Plan Commission

LINBERGER & COMPANY, LLC REAL ESTATE APPRAISAL & CONSULTING SERVICES November 14, 2021 Brett Hanlon, AICP Entitlements Project Manager, Retail Development CARVANA 1930 W. Rio Salado Parkway Tempe, Arizona 85281 Re: Proposed Carvana Vending Machine Fulfillment Center 9801 Woods Drive Skokie, Illinois Dear Mr. Hanlon, At your request, I have evaluated the impact of the above-captioned development on the values of the surrounding properties. Adjoining the Carvana site is a six-building office complex (Old Orchard Woods) to the north and an approximately 650-unit multi-family complex (Optima Old Orchard Woods) to the south. About 500 feet to the east (across a utility easement) are some office buildings and hotels as well as the Edens Expressway. To the west is public open land managed by the Cook County Forest Preserve. Nearby but less proximate are a public high school and a museum. Since in my experience, the value impacts from any development are felt most significantly by its closest neighbors, my analysis focuses on the immediately adjoining office and residential developments. As discussed below, I find no evidence that Carvana will in any way diminish the values of either neighboring development. This conclusion is based on my analysis of the Carvana proposed for Skokie, the Carvana which has been approved for Schaumburg, the existing Carvana in Oak Brook and Carvanas that have been developed throughout the United States. CARVANAS DO NOT CHANGE THE NATURE OF THEIR NEIGHBORHOODS Carvanas are invariably infill developments in established areas with expressway exposure. Both the Oak Brook and Schaumburg Carvanas replaced older office buildings in office/business parks along principal expressways. This will be true of the Skokie Carvana as well since it will replace a five-acre, under-utilized parking lot that is part of a large office campus that began development around 1960. This area is principally commercial and does not fit the profile of a quiet suburban location, as it is bounded on the east by the Edens Expressway, the major traffic artery through Chicago's northern suburbs. Also located here is a multi-family development of three buildings that were 1017 RIDGE AVENUE EVANSTON, ILLINOIS 60202 PHONE 312.968.1017 EMAIL mary@marylinberger.com 0 constructed beginning in about 2006. It does not appear that either its commercial neighbors or its direct exposure on an expressway has had any detrimental impact on this property. The Skokie Carvana site is within in an Office Research (OR) zoning district that Skokie considers to be an industrial classification. This district encompasses both the adjoining office and residential uses. CARVANAS ARE LOW INTENSITY DEVELOPMENTS Carvanas are designed as relatively small single-story buildings combined with a multi-story car vending machine. The vending machines serve as a signifier for the brand. The sites include customer parking and extensive landscaping. The building sizes are typically well below what the zoning would allow. These fulfillment centers attract far fewer customers and occupy far smaller buildings and sites than traditional car dealerships. The Skokie Carvana will be consistent with this profile. It will consist of a 7,958 square foot single-story building topped by an approximately 140-foot-high glass tower on a five-acre site. It will have a much lower lot coverage ratio (3.6 percent) than the adjoining properties or what the zoning would allow (30 percent). The tower is under the zoning's height limitation (180 feet) and is 56 feet less than the height of the adjoining residential buildings (196 feet).(196 feet). The Skokie Carvana will be far smaller than alternative developments that could be constructed by right on this site. It will also generate far less traffic than its residential neighbor. A study for the Carvana development anticipates an average of 128 car trips on weekdays and 130 trips on Saturdays. It is estimated that the residential complex generates 2,770 trips per day, about a 20 times greater traffic volume. CARAVANAS ARE COMPATIBLE NEIGHBORS In reviewing Carvana's operations in other locations as well as what is planned for Skokie, I note the following: • Scope of Activities –Carvanas do not include for-sale vehicles, promotional signage, loudspeakers/intercoms, salespersons, auto parts sales or auto repairs/service/maintenance. There is no car inventory available for inspection by potential purchasers. • Customers – These individuals have completed an online purchase and arrive at pre- scheduled appointments to pick up their pre-owned vehicle. As noted above, Carvana's overall trip generation is anticipated to be quite low. • Truck Access - Trucks delivering cars to the Skokie Carvana will approach and exit along Woods Road off Old Orchard Road to the north. As a result, these trucks will not pass by the residential development to the south. Carvana provides its own cartage service and can control the timing of deliveries. • Vibration – The Skokie Carvana will be using heavy-duty asphalt pavement along its internal truck route, designed to a smoothness specification that will minimize noise and 2  vibration. Further, truck loading will occur on the east elevation, to further shield neighbors from potential noise or vibration. • Exterior Lighting - The Carvana channel letter and logo signs on the parapet of the building backlit. During non-daylight hours, the vending machines are lit up to make them visible. Based on a study of the Oak Brook Carvana, the light from the Skokie vending machine will be less than half the level deemed acceptable by the Village’s zoning ordinance. • Building Location– Although the zoning allows a building setback of only 50 feet, the Skokie Carvana will have a setback of about 97 feet from the southern lot line that separates it from its residential neighbor. The building will also be sited as far east as possible, minimizing the view impact for its neighbor. • Air and Light – Because of its location in relation to the surrounding buildings, I see no likelihood that this development would impede the airflow or natural light to adjoining properties. CARVANAS ARE NOT DETRIMENTAL TO ADJOINING COMMERCIAL PROPERTIES . CARVANA OAK BROOK 3 In April 2019, Carvana opened its first Illinois property at 720 Enterprise Drive along I-88 in Oak Brook. It consists of a 7,700 square foot single-story building and a 75-foot-high vending machine with capacity for 34 cars plus 30 surface parking spaces. It is in an established office park consisting primarily of older low-rise buildings. Neither the surrounding property owners nor the Village board expressed any objections to the development, and there have been no complaints about Carvana's operations as confirmed by Oak Brook’s Department of Development Services. The Skokie Carvana will be developed on a parking lot that historically had served four of the office buildings to the north. In January 2021, this property was sold to buyers who plan to redevelop it. These owners have no objection to the Carvana development. The two remaining buildings at the northern end of the complex have their own parking. I see no basis for concluding that this Carvana will be a detriment to its commercial neighbors. CARVANAS ARE NOT DETRIMENTAL TO ADJOINING RESIDENTIAL PROPERTIES Of the 30 Carvanas developed nationwide, 10 are within 500 feet of a residential development. I attribute this to Carvana's requirement for high traffic locales which in many markets do not include residential uses. However, Carvana is still a somewhat new property type (the first vending machine was launched just six years ago) and over time it is likely that the company will locate its operations in areas with more diverse surrounding land uses. Among the Carvanas with the most proximate residential units are Tempe, Arizona and Philadelphia which are adjoined by apartments. The Philadelphia apartments were constructed as the Carvana was being developed while the Tempe units pre-date Carvana. The Cleveland, Memphis and Houston Carvanas have single-family homes very nearby. However, only a few of these have sold recently as described below: • Carvana Memphis - This development at 7201 Appling Farms Parkway opened in November 2019 and has an eight-story vending machine. To the west is an older subdivision of single-family homes where the nearest street to Carvana is Rose Trail Drive. The homes here are primarily ranches constructed in the 1970s. This is not a high turnover area, and I uncovered only one recent sale close to Carvana, a home at 7129 Rose Trail which is about 330 feet away. It was listed in September 2019 and sold in December 2019, a month after Carvana began operations, for $139,000, which was the full asking price. The seller had acquired the property in January of 2019 for $88,000 (while Carvana was under construction) and had renovated it. • Carvana Houston - This development at 10939 Katy Freeway opened in December 2016 and has a seven-story vending machine. To the south is an older subdivision of single- family homes where the nearest street to Carvana is Lasso Lane. Most of the original homes here are gradually being replaced by new luxury homes. A 3,364-square foot home at 10932 Lasso Lane that was constructed in 2005 immediately adjoins the Carvana site. It sold in May 2018 after being listed for $774,900. A 4,141-square foot home at 10938 Lasso Lane that was constructed in 2017 (after Carvana was completed) also immediately adjoins Carvana. It sold in August 2021 after being listed for $929,900. 4  Since Texas does not disclose real estate sales prices, the closing prices for these homes are not public information. The Skokie Carvana will have a residential neighbor that has successfully operated for several years in a commercial area adjoining an expressway. Since the addition of a low intensity use such as Carvana will in no way change the character of this neighborhood, I see no reasonable basis for concluding that it will be a detriment to its neighbor. CONCLUSIONS In summary, I see no basis for concluding that this Carvana will be in any way injurious to other properties. • Carvana will be a commercial development in a location that has long been predominantly commercial. Carvana will have a residential neighbor because the developer of that property concluded it would be successful in a commercial setting with high traffic visibility. The presence of Carvana will not change this. • This residential neighbor is far larger and taller than Carvana and is estimated to generate over 20 times Carvana's daily traffic. • Carvana will be a very low-impact development from a physical, operational and visual standpoint. It will truly be a quiet neighbor. • What could be developed by right under the zoning on the Carvana site dwarfs what Carvana has proposed. Respectfully submitted, LINBERGER & COMPANY, LLC Mary M. Linberger, MAI 5 CERTIFICATION I do hereby certify that, except as otherwise noted in this report: • I have personally inspected the subject property. I have no present or contemplated future interest in the real estate that is the subject of this report. • I have no personal interest or bias with respect to the subject matter of this report or the parties involved. The amount of the fee is not contingent upon reporting a predetermined opinion that favors the cause of the client, the attainment of a stipulated result, or the occurrence of a subsequent event. • To the best of my knowledge and belief the statements of fact contained in this report, upon which the analysis, opinions, and conclusions expressed herein are based, are true and correct. • I have not relied on any single item of information to the exclusion of other information and all data were analyzed within the framework of my judgment, knowledge, and experience. I have not withheld any pertinent information. • This report sets forth all of the limiting conditions (imposed by the terms of the assignment or by me) affecting my analysis, opinions and conclusions. • This report has been made in conformity with and is subject to the requirements of the Code of Professional Ethics and Standards of Professional Conduct of the Appraisal Institute. • No other person has prepared the analysis, conclusions, and opinions concerning real estate that are set forth in this report. • As of the date of this report, I have completed the requirements of the continuing education program of the Appraisal Institute and am certified by the state of Illinois. • I will not be required to appear in Court or otherwise testify regarding this appraisal unless prior arrangements have been made. • The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. Mary M. Linberger, MAI 6 CONTINGENT AND LIMITING CONDITIONS This Certification is expressly subject to the following stipulations: • I obtained the information, estimates, and opinions contained in this report from sources considered reliable and believed to be true and correct; however, I can assume no responsibility for accuracy. • I assume that the title for this property is marketable. • I assume no responsibility for matters of a legal nature. • Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales or other media, without my prior written consent and approval, particularly as to valuation conclusions, my identity, the firm with which I am connected, any reference to the Appraisal Institute, or any reference to the MAI designation. 7 QUALIFICATIONS EDUCATION Ms. Linberger was an undergraduate student at LeMoyne College in Syracuse, New York, and a graduate student at the University of Chicago. She holds the MAI designation from the Appraisal Institute and is a certified general appraiser in Illinois. She is a member of Lambda Alpha, a national land economics fraternity. EXPERIENCE Ms. Linberger has been engaged in providing real estate appraisal and consulting services for over 30 years. She was initially employed by the Marling Group, a Chicago-based firm that provided appraisal and consulting services to an institutional clientele on a national basis. In 1985, she formed her own firm. AREAS OF SPECIALIZATION Ms. Linberger specializes in providing testimony and other litigation support in areas such as condemnation and zoning. She has extensive experience estimating the value impact of factors such as special uses, zoning changes, environmental contamination, encroachments, easements and parking losses. Some of her recent assignments have included: • Evaluating the value impact on a large commercial property of a zoning ordinance that would substantially reduce the size of its exterior signage; • Evaluating the impact of a proposed bed and breakfast on the values of surrounding historic homes in a lakefront neighborhood; • Evaluating the value impact of a road widening which results in an irreplaceable parking loss for a funeral home; • Evaluating the impact on downtown businesses of converting their privately owned and operated parking to free, municipally owned and operated parking; • Estimating the value impact on a lakefront home of an easement that would grant its neighbors lake access across its front yard; and • Evaluating the value impact of soil contamination from an adjoining property on a vacant commercial building being marketed for redevelopment by a major retailer. 8 CLIENTS The following is a representative list of clients with whom she has worked: Professional Firms Dykema Gosset Fidelity National Law Group Figliulo & Silverman, PC Helm & Wagner Karaganis White & Magel McGladry Neal & Leroy Polsinelli Shughart RSM Swanson, Martin & Bell Taft Stettinius & Hollister Public Bodies Chicago Department of Aviation Chicago Public Building Commission Chicago Public Schools Chicago Transit Authority Illinois Department of Transportation University of Illinois Municipalities City of Berwyn City of Chicago City of Elmhurst City of West Chicago Lenders Bank of America 9