FIRST COAST COMMUTER RAIL TOD STUDY | EXISTING CONDITIONS
FIRST COAST COMMUTER RAIL TOD STUDY | EXISTING CONDITIONS
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REAL ESTATE DEMAND ANALYSIS
RESIDENTIAL DEMAND
Step 1 . Rents and unit size: Estimate average market- rate and affordable rents1 and the average unit size. Step 2 . Household segmentation: Estimate the number of renter households that are income eligible for prevailing market rate or affordable units. Step 3 . Annual turnover: Estimate the average annual turnover rate2 for income eligible renter households from Step 2. Step 4. Preference for urban living: Using survey data3, estimate the likely share of households from Step 3 that are seeking proposed product types (multifamily rental housing in relatively dense, walkable neighborhoods). Step 5 . Demand escalation: Using historic and projected4,5 , population growth rates, escalate the 2022 annual demand from Step 4 to develop 20-year demand estimates (2023 to 2042). Step 6 . Demand capture: Apply estimated, reasonable capture rates of households “in the market” for multifamily rental housing to the 20-year demand estimates.
The analysis included market-rate housing, middle income6 housing, and affordable housing (likely requiring subsidies) in the demand estimates because affordability is an important goal of equitable transit- oriented development (ETOD). Production of affordable housing near transit helps ensure that households of all income levels can use that transit and benefit from increased access to live, work, and play opportunities. Below are additional details for rents and unit size (Step 1) : » Market-rate rents : At an average market-rate rent of $2.10 PSF for new multifamily construction in the submarkets and the region, a renter household would need a minimum income of $80,000 to afford a market- rate unit. As shown in Table 3-14, this minimum income also assumes an average unit size of 956 SF and a household allocating no more than 30% of their income to housing 7. » Affordable : At an average affordable rent of $1.31 PSF for the submarkets and the region, a renter household can earn up to $50,160 to afford an affordable unit. As shown in Table 3-15, this maximum income also assumes an average unit size of 956 SF and a household allocating no more than 30% of their income to housing, plus the goal of supporting unit affordability up to 60% AMI. » Middle Income : The calculations in Table 3-14 and Table 3-15 also inform middle income housing. The minimum eligible household income of $80,000 for a market-rate unit and the minimum eligible household income of $50,160 for an affordable unit serve as the upper and lower bounds for defining a “middle income” household in the region. In other words, for the purposes of demand analysis, a middle income household is one earning between $50,160 and $80,000 who will 1) search for housing at intermediate rents, 2) settle for renting a market-rate unit and allocating more than 30% of their
income to housing, making them cost-burdened, or 3) settle for renting an affordable unit.
A demand analysis was conducted to estimate market potential for new market-rate and affordable multifamily rental units in each of the three submarkets – Downtown Jacksonville, Southern Duval-Northern St Johns, and Greater St. Augustine (see previous Section) – as well as the region comprised of Duval and St. Johns counties. Market potential was also estimated for new office, retail, and industrial square footage in each of the three submarkets and the region, discussed later in this sections. This residential demand analysis only includes multifamily rental units because, based on the prior market analysis, it is assumed that rental properties, rather than condominiums or other ownership properties, are driving multifamily demand in the region and in the FCCR corridor. This analysis also examined growth trends and migration patterns as well as historic rental absorption to estimate demand for new residential uses in the submarkets and the region. The methodology consists of six steps:
Based on these assumptions and the inputs shown in Table 3-14 and Table 3-15, average annual turnover for rental housing considers current and new residents. However, the rental demand considers that not all households moving each year are 1) new households and/or 2) moving into newly constructed units (in fact, only a small portion typically move into newly constructed units). Therefore, capture rates that take the previous analysis into consideration were applied, and it could be acknowledged that the FCCR can create a more transit-connected urban environment that attracts new residents.
Table 3-14: MINIMUM ELIGIBLE HOUSEHOLD INCOME CALCULATION - MARKET RATE RENTAL UNITS
Source: CoStar
1 For rents (Step 1) and household segmentation (Step 2): The estimated average monthly market-rate rent of $2.10 PSF is based on prevailing market rents for new construction (i.e., multifamily properties delivered since 2010) for each station and the region, sourced from CoStar and the study team’s interviews with locally and regionally active developers. The study team estimated an average monthly affordable rent of $1.31 PSF based on the rent that would be affordable to a four- person household earning 60% of the 2022 Area Median Income (AMI) in Duval and St. Johns counties, i.e., $50,160 as calculated by the U.S. Department of Housing and Urban Development (HUD). For a list of AMIs, see: “Florida Housing Income Limits, 2022” via the Florida Housing Data Clearinghouse. http://flhousingdata.shimberg.ufl.edu/income-and-rent-limits/results?nid=1 60% AMI was used as the cutoff for unit affordability because 1) this is an income level needed to qualify for commonly used affordable housing funding and financing sources that support development feasibility, such as the Low-Income Housing Tax Credit (LIHTC), and 2) in order to support units at a deeper level of affordability where there is greater need, i.e., for households earning $15,000 to $50,000. 2 Turnover refers to existing tenants (households) moving out of a unit and into a different unit. Turnover rate refers to the share of total tenants (households) who move units each year. Turnover data comes from American Community Survey 5-Year estimates (2016-2020). 3 “America in 2015: A ULI Survey of Views on Housing, Transportation, and Community.” Urban Land Institute. http://uli.org/wp- content/uploads/ULI-Documents/America-in-2015.pdf 4 “Duval County.” Florida Legislature, Office of Economic and Demographic Research. May 2022. http://edr.state.fl.us/content/area- profiles/county/duval.pdf 5 “St. Johns County.” Florida Legislature, Office of Economic and Demographic Research. May 2022. http://edr.state.fl.us/content/ area-profiles/county/stjohns.pdf
Table 3-15: MAXIMUM ELIGIBLE HOUSEHOLD INCOME CALCULATION - AFFORDABLE RENTAL UNITS Source: CoStar; Florida Legislature, Office of Economic and Demographic Research; U.S. Department of Housing and Urban Development (HUD)
6 Middle income housing refers to housing with rents greater than affordable housing options but lower than newly constructed market-rate housing options. The following paragraphs explain how the study team defined this housing vis-à-vis market-rate and affordable housing. 7 A household that spends more than 30% of its income on housing costs is considered cost-burdened and may have difficulty affording necessities. See: “Rental Burdens: Rethinking Affordability Measures.” U.S. Department of Housing and Urban Development. 2014. https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_092214.html
FCCR TOD
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