Case study about real estate development, street mall

This is the PPT about case study about street mall development in Carrollton. 

Neighborhood Developer

This is the project that John is doing.

I met John Chong. He is the CEO of DIRA which is the company to proceed Condo project in Carrollton. Until now on, this project is very successful. Already, over 80% of condos were sold out.
It started construction around 2 weeks ago. The biggest group of customer buying condos is asian.

He said that there are many opportunity around Hmart in Carrollton. This area has biggest asian mart and biggest spa&waterpark in Texas. The area could be symbol of asian culture in Texas. This might bring many visitors and customers from outside.

And, according to him, the hardest thing in development is funding and lending. To get good condition of lending, I have better to get some equity investors, or land provider.

To lower the construction cost, it is also very important to increase profitability. That is the reason why he always involved in construction by himself,  not as only developer.

Carrollton City's Tax Incentive

I emailed Peter J. Braster in Carrollton City hall. He is a senior manager in Transit-oriented development. I asked about some benefit when I would develop a street mall in Carrollton. 

He emailed back to me like this. 

The City of Carrollton has limited options to incentivize/ support development.  First the project must have a commercial use.  A mall would qualify.  Tax abatements would be the only available option for the City since we are a member of DART and our 4a and 4b sales tax money goes to DART, we can’t use incentives like Frsico does.  For our incentive policy look one our website here:  City of Carrollton Incentives  You can figure out what kind of rebate a mall project would get based on the table.

Let me know if you have any more questions.

With Peter's help, I could find the incentive policy in Carrollton city. 

This is the link of the website which has the policy.

http://carrolltontxdevelopment.com/index.aspx?page=1373

This is the tex reduction rule in Carrollton city.

And, I could get some PPT resource about the Reiford Project. 

Fundng Advice

I contact Ted Kim, vice president of Chase Bank. He is very high rank lending officer in Chase. Actually, he is not side of Real Estate lending. I begged pardon some advice based on his experience and knowledge.  

He advices me if this project could show reliability and profitability. The real estate part in Chase could invest in this project. 

Current preferable LTV of Chase is 80%. And, interest rate is around 6.5% on this kind of project.

But, if the lending period is just 10years, I might be around 3.54% with the condition that interest rates change every 5 years. 

Idea for construction-fabric roofing

I met Josep Kim who is the president of Nissi Group to get some advice about my development project. He is developing and constructing a water park in Dallas. He said that covering with fabric roof on street in Texas is great idea. There is no such  unique street mall in Texas ever. It could reduce risk in summer that shopping people or visitor disappear.

And, he recommended roof materials. That is the Tensile membrane. It is very popular fabric roof type. And, also PTFE roofing. PTFE was used to some sports stadium in Korea for 2002 World Cup. 

Tensile membrane

PTEF roof in soccer stadium in Korea

The problem is cost. But, it is not that expensive. According to my research, the fabric costs $50 per square meter.

REAE5323_My Project

I want to develop a street mall in Carrollton. The city has the development plan known as Reiford project. They has huge development plan which include hotel, residence, office and street mall.  I'd like to adopt some feature on this project which has never been to Texas. It is perfectly fit to  hot weather in Dallas. I will develop a street mall that has a fabric roof on the street. It can make vistors avoid sun light and rain, even hail.

Reiford project in Carrollton city

This is the example of street mall has a fabric roof on street. This is the western dorm shopping district in Korea.

The western dorm in Korea

Marketing & Management plan

Underfloor heating 

Underfloor heating's cost of installing varies by boiler quality and brand, also pipeline's type. But, usually, it takes around $20 per square feet with moderate brand and pipe type. In contrast, central air and heat system in the US is comparably cheaper than underfloor heating. It might take from $0.29 per sf to $5 per sf. At least, underfloor heating cost for installing is 4 times more expensive than central air heating. 

1100 Trinity Mills heating system cost for installing

- underfloor : $20*220,000=$4,400,000

- Central air : $5*220,000=$1,100,000

Buyer charge for underfloor heating

-Cost for heating system increases $15 per sf

  --> 3,300,000(4,400,000-1,100,000)/220,000=$15

Marketing Plan for underfloor heating

There are two ways to cover the cost of installing underfloor heating. One of them is sharing the cost between a developer and a buyer. Each part could charge $7.5 per sf. Then the price of condos would increase from $125 per sf to 132.5 per sf. And, in this assumption, this project still has feasibility if the occupancy rate is over 90%. 

  - The total amount money that the developer can earn from this development is ($125x110,000)+($132.5*110,000)=$28,325,000

  - Total construction cost with underfloor heating is $22,300,000+3,300,000=$25,600,000

  - 25,600,000/28,325,000=0.9

The other way is giving options to a buyer whether they buy a condo with underfloor heating system or not. If they want to buy the condo which has underfloor heating system, they should pay $15 more per sf . 

Green Roofing 

Estimation for green roofing has very wide rage of price. I assume 5,000 sf of green zone on rooftop. And, the type of green roofing is the Paks type. According to the estimation calculator of Green Roof Blocks, the total price for green roof is $72,119.50.

1100 Trinity Mills green roofing cost for installing

5,000sqft = $72,119.50

Marketing plan for green roofing

A developer could rent this green roofing area to residents for urban agriculture uses. If the developer rent this $3 per sf, simply payback year is 5 years. And, this green roofing area could be maintained by Home Owners Association in 1100 Trinity Mills after 5 year. 

LED Lamp's marketing plan

The developer could hand over the decision to buyers about installing LED lamps. If they want to have LED lamp in their house, buyers should pay additional charge. For this,  the developer has to explain about benefits of LED lighting and short payback period. And, the developer should install LED lamps in public space. 

Management Plan

1100 Trinity Mills will be managed by HOA(Home Owners Association). HOA will represent 1100 Trinity Mills after this condo building is built.

HOA has right to correct monthly fee for management from owners. A owner might pay around $150 to $250 per unit. Annual budget for 1100 Trinity Mills is around $400,000. It would be used for paying salary of a manager. And, also, it will cover cost of maintaing green roof and LED lamp in public zone in 1100 Trinity Mills. 

And, 10% of the annual budge will be reserved for improvement or remodeling condos in the future.