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Residential Market Potential

Downtown Atlantic City Study Area

City of Atlantic City Atlantic County, New Jersey

September, 2013 Conducted by On Behalf of ZIMMERMAN/VOLK ASSOCIATES, INC. Casino Reinvestment Development Authority P.O. Box 4907 1014 Atlantic Avenue Clinton, New Jersey 08809 Atlantic City, New Jersey 08401

ZIMMERMAN/VOLK ASSOCIATES, INC. P.O. Box 4907 Clinton, New Jersey 08809 908 735-6336 www.ZVA.cc • [email protected]

Research & Strategic Analysis

STUDY CONTENTS

RESIDENTIAL MARKET POTENTIAL 1

Introduction 1

Overview of Atlantic City and the Downtown Study Area 4

Market Potential for the City of Atlantic City 7 Where will the potential market for housing in the City of Atlantic City move from? 7 —The Draw Areas— 7

Market Potential for the Downtown Atlantic City Study Area 10 Where will the potential market for housing in the Downtown Study Area move from? 10 How many households have the potential to rent or purchase new or existing dwelling units within the Downtown Atlantic City Study Area each year over the next five years? 10 What are their housing preferences? 11 Table 1: Annual Potential Market for New Workforce and Market-Rate Higher- Density Housing Units 13

Target Market Analysis 14 Who is the potential market? 14 —The Target Markets— 14 Table 2: Annual Market Potential for Higher-Density Units by Household Type 21

The Current Context 22 What are the alternatives? 22 —Multi-Family Rental Properties— 22 Table 3: Summary of Selected Rental Properties 24 —Multi-Family and Single-Family Attached For-Sale Properties— 27 Table 4: Summary of Selected For-Sale Multi-Family and Single-Family Attached Developments 29 Table 5: Summary of Multi-Family and Single-Family Attached Units Currently For Sale 30

Rent and Price Ranges: The Downtown Atlantic City Study Area 37 What is the market currently able to pay? 38 —Rental Distribution— 38 Table 6: Target Groups for New Mixed-Income Multi-Family For-Rent 41 —For-Sale Distribution— 43 Table 7: Target Groups for New Mixed-Income Multi-Family For-Sale 45 Table 8: Target Groups for New Mixed-Income Single-Family Attached For-Sale 48 —General Rent and Price Ranges— 49 Table 9: Optimum Market Position—Workforce and Market-Rate Dwelling Units 50 How fast will the unit lease or sell? 51 —Market Capture— 51

RESIDENTIAL MARKET POTENTIAL Page ii

Downtown Atlantic City Study Area City of Atlantic City, Atlantic County, New Jersey September, 2013

ZIMMERMAN/VOLK ASSOCIATES, INC.

Downtown Housing Types 53

Downtown Housing Strategies, Policies, and Programs 56

Methodology 59

Assumptions and Limitations 70 Rights and Study Ownership 71

o

ZIMMERMAN/VOLK ASSOCIATES, INC. P.O. Box 4907 Clinton, New Jersey 08809

908 735-6336 www.ZVA.cc • [email protected]


R E S I D E N T I A L M A R K E T P O T E N T I A L

Downtown Atlantic City Study Area City of Atlantic City, Atlantic County, New Jersey

September, 2013

INTRODUCTION

The purpose of this study is to examine the depth and breadth of the market for new workforce and

market-rate dwelling units, both new construction as well as adaptive re-use of existing buildings,

that could be developed over the next several years within the Downtown Atlantic City Study Area.

For the purposes of this study, the Study Area boundaries include Florida Avenue from Turnpike

Road to the Boardwalk; the Boardwalk from Florida Avenue to Mississippi Avenue; Mississippi

Avenue from the Boardwalk to Pacific Avenue; Pacific Avenue from Mississippi Avenue to South

Carolina Avenue; South Carolina Avenue to Atlantic Avenue; Atlantic Avenue to New York Avenue;

New York Avenue to Baltic Avenue; Baltic Avenue to Martin Luther King Boulevard; Martin Luther

King Boulevard to Mediterranean Avenue; Mediterranean Avenue to Bacharach Boulevard;

Bacharach Boulevard to Ohio Avenue; Ohio Avenue to Baltic Avenue; from Baltic Avenue south of

the Convention Center crossing the Atlantic City Expressway to North Georgia Avenue; North

Georgia Avenue to Sunset Avenue; Sunset Avenue to Turnpike Road; and Turnpike Road to North

Florida Avenue. The Downtown Study Area lies within the newly-designated Atlantic City Tourism

District.

For purposes of this analysis, workforce housing units are those that are affordable to households

earning between $30,000 and $75,000 annually; market-rate units are those that are affordable to

households with annual incomes above $75,000.

RESIDENTIAL MARKET POTENTIAL Page 2



The depth and breadth of the potential market for new housing units within the Downtown Study

Area have been determined using Zimmerman/Volk Associates’ proprietary target market

methodology. In contrast to conventional supply/demand analysis—which is based on supply-side

dynamics and baseline demographic projections—target market analysis establishes the optimum

market position for new housing derived from the housing preferences and socio-economic

characteristics of households in the draw areas within the framework of the local housing market

context.

The target market methodology is particularly effective in defining realistic housing potential

because it encompasses not only basic demographic characteristics, such as income qualification and

age, but also less-frequently analyzed attributes such as mobility rates, lifestage, lifestyle patterns, and

household compatibility issues.

The current constrained market—characterized throughout most of the United States by weak

housing prices; higher than typical levels of unsold units, both builder inventory units as well as

foreclosed and/or abandoned houses; and high levels of mortgage delinquencies by speculators and

investors as well as homeowners—has resulted in restrictive development financing and mortgage

underwriting, taking a significant percentage of potential homebuyers out of the market. However,

contrary to typical performance during economic recessions with high unemployment levels, rental

occupancies have, in general, risen over the past year.

These market constraints do not reduce the size of the potential market; however, depending on the

timing of market entry, the initial percentage of the potential market able to overcome the

constraints of the deep recession and restrictive mortgage underwriting could be reduced.

The findings of this analysis reflect the impact on the Study Area of larger, national and regional

demographic and housing changes. The remarkable transformation of American households—

particularly the emerging predominance of one- and two-person households—over the past decade,

combined with steadily increasing traffic congestion and rising gasoline prices and home

heating/cooling costs, is contributing to significant changes in neighborhood and housing

preferences. A shift has become discernable away from single-family detached houses in lower-

density exurban locations to a diverse mix of apartments, townhouses, and higher-density detached




houses in downtowns and in walkable, mixed-use neighborhoods. This fundamental transformation

of American households and housing is likely to continue for at least the next decade, representing

an unprecedented demographic foundation on which cities can re-build their downtowns and in-

town neighborhoods.

In brief, using the target market methodology, Zimmerman/Volk Associates determined:

• Where the potential renters and buyers for new workforce and market-rate housing

units in the Downtown Study Area are likely to move from (the draw areas);

• How many have the potential to move to the Downtown Study Area if appropriate

housing units were to be made available (depth and breadth of the market);

• What their housing preferences are in aggregate (rental or ownership, multi-family or

single-family);

• Who currently lives in the draw areas and what they are like (the target markets);

• What their alternatives are (other relevant housing in the Atlantic City area);

• What they will pay to live in the Downtown Study Area (workforce and market-rate

rents and prices); and

• How quickly they will rent or purchase the new units (absorption forecasts).

The target market methodology is described in detail in the METHODOLOGY section at the end of

this study.

NOTE: Tables 1 and 2, included in this document, contain summaries of the market potential and general market segments for new market-rate housing units created through adaptive re-use of existing buildings and/or new construction within the Downtown Atlantic City Study Area. Tables 3 through 5 provide the relevant supply-side context. Tables 6 through 10 outline the optimum market position, and the specific target household groups, for new workforce and market-rate housing units. The appendix tables, provided in a separate document, contain migration and target market data covering the appropriate draw areas for both the city and for the Downtown Atlantic City Study Area.




OVERVIEW OF ATLANTIC CITY AND THE DOWNTOWN STUDY AREA

The City of Atlantic City, which covers just under 12 square miles, is an historic resort city located

in southern New Jersey. Originally founded as a seaside resort in the 1850s, the city began to

experience significant disinvestment after World War II, spurred by dramatic declines in tourism. In

1976, to encourage new development and redevelopment within the city, New Jersey passed the

Casino Gambling Referendum, and two years later, the first casino, Resorts International, opened to

the public. Today, the city is the location of 11 casinos, with a twelfth, Revel, which opened to the

public in 2012. Since 1984, when the Casino Reinvestment Development Authority was established

to direct the investment of the casino reinvestment funds, more than $1.5 billion has been spent on

projects in Atlantic City, including over $350 million on housing, resulting in the construction of

more than 1,500 housing units. In 2003 substantial new retail was introduced downtown when

Cordish Associates opened The Walk, the only outlet mall in South Jersey; the center now has more

than 100 stores and restaurants. Phase III is currently under construction, and plans for Phase IV,

Atlantic City Live, are under review.

Approximately 38,000 people work in the casinos; nearly 5,200 people are employed by Atlanticare.

Between 32 and 35 million visitors come to Atlantic City each year, to frequent the casinos, to

attend meetings and shows at the convention center, to shop at The Walk, and to stroll along the

Boardwalk and swim in the Atlantic Ocean. The city is the fifth largest tourist destination in the

country.

As of the 2010 Census, a total of 39,558 people lived in the city, a decline of 2.3 percent over the

city’s 2000 Census population of 40,517. Thirty-eight percent of the city’s residents were African-

American, just under 27 percent were white, 15.6 percent were Asian, and the remaining 20 percent

were some other race or mix of two or more races. More than 30 percent of the population were

Hispanic/Latino, predominantly Mexican and Puerto Rican.

In 2010, Atlantic City contained just over 20,000 housing units. The city’s median housing value is

estimated at $193,200 in 2013, approximately 13 percent higher than the national median home

value, but almost 12 percent lower than the Atlantic County median. More than 46 percent of the

city’s housing units were built before 1960; however, almost 12 percent have been built since 1990.




Just over 15 percent of Atlantic City’s dwelling units are single-family detached, 15.7 percent are

single-family attached, 31.9 percent are units in large multi-family buildings of 50 units or more,

and the remainder are a mix of units in smaller multi-family buildings and duplexes. According to

the 2010 Census, just 28.6 percent of the city’s occupied housing units are owner-occupied, in part

because, compared to the median home value, median household incomes are very low.

The Atlantic City median household income is estimated at $28,700 in 2013, approximately 42

percent below the national median of $49,300, and more than 45 percent lower than the county

median of $52,500. Over 62 percent of the households that lived in the city in 2010 contained just

one or two persons, considerably higher than the national percentage (59 percent); the traditional

American family household—a married couple with children—represented only 12.5 percent of all

Atlantic City households, considerably below the national percentage of just over 22 percent.

Approximately 14.3 percent of all residents aged 25 or older held a college or advanced degree, a

share that was well below the national percentage of 27.7 percent. Over half percent of the city’s

residents aged 16 or more were employed in service/farm occupations, 35.3 percent in white-collar,

and 14.2 percent in blue-collar occupations. Approximately 9.7 percent of the population over 16

were estimated to be unemployed in 2011; another 40.6 percent were not in the labor force (not

employed and not looking for work, or retired).

As noted in the INTRODUCTION, for the purposes of this study, the Downtown Atlantic City Study

Area boundaries include Florida Avenue from Turnpike Road to the Boardwalk; the Boardwalk from

Florida Avenue to Mississippi Avenue; Mississippi Avenue from the Boardwalk to Pacific Avenue;

Pacific Avenue from Mississippi Avenue to South Carolina Avenue; South Carolina Avenue to

Atlantic Avenue; Atlantic Avenue to New York Avenue; New York Avenue to Baltic Avenue; Baltic

Avenue to Martin Luther King Boulevard; Martin Luther King Boulevard to Mediterranean Avenue;

Mediterranean Avenue to Bacharach Boulevard; Bacharach Boulevard to Ohio Avenue; Ohio

Avenue to Baltic Avenue; from Baltic Avenue south of the Convention Center crossing the Atlantic

City Expressway to North Georgia Avenue; North Georgia Avenue to Sunset Avenue; Sunset

Avenue to Turnpike Road; and Turnpike Road to North Florida Avenue.




The Downtown Study Area occupies parts of the Third and Fourth Wards, and is surrounded by the

Ducktown, Uptown, and Westside neighborhoods. The Study Area also lies within the boundaries

of the newly-created Atlantic City Tourist District.

In addition to the ongoing development of The Walk, the Downtown Study Area includes two

potential areas for targeted redevelopment: the Arts and Cultural District—featuring the Dante Hall

and Boardwalk Hall venues—and the Eds-Meds Corridor, adjacent to Atlanticare Hospital, and

including the Atlantic Cape Community College, and the Carnegie Library Center of Richard

Stockton College. The Arts and Cultural District is focused on Mississippi Avenue from

Mediterranean Avenue to the Boardwalk, and it includes the blocks between Georgia and Missouri

Avenues. The Eds-Meds Corridor is a 14-and-a-half block area between New York and Ohio and

Pacific and Baltic Avenues.




MARKET POTENTIAL FOR THE CITY OF ATLANTIC CITY

Analysis of migration, mobility and geo-demographic characteristics of households currently living

within defined draw areas is integral to the determination of the depth and breadth of the potential

market for newly-created workforce and market-rate housing units within the Downtown Atlantic

City Study Area.

American households, more than any other nation’s, have always been extraordinarily mobile. In

2010, because of the impact of the recession on household mobility, approximately 11 percent of

Atlantic City and Atlantic County households moved from one dwelling unit to another, a

considerably lower mobility rate than in previous years. In general, household mobility is higher in

urban areas; a greater percentage of renters move than owners; and a greater percentage of younger

households move than older households.

Where will the potential market for housing in the City of Atlantic City move from?

—The Draw Areas—

As derived from migration analysis—based on the most recent taxpayer records from the Internal

Revenue Service—the principal draw areas for new housing units within the Downtown Atlantic

City Study Area extends from the city and Atlantic County to include adjacent counties, and to

Philadelphia metropolitan area counties in New Jersey and Pennsylvania. This analysis also factors

in the market potential from households currently living in all other counties represented in Atlantic

County migration.

Analysis of the current residences of the employees and staff of the Atlanticare Medical Center and

several of the casinos located in Atlantic City provides additional support for the draw area

conclusions of the migration analysis. Of the hospital and casino employees included in the analysis,

approximately 13 percent currently live in the City of Atlantic City, approximately 75 percent

currently live in the balance of Atlantic County, approximately five percent currently live in Cape

May, Cumberland or Ocean Counties, and approximately seven percent currently live in Camden,

Gloucester, or Burlington Counties in New Jersey, or Philadelphia or Montgomery Counties, in

Pennsylvania.




Based on these analyses, then, the draw areas for the City of Atlantic City and the Downtown

Atlantic City Study Area have been delineated as follows:

• The primary draw area, covering households with the financial capacities to rent or purchase

workforce or market-rate dwelling units currently living within the city limits of Atlantic

City.

• The local draw area, covering households with the financial capacities to rent or purchase

workforce or market-rate dwelling units currently living in the balance of Atlantic County.

• The regional draw area, covering households with the financial capacities to rent or purchase

workforce or market-rate dwelling units that are likely to move to the City of Atlantic City

from Cape May, Cumberland, and Ocean Counties.

• The Philadelphia draw area, covering households with the financial capacities to rent or

purchase workforce or market-rate dwelling units that are likely to move to the City of

Atlantic City from Camden, Gloucester, and Burlington Counties in New Jersey, and

Philadelphia and Montgomery Counties in Pennsylvania.

• The national draw area, covering households with the financial capacities to rent or purchase

market-rate dwelling units and with the potential to move to the City of Atlantic City from

all other U.S. counties (primarily counties on the East Coast).

As derived from the updated migration and mobility analyses, then, the draw area distribution of

market potential (those households with the potential to move within or to the City of Atlantic

City) is as shown on the following page (see also Appendix One, Table 9):




Market Potential by Draw Area City of Atlantic City, Atlantic County, New Jersey

City of Atlantic City (Primary Draw Area): 39.6% Balance of Atlantic County (Local Draw Area): 28.3% Cape May, Cumberland, and Ocean Counties (Regional Draw Area): 7.1% Camden, Gloucester, Burlington, Philadelphia, and Montgomery Counties (Philadelphia Draw Area): 8.4% Balance of US (National Draw Area): 16.6%

Total: 100.0%

SOURCE: Zimmerman/Volk Associates, Inc., 2013.




MARKET POTENTIAL FOR THE DOWNTOWN ATLANTIC CITY STUDY AREA

Where will the potential market for housing in the Downtown Study Area move from?

The target market methodology also identifies those households with a preference for living in

downtowns and in-town neighborhoods. Therefore, after discounting for those segments of the

city’s potential market that would choose suburban and/or rural locations, the distribution of draw

area market potential for new and existing market-rate dwelling units within the Downtown Study

Area would be as follows (see also Appendix One, Table 10):

Market Potential by Draw Area THE DOWNTOWN ATLANTIC CITY STUDY AREA City of Atlantic City, Atlantic County, New Jersey


Total: 100.0%


The regional, Philadelphia, and national draw areas represent much larger proportions of market

potential for new housing in the Downtown Study Area (a combined 47 percent) than for the city as

a whole (a combined 22 percent). Conversely, households already living in the City of Atlantic

represent a considerably smaller segment of market potential for the Downtown Study Area (26.2

percent) than for the city as a whole (39.6 percent).

How many households have the potential to rent or purchase new or existing dwelling units within the Downtown Atlantic City Study Area

each year over the next five years?

As determined by the target market methodology, which accounts for household mobility within the

City of Atlantic City and the balance of Atlantic County, as well as migration and mobility patterns

for households currently living in all other cities and counties, over the next five years an annual

average of approximately 1,545 younger singles and couples, empty nesters and retirees, and

traditional and non-traditional families represent the potential market for new or existing housing

units within the Downtown Study Area.




However, not all of those 1,545 households can afford either workforce or market-rate housing

units. Applicable workforce income ranges can vary depending on household size—based on the

Atlantic City-Hammonton MSA Area Median Family Income of $71,100 for a four-person

household—and whether the units are rental or for-sale. For example, a single-person household

earning between $30,000 and $75,000 per year would fall between approximately 60 percent and

150 percent of the Atlantic City AMI. At the same income range, a two-person household would fall

between approximately 55 percent and 132 percent AMI; a three-person household would fall

between approximately 47 percent and 117 percent AMI; and so on.

In nearly every U.S. market, renter households with annual incomes at or below 30 percent of the

AMI typically can afford only subsidized public housing units; households with incomes between 30

and 50 percent AMI are also only able to afford the least expensive rental housing. Low-income

housing tax credits, typically used to provide affordable and workforce rental housing, are restricted

to projects where at least 20 percent of the households would earn no more than 50 percent of the

AMI, calculated by household size, and at least 40 percent would earn no more than 60 percent of

the AMI; the remaining 40 percent would potentially have no income limitations. On the for-sale

side, it is nearly impossible for households with annual incomes at or below 50 percent of the AMI to

qualify for mortgages, even with heavily-subsidized down payments.

Therefore, this analysis focuses only on households with annual incomes above 50 percent of the

AMI.

What are their housing preferences?

From the perspective of draw area target market propensities and compatibility, and within the

context of the new housing marketplace in the Atlantic City market area, the potential market for

new housing units within the Study Area could include the full range of housing types, from rental

multi-family to for-sale single-family detached. However, downtown development should

concentrate on the highest-density housing types, including redevelopment or adaptive re-use of

existing buildings, which support urban development and redevelopment most efficiently and

provide the greatest fiscal, economic and social/lifestyle benefit.




The housing preferences of those 1,145 draw area households with incomes of at least 50 percent of

the AMI are outlined as follows (see also Table 1):

Annual Potential Market for New and Existing Higher-Density Housing Units THE DOWNTOWN ATLANTIC CITY STUDY AREA City of Atlantic City, Atlantic County, New Jersey

NUMBER OF PERCENT HOUSING TYPE HOUSEHOLDS OF TOTAL

Multi-family for-rent 525 45.9% (lofts/apartments, leaseholder)

Multi-family for-sale 330 28.8% (lofts/apartments, condo/co-op ownership)

Single-family attached for-sale 290 25.3% (townhouses/live-work, fee-simple/ condominium ownership)

Total 1,145 100.0%


These 1,145 households account just under a third of the 3,610 households that represent the

annual potential market for new and existing units citywide, and indicate the depth of the potential

market for new housing units within the Downtown Study Area, not housing need and not

projections of household change. These are the households that are likely to move within or to the

Downtown Study Area if appropriate housing options were to be made available and favorable

economic factors are in place.

Casino and Atlanticare employees are likely to represent between 15 and 25 percent of the potential

market for new housing within the Downtown Study Area, particularly those currently living outside

of Atlantic County. Although between 85 and 90 percent of the approximately 38,000 casino and

hospital employees currently live in either the City of Atlantic City or in Atlantic County, an

estimated 3,800 to 5,700 employees currently live outside the county. Based on employee

demographics, it is likely that at least five percent of these employees—or 190 to 285 employees per

year—would be likely to move to the Downtown Study Area if appropriate housing options were to

be made available.

Table 1

Annual Potential Market For New Workforce And Market-Rate Higher-Density Housing UnitsDistribution Of Annual Average Number Of Households With The Potential

To Move To The Downtown Atlantic City Study Area Each Year Over The Next Five YearsBased On Housing Preferences And Income Levels

The Downtown Atlantic City Study AreaCity of Atlantic City, Atlantic County, New Jersey

Atlantic City, Balance of Atlantic County, Regional Draw Area, Philadelphia Draw Area, and Balance of USDraw Areas

Average Annual Number Of HouseholdsWith Potential To Rent/Purchase Within

The City of Atlantic City 3,610

Average Annual Number Of HouseholdsWith Potential To Rent/Purchase Within The Downtown Atlantic City Study Area 1,145

Annual Market Potential. . . . . . . . . . . . . . . . . . . . . . Multi-Family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Single-Family . . . . . . . .

. . . . . . . . . . . For-Rent . . . . . . . . . . . . . . . . . . . . . . For-Sale . . . . . . . . . . . . . . . . . . . . Attached For-Sale . . . . . . . . .

50% to 80% to Above 50% to 80% to Above 50% to 80% to Above80% AMI 120% AMI 120% AMI 80% AMI 120% AMI 120% AMI 80% AMI 120% AMI 120% AMI

210 155 160 120 85 125 160 60 7018.3% 13.5% 14.0% 10.5% 7.4% 9.8% 12.4% 5.2% 6.1%

525 330 29045.9% 28.8% 25.3%

Total

1,145100.0%

Note: As of May 31, 2011, Atlantic City-Hammonton MSA Median Family Income for a family of four is $71,100.

SOURCE: Nielsen Claritas, Inc.;Zimmerman/Volk Associates, Inc.




TARGET MARKET ANALYSIS

Who is the potential market?

—The Target Markets—

As noted in the INTRODUCTION to this report, the increasing market interest in urban

neighborhoods—walkable, with a mix of uses and a variety of housing types—is the result of

dramatic changes in American household composition, the growing cost of commuting by private

automobile, and the profound impact of the Great Recession—which began in 2007—on both

households and builder/developers, particularly in exurban locations.

The changing composition of American households may have the most lasting influence, however,

because of the changing housing preferences of the two largest generations in the history of America:

the Baby Boomers (currently estimated at 77 million), born between 1946 and 1964, and the

estimated 78 million Millennials, who were born from 1977 to 1996 and, in 2010, surpassed the

Boomers in population.

In addition to both generations being at a stage in life when there is a higher preference for urban

living, particularly for those neighborhoods served by transit, the Boomers and Millennials are

changing housing markets in multiple ways. In contrast to the traditional family (a married couple

with children) that comprised the typical post-war American household, Boomers and Millennials

are predominantly singles and couples. As a result, the 21st Century home-buying market now

contains more than 63 percent one- and two-person households, and the 37 percent of homebuyers

that could be categorized as family households are nearly as likely to be non-traditional families

(single parents or unrelated couples of the same sex with one or more children, adults caring for

younger siblings, to grandparents with custody of grandchildren) as traditional families.

Although information on household composition of the Atlantic City casino and Atlanticare hospital

employees is not available, the age range is very broad, from under 25 years old to more than 70.

The average age is around 40. The share of employees aged in their 20s ranges from approximately

12 percent to over 25 percent depending on employer; employees aged in their 30s comprise

between 13 and more than 22 percent of all employees. Annual employee turnover ranges from

approximately seven percent to nearly 25 percent. Turnover tends to be higher with the younger




employees; nearly every casino reported a significant number of long-time employees who had been

with the same casino since it opened.

As determined by the target market analysis, and reflecting national trends, the annual potential

market—represented by lifestage—for new workforce and market-rate housing units in the

Downtown Atlantic City Study Area can be characterized by general household type as follows (see

also Table 2):

Annual Potential Market By Household Type THE DOWNTOWN ATLANTIC CITY STUDY AREA City of Atlantic City, Atlantic County, New Jersey

PERCENT RENTAL FOR-SALE FOR-SALE HOUSEHOLD TYPE OF TOTAL MULTI-FAM. MULTI-FAM. SF ATTACHED

Empty-Nesters & Retirees 17% 11% 26% 19%

Traditional & Non-Traditional Families 10% 10% 1% 21%

Younger Singles & Couples 73% 79% 73% 60%

Total 100% 100% 100% 100%


The annual potential market consists overwhelmingly of younger singles and couples—73 percent of

the market for new units in Downtown Atlantic City. This generation—the Millennials—is the first

to have been largely raised in the post-’70s world of the cul-de-sac as neighborhood, the mall as

village center, and the driver’s license as a necessity of life. In far greater numbers than predecessor

generations, Millennials are moving to downtown and urban neighborhoods. The target groups in

this segment typically choose to live in neighborhoods that contain a diverse mix of people, housing

types, and uses. For the most part, younger households tend to be “risk-tolerant,” and will move

into areas or neighborhoods that would not be considered acceptable for most families or older

couples.

Among the other principal factors in the larger share of the market held by younger singles and

couples are:

• Their higher mobility rates—young people tend to move much more frequently than

older people;




• Their strong preference for urban apartments, particularly lofts, as evidenced in

numerous comparable loft developments in other cities, ranging in size from

Lawrence, MA to St. Louis, MO;

• The reduced mobility of older singles and couples because of their inability, or

reluctance, to sell their existing units in the current housing recession; and

• The fact that, outside of New York, Chicago, or San Francisco, downtown dwelling

units are rarely the choice of traditional families, in large part because of concerns

about school quality, and the lack of private outdoor space in which their children

can play unsupervised.

Younger singles and couples typically are comfortable in neighborhoods with urban diversity, and

places for social interaction are significantly more important to them than they are to either families

or empty nesters and retirees. This market segment chooses neighborhoods with a “sense of place,”

with outdoor public spaces and neighborhood amenities that reflect their interests. To many of

these households, the public realm can be more important than the dwelling unit itself. However,

the continuing challenge in capturing this potential market is to produce new units that are

attractive to young people (lofts, not suburban-style apartments), at rents and prices that the

identified target markets can afford, and within a vibrant neighborhood with a varied mix of uses,

services and activities.

Approximately 25 percent of these households would be moving to the Study Area from another

location in Atlantic City; 24 percent would be moving from other towns in Atlantic County; just

under 10 percent would be moving from Cumberland, Cape May, and Ocean Counties; 17 percent

from the Philadelphia metropolitan area; and the remaining 24 percent from elsewhere in the U.S.

It is likely that a majority of the casino employees that represent the market for new Downtown

Atlantic City housing units would be younger singles and couples.

The next largest general market segment—empty nesters and retirees—represents 17 percent of the

potential market for new units in the Downtown Study Area, a smaller share than would be

otherwise typical, in part because of their inability to sell—or reluctance to sell at an actual or

perceived loss—their existing dwelling units. Throughout this decade empty nesters and retirees are

likely to represent an important growth market for Downtown Atlantic City as the national housing




market stabilizes, the neighborhood becomes more established and any lingering safety concerns

dwindle.

These households—for the most part, the Baby Boom generation—have been moving from the full-

nest to the empty-nest life stage at an accelerating pace that will peak sometime this decade and

continue beyond 2020. Since the first Boomer turned 50 in 1996, empty-nesters have had a

substantial impact on urban and downtown housing. After fueling the diffusion of the population

into ever-lower-density exurbs for nearly three decades, Boomers, particularly affluent Boomers, are

rediscovering the merits and pleasures of urban living.

Most of the households in this market segment would be moving to the Study Area because of

lifestyle changes, from full nest to empty nest, rather than due to necessity. A very small percentage

are retirees, with incomes from pensions, savings and investments, and social security; the majority

are still working, some in professional and managerial positions, some at the casinos, some as

business owners. Many lived in urban neighborhoods in their youth. As a result, these households

are attracted to move-down options in urban neighborhoods within walking distance of restaurants

and shops, which Downtown Atlantic City now has in significant numbers.

Approximately a third of these households are currently living in Atlantic City and another 40

percent in nearby Atlantic County towns and suburbs; the remaining 28 percent would be moving

from another county in the region, the Philadelphia area, or from elsewhere in the United States.

Family-oriented households are the smallest market segment, representing just 10 percent of the

market for new units in the Study Area. In the 1980s, when the majority of the Baby Boomers were

in the full-nest lifestage, the “traditional family household” (married couple with one or more

children) comprised more than 45 percent of all American households. That demographic has now

fallen to less than 22 percent of all American households (and only about 11 percent in Atlantic

City), and the subset of the one wage-earner traditional family has fallen to less than 10 percent of all

American households. In addition to the reduced percentage of households with children reflecting

the aging of the Baby Boomers into the empty-nest lifestage, the composition of households with

children has become increasingly diverse with notable growth in some areas of non-traditional

families.




The small number of family-oriented households that represent the potential market for new units in

the Downtown Study Area are predominantly non-traditional families—single parents, often

divorced, with one or two older children. Non-traditional families, which during the 1990s became

an increasingly larger proportion of all U.S. households, encompass a wide range of households with

children.

Approximately 20 percent would be moving from another unit located in Atlantic City; just over 23

percent would be moving from elsewhere in Atlantic County; nine percent from Cumberland, Cape

May, and Ocean Counties; 26 percent from the Philadelphia metropolitan area; and the remaining

20 percent would be moving from elsewhere in the U.S.

The primary target groups, their median and range of incomes, and median home values for owner-

occupied units, are:

Potential Housing Market (In Order of Median Income)

THE DOWNTOWN ATLANTIC CITY STUDY AREA City of Atlantic City, Atlantic County, New Jersey

HOUSEHOLD MEDIAN BROAD INCOME MEDIAN HOME TYPE INCOME RANGE VALUE (IF OWNED)

Empty Nesters & Retirees Cosmopolitan Elite $150,000 $75,000–$200,000 $371,300 Suburban Establishment $138,400 $65,000–$175,000 $346,500 Affluent Empty Nesters $136,500 $60,000–$180,000 $365,500 Urban Establishment $106,200 $60,000–$150,000 $306,200 Mainstream Retirees $62,900 $40,000–$90,000 $154,400 Middle-Class Move-Downs $62,100 $35,000–$95,000 $212,000 No-Nest Suburbanites $60,500 $40,000–$90,000 $202,700 Middle-American Retirees $58,700 $35,000–$80,000 $196,900 Blue-Collar Retirees $46,900 $35,000–$60,000 $154,400 Suburban Seniors $37,000 $30,000–$50,000 $129,300 Hometown Retirees $32,800 $25,000–$45,000 $104,500 Multi-Ethnic Seniors $29,700 $25,000–$40,000 $124,900 Second City Seniors $28,800 $20,000–$35,000 $101,900

continued on following page . . .




. . . continued from preceding page

HOUSEHOLD MEDIAN BROAD INCOME MEDIAN HOME TYPE INCOME RANGE VALUE (IF OWNED)

Traditional & Non-Traditional Families Unibox Transferees $140,800 $70,000–$195,000 $339,800 Full-Nest Urbanites $66,500 $45,000–$90,000 $254,700 Multi-Ethnic Families $91,600 $55,000–$125,000 $216,200 Multi-Cultural Families $42,000 $30,000–$55,000 $164,500 Inner-City Families $37,600 $25,000–$50,000 $152,800 In-Town Families $36,200 $50,000–$45,000 $143,600 Single-Parent Families $29,300 $20,000–$35,000 $140,100

Younger Singles & Couples The Entrepreneurs $124,300 $50,000–$175,000 $387,000 The VIPs $110,600 $55,000–$145,000 $353,800 e-Types $103,500 $50,000–$150,000 $309,400 Upscale Suburban Couples $101,000 $50,000–$140,000 $305,000 Fast-Track Professionals $88,600 $45,000–$125,000 $298,900 New Bohemians $64,900 $45,000–$90,000 $296,300 Twentysomethings $60,800 $40,000–$85,000 $241,700 Suburban Achievers $58,700 $40,000–$80,000 $258,100 Small-City Singles $47,700 $35,000–$75,000 $182,200 Urban Achievers $42,300 $30,000–$60,000 $226,200 Working-Class Singles $37,000 $25,000–$50,000 $167,300 Blue-Collar Singles $34,900 $25,000–$45,000 $128,800 Soul City Singles $28,400 $20,000–$40,000 $175,100

NOTE: The names and descriptions of the market groups summarize each group’s tendencies—as determined through geo-demographic cluster analysis—rather than their absolute composition. Hence, every group could contain “anomalous” households, such as empty-nester households within a “full-nest” category.


(Reference APPENDIX THREE, TARGET MARKET DESCRIPTIONS, for detail on each target group.)

The mix of households often progresses during the establishment of downtown living. In city after

American city, the successful establishment of new market-rate housing options in previously non-

residential areas has often been initially dependent upon “risk-oblivious” households. “Risk-

oblivious” households are mostly young singles and couples, often with a large contingent of gays

and a high percentage of artists and artisans seeking inexpensive space for combined living and

working. These pioneers will often begin neighborhood transformation by living illegally in

commercial space. Eventually, once the area becomes populated, restaurants, bars, clubs and unique

or unusual retail establishments begin to define the neighborhood character and raise its profile. At

this point, these neighborhoods become sought after by “risk-tolerant” households. “Risk-tolerant”




households are also usually young and almost always childless. The “risk-tolerant” includes those

willing to make investments in ownership housing—sometimes they are the former “risk oblivious”

seeking to recoup years of sweat equity.

In every case, however, the neighborhood established by these households has grown to encompass

more than simply housing; its flavor and tone has been reinforced by the non-residential uses—avant

garde shops, cutting-edge galleries, trendy clubs, and stylish eating and drinking establishments—

that follow the risk-oblivious and risk-tolerant households, make the neighborhood acceptable for

the “risk-aware” households that follow and contribute to the area’s residential rent/price escalation.

The target market analysis indicates that there is a growing number of risk-oblivious and risk-

tolerant households who already live within the city limits, and a significant market with the

potential to move from outside the city and county limits.

Table 2

Annual Market Potential For Higher-Density Units By Household TypeDistribution Of Annual Average Number Of Households With The Potential

To Move To The Downtown Atlantic City Study Area Each Year Over The Next Five YearsThe Downtown Atlantic City Study Area

City of Atlantic City, Atlantic County, New Jersey

. . . . . . . Multi-Family . . . . . . . . . Single-Family . .. . . For-Rent . . . . . . For-Sale . . . . . Attached For-Sale . .

Above Above AboveTotal 50% AMI 50% AMI 50% AMI

Number ofHouseholds: 1,145 525 330 290

Empty Nesters& Retirees 17% 11% 26% 19%

Traditional &Non-Traditional Families 10% 10% 1% 21%

YoungerSingles & Couples 73% 79% 73% 60%

100% 100% 100% 100%

Note: As of March 2009, Fort Wayne MSA Median Family Income for a family of four is $63,300.The Atlantic City-Hammonton MSA Area Median Family Income (AMI) is $71,100 for a family of four in 20011.





THE CURRENT CONTEXT

What are the alternatives?

—Multi-Family Rental Properties—

Zimmerman/Volk Associates has assembled data from a variety of sources, including on-site field

investigation, augmented by telephone follow-up and internet research, on several larger rental

properties, representing more than 3,000 rental apartments in and around Atlantic City. (See Table

3.) Some of these properties are investment-grade assets: all were built before 2000, and all have 150

or more units. A large number are at functional full occupancy, with five percent or less vacant

units. There are also numerous small properties, rented condominiums and single-family houses

scattered throughout the Atlantic City area where rents per square foot tend to be lower than those

at professionally-managed properties.

Three properties are located in Atlantic City. Metropolitan Plaza, a 191-unit high-rise located on

Rhode Island Avenue, had only two vacant units as of the update in September, both of which have

been re-leased. The property contains 191 one- and two-bedroom units in the high-rise building,

and 24 two- to four-bedroom units in townhouse configurations. Rents range from $665 per month

for a 597-square-foot one-bedroom to $926 per month for a 1,428-square-foot four-bedroom unit

($0.65 to $1.07 per square foot). Income-qualified residents using Section 8 vouchers occupy 20

percent of the units.

Rents for studios start at $690 per month for 456 square feet of living space ($1.51 per square foot)

at The High Gate Apartments, a 14-story high-rise building located on Absecon Boulevard, and

reach $800 per month for a 620-square-foot one-bedroom unit ($1.29 per square foot). The High

Gate was built in 1983 as the Marina Club Condominiums, and some of the units are owned.

Chelsea Village is a 261-unit low-rise property located on Fairmount Avenue. One-bedroom/one-

bath apartments start at $850 per month for a 495-square-foot unit ($1.72 per square foot), 580-

square-foot, two-bedroom/one-bath apartments rent for $1,050 to $1,075 ($1.81 to $1.85 per

square foot), and three-bedroom/one bath units range between $1,250 to $1,275 per month ($1.42

to $1.45 per square foot). At the time of the field investigation, the property was 92 percent

occupied.




The Marina Del Rey apartments, built in the 1950s, are located in nearby Pleasantville. The

property, which contains 232 units, is almost fully occupied, with 98 percent of the unit leased.

Rents range from $720 to $780 per month for 616-square-foot one-bedroom/one-bath apartments

($1.17 to $1.27 per square foot) and from $820 to $880 per month for 729-square-foot two-

bedroom/one-bath apartments ($1.12 to $1.21 per square foot). In Absecon, two large properties,

the 416-unit Landings and the 228-unit California Apartments, have a number of vacancies. At

The Landings, curently 85 percent occupied, monthly rents range from $865 for a 900-square-foot

one-bedroom to $1,035 for an 1,175-square-foot two-bedroom ($0.88 to $1.10 per square foot, the

lowest rents per square foot of the properties included in the survey). At California Apartments,

currently 94 percent occupies, rents range from $970 per month for a one-bedroom apartment

containing 868 square foot to $1,165 for a two-bedroom/one-and-a-half bath apartment containing

1,128 square feet ($1.03 to $1.12).

Several large apartment properties built between 2000 and 2008 are located further inland, in Mays

Landing, and Galloway: Hamilton Greene and Evergreen at Timber Glen in Mays Landing; and

Sunrise Bay and the Woods at Blue Heron Pines in Galloway Township. In general, one-

bedroom rents at these properties range from $850 to $1,435 per month for one-bedroom units

ranging in size from 575 to 1,056 square feet ($1.10 to $1.48 per square foot) and $1,115 to $1,510

for two-bedroom apartments containing between 850 and 1,559 square feet (approximately $1.02 to

$1.32). Two- and three-bedroom townhouses, ranging in size from 1,144 to 2,226 square feet of

living space carry rents of $1,315 to $2,150 per month ($1.01 to $1.47 per square foot). These

suburban properties contain significant amenities, ranging from clubhouse, pool, fitness center,

business center, and a playground.

Table 3 Page 1 of 3

Summary Of Selected Rental PropertiesAtlantic City Market Area, New Jersey

September, 2013

Number Unit Base Unit Rents per Occupancy/Property of Units Type Rent Sizes Sq. Ft. Other InformationAddress

. . . . . Atlantic City . . . . .

Metropolitan Plaza (1988) 191 99%145 S. Rhode Island Avenue Hi-rise. 1br/1ba $665 597 $1.11 Vouchers accepted.AIMCO Management 2br/2ba $802 807 $0.99 20% voucher units.

The High Gate (1983) 158 99%655 Absecon Boulevard Studio $690 456 $1.51 Fitness center,Lakewood Highgate 1br/1ba $760 to 605 to $1.26 to concierge.{also Marina Club condominiums) $800 620 $1.29

Chelsea Village 261 92%(Remodeled 2008) 1br/1ba $850 to 495 $1.72 to Playground.3300 Fairmount Avenue $875 $1.77Beacon Property Management 2br/1ba $1,050 to 580 $1.81 to

$1,075 $1.853br/1ba $1,250 to 880 $1.42 to

$1,275 $1.45

. . . . . Pleasantville . . . . .

Marina Del Rey (1950s) 232 98%112 Atlantic Avenue 1br/1ba $720 to 616 $1.17 to Fitness center, spa, Community Realty Management $780 $1.27 Fitness center.

2br/1ba $820 to 729 $1.12 to pool, spa.$880 $1.21 Income restricted

. . . . . Absecon . . . . .

The Landings at Absecon 416 85%(Remodeled 2008) 1br/1ba $865 to 900 $0.96 to Fitness center,800 Falcon Drive $990 $1.10 spa, pool,Morgan Properties 2br/2ba $1,015 to 1,125 to $0.88 to business center.

$1,035 1,175 $0.90

SOURCE: Zimmerman/Volk Associates, Inc.

Table 3 Page 2 of 3


September, 2013


. . . . . Absecon (continued) . . . . .

California Apartments 228 94%(Remodeled 2009) 1br/1ba $970 868 $1.12 Clubhouse,400 Manor Drive 2br/1ba $1,215 1,128 $1.08 pool, tennis,The Manor Group 2br/1.5ba $1,165 1,128 $1.03 playground.

. . . . . Mays Landing . . . . .

Hamilton Greene 416 98%(Remodeled 2000) 1br/1ba $1,145 to 814 to $1.41 to Fitness center,3401 Montgomery Drive $1,435 862 $1.66 clubhouse, pool,Scully Company 2br/2ba $1,230 to 935 to $1.32 to tennis, hot tub,.

$1,335 1,042 $1.28 basketball courts.2br/2.5ba TH $1,315 to 1,130 $1.16 to

$1,665 $1.473br/2.5ba TH $1,565 to 1,325 $1.18 to

$1,775 $1.34

Evergreen at Timber 498 80%Glen (2008) 2br/2ba $1,275 to 1,164 to $1.10 to Playground, pool,2000 Timber Glen Drive $1,419 1,210 $1.17 tennis courts,Edgewood Properties 2br/2.5ba $1,490 1,454 $1.02 to clubhouse,

$1,510 $1.04 fitness center,2br/2.5ba TH $1,605 to 1,420 to $1.13 to business center.

$1,655 1,480 $1.173br/2.5ba TH $1,700 to 1,660 to $1.02 to

$1,825 1,750 $1.10


Table 3 Page 3 of 3


September, 2013


. . . . . Galloway Township . . . . .

Sunrise Bay 325 93%(Remodeled 2008) 1br/1ba $850 to 575 to $1.24 to Pool, playground,180 Walden Way $965 777 $1.48 fitness center,Edgewood Properties 2br/2ba $1,115 to 850 to $1.11 to clubhouse,

$1,180 1,065 $1.31 business center.2br/2ba TH $1,250 to 1,144 $1.09 to

$1,390 $1.222br/2.5ba TH $1,305 to 1,242 to $1.01 to

$1,450 1,436 $1.053br/1.5ba TH $1,340 1,144 $1.173br/2.5ba TH $1,390 to 1,436 to $0.87 to

$1,400 1,615 $0.97

The Woods at 330 99% Blue Heron Pines (2001) 1br/1ba $1,335 to 1,056 $1.26 to Clubhouse, pool,1000 Bally Bunion Drive $1,435 $1.36 fitness center,DiLucia Management Corp. 2br/2ba $1,555 to 1,309 $1.19 to business center,

$1,655 $1.26 $100 premiums2br/2ba-double master bd $1,685 1,513 $1.11 for water views.

2br/2ba - Loft $1,675 1,559 $1.073br/2ba $1,675 to 1,559 $1.07 to

$1,775 $1.143br/2.5ba TH $2,050 to 2,226 $0.92 to

$2,150 $0.97


RESIDENTIAL MARKET POTENTIAL Page 27 Downtown Atlantic City Study Area City of Atlantic City, Atlantic County, New Jersey September, 2013


—Multi-Family and Single-Family Attached and Detached For-Sale Properties—

Zimmerman/Volk Associates has assembled data through field investigation, telephone and internet

research on the few for-sale properties currently marketing new units, representing just under 1,000

new apartments, townhouses, and single-family detached houses in the Atlantic City market area,

and on the several older condominium buildings in and around Downtown Atlantic City with a

total of over 150 resales on the market in September 2013. (See Tables 4 and 5.) Throughout the

market area, those for-sale properties that were either introduced or had not completed sales in 2007

or later, were severely affected by the collapse of the housing market, as numerous buyers cancelled

reservations or were unable to qualify for mortgages. In response, a number of existing properties

discontinued marketing or are leasing unsold units, and several planned properties have not

commenced construction.

In Atlantic City, the 200-unit Bella Condominiums, by Scannapieco Development, has sold 136

units, an average of approximately 1.5 units per month, since opening in December 2005. The two-

bedroom/two-bath units currently for sale are priced at $290,000 to $370,000 for 1,060- to 1,128-

square-foot units ($274 to $349 per square foot), depending on floor. A total of 63 of the Chelsea

View townhouses, developed by Renaissance Properties, have been sold. The three-bedroom/three-

bath units contain between 2,117 and 2,547 square feet and are currently priced at $294,900 to

$479,990 ($139 to $188 per square foot). Sales have averaged just under one unit per month since

opening in 2007.

In West Atlantic City, K. Hovnanian’s Bayport on Lake’s Bay is a 131-unit townhouse property

located on Bayport Drive. The property, which opened in 2008, has sold 94 units, for an average

sales pace of 1.5 units per month. The two-bedroom/three-and-a-half-bath units range in size from

1,489 to 2,020 square feet and in price from $159,900 to $179,900, or $89 to $107 per square foot.

Three single-family subdivisions are currently being marketed, two in May’s Landing and one in Egg

Harbor Township. Eaglesmere, a 107-lot property on Rue Chagal in May’s Landing, is being built

by Ryan Homes. A total of 93 of the houses had been sold as of September 2013 update, for an

average sales pace of 1.6 units per month; base prices range from $209,990 to $279,990 for houses

containing 1,402 to 2,760 square feet ($101 to $150 per square foot).

RESIDENTIAL MARKET POTENTIAL Page 28 Downtown Atlantic City Study Area City of Atlantic City, Atlantic County, New Jersey September, 2013


Another national builder, Lennar Homes, is developing Cedar Pointe, 176 single-family houses on

quarter-acre lots on Darby Lane, also in May’s Landing. Base prices range from $268,950 to

$347,950 for houses containing between 1,643 to 3,719 square feet ($94 to $164 per square foot).

Lennar has sold 151 of the houses since opening for sales in 2008, for an average of 2.5 units per

month.

Finally, Ryan Homes is also selling detached houses at The Enclave, a subdivision within

Renaissance at Silver Oaks in Egg Harbor Township. Base prices range from $239,990 to $294,990

for 1,680- to 2,822-square-foot houses ($105 to $143); 160 of the total 240 units planned have been

sold since the opening in 2009, for an average sales pace of 3.3 units per month.

Several condominium buildings located in Atlantic City have multiple resale units available. Resale

asking prices at the Ritz on the Boardwalk range from $75,000 for a 392-square-foot studio to

$325,000 for a two-bedroom/two-bath unit; at the time of the update, 26 units in the building were

on the market, most of which have been offered for sale in 2013.

Eight resale units are available at the Atlantic Palace, also on the Boardwalk. Asking prices range

between $79,000 for a 400-square-foot studio to $270,000 for a two-bedroom/two-bath flat.

More than 20 units are on the market at The Warwick, with asking prices starting at $79,900 for a

studio to $175,000 for a one-bedroom flat. Resale prices per square foot range between $148 and

$256.

The most expensive resales are at the Ocean Club, a 1984 tower with 37 condominiums on the

market as of September 2013. Asking prices range from $149,000 for an 623-square-foot, studio

apartment to $2,150,000 for a 3,300-square-foot, four-/bedroom/four-bath penthouse. Prices per

square foot range between $235 per square foot to more than $650 per square foot. Many of these

units have been on the market for less than a year, although one unit has been for sale for more than

four years.

Table 4

Summary Of Selected For-Sale Multi-Family AndSingle-Family Attached And Detached Unit Developments

Atlantic City Market Area, New JerseySeptember, 2013

Unit Unit Price Unit Size Price Per Total Sold toDevelopment Type Range Range Sq. Ft. Units DateDeveloper/Address

. . . . . Atlantic City . . . . .

Bella (12/05) CO 200 136 (1.5)526 Pacific Avenue 2br/2ba $290,000 † 1,060 $274 {units for saleScannapieco Development $340,000 † 1,128 $301 and for rent}

$350,000 † 1,060 $330$370,000 † 1,060 $349

Chelsea View (2007) TH 75-80 63 (0.9)Chelsea Court 3br/2.5ba $294,900 to 2,117 to $139 to {leasingRenaissance Properties $479,990 2,547 $188 unsold units}

. . . . . West Atlantic City . . . . .

Bayport on Lake's Bay TH 131 94 (1.5){2008} 2br/3.5ba $159,900 to 1,489 to $89 to

Bayport Drive $179,900 2,020 $107K. Hovnanian

. . . . . May's Landing . . . . .

Eaglesmere (2008) SF 107 93 (1.6)22 Rue Chagall 0.25 acre $209,990 to 1,402 to $101 toRyan Homes $279,990 2,760 $150

Cedar Point (2008) SF 176 151 (2.5)45 Darby Lane 0.25 acre $268,950 to 1,643 to $94 toLennar Homes $347,950 3,719 $164

. . . . . Egg Harbor Township . . . . .

Renaissance at Silver Oaks 240 160 (3.3) The Enclave (2009) SF $239,990 to 1,680 to $105 toRidge Avenue 0.25 to $294,990 2,822 $143Ryan Homes 0.3 acre

† Spec or model units.


Table 5 Page 1 of 5

Summary of Multi-Family And Single-Family Attached Units Currently For SaleAtlantic City Market Area, New Jersey

September, 2013

Year Asking Unit Price Date Property Built Price Size psf Configuration ListedAddress

Condominiums

The Ritz 1920 $75,000 392 $191 Studio/1ba April, 20122721 Boardwalk $79,000 349 $226 Studio/1ba September, 2012

$79,900 384 $208 Studio/1ba August, 2013$80,000 384 $208 Studio/1ba August, 2013$85,000 386 $220 1br/1ba August, 2013$85,000 Studio/1ba September, 2013$85,000 382 $223 Studio/1ba March, 2013$85,000 349 $244 Studio/1ba May, 2013$87,000 384 $227 Studio/1ba April, 2010$93,000 444 $209 Studio/1ba September, 2013$95,000 362 $262 Studio/1ba January, 2013

$100,000 578 $173 1br/1ba July, 2013$114,900 569 $202 1br/1ba March, 2013$130,000 504 $258 Studio/1ba September, 2013$130,000 517 $251 1br/1ba October, 2013$140,000 584 $240 1br/1ba January, 2013$149,000 502 $297 Studio/1ba August, 2013$150,000 569 $264 1br/1ba April, 2013$150,000 502 $299 Studio/1ba September, 2013$150,000 1br/1ba April, 2013$155,000 670 $231 1br/1ba July, 2013$165,000 670 $246 1br/1ba February, 2013$235,000 1,030 $228 2br/2ba December, 2012$249,900 1,249 $200 2br/2.5ba July, 2013$310,000 1,032 $300 2br/2ba May, 2013$325,000 1,331 $244 2br/2ba February, 2013

Atlantic Palace $79,000 400 $198 Studio/1ba May, 20121515 Boardwoalk $89,900 Studio/1ba October, 2013

$117,900 412 $286 Studio/1ba April, 2012$120,000 412 $291 Studio/1ba September, 2012$120,000 500 $240 Studio/1ba July, 2013$139,000 688 $202 1br/1ba July, 2013$117,900 412 $286 Studio/1ba July, 2013$270,000 2br/2ba May, 2013

SOURCE: Multiple Listing Service;Zimmerman/Volk Associates, Inc.

Table 5 Page 2 of 5


September, 2013


Condominiums {continued)

The Warwick 1950 $79,900 Studio/1ba January, 2012101 S. Raleigh Avenue $79,900 540 $148 1br/1ba October, 2012

$79,900 1br/1ba September, 2013$87,000 613 $142 1br/1ba July, 2013$89,000 600 $148 1br/1ba June, 2013$94,900 Studio/1ba April, 2013$98,000 1br/1ba March, 2013$98,900 540 $183 1br/1ba September, 2013$99,000 468 $212 1br/1ba January, 2013$99,900 1br/1ba February, 2013

$102,900 1br/1ba March, 2013$110,000 540 $204 1br/1ba June, 2013$110,000 1br/1ba February, 2013$120,000 1br/1ba July, 2013$134,900 1br/1ba June, 2013$139,000 544 $256 1br/1ba July, 2013$145,000 2br/1.5ba August, 2013$165,900 930 $178 2br/1.5ba August, 2013$169,900 850 $200 2br/2ba April, 2013$169,900 2br/1ba April, 2013$175,000 1br/1.5ba February, 2013

The Bella 1988 $119,000 1,200 $99 2br/1.5ba June, 2013526 Pacific Avenue $134,999 1,060 $127 2br/2ba September, 2013

$229,000 1,060 $216 2br/2ba September, 2013$245,000 1,302 $188 2br/2ba August, 2013$274,999 1,129 $244 2br/2ba January, 2013$289,000 1,060 $273 2br/2ba August, 2013$290,000 2br/2ba September, 2013$299,000 1,060 $282 2br/2ba September, 2013$300,000 1,060 $283 2br/2ba April, 2013$340,000 1,128 $301 2br/2ba September, 2013$350,000 1,060 $330 2br/2ba September, 2013$360,000 2br/2ba July, 2013$370,000 2br/2ba September, 2013$379,000 1,060 $358 2br/2ba May, 2013


Table 5 Page 3 of 5


September, 2013

Asking Unit Price Date Property Price Size psf Configuration ListedAddress


The Enclave 1984 $124,900 Studio/1ba February, 20133851 Boardwalk $125,000 Studio/1ba May, 2013

$130,000 490 $265 Studio/1ba May, 2013$135,000 760 $178 Studio/1ba May, 2013$139,000 490 $284 Studio/1ba May, 2013$154,900 490 $316 Studio/1ba June, 2013$269,000 1br/1ba June, 2013$269,900 2br/2ba June, 2013$279,000 760 $367 1br/1.5ba July, 2013$295,000 1,080 $273 2br/2ba August, 2013$295,000 1,012 $292 2br/2ba January, 2013$298,000 2br/2ba July, 2013$298,500 1020 $293 2br/2ba September, 2013$300,000 1012 $296 2br/2ba May, 2013$324,900 2br/2ba September, 2013

The Plaza 1970 $160,000 970 $165 1br/1ba March, 2013101 S. Plaza Place $198,000 1,379 $144 2br/2ba May, 2013

The Berkeley 1973 $179,900 Studio/1ba May, 2013100 S. Berkeley Square $249,000 932 $267 1br/1.5ba March, 2013

$250,000 2br/2ba September, 2013$279,000 1br/2ba August, 2013$279,000 1br/1ba May, 2013$299,000 1,000 $299 1br/2ba March, 2013$329,000 1,196 $275 2br/2ba March, 2013$329,950 1,200 $275 2br/2ba October, 2013$499,900 2br/2ba May, 2013$525,000 1,196 $439 2br/2ba July, 2013$799,000 1,516 $527 2br/2ba August, 2013


Table 5 Page 4 of 5


September, 2013



Ocean Club 1984 $149,000 623 $239 Studio/1ba June, 20133101 Boardwalk $155,000 Studio/1ba July, 2013

$169,000 1br/1.5ba September, 2013$239,900 978 $245 1br/1.5ba October, 2013$249,000 1br/1.5ba June, 2013$255,000 1br/2ba May, 2013$259,000 1br/1.5ba April, 2013$259,000 1br/1.5ba September, 2013$265,000 1br/1.5ba August, 2013$269,000 1,146 $235 2br/1.5ba July, 2012$279,000 1br/1.5ba September, 2013$299,000 1br/2ba April, 2013$299,000 978 $306 1br/2ba November, 2011$299,900 910 $330 1br/1.5ba September, 2013$329,000 1br/1.5ba August, 2013$369,000 1,060 $348 1br/1.5ba July, 2013$389,000 1br/1.5ba September, 2013$425,000 2br/2ba April, 2012$435,000 1,385 $314 2br/2ba May, 2012$460,000 1,385 $332 2br/2ba December, 2012$495,000 1,202 $412 1br/1.5ba July, 2009$510,000 2br/2ba June, 2013$529,000 2br/2ba June, 2013$549,000 1br/1.5ba June, 2013$559,000 1,278 $437 2br/2ba April, 2013$565,000 1,968 $287 3br/2.5ba November, 2011$575,000 2,000 3br/2.5ba August, 2013$599,000 1,986 $302 3br/2.5ba June, 2013$649,000 1,986 $327 3br/2.5ba February, 2013$675,000 3br/2.5ba July, 2013$689,000 3br/2.5ba June, 2012$699,000 1,968 $355 3br/2.5ba August, 2013$849,000 2,111 $402 3br/2.5ba July, 2009

$1,290,000 4br/4ba March, 2013$1,575,000 2br/2.5ba August, 2012$1,950,000 3,000 $650 4br/3ba March, 2011$2,150,000 3,300 $652 4br/4b March, 2011


Table 5 Page 5 of 5


September, 2013



Individual Listings2834 Atlantic Avenue, Unit 709 $80,000 580 $138 Studio/1ba August, 20102834 Atlantic Avenue, Apt 912 $84,900 1br/1ba August, 20102834 Atlantic Avenue, Apt 115 $91,900 900 $102 1br/1ba September, 2013131 S Wilson Avenue Unit A $169,900 850 $200 2br/1ba October, 20122715 Boardwalk $109,000 Studio/1ba September, 20132715 Boardwalk $109,000 386 $282 Studio/1ba July, 20132715 Boardwalk $145,000 502 $289 Studio/1ba July, 20122715 Boardwalk $225,000 1br/1ba June, 2013

Townhouses. . . . . Northeast Inlet . . . . .

The Cove 1990s $140,000 1,550 $90 3br/2.5ba March, 2011Gardner's Basin area $145,000 1,566 $93 3br/2.5ba November, 2012

Individual Listings37 Lighthouse Court 1994 $94,900 2br/2.5ba May, 201264 N Pennsylvania Ave. 1982 $95,900 1,120 $86 3br/2.5ba September, 201213 Anchorage Court 1994 $134,900 1,500 $90 3br/2.5ba August, 20132409 Formicas Way 2008 $139,000 580 $240 2br/1.5ba June, 20132421 Formicas Way 2008 $139,000 956 $145 2br/1.5ba April, 20132411 Formicas Way 2008 $159,000 3br/2.5ba June, 20132419 Formicas Way 2008 $159,000 1,418 $112 3br/2.5ba June, 20132 Starboard Court 1994 $164,900 1,567 $105 3br/2.5ba May, 20132419 Formicas Way $179,000 1,276 $140 3br/2.5ba May, 2013





RENT AND PRICE RANGES: THE DOWNTOWN ATLANTIC CITY STUDY AREA

The major challenges to new residential development in the Downtown Atlantic City Study Area

include:

• High costs: The high costs of materials and labor, in addition to the typically high

cost of adaptive re-use, are, without incentives or subsidies, likely to drive rents and

prices beyond the reach of many potential residents.

• Financing challenges: Restrictive mortgage underwriting and development finance

are a challenge to developers and mortgage qualification continues to be difficult for

many potential buyers.

• Neglected or vacant properties: Derelict and vacant properties are a deterrent to

potential urban residents, as they contribute to the perception that Downtown and

the surrounding areas are neglected, and/or dangerous neighborhoods.

From the perspective of the housing consumer, the existing assets of the Downtown Study Area that

make it an attractive place to live include:

• The Atlantic Ocean and the Boardwalk: These two extraordinary amenities are

within a short walking distance of the Downtown Study Area.

• Employment concentration: Most of Atlantic City’s employment is generated by the

11 casinos and by Atlanticare Hospital, which are located either in, or in close

proximity to the Downtown Study Area.

• Entertainment/dining: In addition to gaming, each of the casinos provides multiple

restaurants and extensive entertainment opportunities, ranging from an IMAX

theater to nightclubs, bars, and live entertainment venues. There are also numerous

restaurants located throughout the city; Boardwalk Hall, which has become an

entertainment venue; and Gardner’s Basin, location of the Atlantic City Aquarium,

several restaurants and shops, and the opportunity for fishing charters and a variety

of cruises.




• Shopping: Over 100 factory stores and restaurants are located within The Walk, an

urban open-air outlet shopping center located within the Study Area. A variety of

small local shops and eateries are located along Atlantic Avenue.

• Walkability: The Downtown Study Area is compact enough to walk from one end

to the other without difficulty.

What is the market currently able to pay?

—Rental Distribution—

As noted in the INTRODUCTION, for the purposes of this study, workforce housing units have been

designated to be those that are affordable to households earning between $30,000 and $75,000

annually; market-rate units are generally those that are affordable to households with annual incomes

above $75,000.

Each casino has approximately 750 to 850 employee job titles, and these include hourly as well as

salaried employees. Between 55 and 60 percent of the job titles are paid by the hour. Depending on

job category, hourly employees earn between the minimum wage of $7.25 per hour to nearly $30

per hour. For one employeee, that equates to a range of just over $15,000 to slightly more than

$62,000 per year, based on a 40-hour, five-day work week of 52 paid weeks.

In general, salaried casino employees are paid between approximately $34,000 to well over $100,000

per year, although the number of employees with annual incomes over $100,000 comprise a very

small percentage of the casino workforce. It is very likely, therefore, that a sizable percentage of

casino employees, including those that are single, could qualify for workforce housing.

As noted previously in the study, applicable workforce income ranges can vary depending on

household size—based on the Atlantic City-Hammonton MSA Area Median Family Income of

$71,100 for a four-person household—and whether the units are rental or for-sale.




For workforce housing, an income qualification range established between 50 percent and 120

percent AMI would mean an income range of approximately $25,000 to $60,000 for a single-person

household; $28,500 to $68,250 for a two-person household, $32,000 to $76,800 for a three-person

household, and so on. To qualify for new market-rate units, households would generally need

annual incomes above 120 percent AMI.

A single-person household with an income at 50 percent AMI, or $25,000 per year, paying no more

than 30 percent of gross income for rent and utilities—which is the HUD minimum standard for

affordability—would qualify for a rent, including utilities, of $625 per month. A two-person

household, with an income just under 120 percent AMI, or $68,000 per year, paying no more than

30 percent of gross income for rent and utilities, would qualify for a rent, including utilities, of

$1,700 per month.

The distribution by rent range of the 525 target households—with incomes between 50 and 80

percent, 80 and 120 percent, and above 120 percent of the AMI (as shown on Table 6)—that

represent the potential market for new rental units in the Downtown Study Area is as follows:

Distribution by Rent Range Target Groups For New Mixed-Income Multi-Family For Rent


MONTHLY HOUSEHOLDS RENT RANGE PER YEAR PERCENTAGE

$500–$750 118 22.5% $750–$1,000 146 27.8% $1,000–$1,250 106 20.2% $1,250–$1,500 84 16.0% $1,500–$1,750 59 11.2% $1,750 and up 12 2.3%

Total: 525 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2013.

As noted previously in this study, younger singles and couples represent 79 percent of the market for

new rentals in the Downtown Study Area. However, only 13 percent of those younger singles and

couples can afford units renting for $1,500 a month or more. Approximately half can only afford

monthly rents of $1,000 or less.




Empty nesters and retirees represent 11 percent of the potential rental market; however, none of

them can afford monthly rents of $1,750 or more. Just under a third of these households could pay

no more than $750 per month in rent, and just over a third could afford between $750 and $1,250

per month.

The family market comprises just 10 percent of the potential renter households. Approximately 18

percent of the traditional and non-traditional families could afford monthly rents of $1,500 or more,

but over half could pay no more than $1,000 per month in rent.

Table 6 Page 1 of 2

Target Groups For New Mixed-Income Multi-Family For RentAnnual Average Market Potential


. . . . . . . . . . . . . . . Number of Households . . . . . . . . . . . . . . .

Empty Nesters 50% to 80% to Above & Retirees 80% AMI 120% AMI 120% AMI Total Percent

Middle-Class Move-Downs 10 10 5 25 4.8%No-Nest Suburbanites 0 0 5 5 1.0%

Blue-Collar Retirees 5 0 0 5 1.0%Suburban Seniors 5 0 0 5 1.0%

Multi-Ethnic Seniors 5 0 0 5 1.0%Second-City Seniors 5 5 5 15 2.9%

Subtotal: 30 15 15 60 11.4%

Traditional &Non-Traditional Families

Unibox Transferees 0 0 5 5 1.0%Multi-Ethnic Families 10 5 5 20 3.8%

Full-Nest Urbanites 5 0 0 5 1.0%Multi-Cultural Families 5 0 0 5 1.0%

In-Town Families 10 5 0 15 2.9%

Subtotal: 30 10 10 50 9.5%

Note: The Atlantic City-Hammonton MSA Area Median Family Income (AMI) is $71,100 for a family of four in 20011.


Table 6 Page 2 of 2

Target Groups For New Mixed-Income Multi-Family For RentAnnual Average Market Potential



Younger 50% to 80% to AboveSingles & Couples 80% AMI 120% AMI 120% AMI Total Percent30% to 80% to Above

The Entrepreneurs 0 0 5 5 1.0%e-Types 0 0 5 5 1.0%

Fast-Track Professionals 0 0 5 5 1.0%The VIPs 5 5 15 25 4.8%

Upscale Suburban Couples 10 5 10 25 4.8%New Bohemians 10 5 5 20 3.8%

Twentysomethings 15 20 20 55 10.5%Suburban Achievers 35 40 30 105 20.0%

Small-City Singles 20 20 15 55 10.5%Urban Achievers 10 5 10 25 4.8%

Working-Class Singles 15 10 5 30 5.7%Blue-Collar Singles 15 10 10 35 6.7%

Soul City Singles 15 10 0 25 4.8%

Subtotal: 150 130 135 415 79.0%

Total Households: 210 155 160 525 100.0%






—For-Sale Distribution—

As noted above, for workforce housing, the income limitation of 50 percent to 120 percent AMI

would mean an income range of approximately $25,000 to $60,000 for a single-person household;

$28,500 to $68,250 for a two-person household, $32,000 to $76,800 for a three-person household,

and so on.

A single-person household with an income at 80 percent AMI, or just under $40,000 per year, paying

no more than 30 percent of gross income for housing costs, including mortgage principal, interest,

taxes, insurance and utilities, would qualify for a 30-year mortgage of $100,000 at a 4.5 percent

interest rate. The down payment—contributed by the buyer, or subsidized through a soft second

mortgage, or a combination of both—would be required to make up the difference, if any, between

$100,000 and the purchase price. A two-person household, with an income just under 120 percent

AMI, or $68,000 per year, under the same criteria, would qualify for a 30-year mortgage of $200,000

at a 4.5 percent interest rate. Again, the down payment would be required to make up the

difference, if any, between $200,000 and the purchase price.

The distribution by price range of the 330 target households—with incomes between 50 and 80


represent the potential market for new for-sale multi-family units (condominiums) in the

Downtown Study Area is as follows:

Distribution by Price Range Target Groups For New Mixed-Income Multi-Family For Sale (Condominiums)


PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE

$100,000–$150,000 122 37.0% $150,000–$200,000 74 22.4% $200,000–$250,000 68 20.6% $250,000–$300,000 48 14.5% $300,000 and up 18 5.5%





Younger singles and couples represent 73 percent of the market for new multi-family for-sale

(condominiums) in the Downtown Study Area. More than 40 percent of those younger singles and

couples can only afford units ranging in price between $100,000 and $150,000. Alternatively, less

than 17 percent can afford units priced above $250,000.

Empty nesters and retirees make up more than a quarter of the potential market for new

condominiums in Downtown Atlantic City. Approximately 43 percent of this market can only

afford units priced under $200,000. However, nearly 30 percent could afford new condominiums

priced between $250,000 and $350,000.

Families comprise less than one percent of the potential market for new condominium units in the

Study Area. Approximately 40 percent could afford new units priced between $150,000 and

$200,000; another 40 percent could afford new units priced between $200,000 and $250,000; and

20 percent could afford new units priced between $250,000 and $300,000.

Table 7 Page 1 of 2

Target Groups For New Mixed-Income Multi-Family For SaleAnnual Average Market Potential




Cosmopolitan Elite 0 0 5 5 1.5%Suburban Establishment 0 0 5 5 1.5%Affluent Empty Nesters 0 0 5 5 1.5%

Urban Establishment 0 0 5 5 1.5%Mainstream Retirees 0 0 5 5 1.5%


Middle-American Retirees 0 5 0 5 1.5%Blue-Collar Retirees 0 5 0 5 1.5%

Suburban Seniors 5 0 0 5 1.5%Second City Seniors 5 0 0 5 1.5%

Subtotal: 20 20 45 85 25.8%


Full-Nest Urbanites 0 5 0 5 1.5%

Subtotal: 0 5 0 5 1.5%



Table 7 Page 2 of 2

Target Groups For New Mixed-Income Multi-Family For SaleAnnual Average Market Potential



Younger 50% to 80% to AboveSingles & Couples 80% AMI 120% AMI 120% AMI Total Percent

The Entrepreneurs 0 0 10 10 3.0%e-Types 0 0 5 5 1.5%

Fast-Track Professionals 5 0 5 10 3.0%The VIPs 5 5 20 30 9.1%

Upscale Suburban Couples 10 5 10 25 7.6%New Bohemians 5 5 0 10 3.0%

Twentysomethings 10 10 10 30 9.1%Suburban Achievers 20 10 10 40 12.1%

Small-City Singles 15 10 5 30 9.1%Urban Achievers 5 5 0 10 3.0%

Working-Class Singles 5 5 0 10 3.0%Blue-Collar Singles 15 5 5 25 7.6%

Soul City Singles 5 0 0 5 1.5%

Subtotal: 100 60 80 240 72.7%







The distribution by price range of the 290 target households—with incomes between 50 and 80


represent the potential market for new for-sale single-family attached units (townhouses) in the

Downtown Study Area is as follows:

Distribution by Price Range Target Groups For New Mixed-Income Single-Family Attached For Sale

(Townhouses) THE DOWNTOWN ATLANTIC CITY STUDY AREA City of Atlantic City, Atlantic County, New Jersey

PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE

$100,000–$150,000 141 48.6% $150,000–$200,000 62 21.4% $200,000–$250,000 38 13.1% $250,000–$300,000 22 7.6% $300,000–$350,000 12 4.1% $350,000–$400,000 10 3.4% $400,000 and up 5 1.8%


In this case, younger singles and couples account for slightly over 60 percent of the market for new

single-family attached for-sale (townhouses). Just over 11 percent are able to purchase townhouses

priced above $300,000, but just under 43 percent can only afford units priced between $100,000

and $150,000.

At 21 percent, traditional and non-traditional families are the second largest potential market for

new townhouses units in the Downtown Atlantic City. Nearly two-thirds of these households could

only afford new townhouses priced between $100,000 and $150,000; approximately 27 percent

could afford new units priced between $150,000 and $250,000; and the remaining nine percent

could purchase townhouses priced above $250,000.

Empty nesters and retirees represent the remaining 19 percent of the potential market for new

townhouses in the Study Area. Approximately 43 percent of this market can only afford units priced

under $200,000. However, nearly 30 percent could afford new condominiums priced between

$250,000 and $350,000.

Table 8

Target Groups For New Mixed-Income Single-Family Attached For SaleAnnual Average Market Potential





Middle-American Retirees 5 0 0 5 1.7%Hometown Retirees 5 0 0 5 1.7%Second City Seniors 5 0 0 5 1.7%

Subtotal: 35 10 10 55 19.0%


Unibox Transferees 5 0 10 15 5.2%Multi-Ethnic Families 15 5 5 25 8.6%

Full-Nest Urbanites 5 0 0 5 1.7%Multi-Cultural Families 5 0 0 5 1.7%

In-Town Families 5 0 0 5 1.7%Single-Parent Families 5 0 0 5 1.7%

Subtotal: 40 5 15 60 20.7%

YoungerSingles & Couples

The Entrepreneurs 0 0 10 10 3.4%0 0.0%Fast-Track Professionals 0 0 5 5 1.7%

The VIPs 10 5 5 20 6.9%Upscale Suburban Couples 10 5 10 25 8.6%

Twentysomethings 15 5 5 25 8.6%0 0.0%Suburban Achievers 15 15 10 40 13.8%

Small-City Singles 15 10 0 25 8.6%Working-Class Singles 15 5 0 20 6.9%

Blue-Collar Singles 5 0 0 5 1.7%

Subtotal: 85 45 45 175 60.3%







—General Rent and Price Ranges—

Based on the tenure and unit preferences of draw area households and their income and financial

capabilities, the general range of rents and prices for newly-developed residential units—new

construction, redevelopment, or adaptive re-use—that could currently be sustained by the target

markets for the Downtown Atlantic City Study Area is as follows (see also Table 9):

General Rent, Price and Size Ranges Newly-Created Housing (Adaptive Re-Use and New Construction)


RENT/PRICE SIZE RENT/PRICE HOUSING TYPE RANGE RANGE PER SQ. FT.

FOR-RENT (MULTI-FAMILY)—

Hard Lofts * $600–$1,450/month 450–1,000 sf $1.33–$1.45 psf

Soft Lofts † $675–$1,650/month 500–1,100 sf $1.35–$1.50 psf

Luxury Apartments $1,150–$2,000/month 750–1,200 sf $1.53–$1.67 psf

FOR-SALE (MULTI-FAMILY)—

Hard Lofts * $110,000–$170,000 600–1,100 sf $155–$183 psf

Soft Lofts † $125,000–$200,000 650–1,200 sf $167–$192 psf

Luxury Condominiums $225,000–$300,000 1,000–1,450 sf $207–$225 psf

FOR-SALE (SINGLE-FAMILY ATTACHED)—

Townhouses $195,000–$350,000 950–1,750 sf $200–$205 psf

* Unit interiors of “hard lofts” typically have high ceilings and commercial windows and are either minimally finished, limited to architectural elements such as columns and fin walls, or unfinished, with no interior partitions except those for bathrooms.

† Unit interiors of “soft lofts” may or may not have high ceilings and are fully finished, with the

interiors partitioned into separate rooms, and typically contain architectural elements reminiscent of “hard lofts,” e.g.—exposed ductwork, scored and polished concrete floors, and commercial brushed stainless hardware.


The aforementioned rents and prices are in year 2013 dollars, are exclusive of consumer options and

upgrades, or floor or location premiums, and cover a broad range of rents and prices for newly-

developed units currently sustainable by the market in the Downtown Atlantic City Study Area.

Parking is not included in the rents or prices.

Table 9

Optimum Market Position--Workforce and Market-Rate Dwelling UnitsThe Downtown Atlantic City Study Area

City of Atlantic City; Atlantic County, New JerseySeptember, 2013

Base Base Base AnnualPercent of Rent/Price Unit Size Rent/Price Market

Units Housing Type Range* Range Per Sq. Ft.* Capture

45.9% Multi-Family For-Rent 124to

Hard Lofts {Adaptive Re-Use} $600 to 450 to $1.33 to 148Open Floorplans/1ba $1,450 1,000 $1.45 units

Soft Lofts {New Construction} $675 to 500 to $1.35 toStudios to Two-Bedrooms $1,650 1,100 $1.50

Luxury Apartments $1,150 to 750 to $1.53 to{New Construction} $2,000 1,200 $1.67

One- and Two-Bedrooms

28.8% Multi-Family For-Sale 28to

Hard Lofts {Adaptive Re-Use} $110,000 to 600 to $155 to 32Open Floorplans/1ba $170,000 1,100 $183 units

Soft Lofts {New Construction} $125,000 to 650 to $167 toOne- and Two-Bedrooms $200,000 1,200 $192

Luxury Condominiums $225,000 to 1,000 to $207 to{New Construction} $300,000 1,450 $225

Two-Bedrooms

25.3% Single-Family Attached For-Sale 24to

Townhouses $195,000 to 950 to $200 to 28Two- and Three-Bedrooms $350,000 1,750 $205 units

100.0% 176to

208units

NOTE: Base rents/prices in year 2013 dollars and exclude floor and view premiums, options and upgrades.





For the most part (and depending on location), these rents and prices cannot be achieved by the

development of one or two infill units, but require that projects be of sufficient size to achieve

development efficiency, to have a significant perceived impact on its locale, and to support a high-

profile marketing campaign. Location will also have a significant influence on rents and prices.

How fast will the units lease or sel l?

—Market Capture—

As noted previously in this study, the current constrained market is characterized in many locations

by reduced housing prices, high levels of unsold units, high levels of mortgage delinquencies and

foreclosures, and restrictive mortgage underwriting and development finance. Partly as a result,

there has been a significant shift in market preferences from home ownership to rental dwelling

units, particularly among younger households. This results in a higher share of consumer preference

for multi-family rentals even among relatively affluent consumers than would have been typical just

three years ago.

Given current economic conditions, which are not likely to improve significantly for new for-sale

housing over the near term, Zimmerman/Volk Associates has determined that an annual capture of

approximately eight to 10 percent of the potential market for each for-sale housing type could be

achievable over the next five years. (Nationally, prior to the housing collapse in 2008, new dwelling

units represented 15 percent of all units sold; in the first quarter of 2011, new dwelling units

represented just 8.5 percent of all units sold.)

In contrast to the constrained for-sale housing conditions, Zimmerman/Volk Associates has

determined that for new multi-family rentals, an annual capture of 25 to 30 percent of the potential

market is likely to be achievable.

Based on these market capture forecasts, the Downtown Atlantic City Study Area should be able to

support between 176 to 208 new workforce and market-rate housing units per year over the next five

years, as follows:




Annual Capture of Market Potential THE DOWNTOWN ATLANTIC CITY STUDY AREA City of Atlantic City, Atlantic County, New Jersey

NUMBER OF NUMBER OF ANNUAL HOUSING TYPE HOUSEHOLDS NEW UNITS CAPTURE RATE

Rental Multi-Family 525 124 to 23.6% to (lofts/apartments, leaseholder) 148 28.1%

For-Sale Multi-Family 330 28 to 8.5% to (lofts/apartments, condo/co-op ownership) 32 9.7%

For-Sale Single-Family Attached 290 24 to 8.3% to (townhouses/live-work, fee-simple ownership) 28 8.7%

Total 1,145 176 to 208 units


These capture rates are well within the target market methodology’s parameters of feasibility.

NOTE: Target market capture rates are a unique and highly-refined measure of feasibility. Target market capture rates are not equivalent to—and should not be confused with—penetration rates or traffic conversion rates.

The target market capture rate is derived by dividing the annual forecast absorption—in aggregate and by housing type—by the number of households that have the potential to purchase or rent new housing within a specified area in a given year.

The penetration rate is derived by dividing the total number of dwelling units planned for a property by the total number of draw area households, sometimes qualified by income.

The traff ic conversion rate is derived by dividing the total number of buyers or renters by the total number of prospects that have visited a site.

Because the prospective market for a location is more precisely defined, target market capture rates are higher than the more grossly-derived penetration rates. However, the resulting higher capture rates are well within the range of prudent feasibility.

This analysis examines market potential over the near term. Because of the dramatic changes in the

composition of American households that has occurred since the 1990s (see again TARGET MARKET

ANALYSIS above), and the likelihood that significant changes will continue, both the depth and

breadth of the potential market for downtown living is likely to continue to grow. The experience of

other American cities has been that, once the downtown residential alternative has been securely

established, the percentage of households that will consider downtown housing typically increases.




DOWNTOWN HOUSING TYPES

Building and unit types most appropriate for the Downtown Atlantic City Study Area include:

• Courtyard Apartment Building: In new construction, an urban, pedestrian-oriented

equivalent to conventional garden apartments. An urban courtyard building is three or more

stories, often combined with non-residential uses on the ground floor. The building should

be built to the sidewalk edge and, to provide privacy and a sense of security, the first floor

should be elevated significantly above the sidewalk. Initially, parking is likely to be at grade

behind or interior to the building.

The building’s apartments can be leased, as in a conventional income property, or sold to

individual buyers, under condominium or cooperative ownership, in which the owner pays a

monthly maintenance fee in addition to the purchase price.

• Loft Apartment Building: Either adaptive re-use of older warehouse or manufacturing

buildings or a new-construction building type inspired by those buildings. The new-

construction version usually has double-loaded corridors.

Hard Lofts: Unit interiors typically have high ceilings and commercial windows and are

minimally finished (with minimal room delineations such as columns and fin walls), or

unfinished (with no interior partitions except those for bathrooms).

Soft Lofts: Unit interiors typically have high ceilings, are fully finished and partitioned into

individual rooms. Units may also contain architectural elements reminiscent of “hard lofts,”

such as exposed ceiling beams and ductwork, concrete floors and industrial finishes,

particularly if the building is an adaptive re-use of an existing industrial structure.

The building’s loft apartments can be leased, as in a conventional income property, or sold to

individual buyers, under condominium or cooperative ownership, in which the owner pays a

monthly maintenance fee in addition to the purchase price. (Loft apartments can also be

incorporated into multifamily buildings along with conventionally-finished apartment

units.)




• Liner Building: An apartment building with apartments and/or lofts lining two to four sides

of a multi-story parking structure. Units are typically served from a single-loaded corridor

that often includes access to parking. Ground floors typically include a traditional apartment

lobby and can also include maisonette apartments, retail or some combination of the two.

• Maisonette Apartment: An apartment that is integral to a multifamily apartment building,

but that includes a private, individual entrance at street level. When sited with shallow

setbacks, the entrance to the apartment on the first floor is elevated above sidewalk level to

provide privacy and a sense of security.

• Podium Building: A small-scale apartment building construction type with two or more

stories of stick-frame residential units (lofts or apartments) built over a single level of above-

grade structured parking, usually constructed with reinforced concrete. With a well-

conceived street pattern, a podium building can include ground-level non-residential uses

lining one or more sides of the parking deck.

• Mansion Apartment Building: A two- to three-story flexible-use structure with a street

façade resembling a large detached or attached house (hence, “mansion”). The attached

version of the mansion, typically built to a sidewalk on the front lot line, is most appropriate

for downtown locations. The building can accommodate a variety of uses—from rental or

for-sale apartments, professional offices, any of these uses over ground-floor retail, a bed and

breakfast inn, or a large single-family detached house—and its physical structure

complements other buildings within a neighborhood.

Parking behind the mansion buildings can be either alley-loaded, or front-loaded served by

shared drives

Mansion buildings should be strictly regulated in form, but flexible in use. However,

flexibility in use is somewhat constrained by the handicapped accessibility regulations in both

the Fair Housing Act and the Americans with Disabilities Act.

• Townhouse: Similar in form to a conventional suburban townhouse except that the

garage—either attached or detached—is located to the rear of the unit and accessed from an




alley or auto court. Unlike conventional townhouses, urban townhouses conform to the

pattern of streets, typically with shallow front-yard setbacks. To provide privacy and a sense

of security, the first floor should be elevated significantly above the sidewalk.

• Live-work is a unit or building type that accommodates non-residential uses in addition to,

or combined with living quarters. The typical live-work unit is a building, either attached or

detached, with a principal dwelling unit that includes flexible space that can be used as office,

retail, or studio space, or as an accessory dwelling unit.

Regardless of the form they take, live-work units should be flexible in order to respond to

economic, social and technological changes over time and to accommodate as wide as

possible a range of potential uses. The unit configuration must also be flexible in order to

comply with the requirements of the Fair Housing Amendments Act and the Americans with

Disabilities Act.




DOWNTOWN HOUSING STRATEGIES, POLICIES, AND PROGRAMS

From the perspective of draw area target market propensities and compatibility, a broad range of

new construction as well as adaptive re-use of existing buildings will be required to support and

sustain residential diversity in Atlantic City and the Downtown Study Area.

An effective housing strategy to attract the target households should include:

• The creation of a variety of housing types, both rental and for-sale, including higher-

value market-rate as well as workforce housing units throughout the Downtown

Study Area.

• The establishment of general urban guidelines to assure the compatibility of every

scale and type of housing.

• Mixed-use development: the inclusion of a residential component within mixed-use

buildings, either adaptive re-use or new construction.

The residential re-use of existing non-residential structures is one of the most beneficial

redevelopment types because it creates and enhances a pedestrian-oriented street environment at a

familiar, and often historic, urban scale. The residential redevelopment of the upper floors of

existing commercial buildings along Atlantic and Pacific Avenues, particularly those of architectural

merit, should be encouraged because of the demonstrated positive impact rehabilitation has had on

housing and neighborhood values nationally.

The City of Pittsburgh inaugurated its Vacant Upper Floors Initiative in 2004 with a guide for the

residential adaptive re-use of the upper floors of Downtown buildings. The second phase was

launched in 2006 and provided an architectural consulting program managed by the Community

Design Center of Pittsburgh. The third and final phase, the Vacant Upper Floors Loan Fund, was

launched in 2009 and is a low-interest loan program for developers/owners of downtown buildings

to turn the upper floors into housing. Further information on the Pittsburgh program is available

from the Downtown Pittsburgh Partnership, www.downtownpittsburgh.com.




The City of Philadelphia has had a similar program, called Turning on the Lights Upstairs, in effect

since 1996. Further information on the Philadelphia program is available from the Center City

District, www.centercityphila.org.

Successful residential development/redevelopment in the Downtown Study Area will require the

establishment of a cohesive downtown residential neighborhood, instead of disconnected residential

buildings. A neighborhood is established when enough “mass” is created—both in number of

people and in number of residential buildings.

A neighborhood is the sum of a variety of elements: the configuration of the street and block

network, the arrangement of lots on those blocks, and the manner in which buildings are disposed

on their lots and address the street. A downtown neighborhood succeeds when its physical

characteristics consistently emphasize urbanity and the qualities of city life; conversely, attempts to

introduce suburban scale and housing types (or, indeed, suburban building forms in general) into

urban areas have invariably yielded disappointing results. Therefore, appropriate urban design—

which places as much emphasis on creating quality streets and public places as on creating or

redeveloping quality buildings—will be essential to success. The important elements can be

summarized in several practical inter-related guidelines:

• Preservation or restoration of the urban fabric. Emphasis should be on adaptive re-use, with

new construction used as infill among rehabilitated structures.

• Respect for the urban context. Major renovation and new infill construction should

maintain the building lot disposition and “build-to” line. When building heights are

increased, the new floors should be set back from the existing historical cornice line.

Pedestrian entrances should always be from the sidewalk; automobile entrances should

always be minimized. Buildings should never present a blank wall to the street.

• Streets designed for pedestrian comfort. Automobiles are accommodated on great urban

streets; however, they are not given precedence over ease of pedestrian movement. The

emphasis on streets can have significant, long-term impact on both street safety (providing

“eyes on the street”) and usable parks and squares.




• Improvement of the streetscape. Local artists could create a unique physical environment

which could be extended to the Downtown’s “street furniture”—the trash receptacles,

seating areas, public sculptures, and other small street amenities that make the difference

between an “automobile-oriented road” and a “neighborhood street.”

A high-profile marketing program should be undertaken to promote the Downtown as a viable and

exciting housing option. An effective marketing program will require advertising and public

relations, merchandising and promotion. This could be undertaken as an adjunct to the marketing

of the Tourist District as a destination for shopping and entertainment.

— Advertising and public relations should include an “image” campaign that not only

keeps the Downtown within the public consciousness, but also reinforces the positive

aspects of urban living.

— Merchandising includes consistent street amenities, such as lighting and trash

receptacles with a uniform theme and distinctive designs.

— Promotion should include a series of special events that attract large numbers to the

Downtown.

Since its inception the CRDA has been instrumental in providing financial assistance to potential

homeowners through a variety of funding mechanisms, ranging from the 10 Percent Homebuyer

Loan Programs, the Firefighter and Teacher Home Loan Program, and the 3-2-1 Police Officer

Neighborhood Program to participation in the city’s HOPE VI redevelopment as well as the

transformation of the Northeast Inlet into Harbour Pointe, a mixed-use neighborhood of

townhouses, apartments and a small neighborhood convenience center.

In addition to the re-institution or continuation of programs that encourage home ownership in the

city, any newly-proposed policies should be made compatible with the underlying objective of

promoting and enhancing a vibrant mixed-use urban environment in the Downtown Study Area.

Adding to housing options will build on the strength of, and add support to, the economic

development efforts in the gaming and retail sectors. Resident households, spanning all ages,

household types and incomes, will help sustain the value of the new and existing assets in

Downtown Atlantic City.




METHODOLOGY

The technical analysis of market potential for the Downtown Atlantic City Study Area included

delineation of the draw areas and physical evaluation of the area and the surrounding context.

The delineation of the draw areas for housing within the City of Atlantic City was based on the most

recent migration data for Atlantic County, and incorporating additional data from the 2008-2010

American Community Survey three-year estimates for the City of Atlantic City, and other market

dynamics.

The evaluation of market potential for the study area was derived from target market analysis of

households in the draw areas, and yielded:

• The depth and breadth of the potential housing market by tenure (rental and

ownership) and by type (apartments, attached and detached houses); and

• The composition of the potential housing market (empty-nesters/retirees, traditional

and non-traditional families, younger singles/couples).

NOTE: The Appendix Tables referenced here are provided in a separate document.

DELINEATION OF THE DRAW AREAS (MIGRATION ANALYSIS)—

Taxpayer migration data provide the framework for the delineation of the draw areas—the principal

counties of origin for households that are likely to move to the City of Atlantic City. These data are

maintained at the county and “county equivalent” level by the Internal Revenue Service and provide

a clear representation of mobility patterns. The migration data for the city has been supplemented by

mobility data from the 2008-2010 American Community Survey three-year estimates for the City of

Atlantic City.

Appendix One, Table 1. Migration Trends

Analysis of the most recent Atlantic County migration and mobility data available from the Internal

Revenue Service—from 2004 through 2008—shows that the county began to experience significant

out-migration the last three years of the study period, with net migration ranging from a gain of 170

households in 2004 to a loss of 615 households in 2008. (See Appendix One, Table 1.)




Annual in-migration into Atlantic County slowly declined over the study period, ranging from

5,220 households in 2004, (the highest in-migrating total over the five years) to 4,415 households in

2008 (the lowest in-migrating total). More than 25 percent of the county’s in-migration is from the

three adjacent counties of Cape May, Cumberland, and Ocean. Another 25 percent of in-migration

comes from the Philadelphia MSA counties of Camden, Gloucester, and Burlington in New Jersey

and Philadelphia, and Montgomery in Pennsylvania.

Annual out-migration from Atlantic County has remained fairly steady over the study period, with

5,050 households moving out of the county in 2004, rising slightly to 5,285 households in 2005,

then falling to the low of 5,030 households in 2008. Just under 20 percent of the out-migration is

to the three adjacent counties, and 21 percent is to the aforementioned five counties in the

Philadelphia MSA.

Although net migration provides insights into a city or county’s historical ability to attract or retain

households compared to other locations, it is those households likely to move into an area (gross in-

migration) that represent that area’s external market potential.

Based on the migration data and employee current residence data, then, the draw areas for the City

of Atlantic City and the Downtown Atlantic City Study Area have been delineated as follows:

• The primary draw area, covering households currently living within the Atlantic City city

limits.

• The local draw area, covering households currently living in the balance of Atlantic County.

• The regional draw area, covering households with the potential to move to the City of

Atlantic City from Cape May, Cumberland, and Ocean Counties.

• The Philadelphia draw area, covering households with the potential to move to the City of

Atlantic City from Camden, Gloucester, and Burlington Counties in New Jersey and

Philadelphia and Montgomery Counties in Pennsylvania.

• The national draw area, covering households with the potential to move to the City of

Atlantic City from all other U.S. counties.




Anecdotal information obtained from real estate brokers, sales persons, leasing agents, and other

knowledgeable sources corresponded to the migration data.

Analysis of the current residences of the employees and staff of the Atlanticare Medical Center and

several of the casinos located in Atlantic City provides additional support for the draw area

conclusions of the migration analysis. Of the hospital and casino employees included in the analysis,

approximately 13 percent currently live in the City of Atlantic City, approximately 75 percent

currently live in the balance of Atlantic County, approximately five percent currently live in Cape

May, Cumberland or Ocean Counties, and approximately seven percent currently live in Camden,

Gloucester, or Burlington Counties in New Jersey, or Philadelphia or Montgomery Counties, in

Pennsylvania.

Migration Methodology:

County-to-county migration is based on the year-to-year changes in the addresses shown on the

population of returns from the Internal Revenue Service Individual Master File system. Data on

migration patterns by county, or county equivalent, for the entire United States, include inflows and

outflows. The data include the number of returns (which can be used to approximate the number of

households), and the median and average incomes reported on the returns.

TARGET MARKET CLASSIFICATION OF CITY AND COUNTY HOUSEHOLDS—

Geo-demographic data obtained from Nielsen Claritas, Inc. provide the framework for the

categorization of households, not only by demographic characteristics, but also by lifestyle

preferences and socio-economic factors. An appendix containing detailed descriptions of each of

these target market groups is provided along with this study.




Appendix One, Tables 2 and 3. Target Market Classif ications

An estimated 15,520 households lived in the City of Atlantic City in 2011. (Reference Appendix

One, Table 2.) Median income in the city was estimated at $31,000 in 2011, approximately 38

percent less than the national median of $49,300. Median home value in the city was estimated at

$195,800 in 2011, more than 13 percent higher than the national median of $172,800. With

median home values nearly six times the median income, ownership housing has become

unaffordable for increasing numbers of Atlantic City residents. More than 46 percent of the city’s

households could be characterized as empty nesters and retirees, another 38.5 percent were younger

singles and couples, and 15.3 percent were traditional and non-traditional families.

An estimated 103,725 households lived in Atlantic County in 2011. (Reference Appendix One,

Table 3.) The county median income was estimated at $52,100, approximately five percent higher

than the national median. The county median home value was estimated at $237,700, almost 38

percent higher than the national median. Approximately 53 percent of Atlantic County’s

households could be characterized as empty nesters and retirees, another 29.4 percent were

traditional and non-traditional families, and the remaining 17.6 percent were younger singles and

couples.

Target Market Methodology:

The proprietary target market methodology developed by Zimmerman/Volk Associates is an

analytical technique, using the PRIZM NE household clustering system, that establishes the optimum

market position for residential development of any property—from a specific site to an entire

political jurisdiction—through cluster analysis of households living within designated draw areas. In

contrast to conventional supply/demand analysis—which is based on supply-side dynamics and

baseline demographic projections—target market analysis establishes the optimum market position

derived from the housing and lifestyle preferences of households in the draw area and within the

framework of the local housing market context, even in locations where no close comparables exist.

Clusters of households (usually between 10 and 15) are grouped according to a variety of significant

“predictable variables,” ranging from basic demographic characteristics, such as income qualification

and age, to less-frequently considered attributes known as “behaviors,” such as mobility rates and




lifestyle choices. Zimmerman/Volk Associates has refined the analysis of these household clusters

through the correlation of more than 500 data points related to housing preferences and consumer

and lifestyle characteristics.

As a result of this process, Zimmerman/Volk Associates has identified 41 target market groups with

median incomes that enable most of the households within each group to qualify for market-rate

housing. The most affluent of the 41 groups can afford the most expensive new ownership units;

the least prosperous are candidates for the least expensive existing rental apartments. Another 25

groups have median incomes such that most of the households require housing finance assistance.

Once the draw areas for a property have been defined, then—through field investigation, analysis of

historical migration and development trends, and employment and commutation patterns—the

households within those areas are quantified using the target market methodology. The potential

market for new housing units is then determined by the correlation of a number of factors—

including, but not limited to: household mobility rates; median incomes; lifestyle characteristics and

housing preferences; the location of the site or study area; and the competitive environment.

The end result of this series of filters is the optimum market position—by tenure, building

configuration and household type, including specific recommendations for unit sizes, rents and/or

prices—and projections of absorption within the local housing context.

DETERMINATION OF THE POTENTIAL MARKET FOR THE CITY OF ATLANTIC CITY (MOBILITY ANALYSIS)—

The mobility tables, individually and in summaries, indicate the average number and type of

households that have the potential to move within or to the City of Atlantic City each year over the

next five years. The total number from each county is derived from historical migration trends; the

number of households from each group is based on each group’s mobility rate.

Appendix One, Table 4. Internal Mobility (Households Moving Within the City of Atlantic City)—

Zimmerman/Volk Associates uses U.S. Bureau of the Census data, combined with Nielsen Claritas

data, to determine the number of households in each target market group that will move from one

residence to another within a specific jurisdiction over a given timeframe (internal mobility).




Using these data, Zimmerman/Volk Associates has determined that an annual average of 1,430

households living in the City of Atlantic City have the potential to move from one residence to

another within the city each year over the next five years. Over 60 percent of these households are

likely to be younger singles and couples (as characterized within eight Zimmerman/Volk Associates’

target market groups); another 22.7 percent are likely to be empty nesters and retirees (in seven

market groups); and the remaining 17.1 percent are likely to be traditional and non-traditional

families (in five market groups).

Appendix One, Table 5. External Mobility (Households Moving To the City of Atlantic City from the Balance of Atlantic County)—

The same sources of data are used to determine the number of households in each target market

group that will move from one area to another within the same county. Using these data, an annual

average of 1,020 households, currently living in the balance of Atlantic County, have the potential to

move from a residence in the county to a residence in the City of Atlantic City each year over the

next five years. Just under 38 percent of these households are likely to be traditional and non-

traditional families (in 15 market groups); a third are likely to be younger singles and couples (in 12

groups); and the remaining 28.9 percent are likely to be empty nesters and retirees (in 19 groups).




Appendix One, Tables 6 through 8; Appendix Two, Tables 1 through 8. External Mobility (Households Moving To the City of Atlantic City from Outside Atlantic County)—

These tables determine the average number of households in each target market group living in each

draw area county that is likely to move to the City of Atlantic City each year over the next five years

(through a correlation of Nielsen Claritas data, U.S. Bureau of the Census data, and the Internal

Revenue Service migration data).

Appendix One, Table 9. Market Potential for the City of Atlantic City—

Appendix One, Table 9 summarizes Appendix One, Tables 4 through 8. The numbers in the Total

column on page one of these tables indicate the depth and breadth of the potential market for new

and existing dwelling units in the City of Atlantic City over the next five years originating from

households currently living in the draw areas. Up to 3,610 households a year have the potential to

move within or to the City of Atlantic City over the next five years. Younger singles and couples (in

16 groups) are likely to account for almost half of these households, traditional and non-traditional

families (in 19 groups) another 28.5 percent, and with the remaining 21.7 percent likely to be empty

nesters and retirees (in 24 groups).

The distribution of the draw areas as a percentage of the potential market for the City of Atlantic

City is as follows:

Market Potential by Draw Area City of Atlantic City, Atlantic County, New Jersey


Total: 100.0%





DETERMINATION OF THE POTENTIAL MARKET FOR THE DOWNTOWN ATLANTIC CITY STUDY AREA—

The total potential market for new housing units to be developed within existing buildings or new

construction within the Downtown Atlantic City Study Area also includes the primary, local,

regional, Philadelphia, and national draw areas. Zimmerman/Volk Associates uses U.S. Bureau of

the Census data, combined with Nielsen Claritas data, to determine which target market groups, as

well as how many households within each group, are likely to move to the Study Area in a given

timeframe.

Appendix One, Tables 10 through 15. Market Potential for the Downtown Atlantic City Study Area—

As derived by the target market methodology, an average of 1,545 of the 3,610 households that

represent the market for new and existing housing units in the City of Atlantic City are a market for

new housing units in the Downtown Atlantic City Study Area. (See Appendix One, Table 10.)

Almost 69 percent of these households are likely to be younger singles and couples (in 13 market

groups); another 17.2 percent are likely to be empty nesters and retirees (in 13 groups); and 13.9

percent are likely to be traditional and non-traditional family households (in seven groups).

The distribution of the draw areas as a percentage of the market for the Downtown Atlantic City

Study Area is:

Market Potential by Draw Area THE DOWNTOWN ATLANTIC CITY STUDY AREA City of Atlantic City, Atlantic County, New Jersey


Total: 100.0%


The 1,545 draw area households that have the potential to move within or to the Downtown Study

Area each year over the next five years have been categorized by tenure propensities to determine

renter/owner ratios. More than half of these households (or 785 households) comprise the potential




market for new rental units. The remaining 49 percent (or 760 households) comprise the market for

new for-sale (ownership) housing units. (See Appendix One, Table 11.)

Up to 525 of the 785 households that prefer, or can only afford, rental housing units, have incomes

above 50 percent of the Atlantic City-Hammonton MSA area median family income (AMI). Forty

percent of these renter households, or 210 households, have incomes between 50 and 80 percent of

the AMI; 29.5 percent, or 155 households, have incomes between 80 and 120 percent of AMI; and

30.5 percent, or 160 households above 120 percent of the AMI. (See Appendix One, Table 12.)

Up to 695 of the 760 households that prefer ownership housing units have incomes above 50

percent of the Atlantic City-Hammonton MSA area median family income (AMI). Of these 695

households, 47.5 percent (or 330 households) comprise the market for new multi-family for-sale

units (condominium apartments and lofts); and another 41.7 percent (290 households) comprise the

market for new attached single-family (townhouse/live-work) units. The remaining 10.8 percent (or

75 households) comprise the market for new single-family detached houses. (See Appendix One,

Table 13.)

Up to 120, or 36.5 percent, of the 330 households that prefer multi-family for-sale housing units

have incomes between 50 and 80 percent of the AMI; 85 households, or 25.8 percent, have incomes

between 80 and 120 percent of the AMI; and 125 households, or 37.9 percent, have incomes above

120 percent of the AMI. (See Appendix One, Table 14.)

Up to 160, or 55.2 percent, of the 290 households that prefer single-family attached for-sale housing

units have incomes between 50 and 80 percent of the AMI; 60 households, or 20.7 percent, have

incomes between 80 and 120 percent of the AMI; and 70 households, or 24.1 percent, have incomes

above 120 percent of the AMI. (See Appendix One, Table 15.)




—Target Market Data—

Target market data are based on the Nielsen Claritas PRIZM geo-demographic system, modified and

augmented by Zimmerman/Volk Associates as the basis for its proprietary target market

methodology. Target market data provides number of households by cluster aggregated into the

three main demographic categories—empty nesters and retirees; traditional and non-traditional

families; and younger singles and couples.

Zimmerman/Volk Associates’ target market classifications are updated periodically to reflect the

slow, but relentless change in the composition of American households. Because of the nature of

geo-demographic segmentation, a change in household classification is directly correlated with a

change in geography, i.e.—a move from one neighborhood condition to another. However, these

changes of classification can also reflect an alteration in one of three additional basic characteristics:

• Age;

• Household composition; or

• Economic status.

Age, of course, is the most predictable, and easily-defined of these changes. Household composition

has also been relatively easy to define; recently, with the growth of non-traditional households,

however, definitions of a family have had to be expanded and parsed into more highly-refined

segments. Economic status remains clearly defined through measures of annual income and

household wealth.

A change in classification is rarely induced by a change in just one of the four basic characteristics.

This is one reason that the target household categories are so highly refined: they take in multiple

characteristics. Even so, there are some rough equivalents in household types as they move from one

neighborhood condition to another. There is, for example, a strong correlation between the

Suburban Achievers and the Urban Achievers; a move by the Suburban Achievers to the urban core can

make them Urban Achievers, if the move is accompanied by an upward move in socio-economic

status. In contrast, Suburban Achievers who move up socio-economically, but remain within the

metropolitan suburbs may become Upscale Suburban Couples or Fast-Track Professionals.




Household Classification Methodology:

Household classifications were originally based on the then Claritas PRIZM geo-demographic

segmentation system that was established in 1974 and replaced by PRIZM NE in 2005. The revised

household classifications are based on PRIZM NE which was developed through unique classification

and regression trees delineating 66 specific clusters of American households. The system is now

accurate to the individual household level, adding self-reported and list-based household data to geo-

demographic information. The process applies hundreds of demographic variables to nearly 10,000

“behaviors.”

Over the past 23 years, Zimmerman/Volk Associates has augmented the PRIZM cluster system for

use within the company’s proprietary target market methodology specific to housing and

neighborhood preferences, with additional algorithms, correlation with geo-coded consumer data,

aggregation of clusters by broad household definition, and unique cluster names.

o

ZIMMERMAN/VOLK ASSOCIATES, INC.P.O. Box 4907Clinton, New Jersey 08809

[email protected] • www.ZVA.cc


ASSUMPTIONS AND LIMITATIONS—

Every effort has been made to insure the accuracy of the data contained within this analysis.

Demographic and economic estimates and projections have been obtained from government

agencies at the national, state, and county levels. Market information has been obtained from

sources presumed to be reliable, including developers, owners, and/or sales agents. However,

this information cannot be warranted by Zimmerman/Volk Associates, Inc. While the

methodology employed in this analysis allows for a margin of error in base data, it is assumed

that the market data and government estimates and projections are substantially accurate.

Absorption scenarios are based upon the assumption that a normal economic environment will

prevail in a relatively steady state during development of the subject property. Absorption

paces are likely to be slower during recessionary periods and faster during periods of recovery

and high growth. Absorption scenarios are also predicated on the assumption that the product

recommendations will be implemented generally as outlined in this report and that the

developer will apply high-caliber design, construction, marketing, and management techniques

to the development of the property.

Recommendations are subject to compliance with all applicable regulations. Relevant

accounting, tax, and legal matters should be substantiated by appropriate counsel.

o

ZIMMERMAN/VOLK ASSOCIATES, INC.P.O. Box 4907Clinton, New Jersey 08809

908 735-6336www.ZVA.cc • [email protected]


RIGHTS AND STUDY OWNERSHIP—

Zimmerman/Volk Associates, Inc. retains all rights, title and interest in the methodology and

target market descriptions contained within this study. The specific findings of the analysis are

the property of the client and can be distributed at the client’s discretion.

o

ZIMMERMAN/VOLK ASSOCIATES, INC., 2013

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