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THE ECONOMICS OF gEDEVELOPMENT <br /> <br />As a counterexampie to the greenfield proiecL <br />consider a hypothetical downtown redevelop- <br /> <br />than would ~pica{l¥ he ~ound in a modem 5hop- <br />depths and p~in~ requirements. Because of <br /> <br />a~ing the building, the net o~emting income is <br /> <br />$[oo per square foot of building value ($~o + <br />.[o)--e~uiva~ent to $~o per square ~oot of land <br />($~oo per buildin~ square foot multiplied by ~o <br /> <br />$~o per square ~oot in residual land value to ius- <br />ti~ ac~uisJbon o~ the underlying site. <br /> <br />velopment site. Her builoing design 31so cov- <br /> <br />indicates that the ~roiect will achieve sales <br />prices of 5~25 per net salea~ie s~uare foot or <br />~[75 per s~uare fo~t of gross building area. <br />Althoug~ residual land va{ue is really a func- <br /> <br />into $7 per square foot of site for oreo/floor of <br />residential space built. Therefore, the devel- <br />oder must build a six-ston/building to gener- <br />ate enough residual land value to pay the <br />property owner enough for the site to justify <br />ceasing its current use as a one-stoW store- <br />~ront (six stories multiplied by $7 per site <br />square foot per residential floor equals <br />per square foot in residua~ land value, exceed- <br />lng the $4o currently generated by the site). <br /> A further economic hurdle faced by <br /> <br />luted soil, or need extensive demolition. <br /> <br />ZONING IMPLICATIONS <br />AS illustrated bv the examples, reoeveiop- <br />merit prolects can face significant economic <br />challenges independent of existing land-use <br /> <br />[ng--~s another critical factor affecting proleCt <br /> <br /> o~ten desirable, swle in downtowns: <br /> <br />· FAR or units-per-acre-based bulk and <br /> <br /> enough upper-floor residential develop- <br /> <br />that aglow communities a great deal of [e~er- <br />age to impose changes. The high-profile <br /> <br />munities to regulate design more <br /> <br />the scenado provided earlier, the site needs <br />a rougthy six-fold in-crease in building height <br />to achieve an economicad¥ feasible redevel- <br /> <br />an increase in density is highly controversial <br />The lack of ce~ain~ afforded to the devei- <br /> <br />the proiect m the Erst piace even if commu- <br /> <br /> Appropriate zoning For redevelop- <br />merit should seek to ha(ante the goals of <br />t) regulating design to achieve a high <br />quaiiN environment, and 2) adowthg <br /> <br /> Ba~ancin~ these goals is tricky. AS illus- <br /> <br />ZONING PRACTICZ 2.o6 <br /> <br /> <br />