Los Angeles Builders Say New Affordable-Housing Rules Will Stifle Construction - WSJ

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8 Los Angeles Builders Say New Affordable-Housing Rules Will Stifle Construction - WSJ Page 1 of 4 11/22/2016 This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit U.S. Los Angeles Builders Say New Affordable-Housing Rules Will Stifle Construction Move is hailed by advocates, but developers say it could crimp home supply in already-tight market Construction workers at a residential building being erected in downtown Los Angeles in April. New city regulations encourage more affordable housing. PHOTO: LUCY NICHOLSON/REUTERS By CHRIS KIRKHAM Nov. 17, :00 a.m. ET LOS ANGELES This city became the latest major U.S. municipality to require that developers include affordable housing in new projects a move hailed by advocates, but one that builders say could crimp the supply of homes in the nation s second-largest housing market.

9 Los Angeles Builders Say New Affordable-Housing Rules Will Stifle Construction - WSJ Page 2 of 4 11/22/2016 Policy makers in cities around the U.S. are turning to so-called inclusionary zoning programs to ensure developers set aside housing units for residents who couldn t otherwise afford to live there. Nearly two-thirds of Los Angeles voters last week approved a citywide affordable-housing requirement for developers seeking to build projects of 10 or more units that need a zoning or height change. The rule requires that up to 25% of units in rental properties and up to 40% in for-sale projects meet affordability guidelines. Alternatively, developers can pay a fee to the city. New York City and Seattle passed similar requirements earlier this year. The Los Angeles initiative goes a step further, however. It also sets wage standards for the projects. Developers must pay construction wages on par with those required for public-works projects, hire 30% of the workforce from within city limits, set aside 10% of jobs for certain disadvantaged workers living within 5 miles of the project and ensure 60% of workers have experience on par with graduates of a union apprenticeship program. The mandates could double the hourly wage for some construction trades compared with state median wages. The pay for a carpenter, for example, could rise to $55.77 an hour from $26.16, according to an economic analysis sponsored by opponents of the initiative. Supporters say those wage differentials are inflated. And some developers will be less affected by the change. Those who build primarily affordable housing, using government subsidies, already must pay higher wages. Developers of large high-rise projects, meantime, often use union work crews. The measure was backed in part by the Los Angeles County Federation of Labor, a union group, which argued the city needed an alternative to developers who were paying poverty wages and pushing people out of the city. Laura Raymond, who led the campaign backing the initiative, said builders receive a financial benefit in the form of zoning changes. There s some value that needs to be given back to the community in the form of affordable units and wage standards, she said. Ms. Raymond works with the Alliance for Community Transit-Los Angeles, which promotes smart growth and affordable housing near transit hubs.

10 Los Angeles Builders Say New Affordable-Housing Rules Will Stifle Construction - WSJ Page 3 of 4 11/22/2016 But developers said the combination of elevated wages and additional requirements for belowmarket-rate housing would prevent projects from being built at all. That would worsen housing-supply shortages in one of the nation s most expensive regions. It s already a lot of brain damage and work for a project to go through in L.A., said Paul Habibi, a professor at UCLA s Anderson School of Management who also develops and invests in apartments in the city. It s really only going to stifle the number of housing units built. Shawn Evenhaim, chief executive of Los Angeles developer California Home Builders, said he stopped purchasing land months ago that would fall under the new requirements, anticipating the initiative would pass. He has enough land to get him through the next two to three years, but after that he said he will have to look outside the city limits. There s a huge shortage of housing in L.A., and a huge shortage of low-income housing, he said. They took that problem and made it worse.

11 Los Angeles Builders Say New Affordable-Housing Rules Will Stifle Construction - WSJ Page 4 of 4 11/22/2016 Mr. Evenhaim said he favors an existing state program that allows developers to add greater density in exchange for including affordable units a program he believes is reasonable and doesn t constrict the overall housing supply. On Thursday, the Commerce Department said housing starts rose 25.5% in October to a seasonally adjusted annual rate of million, the strongest pace since August But they remained below levels seen during the late 1990s, a period before the boom and bust that economists consider more normal. Research is mixed on whether affordable housing mandates restrict the overall supply of housing in an area. A San Jose State University study of California cities adopting such requirements in the mid-2000s found a notable decline in building permits after the rules were put in place, whereas other studies have found little or no effect on overall construction. Policy makers typically view the process as a trade-off: In exchange for providing the affordable housing, cities allow developers to build more units than typically allowed. In theory, that would allow the developer to recoup some of the costs of providing the below-market units. Ralph McLaughlin, chief economist at real estate tracker Trulia, said the wage requirements are the biggest wild card for Los Angeles. Those are additional costs that the developer must bear or pass down to the market-rate units, he said. And while added density may give a developer more revenue, it s unclear whether that s going to offset those higher labor costs. Write to Chris Kirkham at chris.kirkham@wsj.com Copyright 2014 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at or visit

12 Dear Tenant: Your Uber Is Here - WSJ Page 1 of 4 11/23/2016 This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit MARKETS PROPERTY REPORT Dear Tenant: Your Uber Is Here Ride-sharing starts to change the way cities, urban landlords think about real estate By ESTHER FUNG Updated Nov. 22, :44 p.m. ET Landlords battling high land costs are turning to a new partner: ride-hailing giant Uber Technologies Inc. As urban real estate becomes ever-more expensive, some property developers are shrinking or killing their parking spaces and offering Uber subsidies and other incentives instead. Developers of shopping malls, stadiums and theme parks, meanwhile, are reimagining their exterior footprints to account for more Uber traffic, playing with new ideas such as widening curbside drop-off areas resembling those found at airports some with concierges offering beverages and shrinking parking lot space. The moves show how ride-sharing is starting to change the way cities and urban landlords think about real estate. They mark another milestone in the sharing economy s encroachment into the property sector. Airbnb already has taken a bite out of the hotel industry by offering home dwellers an easy platform to rent out properties to vacationers and business travelers.

13 Dear Tenant: Your Uber Is Here - WSJ Page 2 of 4 11/23/2016 New residents at the Eleanor Apartments in Los Angeles receive $100 in Uber concessions monthly. PHOTO: TRION PROPERTIES Ride services such as Uber and Lyft, along with the promise of driverless cars, represent the single biggest game-changer for real estate over the next several decades, said Dave Bragg, an analyst at real-estate research firm Green Street Advisors. In all, Green Street estimates parking needs will be cut in half over the next 30 years amid an anticipated decline in vehicle ownership, eliminating the need for 75 billion square feet of parking space. Near downtown Los Angeles, new residents at the 41-unit Eleanor Apartments now receive $100 in Uber concessions every month instead of on-site parking spaces.

14 Dear Tenant: Your Uber Is Here - WSJ Page 3 of 4 11/23/2016 Ride services such as Uber and Lyft, along with the promise of driverless cars, represent the single biggest game-changer for real estate over the next several decades, says analyst Dave Bragg. PHOTO: AL SEIB/LOS ANGELES TIMES/GETTY IMAGES The owner, real-estate investor and developer Trion Properties, had been struggling to come up with parking solutions for its residents in a notoriously car-centric city. A few years ago, it tried to put a Zipcar vehicle in front of the building that would enable residents to rent and return the car to the same spot. But there was already a Zipcar a mile away and neither the city nor Zipcar wanted two so close together. Next Trion leased 10 parking spaces in a nearby medical office building for tenants who are car-owners and offered residents three bicycles with GPS tracking devices. The medical office building later discontinued the lease of parking spaces, said Trion s cofounder Max Sharkansky. THE PROPERTY REPORT Lots of Interest in Parking Lots Rising Rates Threaten Real Estate Bogus Divorces Fuel China Property Boom Its latest fix is simpler: offering cash for Uber or Lyft rides. With the $100 concession, the lack of parking spaces wasn t a deal breaker for me, said 33- year-old Taylor Fisher, who moved into Eleanor Apartments in March. Mall landlords are embracing car services as well. At the Grove in Los Angeles, the highend mall offers bottled water, hot chocolate and hot apple cider during colder weather to customers at its Uber drop-off point. Caruso Affliated, a Los Angeles-based property developer, also offers its customers free Uber rides to and from the property during holiday season.

15 Dear Tenant: Your Uber Is Here - WSJ Page 4 of 4 11/23/2016 We ve done a lot with Uber on accommodating the ease of drop-offs, said Jackie Levy, Caruso s executive vice president of operations, adding that new projects would factor in more Uber-friendly space. Such partnerships with real-estate operators help riders save time that would have been otherwise spent searching for parking, said an Uber representative. Some landlords planning new buildings are taking parking out of the equation entirely. Architecture and development company Jonathan Segal FAIA in August rolled out plans to build an eight-story, 35-unit apartment complex with no parking spaces. The move helped keep costs low for home dwellers, the company said. It will also offer bicycle storage on each floor and a bike rack on the ground floor, and tenants can rent a parking space in a garage nearby for $150 to $250 a month. Over the longer term, driverless cars could make it even easier for landlords to cut parking spaces. Green Street expects mass adoption to begin around 2030 and to be completed 15 years later. Uber already has suggested its entire fleet would be driverless by Two-vehicle households and owners residing in urban areas should be the most likely to find driverless ride-hailing to make much more economic sense than ownership, said Green Street. Some big investors aren t entirely sold, however. When I was in high school in the 50s, the projection by the 90s was that we would all commute to work in our private helicopters, said real-estate investor Sam Zell at a conference in September. I believe that the focus on driverless cars and all these other things eventually will to some extent occur. But I think anybody making bets on kinetic technological change in private assets will be disappointed. Write to Esther Fung at esther.fung@wsj.com Copyright 2014 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at or visit

16 Suburbs Outstrip Cities in Population Growth, Study Finds - WSJ Page 1 of 2 12/5/2016 This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit U.S. Suburbs Outstrip Cities in Population Growth, Study Finds Areas that surround downtowns account for more growth in the largest metro areas A neighborhood in Hoover, Ala., the largest suburb of Birmingham, Ala. PHOTO: BOB MILLER FOR THE WALL STREET JOURNAL By LAURA KUSISTO Dec. 3, :00 a.m. ET Big cities may be getting all the attention, but the suburbs are holding their own in the battle for population and young earners. That is the thrust of a study of population trends and housing set to be released Monday by the Urban Land Institute s Terwilliger Center for Housing, a nonprofit real-estate research group. Property developers and urban-policy experts have trumpeted the influx of young, affluent professionals into big central cities in recent years. The shift has transformed downtown areas, sparking a historic boom in luxury-apartment construction and retail development.

17 Suburbs Outstrip Cities in Population Growth, Study Finds - WSJ Page 2 of 2 12/5/2016 That, in turn, has fueled affordability concerns in cities as diverse as Cleveland and Dallas. Median home values in the urban areas studied were $365,000, compared with $305,000 in the suburbs. But research shows that suburbs are continuing to outstrip downtowns in overall population growth, diversity and even younger residents. The suburban areas surrounding the 50 largest metropolitan areas make up 79% of the population of those areas but accounted for 91% of population growth over the past 15 years, according to the study. What s more, three-quarters of people age 25 to 34 in these metro areas live in suburbs. Stockton Williams, executive director of the Terwilliger Center, said suburbs will continue to play a key role in helping cities, by providing lower-cost alternatives, tackle their affordability challenges. We won t solve the many economic and social challenges that are bound up in our housing market in the urban core, he said. The factors that have enticed Americans for decades to move to the suburbs, such as lower-cost housing and proximity to jobs, remain in place. As of 2014, about two-thirds of jobs in the 50 largest metros were in the suburbs. While employers in the mid-20th century moved thousands of jobs out of urban areas into suburban office parks, the Urban Land Institute found that job growth recently has been more balanced. Between 2005 and 2010, employment in urban areas grew by 8%, while it remained stagnant in the suburbs. But in recent years, that trend has reversed, with suburbs seeing a 9% increase in jobs and city centers just 6%. Still, the findings point to steep challenges some suburbs face. Providing services such as public transportation and school-lunch programs in some less-affluent suburban areas remains challenging because many are more spread out and have less established nonprofit bases than urban areas. Write to Laura Kusisto at laura.kusisto@wsj.com Copyright 2014 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at or visit

18 Co-Living and Co-Working Trend Comes to Chattanooga - WSJ Page 1 of 3 12/7/2016 This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit MARKETS PROPERTY REPORT Co-Living and Co-Working Trend Comes to Chattanooga City s downtown gets a face-lift, with thousands of apartments under construction The Tomorrow Building in downtown Chattanooga, Tenn., was renovated into apartments and is offering flexible leases to people willing to share working spaces. PHOTO: ROBERT PARKS/TU PARKS CONSTRUCTION By ESTHER FUNG Updated Dec. 6, :17 p.m. ET Smaller cities hoping to attract startup companies are finding that hip co-working space isn t always enough some young professionals also want co-living spaces.

19 Co-Living and Co-Working Trend Comes to Chattanooga - WSJ Page 2 of 3 12/7/2016 Lamp Post Properties, the real-estate unit of venture-capital firm Lamp Post Group, invested $8 million to renovate a 120-year-old, four-story historic building in downtown Chattanooga, Tenn., into apartments and is offering flexible leases to people willing to share working spaces. Tenants can choose from 39 fully furnished micro-units in Tomorrow Building that range from 300 to 700 square feet, and can pick three-month, six-month or yearlong leases that run $895 to $1,300 a month. Tenants have their own kitchenettes in their rooms but they can also share two larger kitchens and dining rooms, a large living room and a multipurpose space for events. The primary attraction was to be in a community. It s easy in a startup environment to get isolated, said 24-year-old Chris Weller, who plans to move in on Dec. 9. Mr. Weller, co-founder of Branch Technology, a 3-D printing technology firm focused on real-estate construction, is currently living in a rental apartment on the outskirts of downtown Chattanooga. He said one of the draws of the Tomorrow Building was that it is an old building site with lots of natural light. Another sweetener was a $200 rent subsidy offered by Lamp Post. Tenants in the Tomorrow Building have their own kitchenettes in their rooms but they can also share two larger kitchens and dining rooms, a large living room and a multipurpose space for events. PHOTO: ROBERT PARKS/TU PARKS CONSTRUCTION In large gateway cities around the world, high property prices and long-term leases can be unaffordable for young professionals and workers in the technology field. For them, co-living spaces are becoming more popular. These buildings often provide fully furnished rooms and shared dining spaces and layouts that promote interaction with their neighbors.

20 Co-Living and Co-Working Trend Comes to Chattanooga - WSJ Page 3 of 3 12/7/2016 Shared office space provider WeWork has expanded into the residential sector with WeLive, which is now in New York and Washington, D.C. Common, another co-living space provider, has operations in New York, San Francisco and Washington. Now the trend is moving to smaller cities. So far, six tenants have signed leases in Tomorrow Building, according to Lamp Post. Downtown Chattanooga is getting a facelift, with another few thousand apartments currently under construction. PROPERTY REPORT Blackstone Plans India s First REIT WeWork Puts India Expansion Plans on Fast Track India s Currency Ban Hits Real-Estate Market The city s electric power provider also runs its one gigabit per second fiber optic network, which has been a lure for technology firms and millennials, said Steph Hays, manager of Tomorrow Building. Ms. Hays added that downtown Chattanooga is becoming busier with more restaurants and cafes, and developing its own Innovation District, a concept that has sprouted up in cities such Boston and Detroit and is now taking root in smaller cities. Jonathan Davis, a 20-year-old manager at startup Bellhops, also will move into Tomorrow Building this week after signing a year-long lease. The community living was what I was excited about, where I get to meet the types of people working in startups, said Mr. Davis. The convenience is also a draw. You can come with a duffel bag full of clothes and be set. They ve provided the dishes, silverware, sheets and pillows. Write to Esther Fung at esther.fung@wsj.com Copyright 2014 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at or visit