Urbanexus Update - Issue #127
This selection of economic, real estate, and community development news and information comes from H. Pike Oliver. Some items are behind a paywall.
The economy and finance
High frequency economic indicators — www.calculatedriskblog.com
These indicators are mostly for travel and entertainment and illustrate the most significant changes in economic activity resulting from the pandemic.
Retail
Disney to close 60 Stores in North America
Once a shopping mall mainstay, The Walt Disney Company has announced plans to close at least 60 of its brick-and-mortar locations — or 30 percent — in the U.S. and Canada in a bid to shift its focus to e-commerce. These closures are being described as the “beginning” of the company’s downsizing efforts, with a significant number of overseas stores also expected to close in 2021. The specific stores to be closed were not disclosed.
Housing
Low mortgage rates and desire for space convert prospects to active buyers — eyeonhousing.org
Of the 15% of American adults considering a future home purchase in the final quarter of 2020, 56% have moved beyond planning and are actively trying to find one to buy, up from the comparable 43% share a year earlier.
Hospitality
Evolution of restaurant & hotel design — blueprintfuture.com
Hospitality expert Michael Bonadies on kitchen flexibility and efficiency, and how we can make the evolving post-pandemic new normal more welcoming and hospitable for customers in restaurant kitchens, public spaces, hotels, dining rooms, and bars.
A new hotel in the greater DC area — rebusinessonline.com
Marriott has unveiled plans for a $250 million luxury JW Marriott hotel in the master-planned community of Reston, located between Washington, D.C. and Dulles International Airport. The building will rise 26 stories, featuring 250 guest-rooms, 90 for-sale residential units, 15,000 square feet of meeting space, two restaurants, an executive lounge, swimming pool and fitness center.
Residential
Lot supply is tight across the USA
Zonda’s New Home Lot Sales Index came in at 55.1 for the fourth quarter of 2020, down 11.6% from the third quarter and 20.4% year over year. Out of the 30 select markets in the index, lot supply tightened in 28 markets on a year-over-year basis in Q4 2020. The exceptions are Sacramento, California, where lot supply rose 1% YOY, and Boise, Idaho, where lot supply rose 9% YOY. All 30 markets came in at index values under 75, considered “critically undersupplied.”
Attached housing in the greater Seattle area
Assumptions during the initial outbreak of COVID-19 about how the pandemic would impact housing. Buyers were expected to insist on larger homes to accommodate stay-at-home activities, big backyards, and more space between neighbors. It turns out that attached housing has done very well. The accompanying chart compares the percentage increase of monthly sales rate between attached and detached. Clearly, we see attached sales rate capitalized on the home buying frenzy in Puget Sound. An interesting question to ask in future analysis is how much did the historically low inventory for housing overall compel an attached buyer to “settle” due to lack of availability of single-family housing?
Growth in single-family rental and built-for-rent housing
The single-family rental (SFR) and build-for-rent (BFR) space is emerging as one of the strongest growth sectors in commercial real estate. While the SFR market has made up a portion of the rental market for many years, historically individual and small-scale investors have dominated the market. Institutional investors have only invested in the space for the last 10 to 12 years since the end of the Great Recession.
SFR growth is expected to outpace multifamily, office, retail, storage and hospitality growth by 2022. As the demand for more SFR properties grows, an increasing number of larger investors are expanding their investment strategy to include the product. With the SFR asset class gaining more attention, the BFR sub-segment is playing an emerging role in large-scale investors’ portfolios. The SFR market is estimated at $3.4 trillion, compared to $3.5 trillion for the multifamily market. Currently, institutional investors make up less than 2 percent of the SFR market compared to 55 percent for the multifamily market.
Office
Companies take a wait-and-see approach
A growing number of corporate firms are opting to extend leases on their current locations until there’s more clarity in the post-pandemic market and means for their workplace strategy. Others are pre-empting a future scramble for a new generation of workplaces, signing pre-let commitments for 2023 and beyond. The wait-and-see approach is most prevalent right now in the U.S. where before COVID-19, renewals accounted for 29 percent of all office leasing activity.
But by the end of 2020, that figure was estimated to be around 70 percent, according to JLL data. Around 43 percent of renewals in the final quarter of 2020 were five years or shorter, and WALTs (weighted-average lease terms) are falling.
What happens when a city’s largest employer goes ‘work from anywhere’ — www.bloomberg.com Salesforce positioned itself as a focal point of downtown San Francisco with its behemoth headquarters. Now it joins the list of tech companies de-emphasizing the office.
Community planning and development
A new era for cities and real estate development The shifting priorities of urban communities and how we can reimagine the process of planning and real estate development to better fit modern inhabitants and their concerns.
Berkeley beating back exclusionary zoning
In 1916, the city that is now a byword for progressivism became one of the first in the country to set aside large tracts of its land for single-family homes. Berkeley’s purpose was openly racist; as a real estate magazine of the era explained, excluding apartments and other densely populated residences was part of an effort to protect the wealthy white residents of Berkeley from an “invasion of Negroes and Asiatics.”
Berkeley has finally taken a step in a new direction. The City Council has adopted a measure that acknowledges the racist history of single-family zoning and begins a process to eliminate the restriction by 2022. It is a very baby step: Berkeley’s measure is mainly symbolic, putting off for the future the tough business of actually rezoning the city.
Modern housing — archidose.blogspot.com
John Hill of the Archidose blog, reviews this paperback reprint of Modern Housing, originally published in 1934, as well as the forward by Barbara Penner. Modern Housing is widely acknowledged as one of the most important books on housing of the twentieth century. It catalyzed an intense period of housing activism in the United States, resulting in the Housing Act of 1937, which Catherine Bauer coauthored. In light of today’s affordable housing challenges. Bauer's prescriptions for how to achieve humane and dignified modern housing remain as instructive and urgent as ever.
Catherine Bauer (Wurster) (1905–1964) was a leading public housing advocate and a lecturer at the University of California, Berkeley, where she was instrumental in the creation of its College of Environmental Design. Barbara Penner is an architectural historian and professor of architectural humanities at the Bartlett School of Architecture, University College London.
Boulder’s challenge — www.city-journal.org
The Colorado city’s future depends on whether newcomers can afford to live there. Born a boomtown, Boulder has sought to preserve itself in the face of growth ever since. Time and again, periods of expansion were built on the exhaustion of preservation as an organizing interest, when new political coalitions formed. For such a thing to happen now in Boulder may seem unlikely, but as Minneapolis recently learned, shifts in the political winds can happen suddenly. Seattle’s ADU reform took five years to bring about, following heated debates—and after decades of local citizens making their case. It’s worth noting in this context that the most celebrated architectural features of Boulder’s environment would be illegal to build today.
Regional and metropolitan dynamics
Remote workers spur an affordable housing crunch in Montana
Bozeman has become a haven for coastal refugees as the pandemic drags on, intensifying a housing crisis for existing residents of the town. The average rent for a 2-bedroom apartment in Bozeman hit $2,050 a month in early February, a 58% surge from a year earlier, according to rental site Zumper. The cost of a home also jumped by almost 50%, fueled in part by an influx of office types who switched to remote work when cities locked down — and ultimately decided to relocate when it became clear they wouldn’t go back any time soon.
Will downtown Seattle bounce back after the pandemic?
After months of deserted streets and shuttered storefronts, downtown Seattle faces a long road back to recovery. After months of deserted streets and shuttered storefronts, the businesses, institutions and individuals that depend on downtown Seattle are desperate to see it come back to life, but have little certainty whether or when it can regain its earlier vitality.
Where tech workers moved in 2020--and didn't
The Austin surge that wasn’t. Plus booming Seattle, miraculous Madison, and sluggish San Francisco. LinkedIn data shows where tech workers were actually moving in 2020. The key beneficiaries were less buzzy cities like Madison, Wisconsin; Richmond, Virginia; and Sacramento, California. These places don’t get much play in the news, but they’re attracting tech talent at significantly higher rates than they were previously. Austin, conversely, gained tech workers more slowly.
The Greater Salt Lake market, which includes the seven major counties along the Wasatch Front and Back, has been growing at an astonishing rate over the past few years. This recent massive influx of demand makes it important to understand what makes the Salt Lake City market attractive to so many people and major companies. One of the most notable areas along the Wasatch Front, strategically named “Silicon Slopes,” has been a major draw for technology companies from across the country and is bringing highly desirable jobs to the Salt Lake market. Prior to the COVID-19 pandemic, the market was on average creating approximately 35,000 new jobs per year. Once the pandemic hit, the market lost 86,200 jobs as of April 2020. Based on numbers from the Bureau of Labor Statistics, the Greater Salt Lake market rebounded with a net increase of 5,500 jobs over all of 2020.
Construction
Think Wood surveyed 775 U.S. developers, architects, contractors and industry experts to hear their predictions for the top trends in timber construction this year and to understand how the market has shifted in response to the COVID-19 pandemic. Mass timber has gained major momentum in recent years. As of December 2020, WoodWorks7 reported 1,060 mass timber projects had been constructed or were in design in all 50 United States
The startup construction company, founded in 2015 in Menlo Park, California, vowed to revolutionize the industry through an aggressive growth strategy, offering a wide range of in-house design services and manufacturing many of the products that go into its prefab construction. But by 2019 — a year when the construction industry was reaping the benefits of a strong economy, low interest rates and boom in new development — Katerra was aiming just to break even. By 2020, Katerra announced it was taking cost-cutting measures, including reducing staff numbers by more than 7%. In a December 2020 press release that Katerra stated that it, “became overcommitted and spread itself too thin,” while “growing numerous businesses in parallel — ultimately more than we could fully develop and maintain all at once within this very capital-intensive industry.”
Salt Lake City approves an off-site construction code
The Salt Lake City Council has voted to adopt two new standards in development between the International Code Council and Modular Building Institute that establish best practices for off-site construction.
ICC/MBI Standard 1200: Standard for Off-Site Construction: Planning, Design, Fabrication, and Assembly and ICC/MBI Standard 1205: Standard for Off-Site Construction: Inspection and Regulatory Compliance offer minimum requirements and safeguards for off-site construction safety, public health, and general welfare, as well as standards for regulatory compliance and local inspection processes.
Checking sources
How to spot fake news, visualized in one infographic
With misinformation all over the web, how do you discern fake news from real? Here are the characteristics of fake news and and how to spot them.