Urbanexus Update - Issue #82
H. Pike Oliver compiles this weekly update of real estate and community development news. Please note that some links may lead to items that are behind a paywall.
Investment
2019 institutional real estate allocations monitor
Cornell University's Baker Program in Real Estate and Hodes Weill & Associates have posted the findings of their seventh annual Institutional Real Estate Allocations. Launched in 2013, this this annual report analyzes trends in institutional portfolios and allocations by region, type and size of institution.
Housing
Steps toward reforming U.S. housing finance
During the fall of 2019, the U.S. financial agencies have taken initial, but substantial, steps towards reforming the U.S. housing finance system. Both have been in conservatorship for over eleven years, and government control was never intended to be permanent. Per lawyers at the Gibson Dunn firm, the Housing Reform Plan establishes an overall framework that can influence future legislative action, and other actions toward reform may be taken – as they have begun to be – as an administrative matter. Hat-tip to Michael Tenzer for highlighting this.
SoftBank Group Corp.'s Vision Fund sneezed this last week or so. What that means is that portfolio companies in the $100 billion venture capital investment program have come down with pneumonia. One of those, whether it knows it or not, may be Katerra, a housing construction disrupter that has aroused both enormous capital support from the likes of the Vision Fund and Foxconn, and an almost equally vast host of doubters since its vaunted 2015 start-up. Katerra’s meteoric rise hasn’t been without growing pains, from C-suite changes and layoffs to broader challenges in the construction business.
Amenity rich moderate cost housing
4252 Crenshaw in Los Angeles, which included the demolition of an existing one-story automobile repair center, is a four-story building featuring 111 residential units and 13 live/work units. The successful completion of 4252 Crenshaw can be, in large part, attributed to the several year long community engagement effort focused on incorporating feedback and ideas from local stakeholders.
Zillow Offers generated $384.6 million of the company’s total $745.2 million total revenue for the quarter, a 55 percent increase from Q2 revenue and 34 times what the venture made in its infancy during the same quarter last year.
Predictions for the next decade
George Casey takes a look back at the evolution of the housing industry in the past decade and try to look forward at where the industry is going for the next decade; the 2020's. It will be an exciting time if you enjoy change at multiple levels. For innovators it will be a time when new fortunes can be made in the reshaping of a critical industry. For those who are slow to change, welcome to the world of Sears and other slow adopters who slowly lose relevance and ultimately disappear.
Office
Welltower expands medical office holdings
Welltower Inc. (NYSE: WELL), a Toledo-based seniors housing and healthcare REIT, continues to expand its medical office holdings. The company announced five transactions totaling approximately $1.7 billion, including a $787 million portfolio acquisition of 29 Class A medical office buildings from Hammes Partners, a medical office investment firm based in Milwaukee.
Mixed-use
A newly formed firm headed by Atlanta are developers Jeff Grant and David Hughes, will develop Bridges at Jodeco, a $400 million mixed-use project located adjacent to Interstate 75 in Stockbridge, a southeastern suburb of Atlanta. The residential component of the 158-acre project currently calls for 300 high-end apartments, 90 single-family attached townhomes and 176 detached single-family homes that may be used for senior living.
Dewitt Carolinas Inc. has unveiled the master plans for development of Midtown Exchange, a $1B mixed-use project in Raleigh that will feature residential, office, hotel, entertainment and retail components.The development will be built on a 40-acre lot just outside Interstate 440, north of downtown Raleigh, and will comprise 790,000 square feet of Class A office space, 125,000 square feet of retail and restaurant space, 300 hotel rooms, 300 senior living units and 1,275 residential units. The residential component will include apartments, condominiums and townhomes.
Regional dynamics
For 7th year, more people left California than moved in
California may be the Golden State, but it seems to be losing some of its shine for some people who are opting to pack up and move to other states. Hat tip to Matthew Gardner for noting this.
Expanding, productive Mexico City
Much of the media has been fascinated by the growing number of megacities (built up urban areas with at least 10 million residents). Not only are megacities regularly covered but various reports have them becoming denser. They’re not, as has been demonstrated by Professor Shlomo Angel, who leads the Urban Expansion Program at New York University’s Marron Institute. Hat tip to Wendell Cox for highlighting this.
City and regional planning and zoning
Regional planning for housing development
The Southern California Association of Governments (SCAG) has voted to encourage more housing growth closer to jobs in the coastal areas of the vast metropolitan region. This action was undertaken pursuant to an often ignored 50-year-old state law, which tells cities and counties to plan for enough housing to meet projected population increases and to account for other factors that could indicate a need for more development. The law does not ensure development of planned housing. But the State of California now appears more willing to push local governments to zone for more growth than they’d to comply with the law's mandate that there be enough land to meet the state’s housing need forecasts.
How residential zoning limits educational opportunity
In a cross-city comparison, major cities with more restrictive residential zoning are less effective at providing high quality public education at a low, affordable price.
Environment and resilience
How scientists got climate change so wrong
As recently as the 1990s, few scientists thought climate change would arrive so quickly. Now we’re facing consequences once viewed as outlier scenarios.
