A report from Minnesota Daily. “For around $1,735 per month, you can rent a one-bedroom, one-bathroom penthouse apartment at Hub Minneapolis, one of the newest luxury apartments aimed at students near the University of Minnesota. The apartment complex is roughly a 10-minute walk from Folwell Hall. For $35 less per month, you can rent a one-bed, one-bath unit in New York City that is a 10-minute walk from Central Park. In the past decade alone, neighborhoods surrounding the University have seen an influx of more than 30 new apartment buildings, with at least three more slated to open by fall 2020.”
“More than 15 of the apartments built after 2010 advertise themselves as catering towards high-end audiences, with words like ‘luxury,’ ‘high amenity’ and ‘resort-like’ used on their websites and in advertising materials. Student housing – especially luxury student housing – is a big business, said Margaret Kaplan, president of Housing Justice Center, a Twin Cities-based housing advocacy organization. ‘Students, in a lot of ways, are a bit of a captive market, because they want to be near their universities. So folks are willing to really, in some ways pay more than they can afford,’ Kaplan said.”
“On their websites, many of these apartments intersperse photos of young, vibrant, smiling models with photos of their apartments and amenities. They are selling not just an apartment, but a dreamy lifestyle. Take, for example, the tagline for FloCo Fusion, an apartment that offers tanning beds, party buses and Apple TVs in each apartment: ‘Quit dreaming about how the other half lives. At FloCo, you are the other half.’”
The San Francisco Chronicle in California. “Bay Area residents may feel that everything is becoming more expensive, all the time. But one thing that is not more expensive this year, surprisingly, is rent. Oakland also experienced a dip in rents. Even San Jose felt the pinch.”
The Colorado Real Estate Journal. “You’ve seen it in Denver – now it is happening in downtown Colorado Springs. These new developments are the seeds of a new and modern downtown at the heart of Colorado Springs. The resulting 4,000 to 5,000 apartments, townhomes and condominiums will attract 10,000 to 15,000 new residents to downtown.”
“Colorado Springs has 2,700 apartment units under construction with another 2,800 units planned. This compares with Denver’s 25,800 apartment units under construction plus 31,900 units planned. Absorption in apartments with 50 or more units totaled 600 units the past year with 370 during the past quarter. The overall vacancy rate, including properties in lease-up, increased to 9.7% due to new construction. This is a 10-year high.”
The Daily Illini. “A new apartment called ‘The Dean’ is currently under construction in the center of Campustown. With a surplus of apartments already available in Champaign, student living is expected to be impacted. According to the building permit, the estimated $50 million-valued project will be 17 stories tall with 320 units. The apartment projects completion by August 2020, just in time for move-in week. Due to the oversupply of housing, there remains a high rate of vacancy in local apartments, in which landlords have responded to by calling for decreased taxes.”
From Seattle PI in Washington. “This Belltown loft conversion– located in an historic 1900s brick building just a few blocks from Seattle’s waterfront– could be yours for the recently reduced price of $1.015 million. In that bedroom, a built-in closet (with shoe storage!) includes a ladder so items can be stored all the way to the top of the wall. The HOA fee is $995 a month.”
“Even though the price of this loft has been reduced from $1.025 million in October to $1.015 million this November, Belltown homes have been selling for 98.2 percent sale-to-list ratio in the last 30 days. And as long as we’re looking at history, the condo sold for $570,000 in 2011.”
The Express News in Texas. “A Los Angeles nonprofit that owns low- and moderate-income housing has agreed to to buy five San Antonio apartment complexes — including four mired in bankruptcy — for almost $42 million. Pico Union Housing Corp. has entered into an agreement to acquire the complexes from San Antonio’s Terravista Corp. and its partnerships, bankruptcy court documents show. The deal, which requires bankruptcy court approval, will add about 770 units to Pico Union’s portfolio. Its website shows it owns and manages about 1,000 units in the Los Angeles area.”
“A Terravista official said a dispute with the lender erupted while the company was attempting to refinance the loans on the properties. At the time, Terravista planned to proceed with the refinancing, stabilize the properties and emerge from bankruptcy. Pico Union’s website says its goal is ‘to reduce dependence on welfare, reduce the unemployment index, decrease school dropout rates and assist its constituents in creating wealth.’”
The Tallahassee Democrat in Florida. “Two bullet holes in an apartment window are eerie reminders of an early Sunday morning shooting that has Urban Enclave residents rattled. In between angst and sleepless nights from the shooting, several residents said they can hardly concentrate and have been bunking with each other. They don’t want to be alone — even in their own apartments — and question security measures at one of Tallahassee’s newest student housing complexes.”
“The 149-unit Urban Enclave opened in fall 2018. It markets itself as luxury student apartments with one- to four-bedroom floor plans and amenities, such as private balconies, a resort style infinity pool and a Jumbotron for watching local sports games. Another resident who was home during the shooting, who also asked not to be identified, was asleep at the time of Sunday’s shooting. He woke up to a commotion and later learned his roommate’s window had two bullet holes.”
“He said he’s ‘pretty shaken’ by the whole incident, describing security as ‘subpar at best.’ ‘I don’t think this complex is secure at all,’ he said. ‘I have a problem with the way they advertise this place as secure and gated when it’s not.’”
The Palm Beach Post in Florida. “Even as another project is up for consideration, West Palm Beach’s downtown office market is loaded with empty space, and there is little demand from tenants outside the area wanting to lease large offices, real estate professionals say. Interviews with real estate developers and brokers indicate that the city’s Class A office buildings, which typically attract the top tenants, have plentiful space available directly from the buildings, or from office tenants that are trying to sublease their space.”
“These subleased offices are a shadow market that indicates the real supply of office space is much larger than thought. In fact, the top Class A buildings are at about 80 percent to 85 percent occupancy, meaning office vacancies are at least 10 percent to 15 percent in each building ‘There are major holes in all the buildings,’ said one real estate broker who asked not to be named. ‘Where’s the demand?’”
“Real estate sources say the space glut, and new office buildings coming to the market, are starting to spook some buildings owners who want out. In fact, word is the Phillips Point office complex might go on the market for sale next year, as might other buildings. ‘The market is getting nervous,’ one source said.”
The Wall Street Journal on New York. “Manhattan’s three-year downturn in retail real estate may have claimed its biggest victim yet. A group of international lenders filed on Monday to foreclose on the company controlling 20 Times Square, a 42-story hotel and retail tower once valued at $2.4 billion. The group said that 90% of the property’s retail space has been sitting vacant, according to the filing. The lenders also said in the filing that Maefield Development, the firm behind the project, has failed to put up enough money to complete it.”
“Many investors who bought retail properties betting that rents would keep climbing are now in trouble. At least five New York City retail properties are delinquent on their mortgages, according to research firm Trepp LLC. That list includes only buildings whose loans were packaged into bonds; another 19 buildings are on the watch list for potential problems.”
From Bisnow on New York. “An executive at development firm HFZ Capital Group is facing charges of fraud, after he was allegedly bought off by members of the notorious Gambino crime family. HFZ Managing Director John Simonlacaj pleaded not guilty in Brooklyn Federal Court Friday to charges of wire fraud conspiracy and tax fraud, The City reports. The project received nearly $1.5M in tax breaks, The City reports.”
“The project is one of many condo projects in the city that are up against vast competition and a sluggish market. Thousands of condos in the city, many of them in the luxury sector, remain unsold, creating a challenging environment for developers bringing product to market right now.”
From Planet Money. “On the market for a New York City apartment and wondering why rents are the highest in years? Blame the luxury condo glut. New York City is littered with unsold luxury apartments which has become an expensive problem for developers. In order to make their money back, they’re converting the units into rentals.”