Is there a demand for the massive amount of space Electric Works would create? Yes, new study suggests
With a decision on $65 million in local public funding moving closer by the day, a new study indicates strong demand for the sort of office, residential and commercial space Electric Works would create.
“Is the (Fort Wayne) market big enough to absorb this amount of space? Is the proposed level of pricing reasonable for the market? Does adaptive reuse (of the former General Electric campus) open up a market?” the analysis by Maryland-based RCLCO asked before answering “yes” to all three questions.
The Capital Improvement Board, which oversees the county food and beverage tax and will be asked to provide much of the local funding, proposed such a study in February. But the RCLSO analysis released Thursday was in fact commissioned and funded by Electric Works developer RTM Ventures at the request of the project’s lenders, RTM partner Jeff Kingsbury said. The CIB had input in planning the study and will review its conclusions, however, he added.
Electric Works’ $220 million phase one will include 10 buildings and 224,000 square feet of offices, 113,000 square feet of research/education space, 83,000 square feet of retail/restaurant space, 83,000 square feet of innovation space, 82,000 square feet for apartments and 31,000 square feet of recreational space. Some have expressed doubts so much room could be filled, especially without luring tenants from other local locations. But Kingsbury said RCLCO’s analysis suggests otherwise.
“It’s no surprise to us. We did our homework two years ago (before getting involved),” he said. “What we found encouraging was how bullish they are on the Fort Wayne region.”
“There exists a strong opportunity for new urban development in Fort Wayne as the perceptions about its downtown continue to evolve and as its employment and population bases continue to expand . . . Downtown Fort Wayne outpaced the region as a whole in terms of household growth following a decade of decline between 2000 and 2010. Couple with the younger ages of people living downtown, this trend points to a renewed interest in urban living, likely attributable to young professionals wanting to live near their place of work . . . Central Fort Wayne is well-positioned to capture future office demand and population growth, given that its employment composition favors growing sectors that are attractive to younger, more educated workers,” ” the study noted.
Most downtown office buildings are well-occupied, generally charging between $16 and $20 per square foot, the study reported. Given the lack of new office space downtown, Electric Works could charge $25 per square foot for office space despite its location on the edge of downtown “given the unique positioning and historic character of the site” and other features.
Although several new residential developments have opened downtown in recent years and more are nearly completed or planned, RCLCO suggests there will be an annual demand for between 625 and 675 new apartments in the Fort Wayne area, with 20 percent of that demand downtown. The study suggests 94 apartments in phase one would be able to charge rent of between $875 and $2,000 per month.
Public support is essential, developers have insisted, in order to keep the project’s rents affordable in the Fort Wayne market.
As for retail demand, “residents of downtown are most likely to commute outwards for household-supporting uses, such as grocery stores, pharmacies (and) general merchandise stores,” the report stated. “As additional household growth occurs downtown there are more likely to be opportunities to introduce these types of retail . . . coupled with the current lack of retail space downtown, the accessibility from Broadway and unique character of the project make Electric Works a strong location for future retail.” There is a demand for between 100,000 and 115,000 square feet at Electric Works, supporting rents of about $15 per square foot.
RCLCO also studied the impact of similar projects elsewhere, including Bakery Square in Pittsburgh, Harbor Point in Stamford, Conn., and Grandview Yard in Columbus, Ohio. Like Electric Works, Grandview is adjacent to railroad tracks that had been considered a barrier but have not impeded redevelopment, Kingsbury said.
Despite the general optimism of the report, however, RCLCO notes its conclusions are based on current statistics and assumptions an that “stable and moderate growth patterns are historically not sustainable over extended periods of time . . . it is very difficult to predict when an economic and real estate upturn will end.”
The RCLCO analysis does not address other factors such as economic impact, job creation and taxes generated that were subjects of a previous report by Novogradac & Co., but Kingsbury said those numbers are being updated, too.
Taken together, he added, the reports should help convince doubters Fort Wayne really can support a project of Electric Works’ cost and scope.