Commentary
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Protected: Hispanic homebuyers are the future of the U.S. housing market
Protected: Gerhard Mayer: U.S. Urban Planning Needs Complete Paradigm Shift
Protected: Offering Childcare at City Meetings May Be Key to Diversifying Civic Engagement
In the News: 2018 Was the Year of the YIMBY
A milestone upzoning plan in Minneapolis capped a year that saw pro-housing forces duel NIMBYs in cities nationwide.
Other facets of the plan are drawing critical acclaim, too. The policy eliminates off-street minimum parking requirements, making Minneapolis the fourth city to make such a move. (San Francisco pulled the trigger earlier in December, while both Buffalo in New York and Hartford in Connecticut did so in 2017.) Reason hailed Minneapolis 2040 as a victory for free-market deregulation (even as it pooh-poohed an inclusionary zoning ordinance that encouraged developers to set aside units for low-income families).
By its end, 2018 turned out to be the year of the YIMBY. Not only did Minneapolis prove that a major American city could pass pro-housing zoning reforms beloved by Yes-In-My-Backyard types, it could pass them all at once, and without forcing the mayor to flee by cover of night. Indeed, Minneapolis Mayor Jacob Frey is taking a victory lap on the strength of a truly comprehensive plan—with features that address climate change and structural racism—although it might have cost him the support of some wealthy homeowners. But even this political liability is distributed, as all but one city council member joined together to pass the scheme.
Steep odds for state-level upzoning are also the rule in California, where Scott Wiener, housing champion and state senator, has introduced legislation to repeal a constitutional amendment that restricts low-income housing, as well as another bill to boost denser development near transit. For the latter piece, this is Wiener’s second bite at the apple, after the similar State Bill 827 went down in flames in April. No, 2018 wasn’t an unambiguous victory for housing advocates.
State government likely presents more challenges than opportunities for zoning reform. Texas, for example, passed a bill in 2015 that preempts any municipality from enacting local protections for Section 8 voucher holders. Landlords who discriminate against renters with housing aid drive segregation patterns today. If Atlanta succeeds in passing reforms to promote granny flats, curb minimum parking requirements, and legalize new apartment buildings (all changes endorsed by the city’s zoning board), there’s always the threat that the Georgia state legislature will interfere, as it has done or threatened to do with local laws regulating tobacco, Airbnb, the minimum wage, and more.
Maybe the most important turn in 2018 was not how this city looked to expand its supply of accessory dwelling units (like in Seattle) or how that city realized that single-family zoning is choking its growth (also Seattle). Housing advocates suffered setbacks this year, after all, in places such as Reno and Boulder. And new housing starts are still dismal compared to pre-recession highs. Now, the recovery may be grinding to a halt.
Instead, local leaders hit on successful ways for overcoming the value-action gap—a wonky term for the phenomenon seen when homeowners in progressive neighborhoods post yard signs welcoming all peoples even as they oppose nearby housing developments. Going forward, there are proven tactics for bridging the value-action gap and solving for the ABCs of social change—attitude, behavior, and choice. Minneapolis finally got the damned thing done, and others will follow.
Finally, 2018 marked the Year of Our Lord when NIMBYism went from a seemingly unstoppable force to a figure of mockery. End your year with one Minneapolitan’s delightful zoning parody: “I Was Radicalized by Minneapolis 2040.”
“As I drove from 50th to Lake Street I was subjected to the type of pure urban obscenity that occurs when single family houses mix with apartment buildings. There were duplexes, triplexes, plexplexes,” writes Kristopher Kapphahn, a Twin Cities biostatistician. “They were all just nestled right in among innocent single-family homes. And it was awful. Anyone who has taken Bryant through South Minneapolis knows what I now newly knew: it’s the very definition of urban hellscape.”
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Article: Why Cities Must Tackle Single-Family Zoning
In my neighborhood in San Francisco (or, more accurately, my parents’ neighborhood) there’s a plan afoot to build 42 units of new housing in two parking lots, just steps from a light rail line. Thanks to the city’s inclusionary zoning laws, 18 to 20 percent of those units must be offered at below market rates, on streets lined with single-family homes worth around $1.5 million, and renting for around $5,000 per month, according to Zillow.
Construction could still be years away, due to the city’s byzantine approval process. But the neighbors are already buzzing about the plan, expressing fears that the development won’t fit the neighborhood and preparing demands to scale the project down. It’s Bay Area NIMBYism-as-usual—except that my neighbors are progressive enough to blanch at that now-loaded term. They’re still YIMBYs, as one writer on our local listserv insisted—just the kind whose “yes” to new housing is a bit more qualified.
Such is the state of housing politics in late 2018, on the bleeding edge of a land-use revolution. Booming, expensive cities need more housing, especially the affordable kind. The question is, where will it go? Downtowns are sprouting with cranes, but land values are such that all market-rate development is uber-expensive. And there’s lots of housing, both market rate and affordable, going up in once-low-income neighborhoods that are now gentrifying. Meanwhile, neighborhoods like my own—full of single-family homes—remain virtually untouched by new development.
Convincing—or forcing—the homeowners who rule these neighborhoods to accept new housing that is not consonant with the existing fabric of million-dollar homes is an oft-overlooked front in America’s housing wars, and one that could have a huge structural impact. Adding dense or below-market-rate apartments in high-income neighborhoods close to job centers allows more people to live and commute in an environmentally friendly manner, increases economic mobility, and counters the shameful legacy of segregation.
In Generation Priced Out: Who Gets to Live in the New Urban America, San Francisco tenant activist Randy Shaw paints a picture of a nation beginning to wake up to its housing crisis, but unsure of what to do about it. For years, the discussion around housing affordability in big cities has focused on gentrifying neighborhoods like San Francisco’s Mission District and Brooklyn’s Williamsburg. But according to Shaw, not enough attention is being paid to the wealthier, usually single family home neighborhoods that have effectively walled themselves off from all new housing construction, creating a sort of spatial class privilege that is rampant in America’s most progressive cities. “These high-opportunity neighborhoods must serve more economically diverse residents,” he said in a recent interview in CityLab. “[C]ities that claim to promote inclusion cannot just relegate the non-rich to economically segregated parts of town.”
Generation Priced Out makes the case that providing a wider variety of housing options in these neighborhoods is the missing policy intervention for addressing America’s housing crisis. In his detailed descriptions of successful and not-so-successful housing strategies from around the country, Shaw demonstrates that cities are starting to create a policy playbook that addresses both housing supply and affordability. But as cities exhaust more and more of the housing interventions that are available to them, single-family-home zoning will loom ever larger, until it becomes too egregious to ignore.
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Shaw is a unique breed of housing activist; as the director of the Tenderloin Housing Clinic, he’s long fought for tenants’ rights and affordable housing, but he’s also a strong advocate for building enough market rate housing to keep up with job growth. For decades, and to this day, American cities have not done enough to address either issue, he contends, but some have done a better job than others with particular strategies.
While Shaw calls San Francisco “a cautionary tale of unaffordability,” he also says it “does the best job of every major city in protecting tenants and its rental housing stock.” Of course, he would say that: Shaw is the architect of many of those policies. But it is true that the city has significant tenant protections, including very low rent increase caps for rent control tenants and strong restrictions against the demolition or combination of existing affordable units. The city has also pioneered innovative policies, like its free legal representation program for tenants facing eviction, and a small sites acquisition fund that purchases properties occupied by at-risk tenants and removes them from the speculative market.
San Francisco has not done nearly as well on the supply side, however, adding just one unit of housing for every 12 jobs between 2010 and 2015. Seattle, by contrast, added one unit for every three jobs over this period. Shaw points to Seattle and Denver as cities whose rates of housing construction have made a serious impact on affordability. In January 2018, Seattle saw its biggest month-over-month decrease in median rents in a decade. Between the third and fourth quarters of 2017, Denver saw its biggest decrease in median rents in 36 years, and rents continued to fall the last two quarters of 2017.
But Seattle and Denver are stymied in their efforts to protect existing tenants by state policies and preemptions. Both Washington State and Colorado (along with the majority of states) bar cities from enacting rent control. In California, too, rent control remains limited by a state law, as voters failed to pass Proposition 10, which would have allowed the state’s cities to expand rent limits. In Washington, just cause eviction laws are also hampered by preemption, and in California, the notorious Ellis Act results in thousands of evictions every year.
In the face of these obstacles, and the lack of financial support for housing from state and federal governments, cities are trying to make the most of the tools they have. Portland, San Francisco, and Alameda County (which contains Oakland and Berkeley) have all passed affordable housing bonds in recent years, and Austin and California just passed housing bonds this election.
In addition to building more housing themselves, the biggest thing cities can do to improve housing affordability is change zoning laws. Inclusionary zoning, which requires developers to reserve a certain percentage of new units as affordable, has become more popular in recent years (although some states, like Colorado, also preempt it). But not all inclusionary zoning is created equal: New York’s 2016 law only applies to projects that request zoning variances, even though 35 percent of the city’s land area, including many low-income areas, had recently been rezoned. Inclusionary zoning in D.C. and San Francisco applies to all projects of a certain size.
In concert, increased supply of affordable and market-rate housing, along with strong tenant protections, can stabilize gentrifying communities. Evictions in San Francisco decreased by 21 percent between 2016 and 2017, and another 12 percent between 2017 and 2018. And in the Mission District, the Latino population actually increased by 1,500 between 2011 and 2016, following years of declines. Shaw attributes this trend to an increase in both nonprofit affordable housing and inclusionary units—and, somewhat more controversially, to the “by any means necessary” tactics employed by anti-gentrification activists. By protesting and threatening to hold projects up in court, activists in neighborhoods like the Mission and Los Angeles’ Boyle Heights have negotiated for more affordable units in many projects, and likely discouraged speculators.
These tactics are productive because their practitioners are still pro-housing: They want to maximize the amount of affordable housing in their neighborhoods. But in single-family-home neighborhoods, residents tend to be against any kind of new housing, especially if it’s affordable. In San Francisco’s affluent Forest Hill neighborhood, residents successfully killed a 150-unit development for low-income seniors, a stone’s throw away from a subway station, arguing that it would attract mentally ill and drug-addicted people. Shaw’s book is full of similar examples from around the country of homeowner groups opposing new housing on baldly elitist grounds.
The other tactic frequently employed by homeowners—saving “neighborhood character”’—is often a means to the same end. “Character” must be understood as not only visual, but also demographic. In cities like San Francisco, preserving the status quo for a single-family-home neighborhood often “means maintaining it as a neighborhood where future residents must be rich,” Shaw writes. Another critique levied by those who do not want their neighborhoods to change is that new housing construction in expensive urban markets is inevitably luxury housing. But this argument falls flat when nearly all existing homes are already luxury housing: According to a recent Trulia study, a staggering 81 percent of homes in the San Francisco metro and 70 percent of homes in the San Jose metro are worth more than $1 million. Conveniently, single-family-home zoning also functionally prevents the construction of nonprofit affordable housing, or the below-market-rate units that are generated by inclusionary zoning.
Those who love historic houses are joined in the 21st century by most politicians, planners, and real estate types. Doing away with single-family zoning will not resurrect Robert Moses and unleash him on our neighborhoods. Many cities have demolition controls that prevent sound housing from being arbitrarily destroyed, and these laws could be easily strengthened. Every neighborhood can make room for more neighbors without losing older homes, whether by building units in basements, backyards, and parking lots, or by repurposing nondescript commercial buildings. Besides, San Francisco’s charming Victorian neighborhoods and LA’s rows of bungalows are already peppered with contemporary buildings that interrupt neighborhood character—except that most of these buildings are 5,000 square-foot single-family homes.
The irony is that the communities most vehemently opposed to new apartment buildings—cities like Portland, Oregon, and Cambridge, Massachusetts—are among the most politically and socially progressive in the nation. They are “trapped in the framework of past urban renewal fights,” Shaw writes, when historic, low-income neighborhoods were demolished willy-nilly, and suburban-style urban development was viewed by many as a more environmentally friendly style of living. And so are land use regulations, which responded to citizen outcry in the ‘60s and ‘70s by downzoning many neighborhoods, which prevents new apartment buildings (but permits modest single-family homes to be converted to McMansions). Today, 42 percent of Portland, 57 percent of Seattle, and 78 percent of Los Angeles are zoned exclusively for single-family homes.
Times have, in fact, changed since the 1970s, but getting liberal urban Boomers to understand that will be a massive undertaking. As Shaw’s title suggests, this is nothing short of a generational project that should engage YIMBYs, anti-gentrification activists, and progressives of all stripes who recognize how intersectionally damaging single-family-home zoning is.
To bolster this progressive stance, upzoning should always be accompanied by inclusionary zoning. But a more radical approach, and one that would really give coastal liberals pause, would to be to upzone only neighborhoods above a certain median income threshold, or those that have historically excluded people of color. Upzoning these areas to allow more mixed-use, mixed-income development “opens up middle-class housing opportunities in these otherwise off-limits communities without any risk of displacing low-income residents,” Shaw writes. Good luck arguing against that, my silver-haired comrades.
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Article: Dark Store Fight is Spreading
Discount center: As the “retail apocalypse” rolls on, many cities are struggling to make up for the lost tax revenue they’ve come to expect from brick-and-mortar businesses. As it turns out, some surviving big-box retailers—like Walmart and Target—have found a way to trim their own expenses in a way that only amplifies cities’ budgetary pain. And they are focusing their efforts on a forum that few residents might notice: property tax assessments.
It’s called “dark store theory,” and it’s essentially a novel argument that bustling big boxes should be taxed more like vacant “dark” stores. That means tax assessments value these open, functioning outlets as it they were the shuttered “ghost boxes” that have become increasingly common on the fringes of towns and suburbs. With appeal after appeal, retail giants are succeeding in persuading tax assessors and judges to accept these lower valuations.
(Madison McVeigh/CityLab)
CityLab’s Laura Bliss went to the epicenter of this theory, Wisconsin, to meet the mayors, assessors, and lawyers dueling over dark stores. Since 2015, the Badger State has seen 230 appeal cases in 34 counties, many as repeat appeals on the same properties. These appeals can add up to millions in tax refunds across towns. In the wake of yesterday’s Amazon HQ2 news, here’s a different story about the shifting fortunes of the retail landscape, the creative ways big companies avoid taxes, and the handouts towns keep offering to lure them in. Read Laura’s report: After the Retail Apocalypse, Prepare for the Property Tax Meltdown
Protected: Article: SF supes OK rezoning underused lots to allow more affordable housing in SoMa
Protected: Article: The tenant-landlord relationship is going digital
Why Vulnerable Populations Need Compassionate Cities
Janet K. of Memphis is a widow living on fixed income and Social Security, and deals with health issues related to her age. She’s struggled with tree roots invading her sewer system for years and knew something had to be done.
Unfortunately for Janet, she simply didn’t have the $3,000 needed for the repair. Like many Americans unsure of what to do with an emergency repair, Janet turned to her church, family, and prayer. Fortunately, her supportive local community helped her to rebuild.
The effects of a financial shock, such as a major car repair or a sudden loss of income, can be especially difficult on the elderly. According to the Urban Institute, “As a nation, and within our cities, our population is aging. The number of Americans over 65 will double between 2000 and 2040, while the number of adults over 85 will quadruple over that period. And there are many within this aging population who have not adequately saved to prepare themselves for the expense associated with increased life expectancy and aging in place.
Poverty in American Communities
Poverty in the US has changed little over the past four decades. Currently over 43 million people, one of every seven Americans, live below the poverty line in urban and rural communities. These households are extremely vulnerable to the effects of a financial shock, caused by expenses or lost income that families do not plan for; such as from job loss, illness, injury, death, or a major home or vehicle repair.
A study on the future of equity in cities recently published by the National League of Cities indicated that while cities are benefiting from the “positive outcomes of wealth flooding into metropolitan regions, they also feel the negative impact on community members of varying income levels – particularly, those at the bottom that face increased housing prices, greater need for social services and growing concern for community safety.”
Organizations such as the National League of Cities and PolicyLink are advocating for an equitable agenda when it comes to urban development plans, recognizing that well-planned urban infrastructure can have a positive impact on communities often left behind. According to Anita Cozart at PolicyLink, “infrastructure is vital for sustaining and reinforcing community. The networks, roads, schools, drinking water, sewer systems, facilities, and properties that comprise public infrastructure define neighborhoods, cities, and regions.” And city planners don’t have to go it alone. Cozart says “there are also emerging leaders in the philanthropic and business sectors who are embracing the agenda.”
Over 500 cities across North America have decided to partner with the National League of Cities (NLC) Service Line Warranty Program, administered by Utility Service Providers, to offer an affordable solution to their residents, a solution that complements the infrastructure planning needed to build vibrant cities.
The NLC Service Line Warranty Program is a good example of the private sector contributing to infrastructure improvement. Requiring no investment of municipal dollars and little in the way of municipal management, collaborating with this NLC program enables municipalities to educate and protect homeowners without the extensive logistical and administrative challenges that can distract from their core missions.
The Average American is Unprepared for Financial Shock
Adam and Jennifer F. loved the first home they purchased a historic 100-year-old house in a quiet Wichita, Kansas neighborhood. But when their private sewer line failed, the line that carries sewage from their home to the city’s main sewer line in the street, they were at risk of real financial hardship.
The cost to replace and re-route the line would be at least $7,000 dollars – a significant portion of the couple’s annual income. Since they were unable to afford the needed repair, a local contractor who works for the NLC Service Line Warranty program approached Utility Service Partners to see if the job could be covered under their HomeServe Cares program. These programs can help younger people who haven’t yet built up the savings or credit to afford unexpected home repairs.
When researchers at the Federal Reserve asked the average American whether they could handle the cost of an unexpected home repair project, the answer was simple: no. The Federal Reserve Report on the Economic Well-Being of U.S. Households in 2017 found that 4 out of 10 Americans can’t afford a $400 emergency expense and would have to sell something or take out a loan to cover it. These types of financial shocks can be catastrophic to already vulnerable households as well as those in the shrinking urban middle class, and they happen with alarming frequency.
Aging Private Infrastructure Contributes to Financial Pressures
Paul T. of Waukegan, Illinois, a 96-year-old World War II and Korean War veteran, is living his retirement years surrounded by his family. He shared his home with the children he had raised there and his grandchild. Having his family around him helped the older veteran address health issues, including asthma and being on oxygen.
When’s Paul’s plumbing system choked and backed up, Paul’s unfinished basement filled with six inches of gray water, and everything in the home’s sewer system ended up in the basement.
Fearful for their father’s health and worried about the possibility of toxic mold, the family sent Paul to live with a nearby family member as they tried to address the issue – and how they would pay for the $3,000 repair bill.
When an unexpected financial shock is added to the mix, the elderly may deplete already insufficient retirement savings. According to a survey, when faced with an emergency expense, about a quarter would use early withdrawal from retirement accounts, such as a 401(k), or an individual retirement account (IRA), and this was more likely in households with lower incomes.
Embracing Equitable Agendas in City Leadership
Even with cities making efforts toward equitable infrastructure planning, many residents are still at risk for a significant financial shock due to the aging private infrastructure that brings fresh water into their homes and carries sewage out. Breaks or leaks in private side water or sewer lines can result in repair bills into the thousands of dollars. These leaks and breaks in water and sewer lines, the lines that run between a home and the city’s main line, are far more common than most people assume.
According to a recent study by HomeServe USA, a leading provider of home repair solutions and parent company of USP, that administrates the NLC Service Line Warranty Program, 51% of homeowners reported having a home repair emergency in the past year alone.
USP and HomeServe execute over 400,000 repairs each year and are therefore keenly aware of the prevalence of these emergencies as well as the financial hardship they can cause for unprepared homeowners. “We want to work with our city partners to find solutions to real issues,” said John Kitzie, CEO of USP.
Thus, the HomeServe Cares program was created as a public commitment to aid disadvantaged homeowners who are faced with a service emergency and don’t have the resources or capability to deal with it. The program leverages the company’s most valuable resources: the outstanding network of over 1,100 local contractors, to deliver services to their neighbors in need. Like Paul T. in Waukegan.
A local contractor who is part of the network servicing customers of the NLC Service Line Warranty Program alerted USP to the family’s troubles. The HomeServe Cares program covered the cost of the emergency, after-hours dispatch to pump the grey water out of the basement and clean out the sewer line. Once the basement was free of water, the NLC SLWP also arranged the installation of a new water heater, restoring hot water to the family’s home – all of it without cost to Paul and his family through the HomeServe Cares program.
Caught without a safety net, vulnerable populations of varying ages and income levels, like Paul and Adam, are often left with nowhere to turn.
City Leaders Step Up to Help Vulnerable Populations Rebuild and Repair
Many innovative city leaders agree that these stories demonstrate the need for equitable infrastructure planning to include a component to cover the private side of aging infrastructure. Low cost emergency home repair plans help financially vulnerable populations prepare for potential breaks and leaks to the service lines that provide them with fresh water. These programs also serve to educate homeowners about their responsibility for repairs to these lines. In all of these cases described, an inexpensive monthly repair service plan would have provided the homeowners with immediate access to repair or replacement of the damaged water and sewer lines.
Mildred Crump, former City of Newark, New Jersey councilwoman, was keenly aware the City was experiencing a steady increase in water infrastructure challenges and problems.
In the City of Baltimore, city leaders knew if the city officials were struggling with infrastructure problems on the public side, then so were residents. “We needed to find a solution for our residents, because they could be faced with unexpected, and high, repair bills,” Shonte’ Eldridge, Baltimore City’s Deputy Chief of Operations, said.
Over the past 15 years, the combined power of USP and HomeServe have performed 2.9 million repairs or replacements to critical home systems, spending more than $775 million. But these repair programs are primarily introduced to homeowners through partnerships with cities or utilities, and many city officials remain unaware of the urgent need for them or are unconvinced their residents need them.
“Throughout those couple weeks, I shared my story with lots of different people, and I was shocked to learn how many people have similar issues. Many feel the same way I do,” Adam said. “If I would have known of the availability to purchase a low cost repair plan, I would definitely have purchased it”
When a city embraces a partnership with the program, the investments will address both the issues of aging infrastructure and equitable progress in their cities, helping ensure that vulnerable populations have access to the home repair resources desperately needed to keep them in their homes.
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Protected: Article: The Neighborhoods That Offer a ‘Bargain’ on Upward Mobility
Article: The Urban Land Institute’s annual look at the year ahead focuses on technology and transformation at an uncertain moment
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It’s complicated. In the course of compiling its annual Emerging Trends report, the Urban Land Institute found that the only certainty in its outlook for 2019 was uncertainty. Expert analysis points to a more complex, multi-layered series of overlapping trends, with unpredictable results, as opposed to a few strong narratives.
Will technology offer more opportunity and enhance competition and efficiency, or help consolidate the industry and drive out smaller players? How will shifts in demographics and shopping patterns challenge current investment practices? Will the U.S. ever get a grip on its housing affordability issues?
The report, a joint project of ULI and PricewaterhouseCoopers researchers unveiled during its fall meeting in Boston this afternoon, considered the responses of more than 750 real estate professionals in creating an high-level overview of the trends it believes will impact the real estate world. While the report expects an overall economic slowdown next year, emerging trends and markets in flux that could provide new opportunities.
Here are the broad trends and innovations expected to shape the real estate industry next year.
Grappling with a transformative moment
While vague, predicting a year of significant transformation only reflects the climate of uncertainty and possibility that’s settled over the market. This year alone, the homebuying market was expected to be the most competitive in history before buyers pumped the brakes later in the year. After years of steady growth and low interest rates, many observers anticipate a correction, especially in the face new technology, generational and demographic changes, the rise of new markets, and the continued winding-down of traditional retail. One survey respondent described the feeling of “coming off a peak,” and others have said the “low-hanging fruit has been picked.”
One of the most far-reaching changes rewriting the way real estate professionals do business has been the rise of industry-specific technology, startups, and better and more transparent analytics. In many cases, capital is following fintech, or financial tech, leading to more efficient—and automated—transactions.
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Tapering growth leads to a new numbers game
Less growth means a more challenging environment, and analysts predict a slow down on multiple fronts. Population growth has continued to trickle up, labor force availability, especially in the construction industry, is lackluster at best, and productivity figures for the economy at large show minuscule improvements. Add in government forecasts of an economic slowdown—Congressional Budget Office projections show average GDP growth of 1.9 percent in 2018-19, much slower than at the beginning of the current economic upswing—and real estate activity will likely taper off as well. This deceleration means identifying and capitalizing on new opportunities—such as emerging markets, replacing older buildings, adaptive reuse, and new office space—will be much harder.
Second cities, and now their suburbs, may be key markets
Investors have long seen urban revitalization in smaller U.S. cities as a great bet, but as these downtowns boom and millennials continue to return, young adults have started to make inroads into the suburbs. Researchers are seeing more evidence the younger generation that put off buying a home has its eyes on single-family homes, meaning that housing surrounding these so-called 18-hour cities—especially if it’s in walkable, transit-oriented developments—is in high demand. Census Bureau stats show evidence of a second-city suburban shift. Over 2.6 million people annually moved from principal cities within metropolitan areas to the suburbs in 2016 and 2017, and of the smaller markets in the ULI’s Top 20 emerging market report, 55 percent of new residents over the last five years have relocated to suburban homes.
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Amenity creep and the apartment arms race
In a competitive housing market, apartment landlords and builders have been engaging in an arms race for new amenities. Fancy gyms and rooftop access doesn’t cut it anymore. Today’s cutting-edge multifamily developments include movie theaters, dog runs, communal gardens, and access to coworking space. As landlords “knock themselves over” looking for new selling points to attract downtown renters, smart home and service-economy firms are also rising to the challenge, offering benefits such as laundry service.
Technology tackles the real estate market
Tech has always had its eye on opportunity, and real estate, which represents 13 percent of the U.S. GDP, is a big prize. Next year will see increasing inroads by tech firms, services, and startups seeking to capture and consolidate this fragmented market. Venture capital and tech investors have responded in kind. CB Insights projects real estate tech investment may top $5.2 billion by the end of 2018, firms such as Fifth Wall have zeroed-in on the industry, and investment in building and construction tech has boomed. New platforms for home selling keep popping up, trying to disrupt how this traditional transaction works.
Continued rise of artificial intelligence
Will hype about the game-changing potential of artificial intelligence begin to manifest itself in the real estate industry? While some tech startups have integrated AI into their market analyses, perhaps the most immediately relevant use for machine learning and other emerging technologies is building management, organization, and design. Companies such as WeWork, and smart buildings such as The Edge already see big potential in analyzing user behavior in their shared office space to refine their offerings, redesign the layout of their spaces, and create a virtuous feedback loop. ULI report authors suggest that for the real estate industry, AI may offer big benefits for building efficiency and safety, as well as security and property access.
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Dealing with the real costs of free delivery
As next-day increasing becomes just-in-time, a sea change in logistics and shopper expectations had created new challenges for the real estate industry. The never-ending hunger Amazon and other e-commerce companies have for warehouse space has supercharged the industrial real estate sector, but the possibilities of increasing speedy delivery have contributed to transportation gridlock in major U.S. cities.
Add this to increasingly underfunded infrastructure—businesses will bear an estimated $240 billion in congestion costs over the next five years, while annual spending on roads and highways is just 37 percent of what’s needed to keep pace with deterioration. It’s clear real estate will not only have to factor in, and pay the price, for this oversight, but will need to pay attention to how potential solutions, such as congestion pricing, impact land values and investment opportunities.
Retail transforming into a new equilibrium
The much-hyped retail apocalypse narrative overstates the situation: it’s not extinction, more a culling of the herd. The rise of omni-channel retail and the shrinking size of America’s retail footprint—a response to e-commerce and just-in-time delivery—means commercial developers and investors need to support more efficient uses of space, and see how everyone, from small firms to big box stores, are seeking out a better, not necessarily bigger, brick-and-mortar presence.
This is an era where simply merchandizing is being overshadowed by services, and the rise in new kinds of tenants—such as urgent-care medical facilities, health and fitness providers, restaurants, financial services, and entertainment venues—underscore the strength of the experience economy. It’s also changing how leases are written. With the sector in flux, the standard long-term agreement is making way to shorter deals, even pop-up leases.
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A renewed sustainability focus
In the wake of serious recent reports on climate change, there’s been a renewed focus on sustainability in the building and construction industries from groups such as We Are Still In and the Climate Mayors. As calls to curb emissions and control environmental impacts only rise over the next decade, more and more investors and building managers will make green practices a core part of their business. “Real estate has been proactive on sustainability issues for many years,” reads the report. “As a matter of self-interest as well as social responsibility, the industry is moving ahead to advance its sustainability performance regardless of the direction of national policy.”
The acute affordability crisis
The statistics couldn’t be clearer: the United States faces a widespread housing crisis, from big cities to small towns. Half of all renters pay more than 30 percent of their income on housing, HUD says 12 million Americans spend more than half their earnings on a place to live, and since 2015, the combination of rising prices for single-family homes and rising mortgage rates has cut home affordability by 15 percent. This country needs new homes, and fast; academics estimate the U.S. requires 4.6 million additional rental units by 2030.
That rate of construction should be possible, based on the money bring invested in the multifamily sector, but for a variety of reasons, including regulations, new construction has and remains skewed towards the upper end of the market. A vast reckoning will take place in the rental market. Hopefully public and private stakeholders can work together and build off a handful of good examples to rework how rental buildings are funded and delivered.
The Urban Land Institute’s annual look at the year ahead focuses on technology and transformation at an uncertain moment
Protected: Article: On Yelp, Gentrification Is in the Stars
Article: Parcels, Taking, and Environmental Protection in Murr v. Wisconsin
Earlier this year, the U.S. Supreme Court turned its attention to property boundaries in a case that adds to its corpus on the Takings Clause of the Constitution. In Murr v. Wisconsin , a family challenged a regulation that fused or “merged” its adjacent parcels of land, preventing them from being sold separately. The family claimed that the restriction amounted to a government “taking.” (Murr , 137 S.Ct. 1933 (2017).) …
Read the article in the American Surveyor, October 2017 Parcels, Taking, and Environmental Protection in Murr v. Wisconsin
Written by Lloyd Pilchen who is a municipal, land use, and environmental lawyer with Olivarez Madruga Lemieux O’Neill LLP in Los Angeles. Pilchen serves as city attorney for the City of Ridgecrest and assistant city attorney for the cities of El Monte and San Gabriel in California.
Protected: Article: The ascent of climbing gyms, and battle for post-industrial real estate
Protected: Article: Finding the Untapped Potential of Alleys
Protected: Article: Action Outside a Public Meeting, What Could Possibly Go Wrong?
Protected: Article: Michael Woo – Is There Such a Thing as Too Much Democracy? Challenges to Building Affordable Housing in LA
Protected: Article – Carlyle Hall Opines on LA City’s Forfeiture of Local Control Over ADUs
Protected: Article: Helen Leung Argues ADUs Make a Positive Contribution in Combating CA’s Housing Crisis
Protected: Article: Bob Wieckowski on His SB 831 and the Need for ADUs
What’s Happening in Planning 2013
“The City of Los Angeles is at a pivotal point in its history. Over the last ten years, many positive changes have taken place. With thousands of new lofts and LA Live, Downtown is now thriving. The revitalization of Hollywood is a success story that shows what visionary leadership and strategic redevelopment can accomplish. All across the City, mixed use development that combines multi-family housing with ground floor commercial is the new norm. With the passage of Measure R in 2008, the region is making an unprecedented investment in its rail transit system. Much as the freeway system defined Los Angeles in the 20th Century, the creation of a true regional transit network has the potential to redefine Los Angeles in the 21st. While the City faces many challenges, from creating new jobs and building enough affordable housing, to repairing our streets, maintaining effective public services, and providing adequate infrastructure, there is reason for optimism.
On January 1, 2014, a new Department of City Planning and Development goes into effect that will unify the City’s planning, development services, and permitting functions. Along with the new Economic and Workforce Development Department, which was launched on July 1st of this year, the potential to improve the City’s business climate by eliminating bottlenecks and improving customer service has never been greater. Coordinating the work programs of these two Departments can create public-private partnerships and synergies that will facilitate the creation of thousands of new high-tech and green jobs, laying the foundation for a 21st Century economy. BuildLA, the long-anticipated web-based permitting system, will revolutionize the way the City does business with everyone who invests and builds in Los Angeles, from homeowners and small business owners to large corporations and developers.”
Table of Contents of What’s Happening in Planning 2013
Full Report: What’s Happening in Planning 2013
Part I – Introduction
Part II – Overview of City Planning in Los Angeles
Part III – Recent Accomplishments
Part IV – What’s Happening in 2013-14