Monday, July 20, 2015

The Reality of Pent Up Demand

What if you threw a party and everyone shows up. On Saturday (July 18th) I was shocked. To be honest it was more than a shock, it was a total smack upside the head. For those who have doubted the reality of the marketplace and the demands that high prices and low production have on housing, only had to be with me at the Trilogy Vineyards community in Brentwood, California. What happened Saturday was more than just an open house, it was a full-fledged storming of the castle and taking siege.

Trilogy at the Vineyards (GO HERE) is a resort type active adult master planned development about forty miles east of San Francisco. It sits near the Sacramento River (five miles north), within the eastern hills below Mt. Diablo, and is about an hour and a half from Sacramento, and an hour from Stockton. My land planning and landscape architecture firm has been working with Shea Homes (parent of the Trilogy brand) for more than ten years on the project. The community’s market is about fifteen million people that stretches from Santa Clara County to Sacramento County (and in reality, much farther). The community has a first class clubhouse and recreation facility, great tracts of vineyards that roll right up to the back doors of the homes as well as extensive olive groves – one could believe they are in Tuscany.

The Opening
For the last three months Trilogy Vineyards (Go HERE) has been marketing their new models (at least five new plans designed around the active adult market)—single story with a master down, high-end fixtures and appliances, well decorated, and considering the Bay Area market – very reasonable ($650,000 to $900,000). Extensive on-air radio time was purchased and even Masterpiece Theater on Sunday evenings was not missed.

I don’t have the final numbers but by the time I arrived at 12:15 Saturday more than 1500 people had arrived (or more) and my guess is that more than 4,000 prospective buyers or interested parties walked through the complex that afternoon. It was also an event that showed off Brentwood, the medical clinics and emergency services, restaurants, local cultural, to dispel the rumors about living out in the far reaches of the Bay Area. A first class job all around.

The active adult (over 55 but really over 65) is a rich market both literally and figuratively. We/they are all in the same boat: How do I get the equity out of my home and still remain in the region and not be required to live in some dumpy little 1,200 s.f. apartment with a bunch of whiney thirty-somethings living next door. We/they deserve better and this is the type of project that may appeal to us/them. The turnout seemed to prove this. While the conversion rate may be low, the exposure is unbelievable.

The active adult residential market that is in dire need of expansion and growth. The impact of the these types of projects roll through the residential marketplace, these projects usually free up housing stock that is closer to jobs and urban centers. This market—the baby boomer—has longs legs and will be growing for the next ten to fifteen years. It’s time that more builders get on board.

Stay Tuned . . . . . . . . . . .

Sunday, July 5, 2015

Just Another Brick In The Wall

Construction is changing, especially in the housing industry. There so many technological advancements it’s hard to stay ahead of what idea is next, which one works, and where they will lead.

This article (posted in Gizmag viaBuilder Magazine – HERE) shows the recent development of a brick laying machine that can speed the construction of a home’s basic construction by almost 20 times. Hydraulically enabled and laser controlled the machine can build continuously without coffee and lunch breaks. Of course the real issue is human capital—what is the impact. My guess minimal. There are fewer and fewer people going into the construction industry (no matter what the wages), the physical impact on the human body and the often cyclical nature of the job, makes the decision to be a brick layer or framer or even a roofer, very difficult. Many, after a certain age opt out, or as was found in the last downturn, returned to Mexico (taking their skills with them). The new employee, now with a gaming and technological skills and years playing SimCity, may find these machines to be the answer.

We’ve had machines that build roads for years, this is a quick video to give you an idea as to how fast these things can work.
You want it in Brick?

3D Print Your Home
The future may be to 3D print your new home. Here are a couple of videos to give you an idea of what is coming.

The home building industry has tried for years to develop affordable manufactured homes. The idea, since the turn of the 20th century and catalog kit homes, was to pre-make the house and send it to the job site. Every idea has been tried, from complete modular homes, panel construction, component (pre-built bathrooms and kitchens), and now 3D printing. Costs and profitability will drive the direction of these technological changes. Concrete seems to be the primary building material (it can be easily extruded), but considering the exploding robot technology it can be assumed that, in time, a load of lumber (pre-cut and bar coded) will arrive on a job site, the robot will scan the lumber and building components, align and then manufacture a balloon frame house. Easy-peesy.

We are at the beginning of a new and dramatic shift on home construction, the bigger issue will be local approvals and the weight that the building trades can bring to bear on the these politicians—politicians who are already stressed under the pressure for more affordable housing (see subsidized) and the needs of the public. It will be a bumpy ride.

Stay Tuned . . . . . . . .

Thursday, June 18, 2015

I'll Have the Tutti-Frutti, Please!

My (our) first home Park Forest, Illinois
Sixty years ago my father and mother bought their first home—a brand spanking new one. It had two bedrooms, one bathroom, a living room, a large kitchen and dining alcove, and a utility room. It was, at most, 1,350 square feet on a 70’x120’ lot. The house was located in the most written about post-war community in America on Chicago’s south side, Park Forest, Illinois. Its most important and valuable amenity was a furnace. In fact that, and the water heater, may have been all the tech amenities it had. It did not have a garage, just a carport. And, they were thrilled. (See current photo)

The housing industry is in hog heaven right now. Too many buyers and not enough product—and this includes the rental markets as well. Sure, there may be a few sane parts of America, maybe Iowa and Kansas, where there is some balance, but not around most urban areas and suburbs. Here, “it’s squeeze ‘em for everything they got.” In the SF Bay Area, townhomes that would sell in Orlando for $250,000 sell for $700,000 or more and are bid up and up (info, go here)

Builders update their price sheets weekly to adjust for the demand. Starter homes are now over 1,800 square feet and are more often at 2,400 square feet. In fact the average new home last year was 2,679 square feet (avg.) and the median was 2,491 square feet. Three bedrooms are a minimum, four are now typical. If one thing has changed in the Bay Area is that the single family lot has dramatically dropped in size; in fact most detached lots are now in the 2,800 to 3,200 square feet size, you can literally stand between them and touch both homes (traditional lots in the last housing bubble were minimally 60’x100’ – 6,000 square feet).

However, these are just numbers that react to markets, demand, interest rates, demographics, and governmental controls. While the rental market is hot again (due, in part, to the lack of ready cash by Millennial buyers), even it can’t cover the demand. And now many apartments are being designed to intentionally keep out children and extended family. While they can’t legally be excluded, just tweaking the design and layout does exclude families. And the rents are so high it takes multiple wage earners (married, partners, friends, desperates) to afford them.

Now back to the tutti-frutti. The buyer wants and expects (while bitching about the price) that their new home has everything. Here are the most of the top amenities that buyers want:
Walk-in closets (in fact, his and her walk-ins)
Luxurious laundry rooms (TVs, skylights, high-end appliances)
Extreme energy efficiency (beyond double glass, insulation, and Energy Star)
Great rooms (an open mix of kitchen, dining, family, and entertainment space)
Taller/higher first floor ceilings (9 foot plus)
Smart-er Homes (highest tech, fiber-optics, Wi-Fi, LED lighting, security cams and such)
Home Office (in the case of some, two home offices)
Hardwood Floors (They are back, no wall to wall carpets, sustainable bamboo is so nice!)
High-end finishes (Granite or other quality in kitchen and baths – especially marble baths)
Storage, closets, and even more storage
Minimum two-car garage, bike parking, (urban sites need to have more on-site parking)
Fireplaces (even though in California wood burners will probably be outlawed – gas is the alternative)

When luxury becomes necessity:
We went from fireplaces to central heating (look at the stacks on pre-1900 homes), to all-inclusive systems (HVAC) and now mandatory air conditioning. We are now installing solar systems for electrical support, and extreme high-end data and entertainment systems as standards. Kitchens look like they could be sets for the Food Channel, bathrooms fitted like a Four Seasons hotel spa, and garages are now operating rooms with tile floors. And all this at a cost.

While the yard is much smaller (smaller lot – less veggies, less maintenance = more free time; yeah, sure), the buyer wants a community that has nearby recreation, services, and restaurants. If possible, especially for the Boomer market, they want to live in a resort (they feel they earned and deserve it).

To be honest, these desires and residential needs are the same in Florida and California; it’s the vagaries of markets and governmental controls that separate the two price-wise. But the other significant impact to price is all the tutti-frutti (that I would not give up myself) that goes into these new homes. Now I ask you, don’t you want warming draws, wine fridge, outdoor kitchen, man-cave, home-theater, Amazon rainforest shower, gym, coffered ceiling in the bedroom, shoe racks for 200+ pairs, pet enclosure, a smart house that knows who you are, super-duper air and water purification, and of course a live-in maid. Just saying.

Stay tuned . . . . . . . .

Friday, May 29, 2015

The Rise of the Parklet

A new and innovative urban design solution looking for a problem is underway in many cities from San Francisco to Philadelphia—the parklet. They have also found a place in Brazil and elsewhere. They are nothing more than taking back the street from the car, one parking stall at a time.

This all started (or so claimed) in 2005 when a San Francisco design company took over a parking stall (by feeding the meters all day) and installing a pop-up park with maybe 176 square feet of sod, benches, and boxed trees. From this radical event it grew nationally until 2010 when San Francisco completed its first permanent parklet (and accompanying manuals, guidelines, and nascent bureaucracy). A revolution began and cities nationwide began exploring opportunities in their downtowns and high traffic areas.

This was not without some concern by local businesses afraid to lose that one stall right in front of their door. But cities used an interesting tactic; if the business (usually a coffee shop or deli) was willing to “own” the parklet, they could use it to expand their customer seats and directly affect their bottom line. Some businesses have even offered to pay for the upgrades and improvements. Costs can run all over the place, from remedial projects that cost $15,000 to sophisticated parklets that can run two or three times that amount. Actually there is no limited to cost, only the imagination.

The visual impact on the street depends on the design, the more vertical the better. The most critical design control is the street itself. To be a legitimate parklet, the street paving and drainage remains intact. To start removing asphalt and realigning curbs changes the result to a sidewalk improvement not a parklet. The goal is to be cost effective while also dramatically changing the streets look and add to the pedestrian’s experience. Amenities have included planter boxes, pots filled with annual color, tables and chairs, benches, trellises, shade screens—the list is almost endless.

Some are sleek and modern, others funky and very, very temporary looking, some have used salvage bins with a bench crafted into the side, others have used shipping containers (cut-in windows and doors). One was offered as a mini-golf course. Their primary reason is to increase and expand the pedestrian use of the street.

During the last hundred years the automobile has increasingly demand more and more of the right of way. Wider lanes, bike lanes, on street delivery zones, higher and higher parking rates, it has been a constant war between motorists, bicyclists, and pedestrians. And the car is winning—for now.

The climate on the West Coast and the South favors the permanent installations of parklets. In snowy regions greater concern is warranted and may require more temporary parklet solutions that get setup each spring and removed in the fall. One distracted snowplow operator can do a lot of damage.

The urban street a tough place. So much going on, so much to offer, so much to lose. The more we can enliven and “activate” the sidewalk and storefronts, the better the downtown.

Stay Tuned . . . . . . .

Saturday, May 16, 2015

City of Light, City of Magic

Terminal Tower - Cleveland
A week ago I was in the bleeding heart of the pejoratively named ‘Rust Belt’ of America, Cleveland. It had been many years since I spent any time in this once great industrial city. In fact the last time I was in Cleveland’s downtown was to pick up my marriage license at city hall (Nixon was president then). Much has sadly gone wrong for this city in the intervening forty plus years, and in most instances these wrongs also happened to Toledo, Youngstown, Detroit and the other manufacturing cities that border the Great Lakes.

Dozens of books and magazine articles have tried to figure out what went wrong. We need someone to blame—but right now the why is irrelevant. During the next decade it is how the future is imagined and then executed that it important. Cleveland has everything going for it: great interstate connections, affordable housing, reasonable climate (I am a climate wimp living in California), wonderful waterfront potential, spectacular cultural institutions and museums, high quality and respected colleges and universities. All it’s missing is a vital and strong downtown core.

Peripheral development is strong (especially on the suburban west side). In fact one of the most exciting new town developments Crocker Park (GO HERE) is expanding with new condominiums and apartments. But as happens, none of this outer ring development helps the traditional regional core, if anything is sucks the heart out of the urban center.

Much is changing in Cleveland’s downtown but much more needs to be done. A dramatic remodel to its four block Public Square is under construction next to the Terminal Tower rail, casino, and retail complex (don’t get me started on the casino that’s located in the old Higbee’s retail building directly across from this remodeled park). But it is the five block-sized open city parking lots smack in the center of the downtown that show the tougher side of the current urban condition. While a new city park would be delightful—twenty thousand new employees would be better.

The Arcade - Cleveland
While at Kent State in the late 1960s I purchased a used camera at a shop that was in the city’s landmark historical complex, The Arcade. This complex on Euclid is a jewel and for its more than 125 years been an important architectural part of the downtown. Built during the time of nineteenth century arcades and enclosed retail complexes it is a smaller reminder of Milan’s Galleria Vittorio Emanuele II and Naples’ Galleria Umberto I. Today, it is still loved by the owners (in excellent condition) but not by many others. When the prime tenant on the ground floor is a fitness center, well, you get my point. It sits there waiting for the revolution.

There are now incredible public facilities downtown that have been built during the last twenty years, the Cavaliers play at the Quicken Loans Arena, the Indians at Progressive Field (The Jake), and the Browns have their new stadium where the old baseball and football field (Cleveland Stadium) stood for more than half a century (and it’s a lot nicer than the new 49’s stadium—just saying). And next door, on the meager waterfront, sits the Rock and Roll Hall of Fame (worth visiting).

It is a city that has fought its reputation as an industrial dump celebrated by Randy Newman’s song Burn On.  

But times have changed, you can fish in that once cesspool of a river, Lake Erie is cleaner now than in a hundred years, and there is something finally beginning to happen downtown. But so much more has to be done and these changes must be dramatic and obvious in order to bring people back downtown. More housing, more businesses, more of just about everything. Time will help but this all begs the question about the future of big downtown core cities and whether there is a future for the urban model. That discussion is for later.

Stay Tuned . . . . . . . .