Urbanexus Update - Issue #90
H. Pike Oliver compiles this weekly update of real estate and community development news. Inclusion of an article does not imply endorsement. Please note that some links may lead to items that are behind a paywall.
The economy
A record job growth streak — www.calculatedriskblog.com
Bill McBride of the Calculated Risk blog offers a few comments on jobs growth in the USA. After adjusting for temporary decennial Census hiring and firing (data here) the streak of consecutive positive jobs reports is 118 months long. It makes sense to adjust for the Census hiring and firing since that was preplanned and unrelated to the business cycle.
Master-planned communities
The top-selling master-planned communities
Every year since 1994, RCLCO conducts a national survey identifying the top-selling MPCs through a rigorous search of high-performing communities.
The ranking of RCLCO’s top-selling communities is based on total net new home sales as reported by each individual community. To be included in their ranking, MPCs must have a number of features. True MPCs are developed from a comprehensive plan by a master developer, and incorporate a variety of housing types, sizes, and prices, with shared common space, amenities, and a vital public realm. The best examples of MPCs are developed with a strong vision and comprehensive plan that guide development and unify the community through distinctive signage, wayfinding, entry features, landscaping, and architectural/design standards.
Beyond the built environment, MPCs differentiate themselves from typical suburban subdivisions in that they provide a means for interaction among neighbors in the sense of the word “community.” They foster an environment within which generations can live better in terms of housing and the community environment, and many offer educational opportunities, neighborhood shopping and services, and even employment centers to complement the residential neighborhoods. Although rooted in a vision, the most resilient MPCs have flexible master plans that are environmentally sensitive, market responsive, and nurture the lifestyles of their residents.
Mapping the top-selling master-planned communities
Following the release of the Top-Selling Master-Planned Communities (MPCs), RCLCO prepared an interactive map tool that visualizes the sales at Top-Selling MPCs across the country from 2013 to year-end 2019. This visualization shows that Florida, Texas, and California represent the largest share of home sales among the top-selling communities, with the share of sales in other states steadily growing over the past seven years.
Office
Tech Tenants Are Transforming New York City
Tech has played a pivotal role in transforming the New York office market over the past decade. Whether it was helping establish areas like Flatiron and Chelsea as office destinations, creating a less informal workplace culture, or fueling job growth for the better part of that time, tech’s effect is significant. And it’s the largest companies in this sector, referred to as FAANG (Facebook, Apple, Amazon, Netflix, and Google), who are the driving forces in helping reshape the landscape in the years to come.
Retail
Changes in retail and property tax assessment
Physical retailers attempting to compete with Amazon’s fast delivery have introduced buy-online-pick-up-in-store (BOPIS). Many sellers have found BOPIS difficult to implement due to expensive software that tracks live inventory and requires staff training. Essentially converting a retail-only property into a retail and warehouse hybrid, the method may require modifications to the real estate. This reclassification should be discussed with assessors, because retail space typically commands higher rental rates than warehouse space.
Grocery anchors have also begun to adopt the BOPIS model, and some are finding the logistics to be a challenge given their existing footprints. As a result, some stores are expanding into smaller, adjacent in-line suites to offer this service. Where this happens, a property owner that was once receiving all in-line rents may now collect reduced rents for these suites, given they are now part of the anchor space. In this scenario, it is important for the valuation to weigh the potential grocer expansion into these in-line suites and adjust as needed.
Community development
Land use regulation most restrictive on the coasts
In December, the National Bureau of Economic Research (NBER) released a working paper announcing the release of an updated version of the Wharton Land Use Regulatory Index. The paper’s lead author, Joseph Gyourko, is a professor at the Wharton School who is well known for his research in this area and worked with the previous version of the index.
The index is based on a survey of over 2,400 primarily suburban jurisdictions across the U.S., conducted in calendar year 2018. Answers to the survey are used to construct twelve component indexes (capturing political pressure, number of approvals required, involvement of the state legislature and the court system and the local population in the process, explicit caps on production, density restrictions, presence of impact fees, and the time it takes to obtain approval). The twelve components are combined into an overall index, scaled so that it has an average value of zero and a higher index number indicates more restrictive local land use regulation.
Averaging the index across each of the 44 metropolitan areas that had data on at least ten communities in 2018, clearly shows that the most restrictive regulatory regimes tend to be found on the coasts. The metros with the most restrictive regulations, according to the 2018 Wharton Index, are San Francisco-Oakland-Hayward (with an average index of 1.18) and New York-Newark-Jersey City (with 1.04).
We're not going to build more Main Street towns
What if the “beautiful dream” of a Main Street urbanism isn’t available? What can be done to adapt that dream to auto-dependent suburbs? Johnny Sanphillippo makes the case for more than you might expect.
Transportation
Why high-speed rail has failed — exponents.substack.com
And why it will continue to fail in the USA.
Housing
Conor Dougherty of the New York Times spoke with Dr. Margot Kushel, a leading homelessness researcher, on what it would take to end homelessness.
Regional and metropolitan growth and decline
US population growth primarily in auto-oriented suburbs
Population estimates from the American Community Survey indicate a continuing pattern of the greatest growth in suburbs and exurbs of the USA in the years since 2010. At the same time, the metropolitan areas with the densest urban cores and largest central business districts grew more slowly than metropolitan areas with smaller urban cores.
Environment and resilience
BlackRock puts climate change center stage The $7 trillion investment giant says it will make environmental concerns a key investment focus, and Wall Street may have no choice but to follow suit.
A real estate leader
How one man’s vision launched a national movement
The Integral Group, founded and led by Egbert Perry, has developed many new communities, senior housing facilities, luxury real estate ventures, large-scale commercial properties, and thousands of affordable and workforce housing units. With five offices nationwide, the company now has more than 50 developments in its portfolio, all aimed at providing meaningful housing for residents. This balance is what makes the firm’s approach to community development work.
Around the world
Housing rents continue to rise in most European cities
According to HousingAnywhere's International Rent Index, a rise in residential rents continued across Europe in Q4 of 2019, yet rents did decelerated in the more expensive cities such as London, Amsterdam and Munich.