Economics Research Associates. Washington, DC. December ERA Project No

Transcription

1 Final Report Market & Financial Analysis for the Submitted to MIG Berkeley, California Submitted by Economics Research Associates Washington, DC December 2003 ERA Project No Connecticut Avenue, NW Suite 750 Washington, DC FAX Los Angeles San Francisco San Diego Chicago Washington DC London New York

2 Table of Contents Executive Summary 2 Introduction 2 Study Methodology 2 Market Potentials 3 Financial Analysis & Economic Impacts 11 General & Limiting Conditions 14 Demographic & Economic Profile 15 Introduction 15 Population & Household Characteristics (Tables 14) 15 Household Incomes & Consumer Spending (Tables 57) 16 Visitor Characteristics (Table 8) 17 Employment Trends & Projections (Tables 9 & 10) 17 Real Estate Market Conditions 19 Introduction 19 Housing Trends & Characteristics (Tables 1119) 19 Commercial Development Patterns (Tables 2028) 21 Market Demand & Financial Analysis 26 Introduction 26 Market Potentials 26 Financial Analysis & Economic Impacts 33 Appendix Economics Research Associates (ERA) Market Analysis for Project No

3 I. Executive Summary Introduction Economics Research Associates (ERA) of Washington, D.C. was retained by Moore, Iacofano, Goltsman, Inc. of Berkeley, CA on behalf of the City of Ocala, FL in May 2003 to prepare a market and financial analysis of redevelopment opportunities as part of a master plan for Downtown Ocala. The primary objective of the economic analysis for the Downtown Master Plan is to provide a roadmap that will help guide future investment and redevelopment efforts in the City s Community Redevelopment Area (CRA), and to identify revitalization opportunities for specific, priority sites within the CRA. The market analysis is designed to serve as an independent assessment of real estate market dynamics as they affect the potential for various uses, including housing, workplace (e.g., office), supporting services (e.g., convenience and service retail) as well as destinational uses (e.g., restaurants). This study identifies the depth of potential market support, tests (on a preliminary basis), the financial feasibility of these uses for each priority site, and estimates the potential economic costs and benefits to the City of Ocala. As defined by the City of Ocala, the market study for the Downtown Master Plan is designed to: Understand the development context and issues facing the creation of market supportable revitalization strategies for Downtown Ocala Document the competitive position of Downtown Ocala and test its economic potential for a variety of land uses Provide a roadmap that will help guide future investment and development efforts for the Community Redevelopment Area (CRA) Identify redevelopment opportunities for specific catalyst opportunity sites Outline the conditions necessary to position these specific sites to support uses envisioned by both the City and privatesector interests Study Methodology As the basis for our analysis and recommendations, ERA completed the following tasks: Profiled demographic and economic characteristics to identify fundamental drivers of demand for the various uses identified above. We reviewed growth trends and forecasts for specific factors such as population, households, age composition, employment, household incomes, retail sales and the like in both Ocala and Marion County. Selected research also compared growth trends and projections between Ocala and the City of Gainesville/Alachua County. To understand demographic characteristics within the CRA, this profile reviewed trends in multiple Traffic Analysis Zones (TAZ) generally corresponding with the boundaries of the CRA; Economics Research Associates (ERA) Market Analysis for Project No

4 Conducted stakeholder interviews to gather information from a crosssection of residents, property owners, retailers, businesses, real estate brokers, developers and others to gather a range of market and physical information and to ensure that our recommendations have the broadest possible public and institutional support; Examined the inventory of commercial space located in the CRA based on data provided by the City of Ocala Planning Department in order to evaluate the existing retail and business mix and to inform subsequent testing of market opportunities; Evaluated potential market support for various uses for six priority sites identified by the City. For retail space, ERA identified relevant market segments and analyzed sales potentials for prospective retail categories based on resident and employee spending patterns and required tenant sales performance/productivity. For office space, ERA examined opportunities to capture future employment growth to support additional commercial office development in Downtown Ocala; Prepared a series of detailed financial models for the six priority sites designed to measure the overall financial feasibility of various uses using marketbased assumptions for development costs, rental rates, for sale pricing, operating expenses and absorption. Estimated the potential economic impacts such as new jobs and property tax revenues accruing to the City of Ocala from marketbased development programs on the six priority sites. Documented all findings and recommendations in a final project technical report, including demographic characteristics and, for all proposed development programs on the six priority sites, estimates of supportable demand, financial analysis and economic impacts. This Executive Summary details our key findings and recommendations. Supporting tables and analysis are contained at the end of each chapter. The report is organized into the following sections Executive Summary, Demographic and Economic Profile, Real Estate Market Conditions, and Market Demand and Financial Analysis. Market Potentials (Summary Tables 17) The market analysis is an independent assessment of real estate market dynamics as they affect potential market support for new housing, workplace (e.g., office), supporting services (e.g., convenience and service retail), and destinational (e.g., restaurants) uses in Downtown Ocala. The findings of our market analysis suggest that public policy initiatives should focus on reinforcing the downtown s role as the economic engine of Marion County. This will entail clear and focused public policies, incentives and other regulatory mechanisms designed to foster economic development opportunities in the downtown. For example, this should include a clear strategy designed to increase the number of high quality jobs in the downtown through business recruitment. Economics Research Associates (ERA) Market Analysis for Project No

5 Our program recommendations are highlighted below and illustrated in Summary Tables 1 7 (attached): Office From a regional perspective, future employment and market demand for office space are closely linked. In addition, a critical determinant of both future employment and market demand is the degree to which a community or specific site is competitive. Factors defining this competitive positioning include local and regional access; overall physical characteristics such as highway frontage and visibility, proximity to economic activity such as job creation, business costs such as property taxes and the like. As a rule, office uses require access to a qualified labor pool, contemporary floorplates/building configurations, adequate (and oftentimes the provision of extra) parking, nearby convenience and supporting retail and services and pedestrianscale amenities. In ERA s view, Downtown Ocala appears to be losing market share, as new office development is increasingly concentrated in outlying locations of the City and, more recently, in Marion County. For example, as illustrated in Table 20 in Section III of this report, the City s share of new office space permitted countywide declined from roughly 59% to 41% between While City permit data indicate that approximately 112,000 sq. ft. of office space are permitted annually, the downtown (CRA) has captured little, if any, new office development during this period. Consistent with national trends, new office development in outlying locations is oriented to professional service tenants (e.g., medical, financial, legal, etc.) to serve a growing resident population. Like many smaller markets nationwide, however, information on office supply in Ocala and Marion County is not tracked. Thus, while the City Planning Department estimates that the CRA contains roughly 735,000 sq. ft. of office space (Table 21A), the downtown s fair share of the total office inventory in the remainder of the City and in the County cannot be determined. ERA recommends, therefore, that a market survey of office space located in Downtown Ocala be initiated on an annual or semiannual basis. In smaller communities, this is typically undertaken as a joint effort between commercial brokers, the Chamber of Commerce and/or the downtown business organization, and should be viewed as a marketing tool and as a key component of a larger economic development strategy for the downtown. A property database should be created and updated regularly. For each office building, data should be collected on building size (in sq. ft.); rental rates and lease structure (i.e., net or gross rents); operating and other charges; current vacancy rates; net absorption over the reporting period; availability of parking and other amenities; and other information considered key to marketing. Moreover, the surveys should distinguish between classes of office buildings. In the real estate industry, office buildings are typically ranked according to building quality, Economics Research Associates (ERA) Market Analysis for Project No

6 architecture and design, physical condition, amenities offered, rental rates, tenant types, etc. These categories range from best/highest quality ( Class A ) to moderate quality ( Class B ) to those buildings that having the lowest rents, with aging/obsolete and/or noncompetitive properties ( Class C ). In order to estimate future market potential for office space, ERA utilized forecasts of Service employment prepared by the City for the Traffic Analysis Zones that generally correspond with the boundaries of the CRA. (We note that the City defines Service to include employment in office, medical and lodging uses). Fair Share The City estimates that Service employment in the TAZ zones comprising the CRA will account for approximately 9.8% of citywide employment in 2010 (Summary Table 1). Summary Table 2 illustrates employment forecasts for Marion County prepared by Woods & Poole, Inc., a demographic forecasting service in Washington, D.C., and compares 2003 employment to estimates prepared by the Florida Department of Workforce Innovation. These forecasts project that there will be more than 20,000 new jobs created throughout Marion County between Summary Table 3 translates this future employment growth into demand for office space. In this model, a fair share demand analysis assumes that the CRA will maintain its fair share as a proportion of the City as a whole over time (i.e., the CRA is no more or less competitive as compared to other locations in the City than it is today). This would suggest that employment growth in Downtown Ocala could support an additional 120,000 sq. ft. of office space by 2010 based on demand generated by employment growth in Marion County assuming that the CRA s fair share is held constant at roughly 10%. Induced Demand The next step in a market analysis is to estimate the impact of publicsector efforts such as Citysponsored incentives, ongoing planning initiatives, and infrastructure improvements that could be expected to enhance opportunities for specific uses. ERA believes that the City s planning efforts assuming commitments to provide financial incentives as well as fund specific initiatives such as infrastructure improvements will enhance the overall marketability of Downtown Ocala as a viable employment center. As such, the Downtown becomes a more desirable location for office tenants and other businesses. This is known as inducing demand. Under an induced demand scenario, ERA conservatively estimates that Downtown Ocala s fair share could increase from 10% to 15%. This would increase demand potentials for office space from roughly 120,000 sq. ft. under a fair share scenario to approximately 186,000 sq. ft. under an induced demand scenario. Moreover, ERA strongly recommends that City economic development policies focus on retaining key employment anchors such as the County Courthouse and judicial system, Economics Research Associates (ERA) Market Analysis for Project No

7 which serve to draw daily visitors to Downtown and generate spinoff demand for associated employment such as law firms (which desire proximity to the Courthouse). Thus, as a planning target in the City s ongoing redevelopment efforts in the CRA, ERA estimates a program of 120,000 sq. ft. to 186,000 sq. ft. of office space. The tenant mix is expected to be similar to that which exists in Downtown Ocala today namely, professional services oriented to medical, legal, accounting and financial, etc. These planning targets assume that redevelopment sites offer strong visibility and provide adequate levels of onsite or nearby parking to enhance overall marketability. Planning Target: 120,000 to 186,000 Sq. Ft. of Office Space The program of uses on the priority sites contains a total of 65,000 sq. ft. of office space focused on the Chamber of Commerce and Library sites. This suggests ample opportunity for other redevelopment sites located in Downtown Ocala such as the Murphy parking lot to capture some increment of remaining demand. The market surveys should identify the amount of commercial office space in Downtown Ocala that would be considered physically or functionally obsolete. Over time, of course, this space may be renovated, removed from the competitive inventory of supply, or converted to other uses such as housing. As such, the amount of office space demanded as a result of new employment growth may not necessarily be net new construction. With respect to new office development, as a rule developers seek out markets where stabilized vacancy rates of competitive office product are less than 8% to 10%. The results of ongoing market surveys as recommended above are critical in helping to inform developer decisionmaking and degree of risk whether to undertake new construction. This will also determine the extent to which demand identified in our market analysis is absorbed among existing, viable buildings with readily available vacant space and/or in new construction. Housing A critical mass of housing in Downtown Ocala is extremely important. It serves to strengthen downtown as a viable destination, creates a new, closein neighborhood, fosters demand for other uses such as convenience and service retail, and reinforces Downtown Ocala as a viable business address with a potential supply of labor and consumers with disposable incomes. Obviously, new housing in the CRA must successfully compete in the marketplace, and unit finishes and project amenities are critical. ERA has estimated potential housing demand in the CRA under several scenarios including fair share, moderate, and induced that rely on several critical assumptions, among which include: Economics Research Associates (ERA) Market Analysis for Project No

8 The provision of highquality, marketrate housing that serves to reinforce the competitive position of the priority sites (and Downtown as a whole) in the City s (and the region s) housing market; Public policy initiatives designed to strengthen Downtown Ocala s competitive position in Marion County that result in continued growth of CBD employment, thus enhancing demand for intown housing; and The provision of public incentives that (as illustrated in the financial analysis), are critical in funding certain elements of redevelopment of each priority site, such as infrastructure and parking. Summary Tables 4 & 5 illustrate ERA s housing demand model. The following assumptions were applied in the model: ERA used population forecasts prepared by Woods & Poole, Inc. and assumed that household size (persons per household) in the City and County will increase at the same rate between as it did between This suggests that the City s fair share of the County s population roughly 18% in 2000 will decline slightly to 16.5% by While fair share declines, overall growth still results in a population increase of more than 4,000 new residents and roughly 1,300 new households citywide. Assuming that the number of persons per household citywide increases to 2.51 in 2010 translates into demand for new housing attributable to population growth of approximately 1,600 housing units citywide. In addition, in any given year, there are always households that desire (or require) a change in housing and, hence, turn over, among both renters and owners. Turnover generates additional potential demand beyond the creation of new households from population growth and/or inmigration. Assuming 30% annual turnover (always highest among renters) generates additional demand for housing; in this case, almost 500 units citywide attributable to turnover. ERA assumed that household size in Downtown Ocala would be slightly smaller 1.5 persons per household because a downtown location would be more attractive to singleheaded households, unmarried couples or partners, and/or empty nesters without children. The model further segments potential demand according to fair share (i.e., the CRA today represents only 1.8% of the City s total housing stock), a moderate scenario, and an induced scenario (i.e., highest capture). The induced estimates assume that redevelopment of the CRA succeeds in strengthening downtown s role as a viable employment center and in enhancing downtown s attractiveness and, hence, marketability for new housing. This could be expected to result in successfully doubling (to 4%) or tripling (to 6%) the capture of new housing from future population growth. This reflects the expected leverage in private investment that is Economics Research Associates (ERA) Market Analysis for Project No

9 typically created in redevelopment projects when public incentives and commitments are judiciously used. As noted, the ability to successfully capture demand for new housing in the CRA (and on the priority sites in particular) is based on critical assumptions related to location, visibility, product quality, amenities and overall project environment, critical mass and other factors. This analysis results in potential market support for approximately 60 to 210 housing units in the downtown by This equates to average annual absorption of roughly 10 to 30 units per year depending on market conditions. Model Estimated Capture Supportable Units Fair Share 1.8% 30 Moderate 4% 140 Induced 6% 210 The number of housing units identified in the redevelopment programs for the priority sites (79 units) suggests ample opportunity to accommodate future spillover redevelopment on other adjacent and/or nearby sites. Planning Target: 60 to 210 Units of New Housing Summary Table 5 distributes potential new housing demand by tenure (i.e., owner or renter) and unit type based on the City s housing distribution from the 2000 Census. ERA notes that early phases of new housing are likely to be oriented to renters, as developers seek to mitigate overall risk in untested locations for new housing such as the priority sites. Over time, of course, as initial projects succeed, thus reducing the degree of risk, developers could be expected to diversify the types of new housing product delivered to the marketplace, including, for example, owneroccupied units. Retail Retail uses require a concentration of disposable income (from nearby residents, employees and/or visitors), strong visibility and extensive frontage, adequate parking, and a clear competitive role and market identity. Moreover, supporting tenants oftentimes require an anchor tenant to generate traffic. ERA s retail demand analysis estimates opportunities for new retail development in Downtown Ocala generated by growth in both employment and households from redevelopment of the priority sites. The model illustrates the impact of future growth in these market segments for general retail (convenience, service), restaurants and leisure & entertainment uses assuming new office space and housing are built on the priority sites under fair share, moderate, and/or induced scenarios. The model assumes that the proportion of spending in each of these retail categories does not change over time (i.e., Economics Research Associates (ERA) Market Analysis for Project No

10 future spending patterns in these categories are similar to what is spent today). Key assumptions are summarized below: The model assumes that new households have median household incomes of $50,000 per year today with real growth in incomes of 2% per year by Current annual spending patterns, which are held constant in the model, range from 15% on general retail to 7.6% on food & beverage to 10.4% on leisure & entertainment. Consistent with national trends in small markets like Ocala, new office employee spending ranges from $250 per year on leisure & entertainment to $500 per year for general retail to $1,500 per year for food & beverage. Assuming 200 sq. ft. of space per employee, roughly 600 new jobs could be created in Downtown Ocala under our fair share office model (120,000 sq. ft.) to as many as 930 new jobs under our induced scenario (186,000 sq. ft.). Annual productivity is the estimated minimum annual sales performance required by all retailers. Sales range from $150 per sq. ft. for general retail to $250 per sq. ft. for food & beverage to $200 per sq. ft. for leisure & entertainment uses. While these sales levels are below those required for national retailers, they reflect current rental rates in Downtown Ocala which, as a rule, are typically about 10% of annual sales. Under the induced scenario, the model assumes that judicious public investment in such things as streetscape improvements improves the overall physical appearance of the downtown. In addition, an overall economic development plan should include targeted marketing and business recruitment strategies designed to produce an increase in shopper traffic and additional sales. Fair Share vs. Induced Demand ERA examined retail opportunities under various demand scenarios generated by new households and employees only. We note that the retail model excludes the potential impacts of reuse of the Marion Theater because the unsolicited proposals received by the City to date do not provide sufficient detail on attendance estimates to accurately estimate potential spinoff effects on other uses such as food & beverage. Key results are highlighted below: Under the most conservative, fair share, scenario, 60 new households and 600+ new office employees at limited capture rates ranging from 5% to 10% could be expected to produce only limited demand for new retail in Downtown Ocala. ERA estimates the fair share model would yield demand for approximately 600 sq. ft. of general retail, 400 sq. ft. of food & beverage, and 300 sq. ft. of leisure & entertainment uses. In the moderate scenario, 140 new households and 600+ new office employees and momentum generated by both private investment and public improvements could be expected to enhance the capture of expenditures. This should increase the amount of supportable space to roughly 1,600 sq. ft. of general retail, 1,000 sq. ft. of food & beverage, and almost 900 sq. ft. of leisure & entertainment uses. Economics Research Associates (ERA) Market Analysis for Project No

11 In the moderate and induced scenarios, ERA notes that additional demand should be created as part of inflow. In this case, an improved physical environment and greater shopper choice with new retailers results in the ability to capture additional expenditures from other market segments such as daytime employees outside of the downtown, visitors to the area and the like. Thus, ERA estimates that the induced scenario with capture rates ranging from 10% to 20% plus inflow could support upwards of 3,000 sq. ft. of general retail space, 1,900 sq. ft. of restaurants, and 1,800 sq. ft. of leisure and entertainment. Our retail planning targets are summarized below: Retail Type Fair Share Moderate Induced General Retail 551 1,642 3,064 Food & Beverage 416 1,019 1,884 Leisure & Entertainment ,810 TOTAL (Sq. Ft.): 1,259 3,549 6,758 The program of uses on the priority sites contains a total of 21,500 sq. ft. of retail space much of which is located on the Chamber of Commerce site. ERA notes that this is more than current market dynamics are likely to support. However, as additional redevelopment beyond priority sites occurs, this can be expected to increase both the size of captive market segments such as employees and residents as well as demand for retail and restaurants. ERA believes that a limited amount of new retail and restaurant space is market supportable in Downtown Ocala based on several key industry assumptions related to sales productivity, operations and merchandise mix (e.g., niche retailing). In the course of our market research, we observed that several downtown retailers offer good quality merchandise at appropriate price points while others, in our opinion, are marginal operations. These observations reflect our qualitative (and not quantitative) professional opinions. Based on these qualitative observations, ERA believes that there is room in the market to support selected additional, better quality retailers that could be expected to perform at industry standards especially as key components of the master plan are implemented that serve to strengthen the downtown s overall draw irrespective of the performance levels of current retailers. Hotel/Lodging As noted in our analysis of hotel market conditions, given current market dynamics and significant difficulties in the capital markets for hotel development, nearterm opportunities for new hotels in Downtown Ocala will be limited. As a rule, the capital markets today require average annual occupancies of 70% or greater before consideration is given to financing new hotel development. This would suggest that public investment in economic Economics Research Associates (ERA) Market Analysis for Project No

12 drivers that generate new office development as well as visitor and tourismrelated traffic to Downtown Ocala are critical. Current market conditions suggest that timing is not appropriate for new hotel development. As illustrated in Summary Table 7, an office program of 120,000 to 186,000 sq. ft. could be expected to generate some incremental demand for hotel roomnights (estimated at 30 to 50 rooms). However, this demand can be adequately met among currently unoccupied rooms at both full and limitedservice properties in the City s hotel inventory. Financial Analysis & Economic Impacts (Summary Tables 8 13) Building upon the market analysis, ERA tested the overall financial feasibility and estimated the potential economic impacts of the uses programmed for each priority site. In addition, we have estimated on a preliminary basis the expected City contribution, which may range from construction of parking garages to streetscape improvements to underwriting the cost of land. We note that some priority sites will require significant public intervention; others will be undertaken by the private sector in accordance with the master plan and market/economic realities over time. The economic analysis, which includes a series of detailed financial pro formas contained at the end of Section IV of our report, is based on the following objectives: A privatesector perspective in that the financial models illustrate the expected internal rate of return (IRR) and present value (PV) that would accrue to private developers for building the range of uses programmed on each of the priority sites. An estimated marketsupportable absorption schedule (Summary Table 8) that considers market dynamics, expected City contributions and the timing required to ready sites for redevelopment (e.g., demolition of the Library and Chamber of Commerce buildings). Estimated building development costs for all uses on five of the six priority sites (the Marion Theater is treated separately) as well as potential other costs such as land, demolition and site preparation, and façade improvements. These costs are based on current market characteristics in Ocala, inputs from City staff, and/or planning team estimates. Net operating income that reflects gross revenues less operating expenses for each of these uses to derive an internal rate of return (IRR). The City requested that ERA prepare the financial pro formas using a minimum IRR of 15%. The results of our financial analysis are presented in Summary Tables 913 and summarized below. We note that all market inputs were reviewed with local developers in Ocala during the course of our market research. Economics Research Associates (ERA) Market Analysis for Project No

13 Internal Rate of Return (IRR) With the exception of the City Parking Lot and Library sites, the remaining sites achieve internal rates of return ranging from 15% to 21%. It is assumed that the City retains control of the City Parking Lot site with development of a new structured parking garage; no commercial development is proposed on this site. Returns are based on minimum achievable market rents ranging from $15 per sq. ft. for streetlevel retail to $16.50 per sq. ft. (gross) for upperfloor professional office space. In addition, multifamily rents are estimated at $0.89 per sq. ft. per month in line with current market rents. City Contribution As noted, minimum returns of 15% will require City contributions for various components of the plan. These estimates are illustrated in Summary Table 10. This may range from construction of structured parking to streetscape improvements to demolition/site preparation to underwriting the cost of land on selected sites. Based on City review and input, the models estimate approximately $9.6 million in City contributions (in current dollars), ranging from approximately $321,000 for construction of a plaza on the Sprint site to $4.4 million for construction of a parking garage (and associated operating expenses) on the City Parking Lot site. (As noted below, additional public investment may be required for renovation of the Marion Theater). Economic Impacts ERA estimates that the $9.6 million in public commitments to the items noted above could be expected to leverage more than $22.6 million in private investment only on these five priority sites. This is a ratio of approximately $2.35 (private) to $1 (public). Over time, of course, additional leverage will be created as other sites in the CRA/downtown are redeveloped. In addition, there are other, significant economic impacts to the plan. These are highlighted in Summary Tables 11 and 12. The 79 units of new housing are estimated to generate approximately $4.2 million in construction income, 12 permanent jobs, and more than $120,000 in annual property tax revenues for the City. Moreover, new downtown residents are likely to have approximately $1.1 million in potential disposable income that could be available to support downtown retailers and other businesses. Similarly, the 86,500 sq. ft. of office and retail space proposed on the five priority sites could generate more than $4 million in construction income and almost 400 new, permanent jobs in Downtown Ocala as well as $114,000 in annual property tax revenues for the City. An estimated $5.9 million in annual retail sales could be expected to create almost $414,000 in annual sales tax receipts for the state and Marion County. In addition, 400 new employees with disposable incomes typically spend Economics Research Associates (ERA) Market Analysis for Project No

14 $2,000 per year in retail and restaurants. These expenditures should support almost 3,000 sq. ft. of retail and restaurant space (not locationspecific). Marion Theater At the City s request, ERA reviewed several proposals that were submitted to the City for renovation of the Marion Theater. ERA focused on several key characteristics of each submission, including: Overall Development Strategy how the user proposes to take control of the Cityowned property, such as leasehold, building acquisition or ground lease, etc. Proposed Occupancy Plan how the user proposes to occupy the building, whether in whole or in part Estimated Annual Revenues annual revenues identified in each proposal, including source and amount, as the basis for comparing the potential revenues that might accrue to the City of Ocala Annual Revenue Potential to City either direct rental payments or property tax revenues to the City as estimated by the user or ERA Based on limited available data, ERA also calculated on a preliminary basis the estimated economic impacts. As part of this analysis, we estimated the potential annual net revenues (from annual revenues above), projected annual retail sales or admissions taxes, and estimated fulltime equivalent (FTE) jobs. (It should be noted that multiple, parttime equivalent jobs were combined, in some cases, to equal FTE jobs). In a subsequent request made by the City, ERA created a preliminary stabilized year pro forma for a multiuse theater (6,800 sq. ft.) and restaurant (4,000 sq. ft.). This is illustrated in Summary Table 13. For the theater, we assumed a pro rata share of development costs, revenues and operating expenses based on review of a fourth submittal received by the City in October For a prototype restaurant, we utilized industry assumptions related to costs, expenses and performance for an established operator. The intent of this preliminary stabilized year analysis is to illustrate the expected benefits that might accrue to the City from annual rents paid by the restaurant that can, in turn, be used to pay back any bonds issued by the City to renovate the theater. (As illustrated in the model, this analysis assumes no rental payments from the theater). This preliminary analysis suggests that the City could generate an estimated return of 8% to 9% if a restaurateur can be secured with a minimum annual rent of 10%, assuming conservative annual sales of $260 per sq. ft. This rent roughly $104,000 per year could be used to pay back bonds issued by the City to cover renovation costs estimated at $1.2 million. ERA notes that, because the proposals for reuse of the Marion Theater were unsolicited, they were not prepared in response to a standardized structure. This resulted in proposals that vary in the quality and quantity of data submitted by different users. Because of the Economics Research Associates (ERA) Market Analysis for Project No

15 difference in data contained in each submission, it is not possible to conduct direct comparisons between these submittals. There are numerous questions about the information supplied in each proposal that need to be clarified in order for ERA to take a position and make final recommendations to the City. General & Limiting Conditions Every reasonable effort has been made to ensure that the data contained in this study reflect the most accurate and timely information possible. These data are believed to be reliable. This study is based on estimates, assumptions and other information developed by Economics Research Associates from its independent research effort, general knowledge of the market and the industry, and consultations with the client and its representatives. No responsibility is assumed for inaccuracies in reporting by the client, its agent and representatives or any other data source used in preparing or presenting this study. No warranty or representation is made by Economics Research Associates that any of the projected values or results contained in this study will actually be achieved. Possession of this study does not carry with it the right of publication thereof or to use the name of "Economics Research Associates" in any manner without first obtaining the prior written consent of Economics Research Associates. No abstracting, excerpting or summarizing of this study may be made without first obtaining the prior written consent of Economics Research Associates. This report is not to be used in conjunction with any public or private offering of securities or other similar purpose where it may be relied upon to any degree by any person, other than the client, without first obtaining the prior written consent of Economics Research Associates. This study may not be used for purposes other than that for which it is prepared or for which prior written consent has first been obtained from Economics Research Associates. This study is qualified in its entirety by, and should be considered in light of, these limitations, conditions and considerations. Economics Research Associates (ERA) Market Analysis for Project No

16 Summary Table 1 Employment Estimates & Projections: City of Ocala, CHANGE: AS % OF CITY No. % Study Area (1) (2) CRAPortions (TAZ Zones 154, 155, 156, 166) Industrial (36) 44.4% 0.8% 0.5% 0.3% Commercial (Retail) % 3.8% 3.6% 3.4% Service (3) 1,041 1,216 1,391 1,566 1, % 4.5% 5.6% 5.9% Subtotal: 1,646 1,862 2,077 2,294 2, % 3.5% 3.8% 3.8% Remainder of "Greater Downtown" (TAZ Zones 153, 157, 164, 165) Industrial % 1.1% 1.0% 1.0% Commercial (Retail) % 3.4% 3.1% 2.9% Service (3) ,018 1, % 2.7% 3.6% 3.9% Subtotal: 1,216 1,385 1,558 1,729 1, % 2.6% 2.9% 2.9% TOTAL STUDY AREA: Industrial % 2.0% 1.5% 1.3% Commercial (Retail) 1,000 1,083 1,168 1,252 1, % 7.3% 6.7% 6.3% Service (3) 1,676 1,978 2,281 2,584 2,885 1, % 7.2% 9.2% 9.8% Total: 2,862 3,247 3,635 4,023 4,405 1, % 6.2% 6.7% 6.7% Remainder of City Industrial 9,241 10,540 11,838 13,136 14,436 5, % 98.0% 98.5% 98.7% Commercial (Retail) 12,776 14,556 16,334 17,327 19,895 7, % 92.7% 93.3% 93.7% Service (3) 21,527 20,295 22,421 24,548 26,677 5, % 92.8% 90.8% 90.2% Subtotal: 43,544 45,391 50,593 55,011 61,007 17, % 93.8% 93.3% 93.3% TOTAL CITY: Industrial 9,427 10,726 12,024 13,323 14,622 5, % 100.0% 100.0% 100.0% Commercial (Retail) 13,776 15,639 17,502 18,579 21,229 7, % 100.0% 100.0% 100.0% Service (3) 23,203 22,273 24,702 27,132 29,562 6, % 100.0% 100.0% 100.0% Total: 46,406 48,638 54,228 59,034 65,412 19, % 100.0% 100.0% 100.0% (1) Estimates and forecasts for all Traffic Analysis Zones (TAZ) located in the City of Ocala. (2) These TAZ zones generally correspond with the 'informal' boundaries of Downtown Ocala, and include the CRA as well as portions of adjacent neighborhoods such as the West Ocala Historic District, the Tuscawilla Historic District, and North Magnolia. (3) Includes office buildings, medical institutions and lodging properties.

17 Summary Table 2 NonAgricultural Employment Trends & Projections For Marion County, Woods & Poole CHANGE: CATEGORY Amount % CAGR Woods & Poole Mining & Construction 6,330 8,310 8,480 9, % 0.9% Manufacturing 10,300 12,190 12,940 14,520 2, % 1.8% Transp/Comm/Public Utilities 2,370 4,460 4,670 5, % 1.3% Wholesale & Retail Trade 21,490 27,370 28,770 31,770 4, % 1.5% Finance/Insurance/Real Estate 5,810 8,680 9,150 9,840 1, % 1.3% Services 19,180 30,090 32,290 37,460 7, % 2.2% Government 11,960 15,640 17,060 20,120 4, % 2.6% Total Woods & Poole: 77,440 98, , ,800 20, % 1.9% Annual % Change 2.7% 2.2% 2.1% Florida Dept. of Workplace Innovation Mining & Construction 6,900 Manufacturing 8,900 Transp/Comm/Public Utilities 2,400 Wholesale & Retail Trade 17,600 Finance/Insurance/Real Estate 5,400 Services 28,600 Government 14,700 Total State: 84,500 DIFFERENCE: 20, % (1) (1) Woods & Poole includes parttime and self employment (i.e., employees that do not contribute to state unemployment insurance). Source: Florida Dept. of Workplace Innovation; Woods & Poole, Inc.; Economics Research Associates, August 2003.

18 Summary Table 3 Office Demand: Fair Share vs. Induced for Marion County & Downtown Ocala, 2010 SQ. FT. DEMAND FOR NEW SPACE % OF PER (In Sq. Ft.) OFFICE OFFICE Actual Estimates CATEGORY USERS USER Demand Analysis (1) Mining & Construction 10% ,300 21,350 Manufacturing 20% , ,200 Transp/Comm/Public Utilities 40% ,863 11,025 Wholesale & Retail Trade 15% 175 1,293, ,000 Finance/Insurance/Real Estate 80% ,800 27,600 Services 20% , ,375 Government 50% , ,457 TOTAL DEMAND: 34% 200 2,904,373 1,520,007 Estimates Plus Vacancy Adjustment (2) 72,609 38,000 Cumulative Replacement Demand (3) 145,219 76,000 Less Self 24.1% (753,023) (394,096) (4) TOTAL OFFICE SPACE DEMANDMARION COUNTY (IN SQ. FT.): 2,369,178 1,239,912 Average Annual (Rounded) 236, ,000 Fair Share Capture vs. Induced Capture to Downtown Ocala Fair Share (of Employment) (5) 9.8% Total Demand (In 000s Sq. Ft., Rounded) 121,000 Induced 15.0% Total Demand (In 000s Sq. Ft., Rounded) 186,000 (1) Reflects officeusing employees in each employment sector requiring office space. (2) This allows for a 2.5% "frictional" vacancy rate in new space delivered to the market. (3) This represents new space required by existing businesses to replace obsolete or otherwise unusable space. This is assumed to represent 5% of total demand. (4) Reflects the difference between 2000 employment estimates prepared by the Florida Dept. of Workplace Innovation and Woods & Poole, Inc. (5) This represents Downtown Ocala's fair share of service (office) employment in 2010 in the TAZ zones that comprise "Greater Downtown" as estimated by the City of Ocala. Source: Economics Research Associates, August 2003.

19 Summary Table 4 Housing Demand: Fair Share vs. Induced, AREA Population HHs Population HHs Demographic Forecasts Marion County 258, , , ,190 Persons Per HH City of Ocala 45,943 18,646 49,980 19,901 Persons Per HH As % of County 17.7% 16.5% (1) Housing Demand Potentials To City of Ocala Units Demand for New Housing Attributable to Population Growth: 1,607 Plus Assumed Turnover 30.0% 482 Citywide Total ( ): (2) 2,089 To Downtown Assumed Average HH Size % Fair Share Capture vs. Induced POTENTIAL NEW DOWNTOWN HOUSING UNITS: Scenario Est. Capture No. of Units Fair Share 1.8% 60 Moderate 4% 140 Induced 6% 210 (1) Assumes that household size (persons per household) in Ocala will increase at the same rate between as it did between (2) Turnover among renter households is an estimate that considers area job growth, delivery of new apartments to the inventory, propensity of households to move, etc. Source: City of Ocala; Woods & Poole, Inc.; Economics Research Associates, August 2003.

20 Summary Table 5 Allocation of New Housing Demand By Unit Type, 2010 SCENARIO Fair Share Moderate Induced Downtown Market Potentials Capture of New Population 1.8% 4.0% 6.0% No. of Units Distribution By Tenure & Unit Type Current Housing Tenure OwnerOccupant 57% Renter 43% Total: Current MF Housing Stock Attached Units 12% to 9 Units 52% Units 35% Total: Source: Economics Research Associates, August 2003.

21 Summary Table 6 Potential Expenditures & Supportable Space From New Downtown Residents & Employees, 2010 GENERAL RETAIL SCENARIO Current Moderate High Expenditure Potentials "Greater Downtown" Households From New Housing Subtotal: Median HH Income (In Constant $) (1) $ 57,434 $ 57,434 $ 57,434 Household Expenditure Potentials (As % of Household Income) General Retail 15.2% $ 523,266 $ 1,220,953 $ 1,831,430 Resident Expenditure Potentials: $ 523,266 $ 1,220,953 $ 1,831,430 "Greater Downtown" Employees From New Office Development Subtotal: Annual Expenditure Potentials General Retail $ 500 $ 302,500 $ 465,000 $ 465,000 Employee Expenditure Potentials: $ 302,500 $ 465,000 $ 465,000 Supportable Space From New Households Annual Expenditures $ 523,266 $ 1,220,953 $ 1,831,430 Estimated Capture 10.0% 15.0% 20.0% Captured Expenditures: $ 52,327 $ 183,143 $ 366,286 Required Productivity (2) $ 150 $ 150 $ 150 Subtotal Households: 349 1,221 2,442 Plus Inflow (3) 0.0% 2.5% 5.0% Subtotal Inflow: Supportable Space General Retail: 349 1,251 2,564 From New Employees Annual Expenditures $ 302,500 $ 465,000 $ 465,000 Estimated Capture 10.0% 12.0% 15.0% Captured Expenditures: $ 30,250 $ 55,800 $ 69,750 Required Productivity (2) $ 150 $ 150 $ 150 Subtotal Households: Plus Inflow (3) 0.0% 5.0% 7.5% Subtotal Inflow: Supportable Space General Retail: TOTAL GENERAL RETAIL: 551 1,642 3,064 (1) Assumes median household incomes of $50,000 for new downtown households grown at 2% per year. (2) Required productivity is the estimated minimum annual performance (in sales per sq. ft.) required by all retailers. (3) Represents potential expenditures from other market segments to downtown Ocala, such as nearby daytime employees, visitors to the area, etc.

22 Summary Table 6 (Continued) Potential Expenditures & Supportable Space From New Downtown Residents & Employees, 2010 FOOD & BEVERAGE SCENARIO Current Moderate High Expenditure Potentials "Greater Downtown" Households From New Housing Subtotal: Median HH Income (In Constant $) (1) $ 57,434 $ 57,434 $ 57,434 Household Expenditure Potentials (As % of Household Income) Food & Beverage 7.6% $ 263,376 $ 614,544 $ 921,817 Resident Expenditure Potentials: $ 263,376 $ 614,544 $ 921,817 "Greater Downtown" Employees From New Office Development Subtotal: Annual Expenditure Potentials Food & Beverage $ 1,500 $ 907,500 $ 1,395,000 $ 1,395,000 Employee Expenditure Potentials: $ 907,500 $ 1,395,000 $ 1,395,000 Supportable Space From New Households Annual Expenditures $ 263,376 $ 614,544 $ 921,817 Estimated Capture 5.0% 10.0% 20.0% Captured Expenditures: $ 13,169 $ 61,454 $ 184,363 Required Productivity (2) $ 250 $ 250 $ 250 Subtotal Households: Plus Inflow (3) 10.0% 15.0% 25.0% Subtotal Inflow: Supportable Space Food & Beverage: From New Employees Annual Expenditures $ 907,500 $ 1,395,000 $ 1,395,000 Estimated Capture 10.0% 12.0% 15.0% Captured Expenditures: $ 90,750 $ 167,400 $ 209,250 Required Productivity (2) $ 250 $ 250 $ 250 Subtotal Households: Plus Inflow (3) 0.0% 10.0% 15.0% Subtotal Inflow: Supportable Space Food & Beverage: TOTAL FOOD & BEVERAGE: 416 1,019 1,884 (1) Assumes median household incomes of $50,000 for new downtown households grown at 2% per year. (2) Required productivity is the estimated minimum annual performance (in sales per sq. ft.) required by all retailers. (3) Represents potential expenditures from other market segments to downtown Ocala, such as nearby daytime employees, visitors to the area, etc.

23 Summary Table 6 (Continued) Potential Expenditures & Supportable Space From New Downtown Residents & Employees, 2010 LEISURE & ENTERTAINMENT SCENARIO Current Moderate High Expenditure Potentials "Greater Downtown" Households From New Housing Subtotal: Median HH Income (In Constant $) (1) $ 57,434 $ 57,434 $ 57,434 Household Expenditure Potentials (As % of Household Income) Leisure & Entertainment 10.4% $ 263,376 $ 614,544 $ 921,817 Resident Expenditure Potentials: $ 263,376 $ 614,544 $ 921,817 "Greater Downtown" Employees From New Office Development Subtotal: Annual Expenditure Potentials Leisure & Entertainment $ 250 $ 907,500 $ 1,395,000 $ 1,395,000 Employee Expenditure Potentials: $ 907,500 $ 1,395,000 $ 1,395,000 Supportable Space From New Households Annual Expenditures $ 263,376 $ 614,544 $ 921,817 Estimated Capture 5.0% 10.0% 20.0% Captured Expenditures: $ 13,169 $ 61,454 $ 184,363 Required Productivity (2) $ 200 $ 200 $ 200 Subtotal Households: Plus Inflow (3) 5.0% 10.0% 15.0% Subtotal Inflow: Supportable Space Leisure & Ent.: ,060 From New Employees Annual Expenditures $ 907,500 $ 1,395,000 $ 1,395,000 Estimated Capture 5.0% 7.5% 10.0% Captured Expenditures: $ 45,375 $ 104,625 $ 139,500 Required Productivity (2) $ 200 $ 200 $ 200 Subtotal Households: Plus Inflow (3) 0.0% 5.0% 7.5% Subtotal Inflow: Supportable Space Leisure & Ent.: TOTAL LEISURE & ENTERTAINMENT: ,810 (1) Assumes median household incomes of $50,000 for new downtown households grown at 2% per year. (2) Required productivity is the estimated minimum annual performance (in sales per sq. ft.) required by all retailers. (3) Represents potential expenditures from other market segments to downtown Ocala, such as nearby daytime employees, visitors to the area, etc. Source: Economics Research Associates, revised September 2003.

24 Summary Table 7 Incremental Hotel Roomnight Demand SCENARIO Fair Share Induced New Office Space (In Sq. Ft.) 121, , Sq. Ft. Per Employee Annual Visitors ( % 29,040 44,640 % of Hotel Stays 50.0% 14,520 22,320 Length of Stay 1.5 nights 21,780 33,480 Party Size Annual Roomnights Generated 17,424 26,784 SubtotalRooms Demanded by Office Employees: (1) POTENTIAL HOTEL DEMAND: Gross Potential Room Demand Less Existing Room Demand to Achieve 70% Occupancy (2) (84) (84) Net Potential Room Demand: (50) (32) (1) Assumes annual occupancy of 70%. (2) Represents existing excess (vacant) rooms in the City's hotel inventory available to achieve occupancy levels of 70%. Source: Economics Research Associates, August 2003.

25 Summary Table 8 Estimated Absorption Schedule, By Site & Use YEAR (Assumes Start Date of 1/1/ SITE HOUSING Chamber of Commerce Bank of America City Parking/Sprint Library City Parking Lot TOTAL (Units): Cumulative OFFICE Chamber of Commerce 20,000 20,000 Bank of America City Parking/Sprint Library 12,500 12,500 City Parking Lot TOTAL (Sq. Ft.): 20,000 32,500 12,500 Cumulative 20,000 52,500 65,000 65,000 65,000 65,000 RETAIL Chamber of Commerce 12,000 Bank of America 2,000 City Parking/Sprint 500 Library 4,500 2,500 City Parking Lot TOTAL (Sq. Ft.): ,000 6,500 2,500 Cumulative ,500 19,000 21,500 21,500 21,500 21,500 PARKING Chamber of Commerce Bank of America City Parking/Sprint Library 250 City Parking Lot 450 TOTAL (Spaces): Cumulative SOURCE: ECONOMICS RESEARCH ASSOCIATES, REVISED NOVEMBER 2003.

26 Summary Table 9 PRIORITY SITES: FINANCIAL ANALYSIS (1) Chamber of Bank of City Parking/ Library City Parking Commerce Site America Site Sprint Site Site Lot Site TOTAL DEVELOPMENT PROGRAM Land Use Professional Office 40,000 25,000 65,000 Streetlevel Retail/Restaurant 12,000 2, ,000 21,500 Housing 24,200 33,000 45, ,200 Units Total (Sq. Ft.): 76,200 35,000 45,500 32, ,700 Parking Spaces Surface Onstreet Structured Total (Spaces): FINANCIAL ANALYSIS Development Costs Residential $ 2,344,625 $ 3,293,132 $ 4,807,500 $ $ $ 10,445,258 Commercial (Office & Retail) 6,019, ,571 36,050 3,841,784 10,055,238 Public Space/Plaza 100, , ,360 Parking 835, , ,590 1,657,656 3,165,494 6,136,957 Theater Subtotal: $ 9,199,677 $ 3,907,701 $ 5,286,501 $ 5,499,440 $ 3,165,494 $ 27,058,812 Other Costs Basis in Land $ 500,000 $ 150,000 $ 300,000 $ $ $ 950,000 Demolition/Site Prep 100,000 20, , ,000 20, ,000 Façade Improvements 50,000 50,000 Subtotal: $ 600,000 $ 220,000 $ 600,000 $ 300,000 $ 20,000 $ 1,740,000 TOTAL DEVELOPMENT COSTS: $ 9,799,677 $ 4,127,701 $ 5,886,501 $ 5,799,440 $ 3,185,494 $ 28,798,812 Without Parking $ 8,964,458 $ 3,770,704 $ 5,764,910 $ 4,141,784 $ 20,000 $ 22,661,856 Net Operating Income (2) Residential $ 1,692,354 $ 2,068,562 $ 5,572,729 $ $ $ 9,333,645 Commercial (Office & Retail) 5,054, ,144 59,364 2,759,907 8,045,261 Public Space/Plaza Parking (261,008) (133,052) (855,143) (1,266,688) (2,515,891) Theater TOTAL NOI: $ 6,486,193 $ 2,106,653 $ 5,632,093 $ 1,904,764 $ (1,266,688) $ 14,863,015 PRESENT VALUE & RETURN ANALYSIS Internal Rate of Return (IRR) 21.03% 15.08% 19.30% 11.31% 0.00% Net Present Value 10.0% $ 3,322,000 $ 991,000 $ (776,000) $ 826,000 $ (625,000) 8.0% $ 3,996,000 $ 1,207,000 $ (1,076,000) $ 1,032,000 $ (714,000) CITY CONTRIBUTION $ 1,838,227 $ 220,000 $ 321,360 $ 2,812,799 $ 4,452,182 $ 9,644,568 (1) Excludes Marion Theater. (2) NOI reflects gross revenues less operating expenses for all uses. Total figures may vary depending on the allocation of certain costs. SOURCE: ECONOMICS RESEARCH ASSOCIATES, REVISED NOVEMBER 2003.

27 Summary Table 10 PRIORITY SITES: ASSUMED CITY CONTRIBUTIONS Chamber of Bank of City Parking/ Library City Parking ITEM Commerce Site America Site Sprint Site Site Lot Site TOTAL CITY CONTRIBUTION Existing Mortgage $ 142,000 $ $ $ $ $ 142,000 Parking Garage 835,219 1,657,656 3,165,494 $ 5,658,369 Parking Operating Expenses 261, ,143 1,266,688 $ 2,382,839 Land Writedown 500, ,000 $ 650,000 Demo/Site Prep/Acquisition 100,000 20, ,000 20,000 $ 440,000 Public Improvements 321,360 $ 321,360 Façade Improvements 50,000 $ 50,000 ESTIMATED TOTAL: $ 1,838,227 $ 220,000 $ 321,360 $ 2,812,799 $ 4,452,182 $ 9,644,568 These are preliminary estimates only. City contributions across specific items have been assumed in each financial model for purposes of discussion. Excludes Marion Theater. SOURCE: ECONOMICS RESEARCH ASSOCIATES, REVISED NOVEMBER 2003.

28 Summary Table 11 POTENTIAL ECONOMIC IMPACTS: NEW HOUSING SITE Chamber of Bank of Sprint Library City TOTAL FACTOR Commerce America Block Block Parking Lot PROGRAM Townhouse Units Small Lot Singlefamily Units 9 9 Multifamily Units Total Units: Residential Surface Parking Residential Structured Parking Total Spaces: CONSTRUCTION EMPLOYMENT (1) Estimated Development Costs Townhouse Units $ $ $ 2,655,722 $ $ $ 2,655,722 Small Lot Singlefamily Units 2,151,778 2,151,778 Multifamily Units 2,344,625 3,293,132 5,637,757 Surface Parking 121, ,590 Total: $ 2,344,625 $ 3,293,132 $ 4,929,091 $ $ $ 10,566,848 Equivalent Person YearsEmployment: CONSTRUCTION INCOME Wages as % of Dev't Costs 40.0% 40.0% 40.0% 40.0% 40.0% Average Ann'l Construction Wage $ 26,531 $ 26,531 $ 26,531 $ 26,531 $ 26,531 Construction Income: $ 937,850 $ 1,317,253 $ 1,971,636 $ $ $ 4,226,739 PERMANENT EMPLOYMENT & WAGE (2) Permanent Employment: (3) Average Annual Wage 26,635 26,635 26,635 26,635 26,635 Permanent Wages: $ 87,896 $ 119,858 $ 107,872 $ $ $ 315,625 STATE INCOME TAXESPERMANENT JOBS Permanent Income $ 87,896 $ 119,858 $ 107,872 $ $ $ 315,625 Estimated Income Tax Rate 0.00% 0.00% 0.00% 0.00% 0.00% Annual TaxesPermanent Jobs: $ $ $ $ $ $ STATE INCOME TAXESCONSTRUCTION JOBS Construction Income $ 937,850 $ 1,317,253 $ 1,971,636 $ $ $ 4,226,739 Estimated Income Tax Rate 0.00% 0.00% 0.00% 0.00% 0.00% Temporary TaxesConstruction Jobs: $ $ $ $ $ $ ANNUAL PROPERTY TAX REVENUES City of Ocala Tax Rate Per $1,000 of Assessed Value $ $ $ $ $ Estimated Value at Buildout (1) $ 2,344,625 $ 3,293,132 $ 4,929,091 $ $ $ 10,566,848 Equalization Ratio 100.0% 100.0% 100.0% 100.0% 100.0% Future Annual Property Taxes: $ 26,670 $ 37,459 $ 56,068 $ $ $ 120,197 OTHER IMPACTS Net New Households Estimated Persons/Household Net New Population: Average Annual Wage $ 26,635 $ 26,635 $ 26,635 $ 26,635 $ 26,635 Net New Income: $ 878,955 $ 1,198,575 $ 1,078,718 $ $ $ 3,156,248 Disposable (4) 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% Potential New Disposable Income: $ 307,634 $ 419,501 $ 377,551 $ $ $ 1,104,687 Potential Supportable Retail (Sq. Ft (5) 1,119 1,525 1,373 4,017 (1) Estimated development costs were used to determine equivalent construction employment and assessed values. (2) Includes permanent, seasonal and parttime employment on a fulltime equivalent basis. (3) Estimated at 0.15 fulltime equivalent jobs per housing unit. (4) Defined as estimated income available after consumer needs, housing costs and taxes. (5) Assumes minimum annual performance (sales) of retail or restaurant tenants is $275 per sq. ft. This estimate is not locationspecific. SOURCE: ECONOMICS RESEARCH ASSOCIATES, REVISED NOVEMBER 2003.

29 Summary Table 12 POTENTIAL ECONOMIC IMPACTS: COMMERCIAL USES SITE Chamber of Bank of Sprint Library City FACTOR Commerce America Block Block Parking Lot TOTAL PROGRAM (In Sq. Ft.) General Retail 12,000 2, ,000 21,500 Office 40,000 25,000 65,000 Total Commercial Space: 52,000 2, ,000 86,500 Commercial Surface Parking Commercial Structured Parking Total Spaces: CONSTRUCTION EMPLOYMENT (1) Estimated Development Costs (Per Gross Sq. Ft.) General Retail $ 917,891 $ 157,571 $ 36,050 $ 557,408 $ $ 1,668,920 Office 5,101,942 3,284,375 8,386,318 Total: $ 6,019,833 $ 157,571 $ 36,050 $ 3,841,784 $ $ 10,055,238 Equivalent Person YearsEmployment: CONSTRUCTION INCOME Wages as % of Dev't Costs 40.0% 40.0% 40.0% 40.0% 40.0% Average Ann'l Construction Wage $ 26,531 $ 26,531 $ 26,531 $ 26,531 $ 26,531 Construction Income: $ 2,407,933 $ 63,028 $ 14,420 $ 1,536,713 $ $ 4,022,095 PERMANENT EMPLOYMENT & WAGES (2) Permanent Employment (Per Sq. Ft.) (3) General Retail Office Total: Average Wage $ 26,635 $ 26,635 $ 26,635 $ 26,635 $ 26,635 Permanent Wages: $ 6,126,050 $ 133,175 $ 33,294 $ 3,795,488 $ $ 10,088,006 STATE INCOME TAXESPERMANENT JOBS Permanent Income $ 6,126,050 $ 133,175 $ 33,294 $ 3,795,488 $ $ 10,088,006 Estimated Income Tax Rate 0.00% 0.00% 0.00% 0.00% 0.00% Annual TaxesPermanent Jobs: $ $ $ $ $ $ STATE INCOME TAXESCONSTRUCTION JOBS Construction Income $ 2,407,933 $ 63,028 $ 14,420 $ 1,536,713 $ $ 4,022,095 Estimated Income Tax Rate 0.00% 0.00% 0.00% 0.00% 0.00% Temporary TaxesConstruction Jobs: $ $ $ $ $ $ ANNUAL PROPERTY TAX REVENUES City of Ocala Tax Rate Per $1,000 of Assessed Value $ $ $ $ $ Estimated Value at Buildout (1) $ 6,019,833 $ 157,571 $ 36,050 $ 3,841,784 $ $ 10,055,238 Equalization Ratio 100.0% 100.0% 100.0% 100.0% 100.0% Future Annual Property Taxes: $ 68,475 $ 1,792 $ 410 $ 43,700 $ $ 114,377 SALES TAXES Estimated Annual Retail Sales General Retail Space 12,000 2, ,000 21,500 Assumed Productivity (Sales Per Sq. Ft.) $ 275 $ 275 $ 275 $ 275 $ 275 Total: $ 3,300,000 $ 550,000 $ 137,500 $ 1,925,000 $ $ 5,912,500 State Retail Sales Tax 6.0% 6.0% 6.0% 6.0% 6.0% County Discretionary Sales Surtax 1.0% 1.0% 1.0% 1.0% 1.0% Annual Retail Sales Tax Receipts: $ 231,000 $ 38,500 $ 9,625 $ 134,750 $ $ 413,875 OTHER IMPACTS Permanent Employment Avg. Annual SpendingRetail & Food $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 Gross Employee Spending Potentials: $ 460,000 $ 10,000 $ 2,500 $ 285,000 $ $ 757,500 Potential Supportable Retail (Sq. Ft.): (4) 2,755 (1) Estimated development costs were used to determine equivalent construction employment. (2) Includes permanent as well as seasonal and parttime employment on a fulltime equivalent basis. (3) Estimated at one fulltime job per 400 sq. ft. of retail or general commercial space. (4) Assumes minimum annual performance (sales) of retail or restaurant tenants is $275 per sq. ft. This estimate is not locationspecific. SOURCE: ECONOMICS RESEARCH ASSOCIATES, REVISED NOVEMBER 2003.

30 Summary Table 13 Stabilized Year Pro Forma for Reuse of the Marion Theater BUILDING INFORMATION (In Sq. Ft.): Estimated Gross Building Area 10,800 Parking Lot 14,450 Estimated Gross Lot Size 21,981 DEVELOPMENT PROGRAM Land Use Multiuse Theater 6,800 Restaurant 4,000 Total (Sq. Ft.): 10,800 No. of Seats Multiuse Theater 252 Restaurant 112 Total (Seats): 364 Parking No. of Spaces 30 FINANCIAL ANALYSIS Hard & Soft Costs Multiuse Theater (Pro Rata) $ 818,253 $100/SF 400,000 Parking TOTAL DEVELOPMENT COSTS: $ 1,218,253 Per Sq. Ft. $ 113 ESTIMATED REVENUES & EXPENSES Gross Annual Revenues Multiuse Theater $ 265,162 Restaurant 1,043,318 Parking Subtotal: $ 1,308,480 Operating Expenses Multiuse Theater $ 317,194 Restaurant 312,995 Parking Subtotal: $ 630,189 TOTAL NET OPERATING INCOME: $ 678,291 ESTIMATED REVENUE POTENTIAL TO CITY Restaurant Annual 10% of Gross $ 104,332 Theater Assumes No Annual Rental Payments $ Total Development Costs $ 1,218,253 POTENTIAL RETURNONINVESTMENT: 8.6% Source: Economics Research Associates, December 2003.

31 II. Demographic & Economic Profile Introduction As the basis for evaluating redevelopment opportunities in Downtown Ocala, ERA examined demographic and economic conditions in the immediate downtown and its surrounding neighborhoods, the City in its entirety, and in Marion County. We reviewed growth trends and forecasts for specific factors such as population, households, age composition, employment, household incomes, retail sales and other appropriate economic indices. Selected research also compared growth trends and projections between Ocala and Marion County with the City of Gainesville and Alachua County. To understand demographic characteristics within the CRA, this profile examined trends and forecasts in multiple Traffic Analysis Zones (TAZ) defined by the City that generally corresponds to the boundaries of the CRA. This profile focuses on those variables that drive demand for various uses such as commercial office and retail space; we note that this analysis informed subsequent testing of specific uses. This section of the report synthesizes key findings based on research from public and private data sources. Relevant data are detailed in Tables 1 through 10 and accompanying graphics at the end of this chapter. Population & Household Characteristics (Tables 14) The Ocala Metropolitan Statistical Area (MSA) is comprised of the City of Ocala and Marion County. The population of Marion County increased by 64,000 (33%) between 1990 and 2000, from 195,000 to 259,000 in Much of the County s growth occurred in outlying locations with the development of agerestricted and retirement communities such as The Villages. By comparison, the City of Ocala also gained population but at a significantly lower rate. The City gained 3,900 residents between , for a population of 46,000 in This reflects a growth rate of 9%. In effect, Ocala comprises a smaller share of a larger pie. Preliminary data about population projections through 2010 indicate that the region s population will continue to growth but at lower rates. The population of Marion County is forecast to increase by about 17%, or roughly 54,000. According to forecasts prepared by the City for its Traffic Analysis Zone (TAZ), the population of Ocala is forecast to increase by 4,000 residents to almost 50,000, a jump of 9% between 2000 and Notably, the City s share of the county s population has declined as more readily available (and lowerpriced) sites across the County are developed. In fact, Ocala s proportion of the County s population dropped from 22% in 1990 to less than 18% in Economics Research Associates (ERA) Market Analysis for Project No

32 2000. Presuming population forecasts hold true, the City s share of the County s population will again drop by 2010 to 16.5%. Table 2 highlights changes in age distribution across Marion County and Ocala as well as Alachua County and Gainesville. Between , Ocala lost population among those ages 2534, reflecting the difficulty small (noncollege) communities like Ocala face in attracting young professionals and singles. Conversely, of the 4,000 new residents that Ocala added over these 10 years, more than 2,400 (51%) were between 35 and 54 years old suggesting careful consideration of the types of new housing that might be built in Downtown Ocala. For example, it is likely to be more difficult to attract those households to an urban loft if they have children. As a whole, the number of households in Marion County increased by more than 28,500 between 1990 and 2000, to 106,800, an increase of 37%. By comparison, while Ocala accounted for less than 5% of new household growth in Marion County, Gainesville captured 33% of new household growth in Alachua County. The number of households in Marion County is projected to increase by more than 20,000 new households to 127,200 households by According to the City s TAZ population forecasts, the addition of approximately 4,000 new residents in the City of Ocala by 2010 is expected to translate into roughly 1,600 new households, assuming that the average household size of 2.5 persons is maintained. Combined with a (current) strong housing market, this bodes well for demand for new housing units across the City. The eight TAZ zones that comprise what ERA has defined for purposes of this analysis as Greater Downtown have a population of less than 600 residents in 330 households. Thus, the fair share of Greater Downtown is only 1.3% of the City as a whole. Household Incomes & Consumer Spending (Tables 57) Median household incomes in Marion County increased from $22,500 in 1990 to almost $32,000 in 2000 a sizable jump of 42%. ERA notes that these figures are not inflationadjusted; however, the rate of increase in household incomes during this period was, in fact, higher than overall inflation. Household income trends in Ocala roughly paralleled those of the County. In fact, city residents earn roughly 97% of what county residents earn. By comparison, the presence of students attending the University of Florida in Gainesville dampens household incomes in Gainesville slightly there, Gainesville residents earn roughly 90% of their counterparts in Alachua County. In both cases, gains in household incomes resulted in a sizable increase in the amount of retail space across both Marion and Alachua counties, in Marion County, this is evidenced by new retail development in The Villages and along State Route 200. Economics Research Associates (ERA) Market Analysis for Project No

33 Marion County households spend more than $13,500 per year on retail goods and services this is 16% below the national average indicative of the preponderance of retired residents. Visitor Characteristics (Table 8) Based on ERA s national experience in revitalization projects among smaller communities, a key lesson learned is the importance of increasing the number of people that visit a downtown. There are clear spinoff benefits, including increased consumer spending in downtown businesses and restaurants and, depending on the size and strength of visitor attractions, increased hotel occupancies and other direct and indirect impacts. In Ocala, the City is rightly focusing attention on reuse of the Marion Theater, which is likely to play a key role in enhancing the draw of visitors to the downtown area. On an informal basis, City staff tracks the number of events and attendance to various activities in the City, including the Downtown Square. ERA examined visitor data provided by the City, which is summarized in Table 8. Based on informal (and by no means, precise) attendance estimates, these counts suggest that the 20 to 40 events held annually attract somewhere on the order of 30,000 to 40,000 attendees. Employment Trends & Projections (Tables 9 & 10) A key objective of the master plan for Downtown Ocala is to increase downtown s role as a regional destination. This is intended to take several forms including increasing the number of downtown residents, strengthening its role as a regional employment center, expanding tourism opportunities to draw additional visitors and the like. As such, a critical barometer in evaluating demand for various types of real estate is employment growth. The following highlights relevant employment trends and forecasts for Ocala and Marion County as provided by various sources, including the City Planning Department, the Florida Department of Workforce Innovation, the U.S. Census, and Woods & Poole, Inc., a demographic forecasting service. These findings are highlighted in Tables 9 and 10. Job growth in Marion County during the 1990s was sizable. In fact, between , the County added almost 31,000 new jobs a very respectable growth rate of more than 3% per year for a total employment base of 113,500 in Consistent with a weakening of the state and national economy in late 2000 and 2001, however, the number of jobs in Marion County declined by 1,800, to 111,700. Marion County s strongest employment sectors include Transportation (reflecting lowcost land and excellent highway infrastructure that attract warehousing and distribution functions on I75), Retail Trade (fueled in large part by population growth), and Services (to support a growing resident population). In fact, more than 60% of the County s total job growth over the past 10 years was focused in these three sectors. Notably, Marion County added 2,800 jobs in Finance/Insurance/Real Estate (FIRE) during the 1990s a core employment sector that creates demand for office space Economics Research Associates (ERA) Market Analysis for Project No

34 and reflects growth in professional services occupations such as accounting, legal and medical to support the area s expanding population. Based on City data for its Traffic Analysis Zones (TAZ), the eight zones that comprise Greater Downtown contain roughly 3,500 jobs, a fair share of only 8% of the City s overall job base and far below what a healthy downtown would expect to capture of the regional employment pie. In ERA s downtown revitalization experience, a typical CBD share of regional employment should range from a minimum of 15% to as much as 30% or more. (These data are contained in Summary Table 1 and/or Table 29 elsewhere in this report). Employment forecasts served as the basis for ERA s demand analysis. (This analysis is contained in Summary Tables 17 or 2935 elsewhere in this report). By 2010, Woods & Poole forecasts that employment in Marion County will increase by 20,400 new jobs a 21% jump over 2000 levels. One of the critical challenges that both the City of Ocala and Marion County face with respect to an economic development strategy is the attraction of highquality, wellpaying jobs. Significant job creation among such sectors as Retail Trade and Services characteristic of the County s changing job market during the 1990s do not typically translate into highpaying jobs. A key recommendation in this plan is for City and County officials and appropriate privatesector business groups such as the Chamber of Commerce and Marion County Economic Development Commission to focus economic development efforts that benefit Downtown Ocala. Economics Research Associates (ERA) Market Analysis for Project No

35 Downtown Ocala Master Plan Demographic Profile

36 Table 1 Population Trends & Projections, By Jurisdiction, CHANGE: Woods & Poole Forecasts JURISDICTION No. % 2010 % Change State of Florida 12,937,926 15,982,378 3,044, % Alachua County 181, ,955 36, % 246, % As % of State 1.40% 1.36% 1.19% Gainesville 84,770 95,447 10, % As % of County 46.7% 43.8% 29.4% Marion County 194, ,916 64, % 303, % As % of State 1.51% 1.62% 2.10% Ocala 42,045 45,943 3, % 49,980 (1) As % of County 21.6% 17.7% 6.1% 16.5% (1) From TAZ (traffic analysis zone) population forecasts prepared by City of Ocala. Source: U.S. Census Bureau; Woods & Poole, Inc.; City of Ocala; Economics Research Associates, July 2003.

37 % Change in Population, % 35.0% 30.0% 25.0% 20.0% 20.0% 12.6% 15.0% 9.3% 10.0% 5.0% 0.0% Alachua County Gainesville Marion County Ocala

38 Table 2 Population By Age, By Jurisdiction, % % CHANGE: JURISDICTION 1990 Dist Dist. No. % State of Florida Under 25 4,081, % 4,976, % 895, % 25 to 34 2,116, % 2,084, % (32,144) 1.5% 35 to 44 1,811, % 2,485, % 674, % 45 to 54 1,291, % 2,069, % 777, % 55 to 64 1,267, % 1,559, % 291, % 65 and over 2,369, % 2,807, % 438, % TOTAL: 12,937, % 15,982, % 3,044, % Alachua County Under 25 79, % 94, % 15, % 25 to 34 32, % 31, % (1,382) 4.2% 35 to 44 26, % 29, % 2, % 45 to 54 14, % 26, % 11, % 55 to 64 11, % 15, % 3, % 65 and over 16, % 20, % 4, % TOTAL: 181, % 217, % 36, % Gainesville Under 25 39, % 44, % 5, % 25 to 34 14, % 14, % (242) 1.7% 35 to 44 11, % 11, % (231) 2.0% 45 to 54 6, % 10, % 3, % 55 to 64 5, % 5, % % 65 and over 7, % 9, % 1, % TOTAL: 84, % 95, % 10, % Marion County Under 25 58, % 71, % 13, % 25 to 34 26, % 26, % (372) 1.4% 35 to 44 24, % 35, % 10, % 45 to 54 19, % 31, % 12, % 55 to 64 23, % 30, % 7, % 65 and over 43, % 63, % 20, % TOTAL: 194, % 258, % 64, % Ocala Under 25 13, % 14, % 1, % 25 to 34 5, % 5, % (404) 6.8% 35 to 44 5, % 6, % 1, % 45 to 54 4, % 5, % 1, % 55 to 64 4, % 4, % % 65 and over 8, % 9, % % TOTAL: 42, % 45, % 3, % Source: U.S. Census Bureau; Economics Research Associates, July 2003.

39 Table 3 TAZ Population Estimates & Projections for the City of Ocala, (1) CHANGE: LOCATION TAZ ZONES No. % Population "Greater Downtown" Ocala (2) CRA (Portions) 154,155,156, % Remainder of Greater Downtown 153,157,164, (70) 14.7% Subtotal: (70) 12.0% As % of City Total 1.3% 1.1% 1.0% Remainder of City of Ocala 45,434 47,451 49,471 4, % TOTAL CITY: 46,012 47,996 49,980 3, % Households "Greater Downtown" Ocala No. of 1.75 Persons/HH All TAZ Zones (40) 12.0% (1) Estimates and forecasts for all Traffic Analysis Zones (TAZ) located in the City of Ocala. (2) These TAZ zones generally correspond with the 'informal' boundaries of Downtown Ocala, and include the CRA as well as portions of adjacent neighborhoods such as the West Ocala Historic District, the Tuscawilla Historic District, and North Magnolia. Source: City of Ocala; Economics Research Associates, July 2003.

40 Table 4 Households Trends & Projections, By Jurisdiction, CHANGE: Woods & Poole Forecasts JURISDICTION No. % 2010 % Change Alachua County 71,258 87,509 16, % 101, % Gainesville 31,924 37,279 5, % As % of County 44.8% 42.6% 33.0% Marion County 78, ,755 28, % 127, % Ocala 17,393 18,646 1, % As % of County 22.2% 17.5% 4.4% Source: U.S. Census Bureau; Economics Research Associates, July 2003.

41 % Change in Households, % 40.0% 30.0% 22.8% 16.8% 20.0% 7.2% 10.0% 0.0% Alachua County Gainesville Marion County Ocala

42 Table 5 Per Capita Personal Income, CHANGE: JURISDICTION No. % CAGR Florida $ 19,832 $ 22,942 $ 28,366 $ 29,048 $ 9, % 3.5% Alachua County $ 17,137 $ 20,114 $ 24,841 $ 25,572 $ 8, % 3.7% As % of State 86.4% 87.7% 87.6% 88.0% Marion County $ 15,584 $ 18,190 $ 22,624 $ 22,910 $ 7, % 3.6% As % of State 78.6% 79.3% 79.8% 78.9% Source: U.S. Department of Commerce, Bureau of Economic Analysis; Economics Research Associates, July 2003.

43 Table 6 Median Household Income, CHANGE: JURISDICTION No. % CAGR Florida $ 27,483 $ 38,819 $ 11, % 3.2% Alachua County $ 22,084 $ 31,426 $ 9, % 3.3% Gainesville 21,077 28,164 7, % 2.7% As % of County 95.4% 89.6% Marion County $ 22,452 $ 31,944 $ 9, % 3.3% Ocala 21,766 30,888 9, % 3.2% As % of County 96.9% 96.7% Source: U.S. Census Bureau; Economics Research Associates, July 2003.

44 Median Household Income, 1990 & 2000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Alachua County Gainesville Marion County Ocala

45 Table 7 Annual Consumer ExpendituresMarion County Households, 2002 Demographic Profile (2001) Population 265,325 Households 109,642 Median Household Income $ 35,537 Average Household Income $ 47,020 Consumer Retail Expenditures Annual Per % Total Household Distribution Food & Beverage Food At Home $ 386,789,889 $ 3, % Food Away From Home 215,548,550 1, % Alcoholic Beverages 36,469, % Subtotal Food & Beverage: $ 638,808,180 $ 5, % Apparel & Accessories All Apparel $ 223,399,273 $ 2, % Footwear 39,276, % Watches & Jewelry 18,989, % Subtotal Apparel: $ 281,665,377 $ 2, % Leisure & Entertainment Entertainment $ 254,276,753 $ 2, % Pets & Supplies $ 29,133, % Sporting Goods 18,172, % Toys & Hobbies 18,780, % Video Rental 5,323, % Musical Instruments/Accessories 2,738, % Reading Materials 14,257, % Subtotal Entertainment: $ 342,681,134 $ 3, % Household Furnishings Any Household Furnishings $ 191,990,896 $ 1, % All Appliances 17,474, % Kitchen/Dining Room Furniture 6,323, % Home Electronics 3,245, % Subtotal Home Furnishings: $ 219,034,869 $ 1, % TOTAL ANNUAL HH EXPENDITURES: $ 1,482,189,561 $ 13, % Comparison to U.S.: $16,137 Difference Btn. U.S. & Marion County 19.4% Source: ESRI Business Systems, Inc.; Economics Research Associates, August 2003.

46 Table 8 Estimated Visitor Counts to Downtown Square Events, FISCAL YEAR EVENT LOCATION Downtown Square No. of Events Estimated Attendance (1) 33,470 33,015 36,350 Average Attendance (2) 1, ,100 Elsewhere in Downtown No. of Events 6 N/A N/A Estimated Attendance 16,725 N/A N/A Elsewhere in City No. of Events Estimated Attendance N/A N/A N/A (1) Estimated by event sponsor on permit application to City. (2) Major events that attract from 5,000 to 20,000 include Light Up Ocala, Brick City Festival, and Ocala Arts Festival. Source: City of Ocala; Economics Research Associates, July 2003.

47 Downtown Ocala Master Plan Employment Trends & Projections

48 Table 9 Employment Trends By Sector, Marion County, CHANGE: CATEGORY No. % CAGR All Full & Parttime Employment Wage & Salary Employment 66,519 75,627 90,773 89,410 24, % 3.2% Proprietors Farm Proprietors 1,851 1,940 1,878 1, % 0.1% Nonfarm Proprietors 14,151 16,098 20,853 20,410 6, % 4.0% Subtotal Proprietors: 16,002 18,038 22,731 22,288 6, % 3.6% TOTAL: 82,521 93, , ,698 30, % 3.2% Average Annual % Change 2.7% 4.2% 1.6% Farm Employment 2,966 2,859 3, % 0.4% Nonfarm Employment 79,555 90, ,414 30, % 3.3% Employment by Sector Mining & Construction 6,328 6,189 8,421 2, % 2.9% Manufacturing 10,298 10,862 12,060 1, % 1.6% Transportation & Public Utilities 2,375 3,452 4,312 1, % 6.1% Wholesale & Retail Trade 21,486 25,351 27,424 5, % 2.5% Finance/Insurance/Real Estate 5,807 6,002 8,604 2, % 4.0% Services 19,185 23,299 30,652 11, % 4.8% Government 11,963 13,451 15,698 3, % 2.8% Subtotal NonAgricultural: 77,442 88, ,171 29, % 3.3% Agricultural Services 2,113 2,200 3,243 1, % 4.4% Farm Employment 2,966 2,859 3, % 0.4% Subtotal Agricultural: 5,079 5,059 6,333 1, % 2.2% TOTAL EMPLOYMENT: 82,521 93, ,504 30, % 3.2% Source: U.S. Department of Commerce, Bureau of Economic Analysis; Economics Research Associates, July 2003.

49 Government Mining & Construction Manufacturing Transportation & Public Utilities Wholesale & Retail Trade Finance/Insurance/Real Estate Services 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% % Change in Employment in Marion County,

50 Table 10 Employment Trends By Sector, Alachua County, CHANGE: CATEGORY No. % CAGR All Full & Parttime Employment Wage & Salary Employment 98, , , ,819 28, % 2.6% Proprietors Farm Proprietors 1,294 1,360 1,337 1, % 0.3% Nonfarm Proprietors 14,421 14,679 16,751 17,413 2, % 1.5% Subtotal Proprietors: 15,715 16,039 18,088 18,750 2, % 1.4% TOTAL: 114, , , ,569 30, % 2.4% Average Annual % Change 2.5% 2.6% 0.8% Farm Employment 1,470 1,668 1, % 1.7% Nonfarm Employment 113, , ,606 30, % 2.4% Employment by Sector Mining & Construction 5,614 5,359 5, % 0.5% Manufacturing 5,078 5,823 5, % 1.5% Transportation & Public Utilities 2,141 2,519 3,149 1, % 3.9% Wholesale & Retail Trade 22,645 26,478 27,680 5, % 2.0% Finance/Insurance/Real Estate 7,257 7,364 8,958 1, % 2.1% Services 32,581 38,148 47,946 15, % 3.9% Government 36,360 39,323 42,023 5, % 1.5% Subtotal NonAgricultural: 111, , ,588 29, % 2.4% Agricultural Services 1,349 1,842 2, % 4.1% Farm Employment 1,470 1,668 1, % 1.7% Subtotal Agricultural: 2,819 3,510 3, % 2.9% TOTAL EMPLOYMENT: 113, , ,606 30, % 2.4% Source: U.S. Department of Commerce, Bureau of Economic Analysis; Economics Research Associates, July 2003.

51 III. Real Estate Market Conditions Introduction ERA examined market conditions and characteristics across a variety of real estate products including housing, workplace (e.g., office), and supporting services and destinational uses (e.g., retail and restaurants). This section of the report analyzes inventory, rental and vacancy rates, historical development and absorption trends, new construction, and other appropriate potential supply and demand factors as they affect redevelopment opportunities in Downtown Ocala. The Ocala City Planning Department provided primary information on the commercial building inventory located in the core of the CRA from its GIS database. This information includes such variables as ownership, parcel size (in acres or sq. ft.), building size (in sq. ft.), use and the like. Other sources tapped to assemble property data include interviews with individual property owners and developers, Storetrax.com (an online retail database), the U.S. Bureau of the Census, and the National Research Bureau Shopping Center Directory for the southern U.S. Relevant real estate data are illustrated in Tables 11 through 28 and accompanying graphics at the end of this chapter. Housing Trends & Characteristics (Tables 1119) General housing characteristics as prepared by the U.S. Bureau of the Census indicate little change in the City s overall housing tenure during the 1990s. In fact, the proportion of owners and renters remained unchanged, at 57% and 43%, respectively. Conversely, rates of home ownership in Marion County increased over the past decade from 75% in 1990 to 80% in According to the Census, roughly 3,200 housing units were built in Ocala during the 1990s, or 16% of the City s housing stock. By comparison, over 5,600 units were built in Gainesville, representing 23% of Alachua County s housing stock. As reported by respondents for the 2000 Census, median gross rents in Ocala were $548 per month, an increase of almost 40% since Monthly rents in Marion County are lower reported at $513 per month. Notably, multifamily rents in Ocala are also higher than in Gainesville ($540) but the rate of growth in Gainesville over the past decade was higher. Reported median values of owneroccupied housing in Ocala lag behind that of Marion County: $77,600 and $81,300, respectively, in Compared to the 1990 Census, median housing values in Ocala increased by 25%, which was lower than the rates of increase reported in Marion County (32%), Gainesville (37%) and Alachua County (49%). Table 14 illustrates the region s housing stock by unit type. ERA notes that this distribution was also used in our housing demand analysis to identify the potential range of housing types for the priority sites. Economics Research Associates (ERA) Market Analysis for Project No

52 Approximately 53% of Ocala s 20,600 housing units are singlefamily detached Another 5% are townhouses The remaining stock is comprised of two or more units, mobile homes, etc. Approximately 15% of the City s housing stock are in multiunit buildings of 10 or more units As initial housing opportunities in Downtown Ocala are likely to be oriented to rental product (thus minimizing developer risk in untested locations), ERA examined characteristics of the region s rental apartment market. According to the Gainesville Apartment Market Survey (Table 15), which only recently started tracking the Marion County apartment market, the County contains 2,900 multifamily units. Current occupancy levels are strong 96%. However, average rents are low less than $600 per month or $0.64 per sq. ft. As illustrated in Table 16, new, better quality luxury apartment complexes such as Carlton Arms and Grand Reserve are reportedly doing well, with abovemarket rents ranging from $0.68 per sq. ft. to $0.93 per sq. ft. and low vacancy levels of 3%. This suggests solid demand for higherpriced units, however, the depth of additional market support will be contingent on job growth among higherpaying jobs. Moreover, no reliable tracking of annual absorption is available. Table 16 also illustrates ERA s detailed internal survey of Ocala s apartment market, which yields an inventory of 3,200 units across three subjective categories luxury, moderate and agerestricted. This larger survey indicates nominal (i.e., stabilized) vacancies of less than 3% and monthly rents ranging from a low of $0.59 to a high of $0.93 per sq. ft. As a means of measuring the depth of potential market support for new housing, ERA also examined building permit trends. These findings are illustrated in Tables 17 and 18. According to the U.S. Bureau of the Census, almost 20,000 singlefamily building permits have been issued in Marion County since By comparison, slightly fewer than 1,000 singlefamily permits were issued in the City, reflecting average annual activity of 137 permits per year, at an average unit value ranging from $81,400 in 1996 to $128,500 in While singlefamily product clearly dominates development patterns in the County, the multifamily market is focused in the City. Of the 2,100 or so permits issued since 1996, more than 1,700 permits were granted inside the City limits, reflecting average annual activity of almost 250 permits per year. These include recently completed projects such as Carlton Arms (two phases with 860 units since 1999) as well as 263 units delivered in 2003 at Grand Reserve. Economics Research Associates (ERA) Market Analysis for Project No

53 According to the City s Traffic Analysis Zone (TAZ) data, the TAZ zones that comprise Greater Downtown contained less than 400 housing units in 2000, accounting for a fair share of only 1.8% of the City s total housing stock. Commercial Development Patterns (Tables 2028) For the commercial office and retail inventory, the Ocala City Planning Department provided primary information on the commercial building inventory located in the core of the CRA from its GIS database. This information includes such variables as ownership, parcel size (in acres or sq. ft.), building size (in sq. ft.), use and the like. Other sources tapped to assemble property data include interviews with individual property owners and developers, Storetrax.com (an online retail database), the U.S. Bureau of the Census, and the National Research Bureau Shopping Center Directory for the southern U.S. ERA identified market opportunities that could be expected to strengthen downtown s role as a viable business location. As such, ERA examined commercial development patterns, including building permit activity, absorption patterns, employment growth, hotel occupancy trends and the like. Office In ERA s view, Downtown Ocala appears to be losing market share, as new office development is increasingly concentrated in outlying locations of the City and, more recently, in Marion County. For example, as illustrated in Table 20, the City s share of new office space permitted countywide declined from roughly 59% to 41% between While City permit data indicate that approximately 112,000 sq. ft. of office space are permitted annually, the downtown (CRA) has captured little, if any, new office development during this period. Consistent with national trends, new office development in outlying locations is oriented to professional service tenants (e.g., medical, financial, legal, etc.) to serve a growing resident population. By comparison, new office development in Marion County appears to be gaining ground; since 1996, the amount of new office space permitted has doubled from 63,000 sq. ft. in 1996 to almost 124,000 sq. ft. in Like many smaller markets nationwide, information on total office space in Ocala and Marion County is not tracked. ERA initially estimated the office inventory by calculating the amount of space occupied (per sq. ft.) for the 3,500 retail and service (i.e., office, medical and lodging) employees in the TAZ zones that comprise downtown. This would suggest approximately 628,000 sq. ft. of office space (Table 21). By comparison, the City Planning Department estimates that the CRA contains roughly 735,000 sq. ft. of office space (Table 21A), the downtown s fair share of the total office inventory in the remainder of the City and in the County cannot be determined. Further, no information is available on current office vacancy rates. Economics Research Associates (ERA) Market Analysis for Project No

54 Brokers report that current rental rates for office space in Downtown Ocala generally range from $11 to $14 per sq. ft. on a net basis (i.e., base rent only; operating expenses are in addition). This rental range includes all categories of office space in Downtown Ocala. As noted in the Executive Summary, ERA recommends that a market survey of office space located in Downtown Ocala be initiated on an annual or semiannual basis. In smaller communities, this is typically undertaken as a joint effort between commercial brokers, the Chamber of Commerce, and/or the downtown business organization, and should be viewed as a marketing tool and as a key component of a larger economic development strategy for the downtown. A property database should be created and updated regularly. For each office building, data should be collected on building size (in sq. ft.); rental rates and lease structure (i.e., net or gross rents); operating and other charges; current vacancy rates; net absorption over the reporting period; availability of parking and other amenities; and other information considered key to marketing. Moreover, the surveys should distinguish between classes of office buildings. In the real estate industry, office buildings are typically ranked according to building quality, architecture and design, physical condition, amenities offered, rental rates, tenant types, etc. These categories range from best/highest quality ( Class A ) to moderate quality ( Class B ) to those buildings that would be defined as Class C (i.e., lowest rents, aging/obsolete and/or noncompetitive properties). Retail Table 20 also illustrates retail and restaurant permit activity in Ocala and Marion County between Relevant information is highlighted below: Following significant population growth in the County, almost 1.1 million sq. ft. of retail and food & beverage space has been permitted in Marion County since By comparison, about 679,000 sq. ft. of retail/mercantile and 95,000 sq. ft. of restaurant space has been permitted in the City of Ocala, which accounts for about 38% of the overall retail activity but 65% of the overall restaurant space permitted. The majority of the City s retail activity is occurring on State Route 200 and proximate to the interchanges with I75. In the core of the CRA, City GIS data estimates that there are 243,200 sq. ft. of retail space, or 20% of the CRA s total commercial inventory. This includes primarily streetlevel space, focused on the Downtown Square as well as blocks of service and convenience uses on adjacent streets. Commercial retail centers can be divided into three major categories neighborhood, community and regional centers according to the types of goods or merchandise sold and the particular markets served. These categories are as follows: Neighborhood Centers provide for the sale of convenience goods and personal services that meet the daytoday needs of the immediate neighborhood. Typical goods and services found in neighborhood centers include food and drug stores and Economics Research Associates (ERA) Market Analysis for Project No

55 personal services providers such as dry cleaning establishments. Often, a supermarket serves as the principal tenant with smaller, ancillary retail uses located in adjacent, contiguous storefronts. Typically, the gross leasable area (GLA) of a neighborhood center is 50,000 sq. ft., but can range from 30,000 to 100,000 sq. ft. Community Centers include a wide range of facilities that provide for the sale of soft lines (apparel) and hard lines (hardware and appliances) beyond what is available in a typical neighborhood center. A community center is typically anchored by a junior department store, variety store or discount department store, although it may also have a strong specialty store. Typical size is 150,000 sq. ft., but can range from 100,000 to 300,000 sq. ft. Regional Centers provide shopping goods, general merchandise, apparel, and furniture and home furnishings in full depth and variety. Regional centers are typically anchored by one or more fullline department stores, each with a minimum gross leasable area of 100,000 sq. ft., which serves as the major drawing power for the center. Typically, a regional center has a gross leasable area of 400,000 sq. ft., but can range from 300,000 to more than 1,000,000 sq. ft. Paddock Mall is a regional center. Superregional centers are those containing more than one million sq. ft. of space. They are typically anchored by four or more major department stores. Power Centers are a more recent iteration that contain several largescale retailers, each of which is dominant in their particular retail category. Examples include Home Depot, Costco, and Target. In a power center, the amount of space occupied by smaller tenants is much smaller than in a conventional enclosed mall or strip center, typically comprising about 10% to 25% of the total. ULI has found the median size of power centers to be approximately 338,000 sq. ft. The International Council of Shopping Centers (ICSC) definition notes that power centers range from 250,000 to 600,000 sq. ft. of total retail area (1999). In recent years, some larger power centers, in the 800,000 sq. ft. range, have emerged. According to the Shopping Center Directory, the Ocala metropolitan area contains 4.3 million sq. ft. of retail space distributed across neighborhood, community and regional centers. Roughly 108,000 sq. ft. of retail space has been delivered annually across the metropolitan area. Based on this total inventory, this would suggest that Downtown Ocala s fair share of retail space account for only 6% of the County s total inventory. Limited information on commercial rental rates was provided during our stakeholder interviews. Reported retail rents in Downtown Ocala generally fall in the range of $12 to $15 per sq. ft. (base rent) on a triple net basis. That is, operating expenses such as utilities, taxes and the like are paid by the tenant in addition to base rent. No precise information is available on commercial retail vacancies, but a windshield survey indicates pockets of streetlevel vacancies scattered across the CRA. Economics Research Associates (ERA) Market Analysis for Project No

56 One of the critical measures of the health of a commercial business district is an understanding of the sales performance of retailers and other businesses. This is one of the most difficult factors to research in retail market analysis. On the one hand, it is, of course, proprietary information. On the other, such information is critical because it serves as a key determinant in crafting appropriate revitalization strategies for Downtown Ocala. ERA was unable to obtain detailed information on the sales productivity levels of downtown s retailers. However, based on limited information on rents provided by stakeholders, annual sales performance (using industry standard ratios of approximately 10% of renttosales) would be approximately $120 to $150 per sq. ft. Thus, we were unable to accurately gauge the health of downtown s retailers, including sales performance and degree of capitalization measures considered critical in identifying future opportunities for retail development. More detailed testing will be required as the planning initiatives move forward. Hotel In general, lodging uses require a nearby concentration of office and industrial employment, strong visibility and access from nearby roadways, a strong tourism economy or meetings destination, and/or supporting amenities, including retail and a sense of place. ERA examined trends and characteristics in Marion County s lodging market. Key findings are summarized below and detailed in Tables 2328: Marion County contains a lodging inventory of about 3,500 hotel rooms; notably, the vast majority of these properties are limited service facilities with locations proximate to I75, catering to highway travelers. As illustrated in Table 23, the County s lodging inventory has historically added 80 or so rooms per year to its inventory. Newest properties include the Fairfield Inn, LaQuinta, Country Suites, Red Roof Inn and the Microtel. The region s only fullservice business hotel is the Hilton Ocala on State Route 200. As illustrated in Table 24, ERA examined more detailed performance measures for 13 viable facilities containing 1,700+ rooms. Over the past five years, occupancy levels have fluctuated between 65% and 67% per year. Seasonally, the strongest occupancies are in the winter. Not surprisingly, the weakened economy since 2000 has resulted in a slight decline in overall occupancies. Average daily rates (ADRs) are indicative of limited service properties with ADRs of about $63 per room per night. Average room rates have increased 3% per year since Despite declining occupancies and additions to supply (adding 50,000 roomnights between ), revenue per available room has jumped 2% per year. Revenue Economics Research Associates (ERA) Market Analysis for Project No

57 per available room is the best measure of yeartoyear growth because it considers simultaneous changes in both room rates and annual occupancy levels. Given current market dynamics and significant difficulties in the capital markets for hotel development, nearterm opportunities for new hotels in Downtown Ocala will be limited. As a rule, the capital markets today require average annual occupancies of 70% or greater before consideration is given to financing new hotel development. This would suggest that public investment in economic drivers that generate new office development as well as visitor and tourismrelated traffic to Downtown Ocala are critical. Economics Research Associates (ERA) Market Analysis for Project No

58 Downtown Ocala Master Plan Residential Market Conditions

59 Table 11 Housing Tenure By Jurisdiction, HHs By Occupancy 2000 HHs By Occupancy JURISDICTION Owner % Renter % Owner % Renter % Alachua County 38, % 32, % 48, % 39, % Gainesville 15, % 16, % 17, % 19, % Total: 53,653 49,529 65,876 58,912 Net Gain in HHs ( ): 12,223 9,383 Marion County 59, % 19, % 85, % 21,572 Ocala 9, % 7, % 10, % 7, % Total: 69,056 26,514 95,856 29,545 Net Gain in HHs ( ): 26,800 3,031 Source: US Census Bureau; Economics Research Associates, August 2003.

60 Table 12 Age of Housing Stock By Jurisdiction, 1990 & 2000 JURISDICTION Units Built in Last 10 Years Alachua County 27,003 24,492 Gainesville 7,025 5,644 As % of County 26.0% 23.0% Marion County 45,108 37,987 Ocala 6,566 3,244 As % of County 14.6% 8.5% Units Built more than 10 Years Ago Alachua County 52,019 70,621 Gainesville 27,583 34,467 As % of County 53.0% 48.8% Marion County 49,459 84,676 Ocala 12,912 17,372 As % of County 26.1% 20.5% % Built in Last 10 Years Alachua County 34.2% 25.8% Gainesville 20.3% 14.1% Marion County 47.7% 31.0% Ocala 33.7% 15.7% Source: U.S. Census Bureau; Economics Research Associates, August 2003.

61 Table 13 Housing Rents & Values By Jurisdiction, CHANGE: JURISDICTION % Median Gross Rent Alachua County $ 396 $ % Gainesville % As % of County 96.7% 97.6% Marion County $ 386 $ % Ocala % As % of County 101.6% 106.8% Median OwnerOccupied Home Values Alachua County $ 65,500 $ 97, % Gainesville 63,100 86, % As % of County 96.3% 88.7% Marion County $ 61,800 $ 81, % Ocala $ 62,300 $ 77, % As % of County 100.8% 95.4% Source: U.S. Census Bureau; Economics Research Associates, August 2003.

62 Table 14 Housing Units By Units in Structure, 2000 Marion County City of Ocala UNITS IN STRUCTURE No. % No. % 1 Unit Detached 71, % 11, % 1 Unit Attached 4, % % 2 Units 1, % % 34 Units 3, % 1, % 59 Units 2, % 1, % 1019 Units 1, % 1, % 20+ Units 1, % 1, % Mobile Home 34, % 1, % Boat, RV, Van, etc % % TOTAL: 122, % 20, % Source: U.S. Census Bureau; Economics Research Associates, August 2003.

63 Table 15 Summary Characteristics of the Marion County Apartment Market, 2003 AVERAGE TOTAL VACANT % UNIT SIZE AVERAGE RENT PER UNIT SIZE UNITS UNITS OCCUPIED (sq. ft.) RENT SQ. FT. Market Summary Efficiency % 390 $ 587 $ BR % BR 1, % BR % 1, BR % 1, TOTAL: 2, % 922 $ 587 $ 0.64 By Decade Built After % 1,153 $ 702 $ , % and earlier % Source: Gainesville Apartment Market Survey, 1Q/03; Economics Research Associates, August 2003.

64 Table 16 Survey of Selected Multifamily Rental Projects YEAR NO. VACANT UNITS TURNOVER WORK IN NO. OF BR SIZE (IN SQ. FT.) RENTAL RATES PRICE/SQ. FT. PROJECT/LOCATION TYPE OPEN FLOORS UNITS No. % RATE CBD UNITS SIZE Low High Low High Low High Luxury Carlton Arms Contemp Ph I: % DNA DNA 25 Studio/Eff $ 404 $ 444 $ 0.90 $ SW 29th Street Upscale (500 units) BR $ 450 $ 601 $ 0.88 $ 0.76 Ph II: BR 890 1,150 $ 621 $ 747 $ 0.70 $ 0.65 (360 units) BR 1,500 1,650 $ 855 $ 931 $ 0.57 $ 0.56 Grand Reserve Mediterranean Apr DNA DNA DNA DNA BR $ 660 $ 890 $ 0.96 $ SW 24th Ave Upscale 83 2 BR 1,122 1,179 $ 850 $ 995 $ 0.76 $ BR 1,249 1,384 $ 990 $ 1,275 $ 0.79 $ 0.92 Tuscany Place Mediterranean % High DNA DNA 1 BR $ 550 $ 799 $ 0.85 $ SW 34th Street Upscale 7 mo. leases DNA 2 BR 755 1,289 $ 625 $ 860 $ 0.83 $ 0.67 DNA 3 BR 1,115 1,222 $ 740 $ 829 $ 0.66 $ 0.68 Subtotal Luxury Units: 1, % Studio/Eff $ 404 $ 444 $ 0.90 $ BR $ 553 $ 763 $ 0.90 $ BR 922 1,206 $ 699 $ 867 $ 0.76 $ BR 1,288 1,419 $ 862 $ 1,012 $ 0.68 $ 0.72 Moderate Briarwood Apts. Contemporary % 20% DNA 1 BR $ 360 $ 360 $ 0.38 $ NE 3rd Street 2 BR 1,245 1,245 $ 480 $ 480 $ 0.39 $ 0.39 Cedarwood Apts. I & II VillaStyle % DNA DNA 9 Studio $ 350 $ 350 $ 1.00 $ , NE 39 Ave 40 1 BR $ 450 $ 450 $ 0.75 $ BR $ 560 $ 560 $ 0.62 $ 0.62 Cypresside Townhouses Contemporary % 10% DNA 2 BR/ 2 BA 1,050 1,050 $ 525 $ 525 $ 0.50 $ SE 14th Avenue Townhomes Greenfield Apartments Duplexes & % 10% DNA BR/2 BA 1,050 1,050 $ 475 $ 495 $ 0.45 $ SE 28th Lane Quads 22 Duplex 1,050 1,050 $ 500 $ 520 $ 0.48 $ 0.50

65 Table 16 Survey of Selected Multifamily Rental Projects YEAR NO. VACANT UNITS TURNOVER WORK IN NO. OF BR SIZE (IN SQ. FT.) RENTAL RATES PRICE/SQ. FT. PROJECT/LOCATION TYPE OPEN FLOORS UNITS No. % RATE CBD UNITS SIZE Low High Low High Low High Luxury Carlton Arms Contemp Ph I: % DNA DNA 25 Studio/Eff $ 404 $ 444 $ 0.90 $ SW 29th Street Upscale (500 units) BR $ 450 $ 601 $ 0.88 $ 0.76 Ph II: BR 890 1,150 $ 621 $ 747 $ 0.70 $ 0.65 (360 units) BR 1,500 1,650 $ 855 $ 931 $ 0.57 $ 0.56 Grand Reserve Mediterranean Apr DNA DNA DNA DNA BR $ 660 $ 890 $ 0.96 $ SW 24th Ave Upscale 83 2 BR 1,122 1,179 $ 850 $ 995 $ 0.76 $ BR 1,249 1,384 $ 990 $ 1,275 $ 0.79 $ 0.92 Tuscany Place Mediterranean % High DNA DNA 1 BR $ 550 $ 799 $ 0.85 $ SW 34th Street Upscale 7 mo. leases DNA 2 BR 755 1,289 $ 625 $ 860 $ 0.83 $ 0.67 DNA 3 BR 1,115 1,222 $ 740 $ 829 $ 0.66 $ 0.68 Subtotal Luxury Units: 1, % Studio/Eff $ 404 $ 444 $ 0.90 $ BR $ 553 $ 763 $ 0.90 $ BR 922 1,206 $ 699 $ 867 $ 0.76 $ BR 1,288 1,419 $ 862 $ 1,012 $ 0.68 $ 0.72 Moderate Briarwood Apts. Contemporary % 20% DNA 1 BR $ 360 $ 360 $ 0.38 $ NE 3rd Street 2 BR 1,245 1,245 $ 480 $ 480 $ 0.39 $ 0.39 Cedarwood Apts. I & II VillaStyle % DNA DNA 9 Studio $ 350 $ 350 $ 1.00 $ , NE 39 Ave 40 1 BR $ 450 $ 450 $ 0.75 $ BR $ 560 $ 560 $ 0.62 $ 0.62 Cypresside Townhouses Contemporary % 10% DNA 2 BR/ 2 BA 1,050 1,050 $ 525 $ 525 $ 0.50 $ SE 14th Avenue Townhomes Greenfield Apartments Duplexes & % 10% DNA BR/2 BA 1,050 1,050 $ 475 $ 495 $ 0.45 $ SE 28th Lane Quads 22 Duplex 1,050 1,050 $ 500 $ 520 $ 0.48 $ 0.50

66 Table 16 Survey of Selected Multifamily Rental Projects YEAR NO. VACANT UNITS TURNOVER WORK IN NO. OF BR SIZE (IN SQ. FT.) RENTAL RATES PRICE/SQ. FT. PROJECT/LOCATION TYPE OPEN FLOORS UNITS No. % RATE CBD UNITS SIZE Low High Low High Low High Luxury Carlton Arms Contemp Ph I: % DNA DNA 25 Studio/Eff $ 404 $ 444 $ 0.90 $ SW 29th Street Upscale (500 units) BR $ 450 $ 601 $ 0.88 $ 0.76 Ph II: BR 890 1,150 $ 621 $ 747 $ 0.70 $ 0.65 (360 units) BR 1,500 1,650 $ 855 $ 931 $ 0.57 $ 0.56 Grand Reserve Mediterranean Apr DNA DNA DNA DNA BR $ 660 $ 890 $ 0.96 $ SW 24th Ave Upscale 83 2 BR 1,122 1,179 $ 850 $ 995 $ 0.76 $ BR 1,249 1,384 $ 990 $ 1,275 $ 0.79 $ 0.92 Tuscany Place Mediterranean % High DNA DNA 1 BR $ 550 $ 799 $ 0.85 $ SW 34th Street Upscale 7 mo. leases DNA 2 BR 755 1,289 $ 625 $ 860 $ 0.83 $ 0.67 DNA 3 BR 1,115 1,222 $ 740 $ 829 $ 0.66 $ 0.68 Subtotal Luxury Units: 1, % Studio/Eff $ 404 $ 444 $ 0.90 $ BR $ 553 $ 763 $ 0.90 $ BR 922 1,206 $ 699 $ 867 $ 0.76 $ BR 1,288 1,419 $ 862 $ 1,012 $ 0.68 $ 0.72 Moderate Briarwood Apts. Contemporary % 20% DNA 1 BR $ 360 $ 360 $ 0.38 $ NE 3rd Street 2 BR 1,245 1,245 $ 480 $ 480 $ 0.39 $ 0.39 Cedarwood Apts. I & II VillaStyle % DNA DNA 9 Studio $ 350 $ 350 $ 1.00 $ , NE 39 Ave 40 1 BR $ 450 $ 450 $ 0.75 $ BR $ 560 $ 560 $ 0.62 $ 0.62 Cypresside Townhouses Contemporary % 10% DNA 2 BR/ 2 BA 1,050 1,050 $ 525 $ 525 $ 0.50 $ SE 14th Avenue Townhomes Greenfield Apartments Duplexes & % 10% DNA BR/2 BA 1,050 1,050 $ 475 $ 495 $ 0.45 $ SE 28th Lane Quads 22 Duplex 1,050 1,050 $ 500 $ 520 $ 0.48 $ 0.50

67 Downtown Ocala Master Plan Residential Development Trends

68 Table 17 Singlefamily Building Permits By Jurisdiction, ANNUAL JURISDICTION AVERAGE Permits Issued Alachua County 1,072 1,063 1,023 1,053 Gainesville As % of County 15.6% 14.4% 12.9% 15.9% Marion County 2,333 3,097 5,384 3,605 Unincorporated Area 2,112 2,284 2,479 2,422 2,177 2,926 5,205 2,801 Ocala As % of County 6.4% 4.7% 2.6% 4.9% Average Construction Cost Ann'l % Change Alachua County $ $ $ $ $ 105,586 $ 116,420 $ 116,959 Gainesville 81,327 86,222 78,588 74,485 82,741 97,892 97, % As % of County 78.4% 84.1% 83.3% Marion County $ $ $ $ $ 155,643 $ 109,864 $ 119,312 Unincorporated Area 67,070 76,334 77, , , , , % Ocala 81,398 97, , , , , , % As % of County 97.3% 119.5% 107.7% Source: U.S. Census Bureau; Economics Research Associates, August 2003.

69 Table 18 Multifamily Building Permits By Jurisdiction, ANNUAL JURISDICTION AVERAGE Permits Issued Alachua County 901 1, Gainesville As % of County 26.0% 0.0% 3.9% 12.0% Marion County Unincorporated Area Ocala As % of County 0.0% 48.6% 91.6% 85.0% Average Construction Cost Ann'l % Change Alachua County $ $ $ $ $ 57,032 $ 45,969 $ 47,904 Gainesville 23,962 45,259 47,519 83,145 66, , % As % of County 116.1% 216.4% Marion County $ 31,461 $ 30,393 $ 31,406 Unincorporated Area 28,972 33,217 42,168 42,977 31,461 34,500 37, % Ocala $ 31,060 $ 36,085 $ 69,000 $ 42,128 $ $ 20,058 $ 30, % As % of County 66.0% 97.5% Source: U.S. Census Bureau; Economics Research Associates, August 2003.

70 Table 19 TAZ Dwelling Unit Estimates & Projections for the City of Ocala, (1) CHANGE: LOCATION TAZ ZONES No. % "Greater Downtown" Ocala (2) CRA (Portions) 154,155,156, % Remainder of Greater Downtown 153,157,164, (32) 9.9% Subtotal: (30) 7.6% As % of City Total 1.8% 1.7% 1.5% Remainder of City of Ocala 20,917 21,897 22,884 1, % TOTAL CITY: 21,306 22,275 23,244 1, % (1) Estimates and forecasts for all Traffic Analysis Zones (TAZ) located in the City of Ocala. (2) These TAZ zones generally correspond with the 'informal' boundaries of Downtown Ocala, and include the CRA as well as portions of adjacent neighborhoods such as the West Ocala Historic District, the Tuscawilla Historic District, and North Magnolia. Source: City of Ocala; Economics Research Associates, July 2003.

71 Downtown Ocala Master Plan Office & Retail Market Conditions

72 Table 20 Commercial Building Permits Issued in Marion County (In Sq. Ft.), CHANGE: % ANN'L TYPE TOTAL DIST. AVERAGE In Sq. Ft. Office/Bank/Professional 62, ,448 73,172 84,122 73,302 92, , , % 99,493 Store/Mercantile 242, , , ,877 37,551 32, ,516 1,092, % 156,074 Restaurant 3,154 13,300 24,291 7,480 3,000 51, % 7,318 Mixed Occupancy 8,100 10,772 18, % 2,696 TOTAL BY YEAR: 316, , , , , , ,400 1,859, % 265,580 % Distribution 17.0% 18.9% 14.2% 19.6% 6.4% 6.9% 17.1% Source: Marion County Building Department; Economics Research Associates, August 2003.

73 Commercial Permits Issued in Marion County (In Sq. Ft.), , , , , ,000 50, Office/Bank/Professional Store/Mercantile Restaurant Mixed Occupancy

74 Table 21 Commercial Building Inventory Located in "Greater Downtown" Ocala, 2000 ESTIMATE BASED ON 2000 EMPLOYMENT ASSUMED ESTIMATED 2000 SQ. FT. BLDG. AREA LOCATION EMPLOYMENT PER USER (In Sq. Ft.) Greater Downtown (1) (2) Commercial (Retail) 1, ,800 Service (3) 2, ,275 Total: 3,449 1,036,075 As % of City 8.2% City of Ocala Commercial (Retail) 17, ,125,700 Service (3) 24, ,793,050 Total: 42,204 12,918,750 (1) Estimates and forecasts for all Traffic Analysis Zones (TAZ) located in the City of Ocala. (2) TAZ zones generally correspond with the 'informal' boundaries of Downtown Ocala, and include the CRA as well as portions of adjacent neighborhoods such as the West Ocala Historic District, the Tuscawilla Historic District, and North Magnolia. (3) Includes office, medical and lodging properties. Source: City of Ocala; Economics Research Associates, August 2003.

75 Table 22 Retail Development in Marion County (In Sq. Ft.), DATE UNKNOWN TOTAL % DIST. Inventory (In Sq. Ft.) Neighborhood 300,257 37,620 86, , , ,151 74,692 1,363, % Community 663, , , ,942 2,334, % Regional 559, , % Super Regional 0.0% Subtotal: 300, , , , , ,151 74,692 4,257, % No. of Properties Neighborhood % Community % Regional % Super Regional 0.0% Subtotal: % Square Feet TOTAL: 300, , , , , ,151 74,692 4,257, % % Delivery By Period 7.1% 16.5% 23.2% 21.4% 22.8% 7.2% 1.8% (1) AVERAGE ANNUAL SQUARE FEET DELIVERED: (42 years): 101, (21 years): 107,904 (1) The total excludes centers in Marion County where information on square footage was unavailable. Source: National Research Bureau, Shopping Center Directory; Economics Research Associates, August 2003.

76 Retail Development in Marion County (In Sq. Ft.), ,000, , , , , , , , , ,000 UNKNOWN

77 Downtown Ocala Master Plan Hotel Market Conditions

78 Table 23 Additions to Hotel Supply in Marion County, DATE UNKNOWN TOTAL % DIST. Ocala & Silver Springs FullService/Business % Limited Service/Econ. 1, , % AllSuites % Subtotal: 1, , % Properties King's Inn Ocala Plaza Ocala Inn Courtyard Holiday Inn La Quinta Motor Inn Days Inn (2) Budget Host Hilton Ocala Express Fairfield Inn Travelodge (2) Economy Inn Comfort Inn Hampton Inn Country Suites Ramada InnHoward Johnson Scottish Inn Best Western Red Roof Inn Friendship (2) Super 8 Microtel Flamingo Holiday Inn Royal Days Inn Shangri La Silver Springs Silver Princess Vacation Host Alamo Journey's End Horne's Silver Springs Palms Budget Inn EconoLodge Spring Side Sun Plaza Stage Stop TOTAL: ,520 % Delivery By Period 25.8% 8.2% 0.0% 18.8% 1.6% 11.3% AVERAGE ANNUAL ROOMS DELIVERED: 1961Mid 2003 (42.5 years): Mid 2003 (22.5 years): 50 Source: Smith Travel Research; Economics Research Associates, June 2003.

79 Table 24 Annual Performance Indicators Marion County Hotel Market, (1) AVG. ANN'L GROWTH Available Roomnights (Supply) 557, , , , , , % Occupied Roomnights (Demand) 377, , , , , , % Annual Occupancy 67.6% 65.7% 64.7% 67.2% 65.1% 65.2% (0.7%) Average Daily Rate $ $ $ $ $ $ % Revenue/Available Room $ $ $ $ $ $ % YEARTOYEAR % GROWTH Annual Occupancy (2.8%) (1.5%) 3.8% (3.1%) 0.2% Average Daily Rate 4.3% 1.8% 2.5% 4.7% 1.0% Revenue/Available Room 1.4% 0.3% 6.3% 1.4% 1.2% FACILITY ROOMS % Ocala Plaza % Days Inn Ocala % Days Inn Ocala Airport % Courtyard Ocala % Comfort Inn Ocala % Ramada Inn & Conference Center Ocala % Howard Johnson Express Inn Ocala % Hilton Ocala % Hampton Inn Ocala % Best Western Ocala Park Centre % Holiday Inn Express Hotel Ocala % La Quinta Inn & Suites Ocala % Fairfield Inn Ocala % TOTAL ROOM INVENTORY: 1, % (1) Revenue per available room is the best measure of yeartoyear growth because it considers simultaneous changes in both room rate and annual occupancy levels. Source: Smith Travel Research; Economics Research Associates, August 2003.

80 Table 25 Available Roomnights (Supply) Marion County Hotel Market, (1) AVG. ANN'L GROWTH January 47,368 47,368 54,033 54,033 54,033 54, % February 42,784 42,784 48,804 48,804 48,804 48, % March 47,368 47,368 54,033 54,033 54,033 54, % April 45,840 45,840 52,290 52,290 52,290 52, % May 47,368 47,368 54,033 54,033 54,033 54, % June 45,840 49,350 52,290 52,290 52,290 52, % July 47,368 50,995 54,033 54,033 54,033 54, % August 47,368 50,995 54,033 54,033 54,033 54, % September 45,840 49,350 52,290 52,290 52,290 52, % October 47,368 50,995 54,033 54,033 54,033 54, % November 45,840 49,350 52,290 52,290 52,290 52, % December 47,368 54,033 54,033 54,033 54,033 54, % Annual: 557, , , , , , % Annual % Change: 5.0% 8.6% 0.0% 0.0% 0.0% (1) Supply equals 1743 rooms. Source: Smith Travel Research; Economics Research Associates, August 2003.

81 Table 26 Occupied Roomnights (Demand) Marion County Hotel Market, (1) AVG. ANN'L GROWTH January 33,031 33,331 35,635 36,943 37,416 38, % February 37,559 38,341 43,184 44,010 44,322 43, % March 39,932 38,411 44,770 46,426 46,451 45, % April 31,885 32,214 36,170 36,066 35,453 36, % May 28,134 29,780 31,551 33,741 32,645 33, % June 29,165 27,944 31,473 33,260 33,040 33, % July 30,977 33,227 32,807 32,830 30,149 31, % August 29,467 27,793 29,601 33,250 29,637 28,967 (0.3%) September 26,762 27,577 29,364 30,384 26,862 26,140 (0.5%) October 31,546 34,369 34,164 36,250 31,088 33, % November 30,233 31,113 34,555 33,766 35,271 32, % December 28,516 31,021 28,524 30,422 31,753 30, % Annual: 377, , , , , , % Annual % Change: 2.1% 6.9% 3.8% 3.1% 0.2% (1) Supply equals 1743 rooms. Source: Smith Travel Research; Economics Research Associates, August 2003.

82 Table 27 Room Revenue Marion County Hotel Market, (1) AVG. ANN'L GROWTH January $ 1,848,817 $ 1,914,267 $ 2,111,668 $ 2,212,870 $ 2,295,089 $ 2,412, % February 2,212,086 2,350,510 2,740,702 2,837,966 3,007,030 3,060, % March 2,417,166 2,372,718 2,847,469 3,075,035 3,236,064 3,261, % April 1,813,999 1,878,150 2,127,499 2,211,539 2,270,949 2,318, % May 1,465,546 1,671,452 1,770,781 1,973,900 2,013,372 2,034, % June 1,504,605 1,518,555 1,695,917 1,897,945 2,001,664 2,017, % July 1,615,559 1,800,253 1,793,274 1,903,811 1,800,678 1,896, % August 1,549,863 1,520,466 1,590,992 1,836,241 1,785,930 1,762, % September 1,370,756 1,576,508 1,761,336 1,711,778 1,645,554 1,594, % October 1,682,860 1,972,218 1,928,599 2,128,560 1,818,363 2,084, % November 1,672,059 1,768,872 2,021,279 1,996,924 2,166,529 1,974, % December 1,564,153 1,721,952 1,644,544 1,764,223 1,876,947 1,799, % Annual: $ 20,717,469 $ 22,065,921 $ 24,034,060 $ 25,550,792 $ 25,918,169 $ 26,218, % Annual % Change: 6.5% 8.9% 6.3% 1.4% 1.2% (1) Supply equals 1743 rooms. Source: Smith Travel Research; Economics Research Associates, August 2003.

83 Table 28 Annual Occupancies By Month Marion County Hotel Market, (1) AVG. ANN'L GROWTH January 69.7% 70.4% 66.0% 68.4% 69.2% 72.1% 0.7% February 87.8% 89.6% 88.5% 90.2% 90.8% 89.3% 0.3% March 84.3% 81.1% 82.9% 85.9% 86.0% 85.1% 0.2% April 69.6% 70.3% 69.2% 69.0% 67.8% 69.6% 0.0% May 59.4% 62.9% 58.4% 62.4% 60.4% 61.9% 0.8% June 63.6% 56.6% 60.2% 63.6% 63.2% 64.8% 0.4% July 65.4% 65.2% 60.7% 60.8% 55.8% 58.4% 2.2% August 62.2% 54.5% 54.8% 61.5% 54.8% 53.6% 2.9% September 58.4% 55.9% 56.2% 58.1% 51.4% 50.0% 3.1% October 66.6% 67.4% 63.2% 67.1% 57.5% 61.7% 1.5% November 66.0% 63.0% 66.1% 64.6% 67.5% 61.7% 1.3% December 60.2% 57.4% 52.8% 56.3% 58.8% 56.0% 1.4% Annual: 67.6% 65.7% 64.7% 67.2% 65.1% 65.2% 0.7% Annual % Change: 2.8% 1.5% 3.8% 3.1% 0.2% (1) Supply equals 1743 rooms. Source: Smith Travel Research; Economics Research Associates, August 2003.

84 Annual Change in Market Characteristics Hotel Market in Marion County, FL % 20% 15% 10% 5% 0% 5% Room Revenue Demand Roomnight Supply

85 April May June July August September October November December March January February 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Seasonality of Demand Hotel Market in Marion County, FL Roomnights