More than a year after Hurricane Katrina devastated New Orleans and the Gulf Coast, questions and confusion still reign in rebuilding plans for the city. A key sticking point: a HUD redevelopment program intended to remake public housing in the Big Easy.
In June, the agency announced that it would undertake an ambitious plan to redevelop New Orleans' public housing, including the reopening of 1,000 units within 60 days, raising the value of HUD disaster vouchers, and demolishing several housing projects. At risk: the C.J. Peete, B.W. Cooper, Lafitte, and St. Bernard projects, which endured moderate to severe damage from Hurricane Katrina. In their place, HUD proposes to use a mix of federal public housing funding, bond funds, and low-income housing tax credits to provide mixture of public housing, affordable rental housing, and single-family homes.
A skeptical group of public housing residents filed a civil rights lawsuit two weeks later, arguing that the Housing Authority of New Orleans and HUD are, thanks to the plan, essentially preventing poor families from returning to New Orleans. The suit–filed by Advancement Project, attorney Bill Quigley, attorney Tracie Washington, and the law firm of Jenner & Block–claims that HUD wants to keep low-income, black families out of New Orleans. It also says the local housing authority took no steps to repair housing units that could bring back many of the 5,146 displaced, predominantly black families. Instead, the suit claims it boarded up units and allowed only 880 families to return. Though Larry Schedler, a broker in New Orleans, admits there aren't many options for low-income families who want to return to New Orleans, he believes it would be a mistake to repair the damaged, aging public housing stock. "These are developments that were built under the [Works Progress Administration] program [during the 1930s]," Schedler says. "They're functionally obsolete. Although some of these structures look perfectly fine from the outside, there's mold and electrical issues. In the time you could retrofit these things, it's a lot better to knock this stuff down and put some nice, fresh housing up there."
But a dearth of housing may be not be the only thing keeping evacuees from returning to New Orleans, according to Lisa Blackwell, vice president of state and local strategic outreach and housing policy initiatives for the National Multi Housing Council. "If they've gotten a job, people are putting down roots in other places," she says. "That's a trend that we're seeing with the massive amounts of displaced people."
While housing remains a tremendous challenge for New Orleans' poorest residents, developers are starting to use tax credits to build workforce housing in areas near the city's central business district, which is above the flood plain. "All the activity is focused on tax-credit programs," Schedler says. "I have seen no conventional properties planned or coming out. The new construction has really been tax-credit deals."
–Les Shaver
Spa Specials
Luxury living has never felt better.
Sometimes the best vacation is spent relaxing at home. That will certainly be the case for residents of a new condo community being built in Singer Island, Fla. Estee Lauder Co.'s Aveda Corp., known for its destination spas and botanical beauty products, is launching its first residential spa community. The $500 million oceanfront property will offer 195 condo units (priced from $1.1 million to $5 million) and 96 hotel rooms, plus complete spa facilities to include in-house treatments, yoga therapy, homeopathic consultation, therapeutic massages, and more. "Today's lifestyle has improved to the point where people are really looking for what we call personalized luxury with integrated wellness in a day-to-day life, not just when they go on vacation," says Dilip Barot, president of Amrit Development, which is developing the Florida property called Amrit Resort and Residences. The target audience? Wealthy individuals who want to emulate the lifestyle of the mega-rich, says Barot. While these people can't afford a $10 million-plus oceanfront home, for $1.5 million (plus monthly condo dues and a la carte spa treatments), they can get oceanfront views plus all the lifestyle amenities of the rich and famous, he explains.
Barot plans to partner with Aveda to develop similar residential spa communities throughout the U.S. and the world. Others too are jumping on board with the concept. SpaFinder.com, a spa locator and informational Web site, has about 100 residential spa properties in its database compared to about 25 in 2005. A big leader in the trend: spa and wellness pioneer Canyon Ranch, which recently introduced its hotel-residence-wellness center concept dubbed Canyon Ranch Living. The first project is under construction in Miami Beach, Fla., and will open in 2007.
–Rachel Z. Azoff
Sunny Future
The U.S. population heads for warm weather.
It looks like Americans are en route to sunshine–and savvy developers won't be too far behind. The greatest future growth in the United States is likely to take place in the West, the Sunbelt area, and along the I-85 corridor between Raleigh, N.C., and Atlanta, according to a new population forecast study from The Wharton School at the University of Pennsylvania. The top three spots for growth: Maricopa County in Arizona, Los Angeles County, and Las Vegas' Clark County.
"People are becoming wealthier and looking for lifestyle and want to live in a nice area with better schools, better weather, and shorter commutes," says Albert Saiz, an assistant real estate professor at Wharton and co-author of the study, called Forecasting 2020 U.S. County and MSA Populations. It is based on a wide range of historical data, including the weather, past growth, share of foreign-born residents, demographics, taxation patterns, and new home construction.
So what areas of the country should developers eye with caution? The cold and damp Northeast, Mid-Atlantic, and Midwest are predicted to have the largest slow-down in their rate of growth.
–Rachel Z. Azoff
PLACES TO WATCH
Five most likely places for population growth:
- Maricopa County (Phoenix-Mesa, Ariz.)
- Los Angeles County (Los Angeles-Long Beach, Calif.)
- Clark County (Las Vegas)
- Harris County (Houston)
- Orange County (Calif.)
Five least likely places for population growth:
- Baltimore County (Md.)
- Oswego County (Syracuse, N.Y.)
- Herkimer County (Utica-Rome, N.Y.)
- Cayuga County (Syracuse, N.Y.)
- Chautauqua County (Jamestown, N.Y.)
German Vacation
Archstone-Smith buys a European firm.
Two years ago, Archstone-Smith, a REIT in Englewood, Col., began studying the European apartment markets. A year and a half ago, it sent Dana Hamilton, managing director of Archstone B.V. (its European subsidiary), to Amsterdam to get an up-close look at the market. So it came as no surprise when, in July, Archstone announced it was making a $649 million acquisition of a German company: Deutsche WohnAnlage GmbH (DeWAG).
The transaction consists of more than 6,100 residential units in some of Germany's most desirable metropolitan areas, according to Archstone, including Rhine-Main (Frankfurt/ Wiesbaden), Düsseldorf, Munich, Stuttgart, and Hamburg. The deal also comes with plenty of upsides. "Germany has the second-lowest homeownership rate at 43 percent," Archstone CEO R. Scot Sellers said in a July conference call with Wall Street analysts. "Rental rates are very low and quite affordable for the majority of the population, which provides significant room for future increases."
But rent control laws are tougher in Germany, which can handcuff landlords. "There are a lot of complex issues related to operating this portfolio," says Craig Leupold, a principal with Green Street Advisors, a San Diego-based independent research and consulting firm concentrating on publicly traded real estate securities.
But the DeWag deal does help Archstone-Smith accomplish three things in Europe: further establish a presence there, enhance its portfolio with a great collection of well-located residential assets, and benefit from the experience of a highly regarded European management team.
–Les Shaver
Executive Feedback
What's the most important piece of advice you've been given since you've been in the apartment business?
A: "Do what you say you'll do with a sense of urgency. You'll be the one people count on. But don't rest on your short-lived laurels. Continue to strive for success. Be recognized not for what you did, but what you will do." –Constance B. Moore, president and CEO, BRE Properties
A: "Work hard and give your best at any job that you are doing. Do not get caught up in the politics of the corporation, and treat all individuals you interact with as you would like to be treated." –Christine Freeland, CEO, Riverstone Residential
A: "Successful companies run on principles, execution, heart, and imagination. Be fair and professional with all constituents, including those on the other side of the table at negotiations." –Thomas W. Toomey, president and CEO, United Dominion Realty Trust A: "Since I deal primarily on the capital side of our multifamily investment fund business, the advice I took to heart was [to] always be transparent to your investors and deliver information ahead of bad news, and be temperate with good news, because situations change very quickly." –John Williams, managing partner of capital markets, Carmel Partners
Project of the Month
Santiago Street Lofts: Santa Ana, Calif.
Santiago Street Lofts has pushed the envelope in urban live/work developments. Located in Santa Ana, Calif., the project is considered the first transit-oriented live/work loft community in Orange County–but there's more to this project that meets the eye.
Santiago Street Lofts will feature 108 live/work lofts, allowing residents to live on two upper floors and set up shop at the ground level. But perhaps the most stand-out aspect of the community lies in its "B Occupancy" feature. B Occupancy allows residents at Santiago Street Lofts to pull city permits and make improvements to this commercial workspace. The use of roll-up storefront windows also expands the ground-level component. So for example, if a resident wants to open up a small coffee shop in their ground-level work unit, they can do so by opening the roll-up store front doors and placing tables on the sidewalk, drawing in business.
Rick Aiken, a senior principal at William Hezmalhalch Architects, which designed the community, says one of the toughest challenges was activating the sidewalk. The development was situated in a run down, non-vibrant location. Another challenge–the site was originally zoned for industrial use only. But zoning the lofts as a B Occupancy project and bringing in the live/work aspect helped the developers and designers overcome the site's land use challenges and rejuvenate the sidewalk.
The design of each unit minimizes traffic through the home, as the living spaces are separated from the businesses with the roll-up doors and stairway access to the second and third level. Lofts feel spacious with oversized windows and vaulted ceilings. Other design elements include exposed ductwork and pipes. Units range in size from 1,534 square feet to 2,292 square feet with two-car direct access garages. Prices start at $500,000.
Shared parking with an adjacent rail station highlights the project's urban-friendly lifestyle, allowing residents to explore other means of transportation. The community was built through a partnership with Miami-based Lennar Corp. and Santa Ana, Calif.-based Urban+West+Strategies, and William Hezmalhalch Architects.
–Abby Garcia Telleria