Emerging Trends in Real Estate for 2010

PricewaterhouseCoopers recently completed their annual projection for the real estate market in the coming year for the Urban Land Institute (ULI). The publication, entitled Emerging Trends in Real Estate, is now in its 31st year and is the most widely read forecast report in the real estate industry. It provides an outlook on US, Canadian, and Latin American investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues.

ULI recently held an event in Philadelphia to unveil the results of this study to their membership and interested organizations within the greater Philadelphia region, which GVF attended. Overall, the study suggests that the commercial real estate industry will hit bottom in 2010, after spending nearly a year in suspended animation lagging the already shattered housing market. Some of the major points from the presentation include:

- The commercial real estate market is expected to be the worst since the Great Depression. Retail and office property owners will take the biggest hits, as consumers rein in spending and companies delay hiring and shave occupancy costs

- Surveys by Emerging Trends indicate that 2010 will be the worst time for investors to sell properties in the report's 30-year history. However, those investors with liquid assets (cash) should be posed to take advantage of highly attractive buying opportunities due to massive government infusions and banks disposing of real estate owned.

- Any real estate resurgence will likely not happen until late 2011 or possibly 2012.

- Developers will go into forced holidays, as new development makes little sense when investors can buy existing real estate at bargain basement prices.

- Apartments should rebound faster than any other part of the residential real estate sector, once hiring increases. Much of this is due to pent up demand from young adults still living with their parents.

- Emerging Trends expects the nation's premier 24-hour gateway cities to weather the ongoing turmoil better and recover more quickly than most interior locations. Washington D.C. is expected to make the quickest recovery, as the federal government has cut the fewest number of jobs in the US, and will be the first to hire new employees.

- Along the I-95 Corridor in the Northeast, Philadelphia is expected to recover the slowest of the major cities (with Washington D.C., New York City, and Boston being the others).

- The reason for this is that Philadelphia is relatively insulated from the national economies fluctuations. Philadelphia never experiences the best of the "good times" or the worst of the "bad times". Philadelphia has not been hit as hard by the national economic slowdown as most other cities of comparable size.

Read more »

$280 Million Announced for Urban Streetcar Projects

Secretary of Transportation Ray Lahood recently announced the availability of $280 million for the funding of inner-city streetcar projects. This announcement follows a national trend, including 45 cities throughout the United States and Canada seriously considering the implementation of streetcars within their boundaries. The announcement itself was made in New Orleans, which has requested $100 million for a new French Quarter line.

One of the shining examples of street car networks can be found in Portland, Oregon, a city which reversed the trend of light rail transit systems to focus on a downtown street car line in 2001. This project encouraged transit oriented development, leading to $3.5 billion in new construction, 10,000 new residential units and more than 5 million square feet of office/hotel space within the city. It is the success of this system which has created renewed interest in our nation’s street car systems.

“This grant program will create jobs and reduce pollution while saving commuters in Connecticut and across the country time and money,” said Senate Banking Committee Chairman Chris Dodd (D-CT), author of legislation to help towns and regions plan and implement development projects that integrate needs for transportation, housing, land use, and economic development. “I look forward to working with the Department of Transportation, along with HUD and EPA, as we work to make communities across the country more livable.”

A maximum amount of $25 million per project will be made available from approximately $130 million in unallocated discretionary New Starts/Small Starts Program funds.

Eligible projects include streetcars and other urban circulator systems. Priority will be given to projects that connect destinations and foster the redevelopment of communities into walkable, mixed use, high-density environments.

A second pot of money totaling $150 million in unallocated discretionary Bus and Bus Facility funds will be available for projects that will foster the preservation and enhancement of urban and rural communities by providing new mobility options which provide access to jobs, healthcare, and education, and/or contribute to the redevelopment of neighborhoods into pedestrian-friendly vibrant environments.

Featured Article

More information on the funding announcement can be found HERE

Posted by Scott Greenly, GVF

Read more »

APTA Calls for $15 Billion Investment in Public Transportation

The American Public Transportation Association (APTA) recently called upon the US Congress to invest at least $15 billion in public transportation to support and create hundreds of thousands of jobs and stimulate the economy. APTA just completed a survey of transit services nationwide and identified nearly $15 billion in capital transit projects that can be started in 90 days. APTA estimates this investment would support and create more than 450,000 jobs. The survey also found that the majority of US transit agencies need more than the recommended $15 billion to avoid employee layoffs and service cuts. To date, nearly 90% of the nearly $12 billion designated for transit under the American Recovery and Reinvestment Act have been obligated.

According to the recently released "Economic Impact of Public Transportation Investment", a report completed by the Economic Development Research Group in the Fall of 2009, the benefits of public transit investment can be quantified such that for $1 invested in public transportation, an average of $4 is generated in economic returns. Roughly $3.6 billion of business sales and nearly $500 million in federal, state, and local tax revenue are generated annually by public transportation investment.

Outside of direct employment, US transit agencies sustain a large amount of the total workforce. Consider these statistics APTA observed in 2008 transit ridership:

- In 2008, Americans took 10.7 billion trips on public transportation
- 35 million times each weekday, people boarded public transportation
- Public transportation is a $48.4 billion industry that employs more than 380,000 people

For those interested in the Economic Development Research Group's study, click here

Posted by Ryan Jeroski, GVF

Read more »

Green Routes to Work

Recently a bill has been introduced to Congress, HR 3271, better known as “Green Routes to Work.” What this bill does is incentivize alternative commuting programs by providing tax cuts and breaks for employers that offer specific programs designed to reduce Single Occupancy Vehicle (one person in one car) commutes. The Association for Commuter Transportation states that the bill will:

• make permanent the $230 the tax exclusion for both vanpool & transit; also knows as the transit benefit and parking fringe benefits;
• make self-employed individuals eligible for transit pass fringe benefits;
• include employer-established parking cash-out programs as a qualified transportation fringe benefit;
• establish a 10% vanpool investment tax credit
• establish a tax credit for subsidizing tax-free transit passes to employees;
• allow a general business tax credit for expenditures to improve access for bicycle commuters;
• allow employees to receive transit passes and reimbursements of bicycle commuting expenses as tax exempt
• employer-provided fringe benefits in the same month;
• allow an employer's election to expense the cost of removing architectural and transportation barriers
• to bicycle commuter access to employer facilities; and
• allow a tax credit for teleworking expenses, up to $400 per year.

What does this mean for the employer? If this this bill becomes law, it will provide an incentive for employers to be more engaged with employees’ commutes. Studies have shown that employees that commute by means other than Single Occupancy Vehicles are happier and more productive during the work day. Employers that treat the commute to work as a priority will ultimately have a happier and more productive workforce. This bill is currently before the House for debate, and has not been signed into law.

Posted by Shayne Trimbell, GVF Project Manager

Read more »