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HomeMy WebLinkAboutAIRPORT STUDY AREA DEVELOPMENT FEASIBILITY STUDY_SEP-97I 11111111111111111111111111111111111111111111111 *NEW FILE* Airport Study Area Airport Study Area Development Feasibility Study City of Newport Beach September 1997 i L P 1 1 1 1 1 i 1 1 1 1 1 1 1 1 Table of Contents INTRODUCTION..................................................................................... I SUMMARY OF FINDINGS.....................................................................4 METHODOLOGY..................................................................................... 7 AIRPORT LAND USE STUDY................................................................9 MunicipalRevenue Potential........................................................9 LandUse Pattern and Parcel Ownership...................................13 EXISTING PROPERTY VALUES.........................................................21 PropertySales..............................................................................21 RentalRates.. ............ 6--6 ........ 6 ...... 6.6 .................... 6 ... 6....................23 PropertyValuation Conclusion.........................6.........................24 Propensityto Recycle...................................................................24 FUTURE LAND USE POTENTIAL......................................................29 RetailUse.....................................................................................30 HotelDevelopment...................................................................... 35 Office Professional Use................................................................39 LandUse Summary.....................................................................47 DEVELOPMENT ISSUES, OPPORTUNITIES AND RECOMMENDATIONS.........................................................................48 Airport Study Area Development Feasibility Study INTRODUCTION GRC Associates, Inc. has been retained by the City of Newport Beach for the purpose of assisting in the formulation of a development strategy for the area generally located south of Campus Drive, north of Birch Street, west of MacArthur Boulevard and east of Bristol Street. The study area is located adjacent to the John Wayne Airport and it encompasses approximately 52 acres. The subject area is illustrated in Figure 1 which also denotes the three subareas utilized in this report (hereinafter the study area will be referenced as the "Airport Study Area"). The scope of this study included: a) reviewing the Airport Area Rezoning Study prepared by the Rezoning Subcommittee of the Economic Development Committee of the City of Newport Beach particularly with respect to the financial impacts of various land uses on the City of Newport Beach; b) analyzing real estate data with respect to sales and lease rates; c) surveying properties within the Airport Study Area to determine the propensity of the properties to recycle to new and higher uses; d) developing financial models for potentially feasible land uses to determine the residual land value the uses can support; e) review the deed restrictions restricting the development densities in the area; f) interview selected property owners within the Airport Study Area and the Committee to solicit ideas for inducing economic development, and g) prepare recommendations for municipal actions to assist in the building development of the Airport Study Area. This scope was designed to generate the background materials and ideas required to develop an economic development strategy for the study area. The Airport Study Area is generally recognized as having a very attractive location but the area suffers from lower quality and older development than the surrounding areas in the cities of Newport Beach and Irvine. This lower quality development resulted, in part, from the subdivision of the area into smaller parcels and overly permissive land use controls. However, the area has and does serve as the source of multi - tenant space for a large number of small businesses. Additionally, it fulfills a significant role as the site for certain airport related uses such as rental car agencies, and as a location for restaurants, auto service = m m m m = = = m m = m m m m = m m = Figure 1 Airport Study Area Subareas A, B, and C 'AVPuS I a JU ar B i ISOI jr BIRCH STREET Airport Study Area Development Feasibility Study businesses, convenience commercial services and limited business to business services. With its wide variety of businesses and building types, the area lies in sharp contrast to the large high-rise office developments in the larger area ' and leads property owners and businesses to believe that the area should recycle to higher uses supporting higher land values and rents. From the perspective of the City, the question remains if the area can support uses ' that would make a greater contribution to the tax base of the City and or provide stronger support to the surrounding areas. ' Consideration needs to be made for both short and long term strategies. The Rezoning Subcommittee has expressed interest in near -term ' opportunities but review of existing real estate conditions indicated that the economic development strategy for the area needs to be long-term in nature. There remains significant value in the existing improvements in ' the study area which has not been amortized thus generating a higher land basis than other competing areas that benefit from having vacant land resources. No attempt has been made to fully address the future of the John Wayne Airport. Members of the Subcommittee and property owners have shared ' a number of different perspectives about the future of the airport and the impact of a new international airport at the El Toro Marine Base site. The County continues to make substantial investments in the John ' Wayne Airport and currently is in the process of developing additional parking indicating that the John Wayne Airport will have a continuing and significant role in transportation. tWe believe that the characteristics of the greater airport area (actually the Newport/Irvine area) including thousands of individual businesses, ' several hotels, billions of dollars of private and public investment located at the junction of two major freeways, adjacent to perhaps the most desired residential areas in southern California indicates the airport ' contributes to the area but does not drive the local economy. If the City proceeds to adopt a formal strategy for the Airport Study Area and ,the airport relocation occurs, sufficient flexibility will need to be built in to ' accommodate changing conditions. u t 3 Airport Study Area Development Feasibility Study SUMMARY OF FINDINGS ' • Airport Rezoning Study Review ' The Airport Rezoning Study compared the Airport Study Area with a larger surrounding area. The results of this comparison illustrated that the tax revenue per acre to the City generated ' by the Airport Study Area were only a fraction of the revenue generated to the community by the surrounding area implying that recycling of the study area could result in much higher ' municipal revenues. This comparison did not take into account the nature of the uses in the comparison area which included a major hotel, a car dealership and multiple shopping centers. This comparison of the Airport Study Area with the surrounding area would have increased accuracy if the same uses were compared within both areas such as office uses to offices uses. In a sample of office development, office uses resulted in less than $.07 per square foot in annual sales tax revenue to the ' City. • Property Values and Rental Rates ' 1. Average value of parcels sold in Airport Study Area is $33 per square foot of land value and $73 per square foot of building area. ' 2. Average rents in Airport Study Area are between $1.00 and $1.25 per square foot. ' 3. Average office rents in quality buildings in the airport area are $1.75 TO $2.00 per square foot full service gross and increasing. 4. Vacancy in the greater airport area is less than 10% for the first ' time in ten years. 5. Parcels exhibiting a high propensity to recycle based upon building ' type, quality and age unfortunately are spread randomly throughout the study area making assembly more difficult. 6. The value of the existing parcels within the Airport Study Area ' and the increasing rental rates on existing space make redevelopment of the area very difficult from an economic ' perspective. 1 Airport Study Area Development Feasibility Study I 1 u F 1 1 7. Significant leasehold interests are found in the Airport Study Area which will limit the flexibility of property owners considering recycling their properties to higher uses. • Development Feasibility by Land Use in the Study Area 1. No demand for retail commercial, car dealerships or service commercial in Airport Study Area foreseen in short or long term. 2. Rental rates for newly developed space do not support the demolition of existing buildings and the development of new high quality space at this time. 3. Declining vacancy rates in the greater airport area are anticipated to cause a substantial increase in rents over the next several years. 4. Higher density development permitted by removing the Irvine Company covenants would improve the economics of recycling older office properties. 5. Both hotel and restaurant demand is anticipated in the long term as occupancy and employment increases in the area. 6. The mix -used nature of the Airport Study Area can be a disincentive for new investment in the area when incompatible uses are located in proximity to each other. 7. The greater airport area will remain the most desirable business location in Orange County. • Recommendations 1. The primary recommendation is to consider re -planning the area through the adoption of a statutory specific plan/overlay zone incorporating customized development regulations and standards for the area and limiting incompatible uses. Additionally, in conjunction with the re -planning effort, prepare a master EIR to adequately address environmental requirements for future development. 2. Prepare a redevelopment feasibility study to consider forming a redevelopment project encompassing the Airport Study Area. 3. Develop a system of municipal incentives including a fee reduction program, a broker incentive program, and a marketing program to help encourage the location of revenue producing businesses and to encourage recycling the Airport Study Area. II Airport Study Area Development Feasibility Study II ' 4. Proceed to bring traffic standards into conformance with those of the surrounding municipalities 5. Work towards eliminating the SLUR's through negotiation, acquisition or averaging of densities over the entire Airport Study Area. Airport Study Area Development Feasibility Study I 1 1 II II II II 'I METHODOLOGY The methodology utilized for this study consisted of detailed field work to determine the exterior condition of existing buildings including the configuration and apparent use. This physical review of the Airport Study Area was followed by a review of both resale comparables and rental rates to determine a range of property values for the existing properties. Surrounding developments were considered in defining compatible uses for the area and the general market. A close review of the type of retail tenant found in the surrounding areas and the sales per square foot of building area generally found in the vicinity were reviewed to determine the potential for additional retail development including restaurant development. Competing auto dealership locations were reviewed to determine if any obvious voids existed in the marketplace. Due to the physical configuration of the Airport Study Area, the area does not easily lend itself to conventional shopping center development. However, a proforma model was prepared to illustrate land values that could be supported by shopping center development. The office market conditions within the greater area were reviewed in terms of vacancy rates, rental rates and the relative strength of the airport area in comparison to other office areas in the County. Long term demand for office space was assumed given the economic outlook for Orange County, employment projections, the nature of the area and the cyclical nature of the office market. Our analysis included the review of the issue whether replacement costs still exceed purchase prices for existing office buildings. In addition to the investigation into existing market conditions and the area's physical conditions, consideration was given to several relevant documents including the Airport Land Uses Study, the Municipal Zoning Code, the Traffic Phasing Ordinance, the special land use restrictions recorded against the properties by the Irvine Company and a hospitality/tourism study recently completed for the City. Most importantly, this report reflects the input and ideas for encouraging private investment in the Airport Study Area generated by the Rezoning Subcommittee of the Economic Development Committee and property owners that were interviewed. Many of the interested parties in the area had ideas for improving the competitive position of the study area with other locations in the County and a wide range of views on the future or 'I Airport Study Area Development Feasibility Study ' lack of future of the John Wayne Airport. Similarly, many of those interviewed had several short term concerns with the median islands in ' Campus Drive, pedestrian access to the airport terminal buildings, cable service or municipal support. U 1 II II II II II II 8 I ' Airport Study Area Development Feasibility Study AIRPORT LAND USE STUDY •Yu . •. The Airport Area Rezoning Subcommittee of the Economic Development Committee prepared the Airport Area Rezoning Study (hereinafter the "Rezoning Study") in February of 1996. The primary objective of this effort was to review the Airport Study Area from an economic development perspective and formulate recommendations for future ' actions by the City. The emphasis of the effort was the tax revenue potential for the City of Newport Beach if the study area recycled to higher uses. Topics covered included land use and ownership patterns within the study area, and tax revenue generated within the Airport Study Area in comparison to higher quality areas located to the south of the Airport Study Area. The comparison area was defined as that certain ' area bound by MacArthur Boulevard on the east, Birch Street on the north, Bristol Street on the west and Jamboree Road on the south. ' One of the primary objectives of this study was to review and confirm the preliminary findings of the Rezoning Subcommittee contained in the Airport Area Rezoning Study. The Rezoning Study concluded that the ' Airport Study Area could potentially generate higher tax revenues to the City if it had developed as a planned community similar to the area to the south of the Airport Study Area. This method of comparing "planned" development with scattered development indicated that planned development areas attracted uses that generated approximately twice the tax revenue to the City on a per acre basis. The results of the Rezoning t Study are summarized in Table 1. On an absolute basis, the planned commercial area generated $18,100 per acre while the Airport Study Area generated only $9,100 per acre; however the mix of uses in the two areas ' are substantially different. A fair comparison is difficult unless individual land uses within the Airport Study Area were compared to the same land ' uses in the comparison area. The larger comparison area benefited from several unique and high revenue producing uses such as auto sales and a hotel which may or may not be located in the Airport Study Area if it recycled. II II 11 Airport Study Area Development Feasibility Study Table 1 Comparison of Revenues Generated to the City Total Per Acre 1'91d Per Acre Acreage 52.53 NA 136.94 NA Building Sq. Ft. 965,936 NA 2,877,542 NA Number of Employees 1,610 31 5,257 38 Number of Revenue Entities 822 15.8 1,676 12.2 Number of Tax Parcels 60 NA 62 NA Annual Property Tax Revenue $112,732 $2,168 $433,031 $3,160 Annual Property Tax Revenue/Parcel $1,879 NA $6,984 NA Total Annual Tax Revenue $476,769 $9,076 $2,474,553 $18,070 Total Annual Revenue per Bldg. Sq. Ft. $0.49 NA $0.86 NA Total Annual Revenue per Entity $604 NA $1,476 NA Total Annual Revenue per Tax Parcel $8,274 NA $39,112 NA Total Annual Revenue per Acre $9,076 NA $18,070 NA GRC's review of the data indicated that while the revenue data was an indication that a well planned area will double the revenue per acre of an unplanned area it is difficult to draw any conclusions. The difficulty lies in the nature of property taxes and sales taxes in California. With respect to property taxes, older development is generally assessed at a much lower level per square foot of building area or land area due to the fact that there is an artificial limit on annual increases resulting from Proposition 13. Therefore an older development area by comparison will have substantially less value unless there is significant turnover in ownership triggering re -assessment. GRC did review County Assessor's records to secure the range of values commonly found on high -quality office buildings. These values have been depressed during the recession and are less than replacement cost due to the high vacancy rates and the number of successful appeals; however, the Assessor's records indicated that the range of assessed values for high - quality office buildings are generally between $80 and $120 per square foot and for industrial and R&D buildings generally in the range of $50 - $100 per square foot. To translate this into property tax revenue per acre, assuming a Floor Area Ratio (FAR) of .5, new high -quality office 1 10 ' Airport Study Area Development Feasibility Study ' development would be anticipated to generate approximately $26,100 per acre of development to the property taxing entities with approximately ' 18% or $4,700 of this amount accruing to Newport Beach. Industrial and R&D space at a FAR of .4 would generate property taxes to the City of approximately $2,500 per acre assuming an assessed value of $80 per square foot and the same municipal tax rate of .18%. ' With respect to sales tax, point of sale defines the location that sales tax is credited and while it is possible to project sales tax from retail areas, it is ' not possible to project sales tax per square foot of building from non -retail areas with high accuracy. In the metropolitan basin, there are office locations generating very high amounts of sales tax from business ' equipment sales, tool sales, printing, fuel and other products out of small office locations and, conversely, there are large banks, accounting, law, engineering firms and corporations that have negligible retail sales, if ' any. Office locations can have significant benefits to the greater region ' resulting from employment and the expenditures of those firms and employees in the region. For example, a large employer with 300 employees averaging close to the County median income or approximately ' $50,000 in annual salary per employee would potentially generate taxable retail sales equal to approximately 40% of the gross payroll or $6.0 million. This level of retail sales would generate $60,000 in municipal ' sales tax to the region if the jobs were not replacing or relocated from other County locations. (According to the Federal Department of Labor, this level of employment would also generate indirect employment based t upon a multiplier in the range of 1.6 to 2.0 depending upon the type of industry). ' Currently, California law only rewards the point of sale and unless the employee base used in the calculation above lived and worked (or at least, exclusively shopped) in Newport Beach, the City would only fractionally ' benefit from the employment. Even though Newport Beach imports sales from outside the community so that growth in the region benefits the City, the limited housing stock for median income households and the limited ' growth in the residential base indicates that the primary benefit of new office buildings constructed and employment in Newport Beach will accrue to areas outside the City. The rule of thumb generally utilized for ' retail purchases in proximity to work rather than one's residence is that approximately 5% of the retail expenditures occur in proximity to work. 1 11 Airport Study Area Development Feasibility Study I 1 1 1 I GRC is not familiar with any specific research related to the expenditures of employees in Newport locations. As an alternate approach to considering retail sales tax potential of various uses, the revenue producing nature of individual categories of uses can be considered. Table 2 presents our experience in several cities throughout southern California. Table 2 Sales Tax by Category of Use mpg ogles Tax /Acre. Comments Neighborhood Retail $11k - $15k/acre Typically grocery and drug with 20% service uses. Community Level Retail $19k - $22k/acre Promotional/Power Center $28k - $33k/acre Regional Malls Auto dealerships Hotels $24k- $301c/acre $80k - $1201c/acre $150k - $170k/acre Clothing anchors, freestanding discount stores. Larger power centers with strong mix of tenants, 23% site coverage. Combination of department stores and shop space for fashion malls. Includes sales and leasing, quality of dealerships varies widely. Assumes 70 rms/acre, $100 ADR, 70% occupancy, 9% TOT, no food sales included. Restaurants $25k - $35k/acre Assumes 18% site coverage. (1) Source GRC Associates The above categories of uses are found throughout California and the results vary dependent upon competition and demographics. Office and industrial development is much more difficult to project because of the wide variation in uses and the fact that a sales reporting address can simply be the location where the salesmen are located and the paperwork completed for goods and materials manufactured and possibly stored in a remote location. Without attempting to extrapolate the results to new office development, GRC did identify and research the retail sales generated by businesses occupying buildings totaling approximately 1,500,000 sq. ft. located in high -quality Newport buildings and secured the combined sales tax generated from this space from the City's sales tax consultant. The total sales tax generated was $101,000 for the last four quarters that data was available or $0.067 per square foot. On a per acre basis assuming a FAR 12 Airport Study Area Development Feasibility Study L i,l 1 1 t 1 of .5, the sales tax per acre of the selected Newport Beach office areas reviewed would be $1,460 per acre. Even though we determined that the sales tax data supplied for the Airport Study Area had only limited usefulness due to companies no longer located in the area, it is interesting to note 1% of the total businesses listed in the Airport Study Area generated 66% of the sales tax. The above discussion indicates that municipal revenue projections must be carefully considered prior to utilizing the data for land use decisions if the revenue is the most significant factor in the decision making analysis and office development is the primary land use. LAND USE PATT RNAND PARCEL OWNERSHIP GRC reviewed the land use analysis within the Rezoning Study and found that the land use pattern within the Airport Study Area has changed only marginally since the Rezoning Study. Uses range from retail commercial to office space to a self -storage area and indicate that there has been fairly permissive zoning restrictions during the build -out of the area. These land use categories broken down into finer categories of use are illustrated on the Land Use Maps presented in Figures 2, 3, and 4. The land use pattern illustrates incompatible uses in proximity to each other such as auto repair and self -storage next to office space which may limit the future development potential of the area. The most distinctive feature of the land use map is the location of the car rental agencies serving the airport trade. This use is found within Subareas A and B of the Airport Study Area and are within areas scattered throughout the blocks. Recycling of portions or all of the Airport Study Area may require that the rental agencies be consolidated in proximity to one another. Approximately 6.5 acres or nearly 13% of the Airport Study Area is devoted to rental car agencies. See Figures 5 and 6 for the location by firm name. 1 13 Figure 2 Land Use Map Subarea A b \. BIRCH MPG PRjNJR I _ office _ Industrial _ Multi -tenant Industrial — Commercial/Service ® Auto Rental Agencies 0 Self -Storage ® Health Services Figure 3 Land Use Map Subarea B _..—..—..—..—..—..—. _..____.._.._.._.._.._.._..—..— CAMPUS R O` C n rn t= BIRCH 1 f _ office _ Industrial _ Multi -tenant Industrial — Commercial/Service ® Auto Rental Agencies Self -Storage ® Health Services Figure 4 Land Use Map Subarea C CAMPUS T b O rmn -Oi n a BIRCH _ Office _ Industrial _ Multi -tenant Industrial — Commercial/Service ® Auto Rental Agencies Self -Storage _ Health Services Cal American Rent -a -Car 4200 Campus Drive (Occupies end office and uses west end packing lot to store automobiles) Figure 5 Locations of Rental Car Agencies and Service Facilities Subarea A National Car Rental Service Facility (Gasoline Pumps, Car Wash, Service Bays & Auto Storage) i A-1 Rent Car 4500 Campus Drive, Suite 300 (Occupies front office on the 1 st floor & uses adjacent parking lot for auto storage) III'f(+��rI Alamo Rent a Car BIRCH ervice Facility (Gasoline Pumps, Car Wash. Service Bays & Auto Storage) Figure 6 Locations of Rental Car Agencies and Service Facilities Subarea B Hertz Rent -a -Car _..—..—..^.. —.._.. _am QS rive CAMPUS 3926-3950 0' a O Thrifty Car Ren al 2018 Q iailjo LI N n_ O m u m 4 $ J U A 3929A-3937 iw BIRCH Budget Car & Truck Rental I bIrM t5treet ' Airport Study Area Development Feasibility Study 1 ' Another feature of the Airport Study Area graphically illustrated by the ' Land Use Map is the random nature of the development. There is no real pattern of similar uses occupying distinct areas within the blocks other than the fact that office space and convenience commercial generally ' dominate the Bristol and MacArthur frontages. Re -planning of the area could emphasize the location of compatible uses in proximity to each other similar to the development patterns in the surrounding area. ' Additionally, any re -planning effort should review the scope of permitted uses and eliminate the uses that do not contribute to the area such as the self storage use and auto related uses. ' Field work related to the Land Use Map and the business license register provided in the GRIP analysis of the City also indicated that very few of ' the businesses had an apparent relationship to or reliance on the airport except for the rental car agencies. The land use breakdown for the study area indicates the following building types and use breakdown: Table 3 Land Use Analysis Building Tyne % of Parcels Office 40% Industrial 9% Multi -tenant industrial 16% Commercial/service 9% Auto Rental Agencies 19% Self -Storage 3% R&D 0% Restaurant 1% Health Services 6% The ownership pattern identified in the Rezoning Study has changed only slightly. There are a total of 43 individual owners and the majority of ownerships consist of a single parcel. Certain property owners have and are attempting to consolidate parcels, however, many of the parcels are encumbered with leases or other constraints resulting from the covenants recorded by the Irvine Company at the time the properties were sold. The ownership pattern is considered the most serious constraint to recycling the property. One property owner in the northeastern portion of the Airport Study Area is making a substantial effort to consolidate properties and is in a position 19 Airport Study Area Development Feasibility Study 1 to assemble up to 10 acres if current efforts are successful. Portions of this property remain encumbered with long term leases; therefore, ' property consolidation efforts in the area will require the cooperation of both those holding the title to the land and the leasehold interests. ' A listing of Assessor's Parcel Numbers, property owners by land use, building area, covenant restrictions, and year built are attached in Appendix A. 1 1 M Airport Study Area Development Feasibility Study I n 1 1 1 EXISTING PROPERTY VALUES Property values within the Airport Study Area were deemed to be a significant factor in determining the feasibility of recycling the Airport Study Area to higher uses. The underlying property value can determine both the use and the rent level required to have a successful development and to determine if the subject property can effectively compete with other areas. GRC's investigation into existing property values should not be considered an appraisal of individual properties but an indicator of values in the area. As discussed in the Land Use section of this report, the quality and nature of the properties varies widely. To approach the issue of value, past parcel sales were researched within the area. The results of this research is summarized in Table 4 entitled Property Sales Within the Last Three Years. The location of each property sale is shown on Figure 7. Table 4 indicates that there have been numerous sales within the Airport Study Area or immediate surrounding area during the last three years. These sales also involved properties with office, commercial and industrial uses. The overall price per square foot of building area averaged $96.00 per square foot and the overall sales price based on land area indicated an average sales price of $41.00 per square foot. Restricting the resales to properties within the Airport Study Area produced an average sales price per square foot of land to $33.43 and an average sales price per square foot of building area to $73.48. From these averages, it is apparent that the marketplace places substantial value on the existing improvements despite the age and the lack of high maintenance standards on many properties. Sales outside the Airport Study Area were at a higher value than sales from within the area most likely reflecting the age and quality of the development. 21 Airport Study Area Development Feasibility Study Table 4 Property Sales Within the Last Three Years Sales Price or Bldg. Total Assessed Land Bldg APN Use Jot Size Area Value s . ft. s . ft. 1 427-083-03 Light Industrial 175,982 72,397 $5,805,027 $33 $80 2 427-111-07 Miscellaneous 23,800 N/A $2,253,000 $95 N/A 3 427-111-11 Office -Low Rise 29,000 6,300 $1,100,000 $38 $175 4 427-151-15 Commercial-Misc. 29,000 15,173 $1,500,000 $52 $99 5 427-163-03 Commercial Misc. 131,551 60,580 $4,150,135 $32 $69 6 445-013-02 Light Industrial 152460 27,686 $4,786,198 $31 $173 7 445-013-05 Miscellaneous 277:912 149,600 $19,684,805 $71 $132 8 445-021-14 Office -Low Rise 44,866 39,451 $2,759,055 $61 $70 9 083-271-01 Light Industrial 64,468 26,102 $1,367,866 $21 $52 10 427-083-06 Light Industrial 104,544 49,620 $2,680,088 $26 $54 11 427-111-01 Office -Low Rise 87,120 32,626 $1,692,208 $19 $52 11 427-111-02 Office -Low Rise 29,000 19,202 $608,001 $21 $32 11 427-111-04 Office -Low Rise 35,030 8,768 $1,393,080 $40 $159 12 427-121-02 Office -Low Rise 29,000 5,792 $1,217,015 $42 $210 13 427-121-05 Office Low Rise 29,000 16,281 $1,060,026 $37 $65 14 427-121-06 Office -Low Rise 29,000 6,467 $948,024 $33 $147 15 427-121-08 Light Industrial 29,000 11,685 $973,005 $34 $83 16 427-121-10 Office -Low Rise 29,000 19,603 $750,247 $26 $38 17 427-131-12 Industrial -Steel 29,000 3,805 $451,007 $16 $119 18 427-151-07 Office -Low Rise 36,250 23,229 $1,687,387 $47 $73 19 427-231-20 Office -Low Rise 5,924 5,349 $489,600 ___ $83 $92 TOTAL 1,400,907 599716 $57,355,774 $41 $96 Figure 7 Location of Property Sales Within the Last 3 Years ' Airport Study Area Development Feasibility Study Further analysis of the resale data indicates that the range of values ' based on building square footage varied from $32 per square foot up to $210 per square foot. If the resale data in Table 4 is separated by building type and only the values for low rise office buildings are ' considered (this is by far the most prevalent use in the area), the sales price per square foot of building area is $75.62 and the sales price per ' square foot of land area is $31.46 which are both similar to the overall average values found in the area. ' The difficulty of reviewing values in a mixed use area is that generalizations need to be approached cautiously. A parcel of modest value may exist adjacent to a very valuable parcel. The analysis of ' comparable property values indicates that while not commanding premium values for office, industrial and commercial properties, the marketplace continues to place substantial value on the remaining ' improvements to the point that recycling properties will be difficult in the near term. ' RENTAL RATES With respect to rental rates and vacancy rates in the Airport Study Area, II' we are able to report that of those interviewed, office rents were reported between $.85 and $1.40 on a gross basis with the average of approximately $1.20 to $1.25 for office space and approximately $.60 - $1.00 for R&D type space with some office and industrial space. The rents, similar to the property values, vary significantly with the quality of the space and the type of services offered by the landlord. Our initial ' fieldwork at the on -set of this study indicated a vacancy rate in the multi - tenant space approaching 15% to 20%. Subsequent field work indicates that vacancy rates have fallen dramatically with several owners reporting that their projects are very near full occupancy. Based on an assumed fair market rent of $1.25 per square foot gross and 33% in operating costs, a representative capitalization rate for the average sale was above 12.5% reflecting an older building with less potential for future increases in income. For comparison purposes II' capitalization rates generally vary from 9% to 13% with the numerically lower rates for high quality investments and the higher rates for higher risk properties with less potential for increases in value. Capitalization I' rates in the Airport Study Area are at the higher end of the real estate spectrum. 1 1 II Airport Study Area Development Feasibility Study 11 1 1 1 u II II II The above referenced investigation into re -sale values and rents indicates that a finished buildable site would be difficult to assemble at less than $25.00 to $40.00 per square foot of land area. The preceding range includes not only the sales price of the land but estimated closing, demolition and rough grading costs. The lower valued properties in the area are most suitable for recycling, but any larger development parcel would undoubtedly involve a combination of lower and higher valued properties. Comparing the above range of potential land values with the land values found in other areas suitable for development indicates that the Airport Study Area is not competitive with other areas benefiting from vacant land which rarely exceeds $15.00 to $20.00 per square foot in the very best areas for finished sites. In addition to reviewing property values and rental rates, the Airport Study Area was reviewed from the perspective of building type, quality, age and condition to determine some _ indication of the propensity of individual parcels to recycle. This effort is illustrated in Figures 8, 9, and 10. Near term designations were reserved for parcels that showed signs of deterioration and obsolescence. Only the lowest quality office developments and relatively older one-story tilt -up industrial buildings were included in this category. Mid-term designations were reserved for properties with significant remaining life but beginning to show signs of obsolescence and substandard design. These parcels included the better industrial multi - tenant buildings, the self -storage facilities and older offices in good condition. Long-term properties essentially consisted of the more substantial office buildings, properties with higher value buildings and properties with uses that would be difficult to recycle such as the car rental agencies. The natural life span of these properties in the absence of other property owner inducements was estimated to be in excess of 12 to 15 years. Similar to the land use analysis, this analysis of the propensity to recycle based on building type, condition and land use, while subjective, shows II ' Airport Study Area Development Feasibility Study the random nature of development within the area and graphically ' illustrates the primary constraint facing property owners -- assembling and demolishing properties that have remaining economic life. 1 1 II '1 1 Figure 8 Propensity of Parcels to Recycle Subarea A CAMPUS O O O • O O ® O Figure 9 Propensity of Parcels to Recycle Subarea B CAMPUS O n 0 TRACT I Figure 10 Propensity of Parcels to Recycle Subarea C CAMPUS ' r TRACT I � I ' I I I Q 0 © 0 G) i I � � I � I I � I nRtry I I I r I G I r I 50 ® I I Q; : O i I i I 1 i I BIRCH 1 A a Near Tecn • Mid Term Long Term ' Airport Study Area Development Feasibility Study ' FUTURE LAND USE POTENTIAL ' For the purposes of this study, four primary categories of land use have been considered for the future of the Airport Study Area including retail, auto sales, office and hotel development. ' The Rezoning Study identified the types of businesses that would be of benefit to municipal revenues, for example, business to business sales but ' the Rezoning Study did not suggest any generalized land use limitations or specific uses for the Airport Study Area. ' The Airport Study Area is fully developed and has substantial existing value and any transition to higher uses is anticipated to be a long-term process spanning a period of many years. Consequently, this study is ' designed to take a very long term view and reliance on current market conditions is only a limited indicator of future potential. ' The marketplace has provided very strong indicators of the future land use for the Airport Study Area. Located centrally in an area containing over 27.0 million square feet of office space, fully one-half of the office ' space in Orange County, with a tremendous base of large and small business, the study area benefits from a multitude of assets including good freeway access, a high image location containing some of the highest ' quality buildings in southern California, the airport, proximity to educational institutions, a highly educated employee base, high quality housing, all types of retail and services, and tourist and business ' amenities including quality hotels. These are the ingredients for a premiere area to attract and support business. Additionally, the greater area is widely recognized as a favorite location of entrepreneurs initiating ' new ventures and the airport area recently has been respected as supporting a growing base of technology firms. ' At the request of the Rezoning Subcommittee, we reviewed the land use patterns surrounding certain other airports including LAX, Ontario, Oakland and Long Beach and found that the airports support only a limited amount of airport related uses off -site. The airports appear to contribute to the industrial, office, and commercial nature of the areas, depending more on the business patterns in the vicinity of the airports. In each case, it appears that the airports are a contributing factor but not necessarily the dominant force because there is no consistent pattern of airports supporting a particular land use pattern. The Ontario Airport is a good example and of interest because of its growing importance in southern California. This airport has attracted some hotel uses servicing primarily businesses in San Bernardino County, but the dominant 1 29 Airport Study Area Development Feasibility Study I 1 C 1 E 1 business in the greater airport area is distribution oriented which reflects the County's role in the economy rather than air transportation related uses or office development. A convention center is planned for the area but Long Beach, Los Angeles and Anaheim prove that a convention center need not be adjacent to an airport. A similar situation exists with each of the airport areas reviewed. The surrounding land use reflects the area's niche in the economy rather than being exclusively air transportation driven. In interviewing property owners in the area, GRC encountered a wide range of opinions on the airport and its possible relocation or reduced transportation role in the future of the region. Changes to the airport and its impacts exceed the scope of this report, but it is our belief that the level of private investment in the airport area, the infrastructure and the amenities found in the area, in total, have only a limited reliance on the airport being located in the immediate proximity and will be successful with and without the proposed new international airport at El Toro. N o�'F✓.ki Olm For the purposes of this effort, the state of the existing retail base in the area was considered the best indicator of demand for retail uses to serve the expanding employment base in the area. Our investigation included reviewing the sales data for selected retail addresses and detailed field review of the retail developments within the greater area and the region. Two small retail areas were located in the immediate airport area in Newport Beach. These are illustrated on Figure 11. The first of these areas is located directly to the south of the study area and consists primarily of service commercial, food and office goods. The largest store in the area is a Staples store located on the MacArthur frontage. Commercial development in this retail node has limited street visibility and no freeway access and it is oriented directly to the office market. This retail base is indicative of what can be supported by office areas and it consists of service commercial, novelty retail and office goods with the predominant use being restaurant uses. Consolidated sales tax information for the shop space indicates that retail uses have had very limited success while the restaurants have been quite successful with sales in excess of $300 plus per square foot for the stronger restaurants. Rental rates for the shop space on a triple net basis were as low as $1.25 per square foot and as high as $1.50 per square foot. t 30 Figure 11 Retail Developments ' Airport Study Area Development Feasibility Study ' The second retail area in proximity to the Airport Study Area is located on ' Bristol North in proximity to Jamboree Road and it benefits from its proximity to the employment base and a strong highway commercial location with freeway visibility. This area is much stronger than the ' retail area south of the Airport Study Area but it also consists predominantly of service commercial and food uses. Rental rates in this area are quoted by the property managers at up to $2.00 per square foot ' and the vacancy rates are substantially lower than the retail area immediately south of the Airport Study Area. ' No significant range of goods or shopping is offered nor required in the vicinity of the Airport Study Area and in the long-term future it is probable that the less successful retail areas will be recycled to higher ' uses. We believe this is a by product of two factors. First, business and daily needs of the office developments consisting of printing, mailing, office supplies and goods, convenience items, commercial service uses such ' as travel offices, beauty salons, cleaners, exercise and health facilities and restaurants are located in the immediate area; and, secondly, general consumer goods are found in close proximity at Fashion Island, the greater South Coast Plaza area, and promotional shopping centers in several other nearby locations. ' Retail sales in the Airport Study Area are not suitable to support significant new retail development even in the long term future. Vacancy rates for the area immediately southeast of the Airport Study Area for ' convenience and service retail space, are estimated at 15% which is higher than typically expected of retail areas. ' The area does support and will continue to support certain categories of retail/office uses that often locate in office areas rather than exclusively in shopping centers and are needed to serve the employment base. These ' include restaurants, cellular phone outlets, office supplies and equipment and medical offices. Many of these are currently located in the Airport Study Area. There is also a need for automobile related services including ' car washes and repair facilities. These uses are also found in the Airport Study Area and appear successful because the Airport Study Area is one ' of the only locations where these uses are found in an area supporting many thousands of jobs. If the Airport Study Area is to transition to higher uses over time, there is very little opportunity for automobile service related uses to co -exist with high quality development. ' GRC also reviewed the likelihood that a more traditional retail center ' could be developed in the area. The Airport Study Area is also not properly configured for major anchored retail. Significant retail areas for promotional tenants requires a minimum of approximately 25 acres to II II ' Airport Study Area Development Feasibility Study ' generate sufficient retail mass to attract a broad range of customers. This ' is not feasible in the Airport Study Area due to physical constraints including street patterns and economic conditions that would not allow the site assembly at a cost that could be supported by retail tenants. In ' today's dollars, land costs would have to be reduced by approximately 65% to 70% to support promotional retailers. ' The economics of retail development are illustrated in Proforma 1 which models the land value supported at a specified rent for a 15-acre shopping center. This retail proforma model assumes rent of $2.00 per ' square foot (which exceeds foreseeable retail rents for major retail in the Airport Study Area) and it illustrates that retail shopping center development supports a maximum land value of approximately $18.00 ' per square foot at this rental rate. This supportable land value is substantially less than the cost of assembling large retail sites in the study area. Additional impediments to major retail development are the traffic patterns and the lack of visibility which would increase the difficulty of attracting customers from outside the area, particularly ' during prime business hours. For the above reasons, the above the Airport Study Area is not suitable for shopping center development. ' The best retail opportunity in the Airport Study Area is for high volume restaurant development. Restaurant demand will increase as the office market improves and expands. Restaurants typically support lease ' payments of 5% to 7% of gross food and beverage sales for the site and building shell or 3% to 4%n for a ground lease. At the top end of the market, restaurants with strong lunch and dinner trade can support ' finished land values in the twenty dollar range particularly if there is an opportunity for an efficient site that benefits from joint parking. The location of appropriate restaurants is also a strong marketing factor for ' high quality business development and a strong synergy exists between the uses. II I II II L1 One subset of traditional retail development is the possibility that auto dealership franchises could locate on the Airport Study Area. This use would have the advantage of generating very high sales tax revenues to the City and the area has had some history of success with the Mercedes dealership on the North Bristol frontage (although it is constructing a new facility on the Newport Back Bay and moving from its existing location). Even though this type of development would be somewhat unusual because of limited freeway visibility, the thought was that the employment density in the area and the existing auto related uses would provide for a built in market for auto dealerships. California law has several restrictions on the location of dealerships which are administered by the New Motor Vehicle Board. These regulations establish a procedure II PROFORMA 1 - Retail Use 1. Total land area (acres) 16 10. Avg. net rental rate $2.00 2. On -site ooste/per sq. ft. $3.50 11. Pad leases (blended) $75,000 3. Building oosts/sq. ft. $48.00 12. Taxes/% of land value (oonstrct.) 1.25% Commissions/marketing/6q. ft. $2.26 4. N of Pads 4 13. S. Off -Site $0.00 14. interest rate oonstr 10.00% 5. In -line building area 130,000 15. Miscellaneous $126,000 G. A&E(sq. ft. $3.50 16. Contingency 5.00% 7. Developer Overhead 4.00% 17. Vacancy shops/pads 7.60% 8. Unreimbursed sign cost 0 13. Management 6.00% 9.Permit fees $5.00 19. reserves 1.00% DEVELOPMENT COSTS ($0001) Assist DEVELOPMENT PROFORMA WAcency Assist W-Agency 1. On -site costs $2,286,900 Total Rental Income $3,420,000 2. Building $6,240,000 Less; vacancy, management & reserves ($461,700) 3.01f-site Improvements + engr. $0 4. Other costs Net operating Income $2,958.300 a) Gov4 fees @ 3.60 $650,000 b) A&E $455,000 N.O.I./project cost W/O LAND 25.78% d) Commissions $367,500 a) Legal $12,500 N.O.IJproject cost W/ Land 12,00% 1) Dev. Overhead $341.076 g) Miscellaneous $160,000 RESIDUAL LAND VALUE $11,727,275 h) Contingency @ 3% dir. costs $426.345 LAND VALUE PER SO. FT. $17.95 6. Financing cost $546,466 Capitalization Rates 9.75% NET DEVELOP. COST W/O LAND Project value @ stabilization $30,341,538 & INTEREST AND TAXES ON LAN $11.476,787 Airport Study Area Development Feasibility Study I 1 1 1 1 1 for dealerships to appeal the location of a same -make dealership within 10 miles of an existing dealership. These regulations tend to limit the location of new dealerships in distinct market areas. Figure 12 illustrates the location of the auto centers within the region. This investigation into the location of the auto centers indicated that all major manufacturers are represented throughout the region and within close proximity to the Airport Study Area. This limits the possibility of establishing a new auto center to the relocation of existing dealerships which typically is difficult and somewhat impractical on high cost sites. Typical auto dealerships in Orange County have paid on the order of $7.00 to $12.00 per square foot for highly visible sites and there are many examples of dealerships paying less than $5.00 per square foot when cities are in competition with each other. GRC believes that a new car franchise auto center is not feasible from the perspectives of available market area and economic requirements. GRC investigated the potential for hotel development from secondary data sources including reviewing occupancy and rental rate reports recently cited in the media and through reviewing a feasibility study recently completed on contract with the City of Newport on the need for conference and hotel space in the City. This study was prepared by PKF Consulting. The Newport area has had no new development of hotel rooms during the recession and occupancy rates, rental rates and municipal revenue per room has increased for several years. PKF reports that approximately 40% of hotel demand is from the business traveler and there is a strong demand for additional banquet and meeting facilities within the City. The hotel analysis establishes that current occupancy rates are close to the effective capacity of the existing hotels and average daily room rates are in the range of $106. Occupancy is anticipated to reach capacity at an occupancy rate of 78%. Recommendations are to emphasize tourism, induce additional resort development outside of the Airport Study Area and to consider assisting in the development of additional banquet and meeting space. The PKF recommendations do not directly address the need for non -resort hotels; however, with the category of greatest hotel demand being the business traveler, a growing base in the airport area would indicate that additional hotel development for the business traveler would be able to capture its proportionate share of hotel demand. I Figure 12 Location of Major Auto Centers 10-Mlle Ring !IR WEIRSw A �c F 1 lIJF ♦ A Wa � I . _ O UTANNN Wll1 Y'ej n � \ A. " li nr• - 4 i IY_ _ ( n _ _ S OPnNGI f °� �• YY. lF. .'CRI'S,,,r Ht •�L \ S\ 1 p P0�Y6M00P-• I - i FW9l. ( i I ; ` f 0 ucP F. S\�II' LEISURE ~. FNiI 1 • llflN ,• C SANIA F • IIISII" ONFS R. pILnM MIOWAYw Clfl • 1srG r IqrP x _ y L n 1 ° NoxIN ,Pnupo <tN°aN /// I---. ,�uYNa • NiNw� nPFx .L! �• _ !Yu(O - F —� C.` Noortsu LLEPELANO al v/xnF . , F L 11 na ti,n., .IpN Yuan' --' I•_, ....._ A 6q T i mmNl L , . .,, .t^^4L.:".'.� 'di * ' O 4-0 Tom. i0"iS NA/LONA( ` `\ L ♦. (m. pu[N 14zt (LP n., ,p�(J O FunTuRmR (oP [mo ' ��� O llQ rst uY 1 ��pa \ n_ IIU 0 n neo e MA NEI • P �n lil Fi f 1 Cerritos Auto Square A' 2 Buena Park Auto Center IN( 3 Anaheim/Savi Center LAGUNA OUuCE,(al uwNA' 4 Corona Auto Mall NA 5 Anaheim Auto Center 6 Garden Grove Auto Center f0�" LACUNA 7 Santa Ana Auto Mall i 8 Tustin Auto Center YNPFL M=".AY 4 9 Irvine Auto Center """AA(" [A' 10 San Juan Capistrano Auto Center 11 Costa Mesa Auto Row oAnA .oN 12 Huntington Beach Auto Row 13 Westminster Auto Row Mega Used Car Dealers (proposed) W i _ ♦ } 91 HnNfr3 Qj . Nn MN aING, 4 / Airport Study Area Development Feasibility Study I 1 1 1 t 1 II II II II 1 Currently, the Airport oriented hotel in the vicinity of the Airport Study Area is generating lower transient occupancy taxes per room than other hotels in the City indicating lower average room rates and perhaps occupancy. In general, reports based on PKF data released to the media throughout 1996 and 1997 have reported room rates and occupancy rates in the greater airport area (which includes hotels outside Newport) increasing with occupancies exceeding 70% and average room rates currently approaching $90. This indicates strong demand for high quality hotel development from expanding business and tourist sectors. There is currently a strong interest throughout the southern California region in hotel development and in the rehabilitation of existing properties based upon the more positive economic outlook; however, interviews with developers indicates that the financing of hotels is still extremely difficult. Based upon current trends, hotel development is a definite land use alternative for the Airport Study Area in the long term as the business base expands and should be encouraged from a municipal tax revenue perspective. The economics of hotel development are illustrated in Proforma 2. This proforma indicates that a full -service business hotel could support a land value of approximately $25 per square foot at an occupancy rate of 75% and average room rental rate of $110. These thresholds exceed current results but could be achieved within a few years if the future trends continue; however, hotel development is very sensitive to competition and outside variables. This proforma is not specific to a particular site of the Airport Study Area, it is designed to illustrate what current occupancy levels and rental rates could support for a business oriented hotel. The proforma does indicate that it would be difficult to develop a hotel at the present time unless the average site purchase cost could be reduced to substantially less than $20 per square foot of site area. Table 5 calculates the potential municipal revenue from the hotel assumed in Proforma 2 assuming 75% occupancy and average room rental rates of $100 and increasing 3.5% per year. The table illustrates that hotel tax generation results in one of the most favorable uses per acre of land for the City when occupancy rates are strong. 1 Cost/Room Development Cost/room Land Cosrysq.It. land cost/ room Finance Factors % equity Interest Rate PROFORMA 2 - Hotel Development PROJECT PARAMETERS HOTEL OPERATING INCOME Hotel Operating Data Stabilized Room Rate Stabilized Occupancy Revenue Inflation rate Room Tax Other Revenue Operating Expenses Undistributed expenses Other Expenses Years Following -Stabilization- 1 a $ 4 5 Z a 9 IQ Occupancy Rate 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% Room Rate ($/night) $100.00 $103.50 $107.12 $110.87 $114.75 $118.77 $122.93 $127.23 $131.68 $136.29 Room Revenue $8,212,500 $8,499,938 $8,797,435 $9,105,346 $9.424,033 $9,753,874 $10,095R59 $10,448,593 $10,814,294 $11,192,795 Food Service/OtherRevenue $6,719,318 $6,954.494 $7,197,901 $7,449,828 $7,710,572 $7.980,442 $%259,757 $8,548,849 $8,848,059 $9,157,741 Total Revenue $14,931.818 $15,454,432 $15,995,337 $16,555,174 $17,134,605 $17,734,316 $18,355,017 $18,997,442 $19,662,353 $20,350,535 Departmental Expenses ($7,167,273) ($7,418,127) ($7,677,762) ($7,946,483) ($8,224,610) ($8,512,472) ($8,810,409) ($9,118,772) ($9,437,929) ($9,768,257) Undistributed Expenses ($3,508,977) ($3,631,791) ($3,758,904) ($3,890,466) ($4,026,632) ($4,167,564) ($4,313,429) ($4,464,399) ($4,620,653) ($4,782,376) Other Expenses (fixed expenses/res.) ($746,591) ($772,722) ($799,767) ($627,759) ($856,730) ($886,716) ($917,751) ($949,872) ($983,118) ($1,017,527) Income Before Debt Servicerncentive $3.508,977 $3,631,791 $3,758,904 $3,890,466 $4,026,632 $4,167,564 $4,313,429 $4,464.399 $4,620,663 $4,782,376 DEVELOPER RETURN ON INVESTMENT Income Before Debt Servicerncentive $3.508,977 $3,631,791 $3.768,904 $3,890,466 $4,026,632 $4,167,564 $4,313,429 $4,464,399 $4,620,653 $4,782,376 Return on Cost (NO[/Cost) 11.69% 12.10% 1252% 12.96% 13.41% 13.88% 14.37% 14.87% 15.39% 16.93% Airport Study Area Development Feasibility Study Table 5 Potential Municipal Revenue ($000's) 300 Room Hotel Year .1 2 A 4 A Property Tax"' 54.0 55.1 56.23 57.3 58.5 Sales Tax 20.0 20.0 22.5 22.5 25.0 Occupancy Tax 821.2 849.9 879.7 910.5 942.4 Total Revenue $895.2 $925.0 $958.4 $990.3 $1,025.9 (1) Assumes municipal rate at .0018 on improvements only The above scenario illustrates the potential revenue under very optimistic projections; however, even at 70% occupancy and $80 average room rates, a 300 room hotel and restaurant would generate over $687,000 the first year in municipal taxes or approximately 75% of that illustrated in Table 5. OFFICE PROFESSIONAL USE The Airport Study Area is part of a larger market in Costa Mesa, Newport and Irvine which contains fully one-half of the office space in Orange County. It is frequently referred to as the "engine" which drives Orange County and to a degree all of southern California. It is the center of a growing technology base, and is the location of choice for a wide range of financial institutions, personnel service corporations, foreign trade businesses and development companies. It is also bounded by housing within all price ranges with particularly good access to executive housing which frequently is found to be the number one factor in business location studies. Additionally, the Orange County market has access to a highly educated employee base. The Airport Study Area contains many of the services which are required by the surrounding business base. Medical offices, auto repair, car rental agency storage, self -storage, food uses and service commercial uses are found throughout the Airport Study Area. These uses, generally located on single and double three-quarter acre lots, co -exist with office and manufacturing uses. As addressed in the Airport Rezoning Study, this random mix of uses and development types lies in sharp contrast to the high density, planned community atmosphere of much of the surrounding area. The Airport Study Area also serves as a desirable location for office uses requiring lower rents in the greater airport area. Much of the development has or is beginning to approach its useful life in the foreseeable future due to obsolescence and maintenance requirements. 39 Airport Study Area Development Feasibility Study I I Surprisingly small amounts of the Airport Study Area have recycled to higher uses although several properties have recycled for rental agency uses. There are a few office developments constructed within the last 15 years in the vicinity of Bristol North but these have been on individual lots. There has been no significant consolidation of lots in the Airport Study Area. ' The surrounding uses indicate that the Airport Study Area from a land use perspective should recycle as a high quality office area supporting high density buildings and continuing the pattern established in the larger airport area. For several years, consideration of this option has not been possible as office vacancy rates have exceeded 20% and were as high as 25% during the recession. For approximately the last 8 years there has ' been no significant new office development in Orange County other than what had been planned and financed prior to the recession. During periods that the cost of acquiring existing buildings is less than the ' replacement or development cost of new buildings, the marketplace will not allow the development of new buildings. This has been true and it still remains true, although rents are rapidly increasing, occupancy rates ' are increasing and developers are contemplating the next cycle of office development. Examples of office sales at less than replacement cost remain commonplace. Traditional analysis of office demand is based on modeling regional employment and distributing the projected employment to the various competing nodes and calculating the square footage required to accommodate the increased employment. This approach is not appropriate for the Airport Study Area because: a) the projections of employment must be applied to very large regions and the accuracy of distributing increased employment growth is less than required to analyze a small sub -market; b) the entire southern California market has a shrinking but significant amount of office space to absorb; c) and areas such as the Airport Study Area have no vacant land and limited ability to assemble competitive sites resulting a market skewed to site availability rather than employment growth. It is much more appropriate to assume that the area can support new space if it can be developed at competitive costs or costs that can compete with existing space which is on the market or anticipated to be developed. This approach assumes that the office market will continue to cycle in overbuilt/underbuilt periods spanning several years and that the total space to be constructed within the Airport Study Area will not be a significant percentage of the total market in the airport region when new space is feasible to construct. 40 I Airport Study Area Development Feasibility Study u 1 I 1 C 1 1 The greater airport area is currently approaching 27 million square feet of office space and nearly 41 million square feet of industrial space. If 25% of the Airport Study Area recycled to new office development it would account for less than .007 of the space within the airport market area. More relevant is that of the development areas within the greater airport node, the Airport Study Area has extremely favorable access to two freeways, two primary arterials, the airport, commercial services and relatively would be an attractive location for new office development. Office space absorption in Orange County remains far below the pre-1991 levels of 3.0 million square feet annually. From 1991 through to the present, annual absorption has been less than 1.5 million square feet with Grubb & Ellis reporting a 1996 total of 1.4 million square feet in the County. The greater airport area absorbed 946,000 square feet in 1996 and approximately 195,000 in the first quarter of 1997. The continued growth in leasing when combined with no new development has reduced vacancy rates down to between 8% and 10% depending upon the data source used. This contrasts sharply with the 15% to 25% vacancy rates experienced from the mid to late 1980's. The current trends in absorbing existing inventory of space has increased rents substantially. Research reports that the average office rents have increased from approximately $1.25 in 1994 to $1.55 at the close of 1996. More remarkable is that for the first time in many years developers have announced new speculative office buildings. Property owners of multi -tenant space in the Airport Study Area have reported increased tenant activity with a few owners reporting close to full occupancy for the first time in many years. Rents in the Airport Study Area for lower quality office space have also been reported as increasing from the $0.90 to $1.10 per square foot range over the last few years to between $1.20 to $1.40. Office space throughout the airport area from high rise space to 2-story walkups seem to be benefiting from the combination of an improving economy and no new space. The two categories of rent that are of greatest interest to the Airport Study Area are the existing building rents for lower -quality buildings, because these determine the purchase price of the properties and rents for medium and higher -quality office space which presumably would be the target market if portions of the Airport Study Area were to recycle. To this end and to independently verify current asking prices, a survey was conducted of 15 office complexes in the immediate vicinity of the Airport Study Area and in the Fashion Island area. 41 Airport Study Area Development Feasibility Study 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Asking prices for high quality office space controlled by the Irvine Company ranged between $2.00 per square and $3.60 per square foot full service gross in the Fashion Island area. Office space in lower quality buildings on Dove, Campus and Newport Place south of the Airport Study Area varied between $1.35 and $1.75. Space to the east of MacArthur were higher than west of MacArthur and rents varied from $1.75 to $2.50 per square foot full service gross. The asking rents and the property locations (for the locations outside Fashion Island) are on Table 6 and Figure 13. Table 6 Comparison Lease Rates Bldg. Type Company/Contact Address 2-15 stories Irvine Comp. 4695, 4665 MacArthur Ct. Shops MacArthur Square Corinthian Koll Co. 2-10 stories 3 story office Karen Graham 6 story office Calif. State Bank 3 story office Colton Capital 2 story office Colton Capital Commercial Grubb and Ellis Fairchild Corp. Ctr Irvine Company Irvine Company Irvine Company Irvine Company LFC Commercial Patrick Co. 4343 Von Karmen & others Park MacArthur 1300 Newport Place 1201 Dove St. 2117 Campus 901, 1001, 1101 Dove 3601 Bristol MacArthur and Jamboree 660 Newport Ctr. 620 Newport Ctr. 610 Newport Ctr. 450 Newport Ctr. 240 Newport Ctr. 260 Newport Ctr. Lease Rate $2.20 - $2.50 $100 - $1.30 + $.22 common area $1.85 -$1.95 $1.90 - $2.10 $1.65 -$1.75 $1.75 $1.35 $1.35 $2.50 - $.62 triple net $1.75 $2.25 -$3.25 $2.25 -$3.25 $2.25 -$3.60 $2.00 -$2.75 $2.10 $1.65 -$1.85 $1.70 Notes: 1) All rents are full service gross unless otherwise noted 2) Comps 11-17 are not shown on map and are all located in the immediate Fashion Island area. Figure 13 Comparison Lease Rates Airport Study Area Development Feasibility Study I 1 1 I 1 F The discussion of rental rates is of great importance in determining the feasibility of recycling portions of the Airport Study Area. The economic equation for recycling property consists of the value before and following redevelopment versus the cost of redeveloping. This relationship is illustrated in Table 7 which compares an older property with a lower quality office building with a new office building both on one acre sites: Table 7 Building Value Comparison FAR Gross Rent Gross Project Income Vacancy Operating Costs Net Operating Income Market Value/Sq. Ft. Of Building Area Market Value/Sq. Ft. of Site Area Existing Building 0.5 $1.35 $352,836 10% 35% $194,059 $81.00 $40.49 New Building 0.5 $2.00 $522,720 10% 31%(') $359,370 $173.68 $86.84 (1) Operating costs assumed at $7.50/sq. ft. annually. (2) Capitalization rates to calculate value were 11.00 %v for the older building and 9.5% for the new development. ' Table 7 indicates that recycling the assumed 1-acre site to higher quality office development increases the value of the developed site by over $46 per square foot of land area and increases the value of the ' building area by nearly $93 per square foot. However, in order to capture this increase in value would require an investment equal to the cost of the new improvements plus any carrying costs during the building and lease -up period. In this example, the development cost and carrying costs of a new high quality office building would exceed the increased value of the site following development and lease -up and ' the increase in value would not justify recycling the property in the short term. In the longer term, this relationship can vary significantly as operating costs on older buildings may increase disproportionately ' and rents and values on new buildings may increase more rapidly than on the older buildings. ' Proforma 3 estimates the land value that a new medium quality office building could support at the highest rents found in the vicinity of the Airport Study Area assuming that the premium rents for the area would 1 � 1 ' Airport Study Area Development Feasibility Study be approximately equal to the rents found on the east side of MacArthur ' Boulevard or approximately $2.00 per square foot. For the purposes of constructing this proforma, GRC consulted with a major construction company and estimating resources frequently used by contractors and ' appraisers to secure development costs. Operating costs were estimated from comparables provided by COMPS Infosystems, Inc. Construction costs were assumed to be equal to medium quality metal framed buildings ' with pre -cast panels. These buildings are more expensive to construct than plaster finished foam skins; however, this would be the minimum quality building that would attract the stronger tenants capable of paying ' premium rents for high -image locations (metal and glass buildings are even more expensive). ' Proforma 3 is designed to illustrate the development costs for office buildings with floor area ratios of .5 and 1.0. The proforma indicates that land values currently supported are approximately $20 to $25 per square foot for the higher density development and approximately $15.00 per square foot for the lower FAR scenario. The overall conclusion from Proforma 3 is that increased FAR's improve the feasibility of recycling ' existing properties and would allow for recycling the properties at an earlier date. The overall cost per square foot also needs to be compared with the sale of existing office buildings to determine if the development costs exceed the market value. In recent years, office buildings have sold for less than replacement values by significant margins. Table 8 summarizes a few office building transactions although these sales need to be considered and discounted somewhat for locations inferior to the Airport Study Area and the time of sale. The most significant sale of the group is the Dove Street property in Newport but it is an older building. The sales do indicate the reason that the Airport Study Area and southern California have not benefited from the construction of new office buildings for several years -- the sales price is less than development cost. However, Proforma 3 indicates that at rents exceeding $2.00 per square foot and a FAR of 1.0 that new office development should be feasible in the foreseeable future. Location 1201 Dove, Newport 2677 Main St., S.A. 3000 MacArthur, S.A. 3100-05 Bristol, C.M. Table 8 Office Building Sales Bldg. TvVe Area Rent 6-story 78,123 10- story 212,542 6-story 105,000 5-story (2) 162,000 Sales Price/ so. ft. $1.35 - $1.65 $100.48 (1996) $1.35 $92.44 (1995) $1.50 $84.76 (1995) $1.65 $126.72 (1996) 1 45 M M M M M ! M M M M M M M M M M M w M PROFORMA 3 - Office Development MAJOR COSTASSUMFMN5- Clasa•B• Ofllce Butldlrro 1.0 ASSUMPTIONS CONr, FAR 0.5 1.0 FAR 0.5 1. Total land area (acres) 5.00 5.00 12. Avg. net rental rate $200 $200 2. Land Cosysq. it $15.00 $25.00 13. Taxes(% Of land value (conshrL) 1.00% 1.00% 3. O"itOCosts $350 $3.50 14. Commissionalmarketing/sq. ft. $3.00 $3.00 4. Building costs/sq. It. $65.00 $65.00 15. Interest rate constr 10.00% 10.00% S. Tenant lmprovemer"lowanee $20.00 $20.00 16. Miscellaneous $125,000 $125.000 6. Buiklingarea 108,900 217,800 17. Contingency 5.00% 5.00% 7. Off -Site $0.00 $0.00 18. vacancy 10.00% 10.00% 8. AGE/sq.fL $3.50 $3.50 19. Management 6.00% 5.00% 9. Developer Overhead 4.00% 4.00% 20. Reserves 1.00% 1.00% 10. Govemmental fees $5.00 $5.00 21. LegaVsq.it $0.75 $0.76 11. Operating Expenses $6.00 $6.00 DEVELOPMENTCOSTSf6000M FAR 0.5 1.0 DEVELOPMENT PROFORMA FAR OS 1.0 1. Land $3267,000 $5,445,000 2. O"Ae costs 5762,3GO $762.300 Total Rental Income $ZS13,600 $5,227200 3. Building $7,078,500 $14,157.000 Less; vacancy, management G reserves ($392,040) ($784,080) 4. Off-ske improvements + engr. $O $O Less: opera0ng expenses ($653,400) ($1,306,800) S. Othereosts Net Income before Debt Serviea 571668,160 $3,136,320 a) GoAfees $544,500 $1,089,000 b) AGE $381.150 $762,300 Net operating Income/project coat 10.94% 11.85% c) RE taxes $32,670 $54.450 d) Commissions $326,700 $653,400 PROJECTVALUE e) Legal $81,675 $163,350 f) Dev. Overhead $313,632 $696,772 Capitalization Rates 9.50% 9.50% g) Miscellaneous $150,000 $2001000 h) Contingency $392,040 $745,965 Projectvalue@stablvation $16,506.947 $33,013,895 6. Financing cost $999,763 $1,847,215 NETDEVELOPMENTCOSTS $14,329,930 $26,476,752 Cost Per sq. R $131.59 $121.66 Airport Study Area Development Feasibility Study 1 In summary, there is no apparent demand for retail and auto related uses in the Airport Study Area in the short or long term. Hotel and restaurant development will be feasible in the long run with the growth in the employment base and if appropriate sites can be assembled. A high - quality office development will be feasible in the short and mid term if floor area ratios can be increased to approximately 1.0, otherwise only the most dilapidated areas within the Airport Study Area will recycle. 47 u Airport Study Area Development Feasibility Study 1 1 DEVELOPMENT ISSUES, OPPORTUNITIES AND RECOMMENDATIONS The foregoing sections of this report have outlined the economic realities of recycling properly in the Airport Study Area. Some of the constraints identified include high land value based on actual sales, incompatible uses in proximity to each other, permissive zoning standards and short term economic constraints. Several options were identified for municipal programs to help reverse the current trend towards the physical deterioration of the study area and to take advantage of the development opportunities. Many of the suggested programs resulted from interviews with property owners, the City and from meetings with the Rezoning Subcommittee of the Economic Development Committee. ISSUE 1: Special Land Use Restrictions (`SLUR's") The Irvine Company placed special covenants on the properties in the Airport Study Area when the properties were sold. These restrictions run with the land for 25 years and essentially restrict the development potential of the area to FAR's of .5 and in certain circumstances restrict the use and height of the buildings unless the Irvine Company is compensated for value lost. These covenant agreements essentially restrict the development to what exists today and make it very difficult or impossible to economically justify recycling the property to higher uses. ' Opportunity. Leverage City's relationship with the Irvine Company to ease covenants and restrictions. ' Property owners suggest strongly and almost across the board that the City use its relationship with the Irvine Company to trade certain restrictions in the study area for City assistance in other areas that the ' Irvine Company may need. The Irvine Company has informed City staff that precedent setting is a critical issue and that it may be possible to consider easing the restrictions to the level that exists in other Newport areas. Office development analysis in this report indicates that increased FAR ratios may be required to economically recycle Airport Study Area property. Also it may be possible to negotiate favorable economic terms for the release of covenants or secure area -wide concessions from the Irvine Company that allows the City to offer certain density incentives as development inducements in substandard areas of the Airport Study Area. UA Airport Study Area Development Feasibility Study ' Recommendation: Elimination or easing of the SLUR's is critical to the success of the Airport Study Area which has an impact on surrounding areas and rents. Our recommendation in priority order would be to: I 1 1 I I 1) Continue discussions with the Irvine Company to eliminate the SLUR's to prevent the area from being more deteriorated and allowing the City's General Plan to control density. 2) Calculate and negotiate specific and reduced values for removing the SLUR's at a cost much lower than the $2.00 per square foot of land for each .1 increase in FAR. 3) Negotiate with the Irvine Company to permit the Airport Study Area to have an average FAR of .5 administered by the City which would allow lower density sites like the car rental agencies to transfer density to high demand areas such as the MacArthur frontage. ISSUE2. Traffic Capacity A major constraint facing the Airport Study Area is the limitations within the General Plan and current Traffic Phasing Ordinance which establish standards for intersection levels of service which exceed some of the other competitive jurisdictions. Property owners realize that traffic constraints are a problem but have limited understanding of the issue and its impacts. Opportunity: Adopt a revised ordinance conforming traffic standards to those adopted in adjacent cities. Recommendation: Adjacent cities, each contributing to the traffic count, need to have similar standards for determining intersection capacity or the property owners in the more restrictive jurisdiction will not be able to successfully compete. This same issue applies to traffic mitigation fees. A presentation to the Subcommittee on traffic related matters would be of some interest to the property owners. ISSUE 3. Development Entitlements The Subcommittee discussed at considerable length the advantages of having development entitlements in place for the Airport Study Area which would save the time and expense of environmental analysis and securing future discretionary approvals. Airport Study Area Development Feasibility Study ' Opportunity: Pre-process entitlements allowing higher density development within the Airport Study Area as an inducement to property owners. ' There is significant interest among the property owners for having the right to recycle their properties at higher densities and without having to prepare environmental documentation. The property owners believe that ' entitlements will increase the value of their properties and remove the uncertainties of purchasing additional property. ' Recommendation: Entitlements are of substantial value because they run with the land and thus can be sold. Increased entitlements would have the impact of increasing land values above today's values and make ' the Area even more difficult to recycle. The more desirable option is to complete some of the entitlement process such as environmental clearances area -wide without actually eliminating the need for future ' discretionary action by the City. This will reduce the financial exposure and time required to secure entitlements but make it much more difficult to capture increase value without developing. ' ISSUE 4: Provide the Airport Study Area cable facilities ' compatible with digital data requirements The Airport area is lagging other locations within the City with respect to ' facilities and capabilities provided by the cable company. Opportunity: Require the City's cable television company to ' provide the office and industrial areas the latest information handling capabilities. Property owners are interested because of the need to compete and they are concerned that the cable company will not provide the area with the latest digital capability due to the limited customer base. ' ISSUE 5. Redevelopment Redevelopment is one of the few tools provided by California to cities and counties to assist in the elimination of blight. Redevelopment would allow the City the mechanism and financial resource to assist property owners but would carry with it some controversy and property owner concerns. ' Opportunity: Complete a detailed feasibility study to determine the Airport ability to qualify for redevelopment. 50 Airport Study Area Development Feasibility Study ' Several property owners expressed interest in City assistance of one form or another which could be provided by utilizing the redevelopment tool. Current law requires that eligible areas have characteristics of economic ' and physical blight. The Airport Study Area contains a few physically deteriorated buildings, many examples of incompatible uses in proximity to each other, higher vacancy rates and lower rental rates than found in ' the greater area, examples of questionable subdivision and poor circulation all of which would help qualify the area for redevelopment. Recommendation: Consider proceeding to prepare a redevelopment feasibility study. It is the only significant tool available for financing improvements and municipal assistance. The relative high assessed value of office space would generate future revenue to invest back into the area. The redevelopment program could be oriented to the norms and standards of the City varying from minor programs to help finance fees all the way to land assembly programs. The more aggressive use of the redevelopment tool is very difficult in high value areas with multi -tenant buildings without strong property owner support. Often areas like the subject property do best with a more modest program designed to help on the margin rather than being the driving force in causing an area to recycle. Redevelopment could be of substantial assistance in providing replacement parking facilities for the rental car agencies. In GRC's judgment, the Airport Study Area exhibits characteristics of physical and economic blight and would qualify for inclusion in a redevelopment project area. With a base year assessed value equal to $58,000,000 (which is close to land value at $25 per square foot) the area, would have reasonable up -sides in the future as property recycled. Additionally, the redevelopment area would be of very modest size at 52 acres of developed property. ISSUE 6: Airport Study Area Re -Planning One idea frequently mentioned is the adoption of new development regulations for the Airport Study Area. A specific plan/overlay zone would provide the legal basis for organizing and limiting certain types of uses and allow for the adoption of standards that are adapted to the area and its special conditions. This issue also overlaps with the idea for pre- processing entitlements. ' Opportunity: Adopt a Specific Plan/Overlay Zone identifying high density office/hotel areas, commercial areas and restricting auto related uses. ' Airport Study Area Development Feasibility Study A specific plan/overlay zone could: a) define the development capacity of the overall area, b) establish custom development standards; c) provide incentives to help induce property owners to consolidate lots; d) provide ' for the averaging of density; e) define mixed -use parking standards; f) address and define traffic constraints; g) restrict certain uses to portions of the planning area; and h) establish unique processing requirements. A ' specific plan/overlay zone could also be the vehicle for having the Irvine Company consider modifications to the SLUR's and serve as the vehicle to complete the environmental analysis which would be consistent with ' reducing entitlement requirements. Recommendation: A specific plan/overlay zone are ideal vehicles to re- plan the area for the long term future, provide development incentives and address all aspects of development. ' ISSUE 7.• Car Rental Agencies ' The issues relating to car rental agencies are twofold. First, is it possible to consolidate the storage and service yards to a particular location in the study area; and, secondly, can the rental agencies become a revenue ' source to the City rather than simply a storage facility for airport businesses. 1 1 II 1 Opportunity: Develop a strategy for rental car agencies involving their location and expansion within the study area. Although one of the firms is the leading tax revenue producer in the area, the remaining auto rental lots are not. It is very unlikely that the car rental agencies would consider moving to locations outside the study area unless the airport closed. There is some potential to regulate their location within the study area if the City adopts a financing tool for relocating the uses to alternative locations within the Airport Study Area. Several sources have questioned if the City could negotiate a revenue sharing mechanism with the County as a means of offsetting the negatives associated with the storage and service yards. Recommendation: The car rental agencies should be limited to interior block locations only in an area designated for the use. Revenue sharing with the County appears difficult at best. A requirement that leased vehicles be sold from the site or a common sales lot could be the City's best bet in generating tax revenue from the use. We would recommend that additional rental car agency uses be prohibited and planning tools for amortizing their improvements over a specified term be investigated for 52 Airport Study Area Development Feasibility Study the rental agencies located in desirable portions of the Airport Study ' Area. Alternatively, perhaps the existing facilities which are in inappropriate areas could be consolidated in the long term. ' ISSUE 8: Municipal Economic Development Incentives This issue pertains to the need for the City to offer economic development ' incentives for high tax revenue generating uses or to entities which are responsible for bringing such uses to the Airport Study Area. ' Opportunity: Develop programs providing incentives to developers, property owners and brokers to identify and locate tax ' revenue producing uses. Under the auspices of economic development, municipalities are becoming increasingly aggressive in encouraging tax generating businesses to locate ' within their boundaries. Not too long ago these activities were more within the domain of redevelopment agencies, but municipal assistance is now frequently encountered under the auspices of public parking, ' professional service agreements, assessment districts and sometimes even land writedowns. Because the Airport Study Area will have even more office development in the future, an opportunity exists for the City to ' development incentive programs such as a broker incentive program under which a broker bringing a tenant to the Airport Study Area would receive compensation from the City as well as the property owner. ' Similar programs can be established for property owners recycling older deteriorated properties through the reduction of municipal fees or ' assistance in the entitlement process. Recommendation: 1) Consider the feasibility of adopting a broker ' incentive fee program that rewards brokers for locating sales tax producing entities in the Airport Study Area. The fees could be equal to approximately 15% of the new revenue for a specified number of quarters. ' 2) Develop tenant referral program that would notify interested owners of development and tenant inquiries at the City by E-mail would be helpful ' in communicating leads. 3) Reward owners by reducing or deferring municipal fees for attracting ' tax revenue producing companies in proportion to the new tax revenues generated. II II 53 Airport Study Area Development Feasibility Study Appendix A 1 1 PARCEL MAP Subarea A CAMPUS mxT Hula t �.�c t O O O O O O O O O O t o p t ' ' O t O p nu,urr i ,v=s�y m � p o � t % Py, BIRCH v CITY OF NEWPORT BEACH - Airport Study Area Parcel Number Address Owner Exlsting Land SLUR Land Use Lot Slze Sq. R, of SLUR Assessed Other Year Use BulldlngAres Allowance value Restrlctlons, Built Subarea A 427-111-01 4500 Campus Drive Koll-MV Office -Low Rise Office, Industrial & Retail 87.120 32,626 66,000 1,292.679 1974 427-111-02 4520 Campus Drive K011-KW Office -Low Rise Office, Industrial &Reta9 29000 19.202 474,344 1967 427-111.03 4540 Campus Drive John R. Saunders Trust Office Office, Retail & Lt. Industrial 34,500 11,108 17.000 652837 T.Maiesil) 1965 427-111-04 4570 Campus Drive John R. Saunders Trust Office Office, Retail & Lt. Industrial 35,030 8.768 17.000 893.000 1 1965 427-111-05 4600 Campus Drive John R. Saunders Trust Office -Low Rise Office, Retail & Lt. Industrial 36.8001 17,906 18.000 716600 1 1969 427.111.06 4630 Campus Drive John R. Saunders Trust Office -Low Rise Office, Retail & Lt. Industrial —40,3201 18.600 19,500 2,097,750 1 1968 Teoxori&%m 427-111-07 4678 Campus Drive- Pacific Castle Int. Retail As waxed byappikable zoning. 23600 1.701 6,300 1,231386 wxauran 1964 427-111.08 4667 Campus Drive Dam se Trust Office -Low Rise Office 39.970 33,722 33,300 3,214,000 1%7 Restaurant, Retail - - 427.111.09 46474533 & 4525 MacArthur John R. Saunders Trust & Office Office, Industnal& Retail 138.956 26.632 3,450,000 1966 427-111-10 4501 Birch Street Edward C. Allred Office{ow Rise Office, Industdal & Retail 43 500 11.282 21 500 1.235000 1967 427-111-11 4463 Birch Street Huu N.&Hon lien T. Phan Office -Low Rise Office,lndusiial&Retail 29.0001 6.300 14,600 1,022,000 2 1968 Subtotals 537996 _ 187.847 213,200 16279,4% - 427-121-01 4200 Campus Drive Linda Forsblade Commercial -Mist Industrial w.rincidenlal olfice 3l.M0l 10,186 12,720 1.613,653 1962 427-121-02 4222 Campus Drive E.&Gloria S inns Rent-A-Car As ancmed by appfcable=iFg. 29.000 16,281 15.000 695,000 1965 427-121-05 4300 Campus Drive Cam us Properties Office -Low Rise Office 29,0001 16.281 14.600 660,000 7970 Richard K KmingieTry &JohnR 427-121-06 4320 Campus Drive Saunders Trost Office -Low Rise Office 29,000 6,467 15,000 - 513,000 1 1967 427.121-07 4340 Campus Drive John R. Saunders Trust Office -Low Rise m ebxed by apdcaue zoning. 29,000 13,801 15,000 6%,000 1 1967 427-721-08 4360 Campus Drive John R. Saunders Trust Li hl Industrial As albwed by aplzade mn�g. 29.000 11,685 15.000 509.000 1 1965 427-121-09 14400 Campus Drive Cmeten;e Bank for Nicholas A Gowls Office -Low Rise Office wrinside storage 29,000 7.843 14,593 825.000 1965 427-121.10 4500 Campus Drive Koll-KW Office -Low Rise Office, industrial & retail 29,000 19.603 542.524 1965 427-121.14 4341 Birch Drive Pacific Union Assn Office -Low Rise Office 29,000 14.475 14,600 579,000 1969 427-121.15 4321 Birch Drive 4321 Birch Partners Office -Low Rise Office, Industrial & Retail 29.000 11.584 14,600 777709 4 1968 427-121.17 4301 Birch Drive Bradford Barrett Li ht Industrial Office, Industrial & Retail 29 000 _ 9,812 13.500 613,000 1964 427-121.17 426301rch Drive Geor eKatchedan Medkal•Low•Risa 5 29,000 3,927 11.674 868,465 1%7 427-121-18 4229 Birch Drive West Trust Real & Warehouse 43,500 11,685 14,600 686,665 1967 427-121.23 4361 Birch Drive Dkbed Assoc Rent-A-Car 3 116,000 21 889 29,200 3,108,000 7965 427-121.24 4242 Campus Drive William N. Shattuck Trust Rent-A•Car 6 54.000 8,108 29,200 1,432,048 7965 427.121.25 4201 Birch Drive IDonald R. Lawrenz Trust Rent-A-Car Office wrinside storage 43.210 13,0091 30,4121 1.630,242 1%3 Sublotelc 607,610 195,W6 259,T791 15683,306 Total for Subarea A 1 84 �4831 472,9791 31 %2 802 7/3019710:35 AM PARCEL MAP Subarea B CAMPUS TR -c a_ rn I MCT I 1 II C � I ' 1 1 A CITY OF NEWPORT BEACH - Airport Study Area Parcel Number Address Owner Exist Land SLUR Land Use Lot Sfze Sq. FL of SLUR Assessed Other Year SulfdfngArea Allowance value Restrictions Built Subarea B 427-1301 ailStreetBurstein Enterprises Retail As Panted by appcable zoring a laaduseoem 297079 52.64 90.000 3.100000 1968 427-131-02 3952 Cam us Drive Office, Factory b Car Rental 29000 11.684 15,000 536.493 1968 427.131-03 3900 Cam us Drive DCWest Rent-A•Car Office, Factory b Car Rental 29.000 0 43,500 512,408 1967 427-131-04 4000 Campus Drive DCWest Rent-A-Car Office, Factoryb Car Rental 90 200 19,042 477,152 1967 427 4020 Carona Drive DCWest Rent-A-Car Office, Factory b Car Rental 29000 9604 1.316616 1963 427-131-05 131-06 4040 Cam us Drive Philip S. Ramer Trust Vacant building Office, Industrial b Retail 29.000 13 805 14,600 759.000 One sto 1963 427.131-07 4060 Campus Drive Borstein Enterprises Office Low -Rise As Panted by eppicabte zoft b Iaadweaftrh Kea. 29000 66000 58.400 616.276 427-131-08 4100 Cam us Borstein Enterprises Office LOW -Rise As Panted by Appk" zoft a tam asa areaunces. 29000 616276 427-131-09 12101 Dave Street Dan M. Perlmutter Light industrial Office, IndInIM. Relalb Parkn9 182 516 50,420 85.000 2,750.000 Three story 1 1962 427-131-10 4101 Birch Drive Borstein Enterindses Office LOW -Rise As Panted by applcbla zomq b I" use o; rha=es. 29,000 616,275 427-131.11 4063 Birch Drive Borstein Enternflses Office Low -Rise As Panted by applable zoring s 1"use0rdeanas. 29,000 616,275 427-131-12 4043 Birch Drive Ronald P Beard Trust Li ht Industrial As Panted by appiceble zomgd pm use orCswces. 29.000 3.805 14,600 230,000 427-131-13 4023 Birch Drive George Souleles Trust Light Industrial Office 29,000 9,605 14,500 576,000 1965 427-131-14 4001 Birch Drive Madstein Chia ero Li ht Industrial Indu9dal wdnodeNal o1fl" S katda storage 29,000 11,6 12,80 1964 427.131-16 3955 Birch Drive L L Trust Li ht Industrial I nduatnal wNcidereat on"b Nsde stooge 29,000 1 i 845 12,800 705.002 1965 427.131-16 3955 Birch Drive r Devel2Partners Birch Devel ment Office Ofit 40%: Industrial 60% 29,0001 12.557i 14.5001 7019,770 565000 1965 1965 Totals i 885,595 I 272858 aivooi I 14702 1 7/29197 6:27 PM PARCEL MAP Subarea C � I CAMPUS m A o n rNa ma 1 rnacr CITY OF NEWPORT BEACH - Airport Study Area Parcel Number Address Owner Exlsting land SLUR Land Use LotSlze Sq. R. of SLUR Assessed other Year Use BulldingArea Allowance Value Rewoffons Built Subarea C 427-151-01 State of Cafdomia 427.151-03 3720 Campus Drive ICI Properties Light lnduswlrotrKe Office,induWalorReta6 29,000 13719 14,500 1.199.593 Two stories 1969 427-151-04 3740 Campus Drive ICI Properties Light indent®VOtr" Offioe,Indushialor Revel 29000 10.929 14,500 651,810 Two stories 1968 427-151-05 3760 Campus Drive 3800 Campus Storage Units Olrice, Industrial or Retal • 29.000 13 445 28.000 976,771 Two stories 1965 427-151-06 3800 Campus Drive 3800 Campus StorageUnits Olfice, Industnaf or Retail 31 900 12 290 31,000 986,996 Two stories 1965 427-151-07 3822 Campus Drive Mahone 6Grau w Rise As permitted by appfable zwwg s land usa ordearicas. 36250 23,229 20,000 1,143,371 Two stories 1972 427-151-08 3848 Campus Drive William Anderson ow Rise As permitted by app@able zorwg s land use o,En . 53143 26435 24.000 950.000 Two stories 1969 427-151-09 3857 Birch Drive Univers' Indust ustrial Light Amsdaccuhg,arce A hsswe etonpe 96703 38 405 39,000 750.838 1965 427.151-10 3767 Birch Drive Be J.Ho an Trust ustrial Olrice,Indusbialor Retal47,916 20,862 24,000 420,563 1965 427-151-11 3737 Birch Drive Sushil K. Gar ow Rise Office,IndustrialorRetal 34,800 33,862 26,300 1,590,000 1982427.151-12 3723 Birch Drive Paul T. Salata ow Ruse Cut 29,000 17,362 15,300 870,000 1969427.151-14 3700 Cam us Drive 370001d oin Rise Office, industrial or Retal 33,597 13.523 17000 985,798 Two stores 1978 427.151-15 3701 Birch Drive Rttth L Ko Office -Low Rise Office, Industrial or RelaB 29,000 15.173 15,300 910,000 1981 Total 479 09 239 4 268,900 11435740 7/30/9710:26 AM CITY OF NEWPORT BEACH -Airport Study Area parcel Number Address Owner Exist Land SLUR Land Use Lot Size Sq. R. of BulidingArea SLUR Allowance Assessed Value Other Restdottons Year Built cres Sub.A(Book/11 Subvu A e 1 Subarea ubar Subarea B SubareaC 12M t395 26.30 20.33 11.00 337.996 E07.610 1145606 885,595 479309 187.817 1%,636 384483 272,858 239234 2f3$00 259,779 472979 375.70 268000 tfi$79,�% 15.686.306 31965802 14,702,641 11435740 Total 57.63 2,510,510 896,575 1,116 679 58104 tl63 25 353 Subarea A(Booklil) 63143 Subuea A( Book 121 Subtotal Subarea A 88 496 102 842 Subarea B 28,76 Subarea C 220104 Total Rem2inln SLUR ABowanca 7l3019710:63 AM