Commercial Investment Real Estate Spring 2020

UNLIKELY CANDIDATES TOP LIST OF CITIES WITH BIGGEST RENTAL INCREASES AN ACADEMIC LOOK AT MIXED-USE ZONING’S EFFECT ON AFFORDABILITY INDUSTRIAL REMAINS HOT DESPITE COOLING FORECAST MIAMI VOTES FOR 9-MONTH BAN ON SELF-STORAGE CONSTRUCTION Increasing rents are major news across the United States. But when it comes to which cities ranked highest in rental increases in the past decade, research by PropertyClub us- ing data from Zillow showed some unlikely candidates beat New York, San Francisco, and Austin, Texas. Of the top 100 cities listed, Aurora, Colo. (79 percent); Boise City, Idaho (53 percent); and San Jose, Calif. (49 percent), saw the biggest increases in median rents from 2010 to 2019. Rejiggering the data to focus on absolute differences in median rent shows how locations that were already pricey in 2010 are that much more expensive now. San Jose saw the largest absolute in- crease of $1,083. Meanwhile, Oakland, Calif. ($980), San Francisco ($867), and Boston ($632) clocked in with large bumps in rental costs. Away from the coasts, Midwest- ern cities saw more modest increases, led by Cincinnati and Minneapolis, both at 33 percent. In an ideal situation, mixed- use development solves two problems at once; retail, office, or industrial space is paired with residential units, which can be crucial amid declining supply. But empirical data on the effect of mixed-use proj- ects on housing affordability is lacking. In response, research- ers from the University of To- ronto Mississauga examined mixed-use zoning and housing affordability in Toronto be- tween 1991 and 2006. The city center, with the most amenities and highest demand, proved prohibitively expensive for lower-income individuals with increased development. The researchers argued affordability declined more severely in mixed-used zones in the Toronto area, creating a direct tie between zoning and socioeconomic in- equality. Though focusing on a single case study, the report highlights potential conse- quences for further mixed- used developments. The industrial sector remains the most popular kid in school. In 2019, for instance, 18.7 percent of all transactions in the U.S. were industrial, representing a major jump from the 9.8 percent figure in 2014. According to a January 2020 report from Cushman & Wakefield, gateway metros attracted the most activity, representing two of every five industrial deals. The same report fore- casts market liquidity for sin- gle-asset properties will tick down in coming years, from a 2015-2019 average annual growth rate of 11.8 percent to somewhere between 5 and 8 percent through this year and 2021. Across the market, consolidation will continue to be an overarching trend, with large capital groups looking to expand their industrial port- folios through acquisitions. Miami’s planning, zoning, and appeals board approved two ordinances aimed at curbing the city’s booming self-storage market on Jan. 15 — one pro- poses a 270-day moratorium on any new self-storage facil- ity in the city and the second ordinance outlaws self-storage buildings near specific mixed- use residential areas. This move, according to an official with Miami City Commission- er Manolo Reyes’ office, came in response to fears of overde- velopment. City officials also noted concerns over illegal dumping, which is common near self-storage areas. Both ordinances must be passed by the Miami City Commission in order to be- come law, though all applica- tions for new facilities will not be processed until a final vote. The move by the Miami zoning board is the latest by municipalities looking to con- trol construction of self-stor- age units. Birmingham, Ala.; Pompano Beach, Fla.; and New York have all explored possible development freezes. CIREMAGAZINE.COM COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE 9

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