The Sutton (Fremont Place) | 185'-0" | 17 Floors | Complete

[johnliu]

Originally Posted by jaxg8r1

There have been numerous reports about how development is slowing down and how the affordable housing provisions are not delivering the units needed. Most of the buildings under construction now went through the permitting/review/design process years ago.

The reality is for more affordable housing, either supply needs to go way up or demand needs to go way down. I'm guessing demand isn't going to go down anytime soon but roadblocks to creating supply will definitely causes pricing pressures to escalate. That is what is so insanely frustrating about this and other asinine Portland policies. We are well on our way to becoming a boutique city where people in skyscrapers demand the city not allow other people to live in skyscrapers next door for silly reasons.

This project had zero "affordable" units; it was entirely "market rate" units. So its denial does not reduce the supply of affordable units; it leaves the property available for a future project that does include affordable units.

[cityscapes]

Originally Posted by johnliu

This project had zero "affordable" units; it was entirely "market rate" units. So its denial does not reduce the supply of affordable units; it leaves the property available for a future project that does include affordable units.

That's not exactly true. The people who would have otherwise rented in this building are now going to look elsewhere and put a burden on older lower priced properties that now target them and rent for more just because they can. This is what pushes out people who would need lower priced options in Portland. The market is good at delivering at the higher end, but now that the government has withdrawn from constructing below market rate housing more pressure is placed on the existing housing stock to provide for everyone. Read this on the process of "housing filtering".

[Leo]

Originally Posted by jaxg8r1

There have been numerous reports about how development is slowing down and how the affordable housing provisions are not delivering the units needed. Most of the buildings under construction now went through the permitting/review/design process years ago.

The reality is for more affordable housing, either supply needs to go way up or demand needs to go way down. I'm guessing demand isn't going to go down anytime soon but roadblocks to creating supply will definitely causes pricing pressures to escalate. That is what is so insanely frustrating about this and other asinine Portland policies. We are well on our way to becoming a boutique city where people in skyscrapers demand the city not allow other people to live in skyscrapers next door for silly reasons.

Yeah, with the sheer amount of housing coming online in the Slabtown District, I'm not even remotely worried about it. Discounts have already started to appear, and most of those buildings aren't even open yet.

If the only way we can get affordable housing is to overbuild luxury housing during a boom, have the owners go bankrupt when the boom turns to bust, and then have those apartment buildings spiral downward, then we're doing it wrong.

In my mind, the only value the developer really adds is the kind of coordination that this one failed to pull off. The design, architecture, building, and financing is all the work other people. So I'm not particularly sympathetic to the claim that a developer finds it hard to coordinate work in Portland.

[jaxg8r1]

Originally Posted by cityscapes

That's not exactly true. The people who would have otherwise rented in this building are now going to look elsewhere and put a burden on older lower priced properties that now target them and rent for more just because they can. This is what pushes out people who would need lower priced options in Portland. The market is good at delivering at the higher end, but now that the government has withdrawn from constructing below market rate housing more pressure is placed on the existing housing stock to provide for everyone. Read this on the process of "housing filtering".

This.

The reality is this city needs tons and tons of apartments, townhouses, houses, etc in all price ranges.

[jaxg8r1]

Originally Posted by Leo

Yeah, with the sheer amount of housing coming online in the Slabtown District, I'm not even remotely worried about it. Discounts have already started to appear, and most of those buildings aren't even open yet.

If the only way we can get affordable housing is to overbuild luxury housing during a boom, have the owners go bankrupt when the boom turns to bust, and then have those apartment buildings spiral downward, then we're doing it wrong.

In my mind, the only value the developer really adds is the kind of coordination that this one failed to pull off. The design, architecture, building, and financing is all the work other people. So I'm not particularly sympathetic to the claim that a developer finds it hard to coordinate work in Portland.

I respectfully disagree. When other developers see how stupid this situation is, and they will, this will cause them to think twice about investing in building in Portland. No wise person in real estate would do otherwise. Prices will rise because of this until such a point that the new price points will cover the risk of projects getting stopped because the city council desperately wants Portland to be a small town.

FYI, Im not pro developer in any sense either. I just think that most people that are capable of investing 10s of millions of dollars in 17 story buildings on the riverfront probably have a pretty good sense of what the market is capable of bearing. If there wasn't a demand for this, it wouldn't have gotten very far along. Just my $0.02.

[johnliu]

The apartments in this building would have been, what do you think, $3500/mo for 2 bd?

One less building of $3500 units makes supply just a bit tighter for $3500 units - but supply there isn't tight at all - there is a glut of such units with free rent offers, discounts, falling occupancy. See the Oregon Square discussion.

An "affordable" at 60% MFI 2 bd apartment is about $1,000/mo. More or less supply of $3500 units does not "filter" down to increase or decrease supply of $1000 units. Totally different markets. That's like saying not enough view houses for sale in the West Hills is driving the trailer park market in Gresham.

[AdamUrbanist]

Originally Posted by johnliu

An "affordable" at 60% MFI 2 bd apartment is about $1,000/mo. More or less supply of $3500 units does not "filter" down to increase or decrease supply of $1000 units. Totally different markets. That's like saying not enough view houses for sale in the West Hills is driving the trailer park market in Gresham.

Sometimes it’s easier to appreciate this phenomenon in reverse. Without an adequate supply of luxury units those $1,000 units could quickly “filter up” into much more expensive housing. Those with the most resources can always out bid lower income residents so unless you’re giving them something new to spend their money on, they’re come for my relative bargain of a rental. In San Francisco even the most atrocious apartments rent for a huge premium (even accounting for the area’s high income) because the city has so ferociously resisted new luxury housing. I’ll concede that unobstructed river views mean these particular apartments will filter down less dramatically than others, but that’s hardly the point. Not every building has to filter down to trailer park status to make progress on the housing shortage.

[AdamUrbanist]

I would also add this rather entertaining analysis:
http://cityobservatory.org/how-luxury-housing-becomes-affordable/

[2oh1]

Originally Posted by AdamUrbanist

Not every building has to filter down to trailer park status to make progress on the housing shortage.

What?! Trailer park status? Surely that's not what you think of the people who serve you in restaurants or assist you in the library, or stock the shelves at your grocery store or do any of the other jobs that make your way of life possible.

It's not about trailer park status. Wow that's offensive.

It's about making sure Portlanders can afford to live in Portland.

[johnliu]

Originally Posted by AdamUrbanist

Sometimes it’s easier to appreciate this phenomenon in reverse. Without an adequate supply of luxury units those $1,000 units could quickly “filter up” into much more expensive housing. Those with the most resources can always out bid lower income residents so unless you’re giving them something new to spend their money on, they’re come for my relative bargain of a rental. In San Francisco even the most atrocious apartments rent for a huge premium (even accounting for the area’s high income) because the city has so ferociously resisted new luxury housing. I’ll concede that unobstructed river views mean these particular apartments will filter down less dramatically than others, but that’s hardly the point. Not every building has to filter down to trailer park status to make progress on the housing shortage.

The evidence is that there is indeed a more than adequate supply of "luxury units" built and being built in Portland. Hence the record breaking crane counts, discounts, free rent offers, rising vacancy rates, and delayed projects.

There is not a generic "housing shortage" here. The situation is a growing oversupply of luxury housing and a growing shortage of affordable housing.

That's referring to MFD rental. Different dynamics in condo and SFH.

[2oh1]

Originally Posted by johnliu

The evidence is that there is indeed a more than adequate supply of "luxury units" built and being built in Portland. Hence the record breaking crane counts, discounts, free rent offers, rising vacancy rates, and delayed projects.

Exactly this (above), and especially this:

Originally Posted by johnliu

There is not a generic "housing shortage" here. The situation is a growing oversupply of luxury housing and a growing shortage of affordable housing.

It's hard to even have a discussion about affordable housing because the term Affordable Housing has been co-opted to mean Housing For The Poor. And while there is a lack of housing for the poor, there's also a lack of housing that's affordable for anyone who isn't wealthy. The wealthy have more housing options than they even want at this point and more are on the way as developer after developer goes after the top of the market and older buildings go upscale to keep up.

There is not a housing shortage in Portland.
There's a glut of housing for the rich and a housing shortage for the rest.

[jaxg8r1]

Originally Posted by johnliu

The evidence is that there is indeed a more than adequate supply of "luxury units" built and being built in Portland. Hence the record breaking crane counts, discounts, free rent offers, rising vacancy rates, and delayed projects.

There is not a generic "housing shortage" here. The situation is a growing oversupply of luxury housing and a growing shortage of affordable housing.

That's referring to MFD rental. Different dynamics in condo and SFH.

Question: What if these were built and they didn't rent out. What options do the owners then have?

If indeed we've built too many luxury apartments then they'll have to lower their pricing, no? Just as you say is happening (hence the discounts, free rent, etc that lower the pricing). And Im guessing that a developer or investor willing to put up 10's of millions of dollars better knows what they can get as a return on the investment (ie rent and vacancy rate) than anyone on this forum...

At the end of the day, there is absolutely no economic case to be made (based on construction, labor and land costs) that anyone can build a brand new building and charge rent prices that were in Portland 10 years ago. I think we all wish that were the case but its not. In my mind the solution is to build build build, and then build more. That should keep the rents in existing buildings from rising too fast.

[AdamUrbanist]

Originally Posted by 2oh1

What?! Trailer park status? Surely that's not what you think of the people who serve you in restaurants or assist you in the library, or stock the shelves at your grocery store or do any of the other jobs that make your way of life possible.

It's not about trailer park status. Wow that's offensive.

To be clear, I didn’t mean trailer park status as a derogatory term, I think living in a trailer is a perfectly dignified option. I was referring to Johnliu’s point that trailer parks rent at a different price point than waterfront high rises. In retrospect it would have been more accurate to say trailer park price point. (Though of course there is significant variation in prices between trailer parks).

[AdamUrbanist]

Originally Posted by johnliu

There is not a generic "housing shortage" here. The situation is a growing oversupply of luxury housing and a growing shortage of affordable housing.

There is an undersupply of capital ‘A’ Affordable housing. (Meaning subsized housing) The tax reform bill dramatically undercut the value of the tax credits used to build most affordable housing at the same time that the affordability mandates for many of the Affordable projects built in the late 80’s and early 90’s is expiring. It is a real problem and it’s why things like the housing bond passed by the city and the one proposed by metro are so important. But Affordable (subsidized) housing only lowers housing costs for the people who live in it. It doesn’t help us make progress on the separate issue of overall affordability. That issue needs to be solved by adding supply in excess of demand.

There’s nothing built into the walls that makes luxury housing luxury housing. It’s luxurious (in terms of price point) because it’s both desirable and rare. Building an over supply of it is exactly how we make sure that housing moves down market as it ages. That doesn’t happen over night and that’s frustrating. But it’s clear in the big picture, when you compare growing cities with different housing policies, the ones most permissive of new housing have the lowest costs while the most restrictive cities have the highest housing costs. There is an extensive body of economic research on this topic.

[urbanlife]

Originally Posted by subterranean

Washington County is seeing a lot more urban-style infill development, especially in downtown Beaverton and nearish to MAX stops (the massive Baseline 158 development near Nike, for instance). I don't know if this has any direct correlation to the inclusionary zoning in Portland or if it's just indicative of the market as a whole. All I know is I'm seeing a lot more units coming online that don't look like your stereotypical garden style suburban apartment complexes.

I wouldn't read too much into that, the Westside has been a hotspot for development due to the tech growth, so it is expected for them to see so much new development.

[RED_PDXer]

Originally Posted by AdamUrbanist

There’s nothing built into the walls that makes luxury housing luxury housing. It’s luxurious (in terms of price point) because it’s both desirable and rare. Building an over supply of it is exactly how we make sure that housing moves down market as it ages. That doesn’t happen over night and that’s frustrating. But it’s clear in the big picture, when you compare growing cities with different housing policies, the ones most permissive of new housing have the lowest costs while the most restrictive cities have the highest housing costs. There is an extensive body of economic research on this topic.

I think the term being thrown around these days is "Naturally Occurring Affordable Housing" (NOAH). If there's a glut of "luxury" housing, there's less incentive for landlords to renovate their buildings and charge exorbitant rent. Thus, naturally occurring affordable housing remains in place. It's basically just aged apartments. I've seen enough Househunters International to see how picky folks are about apartment brand new amenities and choosing whether or not to pay the extra rent.

[58rhodes]

Originally Posted by RED_PDXer

I think the term being thrown around these days is "Naturally Occurring Affordable Housing" (NOAH). If there's a glut of "luxury" housing, there's less incentive for landlords to renovate their buildings and charge exorbitant rent. Thus, naturally occurring affordable housing remains in place. It's basically just aged apartments. I've seen enough Househunters International to see how picky folks are about apartment brand new amenities and choosing whether or not to pay the extra rent.

very true!

[AdamUrbanist]

On Wednesday, Portland’s city councilors tripped over one another to spell out their disagreements with a lineup of Northwest Portland homeowners who objected to the height of a proposed new apartment tower.

Then the council unanimously voted to give the anti-housing activists exactly what they had been asking for: no new homes on the site.

continues at Medium

[BrG]

Originally Posted by AdamUrbanist

continues at Medium

Well written article/opinion piece. The Council's behavior here appears incredibly provincial and deeply short sided. I wasn't personally in love with the proposed building, but blocking it for reasons not even pursued by those that appealed the design commission's decision to approve it.... I mean... what in the actual eff? Then cutting off the chance to revise the proposal by sending the project back to staff/design commission for revisions (there is precedent for that), is astonishing. The write-off on this deal for the developer alone, is likely well into the 7 figures.

The message this sends to those interested in pursuing land development within the city, is terrible. I can say first hand, it's very de-stabilizing. It's incredibly costly and hard enough to get design entitlement in the city. Finding surety in each project entitlement schedule is essential when it comes to financing/lending.

This only makes developers want to find sites elsewhere.

[maccoinnich]

Portland doesn’t really want to make housing affordable



Nominally, at least, the Portland City Council is all about housing affordability. They’ve declared a housing emergency. In the last general election, City voters approved a $258 million bond issue to build more affordable housing. The Council has made permanent a city ordinance requiring landlords to reimburse tenants for moving expenses if they pursue a no cause eviction, or if the tenant moves after a 10 percent rent increase.

But ultimately housing affordability in the Rose City, as everywhere, hinges on whether enough supply gets built to accomodate the growing demand for urban living. And the city’s zoning code and project approval requirements are where the proverbial rubber meets the road in terms of expanding housing supply. And in a series of recent actions, the Portland City Council is effectively sabotaging the supply of new housing in a way that will ultimately worsen the city’s affordability problems.

...continues at City Observatory.