The De Anza sub-market is the second most viable retail market after the Uptown area, and has a larger population than the Downtown, Oldtown, and Uptown markets.
Based on a location analysis, the De Anza and its immediate area best supports a lodging use, followed by residential, then office, and lastly retail. Industrial was not considered as it is a use that is not compatible with the area's zoning or existing uses.
The property is situated on 2.05686 acres of CCR zoned land which allows uses similar to R-3/C-2. The improvements include an 88 unit motel (50 rooms are rentable, 30 are not, and 3 are converted to store rooms). Built in 1939, the property is an excellent candidate for historic preservation. The property's current physical layout and design is most conducive to being used as a lodging facility, then residential, retail, and office.
From a residential stand point, residential is the strongest possible use as the market is forecasted to be at 95% occupancy by the time the De Anza could be converted in use to residential. The weakest demand is for office space with a vacancy rate of 12.9%. Retail use is strong, but the property in its current state is not physically suitable for retail use. While suffering from the weakened national conditions, the lodging market is strong enough to support the continued use of De Anza as a motor lodge, but rents would need to be increased to support renovations at the property.
Based on the above analysis, residential and lodging were considered "go" decisions, and retail and office were considered "no-go" decisions for redevelopment.
Financial Analysis--Highest and Best Use
Based on estimated renovated costs and potential income and expenses, and assuming a purchase price of $891,000, a residential redevelopment has the unlikely potential for a profit, while lodging has the potential to earn a development profit of $711,368.
Based on neighborhood responses, focus groups and direct interviews, lodging is the preferred use.