The great YIMBY-NIMBY War rages on and what’s at stake is density. The YIMBYs want to add it by lifting land-use restrictions, particularly in transit-friendly urban areas—thus allowing housing supply to meet demand and lowering artificially high housing prices. NIMBYs want to prevent adding density, thereby preserving property values, personal wealth, and their ability to grow veggies in their backyards.
California is the war’s frontline. According to McKinsey, the state ranks 49th for housing units per capita, its real estate prices are rising 3x faster than household incomes, and it loses $140 billion per year in revenue due to the housing crisis. Much of the shortage flows from land use restrictions, which make it impossible to build in many areas and tags an additional $75k in various impact fees for every new housing unit built.
But if the YIMBYs get their way, State Senator Scott Weiner’s California SB 827 might prove to be the war’s D-Day (YIMBYs are the Allies and Weiner is their Ike, in case you were wondering).
Continue reading “YIMBY housing advocates ask, are you dense?”
Silicon Valley-based construction tech company Katerra announced a SoftBank-lead $865M Series D.
It’s common knowledge the construction industry is FUBAR. It’s second to last in terms of labor productivity of all major industries; it’s one of the least digitized major industries, spending <1% of revenue on R&D; and “large projects across asset classes typically take 20 percent longer to finish than scheduled and are up to 80 percent over budget,” according to McKinsey. Look no further than Denver’s unfinished VA hospital that’s gone $1 B (B as in boy) over budget as a case-in-point.
Continue reading “Katerra: Construction’s $865 million question?”
Coliving—that housing typology for stock-image-looking, experience-loving, stuff-hating, taupe-upholstered-furniture-sitting, high-earning urban millennial professionals—is getting some serious attention from investors. A month ago, reigning champ Common raised a rock solid $40M Series C (making a total of $63.4M to date), and then last week, NYC-based coliving operator Ollie snagged a $15M Series A.
These investments are good indicators that coliving may enter the real estate asset class canon after all. For the last few years, this event seemed less than assured.
Some claimed coliving was for losers. Others pointed to WeLive as evidence of the model’s inherent flaws. If you recall, WeLive is WeWork’s Icarian initial residential outing, consisting of two retrofitted ~30 story buildings; their overstyled, overpriced units now appear to be packed with company friends, family, and “ambassadors” paying discounted rents. Others assumed that big developers would eventually make their own coliving buildings, cutting out the expensive coliving operator.
Continue reading “Take my building, please: Do recent investments mean coliving is here to stay?”
Follow the money
Every six months or so, an article comes out saying that, despite ideas to the contrary, millennials love suburbs, not cities. What these articles seldom mention is the socioeconomic composition of these suburbaphiles. While populations boom in the burbs, educated elites still have a strong preference for cities, according to data recently released by City Observatory. They state, for example, that “the number of well-educated young adults living in the nation’s largest cities increased 19 percent between 2012 and 2016, about 50 percent faster than the increase outside these large cities.”
The proximity-enabled network effect of cities can be an economic multiplier, which is a strong draw for money-loving people and businesses alike. In contrast, many suburbs have fewer opportunities and may be over-reliant on a handful of large employers. And even though homes are typically more affordable, when lower wages and higher transit costs are factored, the suburban economic advantage is eroded. These conditions might help explain why suburban poverty rates in the early aughts were double those of cities.
While many people truly prefer suburbs, it’s also true that many others want to live closer to urban cores but simply cannot because there are no market-rate housing options that are affordable and attractive. Hell, lots of the educated elite can’t afford city-living. The universe belongs to whoever can provide those housing options in a timely and economical manner.
Autonomous vehicles and flat earth property values
One thing that will surely affect our orientation to the city mouse/suburban mouse real estate and economic divide are new forms of mobility. It’s said that ride-hailing apps are already having a flattening effect on residential real estate values in NYC. Because getting around is so easy, one-percent New Yorkers are doing the unthinkable: cross-shopping properties in the East 70s with those in the West 80s!
Continue reading “January 19, 2018”