Urbanexus Update - Issue #134
This selection of economic, real estate and community development news and information comes to you via H. Pike Oliver. Some items are behind a paywall.
The economy
Car rentals explain the economy — www.nytimes.com Prices have fallen recently but not to previous levels. The industry reflects the American economy’s long, strange trip.
Is the world economy going back to the 1970s?
It is almost a half a century since the Organisation of the Petroleum Exporting Countries imposed an oil embargo on America, turning a modest inflation problem into a protracted bout of soaring prices and economic misery. But the stagflation of the 1970s is back on economists’ minds today, as they confront strengthening inflation and disappointing economic activity.
Federal Reserve is closer to taper — eyeonhousing.org
The Federal Reserve (Fed) has been supporting the housing market during the virus crisis, the 2020 recession, and the subsequent, ongoing recovery via asset-backed purchases (among other tools), including $40 billion a month of mortgage-backed security (MBS) purchases. These MBS purchases have held interest rates lower than they otherwise would have been. The Fed has moved closer to announcing a tapering or gradual cessation of these purchases, as it supports the goal of maximum employment and price stability.
Optimism for U.S. commercial real estate
According to the Urban Land Institute's semi-annual real estate forecast, a building consensus of 40 of the nation's economists and industry analysts sees light at the end of the tunnel for the U.S. commercial sector through 2023.
Evergrande
The Evergrande debt crisis — www.bloomberg.com In China, a company called Evergrande promised to deliver apartments to some 1.5 million buyers, who are still waiting for their keys.
China's 'demolition' of Evergrande The knock-on effects of slower Chinese growth would be felt around the world, though so far financial fallout seems likely to be contained.
The Evergrande story is bigger than just one company. It’s about China’s unsustainable model of economic growth, which has relied on endless investment and a mad, debt-fueled development frenzy in recent years. That model helped China soar, but the country is now experiencing some turbulence.
Office
Is going to the office going away? A conversation with Chris Herd, who foresees a future in which most companies are remote-first.
What about older office space as a result of COVID-19
While office space across all classes (A, B and C) are seeing higher-than-normal vacancy rates, Class B or C space is making up a growing share of what's vacant in many markets. But not all.
Industrial
Why warehouse space is so valuable now
Residential
Student apartment sale sets Seattle price record
The M student housing tower in Seattle's University District recently sold for $138 million — which at $1,007 per net square foot is the most expensive price per square foot for a multifamily building in the city’s history, according to Colliers.
It beat out the previous record holder, Tower 12 in Belltown, which sold for $825 per square foot in 2017.
Statistics that illuminate the housing crisis
Headwaters Economics shines a light on record-breaking costs in the West of the USA.
Demand for ownership in the USA
Nine factors that are influencing purchasing.
California’s housing crisis looms large for Gavin Newsom
Having survived a recall vote, Governor Newsom is free to focus on the state’s homeless population and housing shortage. He has more room to maneuver than he did when he first took office. And the extent to which housing prices and purchase transactions have gone nuts in California is highlighted in this article.
L.A.'s dingbat apartment buildings — www.bloomberg.com The colorful carport-equipped apartment buildings offered affordable — and sometimes stylish — digs for generations of L.A. dreamers.
Where do public lands factor into the homelessness? As the housing crisis in the West deepens, more unhoused people are making a home outside.
Retail
Blatteis & Schnur bets big on hHigh-street areas
The company follows the same principle in each of its projects: “You buy the best corners of the city you can. We think long term and are conservatively leveraged or have no leverage,” says Dan Blatteis. Some of Blatteis & Schnur’s biggest projects to date include At Mateo in the Arts District in downtown L.A. as well as a $500 million project in the works in San Francisco’s iconic Union Square. It also has a number of properties in areas such as Santa Monica and Venice, betting big on upscale retail zones.
High-street retail — stores located on main streets — has fared better than some other sectors, especially professional services and fitness, which are taking longer to bounce back from the pandemic’s impact on business and retail foot traffic. “Since the start of 2021 and the shift in the presidential election and the rollout of the vaccine, everything has been fantastic in the high-street retail markets,” Greg Briest, a vice president at Jones Lang LaSalle and added that vacancies in posh retail districts such as the Golden Triangle, Abbot Kinney, and Melrose Place have filled up, and “opportunities have become limited.”
Master-planned communities
Master-planned communities provide an attractive option to a variety of buyer groups. In fact, Zonda data shows that in many states across the country, neighborhoods within a planned community generally sell at a faster rate than other neighborhoods. What makes these locations so attractive to prospective buyers? Zonda Advisory principal Mollie Carmichael and senior vice president Kristine Smale recently shared insights on a few of the top “make me move” trends within planned communities—along with examples of places executing them well—most of which are interconnected on some level and all of which don’t seem as though they’ll be going away any time soon.
Manhattan West in NYC — www.archpaper.com Move over Hudson Yards, today marks the official opening of another megaproject built over a railyard deck on Manhattan’s Far West Side. Manhattan West, a
$600M investment in the Phoenix area — azbigmedia.com
The involvement of Howard Hughes Communities may finally launch a Phoenix-area master-planned community that has been in the works for several decades. The property is the 37,000-acre Douglas Ranch in Buckeye, AZ, about 45 miles northwest of downtown Phoenix.
Metropolitan and regional dynamics
The need to reopen the metropolitan frontier
Survival of the City: Living and Thriving in an Age of Isolation, by Harvard University economists Edward Glaeser and David Cutler characterizes the pandemic as a serious “existential threat to the urban world, because the human proximity that enables contagion is the defining characteristic of the city”.
Vermont and the Contradictions of Place
As Aaron Renn points out, the Green Mountain State, with its natural beauty, small towns and traditional lifestyle, sometimes seems too good to be true. Vermont illustrates many of the cultural contradictions of place in America. It reveals that the preferred environments of many on the left and right actually overlap. Don’t be fooled by their rhetoric; leftist whites also prefer largely white environments. Portland, Ore.; Boulder, Colo.; and Austin (the whitest major city in Texas) are hot destinations for white progressives. There’s also long been a rural component in the modern American left, recalling the “back to the land movement” of the 1960s and 1970s. This left-right overlap in Vermont was humorously pointed out in a Saturday Night Live skit in which a neo-confederate group in Virginia decided to have their annual retreat there.
Exposure density and COVID death rates
In their new book, Harvard economists Edward Glaeser and David Cutler characterize COVID and related issues as an “existential threat to the urban world, because the human proximity that enables contagion is the defining characteristic of the city” Fatality rates data continue to show an association between higher county urban densities and their fatality rates. Urban density is used as a surrogate for the overcrowding that increases exposure density. The issue is not density per se, however, but consistent with crowding which is often found in dense urban areas.
Environment, sustainability. and resilience
Extreme weather and climate change
Epic droughts, wildfires and ever-strengthening hurricanes. As weather events become more extreme, some experts are regarding them as “a new normal.” This video focuses on what is happening focused on the west of the USA, which is experiencing the combined effects of a severe drought cycle and warming temperatures
In their new book, Harvard economists Edward Glaeser and David Cutler characterize COVID and related issues as an “existential threat to the urban world, because the human proximity that enables contagion is the defining characteristic of the city”
Construction
A multi-story full mass timber building — www.archpaper.com
Zoned for both office and light industrial use, the mass timber 1 De Haro is a first both in San Francisco and California as a whole. The project employed both cross laminated timber and glue-laminated timber.
As detailed in a case study on the project, conditions at the site, an area with soft soils located directly adjacent to an underground portion of Mission Creek, called for deep piles to anchor the buildings. Because of the markedly lightweight timber framing system of the structure—30 percent less weight than a comparable concrete system—fewer piles were required to anchor the building’s concrete base. (Concrete flooring was required for the building’s podium level, per city requirements for light industrial use.)
Tallest buildings are getting taller — www.bloomberg.com
Advances in concrete, elevators, and engineering have created a new breed of buildings. The past two decades have seen an explosion of tall buildings. From 1991 to 2001, an average of twelve 200-meter-plus structures went up around the world each year. From 2011 to 2021, the annual average was 112, according to a report by the Council on Tall Buildings & Urban Habitat, an industry-funded nonprofit. Supertalls have proliferated, too. The average height of the 100 tallest buildings in the world has increased 41% since 2001, from 284 meters to 399.
3-D printer helps create a community — www.nytimes.com Three-dimensional printing can create nearly any object. A partnership in Mexico is putting that theory to the test, building a village for residents living in poverty.
Leadership
Larry Johnson cultivates large scale communities
Realizing he could make good money in real estate, Laryy Johnson dropped out of law school after one year to pursue his newfound career in the summer of 1962. It was also the year NASA began to construct the Lyndon B. Johnson Space Center in Houston. Seeing an opportunity, Johnson moved to Houston and started working for a commercial real estate brokerage firm.
Johnson Development’s first planned community was Steeplechase, a 1,000-acre infill development on the northwest edge of Houston. Johnson acquired the property in 1979, set up a MUD, and developed it with a swimming pool, a clubhouse, and a trail network. In the late ’70s, Johnson was also hired by Georgia businessman J.B. Fuqua to manage a 10,500-acre former plantation south of Houston, now referred to as Sienna. Johnson set up a Levee Improvement District, similar to a MUD, raising $20 million to build a levee and manmade lake system that would protect Sienna from periodic flooding by the nearby Brazos River.
Be careful what you pray for
The folly of a Federal infrastructure bill — marketurbanismreport.com Federal infrastructure spending is a questionable idea, namely amid rampant debt and inflation.