Monday, June 29, 2020

HFO Multifamily Marketwatch - June 29, 2020

This week: residential sales rebound, and roughly one-third 30 percent of office and industrial sales are moving forward despite the economic slowdown; and a warning of a second great depression without significant policy intervention.


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The Portland Business Journal reports that approximately one-third of worldwide office and industrial sales moved forward on schedule in May, while around 28% were put on hold, and 17.6% were canceled. Portland-based commercial real estate broker Mark McFarland says that while he has seen Portland-area transactions slow down, they have not come to a halt. He cautions that employers in the tech sector, which has been booming in Portland, may begin rethinking how their companies utilize office space. Typically, tech companies lease space in downtown areas where the price per square foot is high. But if the pandemic causes a shift toward remote work, these companies may re-evaluate whether the cost of renting prime office space makes sense.
Meanwhile, in Portland-area residential real estate, home sale activity started bouncing back in May. While there were fewer pending sales last month compared with May 2019, they were up 52.5% since April. In the Portland Metro Area, prices are up 1.2% year over year, and inventory is around 2.3 months.



Washington Governor Jay Inslee announced last week that masks or facial coverings will be required statewide.
The Governor’s order mandates that anyone over the age of 5 must wear face coverings when utilizing indoor or outdoor public spaces. In Yakima County, which has 6,435 reported cases of COVID-19, businesses will not be allowed to operate unless all customers wear face coverings. Companies that do not comply could lose their licenses. Washington residents who are at home with their family members, outside in places where they can maintain at least 6 feet of distance, or alone in their vehicles do not have to wear face coverings. People who are communicating with someone who is deaf or hard of hearing are also exempt from the mask requirement. Unlike the mandate in 7 Oregon counties, Washington’s mask mandate will be enforceable by police. Violations are classified as a misdemeanor, though Governor Inslee emphasizes that he would prefer not to enforce it.



The Oregon Legislature convened a special session last week to address the state’s pandemic response as well as issues with police brutality.
While the session will not address budget issues, the Governor has indicated that she may call for an additional session once a clearer picture of federal aid emerges. The majority of the pandemic response measures are currently housed in an omnibus package, though an extension of Governor Brown’s eviction moratorium was broken out into a separate bill, HB 4213. Governor Brown’s initial order barring evictions during the pandemic is slated to end June 30th, but HB 4213 would extend the moratorium until 90 days after the Governor ends the state of emergency. A proposed amendment to the bill would set September 30th as the end of the moratorium, and March 31st, 2021 as the date at which missed rents would come due. As in the Governor’s original moratorium order, landlords will be prohibited from charging late fees. The police accountability bills include provisions that would prevent arbitrators from overturning discipline against a police officer. The laws would also ban chokeholds, establish a database of officers who have been disciplined, and empower the Oregon DOJ to investigate police use of force cases. Further, officers would be required to intervene when they witness a colleague engaging in illegal misconduct. Finally, they would restrict the use of tear gas and other “less lethal” crowd control methods.
   
Portland Tribune – Legislative Session Focuses on Police Conduct, Pandemic After-Effects


Activists in Seattle’s Central District are calling on the City to keep its promises to the Black community and to work more proactively to increase rates of Black land ownership in the City.
In a speech earlier this month, K. Wyking Garrett, president and CEO of the Africatown Community Land Trust argued that the City has a responsibility to fulfill its promise to turn Fire Station 6 into the William Grose Center for Enterprise and Cultural Innovation. Although the City committed to this plan in 2016, since then, the station has sat vacant – it is primarily used as a place to park law enforcement vehicles. Spurred by sustained activism in the aftermath of the murder of George Floyd in Minneapolis, the City of Seattle announced on June 12th that it would transfer the fire station to the Africatown Community Land Trust. Garrett and a group of like-minded activists from the community have also established a campaign called “King County Equity Now.” They are calling for the county to hand over several vacant lots as well as a nursing home to the Black community. They are also advocating for a $500 million anti-gentrification land acquisition fund to increase wealth and opportunity for Seattle’s Black residents. Since it was established in 2016, the Africatown Land Trust has found that to fund projects, it has had to partner with white-led nonprofits and development companies. The Trust hopes to move away from these partnerships to better promote Black land ownership in the City.

CityLab – In Seattle, Protests over Racial Equity Turn to Land Ownership


Earlier this month, Oregon Governor Kate Brown announced that Multnomah, Clackamas, and Washington Counties would be considered a single region by the state as it determines when they can move into the next phases of reopening.
This would delay the move to Phase 2 for both Clackamas and Washington Counties, which moved into Phase 1 before Multnomah County. These counties are now pushing back against the Governor’s announcement, arguing that they should not have to wait for Multnomah County to move into the next phases of reopening. Clackamas County is now eligible to move into Phase 2, having entered Phase 1 over 3 weeks ago. After the Governor’s announcement, the Clackamas County Commission voted 3-to-2 to submit the county’s Phase 2 application. Board Chair Jim Bernard was one of the two “no” votes. He points to the recent spike in cases in Union County as an example of why they need to slow down reopening plans. Washington County has also voted to move forward with the reopening, and 13 business organizations located in the two counties have sent a letter to the Governor opposing her plan to treat the Metro area as a single entity.

Portland Tribune – Brown’s COVID-19 Region Opposed in Clackamas and Washington Counties

King County Assessor John Wilson announced that his office will be re-evaluating how private golf courses are taxed to raise the tax base and take some of the burdens off of homeowners and commercial landlords. They have effectively been subsidizing golf courses. According to the Seattle Times, land in the most affordable Seattle neighborhoods is taxed at a rate approximately 71 times the rate of these private golf courses. Also, tax rates are determined by dividing local government budgets by total appraised property values. Because private golf courses are assessed at such low amounts, in many cases, they are being paid for by people who aren’t able to utilize the courses. There are 28 private golf courses in King County, and appraised land value per square foot for these courses ranges from 13 cents to $2.50. In all cases, these rates are significantly below the estimated land value of single-family homes in the same zip codes. The Broadmoor Golf Course in Seattle has an appraised value of 76 cents per square foot. Single-family homes in the same zip code are appraised on average at over $141 per square foot. In Fall City, the Twin Rivers Golf Course is valued at 13 cents per square foot. It is in one of the most affordable areas of King County, where single-family homes are typically appraised at around $5.58 per square foot – nearly 43 times higher. Even public golf courses are assessed at a higher rate than private ones – Seattle’s four public golf courses are valued at between $12.50 and $62.50 per square foot. Local officials hope that increasing the taxes on privately run golf courses will generate more money for county programs and much-needed affordable housing.

The Seattle Times – Are Seattle’s Exclusive Private Golf Courses Getting a Huge Break on Property Taxes? Critics Say It’s Time to Recalculate


A new survey commissioned by the campaign of Mayoral Candidate Sarah Iannarone finds that while a large number of Portlanders have not yet made up their mind about the race, among those who have Iannarone and incumbent Ted Wheeler are running neck-in-neck.
35% of the 992 Portlanders who were surveyed between June 17th and 18th said they are not sure which candidate they will ultimately support in November. But of the 65% of voters who have made up their minds, 33% plan to vote for Wheeler while 32% back Iannarone. The survey showed that Iannarone’s biggest hurdle will be name recognition, while Wheeler’s most significant weakness may be likeability (or lack thereof). 41% of respondents disapprove of Wheeler’s job performance while only 30% approve. But while just 15% of those surveyed have an unfavorable opinion of Iannarone, 61% said they are not sure. In the same poll, Iannarone’s campaign asked potential voters about efforts to defund the Portland Police Bureau. 63% of respondents support reallocating funding from the police to communities of color. Just 22% are opposed.

Portland Tribune – Survey Shows Tight Race for Portland Mayor


Finally, The Atlantic reports that without policy intervention, the US may be heading toward a second Great Depression. Although there have been some signs that allowing businesses to reopen has boosted retail sales and let some people get back to work, these small rays of hope are unlikely to be enough to get the economy back on track in the near term. Atlantic Staff Writer Annie Lowrey predicts that the recovery will look more like the Nike “swoosh” logo than the V-shape some optimistic prognosticators were hoping for. The Congressional Budget Office has revised down expectations for economic output over the next decade by $8 trillion, indicating that a full recovery may be delayed until the 2030s. Economists are bracing for several consequences of the pandemic-related shutdowns, including a massive wave of business closures, state and local budget shortfalls, the ongoing health crisis, and a fiscal cliff that many households are already rapidly approaching. In March alone, nearly 40% of low-income workers lost their jobs. While the increased unemployment benefits and $1,200 stimulus checks provided a boost to a large number of families, they were not nearly sufficient for providing long-term stability in the face of a historic economic downturn. Between March and May, a total of 40 million people lost their jobs, while just 2.5 million jobs were added back last month. When increased unemployment benefits run out at the end of July, those most affected by it will be the households that can least afford it. Most high-income jobs can be performed remotely, and wealthier households have seen few layoffs. But poor and immigrant workers, who were shut out from federal stimulus, will be unable to feed their families or pay their rent without additional federal intervention. Also, this will occur at the same time that the number of COVID cases nationwide is surging, compounding the effects on businesses. Lowrey argues that the federal government must act now to prevent an economic catastrophe by extending unemployment insurance benefits, providing additional help to businesses, sending cash to low-income families, and providing financial support to state and local governments.

The Atlantic – The Second Great Depression

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