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Project Introduction The purpose of this document is to support an interim loan request for the amount of $3,901,553 for construction of a 30,975 SF mixed office-use in Jackson, Tennessee. The project is a four-story office building on Eastlake with retail space on the first floor and parking underneath. The quality of the building's exterior, interior and amenities will be slightly above the median. The expected net operating income per year nears $494,197. Politician Development Enterprises (CDE) will develop this property. They are a LLC with over 12 years of experience developing properties in the Greater Puget Sound area. The company has over $60 million in holdings and is headed up by president Rick Politician. Some former projects include the Fremont Block 40, the Eastview Offices, the Rekhi, University Professional Offices and the Edison Apartments. A building permit has been obtained. The architectural and plans and specifications have been completed as well as a geotechnical inspection of the site. Following is information about the project, marketplace, appraisal findings, participants, specific loan request and financial support. The Specific Project and Marketplace The Site: Our proposed project would be located just West of the I -5 overpass on 3103 Eastlake Avenue East. The location is fairly noisy with a moderate view of Lake Union. The entire site sits on a hill sloping towards the water, and is comparable to the James St., I - 5 overpass on First Hill. Residential housing and apartments surround the site and are of slightly sub par to fair quality. Along Eastlake Ave. around twenty-two to five story office buildings exist that service a mix of tenants. The site has direct access to Metro lines that run to and from downtown. Traffic on Eastlake Ave. is moderate during business hours and congested during rush hours. About 8-10 blocks south on Eastlake, it appears a few office buildings have gone through major renovations. Also, new construction is occurring in that same area. These investments further our belief in the strength Eastlake market. The Specific Proposal: The intended building for the site is a mixed-use office and retail space in a four-story building with 30 underground parking places. These parking spots can be accessed through the alley. There will also be 13 parking spots along Allison St. and Eastlake Ave. Measurements of the rectangular lot are 135ft on Eastlake Ave. and 90 ft on Allison Street. The building is to be of median quality with moderate fixtures and finishes. The exterior will have a bRick or curtain wall finish. Inside the building will be well lit and include high-speed Internet access. It is expected that the top two floors of office space facing west will have a good view of the lake. Other spaces will have views of the street. Landscaping in open spaces will be added to conform the building to the surrounding parks and corporate spaces. General Description of Market: Currently, the market in Jackson can support new office buildings. Although the downtown office vacancy rate stands at 15%, Jackson is the hub of the health-care, artistic, tourism, legal, financial and architectural industries in the Puget Sound area. In contrast, the Eastside depends on the technology sector and experienced vacancy rates close to 20% in the third quarter of 2002 (29% in downtown Bellevue). While construction on Bellevue's Technology Tower and Lincoln Square were put to halt due to a lack of tenants, new projects in downtown Jackson such as Martin Selig's Fifth & Jackson building, Touchstone Corporation's Fifth and Bell building and the IDX tower all were leased out to 60-85% capacity in January of this year. The market for office space in downtown Jackson and adjacent Eastlake are still strong and will only get better through 2007. Real estate brokers saw an increase in leasing activity in the second half of 2002 that is expected to get even stronger this year. The mixed office-use building on Eastlake will be completed right as demand for office space begins to push prices up to previous levels. Other developers will be scrambling to make buildings to fill the demand of tenants while this project will be able to take full advantage. Description of Target Market: The mixed office-use building will be a good site for health professionals. As the Jackson population ages with the Baby Boomers, the needs for health care professionals will continue to rise. Doctors, chiropractors, dentists, acupuncturists and dieticians will all desire office space to serve their clients/patients. The building's parking spaces combined with the plentiful street parking along E Allison St. and Fairview Ave. E supply enough parking spaces for these clients/patients, provides easy access from Downtown, Madison Park, Wallingford and the U-district via arterials. Many other surrounding neighborhoods are also in close proximity, especially with the building's access to I-5. Since the building will include high speed internet, the offices will be able to let clients set up appointments online. As tenants, health professionals prove to be stable and responsible tenants. Once they build a client base it would be hard for them to move their practice, as they would lose many of their clients. Furthermore, furnishing office spaces for any health care professional requires lots of upfront investment. This investment would further induce the tenants to stay. Although managed health care has made the health professionals less stable tenants, they remain slightly more stable than the market average. Description of Comparables: The proposed building is mixed-use, primarily office with retail on Eastlake and parking underneath. Since there were only two other office/retail in the Eastlake are, we have also used office buildings as comparables. Apartment/retail comparables have been used to determine land value. Diagram on following page Comparables for Capitalized Value and Comparable Sales Office Buildings . 2312 Eastlake This building has a similar appearance to our building and shares some of he characteristics that will be part of the subject. The location was slightly better but the views were compromised compared to the subject. The comp has underground parking much like the subject. . 2323 Eastlake This building has a bRick face and good views all around. It is fairly close to the size of the subject. Overall the building has a clean look and is four stories high with underground parking like the subject. Office/ Retail Buildings . 2815 Eastlake This building has a very similar NSF to the subject and is in a nearby location. The building is well finished and is four levels tall with good views of the lake. A large amount of parking is also available in the rear. . 2825 Eastlake This building has a clean and professional look that is desired in the subject. All of the walls have glazing on them. The west side of the building has excellent views of Gas Works Park and the lake. Parking for this building is abundant as well. Comparables for Determining Land Value Apartment/ Retail Buildings . 2727 Eastlake The property here was sold in1995 and then built on in 1996, thus, it provides a good comparison for land value. This property is in a slightly better location, being further south and away from the freeway but it is on the same side of the street. It also has a larger land area than our property, but does not have as good of a view. . 3230 Eastlake Just north of our property on the other side of I-5, this site is also a good comparable for land value as it was sold in 1988 and then built upon in 1997. The view is not as nice since the building is on the other side of the street from the subject property, but the land area is larger.