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' STRA MG 5 <br />:1 <br />Constraints to Increasing / Capturing Demand <br />While opportunities for increasing and or capturing demand outweigh the constraints to <br />the same objective there are practical obstacles to be acknowledged. These include: <br />• The ability of Chapel Hill to capture demand for office space may be eventually <br />limited by its capacity to provide a commensurate supply of building space given <br />the relatively limited amount of land which is available and/or approved for this <br />type of use. <br />• Limited land resources are further constrained for development by associated <br />zoning and regulatory restrictions, an apparently complex and time (cost) <br />consuming approvals process, etc. <br />• Property tax rates are high relative to competitive office markets elsewhere in the <br />Research Triangle. An in -depth comparative tax analysis was beyond the scope of <br />this report but available data and input from local real estate professionals, <br />property developers, etc. seems to support this contention. <br />• Land prices are high relative to competitive office markets elsewhere. As with a <br />tax analysis, in -depth comparative land valuation was beyond the scope of this <br />assignment but input and anecdotal information suggests it is essentially true. <br />• Cost differential — the cost of second generation space in RTP is significantly <br />lower and the added costs of taxes and land noted above contribute to the cost <br />differential and constitute a constraint to capturing demand. <br />• The addition of attractive /cost effective space into the market elsewhere will <br />continue to be a constraint as competition from other communities will likely <br />increase. This also raises the issue of "leakage" of demand from Chapel Hill, and <br />the converse opportunity of "retention" which both figure strongly in the overall <br />market context. <br />• Increased marketing efforts by other competitive markets including international, <br />national, and regional activities elsewhere. More locally, competitive <br />marketing /capture efforts by Alamance, Chatham, Durham and Wake Counties <br />need to be particularly recognized. <br />37 <br />