Case Study No.1:
How Strategic Site Planning Maximized ROI
This case study for Victory Lakes Plaza demonstrates how early site planning decisions—particularly regarding parking layout—can directly influence allowable floor area calculations and, by extension, shape both the financial performance and design identity of a commercial development. We explore how parking ratios become a critical driver of long-term return on investment (ROI), especially on constrained sites.
Understanding Parking Ratios
Parking ratio is a key metric used to assess the adequacy of a property’s parking in relation to its floor area. It is calculated by dividing the total number of parking spaces by the total floor area, typically expressed as the number of spaces per 1,000 square feet of leasable area.
For example, a property with 50 parking spaces and 10,000 SF of floor area would have a parking ratio of 5.0 spaces per 1,000 SF.
Required parking ratios vary by occupancy type and building code. For instance:
B Occupancy (Business): ~4 spaces per 1,000 SF is typical
Storage/Warehouse: Lower requirements
Restaurant or Assembly Uses: Significantly higher ratios
Local building codes and/or zoning ordinances, often derived from IBC (International Building Code) standards, define these minimum ratios per jurisdiction. These regulatory requirements often dictate the maximum allowable building area a site can support, regardless of its zoning envelope or physical ability to build.
Comparative roi Analysis
Our subject property is a compact commercial parcel of less than one acre, located on a high-traffic interstate highway. A key advantage was that stormwater detention capacity had already been secured off-site, eliminating a common constraint. However, the site still presented challenges, including site area consumed by a shared drive along one side and a pre-existing drive aisle location on the opposite side.
On sites of this scale, efficient parking layout becomes the gatekeeper to development potential. Poorly optimized plans can lead to underutilizing the critical site area, reduced leasable area, and diminished project viability.
Many developers treat early feasibility studies as low-cost exploratory efforts. Unfortunately, this often results in generic or underdeveloped site planning efforts that fail to fully capitalize on a site’s potential. Investing in quality site planning at this stage is not a sunk cost—it is a foundation for future profitability.
An initial feasibility study by another architecture firm provides a useful benchmark for comparison.
This study included:
A building yield of approximately 8,500 SF
A building pad located far back, away from the street
Excessive drive aisle area with sub-optimal parking efficiency
A layout that ignored adjacent site contexts and hindered building visibility on approach from the highway
Our approach achieved:
A building yield of approximately 10,000 SF, an increase of over 15% in area-producing income
By analyzing and identifying the inefficiencies of the initial scheme
Reconfiguring the circulation to prioritize a double-loaded aisle strategy, which increases parking density per square foot
Moving the building footprint forward to improve visibility and leverage high daily traffic volumes (more than 100,000 vehicles/day)
Reclaiming leftover site area (after maximizing the parking and allowable area) for placemaking opportunities
Additionally, our due diligence uncovered a planned TxDOT highway expansion project that would have negated the initial study’s parking scheme—creating operational disasters for the future tenants thereby causing major problems for all stakeholders. Our planning avoided these negative impacts entirely, while simultaneously creating an additional income producing bonus by planning for the seamless sale of that portion of the site for eminent domain— without incurring any costs to do so.
Scenario Summary:
Let’s consider the two scenarios with hypothetical numbers:
Scenario A: Annual NOI of $100,000
Scenario B: Annual NOI up by 15%, resulting in $115,000
Assuming a constant cap rate of 6%, we can calculate the property’s value using the formula:
Property Value = NOI / Cap Rate
Property Valuation After 2 Years
Applying the formula:
Scenario A: $100,000 / 0.06 = $1,666,667
Scenario B: $115,000 / 0.06 = $1,916,667
The 15% increase in NOI leads to a $250,000 higher property valuation in Scenario B for a “stabilize and sell” strategy.
Next, we can perform an analysis over a 30-year period for the same two scenarios.
Property Valuation After 30 Years
“Scenario B”, with a 15% higher net operating income, outperforms “Scenario A” by approximately $700,000 in total returns for a “holding” strategy if the income stays continuous.
