Real Estate Impacts:

Baseline Conditions

Dr. Henry Renski

University of Massachusetts Amherst

Thomas Peake

UMASS Donahue Institute

Outline• Three reports on pre-casino baseline conditions

• Starting point for measuring impacts

• Everett as an example

• Similar format for Plainville and Springfield

• Two major sections, with numerous indicators

1. Residential Properties

• Building Permits, Sales, Sale Price, Rents

2. Commercial/Industrial Properties

• Inventory, Vacancy, Net Absorption, Lease Rates

• Analysis conducted at multiple scales

• Host community, immediate region, official surrounding

communities, distance from casino

Sites and Regions

Sites and Surrounding Communities

Residential Real Estate Sales• Source: MA DOR LA3 database

• All property sales in the state

• Real-verified property sales (arms-length transactions)

• Location, Sale Date, Sale Price, Land Use type

• Starting (reliably) in 2008

• Updated to end of 2014 (two + year lag in reporting)

• Focus on three types of residential sales

• Single-family

• Multi-family

• Condominiums

• Others deemed too infrequent/sparse

Everett Sales Trends

• Higher proportion of

multi-family housing

• Upward trend,

particularly condos

• Sale prices growing,

especially condos

Number of Residential Property Sales by Type

Median Sales Price of Residential Properties (2014 dollars)

Sales

Comparisons

• Growth in SF home

sales slightly below

region & state

• Condo sales rising

sharply since 2012

Single-family Home Sales

Condominium Sales

Sale Price

Comparisons

• Relatively affordable

• Prices rising at a

faster rate in recent

years

• Not as fast as many

neighboring

communities

Single-family Homes

Condominiums

Sales “Hot Spots”Areas of Concentrated Single-family Home Sales, 2008 to 2014

Sales “Hot Spots”Areas of Concentrated Multi-family Home Sales, 2008 to 2014

Sales Trends

by Distance

Single Family

• Few sales near site

• Changes in sales

unrelated to distance

Multi Family

• Faster growth further

from site, but similar

since 2012

Condo

• Generally unrelated to

distance

Multi-family Home Sales by Distance to Casino

Condominium Sales by Distance to Casino

Where are homes most expensive?Spatial Variations in the Sale Price of Single-family Homes, 2008 to 2014

Where are homes most expensive?Spatial Variations in the Sale Price of Multi-family Homes, 2008 to 2014

Sales Prices

by Distance

Single/Multi Family

• Closest, least

expensive

• Trends in sales prices

unrelated to distance

Condominiums

• 2-5 miles most

expensive and fastest

rate of growth

Multi-family Home Sales Prices by Distance

Condominium Sales Prices by Distance

Rental Markets, Data Sources

• American Community Survey• Comprehensive and representative profile of housing stock

• Census track/block group level and higher

• Five year rolling survey

• Can’t measure year to year changes

• CoStar• Proprietary Data Service, apartments.com data

• Detailed and very timely (almost real-time)

• Methods rather opaque

• Non-representative: dominated by multi-unit apartment complexes

Rental Profile (ACS)Gross Monthly Rents in Everett and Comparison Regions

999911

1,144

937

1,181

1,064

1,312

1,090

0

200

400

600

800

1,000

1,200

1,400

Everett Essex County MiddlesexCounty

MassachusettsMed

ian

Mon

thly

Gro

ss R

en

t ($

201

4)

2000 2009-13

• > 75% of Everett residents are renters, most multi-unit

• Rents are higher than state median, but below most neighbors

• Increase in rent lower than 6 of 9 surrounding communities

Rental Market, CoStarEffective Monthly Rents, Everett vs. Region and State, 2006 to 2015 (Q3)

• Rents notably higher than reported in ACS

• Effective real rents shoot up in Q1 2015

• Coincides with 300 new units, plus rise in vacant units

• Little change in inventory

or rentable building area

(RBA) from year to year

• Slight declines in inventory

and RBA, consistent with

state trends

Building Inventory

Rentable Building Area

Commercial/

Industrial Building

Inventory

230 227

118

116

0

50

100

150

200

250

Q42007

Q42008

Q42009

Q42010

Q42011

Q42012

Q42013

Q42014

Nu

mb

er o

f B

uild

ings

Everett Commercial Everett Industrial

2,895,471 2,812,760

3,597,150 3,503,887

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

Q42007

Q42008

Q42009

Q42010

Q42011

Q42012

Q42013

Q42014

Squ

are

Feet

Everett Commercial Everett Industrial

4.2%

0.8%

8.4%

5.4%

10.1%

8.0%

0%

2%

4%

6%

8%

10%

12%

Q42007

Q42008

Q42009

Q42010

Q42011

Q42012

Q42013

Q42014

Vac

ant

Shar

e o

f R

enta

ble

Bu

ildin

g A

rea

Everett Immediate Region Massachusetts

Vacancy Rates• Much lower than state

averages

• Commercial vacancy rate

increases since 2013, but

still very low

• Industrial vacancy rates

highly volatile

Industrial

1.7%

3.7%

9.2%

7.9%8.5%7.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Q42007

Q42008

Q42009

Q42010

Q42011

Q42012

Q42013

Q42014

Vac

ant

Shar

e o

f R

enta

ble

Bu

ildin

g A

rea

Everett Immediate Region Massachusetts

Commercial

$11.42

$23.36

$28.27

$22.87$26.34

$20.68

$0

$5

$10

$15

$20

$25

$30

Q42007

Q42008

Q42009

Q42010

Q42011

Q42012

Q42013

Q42014

Co

st p

er S

qar

e Fo

ot

Everett Immediate Region Massachusetts

Lease Rates

Office Commercial

• Typically below state and

region

• Rates increasing since 2013,

now on par with region

Non-Office Commercial

• Steady decline

• Now similar to state/region

Industrial (not shown)

• Erratic, slightly higher than

state/region

Office Commercial

$34.25

$16.00$14.66$15.06

$14.56 $13.68

$0

$5

$10

$15

$20

$25

$30

$35

$40

Q42007

Q42008

Q42009

Q42010

Q42011

Q42012

Q42013

Q42014

Co

st p

er S

qar

e Fo

ot

Everett Immediate Region Massachusetts

Non-Office Commercial

Next Steps

• Shift from establishing baseline to measuring impacts

• Post-casino, do we see a departure from past trends?

• Do we see a similar departure in reference areas?

• Do impacts attenuate by distance?

• Data development

• Two + year lag on property sales is a problem

• Looking into other sources (i.e. County Registry of Deeds)

• Address Matching

• More difficult to match sales in new developments

• New possible source: Master Address File of MassGIS

• Developed for emergency services provision, updated regularly

Thank you!

Additional questions or comments

please email:

hrenski@umass.edu