Urbanexus Update - Issue #146
This selection of real estate and community development news and information comes to you from H. Pike Oliver. Please note that some items may be behind a paywall.
Real estate and the economy
Will stumbling housing drive the U.S. into recession?
A widely read research paper a number of years ago went so far as to claim that "Housing IS the Business Cycle", explaining: "Of the components of GDP, residential investment offers by far the best early warning sign of an oncoming recession."
That's a worrisome point in the current climate. The Bureau of Economic Analysis reports in its quarterly GDP numbers that gross private domestic residential investment has fallen in each of the five quarters through this year's Q2, accelerating to a sharp 17.8% decline during the April-through-June period.
Negative leverage looms for investment sponsors The market will have to adjust to negative leverage by either having cap rates go up or investors willing to take a lower return.
Hurricane Ian is among the costliest storms on record. The impact puts an emphasis on alternative housing options. Insured losses alone are projected to surpass $67 billion, making Ian one of the costliest storms in Florida history without yet accounting for the broader infrastructure damage and uninsured losses.
Economic recovery efforts from hurricanes are generally evident within two to six quarters after the event, however, other current economic hurdles may extend this timeline. Ongoing supply chain constraints, rising interest rates, and widespread inflation may lead to a longer and costlier rebuilding period relative to previous storms, particularly in Southwest Florida.
Mixed-use
Construction rises on Domino Sugar Refinery redevelopment in Brooklyn — newyorkyimby.com Construction is rising on The Refinery, a redevelopment of The Domino Sugar Refinery at 292 Kent Avenue in Williamsburg, Brooklyn.
Redevelopment of a mall in Southern California
A sprawling retail center which neighbors South Coast Plaza is up for redevelopment with a large mixed-use complex featuring housing and commercial uses, under plans now being considered by Santa Ana city officials. Nearly 4,000 homes, a hotel, and commercial space are planned by Related Companies for reuse of the 42 acre site.
Residential
Obscure California law may bring apartments to cities
Developers in Santa Monica, CA (Los Angeles area) are planning 4,500 new apartments under a little-known state legal provision — and the city might not be able to stop them.
The story of a San Diego home over seven decades
To tackle its critical shortage of affordable housing, California has taken aim at a central tenet of the American dream: the single-family home. This podcast tells the story of one such property, in San Diego. It can teach us about the larger housing crisis and how we might solve it.
Disrupting residential resales
Known in the greater Phoenix area for his 72Sold billboards and TV commercials — Hauge is taking his home sales program nationwide. In the latest installment of the Business Journal's Meet the C-suite series, Hague spoke about how his father — and auto sales icon Tex Earnhardt — influenced him, and he explains the psychology behind his successful home sales formula.
Affordable housing tax credits
Forty-year-high inflation rates that are outpacing wage growth and eating away at personal income are exacerbating already outsized resident demand for affordable housing financed by the federal low-income housing tax credits. Affordable housing advocates hope that a recent congressional hearing on affordability will help stimulate discussion and passage of the stalled Affordable Housing Credit Improvement Act. Among other measures, the broadly supported bi-partisan bill would increase the annual allocation of housing credits by 50 percent over two years.
Master-planned communities
Transforming the Irvine Ranch — thebigplanbook.com
A lecture by the authors of Transforming the Irvine Ranch: Joan Irvine, William Pereira, Ray Watson, and THE BIG PLAN summarized how a 93,000-acre agricultural empire in Southern California became a vast real of master-planned community development.
SEE TEXT AND SLIDES: Betty Croly Memorial Lecture at the 2022 Conference of the California Chapter of the American Planning Association.
READ ALSO: A Los Angeles Times article about the lecture.
100,000-home Teravalis breaks ground in Buckeye, AZ
The Howard Hughes Corporation — in partnership with JDM Partners and El Dorado Holdings — broke ground Friday, Oct. 28, on Teravalis, formerly known as Douglas Ranch. The community is located in northwest Buckeye. The groundbreaking took place at 16912 Sun Valley Pkwy., Buckeye 50 miles northwest of downtown Phoenix.
Teravalis is likely to become Arizona’s largest master-planned community. The plan calls for 100,000 homes, 300,000 residents, and 55 million square feet of commercial real estate upon completion. The developer anticipates that the 37,000-acre community will be completed over the next 50 years.
READ ALSO: Here’s why $142.5M West Valley land deal took decades to close
Johnson Development in Texas and Georgia
The firm has 19 active master-planned communities on 47,500 acres of land in the Houston, Dallas-Fort Worth, Austin, and Atlanta areas.
Sustainable and equitable development
Five sustainable eco homes Think Wood presents five homes as project examples that illustrate how you can build single-family housing sustainably and with style.
Climate friendly apartments in Las Vegas
Ovation Development is building a 302-unit multifamily project in the Las Vegas area that will be a leader in solar power generation, Internet of Things (IoT) features, and tracking housing’s carbon footprint, all of which the company hopes will help lead the way in climate-friendly housing and serve as a model for other developers, says Jess Molasky, a principal at the company.
Molasky says that even though this project is a prime candidate for solar power because of its location, it can be a model for developers in locales that aren’t as sunny because solar works well in a lot of different parts of the world, especially with how much solar technology has improved over the years. “We definitely want to demonstrate for other multifamily developers that this is a path that they should be taking,” he says.
Flood risks beginning to influence U.S home buyers Based on new research by Zillow in partnership with ClimateCheck, finds that areas with increased flood risk also see an increase in mortgage denials and in would-be borrowers withdrawing their mortgage applications, even after controlling for income and property value.
How zoning slows racial integration
The power of zoning to separate classes and races has been obvious from zoning’s earliest days. The new papers quantify the contemporary impact of zoning restrictions in Greater Boston and Minnesota’s Twin Cities metro area. They find that zoning for multifamily housing is associated with substantially larger non-White population shares than zoning for single-family housing. Single-family zoning remains a major barrier to extending neighborhood integration, although certainly not the only one. Unlike most other barriers to full racial integration, zoning uniquely can be addressed with straightforward, low-cost policy change.
Real estate leaders
Sharon Harper of the Plaza Companies
Decades after she graduated from Creighton University in Nebraska as a newly minted journalist, Sharon Harper found herself poised to write a new chapter for an iconic part of the Phoenix real estate landscape.
Her goal in 2017 as CEO of Peoria-based developer Plaza Companies, along with development partner Holualoa Cos., was to redevelop the sprawling former Park Central Mall property on Central Avenue. Getting a chance to work with officials at her alma mater so many years later was indeed serendipitous.
John F. Shea dies at 96 — labusinessjournal.com
John Shea, chairman of J.F. Shea Co. Inc., died after a brief illness on Oct. 16 in Pasadena, CA. He was 96 years old. Shea’s company owns and operates nearly 10,000 apartments and has built over 100,000 for-sale homes, many of which are in master-planned communities developed by the firm.