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Advisory
ECONOMIC IMPACT ANALYSIS
1101 BRICKELL AVENUE
- Prepared by -
Lambert Advisory, LC
- Prepared for -
Wall Street Commercial Owners, LLC
November 2005
Economic Impact Analysis 1101 Brickell
Economic Impact Analysis
1101 Brickell
Lambert Advisory has completed an economic impact analysis for the development of
1101 Brickell, a condominium project (with retail/commercial space) located at 1101
Brickell Avenue in the City of Miami. The analysis estimates the tangible direct and
indirect economic impacts that will be derived from the construction and operation of
the development. This report identifies and quantifies the benefits created by the 1101
Brickell development, and can supplement the major use special permit application to be
submitted to the City of Miami.
The 1101 Brickell property is located in downtown Miami, and is accessible to major
thoroughfares, including I-95 and I-195. The residential development will have a
positive impact on the surrounding community in terms of taxes, jobs, and general
investment generated, and will also enhance the area's commercial/retail demand.
We have completed this analysis on the basis of development and performance
information (i.e., price, absorption, timing, costs) that has been provided by Wall Street
Commercial Owners, LLC ("Developer"); Lambert has not independently verified this
information or data.
The 1101 Brickell development represents a new residential/commercial development on
a property that has two existing office buildings comprised of a total of 269,000 square
feet. There will be no impact to the composition of the existing office buildings from the
new residential and retail development. A profile of the project follows.
1101 Brickell
Economic Impact Analysis
Building Features & Profile
Site Size (Net) 3.22 acres
Building Height 75 stories
Number of Residential Units 650 units
Parking 1,470 spaces
Residential FAR 825,374 sq.ft.
Commercial (Retail) FAR 30,007 sq.ft.
Other/Lobby 19,300 sq.ft.
Existing Office (FAR): 269,000 sq.ft.
Est. Gross Building Area (w/parking) 1,506,781 sq.ft.
Source: Developer, Lambert Advisory, 2005.
Construction of 1101Brickell is expected to commence in July 2006, with an anticipated
duration of 33 months. Occupancy is planned for March 2009.
Based upon the information provided and estimates made, construction and subsequent
operations of 1101 Brickell will generate considerable benefits to the immediate area,
the City of Miami, and the metro -Miami community. There are four key areas in which
the project will provide positive economic impacts:
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Economic Impact Analysis 1101 Brickell
1. Short-term construction employment and expenditure
2. Long-term residential expenditure
3. Long-term building employment and operating expenditure
4. Indirect flow -through benefits (real estate and retail)
For both short-term and long-term impacts, which are detailed in the following analysis,
the economic benefit to the area is the result of projected increases in revenue from
primary sources, including employment, wages, and taxes. Accordingly, the impact from
these key sources comes from two distinct measures:
• Direct Expenditures — disbursements for site acquisition and development (hard and
soft costs)
• Indirect Expenditures — net additional expenditures that flow into the local economy
as a result of the new development
Estimates of the tangible impacts from direct and indirect expenditures are captured by
this analysis. However, potential intangible impacts — such as the project's ability to
serve as a catalyst for future development in the immediate area — are not included, as
they are nearly impossible to quantify.
Economic impacts from the four key sources are detailed in the following sections.
1. Short -Term Construction Employment and Expenditure
The impact from short-term construction employment and expenditure is directly
associated with the project's development; the table below shows a summary of
estimated development costs:
1101 Brickell
Economic Impact Analysis
Development Costs
Item Cost
Hard Costs $220,000,000
Soft Costs $36,000,000
Total $256,000,000
Source: Developer
The majority of development -related expenditures will be made in Miami -Dade County,
and the City of Miami will capture a significant share of these expenditures.
Labor will account for approximately 60 percent ($132 million) of hard costs, and
materials will account for 40 percent ($88 million). Over an estimated 18-month
construction period, at an average annual construction wage of $44,5121 in Miami -Dade
County, with a benefit/overhead multiplier of 1.4, there will be 770 Full Time Equivalent
(FTE) jobs created. Additionally, over $1.5 million in professional fees are expected to
1 State of Florida ES-202, fourth quarter 2004
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Economic Impact Analysis 1101 Brickell
be paid to Miami area firms (e.g., architecture, engineering, legal). Assuming an
average profit margin of 15 percent and overhead of 30 percent, nearly $2.8 in
professional wages will be paid out by these firms.
Impact and other fees payable to the City and County during the construction period will
amount to approximately $6.2 million, which will be available for public expenditures
associated with the project including developmental, administrative, permitting, schools,
and other costs2. A detailed profile of impact fees and other relevant non -impact fees
paid to the City and/or Miami -Dade County as a result of the development of 1101
Brickell is included in the following table.
1101 Brickell Avenue
Economic Impact Analysis
Impact and Other Fees
Impact Fees:
City of Miami Development Impact Fee (Ord. 10426)
City of Miami Development Impact Admin. Fee
Miami Dade County Roads
Miami Dade County Schools
Total
$811,065
$24,332
$642,307
$1,155,493
$2, 633,197
Other/Non-Impact Fees:
City of Miami Bonus Fees $2,141,864
Miami Dade W.A.S.A. Connection Fee $919,187
City of Miami Building Permit Fee $242,108
Energy Installation Fee $148,748
M.U.S.P Application Fee $45,000
Dade County Code Compliance $128,000
Radon Gas Fee $14,875
Fire Plan Review Fee $13,387
Ground Cover Fee $2,805
Land Use/Zoning, Review for Building Permit $2,000
Certificate of Occupancy $250
Application Fee $35
TOTAL OTHER FEES $ 3,658,260
TOTAL PROJECT FEES $6,291,457
Source: City of Miami Planning, Building & Zoning; Miami Dade County; Developer;
Lambert Advisory. Refer to Note below; fees above may be subject to change.
2. Long -Term (On -Going) Resident Expenditure
Based on demographic and for -sale housing trends in the area, the 1101 Brickell
resident base is expected to consist primarily of younger working professionals, with
2
Lambert Advisory calculates impact and other fees based upon physical characteristics of the development (as provided by
Developer) utilizing impact/other fee factors provided by the City of Miami and/or Miami Dade County. There may be items for
which additional fees may be collected by the City/County (eg. Tree Trust) and/or State (eg. Energy Conservation) that has not been
included herein. As a result, there will be some variation between the impact and other fees provided herein and the actual fees that
may be paid upon commencement of the development process.
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Economic Impact Analysis 1101 Brickell
supporting retirees and second home residents. Considering the proposed average sale
price will be more than $700,000, it is assumed that the residents will be mostly upper
income individuals/households with incomes of at least $150,000. Therefore, with a
total of 650 households in the building, total personal income for the building is
estimated to be nearly $27 million. Estimating that approximately half of the owners will
relocate from outside the City, and taking into account a limited number of purchases
second home (non resident) buyers occupying the periodically, over $48 million of
marginal personal income will flow into Miami.
We have estimated the marginal impact of $48 million in household income on retail
sales and space demanded, using the Lambert Advisory Retail Trade Model. The
following table provides a summary of additional retail expenditure and demand for
space as a result of development of the apartments by 2010.
1101 Brickell
Area Expenditure Potential (from New -to -Miami Brickell Residents)
2010
Type of Good
Estimated Marginal
Expenditure Growth
2010
Sales per
Square Foot
Square Feet
Demanded
General Merchandise
Apparel and Accessories
Furniture and Home Equipment
Electronic and Appliance Stores
Sporting Goods, Books and Music Stores
Miscellaneous Shoppers Goods
Shoppers Goods - Sub -Total
Food Stores
Eating & Drinking Establishments
Health & Personal Care Stores
Liquor
Convenience Goods - Sub -Total
$1,099,628
$1,057,948
$438,513
$419,412
$400,047
$610,151
$227
$290
$227
$200
$250
$420
4,844
3,648
1,932
2,097
1,600
1,453
$4, 025, 698
$5,618,402
$3,475,659
$1,805,871
$120,535
$258
$422
$375
$407
$280
15,574
13,314
9,268
4,437
430
$11, 020,467
Building Materials $1,083,512
Total
$401
27,450
$115 9,422
$16,129,676 $308 52,446
Source: Lambert Advisory, 2005
In addition to the net new expenditures attributable to 1101 Brickell residents, the
30,007 square feet of new retail planned will also attract retail expenditure — primarily
from the area immediately surrounding the property, with limited additional support
from visitors from outside of the area. Assuming that 20 percent of the expenditure in
1101 Brickell retail comes from outside the City, and based upon sales per square foot
of $308, approximately $1.8 million will be expended within the City per year which is
now going to other areas.
3. Long -Term (On -Going) Building Employment and Operating Expenditure
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Economic Impact Analysis 1101 Brickell
There are a number of areas where positive public benefits or economic impacts will
result from the on -going operation of the residential development. These include:
• Additional employment from operation of the condominium community and
stores;
• Property tax revenue to the City of Miami and Miami -Dade County; and
• Purchase of goods and services.
We estimate that 21 FTE workers will be needed to operate the building and 30 FTE
workers will be employed in the retail stores. Positions such as building managers,
parking garage attendants, maintenance staff, and security personnel will need to be
filled. At an average Miami -Dade County wage of $42,6923 the operation of the building
will generate approximately $2.1 million in wages each year. Positions at various skill
levels will be made available to area residents.
Increased sales tax revenue will result from the operation of the 30,007 square feet of
new retail space. Assuming the net new retail expenditure in stores totals $1.8 million,
approximately $110,000 in additional sales tax will be collected from retail sales.
Additionally, an estimated $850,000 in goods and services related to building
maintenance will be purchased annually within Miami -Dade. This includes cleaning
services, maintenance supplies, utilities, etc.
Finally, the development of 1101 Brickell will provide significant benefit to the City and
County by way of real property and personal property (ad valorem) taxes. The tax
amount is based upon the County Tax Collector's (2005) millage rate of 25.4728 (per
thousand dollars of value), broken down as follows.
3 State of Florida ES-202, fourth quarter 2004
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Economic Impact Analysis 1101 Brickell
1101 Brickell
Economic Impact Analysis
Ad Valorem Tax Breakdown
Item
Millage Annual Tax
City of Miami Operating 8.4995 $3,650,048
City of Miami Debt 0.765 $328,524
School Operations 7.947 $3,412,781
School Debt 0.491 $210,856
Environmental Projects 0.100 $42,944
South Florida Water Management 0.597 $256,377
FIND 0.0385 $16,534
County Millage 5.835 $2,505,798
County Debt 0.285 $122,391
Children's Trust 0.429 $184,145
Library 0.486 $208,709
TOTAL 25.4728 $10,939,109
Source: Miami Dade County Property Appraiser, Lambert Advisory, 2005.
Real property is typically assessed at between 80 and 90 percent of Fair Market Value.
For the purposes of this analysis, we calculate ad valorem taxes for 1101 Brickell based
on 85 percent of total sales proceeds (unit sale value) and commercial space at a total
valuation of approximately $430 million. Accordingly, the development should generate
approximately $10.9 million in real property taxes by 2010. This represents an
estimated net marginal increase of roughly $9.5 million over the ad valorem tax
collection the City would receive if the property were valued at current use at an
estimated $45 million.
4. Indirect Flow -Through Benefits
There will be a number of long term indirect flow -through benefits beyond construction
from the project, particularly from the building operations and retail employment. The
51 FTE jobs created as a result of building and retail operations are assumed to have a
1.2 multiplier impact of 62 additional jobs. This multiplier is derived from the U.S.
Department of Commerce's 1999 RIMS II model, and identifies indirect secondary and
tertiary impacts created throughout the region due to the "ripple effect" of the primary
employment.
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Economic Impact Analysis 1101 Brickell
1101 Brickell Avenue
Economic Impact Analysis
Summary, Economic Impacts
Impact
Short Term Construction Employment & Expenditure
Full Time Jobs 770
Direct Wages $94,300,000
Professional Wages (Miami -Dade County) $2,800,000
Impact Fees Toward Public Expenditure $6,300,000
Total Impact, Short Term Const. Employment & Expenditure $103,400,000
Long -Term (On -Going) Resident Expenditure
Marginal Expenditure Growth — Residents (2010) $16,100,000
Marginal Impact from On -Going Resident Expenditure $16,100,000
Long -Term (On -Going) Building Employment and Operating Expenditure
Full Time Jobs 51
Total Direct Wages Created $2,160,000
Sales Tax from Additional Retail Sales (2010) $111,000
Goods & Service Purchased in Miami -Dade County $860,000
Ad Valorem Taxes (2010) $10,900,000
Total Impact from On -Going Operations of the Building/Retail $14,100,000
Indirect Flow Through Benefits
Full Time Jobs (Indirect) — Miami Dade County 61
Total Indirect Wages Created $2,600,000
Total Flow Through Indirect Benefits $2,600,000
Source: Lambert Advisory, 2005.
Based upon the analysis set forth herein, the 1101 Brickell project will clearly have a
positive economic impact on both the City of Miami and Miami -Dade County. Total
employment created during the development phase is approximately 770, with on -going
annual employment of 61 FTE jobs. Accordingly, there is an estimated $103.4 million
impact from short-term construction employment and expenditures, and a stabilized
$14.1 million annual revenue stream from resident expenditures and building operations
(including real property taxes).
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