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HomeMy WebLinkAbout11/13/2018 DMCC Board of Directors Meeting - PresentationDMCC Board Meeting November 13, 2018 © 2017 DMC Status of Projects Receiving Prior Approval © 2018 DMC © 2017 DMC PROJECT NAME 1 Titan Hilton Hotel 5 Bloom Waterfront 2 Berkman Apartments 6 Wells Fargo 3 Urban on First 7 Hotel Indigo 4 One Discovery Square 8 Hyatt House 2 4 3 1 DMC Projects 57 6 8 Project Status-Private Development Titan Hilton Hotel Anticipated completion date January 2019 with the hotel opening in April 2019. Berkman Apartments Anticipated construction completion of the entire building is early summer 2020. Urban on First Anticipated completion date is summer of 2019. One Discovery Square Anticipated construction completion date is March 28, 2019. © 2017 DMC Project Status-Private Development Bloom Waterfront Securing financing and closing on real estate are next steps. Wells Fargo Renovation Continued work on public realm integrated with Heart of the City design. Hotel Indigo Renovation Construction is underway, completion date and opening of new hotel is estimated for May 2019. Hyatt House Financing is in process. Construction is anticipated to begin in late January, 2019. © 2017 DMC Project Status-Public Infrastructure 4th Street SW Total Project $12.25 million DMC Portion $9.25 million Reconstruct street and upsize utilities for future development Construction begins in 2018 and completion in 2019 7th Avenue NW/SW Total Project $3 million DMC Portion $3 million Reconstruction project to provide additional capacity for storm and sanitary sewer This project is postponed to 2019 due to unexpectedly high bids North Broadway Total Project $17.1 million DMC Portion $4.4 million Reconstruction project for pavements and utilities with enhanced landscaping and public realm improvements Construction to begin in 2019, complete in 2020 13th Avenue Total Project $6.1 million DMC Portion $4.4 million Additional sewer capacity is needed for development along 2nd St SW Bidding and construction to begin in 2020 © 2017 DMC Public Realm © 2017 DMC Public Realm Updates •Chateau Theatre •Heart of the City Chateau Theatre Next Steps •Construction by Benike •Improvements: exterior weather proofing of the building (roofing, tuck pointing, window and door work) and interior renovations (2nd story floor, escalator removal, HVAC, lighting modifications, cosmetic improvements •Timeline:Interior to begin December 2018; exterior roofing will occur in 2019; project complete July 15, 2019 •Cost Savings: Approximately $80k was saved by submitting a second RFP for construction bids •Integration of Chateau with Wells Fargo redevelopment •RFP for program and operations management Heart of the City Next Steps •Reaffirm priority level •Operations and maintenance plan •Fountain design and location •Key Design Elements •Plaza •1st Avenue •Alley •Sources of funding Seating structure-currently being tested. Transportation © 2017 DMC Transportation 2019 Initiatives •Acquisition of Electric Buses •Initial phase of City Loop •Promote TMA (Arrive Rochester) •Study of the H52 decking concept •2nd Street Demonstration Project •Land acquisition for mobility hubs and park and ride system Oct 23, 2018 TMA Launch Transportation Evaluation Criteria for Mobility Hubs 1.Accessibility (Ability to get to and from the site) 2.Route Efficiency (Speed / Ridership etc.) 3.Economic Development (Site itself / Along the Route) 4.Site Acquisition (Costs, Timing etc.) 5.Relationships to Existing Amenities DMC Market Analysis Update Presentation 11-13-18 © 2018 DMC DRAFT DMC Market Analysis Update Presentation 11-13-18 © 2018 DMC Snapshot in time Four major land uses Focus on next five years Inform Economic Development Strategy DRAFT Commercial Office & Medical-Technology Sector Office & Med-Tech © 2018 DMC DRAFT Office/Med-Tech Market TOTAL INVENTORY (SQ.FT.) 2014: 16 buildings with approximately 453,000 s.f. (excluding Mayo) 2018: 16 buildings with approximately 457,000 s.f. Pipeline: Approximately 105,000 s.f.(including Berkman & Discovery Square Phase 1) ESTIMATED NEW DEMAND 2019-24 Demand Drivers Professional Office –DMC initiative, particularly Discovery Square, creating demand for supportive professional services. Plus, general market growth over time as regional population and Mayo’s visitation grows. Med/Tech –Mayo’s relationships and partnerships in early phases. Over time, Mayo’s partnering firms will generate their own relationships and demand, independent of Mayo. Investment in support network and venture funding for start-ups to tap talent and entrepreneurs can also drive growth based on comparable innovation districts nationally. Scenario Estimated Demand (s.f.)Pipeline Low Professional 37,000 20,000 Med/Tech 65,000 85,000 Medium Professional 44,000 20,000 Med/Tech 70,000 85,000 High Professional 55,000 20,000 Med/Tech 76,000 85,000 DRAFT Estimated Professional Office/Med-Tech Demand By 5-Year Phases 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 2019 2024 2029 2034 Of f i c e S p a c e ( s . f . ) Downtown Rochester Professional Office Space Supply and Demand Supply Low Demand Medium Demand High Demand Sources: ROCOG, US Bureau of Economic Analysis, Costar, AECOM 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 2019 2024 2029 2034 Me d -Te c h S p a c e ( S F ) Downtown Rochester Med-Tech Space Supply and Demand Supply Low Demand Medium Demand High Demand Sources: ROCOG, US Bureau of Economic Analysis, Costar, AECOM DRAFT Office/Med-Tech Market FINDINGS The 2019-24 demand for professional office space will most likely be satisfied with upgrades and renovations of existing inventory and/or additional office space in new mixed-use developments, rather than new development of stand alone conventional professional office buildings. Med-Tech in Discovery Square Phase 1 pre-leased successfully, anchored by Mayo Clinic and UMR, capturing accumulated unmet demand from prior period. Phase 2 requires more Mayo partnerships. ECONOMIC DEVELOPMENT OPPORTUNITY The Med/Tech rate of growth is driven by Mayo partnerships and discrete users, as opposed to general market demand to support speculative development. More partnerships = more demand for more space.Support network and funding for start-ups in Discovery Square may accelerate growth. DRAFT DMC/Downtown Rochester Hotel Market Hotels © 2018 DMC DRAFT Hotel Market TOTAL INVENTORY (Rooms) 2014: 2,830 rooms 2018: 2,703 rooms (number reduced due to some consolidation for suites and recent/planned closings offsetting gains) Pipeline: 943 rooms ESTIMATED NEW DEMAND 2019-24 Demand at 70% Occupancy Rate = 3,373 rooms Supply = 3,646 rooms Surplus = 273 rooms Demand Drivers Mayo visitation will still be the #1 demand drivers by a large margin. As the national senior population cohort grows, demand is expected to accelerate. Programming and events at the Convention Center, Chateau Theatre and other venues can increase room-night demand. This will require events that encourage overnight stays later in the week and weekends when Mayo visitation demand is softer. DRAFT Estimated Hotel Demand By 5-Year Phases Source: Smith Travel Research, Experience Rochester / Minnesota, AECOM; 2018 2,000 2,500 3,000 3,500 4,000 4,500 2019 2024 2029 2034 Ho t e l R o o m s Downtown Rochester Hotel Room Supply and Demand Supply Demand DRAFT Hotel Market FINDINGS Current hotel room inventory and pipeline is estimated to satisfy demand until late-2020s at a target occupancy rate of 70%; mid-2020s if market operates at historical occupancy rate of mid-60%. ECONOMIC DEVELOPMENT OPPORTUNITY With continued growth of the University of Minnesota-Rochester, Discovery Square, and Mayo Clinic’s global reputation, Rochester has the potential to position itself as a unique national meeting destination centered on innovations in health and well-being, as well as a regional convention center.Development of event programming with the Civic Center’s renovation, Chateau Theatre, and marketing by new meeting hotels will grow room -night demand for more hotels. Accelerated growth in the near term is possible with price-point differentiation and the development of new facilities that generate additional room-night demand. factors in increase stays DRAFT Mayo Clinic 69% Conventions Meetings Sports 16%Leisure 6% Business & Corporate 5% Other 4% Purpose of trip to Rochester Source: Rochester RCVB Food and Beverage, 22% Lodging, 28% Retail, 17% Transportation, 15% Recreation, 11% Other, 7% Where Tourism Dollars Go Source: Rochester RCVB City of Rochester Tourism DRAFT Multi-family residential units Residential © 2018 DMC DRAFT Residential Market TOTAL INVENTORY (multi-family residential units) 2014: 789 units 2018: 1,096 units Pipeline: 1,282 units (estimated) ESTIMATED NEW DEMAND 2019-24 Demand Drivers Increase market share of regional growth in multi-family demand resulting from community-building, place-making & public investments associated with DMC’s implementation, especially for people working downtown, young adult, empty-nester, and senior populations. DMC associated job growth creates new households, thereby increasing demand for housing. UMR’s growth plans may create demand for specialized student and faculty housing. Housing that is affordable to low-wage earners is needed to have a balanced market. Scenario Estimated Demand (units)Pipeline Low 900 1,282 Medium 1,150 1,282 High 1,350 1,282 DRAFT Estimated Multifamily Residence Demand By 5-Year Phases Sources: US Census Bureau, Minnesota Demographic Center, City of Rochester, Maxfield Research, AECOM 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2019 2024 2029 2034 Mu l t i f a m i l y Un i t s DMC-Vicinity/Downtown Rochester Multifamily Residence Supply and Estimated Demand Supply Low Demand Medium Demand High Demand DRAFT Residential Market FINDINGS The DMC-Vicinity/Downtown Rochester MFR market will more than double its inventory of housing units between 2019-2024. These housing units are estimated to meet or exceed demand in the near term, depending on the capture rate and the rate of future job growth, which DMC’s implementation will influence. While demand may exist for condominiums, disincentives to build given potential legal risks, and the affordability of single-family housing in the region, softens interest in satisfying potential for-sale housing demand. ECONOMIC DEVELOPMENT OPPORTUNITY As the DMC initiative is successful in attracting firms that generate jobs and increase household growth and building amenities to position the downtown market, plus demographic and price-point differentiation of market segment niches, demand for multi-family housing should continue to increase. There is some near term market caution due to the length of the national economic growth cycle. Efforts to improve affordability through design, product differentiation, parking strategies, and subsidy for low-income households will help create a balanced community. DRAFT Retail, Dining & Entertainment © 2018 DMC DRAFT Retail/Dining/ Entertainment Market TOTAL INVENTORY 2014:444,000 s.f. 2018:456,000 s.f. Pipeline:103,000 s.f. (estimated) ESTIMATED NEW DEMAND 2019-24 Demand Drivers More downtown workers and DMC residents and students will provide a foundation for limited service dining, convenience shopping, after- hours spending, and services. More Mayo, conference, event, and hotel visitors expands that base. Capturing a greater market share of regional resident demand for dining and entertainment is emerging and will accelerate with DMC’s implementation and growing critical mass of activity and consumer options. Scenario Estimated Demand (s.f.)Pipeline Low 70,000 103,000 Medium 95,000 103,000 High 130,000 103,000 DRAFT Estimated Retail Demand By 5-Year Phases Sources: US Economic Census, Census of Retail Trade, ESRI, AECOM 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 2019 2024 2029 2034 RD E S p a c e ( s . f . ) Downtown Rochester Retail/Dining/Entertainment Supply and Demand Supply Low Demand Medium Demand High Demand DRAFT Retail/Dining/ Entertainment Market FINDINGS Retail inventory has been relatively stable for the past 5 years with small additions resulting from first floor retail in multifamily residences and renovations of older buildings. Near term demand is satisfied; DMC’s implementation will bring more workers, residents, and tourists leading to longer-term growth . Clustering of dining & entertainment increases market share of regional demand. ECONOMIC DEVELOPMENT OPPORTUNITY Retail/dining and entertainment demand is a function of growth in captured buying power. Visitor growth, more downtown residents and workers, and a larger market share of regional demand for dining and entertainment will support more retail/dining and entertainment over time. As the residential community grows and matures, demand for neighborhood services will increase. A critical mass of dining and entertainment in emerging districts should induce greater demand from the regional market. DRAFT The next phase © 2018 DMC 1.Med-Tech drives new demand for the other uses –double down on more Mayo partnerships & Discovery Square’s supportive eco-system. 2.Downtown housing is proven –focus on diversified workforce, affordable, and specialized housing to create a balanced community. 3.Near term lodging demand satisfied with new supply –prioritize investments that create more room- night demand. 4.Retail follows consumers -develop a dining/entertainment strategy to capture demand. While absorbing new inventory -build “Place” with amenities & mobility to position for the next growth cycle. DRAFT 2019 Work Plan Update © 2017 DMC 2019 Work Plan Updates •Workforce Development •Affordable Housing Summary –Assistive Tech Challenge •Sponsors Fredrikson & Byron Law Firm and Home Federal Bank •Collaborators –the Arc Minnesota Southeast and Mayo Clinic. •Open Division: Twenty one teams applied. –Adapt-A-Cart from Rochester took first place and AbleKitchen from Minneapolis placed second •Professional Division: Seven teams applied –Vitals Aware Services, Inc. took first prize and Mobility 4 All took second place. Teams from UW-Eau Claire, Minnesota State University Mankato, University of Minnesota, Rochester, Minneapolis, Madison WI, and Naples FL. DMC Experience DMC Development Plan Goal #5: Achieve the highest quality patient, companion, visitor, employee, and community member experience, now and in the future Development of DMC Experience Strategy Experience Targets Experience Targets Experience Targets Experience Projects (2018) -Experience Strategy -Framework, Scorecard, Dhasboard Experience Rochester, RDA, Mayo Clinic , DMC -Rochester App (Experience Rochester, Mayo Clinic, DMC) -Rochester Airport Experience Project: Phase 1 (RST, Mayo Clinic, DMC) -Rochester Experience Project: Phase 2 (RST, Mayo Clinic, DMC) © 2017 DMC •Investor & Developer and Discovery Square web pages saw significant growth year-over-year. •Time on website is exceeding benchmark of over 1:30 and more pages are being viewed than in 2017. •More than 160 leads generated through advertising efforts. •High click-through rate from digital advertising and exceeding benchmark. •Continued growth in social media followers among all platforms: Facebook, Twitter and LinkedIn. 2018 Marketing Insights