Client:  State of California Department of General Services, Real Estate Services Division, Asset Planning and Enhancement Branch

GG+A served as the market and real estate economic analyst on a multi-disciplinary team engaged by the State of California Department of General Services, Real Estate Services Division, Asset Planning and Enhancement Branch to prepare a plan for the reuse and disposition of the former Fred C. Nelles Youth Correctional Center site in Whittier, California and to establish a base value for the property. The plan prepared was based on community input and market studies GG+A conducted of the demand for office, retail, and residential uses.

To estimate the office space demand potential for the 75-acre site, GG+A conducted site and property inspections and interviews with real estate developers and office space brokers. GG+A studied data on the office space inventory, analyzed employment data and prepared a forecast of office space demand based on the employment forecast and research on the amount of office space used by differing types of office workers. GG+A synthesized the research to reach judgments on the amount of office space supportable at the site and the rents such space would obtain.

To estimate the retail space demand potential for the site, GG+A identified the relevant market from which most shoppers would be attracted, and identified and assessed the inventory of potentially competitive retail space. GG+A estimated the expenditure potential or retail demand based on analysis of demographic and income data of the households in the primary market area and consumer shopping expenditure patterns. GG+A converted the estimates of purchasing power into estimates of the supportable amount of space based on research on the sales thresholds required for viable development and operation of retail space in the market area. GG+A synthesized the results of the supply-demand analysis, property inspections and interviews with merchants, retail developers and retail brokers to reach judgments about the type and scale of retail development market responsive at the site and obtainable rents.

To estimate the housing demand potential for the site, GG+A completed an analysis that identified the imbalance between housing demand and housing production and supply in the City of Whittier and Los Angeles County and the resulting trend in housing price appreciation. Based on inspections and interviews with representatives of competing supply and residential real estate brokers, GG+A identified the primary geographic areas from households would be likely to be attracted and the kinds of households to which the location would most appeal. GG+A analyzed the product, pricing and absorption characteristics of competing supply and completed an analysis of the price premium new product realizes over existing housing in the same locations. GG+A analyzed demographic and income data to estimate the depth of the primary consumer market for the types of housing most market responsive. GG+A synthesized the research and analysis to recommend the scale, and mix of housing products for the site and to estimate obtainable prices and absorption.

GG+A then worked with the architects and planners, engineers, cost estimators and other team members to identify the physical parameters of a market- and community-influenced plan for the reuse and disposition of the site. GG+A completed capital markets research and obtained cost inputs from the other appopriate team members. GG+A prepared a series of cash flow forecasts and estimates of the obtainable land value based on iterations of the plan and refined cost estimates. GG+A provided the financial analysis and results of the market research to the State’s appraiser whose estimate of value for the property was consistent with the results of GG+A’s analysis.

GG+A prepared both the legal and cash flow methodology and written exhibit of a profit participation agreement to be used as part of the sales contract for the disposition of the property to ensure the State participates in any future appreciation of the property due to changes in entitlement or market conditions.

GG+A continues to provide information and negotiation support as the process of reuse and disposition moves forward.

Reports detailing the market and economic analysis completed can be found on the Department of General Services website:

Office Market Report

Residential Market Report

Retail Market Report