Urbanexus Update - Issue #29
Urbanexus Update - Issue #29
Please scroll down for the weekly compilation of analysis, reporting and opinion about real estate and community development. Note that some links may lead to material that is behind a paywall.
The economy
The unemployment rate declined to 3.7 percent in September. Notably, the unemployment rate for high school graduates without any college continued a dramatic decline as illustrated in the chart below.
But labor force participation has yet to recover to pre-Great Recession levels as highlighted in the following chart from Hoya Capital. This suggests that the USA economy has some ways to go before it has accomplished true "full employment."
Homebuilders and REITs dipped, pressured by an uptick in interest rates highlighted by a sudden surge in the 10-Year bond yield. Homebuilders have lost nearly a quarter of their market value so far this year.
Industrial real estate
E-Commerce, 3PLs push industrial Real estate
Industrial commercial real estate has experienced a great run over the last few years, and its performance didn't slow down during the first half. Warehouses and distribution centers are getting an extra push from two rapidly growing industries: e-commerce and third-party logistics companies (3PLs).
Brooklyn Navy Yard goes vertical
Vertical manufacturing—which places large, floorplate-spanning manufacturing zones at the base of new buildings, with packaging and offices above—will be part of the next phase of development at this former New York City military base.
Office real estate
Cash is pouring into co-working spaces
More and more, larger companies that don't want to be locked into decades-long leases are considering the upsides of flexible spaces. In August, WeWork launched HQ by WeWork to serve the needs of medium-sized businesses. And other giants (think: Amazon, Verizon, and more) have already begun turning to co-working spaces to house entire divisions of their companies
Retail real estate
Reasons to be bearish and bullish on shopping enter REITs
While there is little doubt that e-commerce and demographic trends continue to weaken the outlook for lower-productivity retail assets, brick and mortar stores continue to be the most efficient distribution channel, for now.
Residential real estate
Resurgence of condos in the Seattle area After a half-decade of building rental apartments, developers are switching gears to construct for-sale condo projects, which should open up more homeownership options that are less expensive than single-family homes but still not cheap.
Home affordability in USA is at ten year low
Based on ATTOM Data Solutions Q3 2018 U.S. Home Affordability Report, U.S. home prices in the third quarter of 2018 were at the least affordable level since Q3 2008.
Tech and real estate
Tech venture investors focusing on real estate
One example is Opendoor, a startup that flips homes that attracted attention in June when it announced it had raised $325 million from a long list of venture capitalists. The financing valued the 4-year-old company at more than $2 billion.
Attitudes about developers
Do people object to development or to developers making money?
Attitudes against real estate developers lead to more regulation, punishing developers, which winds up thwarting housing affordability. UCLA researchers Paavo Monkeonen and Michael Manville find that perceived harm is just part of story. A more powerful motivator for opposing new housing may be the drive to punish someone else--namely, developers.
Transportation
Where higher earners commute on transit
Commuting by public transit for higher income persons has hit an all-time high in the Seattle metro area, but the percentage is highest in the greater New York area, followed by the Bay Area, Chicagoland, greater DC and Boston.
Environment
Is it time to leave the American west?
The western US has long been characterized by balmy weather and fresh starts, but some are weary of the unhealthy air and worry about a water shortage.
Around the world
Kenyan tribe fights forced evictions with an app — www.thisisplace.org
The app's ability to geo-reference videos, pictures and audio files enables Sengwer people to record and report activities like illegal logging and evictions.