Urbanexus Update - Issue #135

The Consumer Price Index rose 6.2 percent in October 2021 from a year earlier, its sharpest increase since 1990. That is bad news for President Biden, the Federal Reserve and reduces the benefit of recent wage increases.

Softwood lumber prices rise 9.1% in October 2021, according to the latest Producer Price Index

Federal deficits are at historic highs, price inflation is rearing its head, and lawmakers are progressively losing control over federal finances. We hear much political rhetoric today about who is to blame for skyrocketing federal deficits. But while the 2021 deficit is primarily the result of legislation enacted this year and in 2020, the largest drivers of the worsening structural fiscal imbalance were enacted a half-century ago. In “Why We Have Federal Deficits: An Updated Analysis,” Charles Blahous shows that the nation’s finances cannot be stabilized until those longstanding deficit drivers are reformed in future legislation to moderate their cost growth.

Thomas Malone, a former research scientist at the Palo Alto Research Cente, is the founding director at MIT’s Center for Collective Intelligence, which focuses on sophisticated human-digital collaborations. His conclusion about the return to offices is succinct: “If companies make employees who can do their jobs at home go into the office it will be harder for them to hire, and other companies will benefit.”

Office vacancy is on the rise everywhere, but the rate of increase in downtown office vacancy is outpacing that of suburban office.

That’s according to recent third-quarter office research from CBRE Group Inc. (NYSE: CBRE), which found the U.S. downtown office-vacancy rate hit 16.3% in Q3, the highest it’s been since 1994.

Suburban office, meanwhile, is still marginally higher, at 17.1%, but the margin between the two is at its narrowest since 1998.

Longfellow Real Estate Partners has acquired Luskin Business Park, a nine-property office portfolio totaling 371,281 square feet in San Diego. The sales price was $315.4 million. Longfellow plans to convert the assets into a life sciences campus.

About 30.2% of homebuyers across the country were looking to move to a different metro area, according to Redfin data from the third quarter of 2021.

The analysis, based on the search pattern of 3.3 million Redfin.com users across the country, showed homebuyers are looking to relocate outside their home area has gradually dipped from a peak of 31.5% in the first quarter of 2021 — although still significantly higher than the 25.6% that looked to relocate in the third quarter of 2019.

Redfin zeroed in on homebuyers most likely to relocate, with users only classified as seriously looking to relocate if they have viewed at least 10 homes in a particular metro area outside of their own and those searches comprised at least 80% of their searches.

California home prices continued to level off as the market moved further into the off-season, dipping below the $800,000 benchmark for the first time in seven months. At $798,440 in October 2021, the statewide median price was down 1.3 percent from September’s $808,890 and was up 12.3 percent from the $711,300 recorded in October 2020. The month-to-month price decline was the second in a row, and the price drop from September was on par with the long-run average of -1.5 percent recorded between September and October in the past 42 years.

RREAF Holdings, in partnership with DLP Capital and 3650 REIT, has acquired a 21-property multifamily portfolio for $534 million. The portfolio — named TransCoastal 21 — consists of 4,000 units located in Georgia, Alabama, Florida, Texas, Arkansas, Louisiana and North Carolina. 

Although the seniors housing industry as a whole has suffered big setbacks throughout the COVID-19 pandemic, hitting record-low occupancy rates across the board, one sub-segment was an exception to the rule.

Although there is much discussion around how to define the active adult segment, generally it’s an age-restricted apartment community for physically healthy seniors who don’t yet need the services in independent living such as meal preparation, cleaning or assistance with the activities of daily living.

Without temporary government regulations stopping move-ins to active adult communities — plus a younger, healthier resident than in independent living or assisted living — active adult communities thrived during the pandemic. Lease renewal rates were 80 percent; collections were close to 100 percent and the segment experienced rent growth.

Leading homebuilder Toll Brothers, Harvard Investments, and Värde Partners have formed a joint venture to acquire the remaining undeveloped land in the Estrella master-planned community in Goodyear, Arizona. This purchase, which is said to be one of the largest acquisitions of an active master plan in Arizona to date, includes more than 18,000 acres of entitled land.

Located approximately 17 miles west of Phoenix, the 20,000-acre master plan is already home to more than 7,000 families. The assets acquired include current and future homesites, multifamily and commercial parcels, and developer-owned amenities, including the award-winning Nicklaus Design course at the Golf Club of Estrella and a community welcome center.

Movie theaters have been one of the hardest-hit industries during the COVID-19 pandemic. Spaces where the big screen once lit the faces of attentive viewers fell dark and silent, to sit lifeless for months. Studios released only 23 films in 2020, the fewest since 2003, and box offices sold less than 225 million tickets. On top of the lack of content, theaters are wrestling with new consumer preferences developed during quarantine. Streaming services such as Netflix and Hulu posed a threat to in-person cinemas long before COVID-19 accelerated the preference for home movie viewing.

As is usually custom, a single architect has appeared on the 2021 edition of TIME magazine’s TIME 100 list, this time Kengo Kuma

In his new book, historian Peter Norton punctures the claims of autonomous vehicle companies and warns that technology can’t cure the urban problems that cars created. 

Overall, the unweighted average number of jobs accessible by car in 30 minutes in the 50 metropolitan areas is 55.8 times that of transit. The median is somewhat higher, at 57.7 jobs accessible by cars for each job accessible by transit. This ranges from New York, where autos can provide 5.6 times the 30-minute access of transit, to Detroit, where autos provide nearly 130 times the access.

Mosaic, a construction technology platform, announced a $44 million Series B funding round from Peak State Ventures, Andreessen Horowitz, Founders Fund, Innovation Endeavors, and Building Ventures, among others, bringing Mosaic’s total funding to date to $68.75 million. The new capital fuels Mosaic’s expansion into the major Arizona markets of Phoenix and Tucson.

Mosaic serves as a tech-enabled general contractor for production-scale residential development projects. Much like cloud hosting providers, Mosaic manages construction infrastructure, allowing real estate developers to focus on the value-driving components of their core business, such as land acquisition, sales and marketing, and architecture.

In Austin, ICON has teamed up with BIG and homebuilder Lennar (both investors) to build the world’s largest 3D-printed community.

There are many advantages of using ICFs: they are energy-saving, dampen outside noises, and are fire-resistant for up to 4 hours. Additionally, because EPS and concrete do not contain materials that promote organic growth, ICFs are resistant to mold and mildew growth and the resulting degradation that often occurs in wood-frame structures.