Sunday, February 25, 2007

"Master Planning Is Over In San Diego"

Lack of Land, Traffic Congestion Forcing More Mixed-Use, Infill Projects

Era Over for Large-Scale, Mixed-Use, Master-Planned Suburban Communities

San Diego Business Journal Staff

Several of the retail shops in the Marketplace at Liberty Station celebrated grand openings this month.
Several of the retail shops in the Marketplace at Liberty Station celebrated grand openings this month.
The age of large-scale, mixed-use, master-planned communities in suburban areas of the county may be over.

Tony Pauker, regional president of the Olson Co. and chairman of the Urban Land Institute of San Diego/Tijuana, said future development will shift from master-planned communities to smaller infill mixed-use projects.

“With the exception of a couple large parcels, master-planning is over in San Diego,” said Pauker.

While we are at the end of that era, Pauker said future projects may be as small as a few acres on the waterfront downtown to a few hundred acres in and around Otay Mesa and in North County.

Craig Clark, president of La Jolla-based commercial real estate developer C.W. Clark Inc., said a number of factors played into the growing use of mixed-use, redevelopment projects in San Diego and elsewhere in the past few years.

Clark said the lack of land, congestion and demand for shorter commutes are the leading causes for these adaptive uses.

Shortening The Commute

He stressed the importance of having work and home closer together.

“When you can find a community where a lot of these things are intermingled in a general geographic area, it is much better,” said Clark, citing areas in the city such as Mission Valley.

With the benefits of having a self-contained, self-sufficient community come drawbacks.

“The negative is cost, cost, cost. It is expensive to operate. It is expensive to build,” said Clark.

Nonetheless, Clark said he and other developers would continue pursuing mixed-use development.

“We don’t have a choice,” said Clark.

[Source: http://www.sdbj.com/industry_article.asp?aID=22141724.4341242.1438632.410194.7617086.305&aID2=110655]

Saturday, February 24, 2007

TIF-ed about Condo-rado



In a Rocky op-ed, Jennifer Lang, a researcher at the Independence Institute's loftily named Center for the American Dream, takes issue with urban renewal authorities and mechanisms such as tax increment financing (TIF). The II's chief, Jon Caldara, is a radio personality on Denver's biggest AM station, 850 KOA, and II's beliefs are decidedly libertarian and staunchly anti-tax and anti-most-things-related-to-(our) government. Caldara fancied himself as a modern-day Robin Hood as he spearheaded opposition to Referendum C in 2005 state elections.

In the op-ed piece, Lang contends that "urban renewal aims to stimulate growth and tax revenue to remain competitive with other cities, but ultimately, it could slow regional growth as private development will be drowned out by the influx of subsidized development." The general idea behind TIFs is to finance development or improvements that might not otherwise occur, creating future taxable value. To be sure, some TIF's flop. But it seems misguided to oppose the likes of Stapleton, Lowry and Belmar, which have created thousands of jobs and and millions in tax revenue at sites that would otherwise languish. Today, Stapleton, Lowry and Belmar are thriving centers that provide tax revenue for their respective jurisdictions and more lively public spaces for citizens. The private sector is a key player in this process, and takes on its own risks in undertaking the complexity of mixed-use development, but the public-private partnerships here in Colorado have been vastly successful. Categorcial libertarian opposition to urban renewal authorities is somewhat paradoxical, because it seeks to "free up" private enterprise by shackling government practices that often unleash the positive forces of capitalism.

Lang's piece likens New Urbanism to the "latest planning fad" that greatly undermines the American bedrock, single family homes, replacing them with " high-density, walkable communities with multifamily housing on tiny lots combining retail, office and living space." Oh no! On its website, the Center posts a PowerPoint presentation entitled "Urban Renewal In Colorado's Front Range". Slide 27: "Land as far as the eye can see for eight hours, no land shortage".

Thursday, February 22, 2007

Low Fat Pringles and New Urbanism

Suburbs import urban features to create sense of community

BETSY TAYLOR
Associated Press

Right now, City Hall is in a doublewide trailer where the power just went out.

But if Mayor Pam Fogarty has her way, a new municipal building, still on the drawing boards, - or, really, still in her imagination - will become part of a new chapter in this growing town's story.

The mayor and other supporters, with design help from a firm known for pioneering the New Urbanism movement in architecture, are planning a place to bring people together, where they can walk the streets and pass time, and where a sense of community can flourish.

Dardenne Prairie is getting a downtown.

Once an agricultural community with fields of corn, wheat and soybeans and the occasional cattle farm dotting the landscape, Dardenne Prairie is located about 35 miles west of St. Louis. It is a stone's throw from the two Missouri cities that are growing most rapidly, Wentzville and O'Fallon.

Today, bedroom communities have sprouted in Dardenne Prairie's pastures, and franchise stores line the roads into and out of town. Its population has expanded by about three-fourths, from about 4,000 people at the start of this decade to nearly 7,000 in 2005, according to U.S. Census figures.

But, Fogarty says, her little city is missing something.

"Everybody wants a third place. You have your work. You have your home, but everybody wants a gathering place," says Fogarty, a mother of five.

Her reference is a nod to sociologist Ray Oldenburg who defines the third place as "a setting beyond home and work (the `first' and `second' places respectively) in which people relax in good company and do so on a regular basis."

Fogarty's vision for her town: This third place will include a proper City Hall building, perhaps with a front porch where residents can gather. The new district will give the community a place where people can have "cookies with Santa and the Fourth of July parade," she says, envisioning a walking district filled with shops, offices and living space.

"When you have a downtown, people say, `There's Dardenne Prairie,'" the mayor says.

And she knows exactly where they'll be when they say that.

The would-be downtown is 80 acres, part of it occupied by a baseball diamond that will remain, the rest open fields and a few privately owned houses. Several are rental properties whose owners are interested in selling, Fogarty said.

The site's transformation into a downtown begins with town meetings in April.

---

Dardenne Prairie isn't the only community seeking to establish a sense of place by designing it.

In Storrs, Conn., the University of Connecticut has drawn notice for a plan to essentially build itself a college town, with shops, restaurants, apartments, and even a traditional New England town green. UConn officials have said they don't know of another university that has attempted the same thing.

The belief that aspects of traditional neighborhoods can enhance communities has been growing with certain architects in recent years.

After World War II, suburbs flourished. As many commuters moved farther from cities into housing subdivisions, their lives became more separate from one another. Homes were no longer down the block from the corner store. Offices sprung up in business parks. It became yet another drive to get to church or school.

In their book, "Suburban Nation, The Rise of Sprawl and the Decline of the American Dream," Andres Duany, Elizabeth Plater-Zyberk and Jeff Speck criticize suburban sprawl and related development that appear to have only one goal: "making cars happy."

Duany and Plater-Zyberk are among about a dozen people credited with the New Urbanism movement. They drew much attention after developer Robert Davis asked them in 1979 to design Seaside, Fla., which was inspired by aspects of small-town life.

Now Dardenne Prairie has hired their firm, Miami-based Duany Plater-Zyberk & Co., to help shape its downtown and its future.

---

Not far from Dardenne Prairie, a made-from-scratch community with the fitting name New Town is rising from fields that were mainly used for growing sod.

The 750-acre development, whose full name is The New Town at St. Charles, drew from classic city architecture, with detached garages in back of homes and including a church, a bookstore, a market and other shops with more on the way. Residents can swim, kayak and fish in manmade lakes with fountains and canals that are actually a stormwater system. Wide front porches and parks are intended to encourage neighbors to get to know one another.

New Town is pitched by its creators as "a return to the towns of yesterday."

Developer Greg Whittaker said he wanted to build a community where, "once you park your car, you don't have to get back into it."

In all, 5,700 homes could be built in the instant community, with townhouses selling from $120,000 and a couple of single-family homes topping out at over $1 million.

New Town, which is more than 10 percent complete now, was designed right down to its intricate manhole covers.

A sign at the center of the development displays "The Shades of New Town," the 28 paint colors largely in use at the development. A yellowish cream is called "New Town Latte," and a light green is "New Town Celery." Whittaker says residents can pick their own colors to paint their homes, as long as they clear them first with the town architect.

There are other restrictions. Outdoor furniture can't be plastic, for aesthetic reasons. Gas lawn movers can't be used, an effort to reduce environmental and noise pollution. Venetian blinds facing the outside need to be neutral colors, and individual homes don't have individual mailboxes. Residents pick up their mail at a mail center, a decision made in part to get people socializing and out of their homes, Whittaker said.

Several residents said they've found just what they were looking for in New Town.

Peggy Riley, 56, recently had lunch at the Prancing Pony bookstore with her grandson, Will Statler, 3, before heading to a meeting with a couple of women from St. Charles Christian Church, also located in town.

She said her family is related to eight other families that have opted to move to New Town. She loves how the community looks, but more importantly she's very fond of the other residents. To many of them family is important, she said, and they like to stay active, taking part in church and social gatherings.

"We really try not to leave New Town," she said. "It's like being on vacation. Why would you want to go out into the other world?"

An architectural photographer, Toby Weiss, whose day job is with a residential design-build firm, visited New Town and wrote about it on a blog. Weiss found it ironic that she had to drive "over 30 miles to deep suburbia to see a modern replica of my city neighborhood."

Weiss said she found it a pleasant place to visit, but called aspects of New Town like a movie set or Disney World.

"New Town is the visual equivalent of the taste of low-fat Pringles," she wrote.

"So we should have buildings falling down and graffiti?" Whittaker asked, when told some think the development looks a little too perfect or inauthentic.

"It needs a little time to grow," he said. "It needs a little patina."

---

New Town was planned by DPZ, the same firm that Dardenne Prairie is going to use for its downtown.

A DPZ team, hired for $325,000, plans to come to Dardenne Prairie on April 18-24. They'll hold meetings to talk to residents, business owners and other decision-makers and sketch ideas about their hopes for the new downtown.

To help fund the more traditional downtown it is seeking, the town used an unusual approach to development, first drawing some big-box retailers to generate tax revenue. A Target, J.C. Penney and Shop 'N Save grocery store have gone in, as well as a multi-screen movie theater.

In 2003, the community sought to bring in commercial development, simply to raise basic operating funds. There was no city park, no way even to pay for a trash can, Fogarty said. She noted that she still cleans the bathroom at City Hall, where power went out temporarily during a reporter's visit as utility workers relocated lines.

Over time, as Dardenne Prairie sought development, community members began to think more about the type of place they wanted to be living. A small group started kicking around the notion of a downtown. From there, aldermen passed a resolution, and two community hearings were held last year for public comment.

With more money coming in, the community thinks it has a chance to determine what it wants its future to be, even as it draws on its past.

"You're seeking to enhance a sense of place that hopefully is already there," DPZ project manager Senen Antonio says.

Fogarty, the mayor, said a century-old Catholic church, with caramel-colored stone and simple stained glass windows, may serve as a design inspiration for much of the new downtown.

Either way, she believes the community will get its needed town center.

"You go get what you want," she said, "or you wait for what comes."


For Whom The Bell Tolls

The Denver Post reports that Denver/Boulder/Greeely inflation (3.6%) outpaced the nation (3.2%) in 2006, pushed by rising shelter and apparel costs. Metro's core inflation raced ahead at a 5.5% clip vs. 2.7% for the nation. The WSJ cautions that the core rate went up 0.3% last month after three straight months of 0.1% increases. briefs that the Fed is "expected to hold its key rate target steady at 5.25% a sixth time next month, but further increases are still possible this year. Data out this week showed consumer prices rose faster than expected in January, signaling inflation pressure hasn't abated enough for the Fed to relax -- or cut rates."

~

On Wall Street, Toll Bros. reported a 67% decline in 1Q07 net profit. On the bright side, Toll's cancellation dropped to 29.8% from 36.9% the previous fiscal quarter. Still, only 6,000 to 7,000 homes are expected to be delivered, off from a November estimate of 6,300 to 7,300.

Robert Toll: "There are too many soft markets at this stage of the selling season to call a general upturn in the new-home market," said Chairman and Chief Executive Robert Toll. "Demand varies greatly from week to week in individual markets."

Is it Time yet to talk about housing? The weekly newsmagazine by that very name runs a story under the banner "America's House Party". Nothing earth-shattering here but the article suggests that the latest boom will have lasting effects on how Americans view their homes:
The deeper changes of the real estate boom are likely to stick, particularly the notion that the house is no longer just a home. By tapping their built-up home profits through refinancings and home-equity loans, owners have ensured that the home-as-piggy-bank will be with us for some time, and that may have wide implications for tomorrow's economy.
We can at least take solace in the inherently different nature of housing as an investment vehicle, for houses are after all much more tangible and less prone to crashes than tulips or stocks. Okay, so Wikipedia says there is such a thing as a housing bubble; it's just that "a real-estate 'crash' is usually a slower process, because sellers just decide not to sell. Historically due to inflation, prices do not fall in nominal terms, rather they stay "flat" for a period of 3-5 years."

If you're not so worried about bubbles bursting, think about Colorado's water:

The Colorado River serves seven states - Colorado, Wyoming, New Mexico and Utah in the upper basin and Arizona, California and Nevada in the lower basin. When the 1922 Colorado River Compact divided the water among the states, the annual flow was estimated at 15 million acre-feet. Hoerling said that the recent annual flows are about 13 million acre-feet, but by 2050, climate change may drop that to about 10 million acre-feet - less than what is currently used by all of the states. That could mean there would be no extra water to store in Colorado.
A water bubble? Maybe someday. But back to real estate...

~

Here's John Rebchook's article about Lincoln Station in its entirety:

Work starts on Lincoln Station
Westfield Development and Bradbury Woods have broken ground on the first-phase of Lincoln Station, a transit-oriented development on 35 acres next to the Lincoln Avenue Light Rail station, along Interstate 25 between Lincoln Avenue and C-470.

The mixed-use development will be anchored by a 151,000-square-foot, six-story, energy efficient office building called One Lincoln Station.

Phase one also will include the Clock Tower and Station Street South buildings, which will include 34,500 square feet of boutique office space on two floors above 18,800 square feet of retail.

The commercial space will cost $45 million — $30 million in equity and $15 million in a commercial loan.

The first phase also will include Station Street Lofts, a 73-unit "loft" building with 8,000 square feet of retail.

Eventually, the entire development will have more than two million square feet of additional office space, 2,000 residential units, and 50,000 square feet of retail space.

The first phase will be completed in the spring of 2008.

~

Rebchook also scoops a new eight-townhome project, MetroView, in Jefferson Park.

Here are some renderings from website, denvercore.com, announcing the project:

~
Another Front Range story to ponder: is Foothills Mall ripe for redevelopment? The article doesn't suggest anything of the sort, but consider recent Front Range success stories such as Boulder's Twenty Ninth Street (wikipedia). Just as Centerra is beginning to siphon off retail revenue from Ft. Collins, Flatiron Crossing had been doing the same number on Boulder until they responded. I wonder, by the way, if the new Wild Oats HQ at 29th Street will change now that the Boulder natural grocer has been, um, consumed by its now parent company, Whole Foods.

Twenty Ninth Street Site Plan:

Wednesday, February 21, 2007

Housing related job cuts

The International Times Herald attributes the loss of 100,000 jobs in the United States last year to the slowdown in the housing market, including 24,000 by homebuilders alone in the last three months. Furniture makers, who cut 28,000 jobs in 2006, and other businesses, trades and service providers that support homebuilders are generally struggling. The Joint Center for Housing Studies at Harvard University (Graduate School of Design + Kennedy School of Gov't) claims that "housing and related industries account for about 23 percent of the economy" and expects housing-related unemployment to rise this year. Whirlpool, for example, is expected to cut jobs this year. The IHT article also cites NAR:

New-home sales probably will decline to an annualized pace of 944,000 in the third quarter and then rise to 959,000 in the last quarter, the National Association of Realtors said Feb. 7. Sales of previously owned homes bottomed in the fourth quarter at an annualized 6.24 million and will rise through at least the second half of 2008.
And the US Dept. of Commerce:

Builders broke ground in January on the smallest number of new homes since August 1997 as the industry struggled to unload the record 542,000 unsold properties from last year, the Commerce Department said in a report Friday. In the past three months of 2006, housing starts fell 24 percent from a year earlier.
These last figures are certainly encouraging, suggesting that there's plenty of sobriety among homebuilders in today's tough market.

~

OK, if you know anything about the DFW metroplex, you're well aware that Big D and Cowtown despise one another. The former is supposedly where the East ends, while the latter is where the West begins. LA is to Dallas as ... well, there's no equivalent for Fort Worth. It's compact enough, at least for now, to maintain a "small town" feel, yet it has first-rate cultural offerings, thanks in large parts to pre-eminent Ft. Worth families like the Basses. It's more laid back than Dallas, and arguably more friendly and more Texan.

An article in the Fort Worth Star-Telegram laments the Dallas-ification of Ft. Worth, covering the shuttering of a venerable Ft. Worth watering hole called the Wreck Room.

I suppose change is afoot, but it is a shame that venues with local character and a loyal following get elbowed out. Because of escalating land values, more residents preferring denser city living and cities encouraging mixed-use, retail/residential "urban village" concepts, it was perhaps inevitable that these types of developments would pop up near the city's core. Advocates for this transformation say it's less about the city becoming a knockoff of Dallas than it is about offering an expanded range of living, entertainment and dining alternatives for a growing and increasingly sophisticated population.

An open question: if the places (shops, restaurants, public spaces, etc.) change, will the people change with them? What's the "push" and what's the "pull"?

Saturday, February 17, 2007

Housing News and Vail's Growing Pains


On page A1, the WSJ covers January new home sales, down 14.3 % from December and 37.8% from January 2006. Consumer spending has remained unfettered, despite a surge in delinquent payment among subprime loans. Some economists don't find this segment of loans to be significant enough to become a "macroeconomic event", unless late payments spread to other loan types. Dave Seiders of NAHB now believes that the cut in residential investment will shave one percentage point from inflation-adjusted growth this year.

In a semiannual monetary report issued both on 2/14 and 2/15 before Congressional committees, Ben Bernanke looked favorably upon the housing market's "tentative signs of stabilization":
New and existing home sales have flattened out in recent months, mortgage applications have picked up, and some surveys find that homebuyers' sentiment has improved. However, even if housing demand falls no further, weakness in residential investment is likely to continue to weigh on economic growth over the next few quarters as homebuilders seek to reduce their inventories of unsold homes to more-comfortable levels.

Bernanke said that the biggest risk, or downside, to the FOMC's forecast for 2.5 to 3.0 percent GDP growth in 2007 is is "the ultimate extent of the housing market correction" and any "spillover effects from developments in the housing market onto consumer spending and employment in housing-related industries."

Moving on from the dismal science, the blogging phenomenon is growing in the residential real estate world, providing ground-level intelligence in what has traditionally been the information-constrained business of buying and selling homes. Some blogs take on shoddy home construction while others sing the praises of particular neighborhoods. Realtors, meanwhile, are providing more numbers to consumers striving to be well-informed.

The NYT reports Solaris, a $250m mixed-use development in Vail that, on its face, doesn't sound too controversial: 75 mountain-view condominiums, a two-story lobby, a Japanese restaurant, shops, three cinemas, a bowling alley and a public plaza. "The controversy is an Alpine lodge building that will be constructed of steel, wood and stone. Though its style is more indigenous to the area than the faux-Bavarian style of Vail, the proposed building was criticized for not conforming to the prevailing architecture." At 113', the building would become Vail's tallest.
The developer, a Long Island transplant, wants to make Vail Village a better place for families and others to shop, dine and "conduct business", citing Edwards and surrounding areas that have had the benefit of more room to grow relative to Vail Valley's lack of elbow room. Sixty percent of the condos sold within 6 weeks, with prices ranging from $2.2 million to $18.6 million. Knobel won a 4-3 decision from city council after two opponents to the project lost their re-election bids in November. A special election in July of last year in which a vote was taken on the project showed that a resounding number of voters supported the project: 1,100 of 1,577 voted in favor, revealing a rift between the older vanguard of Vail and the growing younger families who want more retail and entertainment, but perhaps, as opponents, content don't care to preserve Vail's identity, or at least to allow the Village to grow more slowly.

Knobel's foes also claim he's feeding his ego. Here's his statement on the Solaris website:
I want to create effortless mountain living with metropolitan convenience, unsurpassed quality, amenities and service. Most importantly, I want to do it in a way that enhances Vail's pristine beauty and feels world's apart from sterile urban environments.

Are "metropolitan convenience" and "sterile urban environments", though, two sides of the same coin? Regardless, Vail is evolving, and, perhaps, this is what the (majority of) people want.

There has been a lot in the press recently, including many mountain towns that ring uber-expensive ski resorts, regarding the (un-)affordability of housing. Witness this story from the NYT on a presumed ski/ride bum renting out a closet for $200 a month. Once he came out of the closet, literally, after a year, the couch-occupant took the closet-dweller's (more privacy?), um, space. Big Sky, the MT ski area, is a sometimes treacherous 32-mile drive on a two-lane road to the nearest community of signficant size, Bozeman, where many of those who work at Big Sky live. While ski bums from Chicago might willingly live in sub-standard living conditions for a year or two, immigrants from outside the U.S. are flocking to resort communities that face labor shortage.

Saturday, February 10, 2007

What Homes Will Look Like in 2015

The Orlando Sentinel kicks off the International Builders Show with an article predicting the size and shape of homes in 2015. The typical American home will remain at today's average of 2,400 square feet, up from 1,000 square feet fifty years ago. The future home will be more energy efficient and feature more amenities. The bar has been raised for community amenities and floor plans are becoming more open and practical:

Gayle Butler, editor in chief of Better Homes and Gardens magazine, said the "new urbanism" trend of recent years has "reset" expectations. People now look for wide sidewalks, winding streets, community centers and "real front porches," Butler said, all of which allow for a greater sense of openness and interaction among residents.

"A sense of neighborhood," while common in older parts of many towns, is impossible to "retrofit" in more recent subdivisions, she said. Homes of the future will have flexible floor plans but will not be quite as "wide open" as recently constructed models, she predicted. They will have flexible room dividers and "partial walls," more natural lighting, "mud rooms" for storage adjacent to kitchens, and "closet-sized" home offices.
One of the centerpieces of the show is The New American Home 2007, located in the Lake Eola Heights Historic District near downtown Orlando.
~

Some homes are, however, getting bigger. In Athens, Georgia (that is), there is concern about in-town, supersized McMansions.


Forbes
takes a bullish look at homebuilder stocks Beazer, Pulte and Toll Bros. Housing sectors stocks are up 24% over the past six months.

~

A columnist in The Oregonian pits two landowners in downtown Portland against one another. Greg Goodman and his family own 25 prime lots where parking is a more lucrative than mixed-use development: "A city block containing 200 parking spots probably generates a steady income of $500,000 annually, less insurance and property taxes." On the other side, John Russell owns four buildings downtown and has trouble attracting tenants in buildings surrounded by lifeless parking lots. One proposed solution is to raise height limits on downtown buildings. Otherwise, Goodman contends, the Portland Development Corp. has to offer subsidies the employers and businesses it recruits.

Wednesday, February 7, 2007

All Aboard

In yesterday's Denver Business Journal, an article details "Denver homes selling for lower prices" -- more listings and more homes under contract.

Recognized as one of two projects nationwide with "advanced engineering and design", RTD's West light-rail line, due for completion in 2013 has secured $40 million of an overall $290 million in federal fuding, according to yesterday's DP. The Feds will cover $525 million of the approximately $880 million total cost for the southeast line.

SLC's Mayor, Rocky Anderson, a kindred spirit of Denver's Mayor Hickenlooper, talks to Grist, an environmental concern, about overcoming opposition to change, including light rail, in Utah:

We have a corresponding joke, and that is that there are two things people hate: sprawl, and density in their neighborhoods.

But you know, you come up against a lot of resistance to any change. When we put in the first line of light rail in the Salt Lake City area, there was greater opposition to that than anything I can remember in politics: the cost, the contention that it's outdated technology, that people won't give up their cars to ride it. We don't hear that any more, because it's been immensely successful. It's been so successful -- and this is one of those cases of success breeding more success -- communities that were adamantly opposed to light rail before the first line was ever built are now clamoring for it in their neighborhoods.
"Streetcars are for people who don't use public transportation", quotes the Christian Science Monitor in discussing the debate on the value of streetcars in cities and towns across the country, many of which have no mass transit precedent save for buses. The article cites the relatively cheap outlays for streetcars compared to commuter rails and subways and mentions cities -- Tampa, Little Rock and Kenosha, Wis. -- that have witnessed a net benefit from streetcars. The efficiency of streetcars is called into to question by ULI's Robert Dunphy, who likens them to "amenities", and a Charlotte booster describes her city's streetcar as a "moving museum" and an "attraction".

The Wall Street Journal, meanwhile, introduces Jennings, Mo. and Richfield, Minn., aging suburbs of St. Louis and Minneapolis, respectively, that have survived by creating the right conditions for new development. Richfield lured Best Buy with 45 acres for its new HQ, and in Jennings facilitated the redevelopment of a shopping mall and kicked off a $63 mixed-use development that is going forward with the help of city, state and federal subsidies.

The Salem Statesman Journal reports on the partitioning of lots in this OR town of 150,000. Infill development, literally in what used to be backyards, raises concerns about changing the character of neighbhorhoods.

On Monday, Merril Lynch issued a research note that warned about the growing trend of vacant for-sale homes, triggered by the Commerce Dept.'s report of the homeowner vacancy rate rising to 2.7% in 4Q06 vs. a 50-year average of between 1% and 2%.

The University of Colorado-Boulder's Leeds School of Business has released its 42nd annual Business Economic Outlook (PDF, 110 pp.) . The summary states that
"employment growth in Colorado will be moderate, similar to the soft landing experienced by the national economy. The slower growth rates that began in mid-2006 are expected to continue through the first half of the year, followed by stronger perfromance as th presidential eletion draws near...The outlook is for employment to increase at a rate of 1.9% compared to 1.4% for the United States. This will translate into 42,300 additional jobs in 2oo7. this projected growth is above the 10-year average of 36,200 jobs per year."
This is a positive outlook, but the report puts contemporary employment growth into perspective by pointing out that the average annualized rate of job growth during the 1990's was 3.8%. The report also talks about quantity (McJobs) vs. quality (high paying jobs). Positions in the Professional and Business Services category, which often fall into the latter column, netted 60,000 new jobs between 1996 and 2005. Also, the state's population is expected to grow 2% vs. 1% nationally in 2007. Other tidbits from the Outlook: "mortgage rates will stay relatively stable...retail sales will show moderate, but slower growth...the Buffs will again post a winning season in 2007". Stranger things have happened.

Sunday, February 4, 2007

Can "walkable urbanity" drive national and local residential recovery?

An article in ColoradoBiz discusses the gradual shift of national homebuilders towards infill, though the author, Stephen Titus, stresses that it has in some cases squeezed their profit margins due to rising land costs, especially at transit-oriented locations. Chris Leinberger of the Brookings Institution cites the higher home values within the quarter- to half-mile "walkable" radius of Metrorail stops in the DC metro area, though Denver is more than decade away from FasTracks buildout, making such a comparsion a bit premature. Locally, Titus disucsses older homeowners who are downsizing from bigger homes in places like Highlands Ranch and younger buyers who are buying in quickly evoloving neighborhoods like Highland. Today's New York Times, by the way, talks about well-informed, proactive young buyers who are also willing to take on more debt in buying a home.

Saturday, February 3, 2007

WSJ - 'Goldilocks' Economy: Can It Last


Today's "Main Event" column in the WSJ provides a clear take on this week's economic news, revisting the Goldilocks characterization -- not too hot, not too cold -- of the curent state of the national economy. On housing:

Why hasn't the housing slump slowed growth? Investors worried last year that falling home prices and slowing sales could spark a recession by cutting into consumers' spending power. The housing slump shaved 1.16% off annual GDP growth in the fourth quarter and 1.2% in the third. But lower oil prices, which fell as low as $51 last month from a high of $77 a barrel last summer, helped offset those losses. High stock prices, fueled by the 14th consecutive quarter of double-digit earnings growth, also helped to offset the slump.

The latest indicators suggest the housing recession may have bottomed out. Sales of existing homes increased at a seasonally adjusted annual rate of 4.9% in December, the largest such gain since March 2004, although that may have been influenced by unusually warm weather. Mortgage applications and building permits have also increased.

In spite of the concerns on many American minds, wages not keeping up with productivity gains along with rising benefit costs, the consumer confidence index reached a five-year high (110.3) in January.

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Also in today's WSJ, many cities have employed more innovative, market-driven approaches to parking, which has led to more expensive parking in some areas, greater use of mass transit and more "churn" to help ease parking shortage. The premise that higher prices, not more parking, is the solution to the parking crunch may or may not be true. It seems that in "newer", less dense cities like Denver, free parking is in abundance throughout the metro area, putting the central business district at a competitive disadvantage. The article discusses Donald Shoup's 2005 book, The High Cost Of Free Parking, as a key catalyst in new thinking of coming up with parking solutions. One of his precepts includes ensuring that 85% of available parking spaces are occupied at all times by adjusting rates in real time. Perhaps a technological solution for drivers, such as a "toll tag" for parking, would alleviate some of the headaches involved when rifling under car seats for loose change.

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On Wall Street, Irvine, CA-based Standard Pacific Homes stated that its profits were off 72% in 2006. CEO Stephen Scarborough: "We believe many prospective homebuyers are waiting on the sidelines for signs of stabilized pricing."

Thursday, February 1, 2007

The Dallas Fed Makes Sense of the U.S. Housing Slowdown

The Dallas Fed's Economic Letter—Insights from the Federal Reserve Bank of Dallas underscores the challenges of gauging the housing market's effects on the overall national economy:

Although homebuilding declines are steep, the direct effect on the economy is likely to be less dramatic because residential construction, including multifamily units, accounts for just 6 percent of GDP. Even so, homebuilding can significantly affect economic growth. Residential construction added about 0.5 percentage point to GDP growth in 2004 and 2005 but subtracted 1.1 percentage points in third quarter 2006. Many forecasters project further, but smaller, negative impacts on GDP growth through most of 2007.

The indirect effects of a housing slowdown could be larger than the direct effects if the deceleration in home prices leads to slower growth in consumption, the largest component of GDP. The risk of a consumption slowdown is one reason policymakers are monitoring housing prices and home-equity withdrawals.

On home price uncertainties, the letter mentions tightening land supply, financial innovations boosting housing demand, the user cost of housing vs. household income or cost of renting, the differences between investors and owner-occupiers, and persistently low mortgage rates, as factors affecting home prices. The Dallas Fed piece closes by citing the relatively short history of mortgage equity withdrawal ("MEW") and the inadequacy of "traditional yardsticks" as reasons for the Fed to continue closely monitoring housing's impact on the overall economy.

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An AP article describes the recent trend of "opening up" traditional shopping malls in MD and diversifying their tenant bases.
Denver/Boulder have their own traditional malls - Cherry Creek and Park Meadows - but these typical two-story, enclosed malls with department store anchors are also surrounded by clusters of retail such as Cherry Creek North. Shopping malls don't last more than a few decades, as witnessed by Park Meadows putting the old Southglenn Mall out of business. It is being transformed now in the Streets At Southglenn by Alberta Development Partners, which has also built Northlands (130 AC, 1m+ sq. ft.) Southlands (with a "Main Street" similar to Belmar) and Wheatlands (part of 13,000 AC currently under residential development just east of Southlands). The Crossroads Mall in Boulder has already shed its skin and become Twenty Ninth Street. Residential development, however, is not yet in the offing, but Macerich, the developer, has put together a strong tenant base that is intended the ground it lost to surrounding retail clusters like Flatiron Crossing.

What does all this mean? We know that people love to shop, and it does not require a large leap of logic to grasp the attractiveness of integrating more residential development within a "lifestyle" retail development that also provides recreational and entertainment amenities.

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Light rail has fallen out of favor for RTD's Gold Line with two alternatives: heavy rail or streetcars.