Click on the post for the coverage in the Janesville Gazette today reporting that due to a market study, there will be some adjustments to the downtown development plan in EDGERTON due to lower than anticipated rental rates that can be charged.
This is very similar to the financing difficulty that is presented in the Economy Store project in Evansville, where the upper apartments that will have "upscale" features, will also have " low to moderate rents." Because traditional appraisal for commercial properties is done as a multiple of rental income, the low market rental rates is a big obstacle to a "cornerstone". The big bet is that the rents will improve. The bet is made by both the developers and the city, in that both benefit if, and only if, the downtown is reborn and the valuation after the TIF expires is much, much higher which would benefit the taxpayers and the owners.
It would be interesting to see the details of the report on Edgerton and see what the actual rental rates they presume are sustainable. Stay tuned.
Saturday, February 24, 2007
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