Client: City of Greeley (CO)
An investor-developer owns 11 acres of the approximately 17 acres of land on 8th Avenue between the core Downtown of Greeley and University of Northern Colorado campus referred to as the “Madison” or “Maddie” Corridor. The developer had proposed to undertake the redevelopment of the properties it owns, with plans for 100,000 square feet of office space, 160,000 square feet of retail space, and 666,000 square feet of apartment space.
The investor-developer asked for a variety of incentives and the City of Greeley retained GG+A to review the development program and proposal and evaluate the request for incentives. GG+A toured the redevelopment area with the investor-developer, conducted interviews with local real estate brokers, bankers, other real estate investors-developers, and reviewed relevant secondary real estate market data and demographic and employment data. GG+A prepared forms for the investor-developer to specify the assumptions and estimates about the type and quantity of building space, sitework development costs, construction and other costs, revenues, expenses, and investment and financial parameters.
GG+A synthesized the information to prepare discounted cash flow residual land value estimates and conduct sensitivity analysis to test the effects of alternative assumptions and potentially improved building space allocations. GG+A prepared a report on the results of the market research and real estate economic analysis and met with the City staff and investor-developer to review the findings and recommendations. These included changes to the allocation of building space, a reduced amount and make-up of incentives, and a provision for the City to participate in returns above the amount needed for the redevelopment to be financially feasible.
As the process of reprogramming and updated assumptions and estimate evolved over several months, GG+A conducted additional real estate economic analyses. The information and insights drawn from the analysis were used to prepare a redevelopment agreement about which GG+A provided extensive advice about the proposed terms and conditions, including a provision for the City to participate in returns above the amount needed for the redevelopment to be feasible in exchange for municipal assistance to bridge the anticipated feasibility gap. The City and developer entered into a redevelopment agreement with the first phase of redevelopment planned to commence in 2018.