Three New Housing Bills to Impact Multifamily Real Estate Market

The multifamily commercial real estate market is likely to be impacted by three housing bills currently making their way through the California legislature. Senate Bills 330 and 13, and Assembly Bill 1485, each seek to relieve the state’s housing crisis by allowing additional construction and streamlining the approval process.

Sponsored by Senator Nancy Skinner (D-Berkeley), SB 330 will limit how strict cities can make their zoning. According to Bisnow, the proposal “prevents governments from downzoning until 2025; setting parking minimums or imposing housing moratoriums; or enacting other local measures that have made housing development nearly impossible in space-strapped areas.” It also “limits the number of public hearings on a zoning-compliant housing development proposal to five, and the length of time its permits can be considered.” Ideally this will make it easier and faster (and therefore cheaper) to build multifamily housing.

Assembly Bill 1485 aims to expand on 2018’s SB 35, a bill that was supposed to remove “discretionary review and other processes for mixed-income, completely zoning-compliant housing development proposals in cities not meeting their state-determined housing needs.” But due to strict qualification requirements, only three projects have been able to take advantage of the original law’s streamlining effort. The new law clears the pathway to more projects by loosening restrictions. Under AB 1485, 20% of new development units would be reserved for incomes of less that 120% of the area’s median income, a reduction from the previous requirement of 50%.

Finally, SB 13, sponsored by Senator Bob Wieckowski (D-Fremont), is designed to encourage the construction of accessory dwelling units (ADUs) by removing or decreasing fees. In addition, it “allows for automatic approval of an ADU permit application if a local agency has not acted upon the application in 60 days” and “removes the requirement that the owner of an ADU live in the main home while renting out the ADU, meaning both the main dwelling and accessory unit can be rented.” While this will not directly apply to the multifamily industry, the additional availability of ADU rental units may soften the rental housing market.

If they make it through the committee and amendment processes, each of these three bills will be voted on in early September.

Source: Bisnow

Market Pulse: East Bay, September 2019

Welcome to the NAI Northern California’s “Market Pulse” feature. We checked the pulse of the East Bay commercial real estate market to discover the ups and downs of the office, industrial, retail, and multifamily markets. Each market has four dimensions: current inventory, under construction, 12-month net absorption, and vacancy rate.

Check out our September 2019 East Bay Market Pulse infographic. If a dimension is on the rise, the pulse goes above the baseline; if it’s on the decline or negative, the pulse will dip below the baseline.

This month the East Bay office market’s inventory is up to 113 million sq. ft., with approximately 1.2 million sq. ft. under construction on an upward trend. The 12-month net absorption rate is at 1 million sq. ft. of office space. The vacancy rate is up slightly from last month but expected to drop, at 8.2 percent.

For the industrial market, 266 million sq. ft. of space is in the inventory and rising. The space under construction is also rising, at 5.7 million square feet. The 12-month net absorption has dropped significantly compared to last month, at -942,000 sq. ft. of industrial space. The vacancy rate is up slightly from last month and rising, at 4.8 percent.

There are 124 million sq. ft. of retail space available, the same as last month but on an upward trend, with 333,000 sq. ft. under construction on a declining path. The 12-month net absorption rate is at -393,000. Vacancy rates continue to rise, at 3.7%.

The multifamily market is holding strong, up to 171,000 units available in the inventory. Construction is up from last month but headed on a downswing, at 9,800 units in the pipeline. The 12-month net absorption rate is 2,000 units, the same as last month, with a rising vacancy rate of 4.6%.

For more detailed updates or to find out how the East Bay’s submarkets are doing, contact one of our advisors; whether you’re interested in officeindustrialretail, or multifamily properties, we can help.