By Leslie Braunstein
Successful residential development requies customers, cost containment, and capital. In a Trends conference panel moderated by RCLCO’s Adam Ducker, local housing market trends and issues were discussed by JP Morgan’s Allina Boohoff, EYA’s Bob Youngentob, and James Nozar of The JBG Companies. Take-aways included the following:
- The harsh winter of 2013-14 drastically reduced traffic, sales, and rentals, but the market is improving along with the weather.
- While much of the new product is geared to millennials and single professionals, empty nesters comprise an untapped and little understood market.
- Empty nesters have longer buying cycles than younger customers, and are looking for larger units.
- “Loveable” places can be created in the suburbs as well as in urban neighborhoods; examples include EYA’s Mosaic District in Merrifield, VA.
- A vibrant retail mix is critical to the success of “loveable” communities. Developers no longer need to provide swimming pools and community centers; instead, they need to subsidize local retail gathering places such as Busboys and Poets.
- Developers are seeking ways to keep young couples from moving to the suburbs once they have children. While DC schools are improving slowly, New York City’s public schools have improved so rapidly in the last few years that developers there are building three- and four-bedroom condos, some with playrooms, to house growing urban families with young children.
- The Washington area has an abundance of rental units and a dearth of affordably priced condos.
- Entitlement cost has soared, with no end in sight, affecting the affordability of new housing product. This cost creates a high barrier to market entry, especially for developers without secure sources of capital – which is bad for them, but can reduce competitive threats for the developers who have the resources to win entitlements.