).Thesignificantamountofretailconcentratedin AppleValleysupportsinterestinnewdevelopment,butitisexpectedthatthereislikelytobe 5 MAXFIELDRESEARCHANDCONSULTING,LLC EXECUTIVESUMMARY somecurrentfacilityexpansionwithadditionaluserseitherbackfillingexistingspaceorfillingin alimitedamountofnewretailspace. Retailleaseratesrangefromalowofabout$7.00toabout$25.00persquarefoot.Mostofthe retailspaceisolderandleaseratesarehigherforspacethathasthebestlocationsandtenant mix.Sincethepreviousupdate,wenotetherearemorespaceswheretheleaserateislistedas ͞ŶĞŐŽƚŝĂďůĞ͟withprospectivetenants. RetailDemand Thedemandanalysisidentifiedthatprojectedgrowthisexpectedtogenerateademandfor another3.0millionsquarefeetofretailspaceintheTradeAreaoverthenextdecadebasedon calculatedleakageof9%.HigherleakagetolocationsoutsideoftheTradeAreacouldreduce theamountofspacesupportableintheTradeArea. ItisestimatedthatAppleValleycouldcaptureapproximately75,000squarefeetofretailspace from2015to2020ata10%capturerate.Thefocusisexpectedtobeonretailinfillsurround ingthecoreretailareasandanincreaseinsitdown,familystylerestaurants. CommercialOffice Employmentgrowthtrendsforjobsthattypicallyrequireofficespacerevealedthatthesejobs increasedby90.1%between2000and2010,butisexpectedtoincreasebyonly37.3%between 2010and2020.Between2010and2020,theproportionofjobsthattraditionallyuseoffice spaceisexpectedtoincreasefrom27.5%oftotaljobsasof2010to32.4%oftotaljobsasof 2020.Approximately11,126newofficejobsareprojectedfrom2010to2020. MaxfieldResearchcompileddataonofficespaceavailableforleastintheMarketArea.A communitiesrevealsatotalof718office summaryofofficespaceamongtheMarketArea buildingswith37.33millionsquarefeetofspace,ofwhichatotalof2.8millionsquarefeetis available,foranoverallvacancyrateof7.5%.Directavailabilityincludes2.65millionsquare feetanddirectvacancyequalsalmost2.0millionsquarefeetofofficespaceor5.3%.Thetotal amountofvacantofficespaceintheMarketAreaisconsideredtobesomewhatlowat5.3%of directvacancy. Consideringofficespaceswherebuildingshavespaceavailable,thevacancyissomewhathigher at23.7%,whichexcludesmostofficebuildingsthatarefullyoccupied.Leaseratesvarysub stantiallyfromalowof$5.00Grossrenttoahighofalmost$34.00persquarefoot.Theoverall weightedaverageleaserateis$9.18askingrategrossonavailablespace.About91%ofbuild ingsquotetriplenetrentsversusgrossrents. Consideringgrowthinjobsthattypicallyrequireofficespaceandtheproportionofofficejobs thatwouldlocateintraditionalofficespaceversusretailorindustrialbuildings,resultsinan 6 MAXFIELDRESEARCHANDCONSULTING,LLC EXECUTIVESUMMARY estimateddemandforofficespaceof643,320squarefeetoverthedecade.Estimatingthat AppleValleycouldcapture10%ofthisdemandwouldresultinpotentialneedforanother 64,300squarefeetofofficespacebetween2020and2030. IndustrialMarket From2000through2008,AppleValleyhadanetincreaseofeightindustrialbusinesses.Most ofthebusinessesaddedwereinsmallconstructionfirmswithfourorfeweremployees.The mostsignificantdeclinewasinWholesaleTrade. Industrialspaceabsorptiondecreasedsubstantiallyin2009intheTwinCitiesMetroArea,by 3.5millionsquarefeetor3.5%ofthetotaloccupiedspace.InDakotaCounty,thedeclinein absorptionwassomewhatless,2.8%ofthe12.3millionsquarefeetofoccupiedspace.The overallvacancyrateformultitenantindustrialspacewas15.2%in2009,upfrom12.7%in 2008.Thelowestvacancyisinoffice/warehousespace,muchofwhichcancrossoverwith traditionalofficetenants. ThevastmajorityofindustrialspaceislocatedinEaganandBurnsville.Maxfieldidentifiedonly sixindustrialmultitenantbuildingsinAppleValleywithabout165,000squarefeetofspaceand anaveragevacancyof34%. Thenumberofjobsthattypicallyuseindustrialspaceisestimatedtoincreasemodestlybe tween2010and2020.Industrialjobgrowthisestimatedtobe481overthenexttenyears,and Industrialjobsareestimatedtoaccountfor20%oftotaljobs. BasedonprojectedjobgrowthandabsorptionofindustrialspaceintheMarketArea,itis estimatedthatAppleValleycouldcapture15%ofabsorptionorabout2.37acresannually throughthedecade.IfDakotaŽƵŶƚǇ͛Ɛabsorptiondecreases,absorptioninAppleValleyis likelytobeless. EstimatedAbsorptionProperties Table49attheendofthereportprovidesestimatedabsorptionfortheFischeraggregate propertyidentifiedasParcelsBandC.Theseparcelshavebeenproposedonaphasingsched ule.Basedonconversationswiththeowneroftheproperty,wehaveadjustedtheabsorption scheduletoaccountfor portionsofthesepropertiesthatmaybeavailableearlierthanoriginal lyexpectedandhaveconsideredmarketconditionsandpotentialmarketdemandforvarious sites/locations. MaxfieldResearchestimatesabsorptionofpropertyfortheFischeraggregateparcelsasfol lows: 7 MAXFIELDRESEARCHANDCONSULTING,LLC EXECUTIVESUMMARY 20152020 ParcelBAlternative1 150rentalunits 130forsaletownhomes 60SingleFamily 0seniorunits 50,000squarefeetofoffice 80,000squarefeetofretail 100,000squarefeetofindustrial ParcelBʹAlternative2 150SingleFamily 150ForSaleDetachedTownhomes 0ForSaleAttachedTownhomes 0SeniorHousing ParcelCʹAlternative1 150unitsMultifamilyRental 130unitsForSaleTownhomes 60unitsʹSingleFamily 50,000squarefeetofoffice 100,000squarefeetofindustrial 80,000squarefeetofretail ParcelCʹAlternative2 150unitsʹSingleFamily 150unitsʹDetachedForSaleTownhomes 20202030 ParcelBʹAlternative1 300,000squarefeetofcommercialoffice 300,000squarefeetoflightindustrial ParcelBʹAlternative2 50,000squarefeetofcommercialoffice 100,000squarefeetoflightindustrial 85unitsofsinglefamily 200unitsofmultifamilyrental ParcelCʹAlternative1 350unitsofmultifamilyrental 200unitsofforsaletownhomes(detachedandattached) 8 MAXFIELDRESEARCHANDCONSULTING,LLC EXECUTIVESUMMARY 180unitsofsinglefamily 50,000squarefeetofcommercialoffice 100,000squarefeetoflightindustrial ParcelCʹAlternative2 250unitsofsinglefamily 155unitsofseniorhousing 400unitsofforsaletownhomes(attachedanddetached) 100,000squarefeetofcommercialoffice 50,000squarefeetofcommercialretail AlternatedevelopmentconceptsarepresentedforParcelsBandC,currentlyguidedforbusi nessparkdevelopment.Dependingonmarketconditions,alloraportionofthislandareamay beconsideredfordevelopmentwithotheruses. 9 MAXFIELDRESEARCHANDCONSULTING,LLC PURPOSEANDSCOPEOFSTUDY MaxfieldResearchandConsulting,LLCwasengagedbyMonroeMoxnessBergPAtoconductan updatemarketanalysisofthepotentialdemandforvarioustypesofresidential,commercial andindustrialusesonpropertylocatedsouthofCR42betweenFlagstaffAvenueandPilotKnob RoadinAppleValley,Minnesota.Previoussites,ParcelsAandDhaverecentlybeendeveloped withsinglefamilyresidentialsubdivisionsandneighborhoodretailuses. Ourresearchincludesananalysisoftheexistingsupplyofandmarketconditionsforretail, office,industrial,multifamilyandsinglefamilyhousinginthearea.Themarketanalysisfocuses ontheamountof developmentsupportableontheremainingsubjectpropertywithattention giventoanoptimummixofusesandthepotentialsynergiesachievablewithdifferenttypesof developmentincombinationwitheachotherandwithsurroundinglanduses. Topicsanalyzedalsoincludegrowthtrendsanddemographiccharacteristicsandtheimpactof thesetrendsonthepotentialtodevelopvariouslandusesontheproperty.Landuserecom mendationsareprovidedalongwithestimatesofabsorptionfortheremainingproperty. 10 MAXFIELDRESEARCHANDCONSULTING,LLC SITELOCATIONANALYSIS AdjacentandSurroundingLandUses North:IndustrialusesdirectlytothenorthacrossCR42. East:Singlefamilyresidential,multifamily,commercialandcemetery. South:Singlefamilyhomestothesouthwestandsouth,retailandvacantlandtothesouth east,andprivaterecreation. West:Commercialretailandoffice,singlefamilyandmultifamilydevelopments. Map7 ArialPhotographofsubjectSite(ParcelsBandC) 18 MAXFIELDRESEARCHANDCONSULTING,LLC CONCLUSIONS&RECOMMENDATIONS Introduction Theprevioussectionsfocusedonthe͞ĚĞŵĂŶĚ͟and͞ƐƵƉƉůǇ͟factorsforvariousrealestate sectorsincluding:residential(singlefamily/multifamily),retail,office,andindustrial.Foreach realestatesector,wecalculatedtheexcessMarketAreademandandtheproportionofthat demandcapturableinAppleValley.Inthissection,thedevelopmentpotentialandtimingis discussedforeachofthepropertyphases.Incorporatedattheendofthissectionisasummary tablethatestimatesthedevelopmenttimingforeachofthephasesandaprojectedamountof developmentovervarioustimeframes.Fortheupdate,ParcelsAandDhavebeenremoved fromthissectionastheyhavealreadybeenreclaimedandredevelopedorareintheprocessof redevelopmenttootheruses.ParcelsAandDwerebothsoldforresidentialusesandare developedwithsinglefamilyhomes.DespiteParcelDbeingconsideredlastforredevelopment, th itslocationalong160Streetandneartheballparksmadethisparcelattractiveearlyonasthe housingmarketisrecoveringfromtheRecession.AlthoughParcelBisdesignatedasPhase2 andParcelCisdesignatedasPhases3and4,itislikelythatthesephasescouldbeflipped dependingontheusesthatareidentifiedforeachoftheseareas.DevelopmentalongFlagstaff AvenueandalongPilotKnobRoadisnowsufficienttosupportredevelopmentintereston eitherParcelBorParcelCinouropinion. Phase2(ParcelB) Approximately120acreslocatedsouthofCty.Rd42andwestofPilot KnobRoad; Phases3&4(ParcelC) Approximately240acreslocatedsouthofCty.Rd.42,westofJohnny CakeRidgeRoadandeastofFlagstaffAvenue; Foreachdevelopmentparcel,weevaluatethesurroundinglanduses,transportationaccess, ofdevelopment.Althoughthereisaproposed andoverallappropriatenessforvarioustypes phasingfortheproperties,duetothetimingofthecessationandrelocationofminingopera tions,someportionsofparcelsmaybedevelopedpriortofullcessationofminingoperations andrestorationofthepropertyfordevelopment. Marketconditionsareconsideredforeachrealestatesector.Finally,werecommendappropri atedevelopmentconceptsforeachphasebasedonpotentialsynergiesbetweenvarioustypes ofusesandthepotentialtocreatedifferenttypesoflandusesifsufficientpropertyexists. 133 MAXFIELDRESEARCHANDCONSULTING,LLC CONCLUSIONS&RECOMMENDATIONS Phase2(ParcelB) SiteEvaluation ParcelBislocatedinthesouthwestcorneroftheintersectionofPilotKnobRoadandCR42. ParcelBisapproximately120acresinsize.Miningoperationscontinueonthisproperty,but portionsofthispropertyarelikelytoberestoredoverthenextseveralyearstoaccommodate someredevelopment.Therefore,withinParcelsBandC,therearelikelytobesmallerparcels thatwillberedevelopedforotheruseseventhoughminingcontinuesinthecenterportionof theparcels. WestoftheSiteisadditionalminingpropertythatwillberestoredandredeveloped.Northof theSiteacrossCountyRoad42areseveralcommercial/industrialparcelsthatareoccupiedwith variousbusinesses.Southofthepropertyisadditionalmininglandwhichiscurrentlyoccupied withsomeminingequipmentthatwouldberelocatedatsometime.Uponrelocation,thearea southofParcelBwouldberestoredandpreparedforredevelopment.EastofParcelBisParcel A.ParcelAiscurrentlyvacant,butisrestoredandreadyfordevelopment. 134 MAXFIELDRESEARCHANDCONSULTING,LLC CONCLUSIONS&RECOMMENDATIONS AccordingtotheŝƚǇ͛Ɛ2030ComprehensivePlan,theareathatencompassesallofParcelBand asignificantportionofParcelCisguidedas͞DŝǆĞĚUseBusinessĂŵƉƵƐ͘͟Usesatthisloca tionareintendedtofocusprimarilyonofficeandlightindustrialoffice/warehouse,of fice/showroomspace,andincorporateavarietyofusersincludingbuilttosuitandsingle tenant.ParcelsBandpartofParcelCareintendedtobedevelopedwithhighqualityspaceand th extensivelandscaping.AtthesouthendofParcelBisthe157StreetTransitStation.Connec th tionswillbeavailablebetween157StreetTransitStationandtheAppleValleyTransitStation th at154andCedarAvenue.TheAppleValleyTransitStationiscurrentlyconnectedtotheBus RapidTransitwaythroughDakotaCountyconnectingtheMallofAmericawithseverallocations th inEagan,AppleValleyandLakeville.Thecloseproximityofthe157StreetStationhasthe capacitytoenhancethebusinessdevelopmentpotentialforParcelBbecauseworkerscould walkorbustotheirplaceofemploymentfromtheTransitStationtobusinesseslocatedon ParcelB.Iftheseconnectionsarenotfacilitatedhowever,therewouldbeminimalenhance mentfromthetransitstationasmostworkerswouldbetravelingtootherlocationsoutsideof AppleValley. Recommendations AcrossCR42fromParcelBtothenorthisanareathatisprimarilylightindustrialinnature. CommercialdevelopmentisalsopresentandcontainsuserssuchasLifetimeFitness,Betty:Ž͛Ɛ Center,RosemountAreaLearningCenter,HolidayGasStation,AllStarMontessoriand Dance TAGSGymnastics.Thesetypesofdevelopmentmayalsobeincorporatedintoamixeduse businesscampussouthofCR42.PropertytothewestofParcelBisdesignatedasParcelC. Miningisintendedtoceaseonthesepropertiesoverthenextthreeyears.Onceextraction ceases,thepropertywillberestoredfordevelopment.Clearly,thepropertyislargeenoughto supportalmostanytypeofdevelopmentandportionsofParcelCmayberestoredearlierthan ParcelB.Duetosurroundingusesandthecurrentguidedlanduse,itisourthatParcelBwould beappropriatefordevelopmentwithoffice,neighborhoodorcommunitybasedretail(larger retailoutlets)whichwouldbecompatiblewithusessuchasoffice/warehouse,officeshowroom orotherlightindustrialorcommercialbusinessuse.Inaddition,themixedusebusiness campuslandusecategoryalsosuggeststhatinstitutionaluseswouldalsobeappropriate, headquartersorseparatefacilitiesforeducationorotherinstitutionaluse. ParcelBlandareawouldalsobeappropriateformedicalofficeorotherhealthrelateduses. Althoughnohousingiscurrentlyguidedforthisarea,theadjacentandsurroundinglanduses couldsupportnewhousingdevelopment,primarilymediumtohighdensityresidentialthat wouldcaptureaportionofdemand. Residentialdevelopmentwouldrequire,ataminimum,mediumtohighdensitiestosupport compatibleuses.Atthistime,highdensityresidentialdevelopmentincludesgeneraloccupan cyrentalhousing(marketrateorworkforcehousing)and/orseniorhousing.Sincethereal estatemarketiscyclical,timingforthedevelopmentofParcelBmaybeappropriateforatleast amodestcomponentofhighdensityhousingwhichiscurrentlyshownadjacenttocommercial th developmentsouthof155StreetandwestofPilotKnobRoad. 135 MAXFIELDRESEARCHANDCONSULTING,LLC CONCLUSIONS&RECOMMENDATIONS Phases3&4(ParcelC) SiteEvaluation Phases3&4(hereinafterParcelC)encompassmostofthepropertylocatedeastofFlagstaff thth Avenue,southofCR42to157Street,westofJohnnyCakeRidgeRoadnorthof157Streetto th Parcel͛Ɛsouthernboundary(155Street).Thepropertytotalsapproximately240acresandis guidedfordevelopmentasmixedbusinesscampusaccordingtotheŝƚǇ͛Ɛ2030Comprehensive Plan.ThefollowingmapgenerallyoutlinestheboundariesofthepropertyforParcelC.Parcel CisconsideredapproximatelyequalinsizetoParcelB,about120acres. NorthofCountyRoad42isamixofindustrialbuildings,somewithcommercialuses.Tothe westofJohnnyCakeRoad(againnorthofCR42)aretheMagellanPipelineCompanyand HansonPipeandProduct.TotheeastofJohnnyCakeRoadisaHolidaygasstationandconven iencestore.Thereareseveralonestoryofficewarehouseandindustrialbuildingsthatcontain amixofuses,includingagymnasticscenter,apreschool,aschoolbuscompany,amini storage,andtwomultitenantbuildings.ClosertoPilotKnobRoad,butstillnorthofCounty Road42areofficetownhomesandtheValleyBusinessCenter,acomplexoftwoofficeware housebuildingswithatotalofabout100,000squarefeetofspace. 136 MAXFIELDRESEARCHANDCONSULTING,LLC CONCLUSIONS&RECOMMENDATIONS th EastofParcelCacrossJohnnyCakeRidgeRoadisParcelB.Southof160Street,theborder betweenAppleValleyandLakeville,isa15yearoldtractofdetachedsinglefamilyhomeson th lotsofabout10,000squarefeet.Propertysouthof160Streetisnotincludedintheredevel opmentassessment. th AdjacenttoParcelC,northof160StreetandwestofFlagstaffAvenueistheRegattasubdivi sion,amixoftwinhomes,townhomes,andsinglefamilyhomes.Thedevelopmentisabout twelveyearsold.AcrossFlagstaffAvenueinthenorthwesterncornerofSiteistheeasternmost portionofDowntownAppleValley.DirectlywestisaHomeDepotoutletwithseveralsmaller retailpadsofapproximately5,000to10,000squarefeeteach.Ontheoppositecornerof FlagstaffAvenueandCountyRoad42istheFischerMarketplace.Menardswasconsidering relocatingtheirAppleValleystoretothenorthwestcornerofParcelCwhichwouldhave providedthemadditionalroomtoexpandagardencenter.However,Menardswillnotbe relocatingtothatlocationandinsteadisconsiderationanotherpropertyfurthereast.Timingof arelocationofMenardsisuncertain. TransportationaccesstoandfromParcelCisgenerallyexcellentasmostofthepropertyis accessiblefromCountyRoad42andFlagstaffAvenue.ItisanticipatedthatJohnnyCakeRidge Roadwillbecompletedthroughthepropertyasdevelopmentoccursandthattherewillbea signalizedintersectionatCR42andJohnnyCakeRidgeRoad.Therefore,movementintoand outoftheproperties,ParcelsBandC,shouldnotbeinhibited.Additionalaccesstotheproper th tyonthesouthwillbeavailablefrom155Street. Recommendations SimilartotheParcelB,ParcelCislargeenoughtoaccommodatemostrealestateuses.Itmay bethatredevelopmentofthispropertymayrequirealongertimeperiodforfullbuildout.We anticipatethatdevelopmentofparcelsinclosestproximitytoCR42arelikelytobemost attractivetocommercialdevelopersandthattheseparcelswouldbeinhighdemandfor commercial,institutionalandsomelightindustrialdevelopmentastheeconomyrecovers. WiththepropertyguidedformixedusebusinesscampusandsinceAppleValleycurrentlyhasa significantconcentrationofretaildevelopment,ParcelsBandCarelikelytoincorporatea broadmixofuses.Weestimatethatdensityofdevelopmentwouldoccuratbetween35%and 50%sitecoverageforindustrialusesandbetween50%and70%coverageforofficeuses.Truck trafficshouldbelimitedtomajorthoroughfaressuchasJohnnyCakeRidgeRoadandPilotKnob Road. Althoughthemarketforindustrialspaceiscurrentlyexhibitingstrength,itisouropinionthat lightindustrialdevelopmentshouldbefocusedtoprovideexitaccessprimarilyontoPilotKnob th Roadwiththroughaccessaccommodatedon160StreetinsteadofCountyRoad42.Wehave providedanalternatedevelopmentplanforbothParcelsBandCasresidentialdemandis currentlystrongerthancommercialandindustrialdemand. 137 MAXFIELDRESEARCHANDCONSULTING,LLC CONCLUSIONS&RECOMMENDATIONS ThesouthwestcornerParcelCisguidedforlowdensityresidentialdevelopmentandsingle th familyhomescurrentlyoccupythepropertylocatedinthenortheastcornerof160Streetand FlagstaffAvenue.Developmentwithlowandmediumdensityresidentialwouldbecompatible withusestothesouthandeastoftheproperty. Consideringcurrentmarketconditionsforforsalehousing,weenvisionthatresidentialdevel opmentontheportionofParcelCthatiscurrentlyguidedasresidentialwouldtotal650units includinglowandhighdensityresidentialusesandcouldactuallybeginwithinthenextfive yearsandmovingintothenextdecade.Multifamilyhousingvacanciesremainexceptionally lowandweenvisionthatadditionalmultifamilyrentalhousingcouldoccuronportionsof ParcelC,mostlikelyincloseproximitytotheParkandRidestationandtheretailforconven iencepurposes. Mostofthehousingislikelytobeorientedtothesouthernportionsofthepropertynotonly becausetheseareasarealreadysurroundedbyresidentialuses,butbecausethenorthern portionsofthesitetendtobebettersuitedforcommercialdevelopment. Fortheretailcomponent,ParcelCcouldcapturemostofthedemandforretailgoodsand servicesinAppleValleybetween2015and2020,althoughrestorationofthepropertymaynot becompletewithinthattimeframe.WeenvisionthattheareaacrossPilotKnobRoadand oppositeTargetwillcontinuetofilloutwithadditionalcommercialretailspacetocreatea sufficientcriticalmassofretaildevelopmentatthatlocation.Weestimatethatretaildemand forParcelCwouldrangebetween50,000to100,000squarefeetintotal.Additionalcommer cialdevelopmentcouldalsooccuradjacenttoFlagstaffAvenueonthewestandacrossfromthe HomeDepot,ofapproximately100,000squarefeet,leaving50,000squarefeetnearthePark andRideStationoppositetheCobblestoneLakedevelopment.Timingofcommercialdevelop mentonthisportionofthepropertycouldoccurintheshortterm,withinthenextfiveyears, unlesstheSiteisnotready. Basedonprojectedemploymentgrowthamongbusinessesthatusetraditionalofficespaceand demandforindustrialspace,weestimatethatParcelsBandCcouldabsorbapproximately 350,000squarefeetoftraditionalofficespaceonParcelBand275,000squarefeetoftradition alofficespaceonParcelC.Lightindustrialspaceisestimatedtoabsorb400,000squarefeetof spaceonParcelBpropertyand350,000squarefeetofspaceonParcelC.ParcelBacreageis estimatedtoabsorboverthenext15years.ParcelCacreageisprojectedtoabsorbprimarily between2020and2030.Basedonourabsorptioncalculations,thereislikelytobeadditional landareadesignatedforcommercialusesremaininginParcelBandParcelCpropertiesafter 2030. 138 MAXFIELDRESEARCHANDCONSULTING,LLC CONCLUSIONS&RECOMMENDATIONS EstimatedAbsorptionParcelsB&C Table49presentsourestimatesofabsorptionforParcelsBandC,theremainingparcelsofthe th FisherAggregatepropertysouthofCountyRoad42andnorthof160Street.Theabsorption estimatesarebasedonprojecteddemandandtimingofdevelopmentgivencurrentmarket conditionsandwhenvariousparcelswouldbeavailable. ForParcelsBandC,theremaybeamodestamountofadditionallandavailableafter2030if reservedforcommercialofficeandlightindustrial.However,currentmarketdemandformost sectorsofrealestateisstrong.GivenApplesĂůůĞǇ͛ƐcentrallocationinDakotaCountyandits appealasaresidentialandcommerciallocation,propertiesreclaimedfordevelopmentpriorto 2030mayallbedevelopedbeforethattime. 139 MAXFIELDRESEARCHANDCONSULTING,LLC CONCLUSIONSANDRECOMMENDATIONS TABLE49 ESTIMATEDDEVELOPMENTLEVELANDTIMING FISCHERAGGREGATEPROPERTIES 2015through2029 2015through20192020through20242025through2029 UnitsorLandAreaUnitsorLandAreaUnitsorLandArea Sq.Ft.AcresSq.Ft.AcresSq.Ft.Acres Phase2(ParcelB) MixedBusinessCampus(Alternate1) CommercialOffice50,000sf4ac100,000sf8ac200,000sf15ac LightIndustrial100,000sf5ac100,000sf5ac200,000sf10ac MixedUse(Commercial/Residential(Alternate2) LightIndustrial00100,000sf5ac CommercialOffice50,000sf4ac50,000sf4ac00 SingleFamily10033ac8528ac00 HighDensityResidential2007ac2007ac00 3/4(ParcelC) Phases MixedBusinessCampus(Alternate1) CommercialOffice50,000sf2ac50,000sf3ac200,000sf15ac LightIndustrial100,000sf5ac100,000sf5ac200,000sf10ac CommercialRetail80,000sf8ac0000 Residential MultifamilyRental(includesmarketrate/affordable)1505ac1505ac2007ac MultifamilyAttachedTownhomes807ac1009ac00 MultifamilyDetachedTownhomes5013ac10025ac00 SingleFamilyTraditional6010ac8027ac10034ac (Commercial/Residential(AlternateII) MixedUse CommercialRetail0050,000sf4ac00 CommercialOffice25,000sf1ac50,000sf8ac50,000sf8ac SingleFamily15050ac10033ac15050ac SeniorHousing001556ac00 MultifamilyAttachedTownhomes0015013ac1008ac MultifamilyDetachedTownhomes15038ac5013ac1008ac TotalDevelopedAcreageParcelB/PhaseII128acAlt1 TotalDevelopedAcreageParcelC/PhasesIII&IV190acAlt1 TotalDevelopedAcreageParcelB/PhaseII88acAlt.2 TotalDevelopedAcreageParcelC/PhasesIII&IV240acAlt.2 Notes:EstimatedFloorAreaRatiosforCommercialareexpectedtorangefrom0.50to0.70; estimatedfloorarearatioforindustrialisestimatedatbetween0.35and0.50; 3.0unitsperacre; TraditionalSingleFamilyisestimatedat mediumdensityisestimatedat8to12unitsperacreandhighdensityisestimatedat30+unitsperacre. Source:MaxfieldResearchandConsulting,LLC 140 MAXFIELDRESEARCHANDCONSULTING,LLC CITY OF APPLE VALLEY ORDER FOR SPECIAL MEETING NOTICE IS HEREBY GIVEN that the Apple Valley Planning Commission, will hold a special meeting, at the Municipal Center, 7100 — 147th Street W, on Thursday, the 28th day of January, 2016, at 7:00 p.m., (immediately following the City Council meeting) for Mixed Business Campus update by Maxfield Research. DATED this 20th day of January, 2016. Tom Melander, Chair