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A Financial Analysis of the Facilities Master Plan For Orange County
Client: County of Orange, CA
dashed line separator As part of a team of consultants led by Gensler, Gruen Gruen + Associates (GG+A) analyzed over 3.9 million square feet of the County of Orange's real estate portfolio to prepare a Facilities Master Plan. The team developed a Master Plan that will meet the long term office space needs of the County, increase the operational efficiency of the County departments, and maximize the opportunities represented by several underutilized sites. To provide a financial perspective for the Master Planning process, GG+A compared the real estate occupancy costs for the Master Plan scenario to a status quo scenario.

GG+A also conducted an office market reconnaissance of Orange County that informed both the development of the Master Plan and the assumptions underpinning the financial model. In addition, GG+A performed a residual land value analysis to estimate the annual ground lease revenue the County could obtain for two retail sites.

To compare the relative costs of the two scenarios, GG+A developed a dynamic financial model for owned and leased spaces of the County's real estate portfolio. The financial model simulated the monthly occupancy costs that were likely to be incurred by the County over 20 years under each scenario and then discounted all costs to a net present value to allow comparison. To develop realistic forecasts of future occupancy costs, the model was designed to consider a range of factors, including operating expenses, the lease terms, rehabilitation costs, sale values of owned facilities, construction cost, and future escalation of construction related costs, operating costs, and rental costs.

Based on the results of the financial analysis, GG+A estimated the cost of the extensive capital improvements recommended in the master plan, the revenues to be generated from the disposition of surplus properties, and the savings in operating costs due to more efficient use of space.




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