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Downtown growth could near $1B

A real estate market analysis prepared for the new downtown plan concludes Evanston could see $640 million to $856 million worth of new downtown development projects over the next decade.

Linda Goodman of the Goodman Williams Group told the Downtown Plan Committee this morning that the bulk of the new development is likely to be residential.

She forecast that the downtown residential market could absorb 150 to 200 new units a year with a value of $60 million to $80 million.

She said downtown Evanston has strong competitive advantages in the residential market, with excellent transit service, an attractive appearance, proximity to the lake and Northwestern University and essentially no competitive disadvantages.

Ms. Goodman said her analysis recommends that the city embrace a variety of residential opportunities to enhance what she called its vibrant urban environment.

By comparison, six major new residential developments completed since 2000 have added 1,041 units to the downtown housing mix.

She said Evanston’s downtown could probably absorb 10,000 to 12,000 square feet of new retail development each year, which, based on the sale of Sherman Plaza’s retail space at $300 a square foot, she estimated would add $3 million to $3.6 million to the city’s tax base.

She said Evanston has good prospects for general retail growth with the growing base of downtown households and the generally strong North Shore market, but that because Evanston is within the coverage area of retailers in Old Orchard the city needs to provide retail offerings complementary to the mall — supporting the city’s position as a specialty retail center and expanding its service offerings for local residents.

As for the restaurant and entertainment retail category, she said Evanston has advantages in its access to mass transit and the demand created by Evanston households and Northwestern students. But it faces a significant disadvantage in that downtown does not have major arterial streets on which to locate restaurants and entertainment venues for easy access from other communities.

The smallest growth segment she identified was for office space, which she said could grow by 5,000 to 10,000 square feet per year. With an average value per square foot of $200, she said the office sector could add $1 million to $2 million to the city’s tax base.

She said that while Evanston has access to a large knowledge-based work force, excellent mass transit, an attractive mixed-use downtown environment and economically beneficial connections with Northwestern, it suffers as a potential office center because of poor access to O’Hare Airport and the region’s expressway system and from Cook County’s high business tax rates.

She added that Evanston has limited opportunities to expand its hotel space, because despite the demand generated by Northwestern and visitors to local households, for most travelers it’s not competitive with airport-oriented locations.

If all the forecast development were to take place, and assuming an effective annual real estate tax rate of 1.8 percent of a property’s value, the value used by city consultant Kane McKenna Associates in evaluating the current 708 Church St. planned development, the new construction would yield $11.5 million to $15.4 million in property tax revenue annually, of which about 20 percent would go to the city.

That city share would equal about 7 to 9 percent of the city’s current total property tax levy.

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