1. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Forward Monroe 2035 Land Use Plan UpdateEconomic Study and Market Analysis April 18, 2016 Elected & Appointed Officials Presentation

2. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Agenda 1.Project Overview 2.Demographic Profile 3.Employment Profile 4.Real Estate Performance 5.Base Forecasts 6.Demand Forecasts 7.Node Recommendations

3. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Forward Monroe 2035 Land Use Plan UpdateEconomic Study and Market Analysis Project Overview

4. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Project Background o Peak Plan 2030 adopted in 2012 o Project study area not studied in depth o Evaluate probable land uses for a 2035 update

5. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Study Area

6. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Activity Nodes o Neighborhood Mixed-Use Higher-Density Residential Retail/Commercial Node o Employment Mixed-Use Promotes job growth Employment-based uses Supporting retail uses

7. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Forward Monroe 2035 Land Use Plan UpdateEconomic Study and Market Analysis Demographic Profile

8. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Planning Area o Includes: Incorporated Apex ETJ Future service areas o Regional shifts and local dynamics considered o Demand forecasted for the larger Planning Area, then captures used for Study Area

9. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Population Characteristics o Population of over 50,000 in 2015 was almost double 2000 count o Captured 6.0% of regional population growth o Population by age cohort; families with young children are strongly represented o Comparatively high educational attainment; attractive labor force Comparison of Shares of Population by Age, 2015

10. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Household Characteristics o Household size gradually increased; contradicting national trends o Comparatively high median household income ($89,148 in 2015) o Planning Area households earning more than $100k make up 45% of total; drives spending potential Comparison of Shares of Households by Income, 2015

11. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Tapestry Segmentation Boomburgs (50.6%) Up and Coming Families (16.5%) Professional Pride (7.1%) Young professionals with families Affluent High homeownership rate Seeks primarily single-family homes Well educated Mobile and ethnically diverse Ambitious households willing to take risks Young families seeking new housing High labor force participation Carries higher than average debt Well-educated professionals Owner-occupied, single-family detached Upscale lifestyles Mostly married; 50% with children Seeks upscale, suburban lifestyles

12. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Forward Monroe 2035 Land Use Plan UpdateEconomic Study and Market Analysis Employment Profile

13. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Raleigh-Durham CSA o Seven counties in combined statistical area o Nearly 825,000 jobs in 2014, up 19.0% from 2004 o Leading sectors are Healthcare, Education, and Retail Trade o Wake County made up 60% of regional total in 2014 Wake County Capture of Regional Employment, 2014

14. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Planning Area o Over 14,700 jobs; more than double the count 10 years ago o Retail trade the largest and fastest growing sector o Other key sectors: Manufacturing Construction Accommodation & Food

15. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Commuting Patterns o More than 21,000 employed Planning Area residents commuted for employment o Approximately 1,700 people live and work in Planning Area o Traveling north and northeast; RTP, Durham, and Raleigh

16. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Forward Monroe 2035 Land Use Plan UpdateEconomic Study and Market Analysis Real Estate Performance

17. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Housing o Nationally, homeownership has fallen dramatically in 10 years o Housing in the Planning Area is: Comparatively newer (+/- 90% built since 1980) Over 85% is single-family detached 70% is owner-occupied

18. 2035 Land Use Plan UpdateEconomic Study and Market Analysis For-Sale Residential o Residential closings have returned to pre-Recession levels o Closing prices for detached and townhouses have surpassed 2005 measures o Limited starter-home market for detached product; townhouses offer entry point for first-time buyers Residential Closings, White Oak Township, 2005-2015

19. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Rental Residential o Planning Area has over 2,600 apartment units; 70% completed in 1990s o Low vacancy at 5.0%; largely due to limited new supply o Product has traditionally been suburban garden-style; latest approval suggests shifts towards urban Comparison of Vacancy Rate Trends, 2012-2016

20. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Residential Pipeline o Over 8,900 lots/units approved in active residential developments o 2,610 permits have been issued leaving nearly 6,300 lots/units remaining for development o Total doesn’t include Veridea or Westford (almost 9,000 additional lots/units) Approved Lots/Units in Residential Developments, 2016

21. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Retail o Submarket accounted for 38% of new multi-tenant retail construction in last five years o Vacancy rates have fallen across the region; newest retail centers in Apex have extremely low vacancy at less than 5% o Retail services limited west of NC-540 o Retail pipeline robust, but only Nichols Plaza underway Comparison of Retail Vacancy Rates, 2011-2015

22. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Office o Office product targets: Corporate users Professional services Entrepreneurs o Submarket inventory largely targets professional service tenants; limited corporate space o Limited movement in the office market until recently; vacancy fell 510 basis points to 8.1% o Veridea approved for 12 million square feet of general and high- tech office Office Performance, Cary/SW Raleigh Submarket, 2011-2015

23. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Industrial o Industrial product includes: Office/flex Warehouse/flex Warehouse/distribution o Warehouse/flex makes up 56% of the submarket total o Vacancy rates in the submarket similar to regional benchmark Comparison of Industrial Vacancy Rates by Type, 2015

24. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Forward Monroe 2035 Land Use Plan UpdateEconomic Study and Market Analysis Base Forecasts

25. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Population Forecast o Two growth scenarios were created for analysis o Considers Apex’s: Geographic location in region Demographic trends Real estate performance Development pipeline o Through 2035, Apex could add between 38,000 and 60,100 new residents o Population forecasts used to estimate future demand for housing and retail Low and High Population Forecast Scenarios, Apex Planning Area, 2015-2035

26. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Employment Forecast o Regional employment forecast was prepared; economic development generally gains momentum on a larger scale o Employment in the region could exceed 1.2 million jobs by 2035 o High-growth industries include Healthcare, Administrative and Waste Services, and Education Services Employment Forecast, Raleigh-Durham CSA, 2015-2035

27. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Forward Monroe 2035 Land Use Plan UpdateEconomic Study and Market Analysis Demand Forecasts

28. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Study Area Demand Assumptions o Richardson Road will be extended, ultimately connecting US 64 with US 1 o Planned interchange at US 1 and Richardson Road Extension is completed o Access to utilities is expanded throughout the Study Area; increased capacity from the Western Wake Regional Reclamation Facility

29. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Residential Planning Area o Residential demand based on the following factors: Forecasted population growth Average household size (2.71) Vacancy rate (5%) o Forecasted 20-year demand ranges from 14,140 to 22,370 units o How will demand for product types and tenures change in the future? How does land cost affect development patterns? Net New Housing Unit Forecast Scenarios, Planning Area, 2015-2035

30. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Residential Study Area o Leading real estate sector for future Study Area growth; critical factor in determining demand for commercial o Capture assumed to be between 20% and 25% of total, equating to 3,800 to 4,600 units over 20 years o Single-family detached units will likely be the prominent residential type; higher-density demand near key nodes o Land demand of approximately 750 to 900 acres based on forecasted mix and average acreages; policy decisions will affect the number of units that can be accommodated

31. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Retail Planning Area o Retail demand is a function of population growth o Formulaic approach to development: Household densities and spending potential Traffic counts Competition o Based on projected household growth, Planning Area could accommodate between 2.3 and 3.4 million square feet Net New Retail Forecast Scenarios, Planning Area, 2015-2035

32. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Retail Study Area o Housing development in the Study Area will drive demand for future retail o Limited retail services west of NC- 540, but population expected to increase o Apex-Friendship High School boosts daytime traffic counts in eastern portion of Study Area o Study Area could support 285,000 to nearly 430,000 square feet of retail over the next 20 years Low Forecast Scenario, Study Area, 2015-2035 High Forecast Scenario, Study Area, 2015-2035

33. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Office Planning Area o Based on capture of office- occupying growth capture for region o How will evolving location preferences by office product types impact demand? o Planning Area demand forecast is estimated at 740,000 to 985,000 square feet o Veridea demand and large, corporate drop-ins Net New Office Forecast Scenarios, Planning Area, 2015-2035

34. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Office Study Area o Lacking retail amenities, the Study Area is unlikely to attract a significant office presence; role of Veridea? o However, professional-services office users could be supported, seeking access to clientele o Approximately 60,000 to 80,000 square feet of office space could be accommodated Low Forecast Scenario, Study Area, 2015-2035 High Forecast Scenario, Study Area, 2015-2035

35. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Industrial Planning Area o Similar to office, based on industrial- occupying job forecast for region o Access to infrastructure and workforce will drive demand o Smaller-scale flex/office and flex/warehouse users will be important generators o Based on regional capture, 20-year demand could range from 770,000 to 1.1 million square feet in Planning Area o Offering shovel-ready sites is key Net New Industrial Forecast Scenarios, Planning Area, 2015-2035

36. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Industrial Study Area o Likely to be flex/office or flex/warehouse; land values will likely exclude users needing significant acreage o Focus on R&D and technology industries; growing momentum in Triangle and access to skilled labor force o Accessibility issues for distribution given crossings over the railroad o Up to 230,000 square feet of industrial demand could be supported in Study Area Low Forecast Scenario, Study Area, 2015-2035 High Forecast Scenario, Study Area, 2015-2035

37. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Forward Monroe 2035 Land Use Plan UpdateEconomic Study and Market Analysis Node Recommendations

38. 2035 Land Use Plan UpdateEconomic Study and Market Analysis Humie Olive Node (NMU) o Envisioned as Neighborhood Mixed-Use o Location will likely influence this area to develop before the other two nodes o Node of retail and professional service office will be attracted to household concentration and increased school-related traffic (150,000-200,000 square feet) o Higher-density residential will offer variety of housing types close to school facility (+/- 500 units)

39. 2035 Land Use Plan UpdateEconomic Study and Market Analysis New Hill Node (NMU) o Envisioned as Neighborhood Mixed-Use o Access to US 1 interchange o Demand will be driven by residential development in western Wake County and Chatham County o Retail would be attracted to access to highway and future rooftops (+/- 100,000 square feet) o Some higher-density residential could be constructed

40. 2035 Land Use Plan UpdateEconomic Study and Market Analysis US-1 Node (EMU) o Envisioned as Employment Mixed-Use o Transportation and utility infrastructure necessary to attract non-residential users o Synergy with Holly Springs targeted growth area on opposite side of US 1 o Industrial, primarily flex/office or flex/warehouse, could drive demand for up to 230,000 square feet o Supporting retail and professional service office space could also be supported (up to 50,000 square feet), as well as a limited amount of higher- density residential