Loft investments table

Context of Study

Macon's historic business district has experienced a large increase in property investment over the past decade. The revitalization of the city's cultural core has been overseen by a mix of key stakeholders, but NewTown Macon has taken a leading role in facilitating the development of mixed use loft apartment buildings through extensive market studies and a revolving bond fund, which they use to co-finance loft rehabilitation and construction. Since 2012 eighteen loft projects have been completed in downtown Macon, representing an estimated $35.7 million in investment. Of those, NewTown directly co-financed seven lofts through its revolving bond fund, contributing $3.7 million to the developments. Our analysis sought to determine the overall return on investment for the city from the construction of the loft units, as measured by the impact on assessed property values and the resulting change in the tax base for the city government. We also wanted to assess whether NewTown achieved its objective of leveraging self-sustaining transformation in the city's downtown real estate market and thus contributed to a long term shift towards increased residency and livability in the central business district.


To measure the impact of NewTown's work on loft development we used a variety of assessment techniques. The primary method of analysis was a multivariate difference-in-difference regression model of assessed property values, as provided by the city's tax assessor, which estimated the effect of loft development on the properties themselves as well as surrounding parcels. This allowed us to separate the impact of loft investments into direct value growth and indirect, or "spillover", growth and control for larger real estate market trends. We then used these effect measurements to develop a predictive algorithm that estimated the aggregated change in property values with and without loft developments. These dollar values were then used to determine the accrued increase in local property tax revenue for the city. We then added the increase in assessed values with the additional tax dollars to create a total expected added value figure, then compared this with the total cost of the developments to determine a return on investment percentage for all loft projects and NewTown's strategic bond fund contribution.

Return on investment table for downtown loft development


A summary of the results of our impact analysis is given in the table above. By 2018, the eighteen loft buildings completed between 2012 and 2016 will have generated an estimated $24 million in direct property value appreciation, $28.3 million in spillover value through increases in surrounding properties, and $2.36 million in additional tax revenues, for total added value of $56.27 million. We project the value added to 2018 because it takes at least two years for the initial effect of loft development to be realized in the assessed value of properties. The combined added value for the city by all lofts represented a 57% return on the $35.7 million cost of development. After restricting the impact calculations to those lofts which received co-financing from NewTown's revolving bond fund, we calculated that those loft buildings generated $9.3 million in direct value appreciation, $12.4 million in spillover value, and $1 million in added tax revenues, for a total added value of $23.4 million. We then compared this total with NewTown's $3.7 million bond investment to calculate a return on investment of 532%. The bond fund was not the only source of financing for these loft projects, but NewTown's generous interest terms and vested support of downtown revitalization gave the private property developers who oversaw the construction of the lofts a much stronger incentive to invest in Macon. Without the risk mitigation provided by NewTown it is likely that the number of lofts built over the past six years would be much lower, which is why we used the total impact of those lofts receiving bond funds as the return figure in our assessment and thus why NewTown's return percentage is so much larger than the overall return.


The conclusion of our impact assessment was that the construction of new loft apartment units in downtown Macon generated a large positive return for the city. The effect of the loft investments on property values alone created significant improvements in the economic conditions of downtown; we did not even account for the other myriad long term benefits of increased residency through talent retention, consumption, and income or sales tax revenues. NewTown Macon's revolving bond fund was extremely efficient in leveraging new loft developments and, by creating favorable market conditions for attracting and retaining residents, created an incentive for other developers to invest in lofts through their own financing mechanisms. The five new lofts currently scheduled for completion in 2017 and 2018 are a good indication that the market for loft living is robust and still growing, leading us to conclude that NewTown succeeded in its mission of creating a self-sustaining transformation for the city. Our analysis has determined that the construction of new loft apartments in downtown Macon has created large economic benefits for the area, but the addition of high quality housing in the city center is only the beginning; an entire urban ecosystem needs to surround those developments in order to ensure their long-term success. Fortunately, if NewTown can continue to create innovative solutions for the city’s ever evolving challenges, Macon will continue to be a city where all are encouraged to live, work, and play.