A recent report by CBRE highlights Houston’s best- and worst-performing hospitality submarkets in terms of occupancy and RevPAR, and touched on the positive and negative outside economic factors that have impacted the city most profoundly, including the ongoing oil slump, the widening of the Panama Canal and more. The downtown market is feeling some growing pains and a number of high-profile deliveries are still expected in the next year, including the 1,000-room Marriott Marquis, a new Aloft hotel and a Euro-themed, 195-room AC Hotel by Marriott.
There has been much talk in recent years about “splitting” California’s property tax system, thereby imposing a greater tax burden on the owners of commercial and industrial real estate. However, Proposition 13, the state’s landmark 1978 property tax initiative, has prevented the split roll parcel tax from being adopted. Split-roll activists have continued to attempt to repeal Proposition 13, but a recent fact-checking report from the nonpartisan Legislative Analyst’s Office might slow them down. The report titled, “Common Claims About Proposition 13,” debunked two myths that have long served as the top talking points of split roll proponents.
As Charleston continues to see impressive growth, demand for space in all commercial real estate sectors is outpacing supply. Rental prices will continue to escalate as commercial real estate in the Charleston region tightens amid dropping vacancy rates was the key takeaway from the 13th Annual Commercial Real Estate Market Forecast for the Lowcountry. While apartment demand will continue to accelerate but likely peaked in 2015, the industrial sector is expected to grow and expand at a faster pace than other sectors such as retail, office and multifamily.
Philadelphia City Councilman Al Taubenberger introduced legislation to close the loopholes that he says has allowed buyers and sellers of some of the city’s biggest commercial real estate transactions to avoid or lessen the transfer tax on those deals. The measure seeks to end a practice that has allowed the real estate transfer tax — now 4 percent, but set to increase — to be paid against a sum that is less than a property’s actual purchase price. It also would make it more difficult to avoid the transfer tax by having former owners keep a partnership stake in a property, rather than selling it outright.
In an effort to get friendlier with multifamily building owners, home-sharing platform Airbnb launched its Friendly Building Program this month, which allows multifamily owners and community associations to share profits from resident hosting. During Bisnow’s recent Silicon Valley State of the Market event, Airbnb head of multifamily housing partnerships Jaja Jackson spoke about the opportunities available to building owners. The program offers incentives for owners including $1M of primary property and liability insurance and profit-sharing.
The Federal Reserve voted 7-3 to keep interest rates at their current level at its September meeting, despite Boston Federal Reserve President Eric Rosengren expressing concern that leaving the interest rate at its current low level for too long could potentially create asset price bubbles. The soaring commercial real estate market in particular was one of Mr. Rosengren’s chief concerns.
Based on data recently released by Research firm Reis Inc that shows office markets with the biggest year-over-year changes in effective revenue per sq. ft. during the second quarter of 2016, the National Real Estate Investor provided a market snap shot of the top five best and worst performers. The tech sector continues to have a big influence on boosting performance in many office markets. And while it may not be entirely fair to single out some of the laggards on the list, there are some clear trends there as well. According to Reis, smaller tertiary markets continue to struggle to rekindle economic and job growth that will fuel demand for more office space.
The Denver City Council Monday night adopted new legislation that will establish the city's first-ever permanent affordable housing fund, which includes asking developers to pay a new per-square-foot fee and raising property taxes by a half a mill for the first year. The legislation goes into effect Jan. 1 and is expected to raise around $150 million over 10 years to support the development or preservation of 6,000 income-restricted homes.
Kansas City has emerged as one the leading apartment markets in the Midwest as employment gains continue to fuel a healthy rental demand. For the last six years, greater Kansas City has experienced annual average employment gains of 1.5 percent, led by the technology sector. Thanks to the installation of Google Fiber, the Kansas City Startup Village is an appealing location to start a business and currently hosts more than 25 Internet startups. The increase in rental demand is also due to millenials flocking to the downtown area. From 2010 to 2015, residents aged 18 to 35 increased 20.5 percent. Employment opportunities are a big contributing factor, but so is the revival of downtown social life.
The Louisiana Board of Commerce and Industry deferred action on more than two dozen requests for the Industrial Tax Exemption Program on Monday, which would equal about $15 million in property tax breaks. New and expanding manufacturing facilities are allowed an exemption from local property taxes for up to 10 years, but must be signed off by The Board of Commerce and Industry and the governor. However, Gov. John Bel Edwards said he wants to change Louisiana’s approach to the tax exemption program created decades ago, and issued an executive order in June spelling out that he intends to tie the tax breaks to job creation and retention and to involve local government agencies in the decisions.
A report from the Connecticut Conference of Municipalities said the state’s property tax system is “unsustainable” and urged legislators to take several steps to increase funding for local government services rather than relying so heavily on the property tax. Suggestions included expanding the variety of taxes communities can collect and committing to promised sharing of state sales tax receipts despite big projected deficit in the next state budget. The report comes just days after a landmark state court ruling found Connecticut’s education funding system to be “irrational and unconstitutional.”
As job growth continues to outstrip housing creation causing stratospheric rent increases, six Bay Area cities are adding rent- and eviction-control measures on this November's ballot. Since 2010, the average asking rent for units of all sizes in the nine-county Bay Area has risen by roughly $1,000, or 66 percent, to $2,504, according to Novato research firm Real Answers. Economists are sympathetic of skyrocketing rents, but say rent control is unfair. In California, it helps incumbent tenants in rent-controlled units but does nothing to encourage housing creation. But despite economists' warning, San Mateo, Burlingame, Mountain View, Alameda, Richmond, and Oakland have all placed measures on the upcoming ballot.
As Manhattan’s peak apartment leasing season wrapped up in August, renters came out as the victors. While demand was still there, it didn’t translate into higher rents as it has in years past due to a surge of newly built towers forcing landlords to offer more concessions to keep their apartments from going empty.
The median monthly rent in August was $3,399, a dollar less than a year earlier, as property owners worked to lure tenants amid a 40 percent jump in listings, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Apartment seekers signed 6,285 new leases, the most in any month since records dating to January 2008, to take advantage of deals.
Multifamily developers build tens of thousands of new apartments every year reserved for people with low incomes, using subsidies from government programs like the federal low-income housing tax credit (LIHTC). However, the amount of affordable housing being developed has been trending downwards as the as the cost to produce each unit has been going up. This decline comes at an especially bad time, as the U.S. is facing a severe housing shortage and affordable housing is very difficult to find. More than one in every three people in the U.S. struggles with the high cost of housing—the highest level ever recorded, according to the State of the Nation’s Housing, from the Joint Center for Housing Studies of Harvard University report for 2016.
After a record-shattering 2015, a combination of factors early in the year drove a 56% total-dollar-volume drop in California hotel transactions in the first half of 2016 compared to the same period a year earlier, according to research from Atlas Hospitality Group. Alan Reay, president of Atlas, said the severe year-over-year decline in hotel transactions was due in large part to the following factors: Tough numbers to compare to in 2015, a first quarter stock market slowdown and a shift in pricing leading to a gap between buyers’ and sellers’ expectations. “The first quarter was very, very ugly in terms of transactions, and people didn’t know what direction the market was heading,” Reay said. “The second quarter picked up again, but if anything sums up the first six months, it’s that buyers were very cautious.”