Urbanexus Update - Issue #145
This selection of real estate and community development news and information comes from H. Pike Oliver. Please note that some items may be behind a paywall.
Real estate investment
Global commercial property investment
According to global property consultant CBRE, following a strong global economic recovery in 2021 and early 2022, macroeconomic headwinds are raising fears of a broad-based downturn as central banks address persistent high inflation.
The Russia-Ukraine war is also negatively impacting energy supply and weighing on economic growth, especially in Europe, as consumers and businesses grapple with higher energy prices. CBRE also says strict pandemic-related lockdowns and an ongoing government campaign to rein in the tech sector are slowing growth in China. With relatively low inflation to contend with, China's central bank continues to cut interest rates to spur economic growth.
Despite these challenges, all three global regions registered very strong investment volumes in the first half of 2022, reports CBRE. While inflation, higher interest rates, and slower economic growth will cause full-year investment volume to fall below 2021 levels, they remain relatively healthy on a historical basis.
Top 10 REITs for a 20-year-old
On Twitter, investment analysts Brad Thomas got a message in chat from a 20-year-old who asked him to list the top 10 REITs for someone like him. See the full list here.
Top 10 REITs for a 70-year-old Baby boomers are in their 60s to mid-70s today, many about to be or already retired. What are the top 10 REITs the baby boomers should hold forever? Find out.
Top 10 REITs for the 'Silent Generation'
These are the people who were born between 1928 and 1945.
Master-planned communities
The Big Plan Book about transforming the Irvine Ranch
Your curator and co-author Mike Stockstill are looking forward to presenting a lecture based on THE BIG PLAN book about transforming the Irvine Ranch from an agricultural empire to a new town. The presentation will take place at the conference of the California Chapter of the American Planning Association in Anaheim, CA on October 2, 2022. Learn more about the book at https://www.thebigplanbook.com/
Las Colinas – Avadene Neighborhood — mailchi.mp
An interesting neighborhood design from Rick Harrison Design Studio
Mixed use
Blackstone lends $675m for planned Austin skyscraper The 74-story mixed-use property will be the tallest building in Texas when it comes online in 2026.
Residential
Why housing costs exploded during the pandemic?
The pandemic helped spread the sky-high housing prices of coastal hubs to other cities across the US. Read this article to see why it happened.
Rent increases in the south and west of the USA
Rents in more than three-quarters of the nation’s 150 large markets increased rapidly in early 2022, growing by 10 percent or more year over year according to the latest State of The Nation’s Housing report. Rents grew the fastest in markets in the South and West, and also rebounded in many large, high-cost markets where they had fallen early in the pandemic.
Residential real estate transaction industry imploding
Since the start of the pandemic, the biggest challenge that the residential real estate industry faced had been a lack of inventory. The number of listings in many markets were at historic lows, and it wasn’t uncommon for listings to get bombarded with multiple offers almost as soon as they hit the market.
Recently, the residential real estate industry has slowed dramatically. There are several reasons for the slowdown in the gravy train. First, mortgage rates have increased significantly due to the Federal Reserve’s aggressive steps to curb an inflation number that hadn’t been seen in decades. As interest rates increase, it increases the cost of capital which decreases the affordability of buying homes.
The traditional school of thought is that when interest rates increase, the price of homes decreases. But that is not what happened this time around. Since inflation is still out of control, the price that homes are listed for has either stayed flat or continued to increase. The combination of low inventory, increased mortgage rates, sky-high pricing, and fear of a looming recession has created a perfect storm that has reduced the volume of residential transactions.
Western cities in the USA have the smaller house lots
Lot sizes in the western states are shrinking, and a new study reveals that Arizona is among the states with the smallest lots per square foot. Angi, an online home services company, estimated the average lot size in each state and major metro based on more than 390,000 single-family home listings from Zillow. Nevada had the nation’s smallest lots, with a typical size of 7,405 square feet. California also came in with smaller lot sizes than Arizona, with a slightly smaller 8,327 square feet.
Denser cities with more expensive homes tend to have smaller lots, the Angi study notes. In San Francisco, where the typical home is $888,500, the average lot size is just 6,098 square feet — the smallest of any U.S. metro area. In Bridgeport, Conn., where the typical home is $433,000, the typical lot is 43,560 square feet, the largest of any metro area.
Office
Despite the reduction in COVID-19-related health risks, many corporate leaders have had to back off on return-to-office mandates. Unlike restaurant attendance and air travel which began a sustained increase in early 2021, office attendance has lagged significantly. And, given the ongoing tight labor market, this situation is likely to continue per John Change, Sr. VP, Research Services at Marcus & Millichap. Even a mild recession is unlikely to give employers much leverage for employers to get their staffs back in the office on more than a part-time basis.
Downtowns adapt as remote work endures
As the office recedes in importance, central business districts are transforming into spaces to live and socialize, not just work. It’s a process that began before COVID-19.
Office space deal bets on suburban lifestyle
GIC, Workspace Property Trust is acquiring a majority stake in 53 suburban office buildings
NYC office tower lands $1.3 Bn loan — www.bloomberg.com
RXR and its partners are renovating 5 Times Square, upgrading elevators, and adding amenities such as a golf simulator. Backers for the 5 Times Square loan, which runs though May 2026, include Morgan Stanley, Apollo Global Management Inc. and American International Group Inc., according to a statement Tuesday. RXR and its partners have invested another $300 million to help renovate the site.
Regional and metropolitan dynamics
People are still moving to hot, dry places The lure of sunshine and cheap housing in the US Sunbelt still outweighs the risk from climate change and extreme weather
How COVID-19 migration may remake the suburbs
Millennials, the biggest homebuying generation, were starting to decamp urban apartments for suburban homes in the years leading up to the pandemic, seeking space, affordability, and desirable school districts. Companies were leaving pricey Northeastern and California cities for tax-favorable cities in states like Texas, Florida, and the Carolinas, with their workers following suit.
Since the onset of the Covid-19 pandemic, those trends have sped up and are fundamentally reshaping high-growth markets across the United States.
Higher income millennials are on the move
The Grand Canyon State is among the top 10 destinations for wealthy millennials, according to a new study from finance platform Smartasset. The state ranks seventh among states with the largest net gain in wealthy millennials between 2019 and 2020. SmartAsset examined tax filer migration data from the IRS for people under 35 and earning at least $100,000 in adjusted gross income. The data highlights the impact that remote work has had on the economy, allowing many young people to live and work where they want and seek out cheaper locals compared to places like New York City, Los Angeles, Chicago, and Miami.
DC ranks highest for remote work in the USA
Nearly half of employed persons in the District of Columbia were working from home in 2021, according to census data. The numbers also highlight drastically commutes have changed in the Seattle area, which ranked second for work-at-home.
The biggest tech talent hubs in the U.S. and Canada
The tech workforce keeps growing. There are now an estimated 6.5 million tech workers between the U.S. and Canada — 5.5 million of which work in the United States.
This infographic draws from a report by CBRE to determine which tech talent markets in the U.S. and Canada are the largest. The data looks at the sector's total workforce and the change in tech worker population over time in various cities.
The report also classifies which metro areas and regions can rightly be considered tech hubs in the first place by looking at various factors, including cost of living, average educational attainment, and tech employment levels as a share of different industries.
Opportunities in rural areas of America
Some smaller heartland communities are dynamic markets
Construction
Modular and other off-site built housing has declined in the USA — eyeonhousing.org
The total market share of non-site built single-family homes (modular and panelized) was at 2% of single-family completions in 2021, according to Census Bureau Survey of Construction data and NAHB analysis. This share has been steadily declining since the early-2000s despite the high level of interest for non-site built construction. In 2021, there were 24,000 total single-family units built using modular (10,000) and panelized/pre-cut (14,000) construction methods, out of a total of 970,000 total single-family homes completed. While the market share is small, there exists potential for expansion. This 2% market share for 2021 represents a decline from years prior to the Great Recession. In 1998, 7% of single-family completions were modular (4%) or panelized (3%). This marked the largest share for the 1992-2021 period.
Planning and regulation
Zoning for post-retail streets
It's time to rethink zoning requirements that mandate active ground-floor uses.
Around the world
China’s Silicon Valley Lingang in Shanghai has Tesla but struggles to lure others
A 29,000-acre new tech hub southeast of downtown Shanghai successfully attracted major names like Tesla, but Lingang remains almost empty of other firms and residents three years into its launch. With the exception of Tesla Inc., however, — which broke ground on its new Gigafactory in Lingang in 2019 — the biggest investors in the hub are mostly domestic names such as state-controlled Semiconductor Manufacturing International Corp, AI firm SenseTime Group Inc. and EV battery titan Contemporary Amperex Technology Co. Ltd. Big multinational companies are largely missing from the major investor list amid growing US efforts to curb American investment in Chinese tech.
