REAL ESTATE
The Challenges Suburbs Face in Refilling Office Space
“Today’s dying office parks are yesterday’s dying malls,” says Ellen Dunham-Jones, director of the urban design program at Georgia Tech University and author of the book Retrofitting Suburbia: Urban Design Solutions for Redesigning Suburbs. A lot of suburban office space is isolated from other uses, islands in a sea of surface parking. Even before the pandemic, many suburbs recognized the need to revitalize those spaces, and build connections between office space, housing, public outdoor space and other commercial uses. Over the last decade and a half, suburban office parks have begun to recognize “urbanism as the new amenity,” Dunham-Jones says. That trend accelerated during the pandemic. As demand for office space drops, the best properties have an extra advantage — especially those that are walkable; accessible by transit; close to housing, restaurants and retail. Those types of density are urban characteristics that still face a lot of opposition in suburban areas.
https://www.governing.com/urban/the-challenges-suburbs-face-in-refilling-office-space
The key to happiness might be living within walking distance of a coffee shop
In a recent study, Cleveland and his colleagues aimed to determine how density — and other aspects of the built environment, like housing type — impact individual happiness and well-being. The research, which involved surveying almost 1,900 people living in 15 municipalities in the Vancouver region of British Columbia, found no evidence that higher-density living is associated with decreased happiness, social connection, or well-being. Instead, it found that a certain amount of density is necessary, but not sufficient, to maximize residents’ well-being. Well-designed density — think pedestrian-friendly streets with easy access to transit and amenities like shops, restaurants, and parks — was positively correlated with well-being and happiness. But poorly designed density — like very small apartments, scarce green space, and wide roads — is correlated with decreased well-being. “If you simply put a bunch of apartment towers together without providing things that density makes possible, such as local amenities, shops, transit, then you’re actually not delivering the value of density for wellbeing,” Cleveland said.
https://www.businessinsider.com/loneliness-happiness-cure-coffee-shops-dense-housing-parks-walkable-neighborhoods-2024-2
Opportunistic Funds Take Aim At Looming Commercial Real Estate Distress
Big-name managers such as Blackstone, Brookfield Asset Management, Ares, and Starwood are among those that have completed or are actively raising mega-funds targeting opportunistic strategies. For example, Brookfield is actively raising capital for its fifth vintage global opportunistic real estate fund, Brookfield Strategic Real Estate Partners V, which reportedly has a target raise of $15 billion. Office REIT SL Green Realty also is throwing its hat in the ring with a recent announcement that it planned to start fundraising for a $1 billion New York City-focused opportunity debt fund. “Fundraising and the amount of capital sitting on the sidelines that’s ready to deploy is near record highs,” says Aaron Jodka, director of research | U.S. Capital Markets at Colliers. According to Preqin, there is roughly $260 billion in capital that is targeting North American real estate today. That level is down from the high-water mark of $283 billion in 2022, but still a sizable volume by historical standards. “At the end of the day, we’re still at tremendous amounts of investable capital, and the vast majority of this is focused on debt, value-add, and opportunistic strategies,” he says.
https://urbanland.uli.org/opportunistic-funds-take-aim-at-looming-commercial-real-estate-distress
Office prices still need to drop 50% for housing conversion projects to work, says Goldman
But “nonviable” buildings still aren’t yet cheap enough to fully cover conversion and financing costs, even in hard-hit cities like San Francisco, where prices have fallen an estimated 35% since 2019, versus 11% nationally, the team said. To fit Goldman’s criteria as “nonviable,” an office building must be in a suburban area or central business district. They also must be built before 1990, but not renovated since 2000, and have a vacancy rate above 30%. Based on the national price average, the Goldman model “suggests that converting a nonviable office that is priced at the average current level will result in a $164 loss” per square foot, the team wrote. “This means that current office prices would need to fall by that much, to around $154 per [square foot] or by 50%, for the cost to be fully covered by the stream of discounted future revenues.” San Francisco, Boston, Los Angeles and Seattle were getting closer to “break even” levels, but developers in those markets still need building prices to fall over 30% more for conversions to make financial sense, the Goldman team said.
https://www.morningstar.com/news/marketwatch/20240227813/office-prices-still-need-to-drop-50-for-housing-conversion-projects-to-work-says-goldman
Macy’s to close 150 stores in new turnaround effort, forecasts weak 2024 sales
“Fiscal 2024 will be a transition and investment year”, CEO Tony Spring said on a conference call, adding he expects Macy’s to return to consistent sales and profit growth from 2025. It also said it would open 15 Bloomingdale’s locations and at least 30 new Bluemercury stores over the next three years to accelerate growth for its better-performing luxury brands. Its holiday-quarter comparable sales declined 4.2% on an owned-plus-licensed basis, better than analysts’ estimates of 5.8% drop, as steep discounts drew shoppers.
https://www.reuters.com/business/retail-consumer/macys-forecasts-annual-sales-below-estimates-shutter-150-stores-2024-02-27/
5 of the largest office-to-residential conversions underway across the US
Between 2021 and 2024, the office-to-multifamily conversion pipeline swelled from 12,100 units in progress to well over 55,000, according to a new report from RentCafe. Many of these projects can be found in major metropolitan areas that have a good deal of aging, empty office space, led by Washington, D.C., with 5,820 units in progress and New York City with 5,215. While new multifamily starts are slowing down overall, the conversion projects now in active development or construction represent a record high. Here is a sampling of some of the largest conversion projects in progress in the nation’s most active office-to-multifamily hubs, according to RentCafe.
https://www.smartcitiesdive.com/news/large-office-conversions-across-the-us-arlington-cleveland/708197/
REAL ESTATE AND MOBILITY
Is the EV revolution over?
Andres Pinter, co-CEO at Bullet EV Charging Solutions, based in Austin, Texas, said that, for the multifamily market, it’s about playing the long game. “Historically EV drivers have been homeowners, but that is changing as EV prices come down and the next wave of younger EV drivers enters the market,” he said. “The early adopter phase is over, and now everyone is taking the leap into EV.” As Pinter sees it, EV charging is the new laundry room, a necessary utility for many tenants. This especially holds true for new builds. “EV charging is a must-have amenity for groud-up development,” he said. “Partly because it’s more cost-efficient to integrate and install charging into tenant parking during design and construction phases,” he said. “In fact, building code in many jurisdictions now requires a certain amount of EV charging.” For instance, in Atlanta, 20% of parking spaces in new multifamily development must be EV ready. Luque said another reason to offer it is to attract the attention of tech-savvy, environmentally minded renters.
https://www.smartcitiesdive.com/news/is-the-ev-revolution-over/706280/
Walkable Urban Areas in U.S. Grow Despite Pandemic Fallout
Foot Traffic Ahead finds higher demand driving premiums for commercial and multifamily rents and for-sale home prices in walkable urban places, compared to car-dependent alternatives. The report also provides policymakers with recommendations on how to increase both the supply of and access to equitable, walkable urban development while safeguarding affordability and providing benefits such as improving community health, lowering emissions by reducing car use, and advancing equity by bringing access to economic opportunity.
https://spectrumnews1.com/oh/dayton/news/2024/01/30/most-walkable-cities-u-s–ohio
How the Intersection of Architecture and Mobility Will Shape the Cities of Tomorrow
The growing number of EVs will shift the urban landscape, resulting in a need for more charging stations and adjacent smart technologies that can help manage traffic flows, land usage, and environmental concerns. As cities become smarter and more electric, there will be some building types — such as gas stations — that become obsolete, and others — such as parking garages — that can be transformed into mixed use and multimodal centers. How can we repurpose these outdated real estate assets to better serve the needs of urban residents?
https://www.gensler.com/blog/bmwdesignworks-the-intersection-of-architecture-and-mobility
Working from home: Too much of a good thing?
After decades of flight to the suburbs, city centers have again become desirable places where to live. This trend is partly rooted in the shift toward a knowledge-based economy and is embodied in an expanding class of highly-educated and young professionals who work for high-tech, multinational firms, or finance, insurance, and real estate. These workers spend a large number of hours at their jobs, which explains their distaste for commuting to the workplace and stronger preferences for amenities provided nearby. This has fostered the emergence of a wide range of business-to-consumer activities supplied in city centers and produced by low-pay workers (Couture and Handbury, 2023). WFH should reduce the willingness to pay for residential proximity to the city center, and thus induce skilled workers to move to suburbs.
https://www.sciencedirect.com/science/article/pii/S0166046224000140
Why Are There Suddenly So Many Car Washes?
In a country with roughly 280 million private cars and trucks, can there be such a thing as too many car washes? A growing number of city leaders seem to think so. Unlike stores, restaurants or other businesses, most self-service car washes don’t pay sales taxes to their host communities. And they don’t bring much else to the table in terms of local benefits, critics argue; like drive-through-only fast-food outlets (which have also been the target of local bans), the latest generation of automated facilities provide few jobs even as they pump out noise, traffic congestion and vehicle emissions. But where neighbors might see a too-crowded market, investors see the beginning of a boom. From the Snow Belt to the Sunbelt, companies are scrambling to add locations and grab a piece of a $14 billion-plus industry. With 60,000 locations across the US, the sector has been expanding at roughly 5% annually, with some forecasts predicting the market to double by 2030. More car washes were built in the last decade than all the preceding years combined.
https://www.bloomberg.com/news/features/2024-02-21/car-washes-are-taking-over-the-us-here-s-why
AFFORDABLE HOUSING
Why Retirees Can’t Downsize? It’s the Housing Shortage to Blame, Not Taxes
There is a nationwide housing deficit that’s particularly impactful on seniors. A CNN analysis notes that the U.S. is short of approximately 6.5 million homes, a gap that significantly affects the availability of smaller homes suitable for retirees. This shortfall is creating an environment where seniors, even those eager to downsize, find themselves with limited options. In Texas, for example, over 765,000 older residents struggle with housing costs, as reported by the Texas Tribune. These numbers are not just statistics; they represent real people grappling with the challenge of finding affordable, appropriate housing in their later years.
https://www.residenturbanist.com/p/retirees-cant-downsize-housing-shortage-blame-not-taxes
Rethinking the Affordable Housing Crisis
Freemark eventually left MPC and headed to MIT, where he would go on to earn a PhD in urban studies. While there Freemark completed a research paper in 2019 that examined the impact of upzoning on housing prices. Freemark was seeking to prove the hypothesis that an increase in housing supply would lead to lower housing prices. The results didn’t quite turn out that way. His paper became notable because of one startling finding: “Chicago’s land-use reform–an upzoning of parcels near transit–produced a statistically significant rise in property values.” Freemark, and many in the YIMBY community, were surprised by the results. Freemark is on record at X (formerly Twitter) that he neither “expected nor wanted this conclusion,” and offered several hedges: he limited his study to Chicago, and no other cities; he focused on property values and had no data on upzoning’s impact on rents; he hinted that the 5-year timeframe for analysis might not have been enough time to see actual upzoning affordability impacts.
https://cornersideyard.blogspot.com/2024/02/rethinking-affordable-housing-crisis.html
Los Angeles’ one weird trick to build affordable housing at no public cost
That’s thanks to an executive order Los Angeles Mayor Karen Bass, signed in December 2022, shortly after being sworn into office. In the year and change since, the city’s planning department has received plans for more than 16,150 affordable units, according to filings gathered by the real estate data company, ATC Research, and analyzed by CalMatters. That’s more than the total number of approved affordable units in Los Angeles in 2020, 2021 and 2022 combined. The city has also been the subject of at least two lawsuits and a multi-front political battle over whether and how to turn the mayoral decree — which is only in effect as long as Bass wants it to be and barring a court’s decision to end it — into a permanent fixture of Los Angeles housing policy. The policy was designed to fast-track the approval process for 100% affordable projects. What it perhaps was not designed to do — but has done at a scale that few anticipated — is allow private developers, who rarely dabble in affordable housing and simply look to make as much money as humanly possible from building new homes, to take a second look at a set of state laws that give added benefits to entirely affordable projects.
https://calmatters.org/housing/2024/02/affordable-housing-los-angeles/
Opinion: How to solve the nation’s affordable housing crisis
The most straightforward way to do this would be by providing tax relief for builders who build homes sold to first-time homebuyers at or below the area’s median home price. Congress can do this by reducing the federal income taxes that builders pay on these sales, or by expanding the scope of the popular Low-Income Housing Tax Credit program, the longstanding and remarkably effective program that provides tax credits for builders who build affordable rental housing. We estimate that using either to eliminate the tax impact for these sales could lead to more than 1 million new entry-level homes in the US over the next decade and a meaningful softening of home prices at the bottom of the market. Lawmakers should complement this support to increase the supply of housing with targeted help for those looking to buy their first home. The most effective way to do this would be to allow renters to set up a tax-free savings account to save for a down payment, much like those set up for college savings under Section 529 of the Internal Revenue Code.
https://www.cnn.com/2024/02/12/opinions/affordable-housing-market-buyers-parrott-zandi/index.html
What if public housing were for everyone?
Quietly and with little fanfare, the idea of building new publicly owned housing for people across the income spectrum has advanced in the United States. Governments have successfully addressed housing shortages through publicly developed housing in places like Vienna, Finland, and Singapore in the past, but these examples have typically inspired little attention in the US — which has more restrictive welfare policies and a bias toward private homeownership. Then one US community started exploring social housing with a markedly more American twist: Leaders in Montgomery County, Maryland — a suburban region just outside Washington, DC, with more than 1 million residents — said they could increase their local housing supply not by ramping up European-style welfare subsidies but through essentially intervening in the traditional capitalist bidding process. Government, when it wants to, can make attractive bids.
https://www.vox.com/policy/2024/2/10/24065342/social-housing-public-housing-affordable-crisis
US unions target the housing affordability crisis as their ‘biggest issue’
Los Angeles unions are leading the way in pushing innovative ideas to finance affordable housing. Working with many community groups, LA unions won passage of a “mansion tax” ballot measure with 58% of the vote. It creates a 4% real estate transfer tax on property sales exceeding $5m and 5.5% on sales above $10m. Supporters say the tax, which hits a tiny percentage of sales, will collect at least $600m a year to finance affordable housing and provide subsidies to prevent evictions. Even as LA’s real estate industry has challenged the tax in court – it lost the first round – officials in several other cities have expressed interest in adopting a similar scheme to finance housing.
https://www.theguardian.com/society/2024/feb/16/unions-affordable-housing
Eliminating The Chassis Requirement To Free Manufactured Homes From Local Discrimination And Regulatory Dead Weight
Despite their efficiency advantage, manufactured homes face discriminatory barriers to fair competition with site-built construction. Many state laws and local zoning codes restrict or exclude manufactured homes, often based on architectural features common only on manufactured homes, like the congressionally-mandated permanent chassis. The permanent chassis under every manufactured home must be retained even after permanent installation onto the land. This requirement is meant to retain nominal interstate portability, even though manufactured homes are rarely moved after they are attached to the land. The permanent chassis limits architectural flexibility by requiring the home to be installed higher off the ground to account for the chassis’s vertical height, makes basements less practical, and effectively precludes using HUD Code construction for upper floors due to the weight and bulk of the chassis.
https://fas.org/publication/manufactured-home-chassis-requirement/
Proposition 123 awards announced
CHFA joined Governor Jared Polis and the Office of Economic Development and International Trade (OEDIT) to announce the first recipients of Proposition 123 funding. A total of 16 awardees received $25.34 million in funds from the Land Banking program, which provides grants and forgivable loans to support the acquisition of land for affordable rental and for-sale housing.
https://coloradoaffordablehousingfinancingfund.com/land-banking/
https://myemail.constantcontact.com/Proposition-123-eNews—January-31–2024—Land-Banking-Awards.html?soid=1101682993035&aid=nfv6n-kb5cA
MOBILITY
Study: Subsidizing Transit Actually Makes It More Efficient
New York City, for instance, subsidized transit to the tune of a whopping $445 per resident per year between 2016 and 2019, but generated $565 in revenue and had the highest efficiency score of any region in America, with an average of 27.4 passengers per vehicle during the study period. Car-dominated Phoenix, by contrast, received just $97 in subsidies per person annually, collected only $20 in revenues, and had the lowest efficiency score by far, with just 8.7 people aboard every bus and train. Put another way: contrary to their detractors, operating subsides don’t seem to make enfeebled agencies increasingly dependent on government dollars while unleashing legions of mostly empty buses on U.S. streets. Instead, they seem to provide a strong foundation for transit networks to thrive — and ultimately, make significantly more money at the farebox than they would without support.
https://usa.streetsblog.org/2024/02/05/study-subsidizing-transit-actually-makes-it-more-efficient
Inside California’s Coming Fight Over Vehicle Speed Limiters
Speed limiting technology isn’t new — a century ago, local lawmakers tried and failed to make speed governors mandatory for automobiles in Cincinnati. But in an era of quicker vehicles and elevated pedestrian deaths, the idea has gained fresh traction. The European Union has already adopted an ISA mandate that comes into effect later this year. Congress and the National Highway Traffic Safety Administration have shown no sign of following suit, but if California’s bill succeeds, it will be a watershed moment for the nascent movement to leverage speed limiter technology to mitigate the US road safety crisis. And it’s a tool that states and cities might use even if the federal government does not.
https://www.bloomberg.com/news/articles/2024-02-05/california-lawmaker-on-tech-to-stop-speeders-this-isn-t-crazy-town
States warm up to intercity and rural bus service
The closure of many former Greyhound bus stations added to the travel hardships faced by disabled and low-income travelers, according to the Chaddick Institute for Metropolitan Development’s 2024 Intercity Bus Review, published today. “In most cases, municipal governments did little, and in some instances were openly hostile, to efforts to find a new location” for an intercity bus station, it states. However, the report notes that more state-supported bus networks, along with federal funding through the Rural Transit Assistance Program, are changing government attitudes toward intercity bus travel.
https://www.smartcitiesdive.com/news/intercity-bus-outlook-amtrak-flixbus-greyhound/706571/
Transportation launches $15M AI effort to improve US street infrastructure
The program is intended to foster decision-support tools for state and local governments that can help design and deploy a network of Complete Streets, a longstanding agency initiative to support the construction of livable, connective public streets. Bridging existing data gaps is a key feature of this initiative, with some areas of the U.S. lacking the necessary traffic or sidewalk data to improve local infrastructure. “Innovation in the AI and transportation sector is happening at unprecedented speed and has the potential to address some of our most pressing transportation challenges,” said Transportation Secretary Pete Buttigieg in a statement. “This funding supports our country’s small businesses and startups to harness cutting-edge technologies, deploy them in local communities, and make our streets safer.”
https://www.nextgov.com/artificial-intelligence/2024/02/transportation-launches-15m-ai-effort-improve-us-street-infrastructure/393873/
Clearer Thinking About Transportation Pricing
Of course, motorists think they want free roads and parking, but that is a fallacy: those facilities are never really free; the choice is between paying for them directly through user fees or indirectly through higher taxes, housing costs, and prices for other goods. For example, the “free” parking at your local pub increases the cost of beer for all patrons regardless of whether they arrive by car or foot. This is unfair to non-drivers and encourages drinkers to drive, increasing congestion, crash risk, and pollution. There is an extensive vocabulary for overpricing; when people feel they are overcharged we say they are gouged, fleeced, and cheated, but there is no similar vocabulary for underpricing although it is equally harmful. Motorists often argue that road user fees are regressive and unfairly burden poor motorists, but in fact, few urban-peak drivers have low incomes.
https://www.planetizen.com/blogs/127449-clearer-thinking-about-transportation-pricing
Alameda Avenue Study
Denver Regional Council of Governments (DRCOG) is leading a study of Alameda Avenue in partnership with the City and County of Denver, Aurora, Lakewood, Glendale, the Colorado Department of Transportation, and the Regional Transportation District (RTD). The goal is to develop a shared vision for the corridor from Wadsworth Blvd., in Lakewood to the R-Line in Aurora. The study aims to improve mobility and safety for all users and plan for future transit investments, while still preserving the character of the corridor. The study will identify mobility and safety issues and result in recommendations for transportation improvements that will enhance the corridor – making it safer and more accessible for all road users. DRCOG is currently collecting feedback to understand community concerns with safety, mobility or other transportation along the Alameda Corridor.
https://engage.drcog.org/alameda-avenue-study
China’s Electric Vehicles Are Going to Hit Detroit Like a Wrecking Ball
BYD’s cars deliver great value at prices that beat anything coming out of the West. This month BYD unveiled a plug-in hybrid that gets decent all-electric range and will retail for just over $11,000. How can it do that? Like other Chinese manufacturers, BYD benefits from its home country’s lower labor costs, but this explains only some of its success. The fact is that BYD and other Chinese automakers like Geely, which owns Volvo Cars and Polestar brands, are very good at making cars. They have leveraged China’s dominance of the battery industry and automated production lines to create a juggernaut.
https://www.nytimes.com/2024/02/27/opinion/gm-ford-electric-vehicles.html
RTD’s downtown light rail reconstruction project to start in May
Beginning May 26, all D and H line trains will be rerouted to Denver Union Station, and L Line service, which connects 30th•Downing Station to the Downtown Loop, will be suspended. No light rail service will operate in RTD’s central corridor through September 2024. Following completion of the project’s first phase in September, crews will pause reconstruction work until 2025, and all light rail services will resume normal operations.
https://www.rtd-denver.com/community/news/rtd-s-downtown-light-rail-reconstruction-project-to-start-in-may
https://www.masstransitmag.com/rail/infrastructure/press-release/53097893/regional-transportation-district-rtd-denver-rtds-downtown-light-rail-reconstruction-project-to-begin-in-may
BRT is coming to Colfax Avenue!
Transportation Solutions is excited to announce that construction for the Colfax Avenue bus rapid transit (BRT) system begins in 2024 and will be open for service in 2027. This will be Denver’s first step toward building a high-frequency BRT system. As defined by the Federal Transit Administration, Bus Rapid Transit (BRT) is a high-quality bus-based transit system that delivers fast and efficient service that may include dedicated lanes, busways, traffic signal priority, off-board fare collection, elevated platforms, and enhanced stations. BRT has advanced throughout the U.S. in the last decade as congestion has increased and community leaders have sought affordable transit alternatives.
https://www.greaterdenvertransit.com/colfaxbrt/
https://transolutions.org/
