Sara Maffey

Does Zoning Reform work? Read for yourself... Minneapolis has been touted as a model for zoning reform allowing incremental development and a number of other moves to help stimulate housing. So what's happening since they passed these reforms? Nothing immediately... but... Over the past five years, Minneapolis home prices have risen more slowly compared to other U.S. metro areas. Closer cities like Green Bay and Sioux Falls saw increases exceeding $100,000 whereas Minneapolis homes rose by around $79,125 on average, Rent prices followed a similar trend with lesser increases compared to other nearby metros. Perhaps if we need more housing, we should be working on removing barriers than putting new ones up... https://lnkd.in/eZB7rhDf

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CRE Values Likely at or Near Bottom, Election Over but are Rising Treasury Yields a New Wild Card?   Trends:   · Consensus is values are close of may have bottomed (excluding office), and we agree. · The Bid-Ask spread has narrowed. · In our conversations and work with lenders, they’re beginning to look at their pipeline again, issue term sheets, with the goal of increasing lending in 2025. · However, Capital Economics, in a recent report states that “The key takeaway is that if Trump were to follow through on his mooted trade, immigration and fiscal policies, we would expect US inflation to be higher and GDP growth weaker. That would mean a higher level of Treasury yields and, therefore, commercial property cap rates than in our current forecast.” · Regarding real estate values, Peter Rothemund, Co-Head of Strategic Research Green Street, also commented, “Property appreciation was set to accelerate, but then medium-term interest rates turned higher. If bond yields stay at current levels, I wouldn’t expect real estate prices to increase much.” Takeaways: · While there will there be more short-term interest rate cuts in 2025, there are now expectations Treasury yields could rise. · But we have much more stability in short term rates, and in values, just with a higher rate floor compared to recent years. · So, in deal structuring, a potentially higher treasury rate environment needs to be accepted, priced in, and values adjusted accordingly. · In many instances, extend and pretend won't work any more, especially with transitional assets as exit scenarios are often priced off of Treasuries, and need adjustment. · Restructuring debt and properties needs to account for the fact that these factors have duration. · These emerging trends are creating a “new normal.” · Challenges create enormous opportunities, and that is also where we are. · Creativity, structure and private capital are plentiful and available to provide solutions. · Proactive and collaborative strategies matter and are needed.   In navigating through these challenges, it’s important to understand all the complexities of the current capital markets, assets, and loans. EOS Real Estate has the multi-disciplinary expertise to guide you through to resolution.   We can help.   #CRE #realestatefinance #assetmanagement #distresseddebt # #maturitywall

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In 2019, I wrote about "The New Equilibrium" for Urban Land Institute's Emerging Trends. The idea is that #retail space no longer needed for retail would convert to other uses, and that #occupiers of that space would represent incremental demand for the retail space remaining. With 5 years having passed, this data shows that this phenomenon is actually happening!

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Evolution of Community Engagement: New Approaches to Building Support for RE Developments. Evolve hosted a very informative and worthwhile event today. (Yep, they’re still carving a highly needed path in CRE.) Developers increasingly find themselves in choppy waters by not involving the people that live in proximity to a project early on. If they had enlisted a neighborhood outreach at the onset, the inclusion and communication could accelerate the timeline and calm the seas. Communities are willing to mobilize and collectively voice support for a desired concept, company, or a Culinary Dropout. And “interaction with the neighbors is as if not more important than the quality of your development” Brennan Ray, zoning attorney. Collaboration at the onset is key. But what do you do when the faceless adversary, aka social media, spreads misinformation that complicates the process with bad intel? Use social media to provide facts and bring transparency to dispel bad press. If possible, create a website that gives facts, data, summaries, traffic studies, site plans…most of which can be found via public websites anyway. Everyone’s voice is important. Grass roots community outreach is a collaboration worth the time and effort. #community #engagement #communityoutreach #development #cre #arizona Evolve Ventures, LLC Women in Commercial Real Estate - #womenincre Phoenix Business Journal GPS Commercial Advisors

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We should talk about the devaluation of the dollar as a reason why everything is more expensive than it was before COVID-19 and before the government printed another $8T. Printing that much money is equivalent to a 30+% devaluation of the dollar. I believe we are in a global currency/national debt race to the bottom.

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Mixed-use conversion can be difficult to make work in today’s economic environment. But when done right, it creates desirable amenity-rich, community-driven space that offers additional value to consumers. Over two decades ago, AvalonBay Communities recognized the growing trend of municipalities, planners, and residents desiring mixed-use buildings, and since then, we’ve chosen to invest in the expertise needed to bring these projects to life. The coordination and communication on a mixed-use community is of critical importance, requiring more management and oversight to ensure all pieces work together. As a developer, you hope that your vision – including the cost premiums – result in a built environment that outperforms in terms of rent, retention, and occupancy over the long term. The creative solutions, extra planning, and patience can cost more at the outset, but we know that when done correctly, mixed-use spaces offer vibrant environments where people want to live, work, shop, and play. Catch more of my thoughts here: https://lnkd.in/dVx9u34a

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Office-to-residential conversions face regulatory hurdles and high costs. Cities are exploring new strategies, such as California's $400 million allocation in 2022 and Minneapolis removing public hearing requirements, requiring less intensive traffic studies, and exempting converted buildings from the typical requirement that 20% to 30% of units be rented at below-market rates to encourage conversions. However, efforts like the commercial-to-residential legislation have encountered obstacles, including Governor Newsom's veto of a bill providing financial incentives for developers. This highlights the importance of ongoing advocacy and collaboration among government entities, developers, and stakeholders to overcome regulatory barriers and establish office-to-residential conversions as a feasible solution to the housing crisis. Hit the link to read more:

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🌇 **Chapter 2: The Urban Renaissance** 🌇 Continuing with our deep dive into "Shaping Tomorrow's Cities," we now explore the second chapter: "The Urban Renaissance." This chapter delves into the revival of urban living and its implications for communities and businesses. **Question for you:** What do you think are the most significant factors contributing to the urban renaissance in cities today? Stay tuned as we continue to highlight each chapter of our report in the coming weeks! #UrbanDevelopment #CityPlanning #FutureCities #RealEstateResearch #SustainableCities #UrbanGrowth #CBREResearch #CBRE https://lnkd.in/gcchfpzF

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In recent years, due to a general trend of increased datafication due to the internet revolution, housing data has been leveraged not to build stronger communities, but to produce economic profit. Thus, the increase in housing data has created a bifurcation of the housing market. Traditionally, from a buyer's perspective, the housing market is mainly a means to acquire shelter. We propose that increased datafication creates—and is enforcing—a shift in the market where housing is becoming increasingly noxious for those seeking lodging, as the practices of the market migrate to the financialized conception of the housing market.

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It's time to make your property greener and more resilient. Sign up for tomorrow's webinar covering HUD's Green and Resilient Retrofit Program - a game-changer for multifamily housing owners. Learn about the three funding paths to reduce emissions, improve efficiency, and future-proof your properties against climate impacts. Sign up at https://bit.ly/4azsF7f #RealEstateManagement #MultifamilyHousing #GreenBuildings #SustainableHousing #PropertyManagement

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Thanks to #JayParsons for bringing this article to my attention. The author, Harvard Professor Edward L. Glaeser, a fellow at the American Enterprise Institute, suggests that the housing crises could be partially addressed by reforming our zoning codes to allow more housing to be built. However, given the extreme local nature of these laws, he recommends a series of carrots and sticks to encourage them to adopt more permissive rules. Such as the withholding of federal funds for cities that fail to meet certain benchmarks. As I have stated on prior posts, I am NOT a fan of top-down control and enforcement. On the other hand, I have more than my share of direct exposure to the ways in which local housing permits and codes are making development expensive and often impossible. Our building/zoning codes are, at best, antiquated. When combined with NIMBYism which makes it twice as hard for affordable housing it's no surprise to me that we are in a housing crisis. Here is a brief sample of issues I have personally been involved with... A client I am currently working with is resubmitting their development plan to a local municipality for the 3rd time. At an extra cost of $40,000 and 6 months of lost time. On a project designed to provide affordable senior housing. The reason? The city has to see the final development plan, which is exactly the same as the first development plan, which then has to be reviewed and approved by more than a dozen internal departments for the 2nd time. A plan which has already been in front of city council twice and been approved unanimously. Another client has a subdivision plan ready with a builder wanting to build, but the local government won't sign off. Despite the fact that workers are being bussed from 50+ miles away because they have nowhere to live adjacent to employment. Another project I was involved with had to buy an adjacent lot that was attached to a historic home and pave it over in order to get certificates of occupancy for the project. This was after they bought a formerly derelict building in an Opportunity Zone and made it a thriving part of the community again. The reason, parking minimum requirements. As of today, the parking lot is hardly ever used, there is a bus stop in front of the building which is in a historic district. My developer clients have many, many, many more stories to tell. All of which add time and expense at best, or block development altogether at worst. Local municipalities have little incentive to actually change the process. Change isn't popular. It could cost their seat on city council or get them in trouble with city government. The status quo is so much safer and easier. It may take top-down pressure to help us fix this and thereby allow developers the opportunity to provide the housing we desperately need. https://lnkd.in/dhEGSu4h

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“Recent research from Harvard’s Joint Center for Housing Studies has found that millennials are increasingly migrating to suburbs, where housing tends to be more spacious and relatively budget-friendly compared to urban centers. Likewise, a 2023 U.S. Census Bureau Population Survey found that some of this group’s top reasons for moving included “suburban leaning” items such as wanting to own a home (versus rent), seeking newer/better housing, wanting a different neighborhood, and seeking more affordable housing options.” 🍂🪴🏡 Indiana is blessed with over a dozen towns that are gaining national attention for their livability, convenience & affordability (relative to national housing prices). There are another three (3) dozen that are emerging. These towns will be on those lists within the next 18 months! Kudos to the state, county & municipal officials that are willing to partner with regional economic development efforts that assist telling their story and promote the best fit for those looking to relocate.

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According to a new report from RealPage Market Analytics, markets for apartments in urban cores are catching up with their suburban competitors in terms of both occupancy and rent growth. Read on. #housing #multifamily

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With so many projects struggling to pencil right now, it's important that developers really look at the numerous new soft fund opportunities that the federal government has made available.  Enterprise has been kind enough to help summarize them below.  If you or your clients are working in affordable housing I would highly recommend reviewing this article. #affordablehousing, #cre https://lnkd.in/g_PbPjQW

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The Great Affordable Developer Exodus?!? (Part 5) Over the last few days, we have looked at how affordable developers are being pushed into the red. Starting with reduced/deferred fees at the time of award, through operations shortfalls, ending with little or sometimes negative equity at the end.  A process which is forcing many to exit stage left. However, even as we are seeing this possible exodus, there aren’t a ton of new viable candidates eagerly waiting in the wings to take up the mantle. Regardless of the motivation of the new developer, the process is expensive, bureaucratic and slow.   Due to length, I will have to split this up into a couple of posts. I've attached a link to a more comprehensive overview from HUD, which is interesting and frightening. Below is the lifecycle of an affordable deal to get to the point of receiving that developer fee. 1)    Look for land in a QCT/DDA (Qualified Census Tract) that meets the requirements of the QAP (Qualified Allocation Plan).  The QCT helps put more money in the deal (see my prior posts), the QAP is how the state dictates what projects they want and will award. Both the QCT and the QAP can change yearly. 2)    Check the zoning of the parcel, if not correct start the 12–36-month process to change it. Hopefully you can.   Hire an attorney to help make your case with the local zoning board. ($100k plus) 3)    Hire an engineer and an architect. Complete a Phase 1 environmental survey (hopefully it’s clean.) Complete geotechnical and environmental survey. (Around $50K) 4)    If all of the above checks out. Try and get that parcel bought or under contract. Knowing you are competing with every other LIHTC developer who needs the same unicorn piece of land. Normally with non-refundable funds of some sort. ($100k plus) 5)    Once parcel is secured (either purchase, lease or under long term contract) hire an architect and a GC. Develop a site development plan and a proposed budget. ($100k plus) 6)    Providing you can complete all of the above before the application deadline. Submit everything to the state housing authority. Pay more fees and complete a multi-page application. Include all your financials (you need at least a $5MM net worth or a partner). You must have built a LIHTC project in that state within the last few years or have a partner. Partners take a part of the developer fee. Tomorrow, I'll finish this lifecycle evaluation, along with its costs. Notwithstanding the difficulty, I hope those new developers either have deep pockets, or rich sponsors. https://lnkd.in/gZCtQyW2.

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