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Dylan Simon
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Recognizing these characteristics, we’re heralding micro units and co-living spaces as the next big thing in urban living. They’re attractive to young residents who haven’t yet accumulated wealth and who are willing to trade square footage for the all-important proximity to vibrant downtown areas. Such buildings often offer curated and organic social events, providing the community experience that many crave in otherwise impersonal city environments. And for landlords? The ability to cultivate a desirable environment in your building, generate strong demand, and achieve higher yield per foot than traditional leases.
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CMBS lenders offered interest rates fixed roughly 250 basis points over the “swaps” rate on August 22 for loans equal to about 75 percent of the value of an apartment property. That tended to work out to an all-in interest rate a few basis points over 4.0 percent.
Those rates are lower than what Freddie Mac and Fannie Mae lenders typically offered in mid-August. Agency lenders offered 10-year loans fixed at 260 basis points over the yield on 10-year Treasury bonds on August 22 for loans equal to about 70 percent of the value of an apartment property.
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Project documents also indicate that 7,658 square feet of commercial and retail space, as well as 7,065 square feet of amenity space, are included in the plans. 159 vehicle parking spaces, both below and at-grade will be part of the development upon completion.
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BCJ's program for the site is about the same. The two 23-story towers would rise from the site on the south side of Yesler, commonly called Block 6.1, which totals a little less than an acre.
The towers would be phased, with the north tower preceding the south. They would total about 365 units. Below in the podium would be around 10,000 square feet of retail/commercial space. About 248 parking spaces, both underground and structured, are also planned.
Both towers would have roof decks with around 8,000 square feet each. Total project size is around 360,000 square feet.
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“The gap between the yields available on bonds and the yields available on real estate [is] very wide and very attractive,” he notes. “Investors that want to preserve their portfolio returns will probably switch out of bonds and into real estate because of the differential that’s opened up between the forward-looking returns on bonds and the forward-looking returns on real estate.”
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Seattle stands out as an AI hotspot, largely due to a talent pool of engineers cultivated by the likes of Microsoft and Amazon as well as research institutions such as the University of Washington and the Allen Institute for Artificial Intelligence. And we’re not just talking about computer science and engineering majors.
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The average apartment occupancy rate in the U.S. rose to 96.2 percent in July, up 40 basis points from the year before, according to RealPage. That’s the highest the occupancy rate has been since 2000.
Average rents are also growing faster than inflation. “Annual rent growth for new resident leases is solid at 3.1 percent,” says Willett. But the high demand could be pushing rents higher more quickly, he notes. “Price growth isn’t pushing upward the same way that occupancy is.”
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Coliving, similar to a college dorm suite with common areas, is taking off as more renters warm to the concept as a way to combat pricey rents in Miami and other major U.S. cities. The amount of U.S. coliving beds is expected to more than triple from 3,700 to 13,000 over the next few years, according to Cushman & Wakefield. There are currently 9,300 coliving beds under construction in the U.S. as growth in apartment rents outpace wage increases.Click here to edit the content
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Total project size, including the parking, is around 145,000 square feet. The 80 parking stalls will be both underground and structured. A retail/commercial bay with about 1,000 square feet will go on the building's south prow, toward Leary Way.
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The freeze-up in business confidence, caused in part by the trade war, could wind up affecting consumer confidence.
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“Not only do we believe our business model mitigates the pressures of an economic recession, we also believe that our model could position us well in a downturn,” according to the filing. “An economic downturn may provide us an opportunity to further scale our platform at more attractive unit economics.
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Investors are spooked by a scenario known as the “inverted yield curve,” which occurs when the interest rates on short-term bonds are higher than the interest rates paid by long-term bonds. What it means is that people are so worried about the near-term future that they are piling into safer long-term investments.
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Essentially, workforce housing often appeals to those residents who earn too much income to qualify for subsidized affordable housing accommodations, but not nearly enough to satisfy the necessary income thresholds to purchase a home or rent the luxury apartments that have proliferated in recent years — a segment of the population that is only growing.
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You’d be hard-pressed to find a city in the Puget Sound region that isn’t getting increasingly more expensive to rent in. Locales from Everett all the way down to Lakewood saw sizable year-over-year increases in median two-bedroom rent in August. The latter saw the highest increase of any city in the Seattle metro area, sitting around 4.5 percent, three times the national average.
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Moving into 2020, Millennials desire flexibility not only in common areas but in resident units. Specifically, we’re seeing a shift from closed off, formal rooms to open-concept floor plans that allow plug & play for different concepts while accommodating multiple life and family stages. For example, the formal dining room with the classic chandelier lighting is considered all but dead in redevelopment. Residents prefer the blending of functionality and entertainment with the kitchen opening up to the living room or the dining room doubling as a study.
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The national average multifamily rent rose $3 to $1,469 in July 2019, while year-over-year rent growth rose to 3.4%, up 10 basis points from June. According to the latest Yardi Matrix Multifamily National Report, this marks the 13th month in which rent has risen over 3% on a year-over-year basis.
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“A growing number of architecture firms are reporting that the ongoing volatility in the trade situation, the stock market, and interest rates are causing some of their clients to proceed more cautiously on current projects,” the group’s chief economist says.
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Modera Broadway, under construction along Broadway at East Howell Street, will feature 228 apartment homes in two buildings – including 10 live/work homes – and 9,125 square feet of retail space
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The planned 53-story tower would have 568 units and 104 parking spaces on five underground levels.
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Cloudvue would be even larger than Elev8, with about 4.1 million square feet (up from 3 million square feet).
The plan includes about 1.7 million square feet of offices. About 515 “high income” residential units are planned, but whether condos or rentals isn't specified. About 40,000 square feet would be for retail, restaurants and public space.
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“We’re in the middle of an amenity war, and brand-new properties hold the high ground,” says Sanders, who operates 1,749 apartment units across 11 communities, which are 40 years old on average. “Technology is one area where we can get the upper hand because it’s relatively easy to retrofit units with smart home systems.”
By installing features like smart locks, thermostats, lights, and door and window sensors in those existing units, Sanders has been able to gain her own ground in that amenity war, in the name of higher rents—a bump of 4%, on average, for those units.
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Commercial real estate industry leaders continue to see balanced and stable economic market conditions, according to The Real Estate Roundtable’s 2019 Q3 Sentiment Index. The latest survey registered a score of 50, a one-point decrease from the previous quarter. Both the Current-Conditions Index of 53 and Future-Conditions Index of 48 for this quarter remained the same from the previous quarter, reflecting the stabilized real estate market conditions and the overall economy.
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The north end of the former Pemco headquarters block, at 330 Yale Ave N. in the Eastlake/South Lake Union neighborhood, has sold for $28.3 million, according to King County records.
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Seattle has led in the amount of micro-housing developed since 2009. As of the third quarter of last year, Seattle had a total of 6,297 SEDUs, most of which range from between 240 to 320 square feet, according to the report by Jerrid Anderson of Kidder Mathews
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Meanwhile, technology firms continue to be the single biggest occupancy driver, representing 22 percent of all leasing activity in the second quarter, he notes. “As much as growth is broad, there is noticeably unusual growth in a few tech markets,” Anderson adds, citing as examples Seattle, the San Francisco Bay Area and Austin, Texas, which are among top 10 metros for highest office space absorption. “These cities are always ahead of the pack, but this cycle they’re very far ahead.”
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