Category: Analysis

Anything that I have tested empirically, or explain with detailed calculations, or just generally bother to get all the facts straight.

Post #403: When will the last small house in Vienna be torn down?

Approximately 2050, at the current tear-down rate.

Calculation follows.

  • Years of housing stock remaining =
  • Current housing stock
  • Times % amenable to tear-down
  • Times % not already torn down
  • Divided by new houses being built per year.
  • Years of housing stock remaining =
  • 4,626 (Source:  2019-2020 Town budget, page 24)
  • 80% (total guess)
  • 90% (total guess)
  • 100 (Source: 2019-2020 Town budget, page 277)

= 33 years.

2019 + 33 = 2050, rounded to the nearest ten.

Not sure that the calculation is worth much.  But to me, the interesting fact is the number of building permits in the typical year.  In any given year, the Town only issues about 100 permits for new detached homes.  (And since Vienna is nearly fully built-up, I interpret that as about 100 tear-downs per year).

So, while it seems like tear-downs are everywhere, and it seemed to me that the pace of the tear-down boom has been accelerating, the Town’s data on building permits says otherwise.  It’s about 100/year now, and it was about 100/year in (say) 2014.

It’s probably true that you can’t actually buy a small house in Vienna, to live in, because the lot is worth more as a tear-down than the structure is worth as a residence.  And it’s certainly true that the houses being offered for sale in Vienna appear heavily weighted toward new construction (see Post #308).

But in terms of small houses going extinct in Vienna, nope.  At the current rate, it does not appear that will happen any time soon.

 

Post #390, (that’s not a) retail vacancy rate

The Town of Vienna is asking Fairfax County for funds from the Fairfax Economic Support Fund.  They’d like Fairfax to pay for half of a $100,000 economic development study for the Town.  A brief presentation on that was given at the 9/17/2019 County Board of Supervisor’s meeting.  You can see the contents of the presentation at this link (.pdf).

The point of the Fairfax Economic Support Fund is to invest in development around the county, where the expected increase in Fairfax County taxes will cover the cost of the investment.  Fairfax County staff appear to judge that this study will boost tax revenues by more than the $100,000 cost.  So they recommended funding it.

For this posting, the purpose of the proposed study does not much matter.  Based on the bullet points, it sounds like this could be merely finding some justification for MAC zoning.  (“Placemaking” is a giveway there.)  But it might actually be a legitimate market analysis.  If so, I’d applaud that, because, better late than never.  It would be good to have some reasoned analysis of (e.g.) how much more retail space Maple Avenue can be expected to absorb, what types of new retailers are likely to enter that market, and so on.

The only point I want to make here is a technical one.  The Vienna proposal is cited as showing a “15% vacancy rate”.  And that is immediately interpreted as a retail vacancy rate on Maple.

First, that’s not a vacancy rate.  Or, at least, it’s not comparable to the way anyone else calculates a vacancy rate.  Vacancy rates — office, retail, or commercial — are always expressed as a percent of the available space.  (Vacant square footage over total square footage.)  The Town’s number, by contrast, appears to be a count of addresses (“spaces”).  The Town counted 138 vacant “spaces”, of which 68 were on Maple.

So, e.g., Giant Food counts as one space.  The Maple Avenue Market would have counted as one space.  Those two would be weighted equally in a simple count of addresses.

Second, it’s not clear that’s a count of retail spaces only.  That matters materially, because office vacancy rates in Fairfax County are quite high (see below).  My guess is that the Town’s records do not show which spaces are retail and which are office, and that in all likelihood, that’s a count of all commercial addresses in Vienna.

Third, that’s not Maple Avenue in isolation.  The overall fraction of addresses that are empty appear to be for the Town as a whole, not for Vienna.  (I can’t know for sure, because there doesn’t seem to be any copy of this study available on-line on either the Vienna or Fairfax County websites).

This is not a criticism of the number.  A quick-and-dirty throw-away number like that , that’s perfectly fine if it gets the Town the money it was seeking.  The Town took its records, counted addresses, and used that as part of its proposal asking Fairfax to cover half the cost of the study.   I doubt, for example, that the Town’s tax records list the square footage of each establishment.

This is a criticism of how that number is being quoted and used.  My only technical point is that you should NOT compare the Town’s number to any published estimate of retail vacancy rates.  Published estimates will be done properly, based on square footage.  The Town’s number, by contrast, equates (e.g.) a tiny shop space with Giant Food.

FWIW, here are some recent (2014) estimates of actual retail and office vacancy rates, prepared by the Metropolitan Washington Council of Governments (MWCOG) using data from CoStar.  The numbers here will vary modestly from other estimates, based on the exact details of how they went about the calculation.

Source:  MWCOG, CoStar.

Finally, also FWIW, if you want to see how I calculated a ground-floor retail vacancy rate for Maple, showing data and methods, see this post.  Those numbers are a little stale at this point, but they still shouldn’t be too far off.  For further background on the mix of retail on Maple, see Post #201 and Post #208.

Post #341: Recession

The recent dips in the stock market got me asking how the next recession might affect the Town of Vienna, including property values and tax revenues.  This is my first look at how Vienna compared to the U.S. during the last recession.  The question I am eventually working toward how the Town of Vienna revenues changed during and following the last recession.

In 2008, the US very nearly suffered a collapse of its financial system.  And as time passes, we tend to for get that.  Because, in the end, the various Federal rescue efforts — and deposit insurance — were successful.  For now, at least, we still have a banking system, and housing prices have large recovered.

The first section briefly reviews the national impact of the 2008 financial collapse, the second section looks specifically at DC and Vienna housing prices.  Continue reading Post #341: Recession

Post #339: More on Maple Avenue valuations and investment

One oddity of Maple Avenue retail property is that  little of it is advertised as being for sale.  That’s an oddity, if you think there is some sort of crisis in retail.  But not if you think that returns on current investments appear reasonably good.  If the returns are adequate, sales should be infrequent, if only to take advantage of the tax-deferred nature of the investment: Capital gains taxes only have to be paid upon sale of the property.

In any case, my internet search turned up only three advertisements for Maple Avenue retail property for sale.

As noted in Post #319, the combined Starbucks drive-through and Just Tires properties are being offered for sale at $961 per retail square foot.  (See this reference for the ad.)  From that ad, you can infer something like a $60/sq ft/year rental on the retail space.

The two medical office buildings at Maple and Center (where the Sunrise assisted living was proposed):  $7.5M, $682/retail square foot, at this link.

The Princess Jewelers shop, 527 Maple Avenue West, $1.7M, calculated as just over $500/square foot, at this link.

And that led me to thinking about what is and isn’t a feasible investment under existing C1 zoning.

And here, I’m not thinking of just rehabbing existing space.  We know that buildings along Maple are being rehabbed and repurposed all the time.  So that level of investment clearly appears profitable.  A few recent examples finished or in the works include:

  • Taco Bell –> Starbucks;
  • Magruders –> restaurants;
  • Dead gas station –> gas station plus convenience store;
  • Coldwell Banker offices –>  Wawa
  • Pro Feed Pet Supplies –> Ramen restaurant
  • Sandy Spring Bank –> Animal hospital

I could go on.  The point is, there is no lack of examples for redoing existing space.  (And this doesn’t even count the cosmetic make-overs of various shopping center fronts up and down Maple.)

But a more serious question is, how profitable might new construction be?  We have seen some new construction (Sweet Leaf, 2010) in living memory.  But not much.  Is that because it’s sufficiently profitable to remake existing buildings, or is that because it’s just not profitable to build something new, along Maple, under existing zoning?

Obviously, I’m not a builder.  But let me try a rough cut at a pro-forma calculation.

Continue reading Post #339: More on Maple Avenue valuations and investment

Post #337: Retail property assessments along Maple

I’m certainly tired of hearing about what a crisis Maple Avenue retail is in.  At the risk of caricature, the argument seems to be that We Must Act Now or risk having Maple become a ghost town.

Anyone who has tried to drive down Maple Avenue on a Saturday afternoon probably wishes for a little more”ghost town” now and then.  By eye, the reality appears to be the opposite of crisis:  Maple appears to be a busy, viable, profitable shopping district.  Maybe a little too busy at times.

In this posting, I’m going to take my prior analyses of Maple Avenue retail a bit further and look at tax assessments along Maple, compared their trend and level ($/sq ft.) to assessments of similar properties outside of Vienna, but nearby.  The bottom line is consistent with all my prior work:  Tax assessments of the largest retail properties here are rising, and assessment per square foot of land is comparable to retail sites near (but not in) the Town of Vienna.

People who tell you there’s a crisis in Maple Avenue retail do not appear to have the facts on their side. Continue reading Post #337: Retail property assessments along Maple

Post #328: How many assisted-living beds does Vienna need?

Answer:  About 40.  Maybe a few more, because we’re wealthy, and assisted living is something that you have to be fairly wealthy to afford.   Maybe a few less, because our resident population is a little younger than the US average.  But, best guess, if we use assisted living at the US average rate, then 40 assisted living beds would serve the needs of the entire Town of Vienna.

I calculated that back in March, when Sunrise assisted living (proposed for Maple and Center) was a hot topic, but never got around to making that public.  Here, I work through the arithmetic, then just line out the variety of options available for elderly who have various levels of need for assistance.

If you want information on assisted living, in general, in Northern Virginia, see Post #205.

Continue reading Post #328: How many assisted-living beds does Vienna need?

Post #316: MAC versus Mosaic, retail density is an issue

In Post #313, I came to the surprising conclusion that Maple Avenue, at Glyndon, is more “retail dense” than the Mosaic district.  You have more retail square footage, and more establishments, within a quarter-mile walk of that intersection, than are in the Mosaic district.  Although, obviously, the mix of establishments in Vienna is radically different from that in Mosaic..

This raises another question:  How’s the “retail density” of the new MAC mixed-use projects working out?  These are all at the west end of Maple.  If you took the entire western half-mile of Maple (so, a quarter-mile walk in each direction) and built both sides of the road up at the observed MAC density (so, one mile of Maple Avenue frontage), would it equal equal the 350,000 square feet of retail found in the Mosaic District?  Or even the nearly 440,000 square feet of retail at the “Glyndon Shopping District” on Maple?
Continue reading Post #316: MAC versus Mosaic, retail density is an issue

Post #313: Maple versus Mosaic, retail density is not the issue

Post #302 made the case that you can’t expect the entire Maple Avenue corridor to become one big “vibrant, pedestrian-oriented” shopping district.  Any such district would have to be smaller than the length of Maple.  Post #310 pointed out that the Town has no plan for any area smaller than all of Maple.

In this post, I’m going to start to characterize what does and doesn’t appear to work, in this immediate area, in terms of getting that “vibrant, pedestrian-oriented” shopping experience.  I focus on the Mosaic District, then turn to Maple.

And there I got a surprise.  Define “retail density” as the number of retail establishments within a quarter-mile walk of some point.  I figured that Maple Avenue, with those old-fashioned shopping centers, could not possibly be as “retail dense” as Mosaic.  I figured, maybe the reason you don’t see people walking to the shops on Maple is that they are far too spread out.

But that’s wrong.  The center of Mosaic (Strawberry Lane Park/Target) has 81 retail establishments within a quarter-mile walk.  Mosaic claims 350,00 square feet of retail space.  I assumed the sprawling Maple Avenue, with its old-fashioned shopping centers, would have nowhere near that density.  Dead wrong.  The corner of Maple and Glyndon has 107 retail establishments within that same quarter-mile walking distance.   Using Fairfax County tax maps, I calculate just under 440,000 square feet of retail space in that area.

Within a quarter-mile walking distance of the intersection of Maple and Glyndon, there is more total retail space and there are more total establishments than within the Mosaic district.

Continue reading Post #313: Maple versus Mosaic, retail density is not the issue

Post #308: The tear-down boom (again), and the McLeanification of Vienna

The main point of this article is to show you a few graphics that I stumbled across.  So let me get that out of the way up front.  I’m not sure there’s a lot of point to this posting beyond that, other than quantifying what you already know:  They sure are building a lot of big houses in Vienna.  And, at the end, I suggest one possible change in zoning policy:  Letting them cut those big houses in half — as duplexes — would provide a type of less-expensive family-oriented housing that is really getting scarce here in Vienna.

The data:  Single family homes for sale

Per Redfin (with full attribution and acknowledgement of copyright), below is a map of single-family houses for sale in Vienna VA.   I’ve followed that with equivalent maps for Oakton, Fairfax City,  Falls Church, and McLean. These are followed by table showing relevant data for each location.

Take a minute to study the dollar values on the maps, or on the summary table following the maps. Scan for houses under $1M and under $500K.  Do the dollar values for Vienna seem a bit “rich”, compared to your understanding of these communities?

Continue reading Post #308: The tear-down boom (again), and the McLeanification of Vienna