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Oakland housing developers turn to new ways of building to reduce costs

Rising construction costs are pushing Oakland developers to rethink traditional construction methods to make sure much-needed housing continues to get built.

“It is an issue right now that we are all facing increased construction costs,” UrbanCore Development CEO Michael Johnson said during Bisnow’s recent Oakland Construction & Development Update event. “What will happen is some projects will not move forward as a result of that.”

Double-digit increases in the cost of new construction projects are not driven solely by increases in material costs, but also by higher profit margins and greater labor costs as contractors struggle to find a qualified workforce, he said.

Several developers have turned toward using modular units, designing more efficient floor plans and creating new building technologies.

OWow is developing a type of unit that can adjust the number of bedrooms with a push of a button. Mechanized, acoustically rated walls would raise and lower to create up to four bedrooms, oWow founder Danny Haber said. His company has been building macro-units in Oakland that use efficient design to cut down on construction costs.

Other developers have been pursuing modular construction. UrbanCore Development decided to go modular on its Coliseum Connections project about five years ago, Johnson said. Conventional construction was more expensive, and an analysis estimated about a 10% cost savings on a $40M construction budget, he said.

The modular units are expected to be fully in place by Friday and the 110-unit mixed-income housing project is expected to be completed in January.

 

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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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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.

 

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Exclusive: $75 million renovation, office conversion proposed at San Francisco’s biggest shopping mall

Westfield San Francisco Centre, the city’s largest shopping center, could see a $75 million makeover and partial office space conversion. 

Mall landlords Westfield Corp. and Forest City Realty Trust Inc. proposed this week a renovation of tenant spaces, a new facade with more glass, and three new outdoor terraces for the 865 Market St. portion of the property. The companies also want to convert existing retail, storage and meeting space into 49,999 square feet of office space on the seventh and eighth floors. The proposal requires approval from the City Planning Commission.

Numerous retail spaces in the Bay Area and elsewhere are seeking to convert to office amid turmoil in the shopping sector.

 

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San Francisco may ease up on allowing retail space to be converted to offices

As San Francisco landlords struggle to fill vacant retail space, city officials may allow conversions to office space.

San Francisco’s Planning Commission will discuss a plan tomorrow to ease up on retail-to-office conversions in downtown San Francisco. The idea is for the city to become more flexible as the national retail market grapples with huge shifts.

The move would help fill empty space and address the city’s huge office crunch, which has sent commercial rents skyrocketing, disproportionately hurting small businesses and nonprofits. The planning department currently has four applications on file — including the huge, vacant 6×6 retail center in Mid-Market — to shift existing upper-level retail space to office use.

The proposal came after planners rejected a proposal to convert the third floor of the former Loehmann’s department store at 222 Sutter St. to office space. Planners wanted to avoid losing sales tax that retailers generate for the city, but critics pointed out that vacant space doesn’t generate sales tax.

The importance of retailers for the city’s budget is clear: Union Square merchants generate more than 37 percent of the sales tax that the city gets from consumer goods. Those same retailers generate more than 15 percent of the city’s total sales tax funds, according to a new retail report from the Office of Economic and Workforce Development.

As part of a revised downtown plan, planning commissioners are considering loosening restrictions on retail-to-office conversions above a property’s third floor. Changes the planning department is recommending would still prohibit non-retail sales from occupying a building’s first through third floors. Above the third floor, however, offices would be allowed if the leases encompass 5,000 square feet or less. For offices that want to lease more than 5,000 square feet, the deal would require a conditional use permit.

Read more from San Francisco Business Times

Bill could add millions of new homes next to California’s public transit stations

California State Senator Scott Wiener proposed a trio of new housing bills on Thursday, including one that would make it easier to build taller projects near public transit.

Wiener (D-San Francisco)’s SB 827 calls for the statewide removal of single-family home and parking requirements for projects within a half-mile of transit hubs like BART, Muni and Caltrain stations.

The bill would mandate height limits of at least 45 feet to 85 feet for new projects, depending on how close they are to transit. Cities would be able to raise height limits beyond those minimums, and developers could also build smaller projects within the areas if they chose.

Read more from San Francisco Business Times

Ground-Floor Retail Remains Empty In San Francisco As Developers Hunt For Ideal Tenants

Activating Market Street through new residential developments has not gone as smoothly as San Francisco city officials would have liked. Over the past five years, 20 new housing developments were completed on or a few blocks off Market Street, but 17 vacant ground-floor retail fronts remain, the San Francisco Chronicle reports.

The city requires residential developments to include ground-floor retail, but that is not always an easy feat for developers in a city that encourages more small retail than large chain stores. Many developers have said not all sites are ideal for retail. Developers prefer higher credit tenants that can provide long-term tenancy instead of the newer mom-and-pop businesses neighbors want. Grocery stores have anchored many developments throughout the Bay Area, but they require more space than some of the projects will allow.

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