In the course of our extensive market and case studies for downtown residential development, The Danter Company has established a checklist of 23 items that help us judge whether a downtown market is ready for residential development. In this article, the first of a series, we will look at employment/corporate factors.
Factor 1: Downtown Employment
A good base of downtown employment is essential to downtown housing development, since downtown employees are the most natural target market for downtown housing.
Factor 2: Near-Downtown Employment
Employment in the neighborhoods surrounding downtown is also a key indicator of the health of any downtown for housing development, as this group is a secondary target market for downtown housing.
In examining downtown and near downtown employment, it is important to understand the employment type (blue-collar/white collar) and sector (public/private, manufacturing/service/finance/insurance/real estate, etc.). It is also critical to understand the relative wage levels of downtown employees – too often downtown developments fail by pricing themselves out of the reach of all but the highest earners in the market. By the time a household makes the incomes necessary to afford such housing there may be other factors (particularly children) that make housing in the suburbs more attractive.
Factor 3: Major Corporate or Institutional Presence
A key indicator of the stability of a downtown is the presence of a significant number of major employers or other institutions (such as government agencies or colleges/universities). A downtown with diverse corporate and institutional presence provides a stable base of demand for housing. These companies need employee housing at all levels, for their lowest-paid workers as well as their executives.
Factor 4: Level of Corporate or Institutional Involvement
Corporations and institutions which are involved in the life of Downtown make good partners for several reasons. First, their activity in promoting the downtown area tends to help increase the stability and perception of stability of the area. Corporations with active community involvement often are sponsors of the arts, festivals and sporting events that add to the attractiveness and quality of life in the downtown area. Second, they tend to have HR departments that regularly deal with new hires and transfers who can help in publicizing new downtown housing development. Third, some institutions (such as banks, insurance companies and retirement fund managers) can be brought in as lenders or development partners. The involvement of Nationwide Real Estate Investments in the development of downtown Columbus’ Arena District is an example of what can happen when a local investor institution acts on a vision for improving its downtown neighborhood.
Factor 5: 24/7 Employers
Employees of 24/7 institutions, such as hospitals or public safety agencies (police/fire department, EMT), who may have irregular work schedules or may spend a lot of time on call, have great incentive to live near their place of employment and are an excellent source of demand for downtown housing.
Next installment – a look at government and regulatory factors