A wave of new construction is lowering apartment rents in Sydney Australia
Source: Heads Up, California: Sydney Has Figured Out How to Get the Rents Down – Reason.com
A supply glut also lowered rents in Los Angeles in the late 80s. Combined with the recession in the early 90s, the oversupply kept kept rents down for almost a decade. Los Angeles developers never produced the multifamily unit count achieved in the 80s. A few years of 20,000 plus apartment deliveries would lower rents.
Here is what it was like when New York allowed voluntarily vacated apartment rents to be increased by only 20% plus an allowance for renovation costs:
“At Thursday’s hearing, tenants described devoting hundreds of hours to finding apartments for their families only to be stymied by excessive upfront costs. In one example on the extreme end of the spectrum, a tenant who was renting a Manhattan apartment for $2,650/month who decided to go through with the lease said they paid $12,570 in fees before moving in—including a $4,770 brokers’ fee, a security deposit equal to one month’s rent, and a litany of other processing and application fees.”
Soon it will be virtually impossible to find a rent stabilized apartment in New York after the legislature revoked the landlord’s ability to raise rents when a tenant moves. In Los Angeles, you can find plenty of one bedrooms and even two bedroom rent stabilized apartments (and in some areas 3 bedrooms) for $2,650 by just looking in Craiglist, Zillow or any many other websites and Landlords compete for the tenant’s business.
PMI is proud to announce that Appfolio, the apartment management accounting software company, is filling the 4,999 sq ft space located at 215 Rose Avenue in Venice. Their offices are located next to Mail on Line and House Brewing and across the street from Google’s Venice offices. David Wilson and James Wilson of Lee & Associates WLA represented the landlord and Greg Lovett of Cresa represented Appfolio for the five year lease.
Appfolio is software designed for property managers who want to automate, modernize, and grow their business. Founded in 2006, Appfolio has grown rapidly to become an all in one solution to manage multiple property types including multifamily, single-family, student housing, HOA, condo, or commercial properties. Appfolio allows owners and property managers to successfully manage the leasing, marketing, maintenance and accounting or their various properties.
Rose Avenue offers creative working space and is perfect for smaller tenants who desire proximity to Venice Beach and Playa del Ray along with various cafes and coffee houses nearby. Indeed, Rose Studio is across the street from Rose Cafe.
Dockless Scooter and Bike Parking
The City of Santa Monica has embraced dock-less scooters and bikes as an enduring solution to the last mile transportation issue by creating parking for dock-less vehicles where car street parking would normally go. Owners should also encourage the dock-less revolution by also creating parking for dock-less vehicles in their parkway or in the front of their properties.
This week Wheels.com introduced a dockless all electric bike throughout Westwood and Brentwood. Today, dockless scooters along with semi and fully electric bikes crowd Westside sidewalks to offer a solution to short commutes. Many students and urban millennials are abandoning their cars for these alternative transportation devices. A one or two mile commute from campus, transit or home can now be accomplished with these omnipresent devices. One can pay $6 dollars for an Uber or Lift to travel one or two miles or $1.50 for a scooter or bike. These scooters and bikes are hassle free and cost less than parking in many cases. Those properties within two miles of a subway or light rail, campus, major office center, entertainment districts or desirable amenities–will take on greater value. The City planned for bike racks, but now we may need scooter parking.
Planners have for decades promoted bikes as an alternative to driving and as a way to close the gap on short commutes–especially that last mile or two from a subway or light rail. Tech companies have now closed the gap beyond the planners’ dreams. We shall now see how enduring and what impact these devices have on the urban scene. We must now deal with the task of making these alternatives safe and convenient. Remember that in the early days of the automobile–many thought cars unsafe and very upsetting to the horses.
We purchased this property in 2006 for $17 million and sold it in 2013 to Zurich for approximately $49 million. The property was already fully improved with furniture when we purchased the property. The property had been leased by Razor Fish and Sony. We did a lot of heavy lifting. The property suffered from a controversial zoning. We were forced to rezone the area and apply for conversion to an office building. We took the property through the financial crisis in 2009 and leased the building short term to seven start ups and then released 65% of the property to Adobe who highly improved the space. Up it goes until it blows, and the higher it goes–the bigger it blows.
Source: Clarion Partners to Buy 410 Townsend in San Francisco for $86MM – The Registry
Several major political issues will continue to haunt commercial real estate in California. Although the California Apartment Association defeated the repeal of the anti draconian rent control protections in Prop 10–rent control will continue to expand.
The ballot initiative to repeal prop 13 for commercial real estate will appear of the 2020 ballot.
San Francisco declared that special tax propositions that originate from petitions versus the legislature require only a simple majority versus the two thirds vote. San Francisco passed several new taxes based on this interpretation. One such initiative raised the gross receipts tax from .25% to 3.75% for most commercial property owners. For many recent leveraged buyers, this tax could represent over 30% of their net income after debt service. Ouch. The Howard Jarvis Association filed suit that Prop 13 and Prop 218 require a 2/3 majority vote to raise taxes. If Howard Jarvis loses–majority rule would radically increase special taxes all over California. More about this below.
The political winds are calling for more radical versus gradual tax policy to solve issues of income inequality. Expect several new tax measures on the 2020 ballot including a split tax roll initiative repealing prop 13 for commercial properties.
Source: SF unique in requiring only simple majority vote for tax measures – SFChronicle.com