1. 1 Maryland Community Development Fund Assessing the Market

2. 2 Maryland Fund Targeted Goals  Affordable housing for workforce populations, closer to jobs  Mixed-use, mixed-income transit-oriented development  Inclusionary and balanced community policies  Regeneration of low-mod and urban communities Housing Job places Commercial services

3. 3 Address Market Imperfections  Risk bias in markets  Geographic areas  Price points  Transaction size  Land use/development types  High transaction costs for return and volume  Lack of market knowledge  Redevelopment  Brownfields/greyfields  Tenant/buyer financial sophistication  Inexperienced, undercapitalized developers

4. 4 What Are Investors’ Financial Goals?  Rate of return hurdles  Exit strategy for capital  Double-bottom line returns  Sufficient deal flow

5. 5 Market Fundamentals  Economic base and growing industry clusters  Job generation by location and wage  “Economic shed”  Household formation by income, type & tenure  Commercial buying power  Development trends & performance  Quality of existing stock

6. 6 Market Analysis Framework: Start with Region Jobs Supportable Households by Type Employment Land Demand Buying Power Commercial Demand Housing Demand Migration Changing Demographics

7. 7 Target Area Capture Regional Demand Capture Aggregate Value Equity Demand

8. 8 Maryland Economies  Baltimore City  Anne Arundel County  Baltimore County  Howard County  Montgomery County  Prince George’s County  Balance of State

9. 9 Capture Rate Factors  Regional growth patterns  Product segmentation  Existing share of total demand vs. share of recent growth  Competition & their future capacity  Comparables performance  Infrastructure, services, and amenities  Location, location, location

10. 10 Opportunities in Low/Mod Markets

11. 11 Lower Average Incomes Economics Research Associates

12. 12 But Comparable Middle- Incomes Economics Research Associates

13. 13 Translates Into Sizeable Buying Power Economics Research Associates

14. 14 Low, Mod, Mid Tracts in Baltimore Metro

15. 15 Low, Mod, Mid Tract in Maryland’s DC Metro

16. 16 Low, Mod, Mid Tracts in MD

17. 17 Market Influences – Policy Environment  Does planning policy direct growth to core areas?  Are regional transportation plans linking jobs to workforce?  Is government investment supportive?  Does land use policy support desired development?  Are communities supportive?

18. 18 Market Influences – Development Capacity  Are there capable developers?  Are there other equity and debt financing sources to leverage?  Is land available and at a feasible cost?  Is fund’s cost of capital competitive?

19. 19 Tale of Two Markets  Growth Region Job growth Strong household formation Regional supply shortage Growing aggregate buying power Public capital for facilities and services  Stable or Declining Region Limited or negative job growth Few net new households Regional supply surplus Stable or declining buying power Lack of public capital for facilities and services

20. 20 Tale of Two Markets  Growth Region Direct growth Serve emerging niches Add & improve stock Re-cycled housing supported Demand supports new supply absorption and appreciation  Stable or Declining Region Abate dis-investment Serve unmet preferences Replace & improve stock Limits to re-cycling housing New supply redirects demand winners and losers

21. 21 Potential Equity Demand