Young couples and retirees ditch the city for a new kind of suburb

The term “surban” describes a suburban community that offers the conveniences of urban life.

John Burns Real Estate Consulting trademarked the word in 2016. Urban planners have long described a marriage of residential and commercial as “mixed-use” communities. This surban concept, while not novel, has been gaining popularity over the past few years.

Chris Porter, chief demographer at John Burns, said it’s a no-brainer option for many Americans, especially younger couples without kids and empty nesters. Surban communities are often near transit hubs and also have amenities like boutique fitness options, high-quality grocery stores and popular restaurants.

“It’s about lifestyle. There’s this idea that urban environments traditionally don’t have great public schools and the suburban environments do. That’s why you actually see a lot of families, once they start to have kids, moving to the suburbs for school quality. You’ve got lower crime in suburban areas than you would have in urban areas. In urban areas you have walkability and public transportation… bringing some of those things to the suburbs in small downtown areas is really the concept that we see — the concept of surban,” he said in a new podcast.

Projects like Irvine Spectrum, a mega outdoor shopping mall with a residential village adjacent to it, and San Jose’s Santana Row, which brands itself as a “small town feel inside the big city,” are cropping up across California.

City Place in Edgewater, New Jersey, which has luxury apartments sitting above stores like Anthropologie, is right next to a multiplex cinema. Developers are even investing in teacher’s villages that offer the best of both urban and suburban worlds.

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Free time and fun: the new must-haves at apartments

As the luxury multifamily market approaches a peak, apartment owners and managers turning to social amenities to engage residents at their properties.

The new must-have amenity for luxury apartment projects? Time.

During this economic growth cycle apartment developers have engaged in a virtual arms race of amenities. Most were physical goodies they could tout in property tours – features like furnished guest suites for resident’s out-of-town visitors, rooftop pools, and walk-in lobby refrigerators for food deliveries.

Now, say apartment developers and property managers, the trend is towards providing services that save residents time, or experiences that make effective use of it.

Across the country high-end apartments are now offering a host of new services to attract renters: dog-walking, wine tastings, poker nights, errand-runners.

“There’s this feeling that the amenities war has run its course – everyone has the same check list on their website,” said Tom Geyer, vice president of branding at the Bozzuto Group, the Greenbelt, MD.-based developer and apartment manager.

“But I do think the battle of services is a newfound strategy to build value.”

Bozzuto, which owns or manages more than 60,000 units up and down the East Coast, has become a specialist in adding these experience-based and time-saving services, and notes the appeal of service and experience-based amenities goes across all age groups.

For its part, Geyer said Bozzuto doesn’t try to mold their properties to fit a certain age group – for millennials, say.

Rather, the company sees its properties and tenants in terms of “tribes.” Some properties have a preponderance of bike riders, some have dog owners, and others are dominated by retirees looking for urban living experiences.

“Most of our residents are not non-social people,” said Geyer. “Building amenity space is about supporting interaction, looking for a chance meeting of the tribe.”

For example, Geyer said residents aren’t just interested in an onsite gym, they want access to classes.

“Classes are the number one thing, group classes,” he said.

That means not just adding amenities, but re-designing some of the existing amenity spaces. Gyms have to be designed to accommodate the new trends of cross-fit, PX-90 workouts. And equipment has to be placed to accommodate classes.

National Development, a multifamily developer and manager based in Boston, agrees with the new thinking. It hired a full-time marketing and community engagement manager who coordinates events for a dozen National Development properties.

“It’s not an either-or proposition,” said Ted Tye, a managing partner at National Development. “There’s been a real push for physical amenities, and that hasn’t abated. Layered on top of that, as the market gets more competitive, is the social amenity.”

 

 

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Property Taxes Surge on Higher Values

Rising property taxes can be a problem for both tenants and landlords.

Corporations that have been focused on the potential windfall that tax reform will bring are getting a reality check when they look at their property tax bills. Commercial and multifamily properties across the country are seeing a spike in property taxes as assessors continue to reset values to higher levels.

It has taken property tax appraisals time to catch up from the bounce back in values that has occurred after the recession. Some jurisdictions assess commercial property values every year, while others reassess values on a two or three-year cycle. In some cases, such as with the Carolinas, assessments occur every seven years, notes Dorothy Radicevich, a principal in the state and local tax practice and national property tax leader with accounting firm BDO. Most markets are now up to speed on property values, which have now exceeded pre-recession levels in many areas of the country.

“There have been major re-evaluations in commercial properties in all of metro Atlanta for the past two years and especially this year,” says John Hunsucker, owner of Property Tax Consulting LLC in Atlanta. Some of the lower valued properties don’t get as much attention. But this year most of the counties in metro Atlanta reassessed values on higher-end properties that resulted in tremendous increases, he says.

Although some states and jurisdictions do have a cap on how much taxes can be raised annually, such as 2.0 percent to 3.0 percent, Georgia has no such cap. Some taxing authorities in metro Atlanta have gotten very aggressive with tax assessments that have jumped by more than 300 percent, notes Hunsucker. In Fulton County, for example, some of the 2018 assessed values on high-end apartments are higher than what properties could trade for in the current market, he says.

 

 

Read more on National Real Estate Investor

 

 

Oakland’s growing pains could stifle future development

Dozens of cranes dot Oakland’s skyline and thousands of new housing units are in the works, making the current cycle one of the most robust in Oakland’s history.

As more people and businesses turn toward Oakland as a cheaper area to live and work, Oakland has struggled to keep up with both office and housing demand. Downtown Oakland is one of the tightest office markets in the country and multifamily rents have risen 51% since the start of the cycle.

Developers and designers are looking for ways to build more efficiently to keep rents down, but growing community activism, overworked city planning staff and tightening financing could stall future growth in Oakland.

Panelists discussed these topics as well as the impact of modular units and designing housing to meet residents’ changing needs during Bisnow’s Oakland Construction and Development Update event Thursday.

With 900 housing units delivering this year and 2,400 next year, the city is undergoing rapid change.

“Instead of the city [staff] focusing on department stores and auto dealerships, they’re making Oakland a very vibrant place to live,” Junction Properties owner Charles Long said during the event.

The increased development has spurred an anti-displacement movement and a backlash over a lack of affordable housing, which could shut down the future fulfillment of housing that Oakland has in its pipeline, he said.

Developers need to be more cognizant of working with the city and other stakeholders to better address the anti-displacement backlash, he said.

 

Read more on Bisnow

 

 

Modular units make their debut at Oakland housing project

Modular units are being installed at Coliseum Connections in Oakland.

The $53M project, developed by a JV of UrbanCore and Oakland Economic Development Corp., will create 110 mixed-income units on a 1.3-acre Bay Area Rapid Transit-owned parking lot ground-leased to the JV.

The modular units were built by Guerdon Enterprises out of Boise, Idaho. Completion of the modular unit placement is expected on June 29. The project is expected to be completed in January when occupancy also is expected to begin.

Coliseum Connections is one of a handful of modular projects in the works or being planned in Oakland. Panoramic Interests plans to build over 1,000 units in West Oakland next to BART, and RAD Urban is planning two high-rises from steel modular units.

The project at Snell Street and 71st Avenue will have 55 market-rate units with rents ranging from $1,900 to $2,400 for households earning 80% to 120% of the area median income; the other 55 units will be affordable with rents from $1,100 to $1,600 for households earning 50% to 60% of the area median income.

 

Read more on Bisnow

 

 

After two projects sank, can San Francisco find developers for decaying waterfront?

The new effort is one of the largest but also potentially costliest redevelopment opportunities in the city.

The Port of San Francisco is seeking ideas for new uses at 13 historic waterfront piers, in one of the largest but also potentially one of the costliest redevelopment opportunities in the city.

The agency wants proposals from both large developers and smaller tenants such as nonprofits, arts groups and retailers to revive the piers, which are now vacant or used for parking or storage.

Some previously renovated piers have been financial successes. Waterfront offices at the Ferry Building and Piers 1 1/2, 3 and 5 have signed tenants for rents over $100 per square foot. Control of the Piers later sold for $103 million in 2016, and the Ferry Building is expected to be sold to Hudson Pacific Properties for around $300 million, according to sources tracking the market.

But two recent redevelopment efforts failed because of the high costs of rehabilitating and seismically protecting piers. A study for the Port found that $74 million to $10 million would be required to bring a single pier up to code. Last year TMG Partners and Premier Structures, Inc. exited an office, event and restaurant space proposal at Pier 38 after the cost to repair the pier was expected to be as high as $122 million.

 

 

 

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Another 500 apartments on tap amid tiny East Bay city’s housing boom

Emeryville’s former Sherwin-Williams paint factory could begin its transformation into 500 new apartments early next year. 

After a five-year development process, the city approved Lennar Multifamily Communities project in February.

Lennar is expected to file for building permits early next year, said Charles Bryant, Emeryville’s planning and building director. The first homes could be completed by the end of 2021. Lennar didn’t respond to requests for comment.

Despite its tiny 1.28-square-mile size, Emeryville is seeing a number of large multifamily projects as industrial sites give way to mixed-use development. Sherwin-Williams would be the largest.

 

Read more on San Francisco Business Times

 

 

Modular construction to be used in high-rise housing in Oakland

Oakland will soon have the tallest prefab modular high-rise apartment complex in the country.

RAD Urban is pushing forward with plans to build two 29-story high-rises with 200 units of housing using steel-framed modular units.

Unlike projects built with wood-framed modular units that top off at mid-rise level, projects built with steel-framed modular units can reach much higher, RAD Urban Senior Vice President, Construction and Operations Jason Laub said.

Modular isn’t new to construction and it has been around for decades, Laub said. Modular construction and other emerging construction technologies will be discussed at Bisnow’s upcoming Oakland Construction and Development Update! June 14.

The increased costs of construction has caused more people to look at modular as a solution and cost savings, Laub said.

“Developers are increasingly not able to make projects pencil,” he said. “We need to … look for creative technologies to advance the industry and lower the cost to build and deliver housing.”

Steel modular construction saves 20% on construction costs and time to completion compared to conventional stick-built construction.

Modular construction is quickly becoming an alternative to traditional construction to save time and money throughout the Bay Area.

 

 

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Is proximity to mass transit becoming less of a draw for apartment renters?

In the few years since companies like Uber and Lyft began to offer their ride sharing and carpooling options to riders in San Francisco, the premium earned by apartments near mass transit has dropped.

Apartment dwellers have traditionally been willing to pay a premium to live near mass transit stops in urban markets. But fueled by the proliferation of ride-sharing services, a rise in use of electric vehicles and other factors, that allure has begun to lessen in the Golden Gate City and that effect could spread elsewhere, according to new findings from MetLife Investment Management.

“When we look at what makes real estate assets most attractive to tenants, access to transit has traditionally been near the top of the list,” says Adam Ruggiero, head of real estate research for MetLife, which recently released its new report, “On the Road Again: How Advances in Transportation Are Shaping the Future of Real Estate.”

Apartment renters have more options to get around, which may be diluting the amount of extra rent that they are willing to pay to live near a subway stop or light rail station. In the few years since companies like Uber and Lyft began to offer their ride sharing and carpooling options to riders in San Francisco, the premium earned by apartments near mass transit has dropped—but not disappeared.

“It might lower the spread but it does not erase the spread,” says Justin Bakst, director of capital markets for CoStar Risk Analytics, which provided data for the MetLife report.

The introduction of ride sharing and carpooling services in San Francisco coincided with a decline in rental premiums for on-transit apartments (defined properties within a five-minute walk of a transit stop) from a historical average of 20 percent to only 15 percent today, according to the MetLife report

 

Read more from National Real Estate Investor

 

 

San Jose mixed-use apartments eyed west of Google village

Plans for a mixed-use apartment and retail complex have sprouted west of downtown San Jose, a development that would bring more than 100 residences to an area known as the Midtown district.

The proposed development at 259 Meridian Ave. near West San Carlos Street would consist of 110 to 120 residential units and 2,300 square feet of retail, according to documents on file with San Jose city planners.

“The city has been encouraging development within an urban village planning process for this area,” said Jerry Strangis, a principal executive with Strangis Properties, a realty firm that is the project consultant for the development. Strangis wouldn’t identify the principal developer of the property.

 

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