Tag Archive for: affordable housing

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The Pompano Beach City Commission recently approved a change to the city’s zoning code to incentivize well-designed mixed-use and mixed-income developments along the Dixie Highway corridor and along other specific commercial corridors within Pompano Beach.

The initiative began at the Pompano Beach Planning and Zoning Board meeting in February 2021, when Chair Fred Stacer started a discussion related to the city’s interest in beautifying the Dixie Highway corridor following the city’s investments in the roadway itself through the G.O. Bond program.

Stacer said the expectation of quality design for new development should increase. This discussion evolved into the creation of a Dixie Highway Task Force by the chair of the city’s economic development council, Tom DiGiorgio. Stacer was appointed as chair of the task force. The task force adopted the goal of creating mixed-income and mixed-use regulations for Dixie Highway, and ultimately, for all applicable commercial corridors of the city, with additional requirements and incentives in those areas where combatting poverty has been identified as a priority.

According to a study conducted on behalf of the city by the Lambert Advisory Group, Pompano Beach has the highest number of income-restricted housing units in the county (2,140 units), followed by Fort Lauderdale (1,941 units).

Additionally, Pompano Beach has the third-highest proportionate share of income-restricted units to non-income-restricted units in the County — for every 25 residential units in Pompano Beach, one unit is income-restricted. A large proportion of income-restricted units are being developed in census tracts where there is already a high concentration of existing rent-restricted or subsidized units.

The new change to the city’s code uses criteria set forth in the affordable housing incentive policy that Broward County adopted in March 2021. It also integrates the mixed-income housing policy the city adopted in December 2021 to encourage affordable housing and provide relief from the adverse impacts of the concentration of income-restricted housing within Pompano Beach.

The County’s policy allows additional density (more dwelling units per acre) in residential land use categories and unlimited density in “Commerce” and “Activity Center” land use categories for projects on eligible roadways that include affordable housing.

The city’s new mixed-income housing policy intends to be more restrictive than the County’s policy: A minimum of 50% non-income-restricted residential units will be required in residential developments that are within a half-mile radius of an income-restricted residential development project.

Density for properties with a B-3 Commercial zoning, which is predominant along the commercial corridors, will be regulated by the city’s zoning code. Along Dixie Highway (between city limits) and North Powerline Road (between Atlantic Boulevard and NW 15th Street), a minimum of 80% non-income-restricted residential units will be required. The city would provide a minimum 50% density bonus as an additional incentive to redevelop those properties inclusive of the non-income-restricted units.

The new regulations also set design standards that must be maintained by all development along these commercial corridors, including light industrial uses such as warehouses, which are permitted along corridors like Dixie Highway. In addition, a screening requirement was added for visible parking garage façades, as recommended by Stacer.

In addition to Dixie Highway and Powerline Road, the eligible commercial corridors within the ­­­­­­city where the new regulations can be applied include Federal Highway, Sample Road, Copans Road, NW 31st Avenue, Atlantic Boulevard and McNab Road west of Dixie Highway, a portion of Andrews Avenue, and the western portion of MLK Boulevard.

Only properties that have a Commercial land use designation and are abutting those corridors will be eligible to receive residential entitlements through the County’s policy.

Speaking to the City Commission at its March 22 meeting, Stacer said he talked extensively with the redevelopment team of John Knox Village to make sure the three blocks that abut Dixie Highway from SW 3rd Street to SW 6th Street were properly integrated into the city’s new policy for the commercial corridors, as well as the desires of John Knox Village.

 “The new policy is probably going to be cutting edge for the county,” Stacer told the Commission.

Deerfield Beach city officials have taken interest in it, and in the future, there may be opportunities for Pompano to coordinate with them regarding what happens on the Dixie Highway corridor, said Stacer.

Stacer noted that the new guidelines will bring the city’s corridors into the 21st century design criteria, and will help protect single-family residences from the “massive amount of pressure” the city is going to experience due to an increase in population.

“This sets the stage for years to come,” said Mayor Rex Hardin. “It’s not going to transform any roadway today, but this will help guide development in the future for many, many years.”

 

Source: Point!Publishing

 

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Sky-high towers as tall as 500 feet could start cropping up all over Fort Lauderdale, critics fear.

It could happen if a controversial proposal goes through that would raise the height cap to 500 feet on projects that get special zoning. The new ordinance would apply citywide, not just in high-rise-friendly downtown, where zoning already encourages supersized towers. So far, the idea is getting a chilly reception.

“We are not Sunny Isles. We are not Miami. We are not New York,” said longtime resident Nancy Thomas. “I’d rather have it shorter and denser. If we get into this height request we’re going down the wrong path. We are going to start looking like Sunny Isles.”

John Burns, president of the Venetian Condo Association, also has reservations about making such a drastic change that would apply to the entire city.

“Once it’s there, everyone’s going to want it,” Burns said. “You could have 500-foot buildings popping up everywhere. It’s a dangerous path.”

Who Wants Taller Buildings?

Some are wondering what’s behind the push for taller buildings. Look no further than the plan for Pier Sixty-Six. Tavistock, the developer redeveloping the landmark site, wants to build three luxury condo towers that would rise 480 feet high in a neighborhood with a height cap of 120 feet.

“Proposing taller buildings with fewer residential units and less commercial uses will significantly reduce traffic, preserve views and create more open space — all things that we heard were imperative to our neighbors,” said Jessi Blakley, vice president of the Orlando-based Tavistock Development Company. “Our vision will make Pier Sixty-Six a destination gateway and icon once again.”

The developer revamping the Pier Sixty-Six property in Fort Lauderdale hopes to build three luxury condo towers that would rise to 480 feet. Two towers would sit on the south side of the 17th Street Causeway bridge and the third would sit on the north. The plan is not an option unless the commission changes the code to allow building heights of 500 feet outside the downtown area. (RENDERING CREDIT: Arquitectonica)

The vision is not an option unless the city commission changes the code to allow building heights of 500 feet outside the downtown area for projects that apply for Planning Development District zoning. The current code, in place since 2013, caps the height at 300 feet. The code would need to be rewritten, changing the height cap from 300 feet to 500 feet to pave the way for developers to build higher. And the change would require commission approval.

Outside downtown, a developer needs at least two acres to apply for the PDD zoning. Only half an acre is required for properties downtown. It was unclear whether that would change as well.

At a recent City Hall meeting, longtime resident Marilyn Mammano warned the commission they’d be opening up a can of worms by changing the code.

“No one is demanding taller buildings. This is being done at the developer’s request,” said Mammano, president of the Harbordale Civic Association.

Housing Costs ‘Just Crazy’

During the meeting, Mayor Dean Trantalis argued that allowing buildings to go higher would help build up Fort Lauderdale’s housing stock.

“We hear the drumbeat from the community: People say we’re overdeveloping, we’re overbuilding,” Trantalis said. “And at the same time people say the price of housing is just crazy. More development stabilizes the price of housing. We have to have a ‘Come to Jesus’ moment and decide if we are going to allow development to continue to come to this city.”

Commissioner Heather Moraitis countered that many of the projects are considered high-end and would not help boost affordable housing units throughout the city. The mayor and the commission suggested city staff seek feedback from neighborhood leaders and report back before any commission vote is scheduled.

“Let us not be the ones to decide,” Trantalis said. “Let the community decide.”

Staff is planning to present information in November to the Council of Fort Lauderdale Civic Associations, but is welcoming comments at any time, according to a city email dated July 15 that went out to neighborhood leaders.

Leslie Fine, whose condo sits on Fort Lauderdale’s Galt Ocean Mile, didn’t get the email but has a message for the city: This is a bad idea.

“This is not Dubai,” Fine said. “Why does everything have to be so tall? It’s not like people come here because we have tall buildings. It puts more stress on the streets, the sewers, the waterways, the storm drains. Those tall buildings can cast tall shadows. And the roads can’t handle the people we have now.”

Mary Peloquin, president of Council of Fort Lauderdale Civic Associations and a board member of the Coral Ridge Civic Association, did get the email.

“Everybody is concerned about this,” Peloquin said. “Tall buildings all sounds fine until they come to your neighborhood. Tall buildings make residential backyards not private. Tall buildings are great downtown but we don’t have any workable mass transit. And that needs to be fixed if we’re going to have a dense area downtown and in other areas.”

‘Only Way To Go Is Up’

Fort Lauderdale’s Regional Activity Center zoning paves the way for taller buildings and dense development downtown.

Construction cranes abound on Wednesday in downtown Fort Lauderdale. A new proposal would pave the way for 500-foot-high towers throughout the entire city. And the critics are already lining up. (PHOTO CREDIT: John McCall /South Florida Sun Sentinel)

The RAC has no height cap, but so far the tallest building downtown (100 Las Olas tower) stands at 499 feet, a foot under the 500-foot limit set by the FAA. That could change if the FAA says yes to new development requests to build towers closer to 600 feet.

Jim Concannon, president of the Sunrise Intracoastal Civic Association, says he understands the push to allow taller buildings. But he worries it could change the character of neighborhoods outside downtown.

“There’s no question that the city is going to be growing a lot,” Concannon said. “And the only way to go is up. But you’re losing that small-town character. By allowing 500-foot buildings to be anywhere in Fort Lauderdale, you’ve changed the character of the city.”

Local developer Charlie Ladd declined to say whether it was a good idea to change the height cap, but did say it’s important for the residents to be onboard.

“These are big changes to our city,” Ladd said. “We all need to be on the same page. We need to make sure we get it right when these other portions of the city look to redevelop.”

This week, Trantalis had more tempered comments about the whole plan.

“I think there needs to be significant community outreach,” Trantalis told the South Florida Sun Sentinel. “I’m not hearing a lot of support for it, but the process is still ongoing and we are trying to be objective about the issue. I don’t think there’s much of an appetite on the commission to change the ordinance since it would affect properties citywide. We realize the growth needs to focus on the downtown area and not impact neighborhoods that have long been established.”

Real estate analyst Jack McCabe says he would expect an outcry from residents across the board if the commission were to approve the plan. He pointed to the wall of condos that line the beach in Surfside.

“There’s so many condos so close together, the locals call it the wall,” McCabe said. “And you can’t see the beach by noon because of the shadow. If you could make a case that Fort Lauderdale is built out and they need 50-story buildings all over town, maybe then there’s a reason to change the rules. But people are going to be up in arms if all these 50-story towers start going up blocking their views and snarling traffic in an already snarled traffic system.”

 

Source: SunSentinel

 

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When it comes to housing in South Florida, homebuyers and renters aren’t the only ones grappling with sticker shock.

Developers often face construction costs that are 20% to 30% higher than a year ago – a trend that’s already stalled some projects at a time when local residents struggle to secure housing. That means builders have to weigh whether to accept smaller profit margins, eschew some projects altogether or, in the case of affordable housing, seek more money from public funding sources to complete those jobs.

The tri-county region has become one of the most expensive U.S. metropolitan areas to live in due to the heated demand for housing and shortage of developable land. Much of that stems from the influx of out-of-state residents who flocked to the area in record numbers during the Covid-19 pandemic.

The rising cost of materials such as lumber, steel, fuel and iron, as well as tariffs, trade issues and surging labor costs have also driven up construction costs, resulting in higher rents for residential and commercial properties. And rising interest rates also are bringing down some sale prices, which impacts developers’ profit margins.

The spike in construction costs has led some developers to question the viability of taking on certain projects. For example, if construction estimates for condos come in too high, it may not make financial sense to build them, industry insiders say.

Developers and contractors must budget for construction cost increases and prepare for shortages in the supply chain. Items such as concrete, appliances, glass and steel are just some of the necessary staples that can delay the completion of the buildings.

“Construction costs have been as volatile as I’ve ever seen them in my 40 years in the market,” said Michael C. Taylor, CEO of Pompano Beach-based Current Builders. “From August of last year, we are seeing 20% to 25% increases. We don’t have any line items not increasing.”

Typically, Taylor tells developers his quotes are good for six months. But now he can only guarantee prices for 30 to 60 days, as delivery times on certain products have jumped from three months to nearly a year, he added.

Supply chain shortages and material costs are escalating at a pace he’s never seen, said Chris Long, president of Delray Beach-based Kaufman Lynn Construction.

“There’s great demand for housing as people continue moving to Florida, but this has led to affordability challenges,” Long said. “There’s some concern out there that we reached the peak and things need to normalize. They are trying to get deals done before the bubble bursts.”

Construction costs for commercial projects are up 7% to 10% a year, so it’s less severe than for residential projects, said Michael C. Brown, executive VP of Florida for Sweden-based construction firm Skanska. Nevertheless, many of its health care and education clients are scaling down the size of projects – an eight-story hospital wing instead of 10 stories, for instance – to move forward.

Contract Sticking Points

In many cases, the rise in construction costs has created friction between developers and general contractors.

Contracts inked a few years ago couldn’t factor in dramatic building cost increases or supply chain delays, so the parties have to determine who pays for those additional costs, said Lisa Colon, a construction attorney with Saul Ewing Arnstein & Lehr in Fort Lauderdale.

“Owners are making concessions because of supply chain issues that they would not have made two years ago,” Colon said. “Profit margins are less, but you can push it down to the consumer. The consumer will continue to see an increase in rent. Many developers and contractors are now adding price escalation clauses that specify a larger commitment from developers to cover cost overruns. It’s a false thought that contractors are making all this money as prices are going up. Nothing could be further from the truth. Their profit margins are being squeezed even tighter.”

Construction contracts should also address delays and whether material shortages should result in financial compensation, because most contractors will insist on avoiding liability when material shortages are out of their control, said Jordan Nadel, a construction attorney at Miami-based Mark Migdal & Hayden.

 

Source: SFBJ

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Change is a major theme in this year’s Emerging Trends in Real Estate, an annual report by the Urban Land Institute and PricewaterhouseCoopers LLP, heading into 2022.

Housing affordability, soaring construction costs, climate change, proptech and the lasting impacts of remote versus in-office work are, unsurprisingly, some of the major topics and trends identified in this year’s installment. The report includes data, insights and survey responses from 1,700-plus real estate industry professionals.

While the economic recovery for the real estate industry has been better than expected since the pandemic, some adaptations and changes to the office, the way consumers shop and even how and where people live will be changed forever. The report’s survey found 47% of real estate professionals didn’t think changes implemented during the pandemic would revert back in 2022.

 “Long-term impacts from pandemic changes, such as the growing acceptance of work-from-home on the office market, are still unknown. But there’s a greater understanding that such shifts will impact commercial real estate,” said Anita Kramer, senior vice president of ULI’s Center for Real Estate Economics and Capital Markets. “A big lesson has been how things don’t have to change completely to have impact,” Kramer continued. “In the office sector, it’s not that everybody has to be working from home for changes to occur. The office sector is not dead but there will be a bit of a shift within it.”

She said when a fuller picture of how work-from-home will affect office emerges, that’ll prompt further questions: What happens to downtown businesses that rely on lunchtime crowds during the week, or older office buildings and retail centers that may be obsolete in a post-pandemic world?

Real estate investors’ capital war chests have been bolstered this year, but a disproportionate amount of money is flowing into a few sectors.

Tom Errath, managing director and head of research at Chicago-based Harrison Street Real Estate Capital LLC, said during a real estate economic forecast panel at ULI’s fall meeting this week that investors — some fairly new to real estate — are more recently wanting to understand alternative asset classes, which Harrison Street specializes in.

“We are seeing great interest from not only domestic capital but foreign capital,” Errath said. “These asset classes we focus on exist in other countries but they’re not as well developed there. If you want to access them in a meaningful way and take advantage of the transparency and liquidity that exists here, you have to be the in United States.”

Ben Breslau, Americas chief research officer at Jones Lang Lasalle Inc., also said foreign capital has been constrained during the pandemic because of travel restrictions and the inability to tour assets or markets. Once those restrictions lift, he said even more international capital will likely flow in to U.S. real estate.

Ken Rosen, chairman of Rosen Consulting Group of Berkeley, California, also said investors want to pile into the same few sectors. Disproportionately, industrial, multifamily and more niche sectors like life sciences are seeing the greatest competition from capital. The success of those sectors and more broad real estate fundamentals set the stage for more capital flowing in to commercial real estate in 2022.

But what about more traditional asset classes that have become less certain since Covid-19?

“Office remains a bifurcated sector,” said Breslau. “The flight-to-quality theme touted by many in the office space applies to investors, too. It’s not a rising tide lifting all boats but the best office space is seeing bidding wars from tenants. We have a lot of clients and investors who are getting incredibly frustrated, trying to deploy everything in two-and-a-half asset classes,” he continued, referring to industrial, apartments and alternative sectors.”That could propel savvy investors to find opportunities within sectors like office.”

“Properties are available to acquire now but investors may have to have more courage to buy what he called the more contrarian stuff,” Rosen said.

The ULI and PwC survey found most respondents felt there will be a year-over-year increase in availability of capital from lending sources, especially non-bank lending sources, in 2022 as compared to 2021. Sixty percent said they felt equity capital for real estate investing would be oversupplied in 2022.

Perhaps underscoring the continued optimism of the commercial real estate industry, 89% said they were confident about making long-term strategic real estate decisions in today’s environment, with 45% “strongly” agreeing with that statement.

ULI and PwC also identified several markets to watch in 2022.

“The scoring criteria is based on survey respondents’ scores on a city’s investment and development prospects, and other opportunities, said Kramer. “Smaller Sun Belt cities like Nashville, Tennessee, and Raleigh, North Carolina, are identified as supernova cities because of real estate fundamentals, in addition to having walkable downtowns and other factors.”

 

Source: SFBJ

 

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The Senate just passed a $1 trillion infrastructure package, then turned to a $3.5 trillion measure that could include more extensive investments in housing and changes to zoning policies.

The infrastructure bill includes $550 billion for bridges, roads, high-speed internet and other projects. The White House has billed the spending package as the largest-ever investment in public transit. Under the measure, Amtrak receives $66 billion, which is the most the rail service has received since its founding in 1971, according to the New York Times.

The Senate is now considering a $3.5 trillion plan that Democrats hope to approve through reconciliation, a process that would not require Republican support. The resolution allows for up to $332 billion for housing and other investments. That could help fund a $213 billion Biden plan to build or preserve more than 2 million affordable housing units. Other housing proposals in Biden’s infrastructure plan, including an expansion of Section 8 housing vouchers and incentives for cities and states to eliminate exclusionary zoning, could also make it into the larger plan.

The Associated General Contractors of America, whose members would benefit from the approved plan, urged the House to pass it as quickly as possible. House Speaker Nancy Pelosi has indicated that the chamber will not vote on the initial bill until the Senate passes the more extensive measure.

“Unfortunately, some members of the House want to delay action on the bipartisan measure until passing an unrelated, partisan, spending bill,” said Stephen Sandherr, the group’s CEO. “The last thing Washington should do is hold a much-needed, bipartisan infrastructure bill hostage to partisan politics.”

The New York Housing Conference is hopeful that the budget legislation will ultimately include changes to the Low Income Housing Tax Credit program. The group is advocating for a change to the program’s so-called “50 percent test,” which requires 50 percent or more of a development to be financed through private activity bonds in order to be eligible for such tax credits.

Because the federal government caps the number of such bonds New York can issue, the test limits affordable housing construction. Reducing the threshold to 25 percent would add 10,000 affordable housing units each year in the state, the group estimates.

“We have a housing crisis in this country. We certainly have a housing crisis in New York,” said Rachel Fee, executive director of the New York Housing Conference. “Getting around the state caps has to be a priority for New York.”

 

Source: The Real Deal

Hollywood, sandwiched between Miami and Fort Lauderdale, has seemed quaint and sleepy compared to its big-city neighbors, despite impressive community assets.

The 30-square-mile municipality’s amenities include an airport, a walkable downtown, 7 miles of oceanfront and a beachfront pedestrian walkway called the Broadwalk that’s lined with independent restaurants and hotels. Inland are golf courses, residential neighborhoods and the Seminole Hard Rock Resort & Casino. Port Everglades is partly within the city limits.

“Soon, a new wave of development is poised to transform Hollywood. The city currently has $1.2B in real estate development planned or under construction,” City Manager Wazir Ishmael said during a Bisnow webinar last week.

Ishmael outlined some of the major projects around Young Circle, the downtown city center with a 9-acre outdoor amphitheater and arts park, where Hollywood’s main east-west corridor meets north-south artery US 1.

On the southwest quadrant of Young Circle, the $60M Block 40 project is planned from GCF Development. It will have 166 residential units and 103 hotel rooms. On the southeast quadrant, a mixed-use project by BTI Partners will bring 366 luxury rental units and ground-floor retail. The east side of Young Circle is slated for matching towers with two levels of restaurants and retail, also by BTI. South of Young Circle, Hudson Village, a 108-unit mixed-income affordable project by Housing Trust Group, broke ground last year, and Pinnacle at Peacefield, a senior housing community, was recently completed.

Further east, on Hollywood Beach, Related Group last year completed the 41-story Hyde Beach House on the Intracoastal Waterway. In 2019, voters approved a $165M general obligation bond to finance more than 30 projects.

 “Beachfront properties farther south in Miami-Dade County are bloody expensive,” said Continuum Co. Chairman Ian Bruce Eichner, who has been looking to develop a 4-acre beachfront site in Hollywood. “But in Broward County, there’s still an opportunity in Hollywood for a beach that is certainly as beautiful as anything south, at a different price.”

Webinar moderator Raelin Storey, Hollywood’s director of the Office of Communications, Marketing and Economic Development, said the city has two opportunity zones — one downtown and one between Sheridan Street and Stirling Road near I-95. Storey said that over the past few years, the city adjusted its zoning to encourage development along its commercial corridors.

Keith Poliakoff, partner at law firm Saul Ewing Arnstein & Lehr, said that his client, BTI, is about to break ground on Block 58, formerly known as The Hollywood Bread Building in the downtown opportunity zone. It’s planned to include approximately 366 apartment units with 15K SF of retail.

“Construction prices had risen about 10% since the project got underway, but the opportunity zone designation was helping them draw investment to offset the increased costs,” Poliakoff said. “If you do it right, that savings, that potential tax savings in the future, can actually offset the higher construction price.”

Inigo Ardid, co-president of Key International, which owns the Eden Roc and Marriott hotels in Miami Beach, has been exploring possibilities in Hollywood and said he was very bullish on leisure hospitality.

“What we’re seeing is in places that people can get to, mostly drive markets, the hotel markets have come back stronger than ever… Our average stay has gone up well in excess of 60% from where it was before,”  said Ardid.

Related Group Managing Director Eric Fordin said that the once-stunning but long-neglected Hollywood Beach Resort might be redeveloped in time.

“We had the majority of the unit owners under contract to redevelop that property,” Fordin said. “But the ownership structure is complicated. Not only is there a condo-hotel but an estate owns the land and the parking garage. A tentative deal he’d made with it fell through at the last minute.

That’s not all that makes it complicated.

“There’s a separate owner who owns the commercial unit on the first floor and a separate owner that owns the commercial unit on the second floor, plus 360 unit owners and 36 timeshares,” Fordin said.

But that’s not to say the project won’t happen.

“It’s a site that I am laser-focused on,” Fordin said.

Fordin lives in Hollywood himself. He said some residents love Hollywood’s slow vibe, independent stores and two-story motels that cater to Canadian snowbirds. They don’t want Hollywood to be like Sunny Isles, lined with tall towers that create a canyon-like feel. But the quaintness comes with blight.

“Hollywood is always going to be more of a boutique-friendly development opportunity experience,” Fordin said. “I believe once we’re able to assemble some properties along the Broadwalk, you’ll see some great development impacts for the city, but it’s a matter of really aligning all the stars for those things to take place.”

The panelists called for more public-private partnerships, but that hasn’t always worked out great for Hollywood’s taxpayers. For a Margaritaville Resort developed in 2015 by developer Lon Tabatchnick’s Lojeta Realty and Starwood Capital Group, the city invested $23M in the development and left the city potentially liable for $84.3M in bond payments for a connected parking garage, the Sun-Sentinel reported.

 

Source: Bisnow

Midsection of businessman with true and false wooden blocks on seesaw at desk

Panelists representing the industrial, office, retail and multifamily sectors of commercial real estate made the case for investment in their respective sectors at NAIOP’s CRE.CONVERGE, the virtual conference recently taking place.

In a real-time audience poll, the attendees cited industrial as the sector they would be most likely to invest in.  However, much of the discussion pointed to the upsides in what, so far in 2020, has been mostly seen as a negative story for the other sectors.

“Retail may be the sector everyone loves to hate, but all that means is that it’s at the bottom of a cycle that is going to rebound,” said Wade Achenbach, executive vice president, Portfolio Management at Kite Realty Group. “The strip sector and the mall business were struggling for a lot of reasons, and COVID has dramatically made them the hardest hit. If you just look at that trend alone, that’s going to be short lived. You have to be very careful of what you’re looking at. There is no online-only retailer that’s making money today, nor has there ever been. What’s really happening when somebody says e-commerce?  It’s more of an omnichannel. Even Amazon realizes the value of stores with its purchase of Whole Foods.”

The old adage, buy low and sell high, applies.

“I think there is more of an opportunity (in retail) than any of the other sectors,” Achenbach said.

Speaking on behalf of the office sector, which many are questioning in light of the shift to work from home, George Hasenecz, senior vice president, Investments at Brandywine Realty Trust, said its demise has been incorrectly predicted in the past — just as it is now.

“When you think about all the economic events and social trends that have occurred, the dot com bust, September 11, the densification of the office and COVID, people have always said that office is dead. Office has always reinvented itself,” said Hasenecz. “Work from home has been successful in response to the crisis, but it’s very difficult to work in a collaborative environment. How do you maintain your culture, bring new employees on and recruit? Work from home really does go against people’s needs and desires to come together. We think that Class A office is going to be in high demand. Companies want to make sure their employees and their talent feel safe. There still is the competition for talent and office space will be used as a recruiting tool.”

A similar story is playing out in the multifamily sector, said John Drachman, co-founder at Waterford Property Company. The pandemic has driven many people out of dense urban areas and into suburban multifamily units. The turnaround has been sharp in large markets such as New York, San Francisco, Los Angeles and Chicago, where vacancies are increasing and rents are falling. One year ago, the main story line in these markets was a lack of affordable housing.

“As with retail and office, a wider perspective will benefit investors,” Drachman said. “People will move back to urban areas. If you can stomach a little bit of pain, over the long term there could be great buying opportunities for urban apartments.”

Rene Circ, senior managing director and COO at GID Industrial and GID Investment Advisors LLC, spoke on behalf of the industrial sector, which to no one’s surprise seems to be strong. He said there are essentially very few people who are not buying things online.

“I would argue that too much capital is allocated to multifamily and way too much is allocated to retail,” Circ said. “Investors will need to invest in industrial.”

The panel was moderated by Will McIntosh, head of Research at USAA Real Estate.

 

Source: GlobeSt.

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A key component of a successful real estate investment is choosing the right asset class to invest in within the given market.

Supply and demand is constantly changing, meaning what was a lucrative investment one, two, or 10 years ago may not be worthwhile today. See what types of real estate are in high demand right now and how investors can participate in the growing market.

Before we dive into where opportunity lies, note that just because there’s a general demand for these types of real estate doesn’t mean there’s opportunity for them in every market. Real estate is a very localized business that operates on a macro and micro level. For active investors, it’s important to identify what opportunities lie in your local market or participate in a more diversified investment portfolio specializing in these asset classes through a real estate investment trust (REIT).

1. Cold Storage

Cold storage is a type of industrial real estate responsible for the storage and transportation of cold goods, including food products. The global pandemic interrupted the food supply chain, making consumers and large grocery retailers adapt to the shift in consumer preferences for online grocery sales as well as the need for more cold storage as a whole.

This specialized niche has several barriers for entry, making it a difficult asset class to invest in outside of Americold Realty Trust (NYSE: COLD). Americold is the only industrial REIT specializing in cold storage, owning more than 1 billion cubic feet of cold storage space. The company is well positioned financially to grow with the increased demand.

2. Data Centers

We are undoubtedly in the age of technology, with more people and products becoming reliant on the efficiency, ease, and convenience of technology. Data centers are responsible for safely storing and computing data for the government, large corporations, cloud companies, and even data used from phones.

Demand for data centers has been on the rise over the past decade, but COVID-19-related work-from-home orders have put even more pressure on this growing sector. While demand as a whole is up, certain markets are leading the sector, including northern Virginia and Atlanta.

Data centers are another unique sector to invest in with large barriers for entry, making any of the top data center REITs a wonderful way to participate in this industry.

3. Residential Housing, With Emphasis On Affordable Housing

A study conducted by Freddie Mac found that the U.S. is short 2.5 million to 3.3 million housing units in 29 states, with states like Oregon, California, Texas, Minnesota, Florida, and Colorado the leaders in the housing shortage. These states, among others, are also home to some top-tier markets, where housing prices far outpace wages for the area, putting affordable housing in serious demand.

This means multifamily properties, single-family homes, and new construction can potentially be good investments in the right markets. This asset class is the easiest point of entry for investors, with dozens of options available to participate in actively, like fix-and-flip or rental properties, or passively through residential REITs.

However, it’s important to note that with current eviction moratoriums and a record number of tenants being unable to pay rent, the rental industry is facing tough times, making this a volatile market to participate in right now as a smaller investor. However, this industry is fairly resilient, and while it’s currently facing unique challenges, this market clearly has long-term demand and should bounce back in time.

 

Source: The Motley Fool

Panelists spoke at the RealInsight’s Florida Commercial Real Estate Summit at the Hyatt Regency Miami on Wednesday, October 16, highlighting the potential for distribution centers, hotels, shopping malls, technology hub and sports stadiums in Florida’s major cities.

Despite years of continuous activity, Florida’s industrial and multifamily sectors still have room for growth,  said Crocker Partners Managing Partner Angelo Bianco, Mitchell Property Realty President Ed Mitchell and Merrimac Ventures President and CEO Dev Motwani.

“Industrial is where we get our stuff,” said Mitchell.

His company recently bought industrial warehouses in Fort Lauderdale and Tampa, and is soon closing on one in Miami.

“Capital lenders are all over you. It’s nice. Everybody wants to do industrial now,” Mitchell said when asked how capital partners influence his acquisition strategies. “But land costs present a challenge. It costs more to get land in Miami than to build.”

The average land acquisition price per square foot costs $60 to $70 a square foot.

In Boca Raton, Crocker is creating a campus with a food court and STEAM lab maker space, hoping to draw a tech company.

“The idea is to make the workplace like a hotel.” Bianco credited WeWork for the concept. “Their loss is our gain,” referring to the company’s recent woes.

The retail category drew little enthusiasm from panelists, especially at this time when national chains are flailing.

“The spaces are of interest only when there is a big box that you can tear down and add multifamily,” said Motwani. “Multifamily developments continue to generate strong returns, especially in the luxury market.”

As for why affordable projects don’t draw greater interests, Motwani pointed to the financial realities.

“Concrete costs what it costs. Land costs what it costs,” said Motwani. “From a financing perspective, it makes sense to get luxury condos done, not affordable housing.”

But municipalities can encourage affordable housing development through incentives, including fee relief, parking ratios and adding density bonuses, agreed Motwani and Bianco.

 

Source: Miami Herald

The Counselors of Real Estate, an international organization for commercial real estate professionals, ranked what its membership body recently voted on as the current and emerging issues it expects to have the most significant impact on real estate.

Topping the organization’s list in a detailed report just released was U.S. infrastructure, which it characterized as severely lacking, and lagging behind many other developed countries.

“Inadequate infrastructure creates a hard ceiling to economic development, and real estate values are tied to sustainable growth,” Julie Melander, the 2019 chair of The Counselors of Real Estate, said in a press release about the ranking.

The nation’s roads, bridges, tunnels, railways, airports, the power grid, water systems, and levees are all in need of improvement and have failed increasingly often, the organization said.

President Trump has pledged to address infrastructure woes, and the White House and Congressional leadership have discussed funding for infrastructure to the tune of as much as $2 trillion, but action commensurate with the scale of the problem has not materialized.

Housing in the U.S. was the second item on the list, and the organization put an emphasis on the impact of growing inequality and the rising tide of unaffordability in housing, particularly for the middle class.

“Housing affordability is threatening the stability of the middle class, which will hit other parts of the economy as well,” Melander said.

The recently-imposed limit on state and local income tax deductions, along with Baby Boomers having trouble selling their homes were additional housing-related challenges outlined by the organization. Challenges related to weather and climate were third on the list, while slow technological progress including outdated physical plant systems in many buildings, economic challenges and high levels of institutional and personal debt also made the list.

 

Source: Miami Agent Magazine

West Palm Beach

Developer Jeff Greene is moving forward with a four-building, 352-apartment complex that looks across Clear Lake reservoir toward the West Palm Beach skyline. But wait — that’s not all.

Greene, who owns probably more West Palm Beach property than anyone, and who long has drawn city criticism for holding off on construction, says he has pushed the launch button not just on Clear Lake Estates but on several projects in and around the city.

Among them:

– One West Palm, a two-tower, hotel/office/apartment complex downtown at 550 Quadrille Blvd., whose groundbreaking was last month, is scheduled for completion in the first half of 2021.

– A Westgate neighborhood apartment complex, off Congress Avenue north of Belvedere Road, is in the permit process.

– An industrial project off Jog Road, south of Okeechobee Boulevard, is a few weeks from construction.

– He hopes to start a refrigerated distribution center for McArthur Dairy off Florida Mango Road in 30 days. That would allow McArthur to move from its current location on Flamingo Road, where the developer plans to expand his Greene School and build indoor tennis courts.

– A residential complex overlooking Currie Park, with the city’s tallest towers, could be under construction in 12 to 18 months, depending on permitting and the city’s ability to more forward renovating the park.

Housing Affordability A Growing Challenge

The city commission gave initial approval Monday to site plan changes to will allow Clear Lake Estates to rise on the 11-acre site of the scuttled Sail Boat Club project, just across the water from downtown. A vote on final approval is expected as soon as May 20.

Greene said in an interview that another nearby apartment complex he built four years ago, Cameron Estates, is so fully leased it indicates the market is ripe for the Clear Lake project. He’s getting rough construction cost estimates now and would start building as soon as possible, with city approvals. As planned, the project is short 106 parking spaces of the 721 required, so in exchange for a waiver on that requirement, Greene has offered to contribute to transit alternatives.

He would build a waterfront walking and bike trail on the property’s lakefront, and a publicly accessible path linking that trail to Executive Center Drive, or pay the city $158,000 to do the work, by the end of 2020. That work would create a non-vehicular connection between the Palm Beach Outlets, Okeechobee Boulevard and downtown. The developer also agreed to install a PalmTran bus shelter on Executive Center Drive.

At Monday’s city commission meeting, commissioner Cory Neering asked planning officials whether they would require Greene to include workforce housing in the project. Housing affordability has been a growing challenge as the city works to attract companies and their employees downtown. Neering was told the city could broach that issue with the developer over the two weeks before the final approval vote.

But Greene told The Palm Beach Post the site, which he bought in 2015 for $17 million, was too expensive to offer subsidized, below-market rents.

“This building, with the cost of construction and rents will just barely make it” financially, Greene said. “It only works for someone like me, who builds it for what it’s worth when its done. The rents just aren’t high enough and construction costs have gone up so much. The problem is, I can build it if I just make a return on investment, make cash flow, like owning a bond. But if I had to sell it to make a profit, there’s not enough there,” In short, he concluded, “if you try to have any kind of reduced rents, it would probably kill the project.”

No Tenants Yet For One West Palm

One West Palm, its foundation finally under construction, also faces challenges. The project, which Greene announced several years ago and got city approval for two years ago, has yet to line up a tenant for its 209,000 square feet of Class A office space.

Meanwhile, The Related Cos. is coming out of the ground with a competing downtown office tower, 360 Rosemary, to be completed about the same time, next to Rosemary Square (the renamed CityPlace development).

And the city’s Community Redevelopment Agency this week approved a letter of intent for developer Charles Cohen to build an office tower as big as 490,000 square feet, on the ‘tent site’ at the corner of Okeechobee Boulevard and Dixie Highway. Greene, who owns the former Opera Place lot just north of the tent site, where he could develop as much as 1 million square feet, said that despite the current shortage of Class A space, he doubts there are enough tenants out there now to fill three or more buildings.

All the construction comes at a time of sustained growth in the city, which counts $3 billion of substantive projects in its development pipeline and has been challenged for solutions to the traffic that inevitably will generate. These include highrise residences off N Flager Drive in the North End, a sprawling Anchor Site mixed-use development and Currie Park redevelopment on opposite ends of Northwood Road, the renovation of the 1930’s-era Sunset Lounge in the Historic Northwest, a rebuilt golf course and tennis center in the south end, a Drive Shack indoor golf entertainment center and Mitsubishi dealership near the airport, condo towers on S Flagler Drive, and a possible doubling in size of the county convention center, just to name a handful.

Of course, not all proposed projects get built. Greene has tabled a number, himself. His Opera place site has remained vacant for years. He dropped a micro-apartment building a block from Clematis Street and tabled a residential project on Clematis, after commissioning drawings by the same high-profile firm that designed One West Palm, Miami’s Arquitectonica. For the 20 acres he owns around the Currie Park waterfront, he has hired an even higher-profile firm, the Switzerland-based Herzog & de Meuron, designers of the Beijing Olympics’ Bird’s Nest stadium, but that’s another site he’s been talking about for a long time that remains vacant land.

Despite complaints from city officials or neighbors of his vacant sites, the Palm Beach billionaire gets construction cost estimates, does the math and only moves forward when the numbers add up to a profit, particularly since he’s generally not using other people’s money but his own.

At One West Palm, he waited on the market, held off while the city politicked zoning changes that benefited a competitor and he took time off for a run for governor. Now he’s done the numbers again and they add up to a worst-case scenario in which he makes only a little money, and best-case in which he makes a lot, he said. So, the cranes are in place.

Meanwhile, seeing occupancy stabilize at Cameron Estates at a healthy 95-97 percent, the numbers told him that despite construction costs trending high amid the building boom, Clear Lake Estates stood a good chance at success.

 

Source: Palm Beach Daily News