Oregon is facing a chronic labor shortage amid a multibillion-dollar tsunami of real estate development depleting the pool of skilled construction workers. Portland issued nearly 12,000 buildings permits through the first 10 months of its current fiscal year for a record $2.5 billion in projects, easily eclipsing the previous high of $1.9 billion set the year before. The construction workforce plummeted after the Great Recession, and the city was unprepared when then the slow recovery transformed into a storm of development. There’s an estimated 10,000 open jobs, and the labor shortage has led to delays and helped feed rising construction costs. Some developers allege it's also contributed to lapses in quality.
Local officials expressed concerns last week over a bill that gives property tax breaks to Ohio developers, prompting significant changes to the legislation. Designed to help developers predict costs and make more job-ready sites available in Ohio, the business-backed bill would freeze property values for land under commercial or industrial development until the project is completed through a sale of the property, an occupancy permit or the start of business operations. However, local officials who deal with economic development around the state said without major revisions, the bill could do more harm than good in some regions.
In an effort to keep up with e-commerce distribution demands, developers in New Jersey and Long Island are repurposing vacant suburban office buildings into warehouses. While this conversion seems backwards, as office space costs more to build and usually generates higher rents, the red-hot warehouse market driven by the rise of e-commerce has changed that. Though the numbers are small, several suburban office properties in or near New Jersey and Long Island industrial neighborhoods have been redeveloped as warehouses. Industrial values continue to rise, making the conversion worthwhile for developers.
The city of Chicago has a reached a new high for number of tower cranes in the sky. Related Midwest’s recently installed tower crane at its new Streeterville apartment building became the 33rd tower crane to go up in 2016 in Chicago, according to city officials, a post-recession record and eight more than last year. It is the 48th tower crane to operate in Chicago during 2016 – 31 more than the city saw in 2011. There are 29 tower cranes currently operating on construction sites in the city with seven more approved and pending installation.
The city of Denver on Tuesday unveiled details of a sweeping plan to generate $155 million over 10 years to help pay for affordable-housing solutions across the city. According to the Denver Business Journal, the city said it intends to ask developers to pay between 40 cents and $1.70 per square foot and will raise property taxes by half a mill for the first year in order to create the fund, which is meant to support the development or preservation of 6,000 income-restricted homes. The changes will be included in an ordinance that will be voted on by the Denver City Council in August.
In June, Miami-Dade’s property appraiser reported real estate values grew 8.6 percent higher than in 2015; however, the latest accounting from the assessor show there was actually a 9.1 percent surge at the start of 2016 in the county’s property rolls. North Miami Beach took the top spot, with a nearly 17 percent increase in real estate values. While the higher values indicate the county’s ongoing recovery from the real estate crash, the value revisions also mean higher revenues for local governments who don’t lower property tax rates later this year.
New York City’s 421a property tax program, which allows developers of rental apartments to reduce their real estate taxes on new projects for 10 to 25 years in exchange for affordable housing in certain parts of the city, drew a great deal of scrutiny and controversy last year. The program is referred to by both its backers and its critics as a developers’ tax break and has fueled the construction of apartments across the city since the 1970s. The program was championed by Mayor Bill de Blasio as a crucial tool to reach his affordable-housing goals, as it requires developers to set aside 20 percent of a building’s units as affordable to receive the tax break. But critics questioned whether the program, which cost the city over $1.1 billion in forgone taxes in fiscal year 2015, spurred enough affordable units.
New York City property values have surpassed $1 trillion for the first time ever, according to new preliminary tax rolls released Friday. The total market value of taxable property rose to $1.072 trillion for the fiscal year beginning July 1, a 10.6% increase from the $969.4 billion reported this year. It was the largest increase in market values since 2008, shortly before the financial crisis and the crash of the city’s real-estate market. Brooklyn’s surging real estate market lead the way, with properties climbing 16 percent, compared with a rise of 7.4 percent last year. The value of Brooklyn apartment buildings rose by 18.2 percent. In Manhattan, total market values rose 9.3 percent, while Queens saw a 9.9 percent increase.
While medical office buildings will continue to post strong occupancy stats into the New Year, industry executives are concerned the volatility in the health care sector, stemming from the Affordable Care Act aftermath, changes in technology and hospital consolidation, will keep growth and transactions low. Health systems have been looking more to retail centers to build new medical office building (MOB) projects in an effort to reach an expanding consumer base and make access to care more convenient, and there has been no shortage of investor demand and construction activity. In fact, every state experienced active medical real estate construction in 2015, according to research firm Revista. There was more than $86 billion in new construction in the first half of last year alone, much of which centered on MOB projects.
The hotel building boom continues in the U.S., as a total of 103,230 rooms within 865 hotels are currently under construction and scheduled to open through the course of 2016, according to hotel research firm STR. The industry continues to break records on both the demand and revenue side, and developers are boosting investments to keep up with the surging demand. The 1.5% uptick in rooms opening this year is still below the long-term annual average of 1.9%, says Jan Freitag, STR’s senior vice president of lodging insights. But building activity has dramatically increased, with 21% more rooms under construction than a year ago.