REAL ESTATE
An Opportunity to Get Opportunity Zones Right
In practice, the tax benefits and structure of the OZ program were overwhelmingly tilted toward real-estate development. The incentives for businesses that actually make things were always a stepchild with their own separate rules. Most of the winning deals were construction projects already blueprinted and moving through the permitting stage. Those promoters and developers have now scored their windfall tax breaks, packed up and moved out after banking their profits and dismissing their work crews. Meanwhile, the perfunctory incentives and pickier rules for OZ businesses were so uncompelling in comparison that only a tiny fraction of the 2017-24 tax breaks actually went to operating companies still doing business today. Despite these warts, some minor legislative surgery could sharply reduce the number of eligible zones while giving each state a per-capita-based right to designate a few other “bonus” census tracts where economic development makes the greatest sense. That could include selected downtown areas plagued with vacant office buildings begging for redevelopment. Governors could also use them sparingly as a discretionary tool to attract global manufacturers. Smarter rules would turbocharge companies that do more than sell burgers or wash cars. The crucial interlocking keys to OZ prosperity must be forged in Congress, but should then be handed off to empowered local officials who then follow a few discerning rules to certify a qualifying business and point it toward success.
https://www.governing.com/finance/an-opportunity-to-get-opportunity-zones-right
Led by Believers in the City’s Future, Detroit Is on the Rebound
More than a half-dozen upscale hotels, dozens of restaurants, and refurbished apartment buildings have opened in those quarters, bringing life back to the city’s center core. Mike Duggan, standing with his hands in his pockets in a room with exposed bricks and stained glass window, talks with Jenny Welden, who is sitting. And now Detroit’s comeback seems to be gaining serious momentum and spreading out to other neighborhoods farther from the city center. In the last nine years, the city has provided grants to help more than 170 small businesses open up, most in outer-lying areas — a sign of economic optimism that would have been unimaginable a decade ago. More than 35,000 vacant and dilapidated homes that had long depressed neighborhood property values and attracted crime have been razed or renovated. A recent report by the University of Michigan estimated that the value of Black-owned homes in Detroit increased by nearly $3 billion from 2014 to 2022. And another sign of progress: In 2023 Detroit’s population grew by nearly 2,000 to 633,000, a slight uptick but the first yearly increase since 1957.
https://www.nytimes.com/2024/10/12/business/economy/detroit-economy-rebound.html
Opinion | The Little-Known Factor Driving up Housing Costs: Dirty Money
There are tools to address the problem, but we are not using them effectively. In 2001, barely one month after 9/11, Congress passed Title III of the Patriot Act to combat money laundering and terrorist financing. It mandated banks to report suspicious money transfers from abroad. But lobbyists persuaded the Treasury Department to grant the real estate industry a “temporary” exemption from the law’s requirement to report dubious transactions. The loophole remains in place, fueling what has been termed “an extraordinary growth opportunity for high-end real estate.” The United States is the only G7 country that does not require real estate professionals to comply with anti-money laundering laws. Is it any wonde
https://www.politico.com/news/magazine/2024/10/12/undocumented-workers-home-prices-00183126
Build-to-Rent Homes: A Promising Solution to Chronic Housing Shortages
Where available, BTRs are quickly becoming a preferred option for many young families, empty-nesters, and itinerant retirees. Yet several local governments, especially in Georgia, have enacted laws banning BTR developments, mainly in response to misplaced NIMBY — not in my backyard — resistance to living alongside renters. A recent New Jersey appellate court decision rightly admonished such unjustified anti-renter sentiments. The court in Tirpak v. Borough of Point Pleasant Beach Board of Adjustment observed that “the status of a house’s occupant as a property-owner rather than as a tenant is no guarantee that he or she will be a law-abiding and considerate neighbor.”[1] Thus, although the court sympathized with the community’s “desire to maintain a quiet and peaceful environment in this single-family zone,” the court concluded that it “cannot accomplish that objective by imposing land use restrictions that discriminate against renters” — a sentiment that often provides cover for class- and race-based bias.
https://cre.org/real-estate-issues/winner-of-the-2024-jared-shlaes-prize-build-to-rent-homes-a-promising-solution-to-chronic-housing-shortages/
The Future of Workplace Experience Is Here: How AI Is Transforming Spaces
While AI-driven interfaces enhance our interaction with spaces, robotics represents the physical embodiment of AI. Imagine office buildings with robots that clean, deliver supplies, and even wash windows. These aren’t just science fiction fantasies; they’re becoming practical realities. Workspaces now need to be designed to anticipate, accommodate, and be enhanced by the use of robotics, from smart cars and humanoid robots to flying drones. We imagine that office buildings may have designated robot pathways and charging stations, ensuring efficient movement and operation of service robots. For instance, specialized robots might take on tasks like window washing on skyscrapers, shifting human jobs from the dangerous part of hanging off the side of a building to roles that involve operating robotic systems, monitoring water usage, and focusing on safety. This integration of robotics into workplace design not only improves efficiency but also enhances safety.
https://www.gensler.com/blog/ai-is-transforming-future-workplace-experience
Downtown Office-to-Residential Conversions
Buildings that are considered the “worst” office buildings—typically Class B—often are the best candidates for conversion to residential uses. The smaller floor plates and high floor-to-floor ceilings lend themselves to residential conversion. Office building HVAC ducts and electrical wiring reduce 11-foot (3.3 m) floor-to-floor stories to about 8 feet (2.4 m) in height. Such ducts and cabling can be stripped back for residential uses, leaving 10-foot (3 m) ceilings that feel spacious and luxurious to residents. Gensler developed scoring criteria for evaluating the suitability of buildings to conversion from office to residential. The criteria shown in Figure 1 consider the site context, building form, floor plate size, envelope, and servicing. These scoring criteria lend the greatest weight to building form (its shape and ease of unit design) and floor plate (distance from windows to core and elevators).
https://urbanland.uli.org/issues-trends/downtown-office-to-residential-conversions
Commercial Real Estate’s Wall of Maturities: Should You Be Concerned or Not?
With more foreclosures occurring and greater amounts of maturities on the way, should there be concern regarding the vast wall of commercial real estate loan maturities? Although the market continues to navigate the challenges, several reasons for elevated concern linger. First and foremost is the inability to accurately gauge value. The lack of surety around accurate values creates added uncertainty, which in turn can delay transactions, generate greater underwriting risk, and lead to a host of other substantive issues. Additionally, early this year, debt costs exceeded equity. As debt became more costly than equity, many projects were unable to refinance. Recently, rates on debt appear to be receding, which may allow for more projects to be financed.
https://urbanland.uli.org/capital-markets-and-finance/commercial-real-estates-wall-of-maturities
AFFORDABLE HOUSING
As affordable housing disappears, states scramble to shore up the losses
While Americans continue to struggle under unrelentingly high rents, as many as 223,000 affordable housing units like Maalouf’s across the U.S. could be yanked out from under them in the next five years alone. It leaves low-income tenants caught facing protracted eviction battles, scrambling to pay a two-fold rent increase or more, or shunted back into a housing market where costs can easily eat half a paycheck. Those affordable housing units were built with the Low-Income Housing Tax Credit, or LIHTC, a federal program established in 1986 that provides tax credits to developers in exchange for keeping rents low. It has pumped out 3.6 million units since then and boasts over half of all federally supported low-income housing nationwide. “It’s the lifeblood of affordable housing development,” said Brian Rossbert, who runs Housing Colorado, an organization advocating for affordable homes. That lifeblood isn’t strictly red or blue. By combining social benefits with tax breaks and private ownership, LIHTC has enjoyed bipartisan support. Its expansion is now central to Democratic presidential candidate Kamala Harris’ housing plan to build 3 million new homes. The catch? The buildings typically only need to be kept affordable for a minimum of 30 years. For the wave of LIHTC construction in the 1990s, those deadlines are arriving now, threatening to hemorrhage affordable housing supply when American
https://apnews.com/article/low-income-housing-tax-credit-affordable-harris-8f68bcf189c17f910459142ee8a50289
How We Unintentionally Created the Affordable Housing Crisis
After the housing bubble burst in 2007, several hundred banks collapsed, sparking a global financial meltdown, and millions of homeowners lost their homes in foclosure. In response, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and increased its scrutiny of Federal Housing Administration (F.H.A.) loans, which primarily serve low-income borrowers. Provisions included stricter compliance guidelines and higher capital requirements, which would ostensibly make the banking system less prone to fail and protect borrowers from taking on mortgages they couldn’t afford. But the costs associated with adhering to Dodd-Frank’s more than 400 new rules and mandates make it less profitable for most banks to work with small loans. These changes disproportionately hurt community banks, which long served lower-income homebuyers. Even where loans are theoretically available, small-dollar homes often don’t qualify for them because they are too old and in disrepair. That’s a growing problem because over the past century, developers have largely stopped building these homes, citing the rising costs of land, materials and permits, as well as rising zoning and homeowners association restrictions. In 2022, only 8 percent of newly built homes were 1,400 square feet or less, compared with nearly 70 percent in 1940.
https://www.nytimes.com/2024/10/03/opinion/housing-crisis-dodd-frank-financial-crisis.html
Build-to-Rent Homes: A Promising Solution to Chronic Housing Shortages
BTRs are a relatively new phenomenon. Borrowing from traditional suburban development, BTRs are often residential subdivisions comprised of detached, single-family dwellings. The only difference? They are built to rent rather than to sell. Beyond this transactional distinction, BTRs and owned homes are virtually indistinguishable. Indeed, there is a reason for recalcitrant neighbors to prefer the former. Since BTR developers retain ownership, they also maintain a strong incentive to upkeep the aesthetic quality and structural integrity of such homes and to keep pristine the lawns, common areas, and other facilities provided by BTR communities. Once a niche market, BTRs are quickly becoming a popular alternative to homes built for purchase. BTRs offer a quality residential experience without mortgage and maintenance demands of ownership — growing in demand in the current, increasingly mobile economy. The model is particularly attractive to millennials (who prefer flexibility over ownership), families in transition, empty-nesters, and retirees tired of the burdens of ownership. BTRs also appeal to developers who have seen dampened demand for new for-purchased homes in recent years, a decline worsening as outlay costs spike with inflation and mortgage rates continue to climb. Given this rising interest, market experts estimate that developers will add over 300,000 new BTRs in the next couple of years alone, adding much-needed supply to the nation’s chronically undersupplied housing market.
https://cre.org/real-estate-issues/winner-of-the-2024-jared-shlaes-prize-build-to-rent-homes-a-promising-solution-to-chronic-housing-shortages/
Treat Housing Like an Industry in Need of a Plan
The distributed housing industry is obviously quite different from the command-and-control nature of the military industrial complex. Nonetheless, the housing sector is approximately one-sixth of the entire U.S. gross domestic product and increasing shortages of housing necessitate a similarly urgent response. The federated nature of housing requires the federal government to harness the full energies of the nation and help spur a synergistic relationship between all levels of government, sectors of society, technology innovators, and the financial system. In the end, the overarching imperative of delivery — and of meeting national production targets with focus and discipline — has clear echoes. Our conclusion: the U.S. needs a National Housing Industrial Strategy. A true National Housing Industrial Strategy would focus on three logical and linear elements: innovation, supply chains, and workforce. It will require cross-cutting leadership to enable capital and push towards achieving housing production goals.
https://thephiladelphiacitizen.org/treat-housing-like-an-industry-in-need-of-a-plan/
UBS Global Real Estate Bubble Index
The rise in interest rates, for a long time considered unlikely, came with the postpandemic inflation spike. Housing prices reset where high imbalances had accumulated. Homes in major European cities lost up to a quarter of their value in real terms
and imbalances corrected rapidly. Real estate bubble risk has also fallen considerably in cities where home values have shown relative stability during the interest rate turnaround like Sydney and Vancouver, since extreme housing shortages and rising rents helped stabilize markets there. Unintentionally, central banks have meanwhile laid the foundation for the next price boom. Since the sharp rise in interest rates thwarted the plans of many real estate developers, new construction has nosedived in many cities and looks set to exacerbate the housing shortage, thereby leading to upward price pressure in the future. In this edition of the UBS Global Real Estate Bubble Index, discover more about growing, existing, and deflating bubble risks and where interest rate cuts should help revitalize the housing market.
https://elements.visualcapitalist.com/wp-content/uploads/2024/09/ubs-global-real-estate-bubble-index-2024.pdf
The Most Splendid Housing Bubbles in America: Sept Update: Prices Drop in 26 of 28 Big Metros, even San Diego, Los Angeles
Active listings have been surging for months in practically every major market, including in formerly hot markets such as Florida. Sellers are grappling with an unexpected phenomenon: While inventories are piling up, buyers are on strike because prices are too high even though mortgage rates have dropped a bunch over the 10 months through mid-September. Since the rate cut, mortgage rates have risen again but at around 6.6% remain a lot lower than they’d been. The lower mortgage rates have brought out the sellers, but not the buyers who remain on strike because prices are too high. And so, prices even in markets such as San Diego have started to succumb to gravity.
https://wolfstreet.com/2024/10/15/the-most-splendid-housing-bubbles-in-america-sept-update-prices-drop-in-26-of-28-big-metros-even-san-diego-los-angeles/
REAL ESTATE AND MOBILITY
Can parking garages alleviate the housing and homelessness crisis?
The standard structure of most garages, combined with their near universal dimensions based on the unitized size of a parking space, allows for prefabricated housing pods such as those used in L.A. to be easily placed within the facility’s concrete shell. These pods can also make use of the garage’s existing vertical circulation and utility connections. In those instances where existing garages won’t work for a retrofit or unused surface lots exist, new construction designed specifically to provide affordable housing opportunities is typically preferable. Examples of such affordable housing options seem to be popping up everywhere, from a 30-story, affordable housing high-rise in Boston to a 16-story studio apartment complex which stands on the former site of an underutilized parking lot in Honolulu.
https://www.route-fifty.com/infrastructure/2024/10/can-parking-garages-alleviate-housing-and-homelessness-crisis/400137/
In-office work or lower pay? Some candidates are facing the question.
Robert Half found 59% of companies were willing to offer a premium of up to 20% for candidates who are able to work remotely but instead go into the office four or five days a week. The effect was most pronounced at small businesses, where 72% of managers would offer up to 20% more for being onsite most of the time, followed by 60% of managers at midsize companies and 49% at large companies. While many employers are willing to take that step, the big question is whether workers would accept higher pay for reduced flexibility. Employees themselves say they’d rather work less in the office, with 63% in the survey saying they prefer to work in the office three days or less per week. A separate survey by Flexjobs found 58% of workers said they would accept a lower salary. Among those respondents, 31% said they would be willing to take a pay cut of up to 5%, while 18% said they’d be OK with a pay cut of up to 10%.
https://www.bizjournals.com/denver/news/2024/10/11/remote-work-pay-salary-raise-office-rto.html
Can parking garages alleviate the housing and homelessness crisis
In Los Angeles, for instance, an underused parking lot owned by the city has been converted into apartments for low-income or homeless seniors. L.A. has also worked with architectural firm Gensler to retrofit several old garages with pods—inexpensive, prefabricated, modular living units, typically consisting of one to three sustainable, low-square footage rooms. While hardly lavish, these pods can be plugged into existing parking garages and represent a viable alternative to living on the street for L.A.’s homeless population. Architectural firm KTGY provides another example. Its research and development studio reimagined an existing, donut-shaped parking garage in San Diego by inserting factory-built steel living modules into the standalone structure. The proposed Park House design would enable the garage’s 1,091 parking spaces to be converted into 119 one- and two-bedroom units to house the city’s homeless.
https://www.route-fifty.com/infrastructure/2024/10/can-parking-garages-alleviate-housing-and-homelessness-crisis/400137/
MOBILITY
20 Safest and Most Dangerous US Cities for Pedestrians
The study notes, “Many of these cities have also implemented various measures to enhance pedestrian safety, such as traffic-calming measures, pedestrian-friendly infrastructure, improved crosswalks, and education campaigns.” In contrast, the cities ranked as least safe for pedestrians have the highest number of pedestrian deaths, low walking scores, and fewer pedestrian safety interventions.
https://www.planetizen.com/news/2024/10/132047-20-safest-and-most-dangerous-us-cities-pedestrians
These Are North America’s Best Airports, According to a New Ranking
What makes an airport satisfying to travel through? The folks at consumer analytics company J.D. Power set out to answer that question with the J.D. Power 2024 North America Airport Satisfaction Study, which compiled opinions from more than 26,000 U.S. and Canadian airline passengers. The study divided airports into three categories based on passenger volume, and analyzed factors such as ease of travel through airport, terminal facilities, staff, food and beverage, and retail options.
https://dailypassport.com/lesser-known-natural-wonders-california/
Report: Confronting Car Dependence Won’t Just Help With Climate Change; It’s a $6.2 Trillion Opportunity
The Union of Concerned Scientists’ provocatively titled report, “Freedom to Move,” states that giving Americans the freedom to choose among multiple modes of travel is “key to the climate transition” — and that making “visionary but feasible” changes, like shifting land use patterns and investing in walking, biking, and transit, could get our country to the critical net zero milestone. More specifically, the report says that by slashing vehicle miles traveled by about 27 percent from 2035 to 2050 — an amount lower than the VMT reduction goals already in place in California and Washington — America wouldn’t have to build about $201 billion in new energy infrastructure that would be necessary to power millions of electric cars and the gas-powered cars that would still be produced as the fleet transitions. It would also save the country $128 billion in avoided public health costs from tailpipe emissions, as well as the fine pollutants like tire particles and brake dust that heavier electric cars emit even more of. And then there’s the staggering costs of car crash deaths themselves, 250,000 of which could be avoided if VMT was cut, along with 3.7 million crash injuries that often cost far more than a fatality. Most staggeringly, though, U.S. residents would save a collective $5.9 trillion in avoided car payments, fuel, insurance, and other vehicle-related costs if we took car dependence seriously — even if most households didn’t give up driving outright.
https://usa.streetsblog.org/2024/10/30/report-confronting-car-dependence-wont-just-help-with-climate-change-its-a-6-2-trillion-opportunity
Is Denver’s Big Bet on E-Bikes Paying Off?
Denver was the first US city to create such a program, and officials weren’t sure how it would go. “We were expecting a couple hundred applications — for the entire year,” said Mike Salisbury, who then oversaw the e-bike rebate program as a city staffer. “But in two weeks, we received ten times that number.” Since then, Denver has distributed close to 15,000 vouchers, or roughly one for every 40 adult residents. The city has lowered the standard rebate to $300 for an e-bike or $500 for an e-cargo bike, but new batches of vouchers are still snapped up like Oasis reunion tickets. In August, some 17,000 people scrambled to snag one of 220 vouchers. They were gone in seconds.
https://www.bloomberg.com/news/features/2024-10-30/how-denver-became-america-s-biggest-e-bike-booster
Self-driving cars aren’t here yet, but states are getting the rules ready
While no fully autonomous cars are in regular use in the country yet, some states have allowed limited testing and pilot programs on public roads. Many state legislatures are trying to get ahead of self-driving vehicles that eventually will be on their roads by setting standards for operating the vehicles and rules for law enforcement if they see an autonomous vehicle breaking a traffic law. And many laws require, as Kentucky’s does, a minimum insurance requirement to protect drivers, passengers and pedestrians, should the vehicles be involved in an accident. This year, five states and Washington, D.C., enacted bills dealing with fully automated vehicles, according to Douglas Shinkle, associate director of environment, energy and transportation for the National Conference of State Legislatures. The new laws in Alabama, Kentucky and South Dakota allow for the operation of fully autonomous vehicles, while California’s new law deals with safety requirements. North Carolina’s brings the vehicles under updated dealer regulations for all cars.
https://stateline.org/2024/10/28/self-driving-cars-arent-here-yet-but-states-are-getting-the-rules-ready/
Colorado lands $66 million federal grant that officials say will ‘turbocharge’ Front Range rail
The grant, along with a state match of $27 million, will pay for a new side track and signal upgrades over a 10-mile stretch between Westminster and Broomfield. The funding package will also be used to improve five “high priority” crossings in Berthoud, Longmont and other spots in Boulder County. The track is owned by BNSF Railway. But state officials say the upgrades will make it capable of hosting passenger trains, too. They want to use it for the long-planned Front Range Passenger Rail project, which would connect Pueblo, Colorado Springs, Denver, Boulder, Fort Collins and other communities via rail.
https://www.cpr.org/2024/10/29/colorado-front-range-rail-project-gets-66-million-federal-grant/
