ATTACHMENT E
FISCAL IMPACT REPORT
5000 Birch Street, Suite 6000
Newport Beach, CA 92660
($300,000)
($200,000)
($100,000)
$0
$100,000
$200,000
$300,000
$400,000
$324,672
($232,755)
$91,917 Total Recurring General Fund
Revenues
Total Recurring General Fund
Expenditures
Net Fiscal Impact
($300,000)
($200,000)
($100,000)
$0
$100,000
$200,000
$300,000
$400,000
$314,378
($268,065)
$46,313
Total Recurring General Fund
Revenues
Total Recurring General Fund
Expenditures
Net Fiscal Impact
RECURRING GENERAL FUND REVENUES1 AMOUNT % OF TOTAL AMOUNT % OF TOTAL SECURED PROPERTY TAX $131,086 40.4% $138,649 44.1%
UNSECURED PROPERTY TAX $13,109 4.0% $3,813 1.2%
PROPERTY TRANSFER TAX $2,469 0.8% $5,222 1.7%
PROPERTY TAX IN-LIEU OF VEHICLE LICENSE FEE $59,901 18.4% $63,368 20.2% DIRECT AND INDIRECT SALES TAX $55,471 17.1% $26,968 8.6% FRANCHISE FEES $14,438 4.4% $16,629 5.3%
LICENSES AND PERMITS $4,852 1.5% $5,588 1.8%
FINES AND FORFEITURES $1,584 0.5% $1,824 0.6%
CFD REVENUE $41,762 12.9% $52,318 16.6%
TOTAL RECURRING GENERAL FUND REVENUES $324,672 100.0% $314,378 100.0% RECURRING GENERAL FUND EXPENDITURES2 AMOUNT % OF TOTAL AMOUNT % OF TOTAL PUBLIC WORKS $42,505 18.262% $48,953 18.262%
DEVELOPMENT SERVICES $15,333 6.588% $17,659 6.588%
PUBLIC SAFETY $117,758 50.593% $135,622 50.593%
PARKS AND RECREATION $3,831 1.646% $4,413 1.646%
OTHER FINANCING USES $547 0.235% $630
GENERAL GOVERNMENT $52,781 22.677% $60,788 22.677%
TOTAL RECURRING GENERAL FUND EXPENDITURES $232,755 100.0% $268,065 99.8%
NET FISCAL IMPACT
TOTAL ANNUAL RECURRING GENERAL FUND SURPLUS/(DEFICIT)
TOTAL ANNUAL REVENUE/EXPENDITURE RATIO
NOTES:
1 Please see Exhibits 5-7 and 9 for the derivation of these calculations. 2 Please see Exhibits 8 and 10 for the derivation of these calculations. *All figures subject to rounding
APPROVED PLAN PROPOSED PLAN
EXHIBIT 1
CITY OF SAN MARCOS
FISCAL IMPACT SUMMARY
APPROVED PLAN PROPOSED PLAN
HALLMARK-BARHAM CONDOMINIUMS
APPROVED PLAN PROPOSED PLAN
$91,917
1.39 $46,313
1.17 TOTAL BUILDING BUILDING TOTAL BUILDING BUILDING ESTIMATED TOTAL
GROSS SPACE SPACE ESTIMATED ESTIMATED SPACE SPACE ESTIMATED AVERAGE ESTIMATED LAND USE TYPE ACRES ACRES1 SF1 VALUE/BSF2 VALUE2 ACRES1 UNITS1 SF1 VALUE/BSF VALUATION2,3 VALUE2 GRAND TOTAL 10.60 10.90 474,987 $189 $89,765,980 7.74 151 337,195 $282 $628,772 $94,944,572 NON-RESIDENTIAL 10.90 474,987 $89,765,980
OFFICE 6.31 275,067 $300 $82,520,100
COMMERCIAL IN LINE RETAIL 0.42 18,344 $395 $7,245,880
PARKING STRUCTURE 2 4.17 181,576 $0 $0
RESIDENTIAL 7.74 151 337,195 $282 $94,944,572
RESIDENTIAL 7.74 151 337,195 $282 $628,772 $94,944,572 NOTES
1 Source: City of San Marcos.
2 Source: Zonda Research, "Pricing and Absorption Study: Hall Land Company Study, San Marcos, CA.
Cost of the 181,576 SF parking struture is incorporated into the $300 and $395 price per SF of the Office & Commercial Structure 3 "Estimated average sale price" refers to the Estimated closing price per Zonda assumptions. *All figures subject to rounding
EXHIBIT 2
CITY OF SAN MARCOS
PROJECT SUMMARY
APPROVED PLAN
HALLMARK-BARHAM CONDOMINIUMS
PROPOSED PLAN
POPULATION, HOUSEHOLDS, AND EMPLOYMENT (2020)
POPULATION1 97,209
EMPLOYMENT2 37,500
TOTAL PERSONS SERVED3 115,959
HOUSEHOLDS 1 32,460
AVERAGE HOUSEHOLD SIZE1 3.09
NOTES
1 California Department of Finance, Housing and Population Information, January 1, 2020. 2 Source: Calif. Employment Development Dept. January 2021 EXHIBIT 3
CITY OF SAN MARCOS
HALLMARK-BARHAM CONDOMINIUMS
CITY DEMOGRAPHICS
3 Assumes City population plus 50% of employees.
SF PERSONS
PER DIRECT PERSONS PER DIRECT PERSONS
LAND USE TYPE BSF EMPLOYEE2 EMPLOYEES SERVED BSF UNITS HOUSEHOLD1 RESIDENTS EMPLOYEES3 SERVED GRAND TOTAL 474,987 808 405 337,195 151 3.09 466 0 466
NON-RESIDENTIAL
OFFICE 275,067 347 793 397
COMMERCIAL IN LINE RETAIL 18,344 1,221 15 8
PARKING STRUCTURE 2 181,576 0 0 0
NON-RESIDENTIAL SUBTOTAL 474,987 808 405
RESIDENTIAL
RESIDENTIAL 337,195 151 3.09 466 0 466
RESIDENTIAL SUBTOTAL 466 466
NOTES
1 Source: Zonda Research.
2 Source: Commercial Buildings Energy Consumption Survey (CBECS), 2012. *All figures subject to rounding
APPROVED PLAN PROPOSED PLAN
EXHIBIT 4
CITY OF SAN MARCOS
HALLMARK-BARHAM CONDOMINIUMS
PROJECT DEMOGRAPHICS
APPROVED PROPOSED
LAND USE TYPE PLAN PLAN
ALL PROPERTY TAXES
SECURED PROPERTY TAXES $131,086 $138,649
UNSECURED PROPERTY TAXES $13,109 $3,813
PROPERTY TRANSFER TAXES $2,469 $5,222
PROPERTY TAX IN-LIEU OF VLF $59,901 $63,368
GRAND TOTAL ALL PROPERTY TAXES $206,564 $211,051
RESIDENTIAL PROPERTY TAXES
SECURED PROPERTY TAXES $0 $138,649
UNSECURED PROPERTY TAXES $0 $3,813
PROPERTY TRANSFER TAXES $0 $5,222
PROPERTY TAX IN-LIEU OF VLF $0 $63,368
TOTAL RESIDENTIAL PROPERTY TAXES $0 $211,051
NON-RESIDENTIAL PROPERTY TAXES
SECURED PROPERTY TAXES $131,086 $0
UNSECURED PROPERTY TAXES $13,109 $0
PROPERTY TRANSFER TAXES $2,469 $0
PROPERTY TAX IN-LIEU OF VLF $59,901 $0
TOTAL NON-RESIDENTIAL PROPERTY TAXES $206,564 $0
APPROVED PROPOSED
LAND USE TYPE PLAN PLAN
GRAND TOTAL
ESTIMATED BUILDOUT VALUE $89,765,980 $94,944,572
ESTIMATED EXEMPTIONS $0 $0
ESTIMATED ASSESSED VALUE $89,765,980 $94,944,572
ESTIMATED SECURED PROPERTY TAXES $131,086 $138,649
RESIDENTIAL
ESTIMATED BUILDOUT VALUE $0 $94,944,572
ESTIMATED EXEMPTIONS $0 $0
HOMEOWNER'S EXEMPTION (ANNUALLY) $7,000
PERCENT OF SALE UNITS TAKING HOMEOWNER'S EXEMPTION1 0%
ESTIMATED ASSESSED VALUE $0 $94,944,572
ESTIMATED SECURED PROPERTY TAXES $0 $138,649
NON-RESIDENTIAL
ESTIMATED BUILDOUT VALUE $89,765,980 $0
ESTIMATED EXEMPTIONS $0 $0
ESTIMATED ASSESSED VALUE $89,765,980 $0
ESTIMATED SECURED PROPERTY TAXES $131,086 $0
APPROVED PROPOSED
LAND USE TYPE PLAN PLAN
GRAND TOTAL $13,109 $3,813
RESIDENTIAL
ESTIMATED UNSECURED PROPERTY TAXES $0 $3,813
UNSECURED TAXES AS A % OF SECURED2 2.75%
NON-RESIDENTIAL
ESTIMATED UNSECURED PROPERTY TAXES $13,109 $0
UNSECURED TAXES AS A % OF SECURED2 10.00%
UNSECURED PROPERTY TAX CALCULATION
HALLMARK-BARHAM CONDOMINIUMS
PROPERTY TAX SUMMARY
EXHIBIT 5
CITY OF SAN MARCOS
ESTIMATED PROPERTY TAX REVENUES (CASE STUDY)
SECURED PROPERTY TAX CALCULATION
APPROVED PROPOSED
LAND USE TYPE PLAN PLAN
GRAND TOTAL $2,469 $5,222
RESIDENTIAL
ESTIMATED PROPERTY TRANSFER TAXES $0 $5,222
ESTIMATED BUILDOUT VALUE $0 $94,944,572
TRANSFER TAX AS A % OF ASSESSED VALUE 0.11%
PROPERTY TRANSFER TAX PASSED THROUGH TO CITY OF SAN MARCOS50.00% RESIDENTIAL PROPERTY TURNOVER RATE 10.00%
NON-RESIDENTIAL
ESTIMATED PROPERTY TRANSFER TAXES $2,469
ESTIMATED BUILDOUT VALUE $89,765,980
TRANSFER TAX AS A % OF ASSESSED VALUE 0.11%
PROPERTY TRANSFER TAX PASSED THROUGH TO CITY OF SAN MARCOS50.00% NON-RESIDENTIAL PROPERTY TURNOVER RATE 5.00%
APPROVED PROPOSED
LAND USE TYPE PLAN PLAN
GRAND TOTAL $59,901 $63,368
RESIDENTIAL
ESTIMATED PROPERTY TAX IN-LIEU OF VLF $0 $63,368
ESTIMATED BUILDOUT VALUE $0 $94,944,572
ESTIMATED EXISTING ASSESSED VALUE $0 $274,875
PROPERTY TAX IN-LIEU OF VLF INCREASE PER $1,000 OF AV $0.67
NON-RESIDENTIAL
ESTIMATED PROPERTY TAX IN-LIEU OF VLF $59,901 $0
ESTIMATED BUILDOUT VALUE $89,765,980 $0
ESTIMATED EXISTING ASSESSED VALUE $274,875 $0
PROPERTY TAX IN-LIEU OF VLF INCREASE PER $1,000 OF AV $0.67
PROPERTY TAX IN-LIEU OF VEHICLE LICENSE FEE CALCULATION
PROPERTY TRANSFER TAX CALCULATION
EXHIBIT 5 - CONTINUED
CITY OF SAN MARCOS
HALLMARK-BARHAM CONDOMINIUMS
ESTIMATED PROPERTY TAX REVENUES (CASE STUDY)
PROPERTY TAX ALLOCATION (AS A PORTION OF THE 1% GENERAL PROPERTY TAX LEVY) CITY OF SAN MARCOS3,4 7.480%
FIRE DISTRICT3,4 7.123%
TOTAL 14.603%
PROPERTY TRANSFER TAX RATE AND ALLOCATION5
TRANSFER TAX AS A % OF ASSESSED VALUE 0.11%
PROPERTY TRANSFER TAX PASSED THROUGH TO CITY OF SAN MARCOS 50.00%
PROPERTY TAX IN-LIEU OF VLF ASSUMPTIONS
TOTAL CITY OF SAN MARCOS GROSS ASSESSED VALUE6 $7,756,621,947 TOTAL CITY PROPERTY TAX IN-LIEU VLF REVENUES6 $5,191,930 PROPERTY TAX IN-LIEU OF VLF INCREASE PER $1,000 OF AV $0.67 NOTES
1 Estimate, subject to change.
2 Based on typical DTA baseline assumptions.
3 Based on "General Fund" levy for Tax Rate Area (TRA) 13102. Data provided by the County of San Diego Auditor-Controller's Office. 4 Based on the average of the rates for TRA 13102.
5 Source: California Revenue & Taxation Code §11901, et seq.; San Marcos Municipal Code §3.12.020. *All figures subject to rounding
PROPERTY TAX AND PROPERTY TRANSFER TAX RATES AND ASSUMPTIONS EXHIBIT 5 - CONTINUED
CITY OF SAN MARCOS
HALLMARK-BARHAM CONDOMINIUMS
ESTIMATED PROPERTY TAX REVENUES (CASE STUDY)
6 Source: State Controller's Office Division of Accounting and Reporting, Revenue and Taxation Code Section 97.70 (c)(1)(B)(i) - Vehicle License Fee Adjustment Amounts. ]
APPROVED PROPOSED
LAND USE TYPE PLAN PLAN
GRAND TOTAL $55,471 $26,968
RESIDENTIAL SALES TAXES
DIRECT SALES TAX NA NA
INDIRECT SALES TAX - TAXABLE RESIDENT PURCHASES
RESIDENTIAL $0 $26,968
TOTAL RESIDENTIAL SALES TAXES $0 $26,968
NON-RESIDENTIAL SALES TAXES
DIRECT SALES TAX1
COMMERCIAL OFFICE $0 NA
IN LINE RETAIL $44,026 NA
PARKING STRUCTURE $0 NA
INDIRECT SALES TAX - TAXABLE EMPLOYEE PURCHASES $11,445 $0 TOTAL NON-RESIDENTIAL SALES TAXES $55,471 $0
TAXABLE SALES PER SF1
COMMERCIAL OFFICE $0.00 $0.00
IN LINE RETAIL $300.00 $0.00
DISPLACED TAXABLE SALES2 20% 20%
1 Based on typical DTA baseline assumptions.
2 Based on typical DTA baseline assumptions.
EXHIBIT 6
CITY OF SAN MARCOS
ESTIMATED SALES TAX REVENUES (CASE STUDY)
DIRECT SALES TAX ASSUMPTIONS
SALES TAX SUMMARY
HALLMARK-BARHAM CONDOMINIUMS
DISPOSABLE INCOME PER HOUSEHOLD
ESTIMATED AVERAGE HOUSEHOLD INCOME (ASSUMES 3:1 INCOME TO HOUSEHOLD PAYMENT RATIO) 1 RESIDENTIAL $127,237
MORTGAGE ASSUMPTIONS
RESIDENTIAL
AVERAGE PROJECTED SALES PRICE PER UNIT $628,772
AVERAGE MORTGAGE (20% DOWN PAYMENT) $503,018
ANNUAL MORTGAGE PAYMENT (4.5% FOR 30 YEARS) $30,585
ADDITIONAL ANNUAL PROPERTY TAXES & HOA $11,828
RETAIL TAXABLE EXPENDITURES (AS A % OF DISPOSABLE INCOME) RESIDENTIAL 28.0727%
EMPLOYEES (ANNUAL SPENDING PER EMPLOYEE)2 $5,652
RESIDENTIAL (ANNUAL SPENDING PER HOUSEHOLD) $17,860
2 Based on typical DTA baseline assumptions.
NON-RESIDENTIAL INDIRECT SALES TAX ASSUMPTIONS
EXHIBIT 6 - CONTINUED
CITY OF SAN MARCOS
HALLMARK-BARHAM CONDOMINIUMS
ESTIMATED SALES TAX REVENUES (CASE STUDY)
RESIDENTIAL INDIRECT SALES TAX ASSUMPTIONS
SALES TAX % TO CITY1 1.00%
CITY RETAIL TAXABLE PURCHASE CAPTURE RATE2 50%
FY 2020-21 AD VALOREM PROPERTY TAX RATE (13102) 1.12602% PROPOSED SCHOOL CFD 0.00000%
CITY CFD SPECIAL TAXES $948.18
OTHER DIRECT ASSESSMENTS
VECTOR CONTROL $7.92
CWA WATER AVAILABILITY $10.00
MOSQUITO SURVEILLANCE $2.28
MWD WATER STANDBY CHARGE $11.50
SEWER SERVICE CHARGE $467.88
TOTAL ETR 1.356273%
NOTES
1 Estimate, subject to change.
2 Estimate, subject to change.
* All figures subject to rounding
EXHIBIT 6 - CONTINUED
CITY OF SAN MARCOS
HALLMARK-BARHAM CONDOMINIUMS
ESTIMATED SALES TAX REVENUES (CASE STUDY)
SAMPLE PROPERTY TAX BILL
CITY INDIRECT SALES TAX ASSUMPTIONS
RESIDENTIAL APPROVED PROPOSED
LAND USE TYPE COMMERCIAL OFFICE UNITS PLAN PLAN
TOTAL CFD SPECIAL TAXES $41,762 $52,318
RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-01 IA 1 151 $27,186
CFD 2001-01 (FIRE) 151 $25,131
TOTAL RESIDENTIAL CFD SPECIAL TAXES $52,318
NON-RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-01 IA 1 4.59 6.31 $21,701 $0
CFD 2001-01 (FIRE) 4.59 6.31 $20,061 $0
TOTAL NON-RESIDENTIAL CFD SPECIAL TAXES $41,762 $0
RESIDENTIAL APPROVED PROPOSED
LAND USE TYPE COMMERCIAL OFFICE UNITS PLAN PLAN
TOTAL CFD SPECIAL TAXES $188,558 $90,858
RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-02 (ZONES A - E)2 151 $37,388
CFD 98-02 (ZONE F)2, 3 151 NA
CFD 2011-012, 4 151 $53,471
TOTAL RESIDENTIAL CFD SPECIAL TAXES $90,858
NON-RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-02 (ZONES A - E)2 4.59 6.31 $12,053 $0
CFD 98-02 (ZONE F)2, 3 4.59 6.31 NA NA
CFD 2011-012, 5 199,920 275,067 $176,505 $0
TOTAL NON-RESIDENTIAL CFD SPECIAL TAXES $188,558 $0
LAND USE PER ACRE PER SF PER UNIT
RESIDENTIAL1
CFD 98-01 IA 1 $180.04
CFD 2001-01 (FIRE) $166.43
CFD 98-02 (ZONES A - E)2 $247.60
CFD 98-02 (ZONE F)2, 3 NA
CFD 2011-012, 4 $354.11
COMMERCIAL 1
CFD 98-01 IA 1 $1,260.31
CFD 2001-01 (FIRE) $1,165.03
CFD 98-02 (ZONES A - E)2 $1,105.32
CFD 98-02 (ZONE F)2, 3 N/A
CFD 2011-012, 5 $0.3716
OFFICE 1
CFD 98-01 IA 1 $2,520.62
CFD 2001-01 (FIRE) $2,330.07
CFD 98-02 (ZONES A - E)2 $1,105.32
CFD 98-02 (ZONE F)2, 3 NA
CFD 2011-012, 5 $0.3716
NOTES
1 Source: City of San Marcos. Assumes Senior Residential property is charged as Commercial property under the RMA. Subject to confirmation by the City. 2 Special assessments collected from the CFD are deposited into Special Funds, not the General Fund. Therefore, these CFD revenues are excluded from this analysis. 3 No special tax rate for Zone F has been established for the project. 4 "Condominium" Rate, per dwelling unit
5 "Retail" Rate, per building square foot
*All figures subject to rounding
FY 2020-21 SPECIAL TAX RATE
EXHIBIT 7
CITY OF SAN MARCOS
ESTIMATED CFD SPECIAL TAX REVENUES (CASE STUDY)
CFD SPECIAL TAX SUMMARY - GENERAL FUND IMPACTS
CFD SPECIAL TAX RATE ASSUMPTIONS
HALLMARK-BARHAM CONDOMINIUMS
CFD SPECIAL TAX SUMMARY - NON-GENERAL FUND IMPACTS (EXCLUDED FROM ANALYSIS) ACRES / SQ. FT.
ACRES / SQ. FT.
APPROVED PROPOSED
PLAN PLAN
ESTIMATED RECURRING GENERAL GOVERNMENT OVERHEAD EXPENDITURES1 $52,781 $60,788 TOTAL RECURRING CITY GENERAL FUND EXPENDITURES (EXCLUDING GENERAL GOVERNMENT OVERHEAD)2 $52,940,362 TOTAL RECURRING CITY GENERAL GOVERNMENT OVERHEAD3 $15,525,776 TOTAL RECURRING GENERAL FUND EXPENDITURES $68,466,138
RECURRING CITY GENERAL GOVERNMENT OVERHEAD (% OF TOTAL RECURRING GENERAL FUND EXPENDITURES)3 29.33% MARGINAL INCREASE IN GENERAL GOVERNMENT COSTS 100%
NOTES
1 Based on total recurring project general fund expenditures (excluding general government overhead) from Exhibit 12. 2 Based on City of San Marcos Operating Budget, Fiscal Year 2020-21. *All figures subject to rounding
3 General Government Overhead Expenditures defined as costs for City Council, Administration, Housing and Neighborhood Services, City Attorney, City Clerk, Human Resources/Risk Management, Finance/Information Systems, and Real Property Services.
EXHIBIT 8
CITY OF SAN MARCOS
ESTIMATED GENERAL GOVERNMENT EXPENDITURES (CASE STUDY)
GENERAL GOVERNMENT ASSUMPTIONS
GENERAL GOVERNMENT EXPENDITURES CALCULATION
HALLMARK-BARHAM CONDOMINIUMS
APPROVED PROPOSED
REVENUE CATEGORY PLAN PLAN
FRANCHISE FEES $14,438 $16,629
LICENSES AND PERMITS $4,852 $5,588
FINES AND FORFEITURES $1,584 $1,824
TOTAL ESTIMATED MULTIPLIER REVENUES $20,874 $24,041
REVENUE CATEGORY MULTIPLIER1 BASIS
SALES TAX NA CASE STUDY
PROPERTY TAX NA CASE STUDY
FRANCHISE FEES $35.65 PERSONS SERVED
LICENSES AND PERMITS $11.98 PERSONS SERVED
FINES AND FORFEITURES $3.91 PERSONS SERVED
NOTES
1 Based on City of San Marcos Operating Budget, Fiscal Year 2020-21 *All figures subject to rounding
MULTIPLIER BASED REVENUE ASSUMPTIONS
EXHIBIT 9
CITY OF SAN MARCOS
ESTIMATED MULTIPLIER BASED GENERAL FUND REVENUES
MULTIPLIER BASED GENERAL FUND REVENUE SUMMARY
HALLMARK-BARHAM CONDOMINIUMS
APPROVED PROPOSED
EXPENDITURE CATEGORY PLAN PLAN
PUBLIC WORKS $42,505 $48,953
DEVELOPMENT SERVICES $15,333 $17,659
PUBLIC SAFETY $117,758 $135,622
PARKS AND RECREATION $3,831 $4,413
OTHER FINANCING USES $547 $630
TOTAL MULTIPLIER EXPENDITURES $179,974 $207,277
EXPENDITURE CATEGORY MULTIPLIER1 BASIS
PUBLIC WORKS $104.95 PERSONS SERVED
DEVELOPMENT SERVICES $37.86 PERSONS SERVED
PUBLIC SAFETY $290.76 PERSONS SERVED
PARKS AND RECREATION $9.46 PERSONS SERVED
OTHER FINANCING USES $1.35 PERSONS SERVED
NOTES
1 Based on City of San Marcos Operating Budget, Fiscal Year 2020-21 *All figures subject to rounding
MULTIPLIER BASED EXPENDITURE ASSUMPTIONS
EXHIBIT 10
CITY OF SAN MARCOS
ESTIMATED MULTIPLIER BASED GENERAL FUND EXPENDITURES
MULTIPLIER BASED GENERAL FUND EXPENDITURE SUMMARY
HALLMARK-BARHAM CONDOMINIUMS
TOTAL REVENUE PROJECTION
REVENUE CATEGORY REVENUES TYPE METHOD DISCOUNT 1 MULTIPLIER
REVENUES INCLUDED IN FISCAL IMPACT ANALYSIS
SALES TAX $17,814,175 RECURRING CASE STUDY NA NA
PROPERTY TAX $24,000,914 RECURRING CASE STUDY NA NA
SPECIAL TAXES/ASSESSMENTS $7,420,766 RECURRING CASE STUDY NA NA TRANSIENT OCCUPANCY TAX $1,397,136 RECURRING CASE STUDY 0% NA FRANCHISE FEES $4,133,769 RECURRING PERSONS SERVED 0% $35.65 LICENSES AND PERMITS $1,389,271 RECURRING PERSONS SERVED 0% $11.98 FINES AND FORFEITURES $453,570 RECURRING PERSONS SERVED 0% $3.91 TOTAL INCLUDED GENERAL FUND REVENUES $56,609,601 $51.54 CHARGES FOR SERVICES 3
DEDUCTED FROM GENERAL GOV'T CHARGES $1,468,593 NA NA NA NA DEDUCTED FROM PUBLIC WORKS $1,048,724 NA NA NA NA
DEDUCTED FROM DEVELOPMENT SERVICES $708,113 NA NA NA NA DEDUCTED FROM PUBLIC SAFETY: BUILDING REGULATION CHARGES $5,416,683 NA NA NA NA DEDUCTED FROM PARKS AND RECREATION $2,507,190 NA NA NA NA TOTAL CHARGES FOR SERVICES $11,149,303
REVENUES EXCLUDED FROM FISCAL IMPACT ANALYSIS
USE OF MONEY AND PROPERTY 4 $6,969,058 NA NA NA NA
MISCELLANEOUS REVENUES $246,074 NA NA NA NA
OTHER FINANCING SOURCES $4,822,251 NA NA NA NA
INTERGOVERNMENTAL REVENUES $714,709 NA NA NA NA
DEVELOPER FEES $24,445 NA NA NA NA
TOTAL EXCLUDED GENERAL FUND REVENUES $12,776,537
TOTAL GENERAL FUND REVENUES + CHARGES FOR SERVICES $80,535,441 TOTAL RECURRING GENERAL FUND REVENUES $56,609,601
NOTES
1 Certain revenues may not be be expected to increase one-to-one with the new development. 2 Source: FY 2020-21 Budget.
3 All Charges for Services are deducted from expenditures on Exhibit 12. 4 Interest income is modeled on a case study basis on Exhibit 8. *All figures subject to rounding
EXHIBIT 11
CITY OF SAN MARCOS
FY 2020-21 GENERAL FUND REVENUE SUMMARY
HALLMARK-BARHAM CONDOMINIUMS
CHARGES FOR
TOTAL SERVICES EXPENDITURE PROJECTION
EXPENDITURE CATEGORY EXPENDITURES ADJUSTMENT TYPE METHOD1 DISCOUNT2 MULTIPLIER
EXPENDITURES INCLUDED IN FISCAL IMPACT ANALYSIS
GENERAL GOVERNMENT EXPENDITURES
CITY COUNCIL $263,641 RECURRING CASE STUDY NA NA
ADMINISTRATION $6,486,671 RECURRING CASE STUDY NA NA
ECONOMIC DEVELOPMENT $267,707 RECURRING CASE STUDY NA NA CITY ATTORNEY $850,000 RECURRING CASE STUDY NA NA
CITY CLERK $625,588 RECURRING CASE STUDY NA NA
HUMAN RESOURCES/ RISK MANAGEMENT $3,436,858 RECURRING CASE STUDY NA NA FINANCE/ INFORMATION SYSTEMS $3,906,211 RECURRING CASE STUDY NA NA REAL PROPERTY SERVICES $1,157,693 RECURRING CASE STUDY NA NA TOTAL GENERAL GOVERNMENT EXPENDITURES $16,994,369 ($1,468,593) $15,525,776 $0.00
PUBLIC WORKS
OPERATIONS $11,146,469 ($884,325) RECURRING PERSONS SERVED 0% $88.50 ENGINEERING $2,072,161 ($164,399) RECURRING PERSONS SERVED 0% $16.45 TOTAL PUBLIC WORKS $13,218,630 ($1,048,724)
$12,169,906 PERSONS SERVED 0% $104.95
DEVELOPMENT SERVICES
ADMINISTRATION $633,804 ($88,043) RECURRING PERSONS SERVED 0% $4.71 PLANNING $1,371,762 ($190,554) RECURRING PERSONS SERVED 0% $10.19 BUILDING $1,564,338 ($217,305) RECURRING PERSONS SERVED 0% $11.62 ENGINEERING $737,220 ($102,409) RECURRING PERSONS SERVED 0% $5.47 STORMWATER PROGRAM MANAGEMENT $790,442 ($109,802) RECURRING PERSONS SERVED 0% $5.87 TOTAL DEVELOPMENT SERVICES $5,097,566 ($708,113)
$4,389,453 PERSONS SERVED 0% $37.86
PUBLIC SAFETY
FIRE DEPARTMENT $18,181,133 ($2,516,597) RECURRING PERSONS SERVED 0% $135.09 LAW ENFORCEMENT $20,951,653 ($2,900,087) RECURRING PERSONS SERVED 0% $155.67 TOTAL PUBLIC SAFETY $39,132,786 ($5,416,683)
$33,716,103 PERSONS SERVED 0% $290.76
PARKS AND RECREATION
COMMUNITY SERVICES $3,603,748 ($2,507,190) RECURRING PERSONS SERVED 0% $9.46 TOTAL PARKS AND RECREATION $3,603,748 ($2,507,190)
$1,096,558 PERSONS SERVED 0% $9.46
OTHER FINANCING USES
ANNUAL REPLACEMENT/REHAB TRANSFERS $1,568,342 RECURRING PERSONS SERVED 90% $1.35 TOTAL OTHER FINANCING SOURCES $1,568,342 $0
$1,568,342 PERSONS SERVED 90% $1.35
TOTAL INCLUDED EXPENDITURES $79,615,441 $68,466,138
EXPENDITURES EXCLUDED FROM FISCAL IMPACT ANALYSIS
TRANSFERS OUT $870,000 NA NA NA NA
TOTAL EXCLUDED GENERAL FUND EXPENDITURES $870,000
TOTAL GENERAL FUND EXPENDITURES $80,485,441 $68,466,138 NOTES
1 Persons Served method assumes City population plus 50% of employees. 2 Certain expenditures may not be expected to increase one-to-one with the new development. *All figures subject to rounding
EXHIBIT 12
CITY OF SAN MARCOS
FY 2020-21 GENERAL FUND EXPENDITURE SUMMARY
HALLMARK-BARHAM CONDOMINIUMS
$0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
CITY OF SAN MARCOS
HALLMARK - BARHAM CONDOMINIUMS
ECONOMIC IMPACT ANALYSIS - DRAFT (APPROVED PLAN)
RECURRING JOBS
RECURRING IMPACTS
ONE-TIME JOBS
ONE TIME IMPACTS
JOB HOUSING BALANCE
SUMMARY
EXHIBIT 1
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
RECURRING EMPLOYMENT - APPROVED PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY UNITS
RESIDENTIAL 0
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY1 EMPLOYEES/1,000 SQ. FT.2 SQ. FT.1
COMMERCIAL OFFICE 2.88 275,067
COMMERCIAL IN LINE RETAIL 0.82 18,344
PARKING STRUCTURE 0.00 181,576
RECURRING EMPLOYMENT
III. CITY
DIRECT EMPLOYEES3 INDIRECT EMPLOYEES4 INDUCED EMPLOYEES4 TOTAL EMPLOYEES COMMERCIAL OFFICE 793 148 173 1,114
COMMERCIAL IN LINE RETAIL 15 1 2 18
PARKING STRUCTURE 0 0 0 0
TOTAL RECURRING EMPLOYMENT 808 149 175 1,132
NOTES:
* All figures subject to rounding
4 Source: San Marcos City IMPLAN multipliers.
1 Source: City of San Marcos.
2 Commercial Buildings Energy Consumption Survey (CBECS), 2012. 3 Based on multiplying Category SF by Employees/1,000 SF metric.
EXHIBIT 2
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
RECURRING ECONOMIC IMPACTS - APPROVED PLAN
ASSUMPTIONS
% INCOME SPENT TOTAL RESIDENT
I. RESIDENTIAL SPENDING ASSUMPTIONS HOUSEHOLD INCOME IN CITY SPENDING / YR.
RESIDENTIAL $0 24.68% $0
II. NON-RESIDENTIAL OUTPUT ASSUMPTIONS AVERAGE OUTPUT / EMPLOYEE1 OUTPUT / YR.1 COMMERCIAL OFFICE $104,934 $83,212,888
COMMERCIAL IN LINE RETAIL $83,235 $1,248,521
PARKING STRUCTURE $0 $0
RECURRING OUTPUT
III. CITY
DIRECT OUTPUTINDIRECT OUTPUT 1 INDUCED OUTPUT 1 TOTAL OUTPUT COMMERCIAL OFFICE $83,212,888 $19,909,548 $21,468,329 $124,590,765 COMMERCIAL IN LINE RETAIL $1,248,521 $224,463 $316,501 $1,789,485 PARKING STRUCTURE $0.00 0 0 $0.00
TOTAL RECURRING OUTPUT $84,461,409 $20,134,011 $21,784,829 $126,380,250 NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers.
EXHIBIT 3
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
ONE-TIME EMPLOYMENT - APPROVED PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND ASSUMPTIONS UNITS
RESIDENTIAL 0
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS SQ. FT.
COMMERCIAL OFFICE 275,067
COMMERCIAL IN LINE RETAIL 18,344
PARKING STRUCTURE 181,576
III. PUBLIC FACILITIES TOTAL COST
NA
ONE-TIME EMPLOYMENT
IV. CITY
DIRECT EMPLOYEES 1 INDIRECT EMPLOYEES 1 INDUCED EMPLOYEES 1 TOTAL EMPLOYEES COMMERCIAL OFFICE 308 66 79 453
COMMERCIAL IN LINE RETAIL 21 4 5 30
PARKING STRUCTURE 0 0 0 0
TOTAL ONE-TIME EMPLOYEES 329 70 84 483
NOTES:
* All figures subject to rounding
Look and compare to Sunrise
1 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures, Sector 59: Construction of new single family structures).
EXHIBIT 4
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
ONE-TIME IMPACTS - APPROVED PLAN
ASSUMPTIONS
ESTIMATED
I. RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS UNITS SQ. FT. PER DWELLING UNIT COST PER UNIT 1 RESIDENTIAL 0 0 $0
II. NON-RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS SQ. FT. CONSTRUCTION COST PER SQ. FT.
COMMERCIAL OFFICE 275,067 $180 COMMERCIAL IN LINE RETAIL 18,344 $180 PARKING STRUCTURE 181,576 $0 III. PUBLIC FACILITIES TOTAL COST
ONE-TIME OUTPUT
IV. CITY
DIRECT OUTPUT INDIRECT OUTPUT 2 INDUCED OUTPUT 2 TOTAL OUTPUT COMMERCIAL OFFICE $49,512,060 $11,276,893 $10,609,907 $71,398,860 COMMERCIAL IN LINE RETAIL $3,301,920 $702,867 $656,879 $4,661,666 PARKING STRUCTURE $0 $0 $0 $0
TOTAL ONE-TIME OUTPUT $52,813,980 $11,979,760 $11,266,786 $76,060,526 NOTES:
1 Residential Building costs were calculated using Reed Construction Cost Data. * All figures subject to rounding
2 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures, Sector 59: Construction of new single family structures).
EXHIBIT 5
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
JOBS-HOUSING BALANCE - APPROVED PLAN
ASSUMPTIONS
I. EXISTING DEMOGRAPHICS
CITY OF SAN MARCOS
HOUSING UNITS 1 32,460
EMPLOYEES 2 37,500
II. JOB IMPACTS 3
CITY OF SAN MARCOS
DIRECT IMPACT 808
ADDITIONAL INDIRECT 149
ADDITIONAL INDUCED 175
TOTAL 1,132
III. CUMULATIVE PROJECT DEMOGRAPHICS
EXISTING HOUSING UNITS PLUS PROJECT - CITY OF SAN MARCOS 32,460 PERCENTAGE INCREASE 0.00%
EXISTING EMPLOYEES PLUS PROJECT - CITY OF SAN MARCOS 38,632 PERCENTAGE INCREASE 3.02%
JOBS-HOUSING BALANCE
IV. JOBS-HOUSING BALANCE
CITY OF SAN MARCOS
EXISTING 1.16
EXISTING WITH PROJECT 1.19
PERCENTAGE INCREASE 3.02%
NOTES:
1 Source: State of California, Department of Finance, E-5 Population and Housing Estimates for Cities, Counties, and the State (2020). * All figures subject to rounding
2 Source: California Employment Development Department ("EDD") - Labor Market Information Division. 3 Please see Exhibit B-1: Recurring Jobs.
EXHIBIT 6
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
SUMMARY - APPROVED PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS UNITS
LOW-DENSITY RESIDENTIAL 0
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS EMPLOYEES/1,000 SQ. FT. SQ. FT.
COMMERCIAL OFFICE 2.88 275,067
COMMERCIAL IN LINE RETAIL 0.82 18,344
PARKING STRUCTURE 0.00 181,576
ECONOMIC IMPACTS CONCLUSIONS
RECURRING IMPACTS
III. JOB CREATION DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 808 324 1,132
IV. TOTAL OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $84,461,409 $41,918,841 $126,380,250
ONE-TIME IMPACTS
V. CONSTRUCTION JOBS DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 329 155 483
VI. CONSTRUCTION OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $52,813,980 $23,246,546 $76,060,526
OTHER IMPACTS
BALANCE BALANCE % INCREASE/
VII. JOBS-HOUSING BALANCE EXISTING WITH PROJECT (DECREASE) CITYWIDE 1.16 1.19 3.02%
CITY OF SAN MARCOS
HALLMARK - BARHAM CONDOMINIUMS
ECONOMIC IMPACT ANALYSIS - DRAFT (PROPOSED PLAN)
RECURRING JOBS
RECURRING IMPACTS
ONE-TIME JOBS
ONE TIME IMPACTS
JOB HOUSING BALANCE
SUMMARY
EXHIBIT 1
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
RECURRING EMPLOYMENT - PROPOSED PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY UNITS
RESIDENTIAL 151
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY1 EMPLOYEES/1,000 SQ. FT. SQ. FT.1
NON-RESIDENTIAL 0.00 0
RECURRING EMPLOYMENT
III. CITY
DIRECT EMPLOYEES 2 INDIRECT EMPLOYEES 3 INDUCED EMPLOYEES3 TOTAL EMPLOYEES
RESIDENTIAL NA NA NA NA
TOTAL RECURRING EMPLOYMENT 0 0 0 0
NOTES:
All figures subject to rounding
3 Source: San Marcos City IMPLAN multipliers.
1 Source: City of San Marcos.
2 Based on multiplying Category SF by Employees/1,000 SF metric.
EXHIBIT 2
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
RECURRING ECONOMIC IMPACTS - PROPOSED PLAN
ASSUMPTIONS
% INCOME SPENT TOTAL RESIDENT
I. RESIDENTIAL SPENDING ASSUMPTIONS HOUSEHOLD INCOME IN CITY SPENDING / YR.
RESIDENTIAL $126,929 28% $2,690,241
II. NON-RESIDENTIAL OUTPUT ASSUMPTIONS AVERAGE OUTPUT / EMPLOYEE1 OUTPUT / YR.1 NON-RESIDENTIAL $0 NA
RECURRING OUTPUT
III. CITY
DIRECT OUTPUTINDIRECT OUTPUT 1 INDUCED OUTPUT 1 TOTAL OUTPUT RESIDENTIAL $2,690,241 $483,660 $681,977 $3,855,879
TOTAL RECURRING OUTPUT $2,690,241 $483,660 $681,977 $3,855,879 NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers.
EXHIBIT 3
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
ONE-TIME EMPLOYMENT - PROPOSED PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND ASSUMPTIONS UNITS
RESIDENTIAL 151
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS SQ. FT.
NON-RESIDENTIAL NA
III. PUBLIC FACILITIES TOTAL COST
NA
ONE-TIME EMPLOYMENT
IV. CITY
DIRECT EMPLOYEES 1 INDIRECT EMPLOYEES 1 INDUCED EMPLOYEES 1 TOTAL EMPLOYEES RESIDENTIAL 224 84 63 371
TOTAL ONE-TIME EMPLOYEES 224 84 63 371
NOTES:
All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 60: Construction of new multi-family structures). ]
EXHIBIT 4
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
ONE-TIME IMPACTS - PROPOSED PLAN
ASSUMPTIONS
ESTIMATED
I. RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS UNITS SQ. FT. PER DWELLING UNIT COST PER UNIT 1 RESIDENTIAL 151 NA $265,000
II. NON-RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS SQ. FT. CONSTRUCTION COST PER SQ. FT.
NON-RESIDENTIAL NA NA
III. PUBLIC FACILITIES TOTAL COST
NA
ONE-TIME OUTPUT
IV. CITY
DIRECT OUTPUT INDIRECT OUTPUT 2 INDUCED OUTPUT 2 TOTAL OUTPUT RESIDENTIAL $40,015,000 $10,769,482 $8,457,013 $59,241,495 TOTAL ONE-TIME OUTPUT $40,015,000 $10,769,482 $8,457,013 $59,241,495 NOTES:
1 Residential Building costs were calculated using Reed Construction Cost Data.
All figures subject to rounding
2 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 60: Construction of new multi-family structures).
EXHIBIT 5
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
JOBS-HOUSING BALANCE - PROPOSED PLAN
ASSUMPTIONS
I. EXISTING DEMOGRAPHICS
CITY OF SAN MARCOS
HOUSING UNITS 1 32,460
EMPLOYEES 2 37,500
II. JOB IMPACTS 3
CITY OF SAN MARCOS
DIRECT IMPACT 0
ADDITIONAL INDIRECT 0
ADDITIONAL INDUCED 0
TOTAL 0
III. CUMULATIVE PROJECT DEMOGRAPHICS
EXISTING HOUSING UNITS PLUS PROJECT - CITY OF SAN MARCOS 32,611 PERCENTAGE INCREASE 0.47%
EXISTING EMPLOYEES PLUS PROJECT - CITY OF SAN MARCOS 37,500 PERCENTAGE INCREASE 0.00%
JOBS-HOUSING BALANCE
IV. JOBS-HOUSING BALANCE
CITY OF SAN MARCOS
EXISTING 1.16
EXISTING WITH PROJECT 1.15
PERCENTAGE INCREASE -0.46%
NOTES:
1 Source: State of California, Department of Finance, E-5 Population and Housing Estimates for Cities, Counties, and the State (2020).
All figures subject to rounding
2 Source: California Employment Development Department ("EDD") - Labor Market Information Division. 3 Please see Exhibit B-1: Recurring Jobs.
EXHIBIT 6
CITY OF SAN MARCOS - HALLMARK BARHAM CONDOMINIUMS
SUMMARY - PROPOSED PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS UNITS
RESIDENTIAL 151
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS EMPLOYEES/1,000 SQ. FT. SQ. FT.
NON-RESIDENTIAL 0.00 0.00
ECONOMIC IMPACTS CONCLUSIONS
RECURRING IMPACTS
III. JOB CREATION DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 0 0 0
IV. TOTAL OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $2,690,241 $1,165,637 $3,855,879
ONE-TIME IMPACTS
V. CONSTRUCTION JOBS DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 224 147 371
VI. CONSTRUCTION OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $40,015,000 $19,226,495 $59,241,495
OTHER IMPACTS
BALANCE BALANCE % INCREASE/
VII. JOBS-HOUSING BALANCE EXISTING WITH PROJECT (DECREASE) CITYWIDE 1.16 1.15 -0.46%
Hallmark Barham Townhomes City of San
Marcos – San Marcos, California
DTA and City of San Marcos
May, 2021
Key Findings 4
Proposed Site Plan 6
Price Assessment – Alternate Use 12
Price Assessment – Proposed Townhomes 20
Competitive For-Sale Residential Market 23
Location Overview 33
Land Use & Zoning Analysis 42
Attached For-Sale Residential Trends 47
Commercial Retail & Office Market Trends 52
Retail Demand Outlook 68
Demographic Overview 75
Economic Overview 83
Appendix 90
3 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos Background/Objectives, Key Contacts & Limiting Conditions
BACKGROUND & OBJECTIVES
Zonda Advisory has been retained by DTA in conjunction with the City of San Marcos to conduct a portion of the fiscal, economic and market analysis for a proposed 151-unit condominium development on 10 acres (“the project”) in the City of San Marcos. The property is located South of the 78 Freeway and west of La Moree Road. The project includes a General Plan Amendment, a Specific Plan Amendment and Rezone to change the land use designation and zone of the property from Mixed Use-3 (MU-3) to Specific Plan Area (SPA). Additionally, the project requires a grading variance to allow for slopes to exceed 20 feet in height and a Conditional Use Permit for the temporary crushing of rock during grading operations. The objective of this study is to provide an independent analysis of the residential and retail commercial market trends in the San Marcos area within the context of San Diego County. These findings will be used to determine the most likely Alternate use (either for-sale townhomes or mixed-use commercial retail with for-rent multifamily apartments above). Zonda will provide conclusions relevant to the future site use for the planned for-sale residential townhomes, based on April 2021 data.
Note: This report was completed during the ongoing global health crisis created by the COVID-19 (coronavirus) outbreak, the duration and consequences of which are still largely unknown. Our research and conclusions are based upon the best information available to us at the time of publication.
Client is responsible for representations about the development plans, marketing expectations and for disclosure of any significant information that might affect the ultimate realization of the projected results. There will usually be differences between projected and actual results because events and circumstances frequently do not occur as expected, and the difference may be material. We have no responsibility to update our report for events and circumstances occurring after the date of our report. Payment of any and all of our fees and expenses is not in any way contingent upon any factor other than our providing services related to this report.
LIMITING CONDITIONS
The following key team members participated on this analysis:
Tim Sullivan, Senior Managing Principal, oversees our Advisory practice. With over 38 years of experience, Mr. Sullivan is an expert in residential and mixed use feasibility studies, strategic planning and product development, and regularly conducts market analyses around the United States and internationally.
Alexis Wilmot, Manager - Advisory, managed the engagement on a day-to-day basis. Ms. Wilmot has 18 years of experience evaluating for-sale , apartment and retail land uses in the real estate industry. She regularly analyzes residential and mixed-use developments around the country, with a specific focus on the Southern California market, and North Inland County in particular.
Additional support was provided as needed.
KEY CONTACTS
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 4 Key Findings
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 5 SWOT Analysis
Site Plan & Location Analysis
As part of our due diligence for the Subject, we assessed the existing land use (Mixed-Use-3 referred to hereafter as the Alternate”) and Proposed rezone land use (SPA with residential) using a S.W.O.T analysis. The main advantage of the rezone over the existing use is that for-sale residential is currently very lucrative and also less costly to build than mixed use office and retail which would require a very expensive parking structure. The Alternate use office space entails bringing over 275,000 square feet to market in a down cycle with 14% vacancy.
Internal Factors
Strengths (+) Mixed-Use-3 SPA Residentail Townhomes
Overall Advantages
• High traffic area (169,000 ADT) will draw retail clientele. However, the site as Alternate use development is largely slated for Office, with just a small retail portion likely be limited to convenience stores and sevrices for the office tenants. • Excellent window along Highway 78 for retail - but again, the site was slated for 93% office use, and less than 7% retail.
• An area where residential uses are already present directly adjacent to the site (small lot development by Barratt American)
• Developer interest in the site as currently zoned has been historically unsuccessful, whereas for-sale sites are hard to come by and there is curently a developer interested in for-sale devlopment at the Subject site.
Weaknesses (–) Mixed-Use-3 SPA Residentail Townhomes
Areas of Improvement
• True mixed use development which is supportive of the MU-1 and MU-2 uses is not ideal at this particular location given the height limit of 3 stories becuase of adjacent residential uses.
• The location is better suited to Office (hence the Alternate use plan) but will require the construciton of a very large parking structure
• The topography does not lend itself to the development of slab on grade parking, and would make ingrees and egress more challenging off Barham during peak traffic. • Site is significantly sloped and therefore not as efficient as a flat parcel for residential development
• Site is rocky and will require signifcant grading and a rock crushing permit • Site is very close to 78 Freeway and Sprinter Rail overpass, with noise impacts • Site ingress and egress could be challenging at peak traffic times.
External Factors
Opportunities (+) Mixed-Use-3 SPA Residentail Townhomes Market Voids & Favorable Trends
• Some retail gap for clothing or special use stores which could work at this location. • A severe undersupply of new attached for-sale homes in the CMA (Competitive Market Area)
• Rising home prices make residential development very lucrative for the City at present.
Threats (–) Mixed-Use-3 SPA Residentail Townhomes
Obstacles & Market Shifts
• Financing mixed-use deals is far more difficult. Financers have to evaluate each use separately, zoning and building approvals can get exponentially harder, and from a design perspective there are a lot more details you have to get right • Office space is a very challenged market currently following the pandemic, with high vacancy of around 14% and antiicpated slow recovery.
• Construciton costs driven high by the for-sale real estate market make the required structured parking garage prohbilitvely expensive to build, rendering such a development infeasible.
• Noise impact from freeway and Sprinter Rail overpass will need to be mitigated. • Current zoning prohibits the development of residential only • Ground floor height requirement under currentl designated land use and zoming is 15 feet, which is not compatible with residential.
• Maximum FAR is 1.5 which is not compatible with residential use Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 6 Proposed Site Plan
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 7 Project Description
Site Plan & Location Analysis
The project proposes 151 multi‐family residential units situated on 10.6 acres for a density of 14.3 units per acre. Residential buildings have a contemporary Spanish style elevation and comprise one, two, and three‐story condominiums with ten different floorplans. The site plan proposes 19 7‐plex buildings (133 units) and six 3‐plex buildings (18 units) for a total of 151 units. A 1,160 square foot recreation building is planned with a kitchen, living room, dining room, California room, patio, restroom and storage area. The proposed project includes five recreational spaces such as play areas, tot lots, seating, barbeques, open grassy areas, and patios. Open space totals 5.35 acres. Two accesses on E. Barham Drive provide an internal loop through the site.
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 8 Proposed Floorplans – Triplex Carriage
Site Plan & Location Analysis
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 9 Proposed Floorplans – 7-Plex Rowtowns
Site Plan & Location Analysis
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 10 Proposed Floorplans – 7-Plex Rowtowns
Site Plan & Location Analysis
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 11 Alternate Site Plan
Site Plan & Location Analysis
If the project site were to be developed under the current Mixed-Use 3 Zone, assuming the minimum size in order to meet the 1.0 FAR minimum per the MU-3 Zone, it is estimated the following project would be developed:
• 3 buildings totaling 474,985 square feet, of 3 stories each. • 18,344 sf commercial space; 275,067 sf office space;
• 181,576 sf parking structure space providing 879 parking spaces of surface and structured parking. Although this last element will affect construction costs, it is not included as a line item in the valuation of the commercial project. Rather, it is assumed that without the structured parking, the commercial component doesn’t function, and therefore the commercial component pricing has the structured parking provision “baked in” to the office and retail space numbers.
The development outlined above will be referred to hereafter in this report as the Alternate use, and serves as the comparison in value to the proposed residential townhome use. The Alternate use would result in an FAR (Floor Area Ratio) of 1.03, which is within the required guidelines. The Alternate use would be prohibitively expensive to build due to the structured parking and the 3-story height limit because of the site’s adjacency to residential.
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 12 Price Assessment of
Alternate Use
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 13 Our valuation of the Subject under current zoning as a commercial development with office space and retail is $88.5 million. This is the average of the amount yielded by two different valuation approaches, namely Net Operating Income and sales transactions.
Our valuation of the Subject as the proposed Hallmark at Barham Drive townhome development is $95 million. This is based on a comparison of the Subject offering in terms of location, design and product in relation to the for-sale attached new home competitive market which includes San Marcos, Vista and Escondido.
Commercial Space Value Conclusions
Mixed-Use Commercial Retail & Residential Evaluation
Source: Zonda, REIS, Loopnet, CBRE, Lee & Associates, Cushman and Wakefield, and Colliers ▬ Incentives ▬▬ Typical Spending ▬ Estimated Existing Total # of Est % of Average Base Price Options / Lot Closing Closing Sales Rate Project/Subdivision Type Configuration Units Total Units Unit Size Price Reduction Upgrades Premiums Price $/SF Value Barham Drive Carriage Triplex Townhomes Attached 18 12% 1,719 $610,000 -$5,000 $20,000 $3,667 $628,667 $366 $11,316,000 Barham Drive Rowtowns Townhomes Attached 133 88% 1,631 $611,429 -$5,714 $20,000 $3,071 $628,786 $385 $83,628,500 Community Summary 151 100% 1,642 $611,258 -$5,629 $20,000 $3,142 $628,772 $383 $94,944,500 Type Square Feet
Est. Monthly
Lease Rate Per
SF (Gross)
Est. Annual
Lease Rate Per
SF (Gross)
Gross Receipts Operating
Expenses
Net
Operating
Income
Vacancy Rate Vacancy Total Estimated
Annual Revenues
Cap Rate
(%) Total Value $/SF
Commercial Office 275,067 $2.48 $29.76 $8,185,994 ($1,925,469) $6,260,525 -14.0% ($876,473) $5,384,051 6.80% $79,177,227 $288 In-line Retail 18,344 $2.71 $32.52 $596,547 ($110,064) $486,483 -5.0% ($24,324) $462,159 5.70% $8,108,048 $442 TOTAL 293,411 $2.48 $29.76 $8,185,994 ($1,925,469) $6,260,525 -14.0% ($876,473) $5,384,051 6.80% $87,285,275 $297 *Assumes all real estate property taxes, insurance, management fees (on or off-site), repairs and maintenance, and utilities are paid by tenant under a Triple Net lease.
Type Square Feet
Price Per
Square Foot Total Value
Commercial Office 275,067 $300 $82,520,100
In-Line Retail 18,344 $395 $7,245,880
TOTAL 293,411 $306 $89,765,980 AVERAGE PRICE ESTIMATE $88,525,627 Net Operating Income / Cap Rate Valuation Approach
Sales Transaction Valuation Approach
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 14 Commercial Methodology and Price Assessment Conclusions Mixed-Use Commercial Retail & Residential Price Assessment Our valuation of the Subject Alternate use includes both the NOI cap rate approach and a comparison of recent sales transactions, and focused specifically on a combination of strip retail/commercial office. The resulting price assessment cross-referencing both methods is $85.5 million.
Zonda assumptions are supported by our market research and interviews with local retail brokers including CBRE, Lee & Associates, Cushman and Wakefield, and Colliers, and include the following:
• A vacancy rate of 14% for office, which is high, but is in line with the market reports for the office market currently. • A vacancy rate of 5% for inline strip retail.
• Operating expenses for the office component are estimated at $7.00 per square foot. • Operating expenses for the strip retail are estimated at $6.00 per square foot. • Cap rates for office space have softened since the pandemic, and we estimate a cap rate for the Subject office component at 6.8%. • Cap rates for retail space remain healthier than office rates, and Zonda used 5.7% as the rate for the ground floor retail component.
Type Square Feet
Est. Monthly
Lease Rate Per
SF (Gross)
Est. Annual
Lease Rate Per
SF (Gross)
Gross Receipts Operating
Expenses
Net
Operating
Income
Vacancy Rate Vacancy Total Estimated
Annual Revenues
Cap Rate
(%) Total Value $/SF
Commercial Office 275,067 $2.48 $29.76 $8,185,994 ($1,925,469) $6,260,525 -14.0% ($876,473) $5,384,051 6.80% $79,177,227 $288 In-line Retail 18,344 $2.71 $32.52 $596,547 ($110,064) $486,483 -5.0% ($24,324) $462,159 5.70% $8,108,048 $442 TOTAL 293,411 $2.48 $29.76 $8,185,994 ($1,925,469) $6,260,525 -14.0% ($876,473) $5,384,051 6.80% $87,285,275 $297 *Assumes all real estate property taxes, insurance, management fees (on or off-site), repairs and maintenance, and utilities are paid by tenant under a Triple Net lease.
Type Square Feet
Price Per
Square Foot Total Value
Commercial Office 275,067 $300 $82,520,100
In-Line Retail 18,344 $395 $7,245,880
TOTAL 293,411 $306 $89,765,980 AVERAGE PRICE ESTIMATE $88,525,627 Net Operating Income / Cap Rate Valuation Approach
Sales Transaction Valuation Approach
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 15 For-Sale Methodology and Price Assessment Conclusions Mixed-Use Commercial Retail & Residential Price Assessment Our valuation of the Subject Proposed use is based on a study of comparable actively selling and recently sold out townhome communities in the Competitive Market Area (or CMA) which includes north and south San Marcos, Vista, and the easternmost portion of Carlsbad. We also looked at small lot/duplex product in lower priced Escondido for further perspective. The resulting price assessment is $94,944 million.
Zonda assumptions are supported by our market research and interviews with local sales offices, and include the following:
• A buyers incentive of between $5,000 and $5,700 to be attributed as a credit to preferred lender closing costs. • Options and upgrades spending averaging $20,000 per unit on top of the base house package price. • Operating expenses for the office component are estimated at $7.00 per square foot. • Unit premiums for specific orientation within the building or the community, averaging $3,142 per unit.
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 16 The following office lease transactions were used to determine a likely price assessment for the commercial retail component of the Alternate use. Median rent is $2.39 per square foot and average rent is $2.57. In our price estimate Zonda used the $2.48 halfway point of these two benchmarks, which also matches up with the Q1 North County lease rate of $2.47 per square foot.
Alternate Use: Office Lease Rates
Chapter Name
Property Name
No. Address Type Zoning Acreage Sale Date Year Built Square Feet Lease Rate p.a Price/ mo GLA Terms Gateway at San Marcos
1 100 E San Marcos Blvd Office MU 4.76 Listing 2002 3,026 $25.80 $2.15 64956 Gross San Marcos, CA 92069 8,675 $31.20 $2.60
Promenade at Creekside Ph II
2 6 Creekside Drive Office MU 0.59 Listing 2018 3,066 $27.00 $2.25 11003 NNN San Marcos, CA 92078
3152 Lionshead
3 3152 Lionshead Ave Office C 1.97 Actual 2007 5,325 $30.24 $2.52 5323 Gross Carlsbad, CA 92010
Opus Point Collection
4 3176 Lionshead Ave Flex Office PM 1.97 Listing 2007 2,954 $22.20 $1.85 12176 Gross Carlsbad, CA 92010
North County Corporate Center
5 277 Rancheros Dr Office CO 3.22 Listing 2000 8,610 $26.00 $2.17 65541 Gross San Mkarcos, CA 92069
Civic View Corporate Centre
6 300 Rancheros Drive Office C 1.8 Listing 2008 22,233 $34.20 $2.85 95531 Gross San Marcos, CA 92069
Premier Crossing
7 2301 S. Melrose Drive Medical Center C1 5.15 Listing 2008 3,195 $36.00 $3.00 51702 Gross Vista, CA 92081
Min: 2000 2,954 $22.20 $1.85
Max: 2018 22,233 $36.00 $3.00
Median: 2007 4,260 $28.62 $2.39 $2.48
Average: 2007 7,136 $29.08 $2.57
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 17 The following retail strip center sales and listings were used to determine a likely sale price for the mixed use commercial component of the Alternate use. The weighted average sales price is $299, and Zonda rounded this to $300 per square foot for the Alternate Mixed Use Office component.
Alternate Use: Office Sales
Chapter Name
No. Address Type Zoning Acreage Sale Date Year Built Cap Rate Square Feet Sale Price Price/ SF Price/Acre Park Place North
1 950 Boardwalk Office MU 0.115 2006 -- 1,478 $369,950 $250 $3,216,957 San Marcos, CA 92078 0.517 2006 4,795 $1,366,575 $285 $2,643,279 Park Place North
2 950 Boardwalk Office MU 0.59 2006 2,314 $416,666 $180 $706,214 San Marcos, CA 92078
Vista Business Park
3 2575 Fortune Way Flex Office CI 1.98 1999 6.80% 4,140 $906,250 $219 $457,702 San Marcos, CA 92078
Opus Point Collection
4 3152 Lionshead Ave Flex Office PM 1.97 Listing 2007 7.20% 5,325 $1,735,000 $326 $880,711 Carlsbad, CA 92010
Vista Office & Medical Suites
5 2301-2305 Melrose Dr Office CO 2.465 Sale 2008 4.5% 3,140 $1,350,000 $380 $547,667 Vista, CA 92081
Nordahl Medical Center
6 838 Nordahl Rd Medical Center C 0.59 2007 6.44% 1,000 $365,000 $365 $618,644 San Marcos, CA 92069
Sycamore Medical Canter
7 902 Sycamore Medical Center C1 0.8 2007 5.0% 13,727 $5,288,400 $385 $6,610,500 Vista, CA 92081
Min: 1999 4.5% 1,000 $365,000 $180 $457,702
Max: 2008 7.2% 13,727 $5,288,400 $385 $6,610,500
Total: -- -- -- -- --
Average: 2006 6.0% 4,490 $1,474,730 $299 $1,960,209
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 18 The midway point between median and average lease transactions in San Marcos for Retail space is $2.71. Zonda used this lease rate rate of $2.71 per square foot per month for the NOI method retail price assessment of the Alternate use.
Alternate Use: Strip Center Retail Sales
Chapter Name
Property Name
No. Address Type Tenant Sale Date Year Built Square Feet Lease Rate p.a Price/ mo GLA Terms Foothill Center
1 1301 E Vista Way Retail Vista French Café Leased 2002 1,918 $28.12 $2.34 115175 NNN Vista, CA 92084 Top Nails Leased 889 $30.39 $2.53
The Max Salon Leased 1,056 $29.28 $2.44
Pizza Hut Leased 1,200 $24.00 $2.00
Vista Foothill Dentistry Leased 1,352 $32.51 $2.71
Drs office Leased 950 $36.19 $3.02
Vacant Vacant 852 $24.31 $2.03
T Mobile Leased 1,041 $41.92 $3.49
Starbucks Leased 1,747 $44.40 $3.70
Vacant Vacant 1,038 $30.00 $2.50
Jiffy Lube Leased 2,003 $41.94 $3.50
All American Barber Leased 995 $27.74 $2.31
Promenade at Creekside Ph II
4 6 Creekside Drive Retail Leased 2018 4,066 $33.00 $2.75 11003 NNN San Marcos, CA 92078
Twin Oaks Town Center
5 403-407 N. Twin Oaks Valley Rd Retail Actual 2006 2,481 $30.00 $2.50 24157 NNN San Marcos, 92069
Campus Pointe II
6 801 S. Twin Oaks Valley Rd Mixed Use Retail Leased 2017 1,103 $33.00 $2.75 4951 NNN San Marcos, 92078
Panera San Marcos Blvd
7 San Marcos Blvd & Bent Ave Retail Drive Thru Listing 2021 3,500 $45.25 $3.77 3500 NNN San Marcos, CA 92078
Min: 2002 852 $24.00 $2.00
Max: 2021 4,066 $45.25 $3.77
Median: 2012 1,103 $30.39 $2.53 $2.71
Average: 2013 1,637 $33.25 $2.89
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 19 The following retail strip center sales and listings were used to determine a likely sale price for the mixed use commercial component of the Alternate use. The weighted average sales price is $394, and Zonda rounded this to $395 per square foot for the Alternate Mixed Use Retail component.
Alternate Use: Strip Center Retail Sales
Chapter Name
Property Name
No. Address Type Zoning Acreage Sale Date Year Built Cap Rate Square Feet Sale Price Price/ SF Price/Acre Woodland Crossings
1 975-979 Woodland Pkwy Neighborhood Center C 1.16 Sale Date 2007 7.60% 10822 3850000 $356 $3,318,966 San Marcos, 92069
2 157 N Twin Oaks Valley Rd Class B C 0.59 Sale 2007 6.44% 4,200 $410,000 $98 $694,915 San Marcos, CA 92069 Restaurant
3 355 Via Vera Cruz Class C 1.04 Listing 2000 6.80% 11,500 $2,500,000 $217 $2,403,846 San Marcos, CA 92078 Retail
Citricado Village
4 2500-2510 S. Escondido Blvd Neighborhood Center MU 1.42 Listing 2,007 -- 9,797 $2,929,000 $299 $2,062,676 Escondido, 92025
Campus Pointe II
5 801-803 S.Twin Oaks Valley Rd Neighborhood Center MU 1.6 Sale 2014 5.40% 12,104 $4,600,000 $380 $2,875,000 San Marcos, 92069
Twin Oaks Valley Rd
6 403-407 N. Twin Oaks Valley Rd Neighborhood Center C 0.94 Sale 2007 5.40% 21,390 $5,980,000 $280 $6,361,702 San Marcos, 92069
Panera San Marcos Blvd
7 San Marcos Blvd & Bent Ave Retail Drive Thru 0.97 Listing 2021 3.85% 3,500 $4,026,000 $1,150 $4,150,515 San Marcos, CA 92078
Del Oro Marketplace
8 San Marcos Blvd & Bent Ave Shopping Center 8.94 Listing 2021 6.20% 85,855 $32,239,000 $376 $3,606,152 San Marcos, CA 92078
Min: 2000 3.9% 3,500 $410,000 $98 $694,915
Max: 2021 7.6% 85,855 $32,239,000 $1,150 $6,361,702
Median: 2007 6.2% 11,161 $3,938,000 $327 $3,096,983
Average: 2010.5 6.0% 19,896 $7,066,750 $394 $3,184,222
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 20 Price Recommendations
as Proposed Townhomes
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 21 Zonda’s recommended total prices average $628,772 ($383 per square foot) for the proposed 151 townhomes, with an expected total revenue of $94,944,500 based on these prices. Our April 2021 base pricing is $611,258 per unit, and all-in pricing factors in incentives of roughly 1.0% of base price, options and upgrades spending of $20,000 per home, and unit premiums of roughly $3,142 on average per unit.
Subject Total Price and Absorption Summary
Price & Sales Pace Recommendations
▬ Incentives ▬▬ Typical Spending ▬ Estimated Existing Total # of Est % of Average Base Price Options / Lot Closing Closing Sales Rate Ref Project/Subdivision Type Configuration Units Total Units Unit Size Price Reduction Upgrades Premiums Price $/SF Value A Barham Drive Carriage Triplex Townhomes Attached 18 12% 1,719 $610,000 -$5,000 $20,000 $3,667 $628,667 $366 $11,316,000 B Barham Drive Rowtowns Townhomes Attached 133 88% 1,631 $611,429 -$5,714 $20,000 $3,071 $628,786 $385 $83,628,500 Community SummaryCommunity Summary 151 100% 1,642 $611,258 -$5,629 $20,000 $3,142 $628,772 $383 $94,944,500 $450,000
$500,000
$550,000
$600,000
$650,000
$700,000
$750,000
$800,000
750 1,000 1,250 1,500 1,750 2,000 2,250
Estimated Closing Price
Unit Size
Barham Drive Carriage Triplex (Townhomes) - Attached, 4.0 sls per mo Barham Drive Rowtowns (Townhomes) - Attached, 4.0 sls per mo Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 22 Zonda’s recommended base prices for the triplex units range from $580,000 to $655,000, and the rowtown homes are based priced form the mid $400,000s to the low $700,000s. Our inspection of the proposed floorplans for the two product lines influenced proposed prices, which are competitive with the actively selling local attached new home market.
Subject Price Detail
Price & Sales Pace Recommendations
Mo. Incentives ▬ Typical Spending ▬ Estimated Est. ▬ Pymt Impacting ▬ 95.0% 30.0% Subject Property Size Sales Base Closing Options / Lot Closing Closing Mo. Base Addl 3.0% Qualifying Product Details Mix (SF) Bd/Ba Level Pkg Pace Price Costs Upgrades Premiums Price $/SF HOA Tax Taxes Mo.Pmt. Income A BARHAM DRIVE CARRIAGE TRIPLEX │ HALLMARK │ │ SAN MARCOS Product: Townhomes 6 1,573 2-3/3 3 2 4.0 $580,000 -$5,000 $20,000 $3,000 $598,000 $380 $275 1.20% 0.0% $3,647 $145,875 Configuration: Attached 6 1,650 3/2.5 3 2 $595,000 -$5,000 $20,000 $3,000 $613,000 $372 $275 1.20% 0.0% $3,731 $149,258 Lot Dimension: 3-Plex 6 1,935 4/3.5 3 2 $655,000 -$5,000 $20,000 $5,000 $675,000 $349 $275 1.20% 0.0% $4,081 $163,241 Total Units: 18
18 1,719 4.0 $610,000 -$5,000 $20,000 $3,667 $628,667 $366 $275 1.20% 0.0% $3,820 $152,791 B BARHAM DRIVE ROWTOWNS │ HALLMARK │ 0 │ SAN MARCOS
Product: Townhomes 19 858 1/1.5 3 1 4.0 $435,000 -$4,000 $20,000 $1,500 $452,500 $527 $275 1.20% 0.0% $2,826 $113,058 Configuration: Attached 19 1,364 2/2.5 3 2 $555,000 -$5,000 $20,000 $3,000 $573,000 $420 $275 1.20% 0.0% $3,506 $140,236 Lot Dimension: 7-Plex 19 1,667 3/2.5 3 2 $620,000 -$6,000 $20,000 $3,000 $637,000 $382 $275 1.20% 0.0% $3,867 $154,671 Total Units: 133 19 1,705 3+O/2.5 3 2 $630,000 -$6,000 $20,000 $3,000 $647,000 $379 $275 1.20% 0.0% $3,923 $156,926 19 1,801 3+D/2.5 3 2 $650,000 -$6,000 $20,000 $3,000 $667,000 $370 $275 1.20% 0.0% $4,036 $161,437 19 1,898 4/3.5 3 2 $670,000 -$6,000 $20,000 $3,000 $687,000 $362 $275 1.20% 0.0% $4,149 $165,948 19 2,126 3+1/2.5+1 3 2 $720,000 -$7,000 $20,000 $5,000 $738,000 $347 $275 1.20% 0.0% $4,436 $177,451 133 1,631 4.0 $611,429 -$5,714 $20,000 $3,071 $628,786 $385 $275 1.20% 0.0% $3,820 $152,818 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 23 Competitive For-Sale
Residential Market
24 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos Peak at Delpy’s Corner
Skyhaus (sold out) &
Latitude (Rancho Tesoro)
Avila
Verano & Solara
(Skyline)
The Retreat (Canopy Grove)
Viewpointe
Citron – Sold Out
Contempo – Sold Out
Level 15 – Sold Out
Competitive Project Location Summary
Competitive Market Analysis
Zonda considered comparable townhome communities proximate to Hallmark Townhomes, located in San Marcos, Vista and the duplexes at Canopy Grove in Escondido.
Contracts/ Avg. ▬ Incentive ▬ ▬ Typ. Spend. ▬ Est. Est. ▬ Pymt Imp. ▬ Total Sales L3M Unit Base Price Opt. / Opt. / Lot Closing Closing Closing $/ Mo. Mo.
Community - Builder City/Master Plan* Config. Units Pace SP Size Price Reduc. Upgrd. Upgrd. Prem. Price $/SF Incentive HOA Tax Paymnt Peak at Delpy's Corner - Lennar Vista 2-story row 124 4.69 5.00 1,592 $560,067 $0 $2,500 $13,000 $2,500 $573,067 $361 -$5,000 $340 1.1% $3,505 Solara at Skyline - D.R. Horton Vista 2-story row 80 2.48 4.00 1,513 $609,990 $0 $0 $10,000 $3,000 $622,990 $412 -$5,000 $335 1.3% $3,880 Latitude - Brookfield Residential Rancho Tesoro* 3-story court 120 5.81 5.33 1,589 $700,213 $0 $2,500 $33,000 $2,000 $732,713 $467 -$5,000 $250 1.7% $4,663 Verano at Skyline - D.R. Horton Vista 3-story row 109 3.92 5.00 1,570 $582,323 $0 $0 $10,000 $3,000 $595,323 $385 -$5,000 $335 1.3% $3,723 Canopy Grove/Retreat/Duplex - Lennar Escondido 6-pak 81 5.75 4.67 1,943 $631,650 $0 $0 $16,000 $4,000 $651,650 $336 -$5,000 $270 1.2% $3,897 Skyhaus - California West Rancho Tesoro* 2-story court 100 6.41 6.41 1,243 $536,733 $0 $0 $20,000 $0 $556,733 $462 -$4,000 $225 1.6% $3,532 Viewpointe - KB Home San Marcos 3-story interlock 78 3.84 3.84 1,471 $472,790 $0 $0 $10,000 $3,000 $485,790 $332 -$5,000 $296 1.3% $3,040 Total Units - CMA: 99 Average: 4.70 4.89 1,560 $584,824 $0 $714 $16,000 $2,500 $602,609 $394 -$4,857 $293 1.3% $3,749 Median: 4.69 5.00 1,570 $582,323 $0 $0 $13,000 $3,000 $595,323 $385 -$5,000 $296 1.3% $3,723 25 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos Total Price Positioning vs Competitive Market
Competitive Market Analysis
Proposed total pricing is in line with the price trend line for Skyhaus which sold out recently at Rancho Tesoro. Zonda found recent pricing (March 29, 2021) on just two of the original four Verano at Skyline plans. Verano’s three-story rowtowns in Vista on the border of Carlsbad and South San Marcos offer a valuable comparable which we believe should command a premium. We also collected fresh pricing on the final three-story units at Latitude in Ranch Tesoro as of May 13, 2021, and the updates are reflected below. $400,000
$450,000
$500,000
$550,000
$600,000
$650,000
$700,000
$750,000
$800,000
$850,000
750 1,000 1,250 1,500 1,750 2,000 2,250
Estimated Closing Price (000s)
Unit Size
Barham Drive Carriage Triplex (Townhomes) - Attached, 4.0 sls per mo Barham Drive Rowtowns (Townhomes) - Attached, 4.0 sls per mo Peak at Delpy's Corner - 2-story row sq ft, Lennar, 4.7/5.0 sls per mo.
Solara at Skyline - 2-story row sq ft, D.R. Horton, 2.5/4.0 sls per mo.
Latitude - 3-story court sq ft, Brookfield Residential, 5.8/5.3 sls per mo.
Verano at Skyline - 3-story row sq ft, D.R. Horton, 3.9/5.0 sls per mo.
Canopy Grove/Retreat/Duplex - 6-pak sq ft, Lennar, 5.8/4.7 sls per mo.
Skyhaus - 2-story court sq ft, California West, 6.4/6.4 sls per mo.
Viewpointe - 3-story interlock sq ft, KB Home, 3.8/3.8 sls per mo.
26 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos Total Price Positioning vs resale Closings
Competitive Market Analysis
The Subject is appropriately positioned at the higher end of resale home closings within a 2.5-mile radius of the competitive market past year. The Subject pricing falls in line with Carlsbad-proximate Skyline, just above much older homes in more desirable South San Marcos (92078), and well above older condos in less desirable North San Marcos (92069). $350,000
$400,000
$450,000
$500,000
$550,000
$600,000
$650,000
$700,000
$750,000
750 950 1,150 1,350 1,550 1,750 1,950 2,150 2,350
Resale Closings Versus Subject Estimated Closing Price
(000s)
Unit Size
Barham Drive Carriage Triplex (Townhomes) - Attached, 4.0 sls per mo
Barham Drive Rowtowns (Townhomes) - Attached, 4.0 sls per mo
Subject 2.5 Mile Radius
Rancho Tesoro 2.5 Mile Radius
Skyline 2.5 Mile Radius
Viewpointe 2.5Mile Radius
Delpy Corner 2.5 Mile Radius
Canopy 2.5 Mile Radius
Sales Year Avg. Net Pricer Per
Ref Reference Area Date Range Sales Pace Overall Built Bed Bath Sq. Ft. Price Square Foot A Subject 2.5 Mile Radius May-20 to Mar-21 33 3.28 2012 2.82 3.12 1,478 $465,045 $318 B Rancho Tesoro 2.5 Mile Radius Apr-20 to Mar-21 132 11.57 2007 2.72 2.89 1,412 $517,713 $371 C Skyline 2.5 Mile Radius Apr-20 to Mar-21 180 15.21 2011 2.89 3.06 1,475 $571,550 $391 D Viewpointe 2.5Mile Radius Apr-20 to Mar-21 100 9.24 2009 2.74 2.93 1,423 $506,101 $364 E Delpy Corner 2.5 Mile Radius Apr-20 to Mar-21 41 3.61 2016 3.02 2.93 1,645 $489,334 $301 F Canopy 2.5 Mile Radius Apr-20 to Mar-21 34 3.08 2014 3.09 3.00 1,692 $529,250 $319 Resale Market Average Total Sales - 520 2010 2.84 2.98 1,477 $529,290 $364 Resale Market Median 2007 3.00 3.00 1,454 $525,000 $363 27 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos Recommended Sales Pace
Competitive Market Analysis
Our elasticity of demand analysis indicates no elasticity between price and absorption, with smaller lower priced units selling at the same pace or even slower depending on specification and execution level. The Zonda projected sales pace recommendations are on the conservative side in today’s market where between 5 and 6 units per month is the new norm. Absorption of 4 homes per month accounts for future market fluctuation.
Source: Zonda, Independent Sales Offices
2.0 3.0
4.0 5.0
6.0 7.0
$450,000 $500,000 $550,000 $600,000 $650,000 $700,000 $750,000 Sales Pace
Base Price (000s)
Estimated Sales Pace - Subject CMA - Overall Sales Pace CMA - L3M Sales Pace Linear (Estimated Sales Pace - Subject)
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 28 Solara at Skyline – D.R. Horton, Vista 92081
2-story row-town
Skyhaus at Rancho Tesoro – California West, San Marcos 92078 2-story motorcourt - gated
South San Marcos (92078) & South Vista (92081)
Competitive Market Analysis
Latitude at Rancho Tesoro – Brookfield, San Marcos 92078 3-story motorcourt - gated
Verano at Skyline – D.R. Horton, Vista, 92081
3-story courtyard
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 29 Sierra - KB Home, Vista 92084
2-story row-town - gated
Peak at Delpy’s Corner – Lennar, Vista 92084
2-story row-town
South Vista (92081) & North Vista (92084)
Competitive Market Analysis
Avila – Lennar, Vista 92081
3-story row
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 30 Mission Villas - KB Home, San Marcos, 92069
3-story BTB townhome
North San Marcos (92069)
Competitive Market Analysis
Viewpointe - KB Home, San Marcos 92069
3-story Interlocking with BTB Plan 1 end caps
Mission Terrace – KB Home, San Marcos 92069
3-story motorcourt
Caprice – D.R. Horton, San Marcos 92069
2/3 story row-town
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 31 Competitive Market Detail
Appendix
▬ Incentives ▬ ▬ Typical Spending ▬ Estimated Est. ▬ Pymt Impacting ▬ 95.0% 35.0% Project Size Base Price Options/ Options / Lot Closing Closing Closing $/ Mo. Base Addl 3.0% Qualifying Project Detail (SF) Bd/Ba Level Pkg Price Reduction Upgrades Upgrades Premiums Price $/SF Incentive HOA Tax Taxes Mo.Pmt. Income 1 Peak at Delpy's Corner │ Lennar │ Vista │ Attached - 2-story row │ Expected Sell-Out By 08/21 at 4.69 per mo.
Total Units/Remaining: 124 / 23 1,472 2.5/3 2 2 $532,900 $0 $2,500 $13,000 $2,500 $545,900 $371 -$5,000 $340 1.1% 0.0% $3,355 $134,213 Contracts: 101 1,557 2.5/3 2 2 $555,900 $0 $2,500 $13,000 $2,500 $568,900 $365 -$5,000 $340 1.1% 0.0% $3,482 $139,294 Sales Pace Overall: 4.7 1,747 2.5/4 2 2 $567,400 $0 $2,500 $13,000 $2,500 $580,400 $332 -$5,000 $340 1.1% 0.0% $3,546 $141,835 Sales Pace L3M: 5.0 - - - - - - - - - - - - - - - - -
1,592 $552,067 $0 $2,500 $13,000 $2,500 $565,067 $356 -$5,000 $340 1.1% 0.0% $3,461 $138,447 2 Solara at Skyline │ D.R. Horton │ Vista │ Attached - 2-story row │ Expected Sell-Out By 08/21 at 2.48 per mo.
Total Units/Remaining: 80 / 13 1,426 2.5/3 2 2 $579,900 $0 $0 $10,000 $3,000 $592,900 $416 -$5,000 $335 1.3% 0.0% $3,709 $148,350 Contracts: 67 1,538 2.5/3 2 2 $584,900 $0 $0 $10,000 $3,000 $597,900 $389 -$5,000 $335 1.3% 0.0% $3,737 $149,488 Sales Pace Overall: 2.5 1,576 2.5/4 2 2 $605,900 $0 $0 $10,000 $3,000 $618,900 $393 -$5,000 $335 1.3% 0.0% $3,857 $154,268 Sales Pace L3M: 4.0 - - - - - - - - - - - - - - - - -
1,513 $590,233 $0 $0 $10,000 $3,000 $603,233 $399 -$5,000 $335 1.3% 0.0% $3,768 $150,702 3 Latitude │ Brookfield Residential │ Rancho Tesoro │ San Marcos │ Attached - 3-story court │ Expected Sell-Out By 05/21 at 5.81 per mo.
Total Units/Remaining: 120 / 15 1,243 2.5/2 3 2 $475,880 $0 $2,500 $22,000 $2,000 $497,380 $400 -$5,000 $250 1.7% 0.0% $3,251 $130,059 Contracts: 105 1,336 2.5/2 3 2 $489,880 $0 $2,500 $22,000 $2,000 $511,380 $383 -$5,000 $250 1.7% 0.0% $3,335 $133,419 Sales Pace Overall: 5.8 1,532 2.5/3 3 2 $529,880 $0 $2,500 $22,000 $2,000 $551,380 $360 -$5,000 $250 1.7% 0.0% $3,575 $143,016 Sales Pace L3M: 5.3 1,933 3/3 3 2 $589,880 $0 $2,500 $22,000 $2,000 $611,380 $316 -$5,000 $250 1.7% 0.0% $3,935 $157,413 1,511 $521,380 $0 $2,500 $22,000 $2,000 $542,880 $365 -$5,000 $250 1.7% 0.0% $3,524 $140,977 4 Verano at Skyline │ D.R. Horton │ Vista │ Attached - 3-story row │ Expected Sell-Out By 03/21 at 3.92 per mo.
Total Units/Remaining: 109 / 3 1,183 2.5/2 3 2 $519,490 $0 $0 $10,000 $3,000 $532,490 $450 -$5,000 $335 1.3% 0.0% $3,365 $134,600 Contracts: 106 1,515 3/3 3 2 $563,700 $0 $0 $10,000 $3,000 $576,700 $381 -$5,000 $335 1.3% 0.0% $3,617 $144,662 Sales Pace Overall: 3.9 1,726 3.5/3 3 2 $614,600 $0 $0 $10,000 $3,000 $627,600 $364 -$5,000 $335 1.3% 0.0% $3,906 $156,248 Sales Pace L3M: 5.0 1,856 3.5/4 3 2 $631,500 $0 $0 $10,000 $3,000 $644,500 $347 -$5,000 $335 1.3% 0.0% $4,002 $160,094 1,570 $582,323 $0 $0 $10,000 $3,000 $595,323 $385 -$5,000 $335 1.3% 0.0% $3,723 $148,901 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 32 Competitive Market Detail
Appendix
5 Canopy Grove/Retreat/Duplex │ Lennar │ Escondido │ Attached - 6-pak │ Expected Sell-Out By 10/21 at 5.75 per mo.
Total Units/Remaining: 81 / 58 1,900 3/4 2 2 $628,400 $0 $0 $16,000 $4,000 $648,400 $341 -$5,000 $270 1.2% 0.0% $3,879 $155,140 Contracts: 23 1,986 3/4 2 2 $634,900 $0 $0 $16,000 $4,000 $654,900 $330 -$5,000 $270 1.2% 0.0% $3,915 $156,587 Sales Pace Overall: 5.8 - - - - - - - - - - - - - - - - - Sales Pace L3M: 4.7 - - - - - - - - - - - - - - - - -
1,943 $631,650 $0 $0 $16,000 $4,000 $651,650 $336 -$5,000 $270 1.2% 0.0% $3,897 $155,864 6 Skyhaus │ California West │ Rancho Tesoro │ San Marcos │ Attached - 2-story court │ Expected Sell-Out By 02/21 at 6.41 per mo.
Total Units/Remaining: 100 / 0 752 1.5/1 2 1 $419,900 $0 $0 $20,000 $0 $439,900 $585 -$4,000 $225 1.6% 0.0% $2,838 $113,524 Contracts: 100 1,092 2/2 2 2 $504,900 $0 $0 $20,000 $0 $524,900 $481 -$4,000 $225 1.6% 0.0% $3,343 $133,721 Sales Pace Overall: 6.4 1,229 2.5/2 2 2 $517,900 $0 $0 $20,000 $0 $537,900 $438 -$4,000 $225 1.6% 0.0% $3,420 $136,810 Sales Pace L3M: 6.4 1,251 2/2 2 2 $554,900 $0 $0 $20,000 $0 $574,900 $460 -$4,000 $225 1.6% 0.0% $3,640 $145,602 1,389 2.5/3 2 2 $554,900 $0 $0 $20,000 $0 $574,900 $414 -$4,000 $225 1.6% 0.0% $3,640 $145,602 1,745 2.5/3 2 2 $667,900 $0 $0 $20,000 $0 $687,900 $394 -$4,000 $225 1.6% 0.0% $4,311 $172,452 1,243 $536,733 $0 $0 $20,000 $0 $556,733 $462 -$4,000 $225 1.6% 0.0% $3,532 $141,285 7 Viewpointe │ KB Home │ San Marcos │ Attached - 3-story interlock │ Expected Sell-Out By 03/21 at 3.84 per mo.
Total Units/Remaining: 78 / 0 1,237 2.5/2 3 2 $458,990 $0 $0 $10,000 $3,000 $471,990 $382 -$5,000 $296 1.3% 0.0% $2,962 $118,483 Contracts: 78 1,455 2.5/3 3 2 $479,990 $0 $0 $10,000 $3,000 $492,990 $339 -$5,000 $296 1.3% 0.0% $3,081 $123,228 Sales Pace Overall: 3.8 1,532 2.5/2 3 2 $469,990 $0 $0 $10,000 $3,000 $482,990 $315 -$5,000 $296 1.3% 0.0% $3,024 $120,968 Sales Pace L3M: 3.8 1,551 2.5/2 3 2 $474,990 $0 $0 $10,000 $3,000 $487,990 $315 -$5,000 $296 1.3% 0.0% $3,052 $122,098 1,581 2.5/2 3 2 $479,990 $0 $0 $10,000 $3,000 $492,990 $312 -$5,000 $296 1.3% 0.0% $3,081 $123,228 - - - - - - - - - - - - - - - - -
1,471 $472,790 $0 $0 $10,000 $3,000 $485,790 $332 -$5,000 $296 1.3% 0.0% $3,040 $121,601 ▬ Incentives ▬ ▬ Typical Spending ▬ Estimated Est. ▬ Pymt Impacting ▬ 95.0% 35.0% Project Size Base Price Options/ Options / Lot Closing Closing Closing $/ Mo. Base Addl 3.0% Qualifying Project Detail (SF) Bd/Ba Level Pkg Price Reduction Upgrades Upgrades Premiums Price $/SF Incentive HOA Tax Taxes Mo.Pmt. Income Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 33 Location Analysis
34 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos The Hallmark Townhomes are situated on Barham Drive which culminates just
1.25 miles to the west (off the aerial map shown below) in the North City complex which is currently under development with all types of restaurants, high end apartments and office space.
Source: Loopnet, Lee & Associates
Aerial Location Map of Services Looking West Towards Vista Location Analysis
35 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos The Subject is within easy driving distance of several retail and recreational services along the 78-Freeway.
Source: Loopnet, Lee & Associates
Aerial Location Map of Services Looking East Towards Escondido Location Analysis
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 36 Employees by Zip Code Drive Time Map
Location Analysis
Collectively there are 34,880 employees in the two San Marcos zip codes, with 18,2341 in the Subject zip code 92078. The greatest concentration of local residents commute to destinations along the Highway 78 Corridor, although some do travel as far as Temecula and Downtown San Diego for work.
20-minute
drive time
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drive time
45-minute
drive time
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 37 Local Resident Commute Patterns
Location Analysis
The City of San Marcos accounts for almost 12% of employment for local residents, underscoring the viability of a Starbucks along one of the busiest thoroughfares in the City, as commuters head to work and school. The greatest concentration (22.5%) of local residents commute to San Diego for work, while a further 13.4% commute to Carlsbad. Vista and Escondido are also employment centers which account for over 5% of resident commuter destinations. A large share of local residents travel less than 10 miles to work, with am additional 24% travelling 10 to 24 miles each way per day. It should be noted that the City of San Diego also includes Rancho Bernardo south along the I-15, which is less than 10 miles away.
38 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos General Location:
• The Subject is ideally located for a for-sale townhome project based on compatibility with surrounding residential uses including the project developed by Barratt American immediately east of and adjacent to the Subject. • The Subject enjoys high visibility by right next to the Highway 78 Corridor. • The site is proximate to one of the Cal State San Marcos to Palomar College Breeze Bus stops, and the Sprinter stop is less than 1.0 mile away.
Existing Site Conditions and Zoning:
The Subject parcel is currently unimproved with undisturbed vegetation. There is a fairly steep grade break from south to north which limits accessibility if developed under the Alternate use. Existing Improvements are limited to the concrete sidewalk along S. Barham Drive.
The Sprinter Rail is elevated above street level just west of the Subject as it runs over the 78 Freeway. The Barham Park and Ride is located just west of Grace Church which is on the western edge of the site. There is a small park called Grace Park along the western edge by the church.
Source: City of San Marcos, Fidelity National Title Company Current Site Conditions
Location Analysis
Barham Park & Ride
Grace Church
Grace Park
39 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos Power Inn Apartments│ Virtua Opportunity Zone Fund I, LLC │ 39 The Subject has excellent access to public transportation options including the Breeze Bus line, the Inland Rail Trail and Rail Sprinter lines.
Area Public Transit
Location Analysis
The Subject is located equidistant from CalState
San Marcos and Nordahl Road Sprinter Stations
which are both within a mile of the site. The
347 Bus stops 1 mile to the west at CalState San
Marcos. The 305 Bus line is located on the
other side of Freeway 78 roughly half a mile
from the Subject, and access to the Freeway
itself is a 1 minute drive.
40 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos The Sprinter light rail is a 22-mile rail system that connects Oceanside, Vista, San Marcos, and Escondido, serving 15 stations along the Highway 78 corridor. The nearest Sprinter stop is the Palomar College Station stop, located 1.5 miles to the northwest along Mission Road.
Source: North County Transit District
Sprinter Transit Map
Location Analysis
41 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos Subject
1-mile
2-mile
3-mile
Source: ESRI
Average Daily Traffic Count
Location Analysis
The highest surface street traffic counts in the City of San Marcos are along the 78 Freeway, from which the Subject is clearly visible. This will positively impact the marketing window for the proposed for-sale townhomes. The average daily traffic count along the portion of the freeway adjacent to the site is 167,000, which is very high.
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 42 Land Use & Zoning Analysis
43 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos The Subject is located in the City of San Marcos. The San Marcos General Plan is shown below with the Subject displayed as a black circle. The zoning for the site is Mixed Use-3 (MU-3) and the proposed rezone for the Subject is to Specific Plan Area (SPA).
Source: City of San Marcos
Land Use Map
Location, Land Use & Zoning Analysis
44 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos The applicant is seeking a Specific Plan
Amendment and a General Plan Amendment for
the site which currently falls under the Mixed
Use 3 Zoning and Land Use. Under the MU-3 land
use the Subject 10.94-acre property could support
potential Mixed-Use development of three 3-
story buildings totaling 474,985 square feet. The
development (the Alterative use) would entail
roughly 18,344 sf commercial space, 275,067 sf
office space and a 181,576 sf parking structure
providing 879 parking spaces.
The project applicant is also requesting approval
of a Specific Plan (SP20‐0002), Rezone
(RZ20‐0001), Multi‐Family Site Development
Plan (MFSDP20‐0001), Tentative Subdivision Map
(TSM20‐0001), a Conditional Use Permit
(CUP20‐0007) and a Grading Variance
(GV20‐0002). If approved, these entitlements
would allow for the development of 151
multi‐family residential units.
Land Use Map Detail & Alternate Plan
Location, Land Use & Zoning Analysis
45 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos Source: City of San Marcos
According to the zoning maps from the City of San Marcos, the Subject is zoned Mixed Use 3. Under the current zoning, the project would require a commercial element such as office space and retail, or a multifamily senior care facility.
Zoning Map Detail
Location, Land Use & Zoning Analysis
46 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos Source: City of San Marcos Zoning Ordinance
Permitted Uses Under the SPA Land Use Designation
Location, Land Use & Zoning Analysis
SPA Zone Specific Plans on properties with the General Plan land use designation of “Mixed Use” shall include a mixed-use component. All other properties that are designated with a “Special Consideration” designation on the General Plan Land Use map shall include a development proposal that is consistent with the General Plan land use, which may include residential, senior residential, commercial, or industrial development.
The Mixed Use 3 (MU-3 (SP)) Zone is intended to support a job-based mixed use area combining a variety of commercial and office uses integrated as a cohesive development.
Residential uses are not permitted in the MU-3 (SP) Zone.
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 47 Attached Residential
For-Sale Housing Trends
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 48 The following slides highlight single family detached price and sale volume for the Competitive Market Area or CMA. The CMA for Hallmark Townhomes as shown in the map below is defined as the Inland North County area of Escondido, San Marcos, and Vista.
CMA Map – Inland North County
Housing Market Trends
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 49 Rolling average sales volume for the collective CMA fared well over the past 15 months since November 2019, and after a brief downward reaction to the pandemic, improved to a new 11-year high of almost 1,000 units. City of San Marcos sales volume dipped by roughly 14% off 2019 levels, but the Subject zip code has remained steady at a volume since November 2019, and is a positive factor in bringing on new product to the area.
Attached Sales Volume Trends: Competitive Market Area
Housing Market Trends
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Rolling 12-Month Total Condominium Sales
CMA (Escondido/San Marcos/Vista)
Source: Collateral Analytics
Escondido & North San Marcos 92069
CMA (Escondido/San
Marcos/Vista)
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 50 $544,833 $540,750
$458,167
Rolling 12-Month Total Condominium Price
92078
$454,333
$418,500
$391,333
$100,000
$150,000
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$350,000
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Rolling 12-Month Total Condominium Price
CMA (Escondido/San Marcos/Vista) North San Marcos 92069 Source: Collateral Analytics
Rolling average sales price for the City of San Marcos is typically at the top of the greater CMA, and the Subject Zip code 92078 is currently at a premium of $82,000 over the CMA. South San Marcos (92078) homes of all ages hover just under $550,000, and is almost $150,000 higher than the north San Marcos 92069 zip code.
Attached Sales Price Trends: North San Marcos vs South San Marcos & CMA Housing Market Trends
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 51 $342
$318
$330
CMA (Escondido/San Marcos/Vista) North San Marcos 92069 $340
$373
$320
$342
$100
$150
$200
$250
$300
$350
$400
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Rolling 12-Month Total Condominium Price per Square Foot 92078
Source: Collateral Analytics
Rolling average attached price per square foot shows a clear separation between South San Marcos and North San Marcos. The CMA price per square foot generally tracks higher than North San Marcos, but is lower than South San Marcos which has seen very strong appreciation of almost 10% over the past 12 months from $340 to $373 per square foot.
Attached Sales Price Trends Per Square Foot: Escondido vs North San Marcos Housing Market Trends
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 52 Commercial Retail &
Office Market Overview
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 53 No sector was hit harder than retail, which had to shut down or severely limit operations due to regulations aimed at slowing the spread of the virus. The Great Recession at least gave new retail businesses a chance to open and give it a shot, even though the economy was bad. This time business owners don’t know if their businesses could even stay open.
San Diego retail fell to about 50 percent of typical leasing volume. It remains difficult for retailers to plan as far as space capacity. Major closures included Macy’s in downtown, Nordstrom in Escondido, Sears at the Shoppes at Carlsbad and another Sears in Chula Vista. There were also several companies that announced they were closing for good or declaring bankruptcy with locations in San Diego County: Pier 1, Tuesday Morning and Souplantation.
New retail leases were smaller than past years, averaging 2,400-square-feet, down 500-square-feet from the average the last five years.
CoStar said average rent for retail was down 1.3% from 2019 to $2.52 per square foot in 2020. Malls had the biggest reduction — down
5.7% to $3.26 per square foot. The vacancy rate was up 0.4% for retail in 2020, and an additional 0.6% in Q1 2021. This is not a huge increase considering the pandemic. CoStar attributed at least part of the small increase to landlords working out deals with tenants. The average asking triple-net lease rate per month per square foot in San Diego County was $2.38. The reported average asking rental rate in the county unexpectedly increased over the past two quarters, creating a “false positive” not due to a true increase in rates but is a result of asking rates at the low end getting changed to “undisclosed” or “negotiable” which removes them from the calculation of average asking rates.
San Diego County Commercial Retail Summary
Commercial Retail & Office Market Overview
54 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos San Diego County Retail Trends by Product Type
Commercial Retail & Office Market Overview
An uptick in new commercial retail deal activity combined with limited move-outs kept the availability rate at 6.1% in the wake of the 2020 COVID-19 disruption. The average asking rate climbed to $2.38 NNN as more spaces hit the market. Leasing activity remains negative in the face of supersized new space deliveries and more to come in the pipeline. General retail is the most viable in terms of vacancy.
Absorption (SF) Deliveries (SF) Under Asking Rent
Type Total SF Vacant SF Construction (SF) ($/ SF/ Mo.)
General Retail 54,825,575 2,188,162 4.0% (380,497) 420,399 294,314 $2.71 Shopping Center 56,022,022 3,717,504 6.8% 258,136 381,156 84,388 $1.96 Mall 14,219,704 826,383 6.5% (224,852) 159,039 300,000 $2.31 Power Center 11,726,021 620,067 5.3% (163,501) 48,654 81,812 $2.17 Specialty Center 1,962,551 121,006 7.3% (19,519) 0 0 $1.40 TOTAL: 138,755,873 7,473,122 5.4% (530,233) 1,009,248 760,514 $2.38 Vacancy
Rate
General
Retail
40%
Shopping
Center
40%
Mall
10%
Power
Center
9%
Specialty
Center
1.4%
Total Inventory
Source: Voit, CBRE
0.0%
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2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
$0.00
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$1.00
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$2.00
$2.50
$3.00
General Retail Shopping
Center
Mall Power Center Specialty
Center
Vacancy Rate
Avg. Asking Lease Rate (Mo.
$/SF)
($/ SF/ Mo.) Vacancy Rate
55 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos San Diego County Retail Inventory
Commercial Retail & Office Market Overview
Retail inventory in San Diego County decreased for the third quarter in a row, but the adjustment was minimal, signaling a possible recovery in the market.
136.50
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2012 2013 2014 2015 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Square Feet (in Millions)
Retail Inventory (in Millions Square Feet)
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 139,486,151 139,558,949 139,658,357 140,182,420 140,195,309 140,227,314 140,313,860 140,371,737 140,217,504 140,553,061 140,831,773 140,740,160 140,711,682 140,873,288 139,002,623 138,760,545 138,755,873 42,795 72,798 99,408 524,063 12,889 32,005 86,546 57,877 -154,233 335,557 278,712 -91,613 -28,478 161,606 -1,870,665 -242,078 -4,672
0.0% 0.1% 0.1% 0.4% 0.0% 0.0% 0.1% 0.0% -0.1% 0.2% 0.2% -0.1% 0.0% 0.1% -1.3% -0.2% 0.0% Inventory
Total Inventory (SF)
Inventory Change
% Change
56 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos San Diego County Retail Lease Rates
Commercial Retail & Office Market Overview
Retail lease rates appear to have increased, but this does not reflect the true situation in San Diego County where it is a tenant’s market, and landlords are making deep concessions to secure lease up.
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Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Avg. Asking Lease Rate (Monthly $/ SF)
Source: Voit, CBRE
Retail Lease Rates and Vacancy Rates
Lease Rates
Vacancy Rates
Lease Rates Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Lease Rate ($/ SF/ Mo.) $1.86 $1.91 $1.94 $1.92 $1.90 $2.00 $2.03 $1.93 $1.90 $1.87 $1.99 $2.02 $2.04 $2.22 $2.31 $2.33 $2.38 Lease Rate Change $0.04 $0.05 $0.02 ($0.02) ($0.02) $0.11 $0.03 ($0.10) ($0.03) ($0.03) $0.12 $0.03 $0.02 $0.18 $0.09 $0.02 $0.05 % Change 2.1% 2.6% 1.3% -0.9% -1.1% 5.5% 1.5% -5.1% -1.4% -1.6% 6.4% 1.5% 1.0% 8.8% 4.1% 0.9% 2.1% 57 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos San Diego County Retail Vacant Space & Occupancy Rate
Commercial Retail & Office Market Overview
Vacancy rates paint a more realistic picture of the challenged retail market as occupancy fell sharply during the pandemic – the good news is that vacancy stabilized at 6.1% between Q4 2020 and Q1 2021. This trend is supported by available space, which dropped marginally over the past three months.
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Source: Voit, CBRE
Vacant Space and Vacancy Rates Vacant
Space
Vacancy Rates Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Vacancy Rate 3.8% 3.7% 3.5% 3.6% 3.6% 3.8% 3.8% 3.8% 3.9% 3.8% 3.9% 3.9% 4.0% 4.2% 4.8% 6.1% 6.1% Vac. Rate Change 0.0% -0.1% -0.1% 0.0% 0.1% 0.2% 0.0% 0.0% 0.1% -0.1% 0.1% 0.0% 0.2% 0.2% 0.6% 1.3% 0.0% % Change -0.4% -3.5% -3.0% 1.1% 1.6% 4.6% 0.8% -0.4% 1.9% -1.5% 1.8% -1.0% 4.1% 4.5% 13.6% 27.9% -0.7% 58 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos San Diego County Retail Net Absorption
Commercial Retail & Office Market Overview
San Diego County is still not able to absorb new retail space, as shown by the plummeting net absorption between Q1 2020 and Q1 2021. The retail market appears to be poised for a fresh look at how retail space will function in the future, with far less in-person square footage, and increased capacity to warehouse and ship goods marketed online. -1,000,000
-800,000
-600,000
-400,000
-200,000
0 200,000
400,000
600,000
Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Square Feet
Source:Voit, CBRE
Net Absorption (Square Feet)
Net Absorption Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Net Absorption (SF) 74,233 252,553 245,934 442,802 -57,002 -205,432 28,031 76,614 61,112 55,253 133,920 113,361 -248,317 -170,911 -574,667 15,635 -804,198 Net Absorption Change -1,615,721 178,320 -6,619 196,868 -499,804 -148,430 233,463 48,583 -15,502 -5,859 78,667 -20,559 -361,678 77,406 -403,756 590,302 -819,833 % Change -95.6% 240.2% -2.6% 80.0% -112.9% 260.4% -113.6% 173.3% -20.2% -9.6% 142.4% -15.4% -319.0% -31.2% 236.2% -102.7% -5243.6% 59 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos San Diego County Retail Space Deliveries
Commercial Retail & Office Market Overview
New retail space saw a sharp uptick in San Diego County well above the 10-year average of 354,000 square feet, with over 800,000 square feet delivered in the past two quarters. The retail market appears to be poised for a fresh look at how retail space will function in the future, with far less in-person square footage, and increased capacity to warehouse and ship goods marketed online.
Deliveries Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Deliveries (SF) 82495 101017 101394 553738 76008 27032 107292 57877 32687 495946 698833 157801 202887 180344 504520 871737 800562 Deliveries Change -252434 18522 377 452344 -477730 -48976 80260 -49415 -25190 463259 202887 -541032 45086 -22543 324176 367217 -71175 % Change -75.4% 22.5% 0.4% 446.1% -86.3% -64.4% 296.9% -46.1% -43.5% 1417.3% 40.9% -77.4% 28.6% -11.1% 179.8% 72.8% -8.2% 0 100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2012 2013 2014 2015 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Square Feet
Source: Costar
Deliveries (Square Feet)
60 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 0 100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
2012 2013 2014 2015 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Square Feet
Source: Costar
Under Construction (Square Feet)
San Diego County Retail Space Under Construction
Commercial Retail & Office Market Overview
The pipeline for San Diego County is also well above the 10-year average of 555,000 square feet, and it remains to be seen how successfully this new space will be integrated into the market. The County-wide retail market performance may be turning a corner, but the recovery will likely be slow, and we anticipate that the landscape of the retail market will be forever changed.
Under Construction Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Under Construction (SF) 764,130 824,796 882,117 454,712 449,303 508,847 411,435 390,692 250,462 428,406 344,018 305,773 322,923 599,653 868,742 915,356 760,514 Under Const. Change -19,565 60,666 57,321 -427,405 -5,409 59,544 -97,412 -20,743 -140,230 177,944 -84,388 -38,245 17,150 276,730 269,089 46,614 -154,842 % Change -2.5% 7.9% 6.9% -48.5% -1.2% 13.3% -19.1% -5.0% -35.9% 71.0% -19.7% -11.1% 5.6% 85.7% 44.9% 5.4% -16.9% 61 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos San Diego County Retail Trends by Submarket
Commercial Retail & Office Market Overview
North County is the second largest retail Submarket in San Diego County with the second highest vacancy rate of 4.8%,relatively low asking lease rate averaging $1.45, and very robust pipeline of space. The average asking rate climbed to $2.38 NNN as more spaces hit the market. Leasing activity remains negative in the face of supersized new space deliveries and more to come in the pipeline. General retail is the most viable in terms of vacancy.
Absorption (SF) Deliveries (SF) Under Avg. Asking Rent
Construction (SF) ($/ SF/ Mo.)
Central South 39,286,803 1,574,916 2.9% 91,526 59,622 2,640 $2.35 East County 19,702,260 832,111 3.6% (166,664) 23,594 15,834 $1.63 I-15 Corridor 6,476,572 314,414 3.1% 30,968 0 0 $2.95
Central North 17,463,991 981,312 0.0% 0 0 0 $0.00
North County 36,543,585 1,963,907 4.8% (81,299) 141,794 210,790 $1.45 South County 19,529,412 791,749 5.3% (165,028) 23,167 44,558 $2.80 TOTAL: 139,002,623 6,458,409 3.8% (157,789) 268,209 390,692 $1.93 Submarket Total SF Vacant SF Vacancy Rate
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Vacancy Rate
Avg. Asking Lease Rate (Monthly $/
SF)
($/ SF/ Mo.)
Central
South,
28.3%
I-15
Corridor,
4.7%
Central
North,
12.6%
North
County,
26.3%
South
County,
14.0%
Total Inventory
Source: Voit
62 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos North County Retail Inventory
Commercial Retail & Office Market Overview
Retail inventory in North County decreased for the third quarter in a row after a five-year high of over 34.5 million square feet in Q2 2020.
32.00 32.50
33.00 33.50
34.00 34.50
35.00 Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018Q1 2019Q2 2019Q3 2019Q4 2019Q1 2020Q2 2020Q3 2020Q4 2020Q1 2021 Square Feet (in Millions)
Source: Costar
Retail Inventory (in Millions Square Feet)
Inventory Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Total Inventory (SF) 33,100,768 33,077,583 33,085,568 33,087,462 33,176,034 33,204,037 33,402,058 32,870,481 33,397,068 33,338,121 33,343,107 34,520,068 33,043,585 33,056,152 32,870,481 Inventory Change 118,977 -23,185 7,985 1,894 88,572 28,003 198,021 -531,577 526,587 -58,947 4,986 1,176,961 -1,476,483 12,567 -185,671 % Change 0.4% -0.1% 0.0% 0.0% 0.3% 0.1% 0.6% -1.6% 1.6% -0.2% 0.0% 3.5% -4.3% 0.0% -0.6% 63 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos North County Retail Lease Rates
Commercial Retail & Office Market Overview
Retail lease rates appear to be on the increase over the past quarter, but this does not reflect the true situation in North County where it is a tenant’s market, and local landlords are still making deep concessions to secure leases.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Vacancy Rate
Avg. Asking Lease Rate (Monthly $/ SF)
Source: Costar
Lease Rates and Vacancy Lease Rates Vacancy Rates
Lease Rates Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Lease Rate ($/ SF/ Mo.) $1.58 $1.56 $1.53 $1.75 $1.72 $1.45 $1.42 $1.87 $1.40 $1.64 $1.66 $1.76 $1.81 $1.77 $1.87 Lease Rate Change ($0.04) ($0.02) ($0.03) $0.22 ($0.03) ($0.27) ($0.03) $0.45 ($0.47) $0.24 $0.02 $0.10 $0.05 ($0.04) $0.10 % Change -2.2% -1.3% -2.0% 14.3% -1.8% -15.5% -2.2% 31.7% -25.1% 17.1% 1.2% 6.0% 2.8% -2.2% 5.6% 64 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos North County Retail Vacant Space & Occupancy Rate
Commercial Retail & Office Market Overview
Vacant space is the highest it’s been in five years, and saw a sharp uptick to over 2.3 million square feet in the North County market over the past quarter. The current vacancy rate is 7.0%, logging another 16% step up as seen in Q3 2020. Starbucks is a high-paying triple net tenant which customarily signs leases with virtually landlord responsibility. They re-negotiated their leases, asking for discounts during the pandemic. The Subject site will involve a brand new lease, and likely will not be affected by typical lease market movements.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
0 500,000
1,000,000
1,500,000
2,000,000
2,500,000
Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Vacant Space (Square Feet)
Source: Costar
Vacant Space and Vacancy Rates
Vacant Space
Vacancy Rates
Vacancy Rates Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Vacancy Rate 4.5% 4.2% 4.3% 4.7% 4.7% 4.8% 4.8% 7.0% 4.8% 4.5% 5.1% 5.1% 5.9% 6.1% 7.0% Vac. Rate Change -1.4% -0.3% 0.2% 0.4% 0.0% 0.1% 0.0% 2.2% -2.2% -0.3% 0.6% 0.1% 0.8% 0.1% 1.0% % Change -23.8% -6.3% 3.7% 8.4% 0.9% 1.1% 0.1% 46.3% -31.8% -5.8% 12.2% 1.2% 16.0% 1.9% 16.0% 65 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos North County Retail Net Absorption
Commercial Retail & Office Market Overview
Net absorption in the local market improved took a beating again in Q1 2021 after brief respite at the end of 2020. The continued development pf new retail space in North County is putting downward pressure on lease rates and occupancy levels. However, this data should not impact on the success of Starbucks at the Subject site, as the brand already has a clear strategy for moving forward in the ”new normal” ,and is acquiring this space as part of their market shift towards smaller spaces and greater online and drive through sales. -500,000
-450,000
-400,000
-350,000
-300,000
-250,000
-200,000
-150,000
-100,000
-50,000
0 50,000
100,000
150,000
Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Square Feet
Source: Costar
Net Absorption (Square Feet)
Net Absorption Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Net Absorption (SF) 12,719 61,453 -33,125 -119,037 61,049 9,814 43,537 -309,868 58,588 129,773 -201,551 -267,894 -119,700 12,567 -309,868 Net Absorption Change -1,310,443 48,734 -94,578 -85,912 180,086 -51,235 33,723 -353,405 368,456 71,185 -331,324 -66,343 148,194 132,267 -322,435 % Change -99.0% 383.2% -153.9% 259.4% -151.3% -83.9% 343.6% -811.7% -118.9% 121.5% -255.3% 32.9% -55.3% -110.5% -2565.7% 66 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos North County Retail Space Deliveries
Commercial Retail & Office Market Overview
New retail space in North County well above the 5-year average, with over 584,000 square feet delivered in the past three quarters. In contrast, the average square footage delivered to this market over the past five years is just 63,572 square feet. 0 20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Square Feet
Source: Costar
Deliveries (Square Feet)
Deliveries Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Deliveries (SF) 2,500 6,028 35,081 0 78,710 28,003 198,021 184,350 0 58,947 4,986 45,086 148,322 251,623 184,350 Deliveries Change -30,247 3,528 29,053 -35,081 78,710 -50,707 170,018 -13,671 -184,350 58,947 -53,961 40,100 103,236 103,301 -67,273 % Change -92.4% 141.1% 482.0% -100.0% 0.0% -64.4% 607.1% -6.9% -100.0% 0.0% -91.5% 804.3% 229.0% 69.6% -26.7% 67 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos North County Retail Space Under Construction
Commercial Retail & Office Market Overview
The pipeline for North County is below average with 147,226 square feet of space anticipated. The uptick in retail space construction over the past quarter may point to an anticipated recovery by retail developers. However, the recovery will likely be slow, with fundamental changes moving forward.
0 50,000
100,000
150,000
200,000
250,000
300,000
350,000
Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Square Feet
Source: Costar
Under Construction (Square Feet)
Under Construction Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Under Construction (SF) 186,492 250,495 235,617 313,295 238,793 210,790 42,000 147,226 57,921 27,412 35,062 96,272 94,681 99,786 147,226 Under Const. Change 133,191 64,003 -14,878 77,678 -74,502 -28,003 -168,790 105,226 -89,305 -30,509 7,650 61,210 -1,591 5,105 47,440 % Change 249.9% 34.3% -5.9% 33.0% -23.8% -11.7% -80.1% 250.5% -60.7% -52.7% 27.9% 174.6% -1.7% 5.4% 47.5% Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 68 North County Retail Market Trends
Commercial Retail & Office Market Overview
Retail availability increased significantly, transaction volume was down, and there was a huge wave of negative net absorption in 2020.
Retail real estate had the highest percentage of business disruption from coronavirus and the government lockdowns, possibly second only to hotels. Until the affected businesses are able to fully resume operations, retail real estate will experience a continued downward pressure on market fundamentals. The North County (Carlsbad, Oceanside, San Marcos, Vista and Escondido) trends are tabled below. The Shopping Center average lease rate was used in the NOI/cap rate commercial alterative use valuation.
Coming out of the pandemic, North County Retail has the second highest vacancy rate in the County of 7.02%. The average asking rate is currently $1.87 per square foot, with the least expensive neighborhood and strip retail centers hardest hit. Planet Fitness signed the largest most recent San Marcos lease for 24,100 square feet in March 2021. The biggest retail deal in the City of San Marcos was in December 2020, with Sentre paying $19.25 million for the multi-tenant property at 155 Rancho Santa Fe Rd. This sale price per square foot was used in the sales transaction approach to valuation of the commercial component alterative use for the site. 96,606 SF shopping center at 155 Rancho Santa Fe Rd, in San Marcos sells for $19.25M ($199/SF).
Retail Market Statistics by Type for Subject Submarket (1st Quarter 2021) YTD Net YTD Under Quoted Quoted Rates
Type # Bldgs. Total GLA Direct SF Total SF Vac. % Absorption Deliveries Const. SF Rates ($/ SF/ Mo.) General Retail 1,704 11,744,051 500,103 437,470 3.7% (169,433) 41,697 76,014 $24.60 $2.05 Mall 25 2,801,678 328,468 32,480 1.2% (144,000) 0 0 $0.00 $0.00 Power Center 109 2,942,320 200,303 226,487 7.7% (7,737) 26,795 9,312 $17.76 $1.48 Shopping Center 971 15,012,599 1,277,981 1,493,668 10.0% 11,302 115,858 61,900 $21.60 $1.80 Specialty Center 5 369,833 370 370 0.1% 0 0 0 $36.00 $3.00 Total 2,814 32,870,481 2,307,225 2,190,475 6.7% (309,868) 184,350 147,226 $22.44 $1.87 Existing Inventory Vacancy
69 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos San Diego County Office Trends
Commercial Retail & Office Market Overview
Falling commercial office occupancies, rising sublet availabilities, and a pile up of pipeline speculative development increase the challenges for San Diego’s office space. San Diego County office space reached an all time high for available space with 19.3 million square feet or 16.3% of total inventory not leased.
70 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos San Diego County Office Trends
Commercial Retail & Office Market Overview
Net absorption across the County appears to be levelling off. However, there is a large pipeline of 2.6M+ square feet of office space under construction which could affect this. San Diego County vacancy is currently at 13.8%, spurred by subleasing inventory which is on the rise (currently at 685,000 square feet). Asking rents for office space County- wide is $3.19 per square foot, with sublease space at $2.76 per square foot. Rents appear not to have decreased during pandemic, but this trend is deceptive, as asking rents do not include incentives which are currently very deep.
71 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos North County and San Marcos Office Trends – Q4 2020
Commercial Retail & Office Market Overview
North County Office vacancy as of Q4 2020 was trending at roughly 13%, with rents at $2.80 per square foot. San Marcos office space was at 8.6% vacancy with rental rates averaging $2.64 per square foot. The Alternate use for the Subject as mixed use commercial entails a mix of ground floor retail and office spaces. As such, Zonda researched the office trends for the most recent quarters to ascertain the latest trends. The office market is primed for a rebound after a year of havoc owing to the effects of the pandemic. Volatility is still anticipated in the short term, with a forecast of better long-term prospects.
72 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos North County Office & San Marcos Office Trends
Commercial Retail & Office Market Overview
San Marcos Lease rates for office space rose by 1.52% over the past quarter from $2.67 to $2.63 per square foot, logging the second highest increase of all the cities in the North County Submarket. This suggests that office trends may be turning a corner for the positive in San Marcos. The City lost just 9,341 square feet of space, and vacancy improved by almost 1.0% over the same time last year to 7.7%.
San Marcos has the lowest vacancy rate by far in the North County Submarket. The Vista/Escondido suffered the most severe vacancy rates during the pandemic, with 34.0%+. San Marcos office space rents are currently less than 2.0% behind Carlsbad lease rates.
73 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos North County & San Marcos Office Trends – Q1 2021
Commercial Retail & Office Market Overview
North County Coast (including San Marcos) vacancy rates appear to have stabilized at around 15% over the past twelve months, while North County Inland (ie: Escondido) is rising and is currently at roughly 13%. The Coastal North County office Submarket currently has the second highest vacancy rate. The North County Coast (including San Marcos) lease rates appear to stable at around $2.75 per square foot on a year-over-year basis in spite of the downward effects of the pandemic on the San Diego office market. The North County Inland rates however have dropped from $2.85 to $2.70 over the same time period.
74 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos North County & San Marcos Office Trends – Q1 2021
Commercial Retail & Office Market Overview
The North County Submarket (including San Marcos) lease rates average $2.65 per square foot, with San Marcos office lease rates ranked second highest behind Carlsbad at $2.47. The average asking lease rate for San Marcos Class A office space is $2.93, while Class B is $2.22, and Class C is $1.84 per square foot. Zonda assumed the asking lease rate for the office space at the Subject at the average asking rate for Q1 2021 of $2.47 per square foot.
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 75 Demographic Overview
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 76 20-Minute Drive Time CMA
Demographic Profile
The following section focuses on demographics in the competitive market area (CMA) which is defined as a 20-Minute Drive tine from the Subject, and includes the areas of San Marcos, Vista, Escondido, Oceanside, Carlsbad, Rancho Bernardo and Encinitas.
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 77 Median Household Income in the CMA
Demographic Profile
The Subject Zip code 92078 has a median income of $85,000, with concentrations of higher incomes in the census tract directly south and north of the Subject. Incomes by zip code are shown on the inset map below, and at a census tract level on the larger map. 20-minute
drive time
30-minute
drive time
45-minute
drive time
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 78 Average Net Worth in the CMA
Demographic Profile
Average net worth in the Subject zip code
92078 is a little over $900,000, and is much
higher than neighboring San Marcos zip
code 92069 at $540,000. Net worth is a
strong indicator of area wealth as it adjusts
for retirees who may no longer be working
but are nevertheless affluent.
20-minute
drive time
30-minute
drive time
45-minute
drive time
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 79 Population, Household Profile and Age
Demographic Profile
The City of San Marcos has a population of over 100,000 living in 34,000 households which tend to be larger in size at 3.0 people compared with 2.8 for the CMA and 2.7 for the Subject South San Marcos zip code 92078. Median age in San Marcos overall is slightly younger than the CMA, which mirrors the 92078 zip code.
Paste Paste
Paste Paste
Source: ESRI
37.7 35.5
37.7 34.0
34.5 35.0
35.5 36.0
36.5 37.0
37.5 38.0
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92078 Median Age (2020)
2.8 3.0
2.7 2.6
2.6 2.7
2.7 2.8
2.8 2.9
2.9 3.0
3.0 3.1
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92078 Avg. HH. Size (2020)
693,869
102,308
50,790
0 100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
CMA - 20-Minute Drive
Time
City of San Marcos Subject Zip Code 92078
Total Population (2020)
242,182
33,913 18,453
0 50,000
100,000
150,000
200,000
250,000
300,000
CMA - 20-Minute Drive
Time
City of San Marcos Subject Zip Code 92078
Total Households (2020)
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 80 Income, Net Worth, Occupation & Education
Demographic Profile
The City of San Marcos has slightly lower median income and net worth than the greater CMA and the south side of the Highway 78 Corridor, which includes affuent areas such as San Elijo Hills and Old Creek Ranch. High education level and white collar jobs in 92078 point towards a much large proportion of high earning professionals than in the CMA and City of San Marcos overall.
Paste Paste
Paste Paste
Source: ESRI
$83K
$78K
$85K
$74,000
$76,000
$78,000
$80,000
$82,000
$84,000
$86,000
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92078 HH. Income (2020)
$141K
$120K
$173K
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92078 Net Worth (2020)
49.2% 48.8%
56.8%
44.0%
46.0%
48.0%
50.0%
52.0%
54.0%
56.0%
58.0%
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92078 Educational Attainment - Bachelor's or Higher (2020)
63.5% 62.6%
72.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92078 Occupation (2020)
White Collar Services Blue Collar
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 81 CMA - 20-Minute Drive Time
Rank Cluster Lifestyle Group Household Type Diversity Index
Ow n vs.
Rent Preferred Housing Age HH
Size HH Income Net Worth Home
Value HH % Age HH
Size HH Income Net Worth Home
Value HH %
1 2B: Pleasantville Upscale Avenues 60 83% Single Family 42.3 2.9 $89,300 $314,900 $355,600 2.1% 41.4 3.1 $119,284 $458,691 $959,423 10.4% 2 1E: Exurbanites Affluent Estates Married Couples 34 85% Single Family 50.4 2.5 $101,800 $483,900 $399,400 1.9% 49.4 2.7 $135,982 $704,860 $1,077,597 7.7% 3 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 33.7 3.2 $111,200 $348,600 $353,200 1.8% 33.0 3.5 $148,538 $507,779 $952,948 6.9% 4 2A: Urban Chic Upscale Avenues Married Couples 47 66% Single Family 42.9 2.4 $103,600 $272,500 $577,200 1.3% 42.0 2.6 $138,386 $396,930 $1,557,309 5.2% 5 13C: NeWest Residents Next Wave Married Couples w / Kids 87 17% Multi-Unit Rentals 27.2 3.3 $30,000 $11,000 $140,700 0.8% 26.6 3.6 $40,073 $16,023 $379,614 5.2% 6 7B: Urban Villages Ethnic Enclaves Married Couples 86 70% Single Family 33.6 3.8 $58,900 $114,300 $279,400 1.0% 32.9 4.1 $78,677 $166,492 $753,832 5.1% 7 2D: Enterprising Professional Upscale Avenues Married Couples 72 52% Multi-Units; Single Family 35.1 2.5 $81,500 $93,100 $342,400 1.4% 34.4 2.7 $108,865 $135,612 $923,809 5.1% 8 13A: International Marketplace Next Wave Married Couples w / Kids 89 28% High Density Apts; Single Family 32.6 3.0 $42,900 $15,100 $338,900 1.2% 31.9 3.3 $57,305 $21,995 $914,366 5.1% 9 8C: Bright Young Professional Middle Ground Married Couples 66 43% Single Family; Multi-Units 32.6 2.4 $53,900 $35,700 $193,900 2.3% 31.9 2.6 $71,998 $52,001 $523,150 5.1% 10 9E: Retirement Communities Senior Styles Singles 48 45% Multi-Units; Single Family 52.8 1.9 $36,900 $43,500 $175,900 1.2% 51.7 2.0 $49,290 $63,363 $474,585 4.4% City of San Marcos
Rank Cluster Lifestyle Group Household Type Diversity Index
Ow n vs.
Rent Preferred Housing Age HH
Size HH Income Net Worth Home
Value HH % Age HH
Size HH Income Net Worth Home
Value HH %
1 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 33.7 3.2 $111,200 $348,600 $353,200 1.8% 31.1 3.7 $139,973 $431,557 $885,132 22.7% 2 9E: Retirement Communities Senior Styles Singles 48 45% Multi-Units; Single Family 52.8 1.9 $36,900 $43,500 $175,900 1.2% 48.7 2.2 $46,448 $53,852 $440,812 9.4% 3 8C: Bright Young Professional Middle Ground Married Couples 66 43% Single Family; Multi-Units 32.6 2.4 $53,900 $35,700 $193,900 2.3% 30.1 2.8 $67,847 $44,196 $485,921 9.1% 4 4A: Soccer Moms Family Landscapes Married Couples 49 85% Single Family 36.8 3.0 $88,600 $272,200 $259,400 3.0% 33.9 3.4 $111,525 $336,976 $650,066 8.0% 5 13C: NeWest Residents Next Wave Married Couples w / Kids 87 17% Multi-Unit Rentals 27.2 3.3 $30,000 $11,000 $140,700 0.8% 25.1 3.8 $37,762 $13,618 $352,599 7.7% 6 7B: Urban Villages Ethnic Enclaves Married Couples 86 70% Single Family 33.6 3.8 $58,900 $114,300 $279,400 1.0% 31.0 4.3 $74,140 $141,500 $700,187 6.3% 7 2B: Pleasantville Upscale Avenues Married Couples 60 83% Single Family 42.3 2.9 $89,300 $314,900 $355,600 2.1% 39.0 3.3 $112,406 $389,837 $891,147 6.2% 8 13A: International Marketplace Next Wave Married Couples w / Kids 89 28% High Density Apts; Single Family 32.6 3.0 $42,900 $15,100 $338,900 1.2% 30.1 3.5 $54,000 $18,693 $849,296 5.9% 9 9D: Senior Escapes Senior Styles Married Couples w /No Kids43 75% SF; Mobile Homes/Seasonal 53.4 2.2 $37,300 $102,000 $121,600 0.9% 49.2 2.5 $46,951 $126,273 $304,734 4.7% 10 4B: Home Improvement Family Landscapes Married Couples 64 80% Single Family 37.4 2.9 $69,600 $186,300 $199,000 1.7% 34.5 3.3 $87,609 $230,634 $498,701 4.4% Subject Zip Code 92078
Rank Cluster Lifestyle Group Household Type Diversity Index
Ow n vs.
Rent Preferred Housing Age HH
Size HH Income Net Worth Home
Value HH % Age HH
Size HH Income Net Worth Home
Value HH %
1 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 33.7 3.2 $111,200 $348,600 $353,200 1.8% 33.0 3.4 $151,400 $622,077 $950,667 33.0% 2 9E: Retirement Communities Senior Styles Singles 48 45% Multi-Units; Single Family 52.8 1.9 $36,900 $43,500 $175,900 1.2% 51.7 2.0 $50,240 $77,626 $473,450 17.2% 3 8C: Bright Young Professional Middle Ground Married Couples 66 43% Single Family; Multi-Units 32.6 2.4 $53,900 $35,700 $193,900 2.3% 31.9 2.5 $73,385 $63,707 $521,898 16.7% 4 4A: Soccer Moms Family Landscapes Married Couples 49 85% Single Family 36.8 3.0 $88,600 $272,200 $259,400 3.0% 36.0 3.1 $120,630 $485,741 $698,197 9.4% 5 9C: The Elders Senior Styles Married Couples w /No Kids21 82% SF; High-Rises; Mob. Hm/Seas. 72.0 1.7 $38,200 $209,800 $180,100 0.7% 70.5 1.8 $52,010 $374,388 $484,754 6.0% 6 7B: Urban Villages Ethnic Enclaves Married Couples 86 70% Single Family 33.6 3.8 $58,900 $114,300 $279,400 1.0% 32.9 3.9 $80,193 $203,968 $752,028 4.4% 7 9D: Senior Escapes Senior Styles Married Couples w /No Kids43 75% SF; Mobile Homes/Seasonal 53.4 2.2 $37,300 $102,000 $121,600 0.9% 52.3 2.3 $50,784 $182,019 $327,297 4.2% 8 2B: Pleasantville Upscale Avenues Married Couples 60 83% Single Family 42.3 2.9 $89,300 $314,900 $355,600 2.1% 41.4 3.0 $121,583 $561,939 $957,127 3.7% 9 9B: Golden Years Senior Styles Singles 42 63% Single Family; Multi-Units 51.6 2.0 $64,000 $157,100 $326,100 1.3% 50.5 2.1 $87,137 $280,345 $877,725 3.4% 10 13C: NeWest Residents Next Wave Married Couples w / Kids 87 17% Multi-Unit Rentals 27.2 3.3 $30,000 $11,000 $140,700 0.8% 26.6 3.5 $40,845 $19,630 $378,706 2.1% National Cluster Characteristics Locally Adjusted Characteristics National Cluster Characteristics Locally Adjusted Characteristics National Cluster Characteristics Locally Adjusted Characteristics Demographic Tapestry Profile
Demographic Profile
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 82 CMA Demographic Profile
Demographic Profile
The San Marcos area is characterized by a mix of lower and high income households, ranging from young to old. Top Lifestyle Groups include affluent “Boomburbs” Move Downs, Retirees, Young Professional Couples, Comfortable Families, above average earning Ethnic Families, and Low Income Next Wave Married Couples with Kids. Lifestyle Groups are shown below in order of income, with Boomburbs as the highest earners $150,000+) and NeWest as the lowest earners (less than $40,000).
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 83 Economic Overview
Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 84 Population Growth
MSA Economic Trends
Population growth in the MSA is expected to get back on track next in 2021 after experiencing slower than normal growth in 2020.
Positive population growth bodes well for the development of new retail space and should have a positive effect on the demand for Starbucks at the Subject location.
0 5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F 2024F 2025F Annual Population Growth
Source: Moody's Analytics; U.S. Census Bureau (BOC)
San Diego-Carlsbad, CA Metropolitan Statistical Area - Moody's Analytics Five-Year Forecast Category 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F 2024F 2025F Total Population 3,137,156 3,174,335 3,209,768 3,248,877 3,280,850 3,306,089 3,321,237 3,333,861 3,338,330 3,349,380 3,368,792 3,382,141 3,394,882 3,407,229 3,418,544 Prior Year Change 33,944 37,179 35,433 39,109 31,973 25,239 15,148 12,624 4,469 11,050 19,412 13,349 12,741 12,347 11,316 Annual % Change 1.1% 1.2% 1.1% 1.2% 1.0% 0.8% 0.5% 0.4% 0.1% 0.3% 0.6% 0.4% 0.4% 0.4% 0.3% Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 85 Residential Building Permits
MSA Economic Trends
Building permits in the MSA are expected to ramp up again in 2022, and remain steady over the next five years at or above the historical average of +/- 9,783 units. The area demand for new homes in turn triggers demand for retail services such as the planned Starbucks. 0 2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F 2024F 2025F Residential Building Permits
SFD Building Permits MF Building Permits Historical AverageSource: Metrostudy; U.S. Bureau of Labor Statistics (BLS) San Diego-Carlsbad, CA Metropolitan Statistical Area - Metrostudy Five-Year Forecast Category 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F 2024F 2025F Total Building Permits 5,370 5,666 8,264 6,875 9,883 10,791 10,441 9,834 8,216 9,076 10,001 10,268 10,568 10,563 10,588 Annual % Change 53.7% 5.5% 45.9% -16.8% 43.8% 9.2% -3.2% -5.8% -16.5% 10.5% 10.2% 2.7% 2.9% 0.0% 0.2% SFD Building Permits 2,245 2,197 2,565 2,487 3,222 2,351 4,056 3,489 3,019 2,823 3,219 3,459 3,047 2,988 2,888 Annual % Change -1.1% -2.1% 16.8% -3.0% 29.6% -27.0% 72.5% -14.0% -13.5% -6.5% 14.0% 7.5% -11.9% -1.9% -3.3% MF Building Permits 3,125 3,469 5,699 4,388 6,661 8,440 6,385 6,345 5,197 6,253 6,782 6,808 7,521 7,575 7,700 Annual % Change 155.3% 11.0% 64.3% -23.0% 51.8% 26.7% -24.3% -0.6% -18.1% 20.3% 8.5% 0.4% 10.5% 0.7% 1.6% Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 86 Employment
MSA Economic Trends
After 100,000 job losses in the MSA in 2020, unemployment is expected to begin a recovery in 2021. It should be noted that these forecast estimates assume the successful roll out of a COVID-19 vaccine, and a return in some form to normalcy. Unemployment spiked to
8.9% in 2020 and is not forecast to dip back below 7% until 2025.
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-120,000
-100,000
-80,000
-60,000
-40,000
-20,000
0 20,000
40,000
60,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F 2024F 2025F Unemployment Rate
Annual Non-Farm Employment Growth
Prior Year Change Unemployment RateSource: Metrostudy; U.S. Bureau of Labor Statistics (BLS) San Diego-Carlsbad, CA Metropolitan Statistical Area - Metrostudy Five-Year Forecast Category 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F 2024F 2025F Non-Farm Employment 1,250,133 1,282,800 1,316,200 1,344,933 1,384,692 1,422,400 1,452,158 1,482,225 1,504,133 1,403,250 1,429,697 1,479,124 1,498,122 1,511,100 1,523,742 Prior Year Change 9,942 32,667 33,400 28,733 39,758 37,708 29,758 30,067 21,908 (100,883) 26,447 49,427 18,997 12,979 12,641 Annual % Change 0.8% 2.6% 2.6% 2.2% 3.0% 2.7% 2.1% 2.1% 1.5% -6.7% 1.9% 3.5% 1.3% 0.9% 0.8% Unemployment Rate 10.3% 9.1% 7.8% 6.4% 5.2% 4.7% 4.0% 3.4% 3.2% 8.9% 8.5% 7.6% 7.3% 7.1% 6.9% Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 87 Employment by Sector
MSA Economic Trends
The pandemic year saw a sharp decline in Government jobs, as well as Leisure & Hospitality services, but rolling monthly averages appear to be turning the corner with some recent positive growth in the Construction and Professional/Business Service sectors. -417 -1,685
9,686
3,273
-2,748
-10,864
-19,974
-2,080 -2,839
-4,160
-25,000
-20,000
-15,000
-10,000
-5,000
0 5,000
10,000
15,000
Financial
Activities
Information Professional &
Business Services
Construction &
Mining
Education &
Health Services
Government Leisure &
Hospitality
Manufacturing Other Services Trade, Transp.
and Utilities
Annual Non-Farm Employment Growth
Source: Moody's Analytics; U.S. Bureau of Labor Statistics (BLS) Category Financial
Activities Information
Professional &
Business
Services
Construction &
Mining
Education &
Health Services Government Leisure &
Hospitality Manufacturing Other Services Trade, Transp. and Utilities
Current Month (Jan-2021) 74,387 20,016 265,902 84,580 207,399 232,533 151,370 110,152 46,001 209,039 Current Month (Jan-2020) 74,805 21,701 256,216 81,307 210,147 243,397 171,344 112,231 48,841 213,199 12-Month Change -417 -1,685 9,686 3,273 -2,748 -10,864 -19,974 -2,080 -2,839 -4,160 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 88 E/P Ratio
MSA Economic Trends
E/P Ratios in excess on 1.2 indicate a supply-constrained housing market with implied price growth. Moody’s Economy.com predicts a small jump in 2022 followed by a return to equilibrium in 2023, followed by a drop off thereafter in response to perennial job losses.
The E/P ratio in the San Diego MSA is expected to get back down to a stable 1.2 in the outer years of the five-year forecast.
1.6 0.9
0.6 1.4
1.6 2.2
1.2 -1.4
-22.4
-2.5
1.9 5.8
4.0 4.2
4.0 3.5
2.9 3.1
2.7 -11.1
2.6 4.8
1.8 1.2
1.2 -25.0
-20.0
-15.0
-10.0
-5.0
0.0 5.0
10.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F 2024F 2025F EP Ratio
Source: Metrostudy; U.S. Bureau of Labor Statistics (BLS) San Diego-Carlsbad, CA Metropolitan Statistical Area - Metrostudy Five-Year Forecast Category 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F 2024F 2025F Non-Farm Employment 1,250,133 1,282,800 1,316,200 1,344,933 1,384,692 1,422,400 1,452,158 1,482,225 1,504,133 1,403,250 1,429,697 1,479,124 1,498,122 1,511,100 1,523,742 Prior Year Change 9,942 32,667 33,400 28,733 39,758 37,708 29,758 30,067 21,908 (100,883) 26,447 49,427 18,997 12,979 12,641 Building Permits 5,370 5,666 8,264 6,875 9,883 10,791 10,441 9,834 8,216 9,076 10,001 10,268 10,568 10,563 10,588 Employment/Housing 1.9 5.8 4.0 4.2 4.0 3.5 2.9 3.1 2.7 -11.1 2.6 4.8 1.8 1.2 1.2 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 89 Affordability Index
MSA Economic Trends
The Affordability Index is expected to drop (ie: become less affordable) over the next five years, implying higher priced homes in reaction to lower new home building activity and the current trend where existing home prices inch ever closer to new home prices. As the existing home market price rises, so new home prices are pushed up, and Moody’s Economy.com predicts that the ratio could drop to its lowest point in 15 years in 2022.
78 71
67 54
49 47
52 78
95 86
95 100
85 82 79 82 79
74 81 81
72 64
59 54 51
0 25
50 75
100
125
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F 2024F 2025F Affordability Index
Source: Moody's Analytics; National Association of Realtors (NAR) San Diego-Carlsbad, CA Metropolitan Statistical Area - Moody's Analytics Five-Year Forecast Category 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F 2024F 2025F Affordability Index 94.7 100.4 85.2 81.9 78.9 81.8 79.1 73.8 81.2 80.6 72.2 64.4 59.1 54.5 51.3 Hallmark Barham Townhomes City of San Marcos – DTA and City of San Marcos 90 Appendix
Thank you!
Zonda
3200 Bristol Street, Suite 640
Costa Mesa, CA 92626
(877) 966-3210