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Analysis of Real Estate Economics & Potential Bonding Capacity of Industrial Development
Client: The Harvard Economic Development Corporation
The Harvard Economic Development Corporation ("HEDC") retained Gruen Gruen + Associates ("GG+A") to conduct a real estate economic analysis to identify whether a feasibility gap is likely to exist for the private development of higher-quality industrial building projects. HEDC also asked GG+A to complete a preliminary analysis of the amount of infrastructure financing a prototypical industrial development could potentially support.To identify whether a gap in feasibility exists, GG+A simulated the real estate investment results of a prototypical development, based on the estimated cash flows produced from market-research driven cost and revenue assumptions and capital market parameters.
GG+A identified criteria for financing infrastructure and a variety of financing mechanisms. GG+A built a model to assess the bonding capacity under a Special Assessment District and a Tax Increment Financing District. Based on the analysis, GG+A identified potential strategies for bridging the identified feasibility gap and financing needed infrastructure to facilitate industrial development.