Ikea launches visualisation and e-commerce app

Ikea has launced an app with which customers can place products in their own house using augmented reality, then buy the items online. This means customers do not need to go to suburban physical stores as often, reducing the stress on environment and mobility.

New business model

After entering the measurements of their houses into the app and answering a few questions concerning taste and life situations, customers can visualise Ikea products in their homes using augmented reality. If they like what they see, they can order the products using the app. This takes the process a step further than the previous app, which did allow 2,000 items to be virtually placed in people’s homes but did not offer the e-commerce option.

The new app will be tested in France and the Netherlands, but will be rolled out to Ikea’s eight main markets (including China, Germany and the United States) before the end of the year. It is part of the chain’s new business model, which turns away from suburban big boxes in favour of e-commerce and smaller city centre stores. The first of such stores opened earlier this month in Paris.

The new business model means the end of 7,500 traditional jobs because of “changing customer behaviour”, but also heralds 11,500 new jobs in emerging markets. The Swedes also have high hopes for their chances in e-commerce, both in Europe and (through platforms) in China and the United States.

https://www.infabode.com/hubs/general-global-property-technology/hub_posts/106281

Lenders Don’t Care If Your Project Is In An Opportunity Zone

Opportunity zones have generated nationwide excitement since they were introduced, but a maxim has been repeated ad nauseum to temper that enthusiasm: An opportunity zone doesn’t turn a bad deal into a good one.

While the capital gains tax benefits only apply to equity investments, a real estate deal done without debt is a rarity. For commercial real estate lenders, the maxim holds true — opportunity zones don’t change the fundamentals of a deal.

“We look at how much equity is going into a deal, if the deal makes sense and if we like the area, then we do the deal [or not],” Capital One Senior Vice President Sadhvi Subramanian said. “From the CRE side of it, if it’s in an opportunity zone or not doesn’t have an impact on how I’m going to finance the deal at all.”

Since their introduction as part of the Tax Cuts and Jobs Act of 2017, opportunity zones have come under criticism as a program for its lack of restrictions and reliance on census data from 2010. The bulk of investments to make use of deferred and discounted capital gains taxes will flow to growing areas that don’t need extra incentives, neighborhood advocates worry, neglecting the areas the legislation was meant to benefit.

Financial giants such as Prudential and Goldman Sachs have made some deals in distressed areas using their social impact funds, and plenty of banks like Capital One have social impact branches of their own to give out low-interest loans, but the additional requirements for any project to qualify for other tax breaks can be a stumbling block for the pool of investors the law is meant to draw in.

“What [opportunity zones] are really doing is potentially bringing in non-real estate investors to the mix,” Madison Realty Capital co-founder and Managing Principal Josh Zegen said.

Inexpert investors will likely place their trust in fund managers to handle the transactions, but they do so to maximize return and to ensure compliance, not necessarily to maximize social impact.

MRC is among the vast majority of private equity and debt firms that does not have an impact fund. Even qualified opportunity funds interested in social impact have not been offering terms significantly better than non-OZ investors, according to Shift Capital Director of Development Nancy Gephart. Private debt sources may be more amenable to opportunity zone deals than banks because of the greater potential pool of equity sources. OZ deals need to cover potential cost increases associated with the improvements necessary to qualify for the program’s tax benefits.

“In an opportunity zone-related investment, the numbers need to work, but we know that there’s another source of income or cash that can come into the deal,” Zegen said. “So in some ways, it creates more liquidity [potential] for that deal.”

Like Subramanian, Zegen said he wouldn’t change his underwriting framework for the sake of an opportunity zone deal. But he said more potential avenues to covering cost overruns could serve as something of a tiebreaker when MRC is weighing projects to finance.

“If the deal didn’t work on the merits of the deal, I wouldn’t be interested in doing the deal,” Zegen said. “When it’s on the line, that could push me over the edge, I could say. If it meets our criteria, opportunity zones would make me more excited about the deal.”

It may not be all that surprising that private debt funds would be more flexible in making financing deals than banks; that has become the case across commercial real estate. In the early stages of the opportunity zone program, one of the most popular deal formats has been the recapitalization of a project that is already well underway, Zegen said.

“We’re seeing a number of recapitalization deals, where ownership is looking to restructure a deal to take advantage of opportunity zones, and where they need bridge loans or something like that to bring in a new investor,” Zegen said. “So if they were considering selling [a building], now they recapitalize.”

Zegen told Bisnow that MRC is in negotiations on several such deals, but has not closed on one to date. But as deadlines to maximize capital gains tax discounts approach, investors and developers will need to put together financing more quickly.

Being unregulated, debt funds can match the speed of dealmaking required more easily than banks, meaning they could take a larger and larger share of debt deals in the sector going forward, Zegen said.

Wherever the debt is coming from, the picture of opportunity zone financing is beginning to form as nearly indistinguishable from other forms of commercial real estate deals. As a method of encouraging business in disadvantaged areas, the legislation doesn’t appear to be doing the job.

“A lot of [Low-Income Housing Tax Credit] deals, say, would never get done without LIHTC, and with opportunity zones we’re seeing that for the most part, the deal works anyway, and OZs are an added benefit,” Zegen said.

https://www.bisnow.com/national/news/opportunity-zones/lenders-dont-care-if-your-project-is-in-an-opportunity-zone-99154

All Eyes on Brooklyn’s Tech Surge

Technology has changed irreversibly the face of real estate, giving a sense of community among all those connected. A recent KPMG survey found that New York City will eclipse Silicon Valley’s tech scene in the next four years due to its increasing number of incentives and government-backed programs.

While Manhattan has clearly emerged as a rock-solid tech hub, its neighbor to the East is a shier, yet well-contoured tech titan-to-be that houses the campuses of large players in the market such as Etsy, Kickstarter and Livestream. Brooklyn is attractive to tech companies not only for its shorter commutes and cheaper rents, but also because of its rich offerings of shared workspaces and bohemian offices. Justin Fitzsimmons, research analyst at GFI Realty, sheds light on how these companies are driving a real estate boom across many Brooklyn neighborhoods.

How does Brooklyn’s tech-driven economic growth relate to New York City’s tech expansion?

Fitzsimmons: Brooklyn’s tech-driven economic growth speaks volumes to New York City’s overall tech expansion. We’ve seen big players such as Google come in heavy with a $2.4 billion purchase of the 1.2 million-square-foot Chelsea Market and we’ve seen Spotify lease 564,000 square feet at 4 World Trade Center for its headquarters. Both are located in trophy buildings in established Manhattan neighborhoods. However, Brooklyn and other outer boroughs are no longer competing with Midtown South and the Financial District, but complementing them.

We’re noting the rising pricing for office space in Manhattan, but we’re also seeing that ripple effect. Kickstarter, Vice Media, Amplify, Etsy, Livestream, HUGE and MakerBot have one important thing in common: their locations. These big-name companies, all located in neighborhoods commanding some of the highest residential rents and seeing unprecedented new office space development, are actually driving economic growth in the borough.

In the past, the city’s tech scene recorded rapid growth because there’s a multitude of startups that call Brooklyn home as well as a plethora of new ones that are not only filling the existing office space and upcoming new campuses, but forcing investors to keep the office development ball rolling as Brooklyn continues its role in securing New York City’s title as the nation’s second-largest tech hub.

What are the trends shaping up the borough’s commercial real estate landscape due to the tech influx?

Fitzsimmons: The tech influx in Brooklyn is shaping the commercial real estate landscape in ways that was hard to imagine 15 years ago. Former areas of booming industry—waterfront neighborhoods such as Williamsburg, Brooklyn Navy Yard, Dumbo, Gowanus, Sunset Park and Long Island City—were left barren after industry in the city began to collapse, resulting in neighborhoods left in states of disrepair. Years later, those abandoned warehouses and waterfront properties would become rife with opportunity. Following rezonings of former industrial areas, underserved subsections became hotbeds for upscale residential development and ideal for new commercial development.

Tech companies need space and today’s business model differs from that of yesteryear. Brooklyn’s work pool aims for live-work-play settings. A younger workforce wants to work a short walk or bike ride away from work and get lunch in the building’s food hall or on-site café. Lastly, they need open workspaces where collective thoughts can be shared, where the corner office is for everyone.

How are developers adapting their strategies to the changing office market and increased demand?

Fitzsimmons: The new commercial developments that are housing tech companies are being designed with these amenities in mind and their employees are happy to live in the idyllic neighborhoods in which these firms are born out of or have moved into. Developers, seeing the demand for more office space in the face of the growing tech market, are adapting their strategies by simply providing the product in demand.

For the smaller start-ups, coworking has become a trend that doesn’t seem to be going anywhere but up. Smaller companies need smaller spaces, so instead of building your tech company out of your Brooklyn apartment, as the co-founders of Etsy did, you can now lease small or single-office space in coworking locations. Some examples other than WeWork are Bond Collective, Industrious, Green Desk, Bklyn Commons, CoLab Factory, Compound Cowork, Industrious, Pencilworks and SHARED Brooklyn.

Additionally, there are larger-scale models like DUMBO Heights, a five-building, creative office campus. Dumbo Heights is just blocks from the Time Out Market Food Hall, which accentuates the game-changing nature of the residential development at 85 Jay St. These three developments and the developers behind them provide a great example of the ability of office, retail and residential to bolster each other and collectively create neighborhood growth.

Tell us more about the most representative projects highlighting the area’s growth as a tech hub.

Fitzsimmons: I think the project that best highlights Brooklyn’s continuous growth as a tech hub is Brooklyn Navy Yard. The apex of the Brooklyn Tech Triangle—Brooklyn Navy Yard, DUMBO and Downtown Brooklyn—is a 300-acre, 13 million-square-foot hub which currently provides New Yorkers 9,500 jobs in the manufacturing, technology and industry sectors. The vast, former U.S. Naval Yard has building-to-building shuttles, a ferry terminal and will soon have technologically advanced robotic, autonomous vehicles which will help employees get around easier.

One of the many buildings inside of Brooklyn Navy Yard is Dock 72, a ground-up construction that embodies the new style of commercial development. The 675,000-square-foot structure will feature floor-to-ceiling windows, landscaped terraces and the building’s unique design is just the beginning. Amenities include an espresso bar, juice bar and tavern. There will also be a gym, basketball court, rooftop conference rooms, its own ferry stop and bike valet. And the anchor tenant? WeWork.

Not only is Brooklyn Navy Yard’s size and job count the borough’s largest, but the vision for the future is the most promising to pushing Brooklyn further towards becoming the technology force that it’s seemingly poised to be. It speaks volumes as to where Brooklyn’s been, where it is today and most importantly, where it’s headed.

Elaborate on the neighborhoods we should keep an eye on and why.

Fitzsimmons: These would be Gowanus, Red Hook and Sunset Park. Due to its recent rezonings, Gowanus is getting closer and closer to a tech-oriented character, but we see it expanding as pricing rises in areas like DUMBO and Downtown Brooklyn. Red Hook has the space and increased investor interest. The only thing that seems to hinder a big boost in commercial development is transportation. However, with the NYC Ferry and the need for more space, I see Red Hook finally coming into play. Lastly, with the expansion of Industry City, as well as a number of other commercial campuses throughout the area, Sunset Park has room to grow.

How do you see the Brooklyn office market going forward?

Fitzsimmons: The multiple moves of Manhattan-based companies to the outer boroughs, combined with the proliferation of start-ups being founded in these submarkets is quite notable, demonstrating their true status as tech incubators. Additionally, with the success of both the commercial and residential sectors, each contributing to the other’s growth, it is no surprise that businesses and real estate investors alike have begun to see many neighborhoods in Brooklyn and Queens in an entirely new light.

When Kickstarter made the decision to move its headquarters from the Lower East Side to Greenpoint, the move was fairly unique. However, in the following years, that decision was emulated by a range of other technology, advertising, media and information firms and, subsequently, real estate investment in the outer boroughs has increased exponentially. As technology continues to grow in new neighborhoods, savvy developers will continue to build in the same areas, catering to the thousands of new employees that are lining up to grow alongside their employers.

https://www.infabode.com/hubs/general-new-york-office-market/hub_posts/105879

Airbnb agrees to share data for over 17,000 NYC listings

Airbnb and New York City are inching closer to making peace over data sharing. To start, the home rental outfit has reached an agreement to hand over semi-anonymized host and reservation data for over 17,000 listings in the city. It’s also providing data for every NYC listing rented between January 1st, 2018 and February 18th, 2019 that might have violated the city’s short-term rental laws.

Some of the data transfer won’t be completely voluntary. A judge has ordered Airbnb to comply with subpoenas by providing detailed info for “dozens” of hosts and “hundreds” of guests who’ve either listed or stayed in over a dozen buildings in three boroughs over the past seven years. The data includes sensitive material like names and addresses, bank account details and reservation histories.

An Airbnb representative told Wired that the company hoped that honoring the subpoenas was a “first step” toward city regulations that were in line with its rights and obligations. It also claimed this “reinforces” privacy concerns by having the city show the court why it needed more detailed information. The company had previously characterized the subpoenas as “overbroad and unduly burdensome.”

This doesn’t represent a definitive end to the quarrel between Airbnb and NYC, but it could have a significant influence on how the city treats home rental services. The metropolis has long been concerned that Airbnb and similar services exacerbate housing issues by letting tenants and landlords turn apartments into makeshift hotel rooms, denying permanent residents a place to stay. Airbnb’s info could help NYC determine the scale of this practice and prosecute offenders.

https://www.engadget.com/2019/05/26/airbnb-nyc-listing-data-sharing-agreement/

NYC’s Chelsea becomes more solidly Googleopolis

You can call Chelsea “Googleopolis.”

The tech giant already owns or rents nearly all the property between West 15th and West 16th streets from Eighth Avenue to the middle of the Hudson River on Pier 57, and Wednesday it announced ownership of another property in the neighborhood, acquiring the Milk Building at 450 W. 15th St. from Jamestown Properties for an undisclosed sum.

Jamestown was represented by Doug Harmon, Adam Spies, and Kevin Donner at Cushman & Wakefield, and Google was represented by Darcy Stacom at CBRE.

The building is connected by a bridge to Chelsea Market, which Google also owns after acquiring it from Atlanta-based Jamestown last year for $2.4 billion.

Google plans to occupy three of the Milk Building’s eight floors.

“This purchase will help us meet our short-term growth needs in Chelsea-Meatpacking,” said William Floyd, Google’s director of external affairs. “We are excited by this investment and are committed to continuing to contribute to the vibrancy of this amazing neighborhood.”

This is Google’s third property purchase in Chelsea since 2010.

Google has more than 8,000 employees in the city and says it plans to double that number in the next decade.

It owns 111 Eighth Ave., the city’s fourth-largest office building, with 2.9 million square feet.

In December, the tech giant announced that it will double its Manhattan workforce by opening a $1 billion Hudson Square office campus which would make the company one of the city’s biggest office tenants.

https://www.infabode.com/hubs/general-new-york-office-market/hub_posts/105109

100 years of design at Herman Miller’s new exhibition

Herman Miller flagship in New York City

 Max Touhey

Are you a Herman Miller obsessive?

The purveyor of iconic midcentury modern furniture is opening a new exhibition celebrating 100 years of design and culture at their New York City flagship—just in time for NYCxDesignand ICFF. Starting on Sunday, May 19, design aesthetes can visit the showroom at 251 Park Avenue South in the Flatiron District to view works by Ray and Charles Eames, Alexander Girard, George Nelson, and so much more.

Called “A Way of Living,” the expansive exhibition will cover the second floor of the showroom and be open all summer. It will feature a wide range of Herman Miller’s archival materials—including furniture, posters, and textiles—and 10 milestone chapters for the Michigan-based company.

The exhibition shares the same name as Herman Miller’s upcoming book, which gives a comprehensive history of the brand over 600 pages. The book will be available on May 29 at the showroom and on HermanMiller.com.

https://ny.curbed.com/2019/5/13/18537316/herman-miller-midcentury-modern-eames-history

Why California Killed Its ‘Upzoning’ Bill. Again.

California famously has a housing supply and affordability crisis underway, and the preeminent idea for dealing with it has been to undercut local zoning regulations that restrict the quantity, type and location of housing construction. Newly elected Governor Gavin Newsom initially proposedwithholding state transportation funds from jurisdictions that get in the way of new housing goals, but soon back downed (for the time being, anyway). A more ambitious state bill (often described as “upzoning” legislation because it encourages more high-rise housing near transit centers) aimed at the twin challenges of housing supply and climate change was blocked by a coalition of opponents last year.

That legislation, now known as SB 50, was revised by its sponsor, San Francisco state senator Scott Wiener, to take into account the complaints of low-income housing advocates and looked to be in much stronger shape this year. Its basic approach is to preempt local zoning rules regulating high-density housing near transit centers, in order to encourage both more multi-family housing and fewer cars on the road (and shorter commutes). Vocal opposition (aside from conservatives favoring a complete free market in housing) this year was largely limited to local governments, as the Los Angeles Times reports:

Though cities and counties remained opposed to Wiener’s efforts this year, the legislator secured backing from the powerful State Building & Construction Trades Council of California, the labor group representing construction workers. He was also in negotiations with tenant organizations over potential changes to the bill, and found additional new supporters including environmental and other labor groups that hadn’t weighed in last year.

But SB 50 was killed for this year’s legislative session by the chairman of the senate’s appropriations committee, Democrat Anthony Portantino, who represents a wealthy suburban bedroom community near Los Angeles where increased housing density is not super-popular. Wiener and other supporters were convinced that the bill would have passed the full senate had it not been sidetracked by Portantino (whose own “solution” to the housing problem is to authorize specialty “California Housing Crisis Awareness” license plates).

Perhaps this, er, construction accident in the movement to deal with NIMBY (“Not In My Back Yard”) obstruction of new housing construction will galvanize supporters. Newsom, who had been notably neutral towards SB 50, expressed “disappointment” at its demise, and might get off the sidelines, given the priority he has assigned to the housing crisis. According to a pro-SB 50 group, public support for it is already running at better than 2-1 levels.

If Democrats can ever achieve a consensus on housing policy, they can do as they wish at present, since the Donkey Party has supermajorities in both chambers in the legislature. But as Portantino’s lethal action showed, suburbanites from both parties are wary of disturbing the status quo in housing patterns, and some may even be luxuriating in the sky-high home purchase and rent prices in the Golden State (the median home price in California is $549,000 and the median monthly rent is $2800). There’s never been a city or county government anywhere that will welcome state preemption of their powers, particularly over something as fundamental as land use. So the road to enactment of “upzoning” legislation remains rocky and winding. If you’re homeless in California, or are struggling to afford a mortgage payment or rent, help is not quite yet on the way.

http://nymag.com/intelligencer/2019/05/california-again-kills-upzoning-bill-to-spur-new-housing.html

U.S opens antitrust investigation of U.S. real estate industry

According to Bloomberg’s By David McLaughlin and Patrick Clark, U.S. regulators are conducting an investigation of “potentially anti-competitive practices in the residential real estate brokerage business.” According to the Bloomberg report, the focus of the probe will be “on compensation to brokers and restrictions on their access to listings.” “The probe was detailed in a civil investigative demand, which is akin to a subpoena, issued by the Justice Department to CoreLogic (CLGX), a provider of real estate data to government agencies, lenders and other housing-market participants.Companies that may be impacted by this include Marcus & Millichap (MMI), RE/MAX Holdings (RMAX), Redfin (RDFN), Realogy (RLGY) and Zillow (Z).
https://thefly.com/landingPageNews.php?id=2912879

Millennials, Gen Z Would Rather Rent Than Own — Just About Everything

Rent a ring. Or a dress. Borrow a table. Rent a sporting good.

This may be the shopping center of the future. A JLL report released Tuesday found that a large majority of millennials and Generation Z would rather rent trendy, well-made products than actually buy and own things.

“Just imagine in the future having a different phone every week,” JLL President and CEO Retail Americas Greg Maloney said during a media panel at ICSC RECon in Las Vegas. “I don’t know [if those type of stores will work]. But those are the type of things we need to start investigating.”

JLL released a survey titled the Future of Retail on the second day of the ICSC RECon convention, the largest gathering of retail professionals in the world. JLL brought in speakers to highlight retail’s growing shift from traditional brick-and-mortar to slowly incorporate experiential and innovative concepts.  The survey, conducted earlier this year, polled 1,500 male and female consumers nationwide across six generations — from Gen Z to seniors — and asked them what they wanted from their shopping centers in the future. The survey did not break down consumers by income or ethnic demographics.

The survey found several interesting tidbits: More than 50% of those polled want a skilled customer service person and only 7% want a robot with artificial intelligence to help them shop and check out.

More than 62% of the participants across generations, led by 72% of millennials, want stores to remember their shopping preferences. Nearly 30% want malls to have some sort of family-friendly entertainment.  Nearly 37% want stores to offer same-day delivery. 71% of millennials and 72% of Gen Z would rather rent a trendy and well-made product from a store than purchase it.

JLL released the Future of Retail survey at ICSC RECon 2019 in Las Vegas. The poll comes as the retail industry continues to undergo a tremendous shift as it tries to adjust to the growing influence and sales from e-commerce.  A recent report by commercial real estate data company Reonomy found that retail property values are going down for the first time in years. It is clicks vs. bricks.

But rather than discuss the state of today’s retail climate, the JLL survey and officials wanted to focus on the physical retail industry’s enormous potential in the years to come, Maloney said. Maloney said developers can no longer rely on the old model of “build it and they will come.”

“Before, it was a developer-driven business,” Maloney said. “Today it is a consumer-driven business. If we don’t deliver for the consumer with what they want, we’re not going to achieve their sales.”

Maloney believes the shopping center of the future will be mixed-use.  The new shopping center will have a hotel, office, an entertainment venue, plenty of food options and open space — perhaps a soccer field. About 20% of the respondents in the survey expect to see a wellness center or healthcare facility in shopping centers. Nearly 38% want these centers to have healthy food and drink options.

“It’s going to be a true live, work and play center,” Maloney said.

The survey also found that technology will play a key role in the future of shopping centers. More than 26% of shoppers want technology that helps them navigate a shopping center.

JLL Americas Director of Retail Research James Cook said another interesting trend is the rise in popularity of the sharing economy.  Since millennials, those born from 1981 to 1996, and Gen Z, those born between 1995 and 2015, value experience over material goods and are aware of their impact on the environment, there could be a shift in what kind of stores will inhabit malls of the future.

Some mall stores could become a type of retail library, where people can rent clothing, technology, jewelry and other items for a price and return them at a later date. The rent-a-product approach is not that far-fetched, Maloney said. There are already at least nine stores that allow shoppers to rent designer high-end clothing and accessories. The survey found across the six generations that were polled, more than 57% would rather rent a trendy item than purchase and own it. And fashion retailers Rent The Runway and West Elm have teamed up to extend the rental concept to home design, according to the survey.

Maloney remembers when he heard about Amazon discussing drone deliveries several years ago.

“We all laughed at it,” Maloney said. “[But some] of these far-fetched ideas are starting to get some traction to it.”

Cook said it doesn’t matter what kind of product a store or shopping center offers if it doesn’t treat customers well. No tech or gizmo can replace good human interaction, he said. The survey found that more than 50% of respondents care most about receiving quality customer service when they walk into a store.

“They just want good old fashioned customer service and a [positive] retail experience,” Cook said.

https://www.bisnow.com/los-angeles/news/retail/icsc-recon-the-state-of-retail-98980

Housing crisis has Seattle weighing end of single-family zoning

Maher Abed works as a security officer at the Space Needle, Seattle’s signature landmark.

He moved to Seattle with his wife and four sons in 2017, after years of persecution from the Islamic State group and Iraqi militias in Baghdad, his hometown.

Abed worked as a liaison officer between the U.S. and Iraqi armies. He moved his family around as he was being persecuted by the Iraqi militias. His brother was kidnapped by a militia.

Abed finally came to the United States as a refugee and chose Seattle because it was the only city in the U.S. where he had any family or friends. He was hopeful, knowing that the city was ripe with work opportunities. But he would soon come to learn that Seattle’s supply of employment was not matched by a supply of affordable housing.

“When I climb to the top of the Space Needle and look out at the city, I see a lot of construction, but I see it’s all for working,” he said. “Not for living.”

In an effort to address the issue, Mayor Jenny Durkan, a Democrat, signed a Mandatory Housing Affordability policy into law in March that would change zoning rules in 27 neighborhoods. The policy is expected to generate 6,000 new homes over the next decade.

Due to the success of tech giants like Amazon and Microsoft, the city has attracted more than 105,000 new residents since 2010, a population increase of 16 percent.

Real estate in the city is booming. But almost none of the new developments in Seattle are affordable to the majority of residents.

As is the case in most cities, Seattle sets specific zoning rules that dictate what can or can’t be built in each of its neighborhoods. That’s why a skyscraper won’t be built in the suburbs nor would a sprawling suburban manor in the heart of downtown.

However, with 75 percent of its residential land zoned for single-family use, a substantial majority of Seattle’s land is rendered essentially unavailable for development of apartment complexes, duplexes and other kinds of structures that could help meet the city’s high demand for housing.

This means that denser housing is limited to small pockets of the city. For working-class families like Abed’s, this scarcity makes it practically impossible to find affordable, multifamily housing in the city.

Zoning a neighborhood from single-family to multifamily is what city planners refer to as “upzoning.”

Teresa Mosqueda, a City Council member and labor activist, has been one of Seattle’s most prominent advocates for diversifying zoning throughout the city.

Mosqueda said that the city’s massive population growth has not been coupled with an effort to house its newest residents. In fact, Mosqueda said, Seattle has zoned backward, defensively downzoning even more land to single-family use as the population grew.

Mosqueda says she believes that the main reason Seattle’s zoning has stagnated is that its neighborhood councils are run primarily by homeowners, whereas the general populace is mostly renters.

“We want more people of color. We want more women. We want more renters. We want more youth. We want more LGBTQ populations to sit on these neighborhood councils and really inform the city’s policies,” Mosqueda said.

From Philadelphia to Portland, housing advocates all over the U.S. have gained momentum in their push to reduce single-family neighborhoods. In December, Minneapolis became the first major U.S. city to eliminate single-family zoning altogether, voting to allow for complexes with up to three dwelling units in all of its neighborhoods. In California, a large piece of housing legislation reducing single-family zoning across the state has made progress through the state Senate.

Seattle’s upzoning plan is set to take place throughout the city, but only 6 percent of single-family neighborhoods will be affected. These neighborhoods will be rezoned to allow for smaller, denser housing, while encouraging developers to keep existing structures and turn them into multifamily housing — like duplexes — in order to preserve a neighborhood’s aesthetic.

Andy Fessel is a Seattle homeowner in the wealthy single-family neighborhood of Queen Anne. Unlike many of the homeowners in his neighborhood, Fessel actually wants his neighborhood’s zoning rules to change.

Fessel, 65, and his wife are retired and moved to Seattle from the California Bay Area in 2018 to be closer to his daughter and grandchild. He and his wife bought a single-family home with the hopes of using its extra space to build a second structure on the property.

Fessel says a common mistake people make is confusing multifamily housing with large apartment complexes. For the most part, he said, homeowners would like to at least have the option of building a cottage in their backyard that they can rent it out.

“For a lot of people, it’s additional income,” he said, adding that the cost of living goes up for the elderly while their income does not. Accessory dwelling units can be a way to prevent displacement from longtime residents, he said.

“Our biggest obstacle is our own neighborhood,” Fessel said, referring to the neighborhood council that has tried its hardest to stand in the way of Seattle’s upzoning efforts.

Martin Kaplan is an architect and longtime Seattle resident leading that fight as part of the Queen Anne Community Council, which argues that the city has not taken sufficient consideration of the environmental impact that upzoning could have.

“I’m not against increasing density but it has to be done smartly,” Kaplan said.

Kaplan said that upzoning measures would infringe on Seattle’s autonomy to manage its own land-use decisions.

Kaplan and the neighbors fighting alongside him worry that upzoning will wreak havoc on some neighborhoods that were not designed for multifamily housing. They argue that a one-size-fits-all approach is going to strain utilities and crowd streets with parking.

The Seattle City Council is considering laws to make it easier for single-family homeowners to build accessory dwelling units like backyard cottages, and last week, a hearing examiner ruled that the city’s examination was sufficient enough to move forward.

Jessica Trounstine, professor of political science at the University of California, Merced, said it’s true that upzoning can be detrimental if it’s not done in tandem with investments in infrastructure.

“Density creates congestion,” Trounstine said. “If you don’t also invest in infrastructure that’s needed to support that population, it’s going to be really annoying to live there.”

“If the city builds new housing but doesn’t also build new roads and new schools, and expand the sewer pipes, then everybody is going to suffer,” Trounstine said.

Trounstine argues that this shouldn’t keep cities from upzoning; it should encourage them to do so thoughtfully.

In a study published January in the journal Urban Affairs Review, Yonah Freemark, a doctoral student in urban planning at the Massachusetts Institute of Technology, found that the upzoning in Chicago had no effect on housing supply and that, in fact, housing prices went up in the first five years.

In the early 1900s, many U.S. cities engaged in racial zoning, designating which neighborhoods could be inhabited by white people and which by people of color.

The Supreme Court struck down these zoning maps in 1917. “Immediately, they get replaced with zoning maps that use the exact same structure, but instead of race, they use housing types,” Trounstine said.

Enlisted by Seattle’s City Council, the Seattle Planning Commission spent a year and a half compiling a report on the impact of single-family zoning in Seattle and argues that the city’s current zoning is a direct reflection of historically racist zoning practices.

The planning commission’s report found that single-family neighborhoods are dominated by white and high-income residents, and only a quarter of black and Hispanic Seattle residents are homeowners.

Housing affordability is only one part of the problem, said Tim Parham, chair of the Seattle Planning Commission. As the commission’s report outlines, nearly all of the city’s schools and parks are in pricier single-family zones.

Thanh Nguyen experienced housing instability for most of her life, living in Seattle’s low-income and Section 8 housing throughout her childhood and adolescence.

Nguyen left Section 8 housing when she was 26 and was eventually able to purchase a condominium in the Kent neighborhood south of Seattle. Now, she volunteers with the Washington Low Income Housing Alliance, where she tries addressing housing insecurity in Seattle through education and community organizing.

Nguyen said that upzoning will definitely be helpful, but won’t be a panacea for the city’s housing crisis.

“It’s not the solution that’s going to solve everything,” she said. “You need better housing stock. You need more services.”

Abed said he’s taken his children to the Space Needle many times. As a family, they dream of being able to live closer to the city, even though he says he doesn’t picture that happening any time soon.

“Prices are going up more and more,” he says, “and I worry they will never go down.”

https://www.american-apartment-owners-association.org/property-management/latest-news/housing-crisis-has-seattle-weighing-end-single-family-homes

Zero Down Payment Loans Now Available to Real Estate Investors

Déjà vu? Hard Money Sources is now connecting real estate investors to lenders in order to allow those investors to finance 100% of their respective real estate purchases.

Unlike what we saw during the uptick to the housing crisis in 2007-2008, Hard Money Sources is making two loans to real estate investors. The first loan is a personal loan based upon the individual investor’s “credit worthiness.” This loan can also cover loans for down payments. The second loan is a traditional hard money loan backed by the equity of the property being financed.

The combination of these two loans can range from $100,000 to $1M. The borrower must have a minimum FICO score of 680 AND provide income verification in order to be approved. (Usually, the most a borrower can expect from a lender is a loan that equals 90% LVT or 75% of the value of the home after repairs are made.)

The key phrase here is “the value of the home AFTER repairs are made.” Harvard University’s Joint Center on Housing Studies (JCHS) is forecasting home remodeling to fall substantially in the near future and Hard Money Sources is looking to mitigate that drop by making these zero down payment loans available to investors.

Harvard’s JCHS Leading Indicator of Remodeling Activity (LIRA) Index is predicted to fall from its current 7% to 2.6% in Qi 2020. The historic average of remodeling activity is 5%; such a drop to 2.6% would be similar to remodeling activity in 2013.

Chris Herbert, managing director of Harvard’s JCHS, said, The slow down in home price appreciation, home sales activity and remodeling permits are lowering our expectations.”

Confidence levels among members of the National Association of Home Builders (NAHB) reflect Harvard’s JCHS predictions. According to Robert Dietz, chief economist with the NAHB, “The NAHB’s forecast calls for slowing growth, declining home price appreciation and existing home sales volume, combined with rising construction costs” caused NAHB confidence levels in the housing market to drop 3 points in April 2019.

Even if declining mortgage rates mitigate declining sales and refinancing, unlikely, Hard Money Sources is hoping to at least brake such sluggish trends.

https://www.infabode.com/hubs/us-real-estate-debt/hub_posts/104529

Look to Florida for Insights into Real Estate Trends

Look to cities in Central Florida for insights into US demographic and development trends. Florida’s Lakeland and Winter Haven cities are good places to start to understand what’s happening in more rural, exurban places. And then look at The Villages to help shed light upon the “silver tsunami” sweeping the country.

The Lakeland-Winter Haven area, a rural area in between Tampa and Orlando, has experienced a +3.2% increase in population growth since last year. Forbes Magazine calls this population growth a “Snow Belt to Sun Belt shift.” Writing in Forbes, Garrett Kenny, a real estate developer, wrote. “It’s only a matter of time before this area between Tamp and Orland becomes con-urbanized. Getting in early while the growth potential is particularly high is how developers can realize massive success…”

The Villages, a rapidly expanding planned senior living center, represents what the sweeping “silver tsunami,” the relocation of 60+ and retirees, will look like. “We predict,” Hamilton Lomback, a demographics researcher at the University of Virginia, told Curbed’s Patrick Sisson, “the nation’s 65-plus population will grow by roughly 90% by 2040.”

Currently, there are 4.3M people, soon to top 5.2M, in the Orlando region of the state, according to Orlando’s Economic Partnership 2030 Report. This report forecasts more than 1,500 people moving into the area every week.

Buoyed by sprawl, super-commuters and seniors, Orlando is the ninth fastest growing region in the county. Since 2010, the region has seen +20% population growth. The Bureau of Labor Statistics ranked Orlando number one for job growth for the fourth consecutive year and there is $10B in infrastructure projects and $1B in downtown development funds already in place.

Master-planned communities such as The Villages are “extreme examples of what aging Boomers are doing.” According to Harvard University’s Joint Center for Housing Studies, someone over 65 years old will head one in three households. It also projects that Americans over 80 years old will double from today’s 6M people to 12M people in the next two decades.

Sisson suggests that this narrative is consistent with past narratives in Florida “…a housing boom build on cheap land, car-centric planning and a dearth of transit-friendly, affordable units.”

https://www.infabode.com/hubs/general-florida-real-estate/hub_posts/104532

Nordstrom sets October opening for Manhattan flagship store

Nordstrom has set a date for the opening of its Manhattan flagship location as construction continues on the department-store chain’s biggest-ever bet.

The retailer plans to throw open the doors of its seven-story, 320,000-square-foot store on West 57th Street on Oct. 24, a spokeswoman for Nordstrom confirmed.

With Nordstrom and rival Neiman Marcus both coming to town in 2019, it should prove to be a landmark year for New York retail. The city has long been home to some of the world’s most prominent luxury department stores, including Saks Fifth Avenue, Bergdorf Goodman and Bloomingdale’s.

Plans to open a full-line Nordstrom in the city were initially announced in 2012, but the Seattle-based retailer has had New York aspirations for more than two decades. It opened a much smaller men’s store last year.

Nordstrom’s urban expansion sped up this month when the company said it would also open two Nordstrom local service hubs in Manhattan. These locations don’t sell merchandise; instead, customers can pick up online orders and receive alterations and tailoring. There are also several Nordstrom Rack outlets in the city.

https://www.infabode.com/hubs/general-new-york-retail-market/hub_posts/104556

Upheaval: What NY rent reforms would do

In 26 days the laws governing rent regulation in New York City will lapse. Four days later the legislative session is scheduled to end. At that point, it seems certain, the system—which has spurred the construction and rehabilitation of housing and led to significant rent increases and greedy exploitation by too many landlords—will be fundamentally overhauled.

If it weren’t for President Donald Trump, Albany would be debating how to fix the laws to limit rent increases and deter abuses. But Trump so inflamed most New Yorkers that they decided to punish anyone linked to the Republican Party—which in the state Senate means friends of real estate.

First, in the Democratic primary voters ousted key members of the Independent Democratic Conference, a splinter group that had helped Republicans maintain control of the state Senate. The insurgents they elected are virtually all progressives with little patience for the economics of real estate. Then, in November, voters ousted so many Republican senators that Democrats were handed a sizable majority.

The political earthquake also flipped Albany dynamics in another way: The Senate is now the source of the more radical reforms including extending rent regulation statewide (as Oregon recently did). The Assembly’s position appears to be more moderate—at least if Speaker Carl Heastie’s statements are to be believed. Gov. Andrew Cuomo backs big changes to favor tenants, but it’s always hard to know what his bottom line really is.

Here’s a guide to what’s on the table and what it could mean.

VACANCY PROVISIONS. Pending legislation would end landlords’ ability to move an apartment to the free market when a tenant leaves and the regulated rent exceeds $2,775 per month, and end their ability to increase regulated rents by 20% when a vacancy occurs.

That clearly would restrain rents in the regulated market. As the gap widens between regulated and market-rate rents, expect a black market to re-emerge as tenants scramble to land regulated apartments. Ending vacancy benefits also is likely to disincentivize landlords from using disruptive renovations and other methods to harass tenants so they leave.

CAPITAL EXPENDITURES. Reducing landlords’ ability to recoup the cost of upgrades would curb such abuses as property owners ordering unnecessary or overly expensive work that raises rents. It also could deter reinvestment in rent- regulated buildings, however.

PREFERENTIAL RENTS. Landlords often rent units below the legal maximum because of weak market conditions. They can then raise the rents to the legal limit when the lease expires. The Independent Budget Office estimates 266,000 units have such preferential rents. Albany might declare those lower rents to be the official regulated rent. But this issue is a red herring: Only 8% of apartments are raised to the legal rent annually, the IBO says. If the state locked in preferential rents, landlords would leave apartments vacant when rents fall (as they surely will in the next economic downturn).

UNIVERSAL RENT CONTROL. It is hard to believe such a radical plan will pass. If it does, the political earthquake it triggers outside the city could endanger Democrats all over the state as homeowners—who pay big property taxes outside the city—react to lawmakers giving renters such protections.

https://www.infabode.com/hubs/general-new-york-residential-market/hub_posts/104554

Goldman Sachs in talks to buy B&B hotels from PAI for EUR1.9B

The merchant banking division of Goldman Sachs is in talks to buy B&B Hotels, a chain of 500 budget hotels, from private equity firm PAI Partners, The Financial Times’ Philip Georgiadis reports, adding that the deal could be worth EUR1.9B. The transaction is expected to close in the second half of this year, subject to regulatory approval and employee consultations, according to the report.
https://thefly.com/landingPageNews.php?id=2911283