Urbanexus Update - Issue #67
Please scroll down for the weekly compilation of analysis, reporting, and opinion about real estate and community development. Some links may lead to items that are behind a paywall.
The economy and investment
After surging out of the gate in the first quarter, the high-flying real estate investment trust (REIT) sector trended sideways in the second quarter, finishing roughly flat despite the continued interest rate decline that, other things being equal, should result in higher real estate values. This may suggest investor uncertainty about the overall prognosis for the economy.
Housing
Multifamily development wave has lenders wary
Lenders are understandably exercising caution when it comes to financing multifamily housing development projects, says Robert Murray, chief economist for Dodge Data & Analytics, which tracks construction starts across commercial real estate.
Consumer benefits of investors buying houses
The increased availability of single-family homes for rental is good for consumers in general. Condominiums and co-ops allow a family to live in a multi-family building as an owner, not just a renter. And now the rise of investor-owned rental houses allows living in a single-family home without being an owner. Although the traditional options seem to suit most people, some would prefer alternatives.
Retail
Filling vacant big-box retail space — rebusinessonline.com
The easiest and most straightforward route for filling a vacancy is re-leasing to a tenant that will use the same amount of space. This may not garner much in terms of a rent differential, but it is an easy solve to the problem at hand. On the other end of the spectrum, an owner can elect to completely redevelop the space, which can lead to a big pay off in terms of higher rents. The major consideration should be the risk versus reward — will the amount of investment pay off in additional value for the owner or landlord?
Office
Blackstone’s EQ Office has paid $1.2 billion for two 1980s-era Seattle office towers, 999 Third and US Bank Centre, and company said it plans to spend $89 million repositioning the assets. The acquisitions come six months after Blackstone paid more than $540 million for the 42-story 800 Fifth in Seattle. The latest buys increase EQ’s investment to 3.1 million rentable square feet, or about 16 percent of the city's Class A office space.
A trophy office building sale in San Francisco — rebusinessonline.com
Paramount Group Inc. (NYSE: PGRE) is slated to acquire 55 Second Street. The transaction is expected to close in third-quarter 2019. The price reflects of valuation in excess of $1,000 per square foot ($408 MM for 387 K sq. ft.) The 25-story property is LEED Platinum certified and 87.4 percent leased.
Mixed use
Block 136 in Portland, OR, is comprised of two complementary buildings that relate to contrasting parts of the evolving Pearl District, and are joined by a new public courtyard. The brick-clad low-rise is a modern interpretation of historical industrial buildings to the south, while the sleek, glassy residential tower relates to a taller context to the north.
Walkability in US cities
D.C. ranks among the most walkable U.S. metros
The D.C. area comes in fourth for walkable urbanism. Walkable urban places feature high development density, lenient zoning rules, mixed uses, and multiple forms of transportation, according to the authors. A helpful rule of thumb for thinking about walkable areas is whether “destinations such as home, work, school, stores, and restaurants” are within a half-mile or so of a specific point. The report describes “761 regionally significant walkable urban places,” or “WalkUPs,” in the 30 metro areas studied.
Mammoth parking garages In Seattle — www.seattletimes.com Some of the largest parking structures ever built in Seattle are coming on line in and around our high-tech neighborhoods. But we're embarrassed about it, so it's OK.
Homelessness
Perspective on homelessness in L.A.
The challenge of addressing homelessness should be simplified, to be sure, but there’s reason to doubt that connecting it to the separate problem of housing affordability for the middle class is the proper frame for the task at hand.
Homeless and Addicted — www.facebook.com
A follow-up on the Great Seattle Homelessness Debate.
Leadership
Managing professional decline — www.theatlantic.com
It comes earlier than you may think. But there are ways to make the best of it.
Around the world
Luring city dwellers to emptying villages
Japan is trying to encourage internal migration: a "U-turn", when someone returns to their hometown, or an "I-turn", for those who move to the country from a city, to stem rapid depopulation.