NAHB forecast: Housing to pick up steam in 2016

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WASHINGTON – Oct. 26, 2015 – Steady employment and economic growth, pent-up demand, affordable home prices and attractive mortgage rates will keep the housing market on a gradual upward trend in 2016, according to speakers at the National Association of Home Builders (NAHB) Fall Construction Forecast Webinar.

However, the builders agree there are also persistent headwinds to a full recovery, related largely to a shortage of lots, the availability of labor and the rising cost of materials.

“This recovery is all about jobs,” said NAHB Chief Economist David Crowe. “If people can get good jobs that pay decent incomes, the housing market will continue to move forward.” The good news, Crowe added, is that total U.S. employment of 142 million is now well above the previous peak of 138 million that occurred in 2008.

The one caveat is that job growth has been concentrated heavily in the service sector, which tends to pay lower wages than goods-producing jobs.

Meanwhile, home equity has nearly doubled since 2011 and now stands at $12.5 trillion.

“The single biggest asset in most people’s portfolio is the home they own,” said Crowe. “That’s important because the primary purchasers of new homes are the sellers of existing homes. The more equity they have, the more comfortable they feel about purchasing a new home.”

Mortgage interest rates are expected to rise over the near-term, averaging 4.5 percent in 2016 and 5.5 percent in 2017, but Crowe said it’s not expected to have an impact on the housing recovery because “as the economy gets better, job and wage growth should keep pace. So even though mortgage rates will rise, they will still be low by historical standards and very affordable.”

Supply headwinds
Crowe pointed to several factors that are hindering a more robust recovery. A NAHB survey of members found 61 percent of builders said that the cost and availability of labor was a significant problem in 2014 – it was only 13 percent in 2011.

About 58 percent of builders noted a short supply of lots in 2014. In 2011, only 20 percent said the same.

Concerns over building materials stood at 58 percent among builders in 2014, up from 33 percent in 2011.

Single-family continues to post gains
NAHB projects 719,000 single-family starts in 2015, up 11 percent from the 647,000 units produced last year. Single-family production is projected to increase an additional 27 percent in 2016 to 914,000 units.

On the multifamily side, production ran at 354,000 units last year, slightly above the 331,000 level considered a normal level of production. Multifamily starts are expected to rise 9 percent to 387,000 units this year and post a modest 3 percent decline to 378,000 units in 2016.

Residential remodeling activity is forecasted to increase 6.8 percent in 2015 over last year and rise an additional 6.1 percent in 2016.

Suburbs still hot
Looking at home buyer preferences, Trulia Housing Economist Ralph McLaughlin said that contrary to popular belief, millennials prefer to own a home in the suburbs rather than rent in the cities.

“Many believe that homebuyers are bucking the trend of previous generations in that they want to live in urban areas and want to rent,” said McLaughlin. “What we are finding from our surveys is just the opposite. Among millennial renters, almost 90 percent say they eventually want to purchase a home. That is significantly higher than Gen Xers, who were hurt by the recession, and quite a bit more than current baby boomer renters, who are at 40 percent.”

However, an overwhelming majority of millennials, who are still starting households and paying off college debt, say it will be at least two years before they are ready to buy.

Roughly half of all Americans prefer to live in suburban areas, about a quarter prefer urban areas and just over 20 percent prefer rural communities, according to a Trulia survey conducted last November.

“As we get into the recovery, suburban areas are growing faster than urban areas,” said McLaughlin. “That is a sign that the urbanization trend we saw start to happen at the beginning of the recovery was more of a blip rather than a new rule.”

Moreover, the percentage of households living in urban neighborhoods in 2013 was lower among nearly all age groups compared to 2000.

“So again, this shows there really isn’t an urbanization trend among households,” said McLaughlin. “Homebuyers are saying they prefer modern and modest-sized homes in the suburbs with amenities,” he said, adding that 44 percent of Americans say they want to live in a house between 1,400 and 2,600 square feet.

Recovery in all regions, but pace varies
NAHB Senior Economist Robert Denk said that housing market conditions are improving in all regions, but the pace of recovery continues to vary by state and region.

“We’ve gotten to the point in the recovery where we no longer have problems that came with the housing bust,” said Denk. “It now is really a matter of housing markets reconnecting to the fundamental drivers, and that is employment. Production has been rebounding in all regions, prices have been moving up and new foreclosures are back to more normal levels.”

Using the 2000-2003 period as a healthy benchmark when single-family starts averaged 1.3 million units on an annual basis, NAHB projects that single-family production, which bottomed out at an average 27 percent of normal production in early 2009, will rise to 74 percent of normal by the fourth quarter of 2016 and 91 percent of normal by the end of 2017. Single-family production currently stands at 53 percent of normal activity.

The hardest hit areas during the downturn were a combination of the bubble states – California, Arizona, Nevada and Florida – and the industrial Midwest. The bubble states had the most excessive price and production spikes, while the problems in the Midwest were related more to fundamental economic weakness.

The most successful recoveries are happening now in the energy states, including North Dakota, Wyoming, Texas, Montana and Louisiana.

Other states exhibiting strong employment and housing growth include South Carolina, Utah, Tennessee, Idaho, Oregon and North Carolina.

Another way of looking at the long road back to normal: By the end of 2017, the top 40 percent of states will be back to 99 percent or more of normal production levels, compared to the bottom 20 percent, which will still be below 73 percent.

“Keep in mind that with all of these buckets, the numbers keep getting higher,” said Denk. “There is broad-based improvement across the country.”

© 2015 Florida Realtors®

Gary Nader’s Plan For Condo, Hotel Towers And Museum On Biscayne Boulevard

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Former Related Group president Roberto Rocha has teamed with art dealer Gary Nader on a plan to develop a Biscayne Boulevard property owned by Miami Dade College.

The proposal calls for replacing a 2.56-acre surface parking lot owned by MDC at 520 Biscayne Boulevard with a project that includes:

Tower A – 144 condo/hotel units (142,272 rentable sf), 228 luxury residential condo units (450,718 sellable sf)
Tower B – 300 luxury residential condo units (692,100 sellable sf)
Latin American Art Museum (122,902 sf)
Theater (1,600 seat)
Conference Center (29,150 sf)
Nader’s proposal, called ‘Museu’ was unsolicited, and MDC is asking for alternative bids from other developers, due early November. In a May letter, Nader had said that he hoped to begin marketing the project during this year’s Art Basel.

Fernando Romero Enterprise is the architect.

Puerto Rico: Island of Opportunities Video

Check out this Video on Puerto Rico.  Don’t miss the opportunity. Invest in your future. Puerto Rico has a privileged location and is the Gateway to the Americas. Ideal for trade and access to federal programs. The island has an educated bilingual workforce and key business sectors such as: manufacturing, services, technology, research & development, banking, financial, etc. It offers incentives and tax credit to those interested in establishing or doing business in Puerto Rico.

Miami 3Q Sales Report

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MIAMI: Q3 Report Reveals Surging Buyer Demand
by James McClister November 16, 2015

Sales were up, prices were up and homes sold faster, so despite a dip in inventory, it was mostly a banner quarter for Miami, a report from the Miami Association of Realtors recently confirmed.

Residential sales topped 7,800 this quarter, which marks a 2.3 percent increase from the same period last year. Growth can largely be attributed to the 4.1 percent year-over-year jump in single-family transactions – though, condo sales did still inch forward 0.8 percent despite the rise in inventory and pre-construction condo units available.

The strong demand represented in sales translated to price as well in the third quarter. In the single-family sector, median price was pushed up 9.3 percent from the third quarter in 2014 to $273,200 – higher than both the state’s median price of $199,900 and the national median of $229,000. Condo median price also experienced a healthy bump of 4.8 percent.

Prices + Low Mortgage Rates + Diverse Job Market = Consumer Confidence
Since the beginning of the year, several organizations, including rating agency Fitch Ratings, have put forward evidence claiming Miami properties are overvalued. However, according to the National Association of Realtors 2015 Profile of Home Buying Activity of International Clients, the city remains “more affordable” than other global cities, such as London, where the difference in condo price is more than $700,000 – a fact MIAMI 2015 Residential President Christopher Zoller reiterated in a statement accompanying the association’s report.

“Miami real estate remains a bargain compared to other world-class global cities,” he said. “Miami single-family home prices are at 2004 levels, considerably lower than world cities such as New York, London and Hong Kong.”

Zoller attributed a growing consumer confidence to a coupling of prices, low mortgage rates and the area’s diversified job market.

Inventory Issues
The appeal of Miami’s real estate market, particularly its luxury sector, which attracts buyers from around the globe, is becoming more apparent to many homeowners in the city, as active listings were up in the third quarter from 17,480 during the same period last year to 17,837 – a 2 percent increase.

Still, demand in the single-family sector is outpacing both builders and the ambitions of potential sellers. Median days on market has dropped from 45 a year ago to 39, while inventory tumbled 5.4 percent to a 5.1-month supply – still ahead of the national supply.

As mentioned above, the supply of available condos in Miami has surged this year, a trend that continued in the third quarter, as active listings went up 6.3 percent year-over-year to an 8.7-month supply. But demand in the sector has failed to keep up. Median days on market for condos climbed 5.3 percent from the same period last year to 60.

– See more at: http://miamiagentmagazine.com/miami-q3-report-reveals-surging-buyer-demand/?utm_source=hootsuite#sthash.ne41KqQV.dpuf

Leonardo DiCaprio working with Delos to build eco resort on private island

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Leonardo DiCaprio has announced that he’s opening an eco resort on his private island in Belize. The actor picked up the 104-acre Belizean island, Blackadore Caye, in 2005 for just $1.75 million.
The planned luxury resort will feature villas on a platform over the water, artificial reefs with “fish shelters” and a nursery growing marine grass to feed manatees, according to Curbed. It is expected to open in 2018.

“The main focus is to do something that will change the world,” DiCaprio told the New York Times. “I couldn’t have gone to Belize and built on an island and done something like this if it weren’t for the idea that it could be groundbreaking in the environmental movement.”

DiCaprio is working with NYC developer Delos to build 68 resort villas and 48 private houses to sell. DiCaprio owns a unit in the Delos Living building at 66 East 11th Street.

The units will cost between $5 million and $15 million. Jason McLennan, author of “The Philosophy of Sustainable Design,” has been tapped to design the project. [Curbed] – Christopher Cameron

Read more: 

Say Belize, please, for bargains on Caribbean luxury

By The Real Deal

Belize is an under-the-radar bargain in the market for Caribbean real estate, according to a new report by an affiliate of Christie’s International Real Estate. Christie’s affiliate Sancas Realty suggests in its report that Belize has the potential to become a leading destination for wealthy buyers of luxury villas and beachfront homes.

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The report detailed several lures of luxury homes in Belize. For starters, the fixed exchange rate of the Belizean dollar against the U.S. dollar is two-to-one. Gil Castillo, president of Sancas Realty, said in the report, “American buyers can be assured that their investment in Belize real estate will continue to appreciate on pace with the U.S. dollar.” Luxury homes in Belize have an average price under $1 million. Starting prices for luxury homes in markets worldwide average $2 million, according to Christie’s, which relies on local standards to define properties as luxury homes.

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Infrastructure upgrades and low property taxes in Belize also have supported the development of luxury homes there. Major air carriers have added flights to Belize from hub cities including Panama City, Panama, as well as Los Angeles and Houston.

Sancas Realty also reported that foreign nationals already account for 95 percent or more of the luxury-home purchases in Belize in beachfront locations.

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Dolphin Capital Investors has launched sales for luxury villas in the Dominican Republic

By Katherine Kallergis, The Real Deal

Miami Beach-based Pierre Charalambides of Dolphin Capital Investors has launched sales for luxury villas in the Dominican Republic – and is looking to lure New York and local buyers. Charalambides, co-founder and managing partner of London-based Dolphin Capital is leading development of the 200-acre Amanera resort and villas, part of a long-term 2,400-acre project in Playa Grande. The resort, which opened at the end of November, features access to a 180-acre golf course, club house, spa and health club, restaurant and outdoor activities. The Amanera resort and villas are part of the first phase. “If the first phase does not go exactly as planned, and you have a lot of land around it, you have a lot of room for error,” Charalambides told The Real Deal.

 

Aman Villas

The villas, priced from $4 million to $8 million, range from 2,400 square feet to 8,600 square feet.

 

Buyers will have the option of joining the hotel rental program. “We know owners [of a nearby resort] that make $600,000 to $1 million on rental villas a year,” Charalambides said. He’s sold five of 35 villas and expects to sell out within the next three years, and said the units offer a value as compared to South Florida and the Northeast. “We think the opening coincides with a great time in the market. Prices in Miami and New York are very high,” he said. Dolphin Capital, with regional offices in the South-of-Fifth neighborhood of Miami Beach, and listed on the London stock exchange, has a $150 million investment in the project. That includes about $50 million in debt. The deposit structure is 40 percent to purchase the lot and receive a title, then the remaining 60 percent in three installments. From start to finish, each villa takes about 18 to 24 months to deliver. So far, the biggest demand is from the finance industry in New York, he said. But the firm is also targeting high net-worth individuals from West Palm Beach and Miami. According to a Knight Frank wealth report released earlier this year, Miami has become a hot spot for the wealthy, and will remain among the world’s top 10 cities for the super rich through at least 2025. Underlying that is the demand for luxury properties. “Obviously, there’s less reason to leave Miami to go to Dominican Republic. [But] the more Miami prices are rising now and the more the city is becoming more and more [congested], it becomes more of an escape,” he said.

Is Miami real estate at or nearing its peak ?

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By Erik Bojnansky, The Real Deal 

Most of Miami’s real estate sectors are at or near their peak, according to a national economist who spoke at CREW-Miami’s Economic Outlook luncheon held at the Four Seasons Hotel Miami on Tuesday.

Hugh Kelly, a clinical professor at New York University’s Schack Institute of Real Estate and a member of the Counselors of Real Estate, said that while most real estate sectors across the country are poised for expansion, there are local markets that have already seen explosive growth, such as Miami, and “it’s time to play defense.”

Current data suggests that there’s still room for the office market to grow in Miami, he said. But the data also claims that the hotel and apartment sectors in Miami are at their peak, Kelly said. Miami’s industrial and retail sectors, meanwhile, are coming close to the peak.

“It’s time to start thinking about how to preserve those gains and how to monetize those gains. Is it a sell strategy or a hold strategy? Is it a chance, if you are going to acquire, to make sure you buy based on existing cash flow rather than on future appreciation?” Kelly said. “Those are ways to think defensively about where you stand in the cycle and make the cycle run in your favor rather than react to the cycle as it turns.”

Most trends, on the other hand, appear to favor Miami in the long haul, Kelly added. For one thing, Miami is what Kelly calls a “24-hour city”— places that tend to be very beneficial for long-term real estate investors. The financial markets are also going through a period of volatility, which will likely increase the flow of cash toward real estate as a “safe haven.”

“In a lot of ways that is why gateway cities do so well in terms of foreign capital,” Kelly said.

However, rising interest rates, capital rates, and increases in regulations have contributed to the overall deceleration of international capital flows, Kelly added. This will cause some “marginal deals” to fall apart nationally, he said. Incidentally, Kelly doesn’t blame the rise of capital rates on the Federal Reserve finally increasing interest rates. “It’s because the pool of capital is very deep but not limitless,” Kelly said.

Overall, a knowledgeable investor who “stays awake” and knows when to play offensively or defensively will do fine in the national real estate market, Kelly said. He also doesn’t foresee a major correction in most hot real estate markets, except for places that are really saturated and overpriced like Manhattan.

“If you are building 5,000 apartment units that need to have buyers at $10 million and up, even in New York the market is a little thinner,” Kelly said.

But is Miami overbuilt and overpriced? And will it be hit by the devaluation of foreign currency against the U.S. dollar? After all, it was foreign currency that helped fuel Miami’s rebound that followed the great recession. When asked that question by Britt Rosen of Appraisal Services, Inc., Kelly, whose speech mainly focused on national trends, admitted he wasn’t sure. “You don’t come into a city pretending to know more than the people who live there,” Kelly said. He then quoted from his old high school history teacher, a marine captain: “Remember what an expert is: a loud mouth far from home.”

Rosen believes that Miami is heading for a price correction. With foreign currencies continuing to drop, it’s only a matter of time before some South American investors sell their units for below market price, he reasoned. Plus, there’s a lot of new residential units being built. “I think we’re going into an oversupply market residentially,” he said.

But Cristina Arana Lumpkin, an attorney with Bilzin Sumberg and president of CREW-Miami, is more optimistic.

“There are two ways of looking at it. You could look at the devaluation of Latin American currencies as being negative, but you can also look at people living in those countries where their currency is being devalued and they still need a safe haven,” Lumpkin said.

“And Miami has operated as a safe haven for Latin America for a long time now and will probably continue to do so in the near future,” she said. “In difficult times… safe havens are more about the preservation of capital than the return of capital.”

 

Which Comes First, the Park or the People?

 

 

 

Do you live within a half mile (0.8 km) of a park? Can you walk from your home to a park in ten minutes or less?

If you live in Boston, San Francisco, New York City, or Washington, D.C., the answer is almost certainly yes: nearly every resident in those cities has quick and easy access to some kind of public park space.

If you live in a more spread-out place, like Fort Worth, Texas; Columbus, Ohio; or Las Vegas, there is only about a 50/50 chance you can easily walk to your closest park. And things are more challenging in the sprawling giants like Oklahoma City, Memphis, and Indianapolis. In Houston, for example, more than 1.2 million people cannot get to any park, even a tot lot or a small urban square, without walking more than a half mile.

These facts, determined through mapping by the Trust for Public Land (TPL), demonstrate the need for many more parks for the increasingly urbanized U.S. population. Cities are rising to the challenge in creative ways, building deck parks over highways, converting asphalt schoolyards to after-school community parks, installing community gardens at abandoned properties, turning unused rail lines into linear parks, and more.

All these efforts help provide green space within a ten-minute walk for the millions of urban and suburban Americans who are too far from parks to derive the health, environmental, and rejuvenating benefits they offer. While a number of big-city mayors and even a governor have endorsed the goal of providing parks or other open spaces within a ten-minute walk of residents, adding enough parks to serve all 249 million people living in U.S. cities, suburbs, and urbanized areas—83 percent of the population—will be a challenge.

There is another, concurrent approach to providing Americans with a nearby park: bringing more dwellings to the periphery of existing parks to increase density on their edges. This is what TPL researcher Kyle Barnhart calls, “not only ‘parks for people,’ but also ‘people for the parks.’”

Small areas of pavement are transformed into usable urban open space, commonly known as parklets, in San Francisco’s Pavement to Parks Program. Small areas of pavement are transformed into usable urban open space, commonly known as parklets, in San Francisco’s Pavement to Parks Program.

The concept is parallel to the approach taken with transit. It is well established that the expense of building and operating transit lines can and should be earned back through the promotion of transit-oriented development—dense pockets of housing, commercial space, and retail development within 2,000 feet (610 m) of subway stations and major trolley and bus stops. Arlington, Virginia, for example, has won numerous awards—and achieved notable economic success—by closely tying compact residential and commercial redevelopment to six of its Metro stations.

The same logic can hold for park-oriented development. While studies by Smart Growth America and others show that transit is the strongest generator of demand for urban consolidation and density, parks can be high on that list, too. This has been shown in compact redevelopment in such places as Philadelphia (around Hawthorne Park), St. Paul, Minnesota (around Wacouta Commons), and Denver (along Commons and Confluence parks).

Surveys regularly find that people strongly desire greenery nearby, and they like providing a place for their children (and their dogs) to play. Even people who have no kids or animals and rarely go to a park significantly benefit from simply having a green view from a house or an apartment, as has been shown in research by Ming Kuo at the University of Illinois and others.

“The great thing about parks is that you can jump into them from just about anywhere,” says Elizabeth Shreeve, a planner and a principal with SWA, a landscape architecture, planning, and design firm in Sausalito, California. “And it’s particularly true for trails—long, thin parks that can have a few miles of edge and touch so many more communities.”

Americans are not unified on the topic of density and parks, and that lack of consensus may be partly due to the many different mental pictures people have of both parks and cities.

Iconic photos from New York City and Chicago show massive walls of apartments facing Central Park and Lincoln Park, respectively. Philadelphia’s Rittenhouse Square, San Francisco’s Portsmouth Square, and Portland’s new Jamison Square teem with activity nearly around the clock because of the large number of people living nearby. But that is not the rule. An ongoing study by the Rand Corporation is finding that some city parks around the nation are surprisingly lightly used, and part of the reason is that so few people live near them.

One dramatic case is Portland’s 5,032-acre (2,036 ha) Forest Park, one of the largest city parks in the country, which has only 4,344 residents within a half mile (0.8 km) of its long boundary. It receives only about 500,000 visits per year, which sounds like a lot, but that works out to less than two persons per park acre every week.

In contrast, New York City’s Riverside Park, much smaller at 330 acres (134 ha), serves more than 259,000 people within easy walking distance and receives about 3.5 million visits a year. Riverside Park and the adjacent Riverside Drive were specifically planned and designed in the 19th century as an amenity attraction for the development of scores of mansions, and later handsome apartment buildings, along the drive, and it worked.

In a few places, tall buildings could threaten the very parks they celebrate. In Manhattan, a recent spate of ultra-tall luxury condominium towers is casting shadows that reach into Central Park at certain hours during winter months. (These buildings do very little for urban density because their super-wealthy owners generally reside elsewhere most of the time.)

Parks in densely developed midtown areas of major cities might well require special zoning protection to avoid being cast in shade much of the year. San Francisco already has fought back with a stringent sunlight protection law that requires developers to replace every square foot of parkland that is newly shaded even one hour of the year.

One trend affecting densification around city parks involves the conversion of former manufacturing and office buildings to residential use. From Portland, Maine, to Portland, Oregon, and from Washington, D.C., to Seattle, Washington, business and industrial centers have been turned into or added to residential communities. As new residents move into the once-nearly abandoned historic downtown Los Angeles, how might that change demand for park amenities like playgrounds in Pershing Square or increase use of newly built Grand Park or Spring Street Park?

Finding the Revenue

Park-oriented development plays into two of today’s realities: urbanites want high-quality parks nearby, and mayors need revenue to maintain the quality of those facilities. That revenue can only come from taxpayers, philanthropic donors, or people paying fees.

“In cities, density not only matters, it’s crucial,” says Mahlon “Sandy” Apgar IV, a real estate counselor and author. “Parks are one of the key features that can bring it about.”

Apgar himself is living his aphorism. Beginning as an intern with legendary developer James Rouse, he has lived in London; Washington, D.C.; and Baltimore’s suburbs. But after becoming empty nesters, Apgar and his wife, Anne, moved to Baltimore’s Federal Hill neighborhood, which is anchored by the famed Inner Harbor and a historic park. There they cofounded a park revitalization organization called South Harbor Renaissance.

Apgar is focusing his attention on finding a sustainable funding model to pay for better upkeep and management of that historic open space, Federal Hill Park. He thinks solutions could include market-based pricing for revenue-generating activities in the park, a value-based local tax benefit for merchants who contribute in-kind support to the park, and a services-based assessment (such as those charged by private neighborhood associations) to pay for maintenance by the Waterfront Partnership, Baltimore’s celebrated open-space management group.

“As Baltimore grapples with solutions to issues of employment, housing, and education, parks must be part of the mix as well to make it a healthful and beautiful city that unites and uplifts people,” Apgar notes.

“Of course, conversations about density can be a flashpoint for a community,” he adds. “People intuitively perceive the drawbacks more than the benefits. Most people don’t link their neighborhood’s density with the capacity and resources to improve their parks. So, that’s what policy makers and officials themselves need to understand and then communicate to constituents.”

Opposition to greater building height or increased development density surrounding parks is often due to NIMBYism, he says. “And in older cities, it may be symptomatic of other issues confronting residents, such as antiquated infrastructure and inefficient public services despite high taxes.”

In the absence of lengthy conversations and public education, “battle lines are drawn between old-timers and newcomers who bring fresh ideas and energy to enliven community parks,” Apgar says.

Jamison Square, the first park added to the Pearl District in Portland, Oregon, is a model pocket park that, through a variety of inclusive features including a fountain, a boardwalk, and an outdoor gallery, enables a high level of use by the surrounding communities. (PWL Landscape Architecture)
Jamison Square, the first park added to the Pearl District in Portland, Oregon, is a model pocket park that, through a variety of inclusive features including a fountain, a boardwalk, and an outdoor gallery, enables a high level of use by the surrounding communities. (PWL Landscape Architecture)

“Historically, inflexible zoning did not allow much room for experimentation. Now that’s changing,” he says. “The millennials’ drive to the city and enthusiasm for shared space promotes higher-density urban design. Planned new communities have shown the way by integrating open space with denser mixed-use development and introducing flexibility to open-space zoning. And these innovations, thankfully, are moving from backroom deal making to more open neighborhood forums.”

Baltimore has a triad of parks that illustrate the opportunities and challenges of the “people for the parks” concept.

Federal Hill is an eight-acre (3.3 ha) park in a crowded historic neighborhood. A few miles away, 135-acre (55 ha) Patterson Park, supported by a group called Friends of Patterson Park, is becoming steadily safer, more beautiful, and more active, adding significant value and appeal to its neighborhood; it seems likely that the housing market there would support replacement of some of the small surrounding rowhouses with apartment buildings.

But the story is different on the west side, where 700-acre (283 ha) Druid Hill Park was at one time the city’s premier pleasure ground, surrounded by large apartment buildings and a dense fabric of fashionable brownstones. Because of severe neighborhood decline, the periphery today is a sad mixture of old buildings, vacant land, and a few new gated developments.

Zoning and Political Will

There is no one-zoning-fits-all solution to these myriad situations, nor a single best way of developing around parks. In some places, the housing demand simply does not exist; in others, there would be strong resistance from current residents to denser development. Apgar takes that concept further: he believes that large parks should not even be thought of as single entities. “One of Patterson Park’s strengths is that it is large and diverse enough to have a mix of surrounding communities with different types of housing, different uses, and different markets,” he says.

In all cases, local politicians and business leaders would have to understand that park-oriented development is economically beneficial to the city and environmentally beneficial to the surrounding region, just as is the case with transit-oriented development.

Clearly, with a few notable exceptions in places like New York City, many neighborhoods surrounding parks are far from being fully developed. In fact, with many urban communities in a state of almost continuous redevelopment flux, there is often room for gradual densification. A rough calculation shows that if the density around parks in all urban areas were slowly increased so that the half-mile-walk “catchment population” doubled from an average of about 1,850 people to 3,700, the number of new parks needed to provide the ten-minute walk to all city dwellers would be cut in half.

This approach would not be easy. One person particularly aware of the importance of parks, but also of the challenge of density, is Jeremy Sharpe, vice president for community development for the Rancho Sahuarita master-planned community in Tucson, Arizona.

“The closer residents can be to a park, the better,” Sharpe says. “A safe, well-maintained park is an amenity. We regularly survey our residents, and parks and trails continue to be the main reason people live in our community.”

Federal Hill in Baltimore’s Inner Harbor offers eight acres (3 ha) of park space in what otherwise is a crowded historic neighborhood.
Federal Hill in Baltimore’s Inner Harbor offers eight acres (3 ha) of park space in what otherwise is a crowded historic neighborhood.

But density is a challenge, he says. “In principle, in gateway cities the park-oriented development idea makes sense. But in non-gateway cities like Tucson, the market doesn’t demand that level of density,” he says. “Yes, there is an increased interest in urbanity, especially by millennials. But according to two 2015 ULI studies, while 37 percent of millennials want to live in cities rather than suburbs or a small town (America in 2015), only 13 percent actually now live in or near downtowns (Gen Y and Housing). Most millennials want urban amenities in a suburban environment.

“Also, sometimes changes in the development process are difficult,” Sharpe continues. “New ideas are often challenged, not because of the concept necessarily, but because there aren’t existing principles to work under in the local market. Public planners have limits on what they’re able to approve due to politics and zoning constraints. In our master-planned community, we’ve had to demonstrate some amenities and principles that were new and unfamiliar in our region.”

Shreeve turns that thought around. “How about giving developers density bonuses for making improvements to existing parks?” she says. “Traditionally, in many places developers give land or money for new parks. But what if they also had the alternative of making our current parks better and allowing more people to live around them?”

Would this densification strategy cost more, or less, than simply buying more land? No one knows yet, but there is one major difference between the two approaches: buying the land requires public (and occasionally, private) money, whereas changing the urban form can be done largely through private financing. Small changes in zoning rules, incentives, or both can allow private developers to enter the market and assume the risk in return for likely profit.

Cities today are again ascendant, but they can also be difficult places to live without green space and other places providing respite. Creating new parks and working to fit more people around the edges of existing parks is a double-barreled way to get the most benefit to the largest number of people at a cost the nation can afford.

Peter Harnik is director of the Center for City Park Excellence at the Trust for Public Land; he is author of Urban Green: Innovative Parks for Resurgent Cities (Island Press, 2010).

Transforming Cities through Art and Culture

red lips

 

By Leslie Braunstein, ULI Magazine

Art and expressions of culture can no longer be considered pricey or optional additions to major real estate projects. “Culture is the new currency,” stated Shaheen Sadeghi, president and CEO, LAB Holding, at a 2015 ULI Fall Meeting opening general session. “It’s the way you think and interact with your community.” Jessica Goldman Srebnick, CEO of Miami-based Goldman Properties, added, “Art is a game-changer.”

Srebnick’s late father, Tony Goldman, “saw things that other people don’t see,” she explained. “We always integrate art into our projects. Why surround yourself with sterility when you can surround yourself with something fascinating? As developers, we have the largest canvases in the world.”

For the last four decades, Goldman Properties has used community-based public art as a springboard for neighborhood revitalization, transforming some of the East Coast’s most downtrodden urban areas into iconic destinations that have skyrocketed in value. After rebuilding much of Greene Street in New York City’s SoHo district, Goldman moved into Miami Beach in 1986, quickly acquiring 18 deteriorating art deco buildings along Ocean Drive. Now, of course, this South Beach strip is a world-class cultural, recreational, and tourist magnet.

More recently, the company has taken on another challenge: acquiring about 20 run-down single-story commercial buildings in the dying industrial Miami neighborhood called Wynwood. It was there, said Srebnick, that her father would implement many of the lessons learned throughout his career. Before redeveloping and leasing a single structure, the company invited a group of the world’s leading graffiti artists to paint the backs of their newly acquired buildings. These modern works of art—open to the public and illuminated at night—became the Wynwood Walls, “the world’s largest outdoor street museum,” attracting up to 15,000 people per day.

One of the lessons learned by Goldman is the evolution of a new live/work/play neighborhood. It starts with the “play” element, often in the form of restaurants. Greene Street Café in New York, Trust in Philadelphia, and Wish and Lucky in Miami Beach all proved that “people will come to a great restaurant even if it’s in a crappy neighborhood.” So Goldman proceeded to lease space to a new restaurant, Wynwood Kitchen and Bar.

The next step, Srebnick went on, is work. “Dad said we should never give in to fear, so we have always been the first to jump into the pool,” she explained. “Curation is important; we wanted differentiated and creative office users.” To obtain an anchor tenant in Wynwood, Goldman leased a building for a dollar a year to the Museum of Contemporary Art. Later, they had an artist paint bold black-and-white stripes on an empty building, then leased it to technology sector tenants, realizing a rent increase from $6 per square foot ($65 per sq m) to $35 per square foot ($377 per sq m). A plain garage was given a stunning, futuristic facade. “We believe that Wynwood will become one of the world’s most important neighborhoods for the marriage of public art and architecture,” Srebnick concluded.

Sadeghi engaged the audience of ULI members with music, images, and a variety of provocative questions. “Why do we fear riding in an elevator with another person? What would happen if you let that other person into your life? What if there was a pawnshop where you could sell your bad memories and leave them behind? As developers, we are in the memory-making business; our projects can change people’s lives.”

The California-based speaker went back in history to point out that after World War II, the world had to buy goods from the United States because other major powers were destroyed. Foreign and domestic demand, combined with new technology, spurred the era of mass production, the era of consumption, and the rise of the middle class. TV dinners and canned meat gave rise to fast food and then the drive-through. Everything had to be done faster and cheaper. Americans represent 4.5 percent of the world’s population, Sadeghi pointed out, but consume 25 percent of the world’s goods.

But now Americans are fed up and a major shift is occurring, he continued. Mass culture in the United States is giving way to a plethora of niche subcultures. “It’s about personalization, customization, and localization, not homogenization. We want content in our lives; we want layers of experiences; we want authenticity that cannot be bought.”

So what does this have to do with real estate development? The answer is: everything. “We are stuck in Development 1.0,” Sadeghi noted. “But insanity is doing the same thing over and over again [and expecting different results]. People in the community are now active participants—even coauthors—in our projects.”