American cities need more homes

Restrictions are being lifted in New York City and elsewhere in the US to allow offices to be converted into apartments

On the edge of Manhattan’s financial district, a 1960s brutalist tower designed with narrow slits of glass to look like a computer punch card has been given a fitting facelift. Formerly occupied by back-office staff at JPMorgan Chase, the renovated building at 25 Water Street is America’s largest office-to residential conversion to date.

Apartments advertised for rent include studios starting from about $3,600 a month. And in a nod to the hybrid working era, for about $7,700 you can rent a studio with two home offices.

The 1,300-apartment building is among dozens of office conversions that New York City council hopes will help address the housing shortage.

In December the council voted in favor of the Yes for Housing Opportunity proposal, which would add 80,000 housing units beyond otherwise anticipated supply over the next 15 years. The policy includes lifting a restriction on converting offices built after 1961 into housing and moving the cut-off date to 1990 instead. Lawmakers in states across America are exploring quick fixes to boost the supply of housing.

Last year Arizona and Hawaii passed bills permitting vacant offices and other underused commercial space to be converted into homes. California, Hawaii, Massachusetts, Arizona and Rhode Island also passed laws allowing spaces such as basements, garages, attics and backyards to be turned into so called granny flats, or accessory dwelling units, to help increase the provision of affordable homes. Mark Zandi, chief economist at Moody’s Analytics, estimates America has a shortage of 2.8 million affordable homes.

Homelessness across the US rose by more than 18 per cent last year because of high housing costs, natural disasters and a rise in migration to large cities.

A survey in January last year for the US Department of Housing and Urban Development found that 770,000 people were in shelters, temporary housing or had no shelter, the highest number since the annual survey began in 2007.

Academics trace the country’s housing shortage back to the implementation of single-family zoning laws in the 1910s, which restricted certain areas to single family houses and prohibited the construction of apartment buildings and other properties such as factories.

The first such district was established in Berkeley, California, in 1916 to protect the neighborhood from infiltration by the working classes and ethnic minorities.

Jerome Powell, chairman of the US Federal Reserve, warned Congress last week that the central bank could not solve the affordable housing crisis simply by lowering interest rates.

President Trump has signed a presidential memorandum “to deliver emergency price relief for American families”. He ordered federal agencies to come up with proposals to drastically lower the cost of housing and expand supply.

Officials have been told to find red tape to cut that could lower construction costs and so make homes more affordable, and to review land-use policies to promote developments, such as higher density properties.

On this point, Trump has some shared beliefs with liberal politicians. After the devastating wildfires in Los Angeles last month, Gavin Newsom, California’s governor, signed an executive order suspending environmental reviews and ordering state agencies to identify regulations holding back construction.

Housebuilders have welcomed the move towards deregulation. However, they said the Trump administration’s decision to impose 25 per cent tariffs on all steel and aluminium products imported into the US would deter new development and frustrate efforts to rebuild after natural disasters. “Ultimately, consumers will pay for these tariffs in the form of higher home prices,” the National Association of Home Builders said.

Until regulatory reforms are implemented and building materials costs stabilize, more American city workers will be forced to consider creative housing solutions.

Source: The Times

Infrastructure delays may disrupt developers’ plans beyond Metro Manila

Further delays in mass transport projects may complicate property developers’ expansion plans outside the National Capital Region (NCR), as improved connectivity is a key factor in unlocking new growth areas, analysts said.

“One way to temper the lackluster demand in Metro Manila is to be more aggressive in expanding outside the capital region; developers are also hinging their expansion on these infrastructure projects,” Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said.

“These delays will likely stall the development strategies of developers outside Metro Manila,” he added.

Among the causes of delays in major mass transport projects are right-of-way (RoW) issues, budget constraints, and procurement and technical challenges.

“Infrastructure project delays may affect the credibility of the National Government in delivering economy-enhancing projects, which, in turn, could indirectly negate investor appetite for the Philippines,” Havitas Properties President and Chief Executive Officer Jonathan F. Caro said.

For instance, delays in the North–South Commuter Railway (NSCR) could affect key developments outside Metro Manila.

The Department of Transportation recently established a Flagship Project Management Office to accelerate the implementation of key mass transportation projects, including addressing RoW challenges.

Big-ticket projects under its monitoring include the NSCR, the Metro Manila Subway Project, the EDSA Busway Project, the EDSA Greenways Project, the Cebu Bus Rapid Transit, and the Davao Public Transport Modernization Project.

Both investor and buyer confidence rely on the timely delivery of public infrastructure projects, said Spike Alphonsus Ching, project director at PH1 World Developers.

“Delays or unmet expectations could erode confidence, particularly for developments meant to benefit from these projects. However, once these projects are completed, we expect a positive impact on the market, as enhanced connectivity unlocks new growth opportunities for both investors and property owners,” he said.

Delays in mass transport projects could also affect the development of luxury properties, which are primarily located outside the capital region.

“You can’t live there if you can’t get there,” Bill Barnett, executive director of Thailand-based hospitality consulting group C9 Hotelworks, said.

Mr. Barnett added that mass transportation infrastructure is necessary to further develop metropolitan areas in the countryside.

“For luxury real estate like branded residences, there is strong opportunity outside traditional areas like Makati, BGC (Bonifacio Global City), and the Bay Area, but the catalyst for change has to be a large-scale commitment to mass transport,” he also said.

Source: Business World

Building permit approvals continued to fall in January

Approved building permits continued to decline by record double digits in January, the Philippine Statistics Authority (PSA) reported.

The PSA, citing preliminary data, said building projects covered by the permits numbered 12,526 in January, contracting by 14.6% from 14,665 a year earlier.

This was the second straight month that construction starts fell. January’s decline was steeper than the revised 5% year-on year drop logged in December last year.

It was the largest decline to date since the PSA began tracking the indicator on a monthly basis in January 2024. Previously, approved building permits data were released on a quarterly basis.

Building projects in January covered a floor area of 3.72 million square meters (sq.m), up 29.5% from a year earlier.

Construction projects represented by the permits were valued at P48.58 billion in January, 26.1% higher from P38.52 billion a year earlier.

Reinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc. said that the decline in construction activity can be an indicator of a “waiting” behavior from developers as they expect rate cuts this year, which can help them save costs in financing these projects.

“I expect this behavior to change this year as rate cuts are seen underway and the price of construction materials has stabilized,” he said.

Last year, the Bangko Sentral ng Pilipinas (BSP) slashed benchmark rates by a total of 75 basis points (bps) since its easing cycle in August, bringing policy rate at 5.75%.

However, in February during its first policy meeting this year, the BSP kept its policy settings, surprising market expectations and at the same time signaled fewer rate cuts this year.

BSP Governor Eli M. Remolona told Bloomberg in a televised interview last March 19 that the central bank could still cut rates next month up to 75 bps if economic output weakens.

Headline inflation rose 2.9% in January, steady as December.

In February, inflation slowed to 2.1%, bringing the average inflation rate in the first two months to 2.5%, within the central bank’s 2-4% target.

Additionally, retail price growth in the National Capital Region (NCR) eased to 1.2% in January, its weakest pace in five months.

Construction materials retail price index (CMRPI) in January was slower than the 1.5% in December and 1.4% recorded in January 2024.

On the other hand, construction materials wholesale price index (CMWPI) also slowed to a record 0.1% that month, lower than the 0.2% in December and 1.5% a year earlier.

The CMRPI is based on 2012 constant prices, while the CMWPI is based on 2018 constant prices.

The PSA noted that residential had the highest number of constructions at 7,671 or 61.2% of the total number of constructions during the month.

However, this segment dropped 14.1% year on year. Residential projects were valued at P20.94 billion higher than the P16.35 billion in January 2024.

Single homes accounted for 89.5% of the residential category with approved permits contracting by 11.3% to 6,863.

Permits for apartment buildings fell by 35% to 708, while permits for duplex or quadruplex homes also went down by 13% to 80.

Nonresidential projects, on the other hand, slipped 4.3% to 3,138 from 3,278 from January 2024.

These projects accounted 25.1% of the total and were valued at P24.16 billion, 40.4% higher from a year ago.

Approved commercial constructions which made up 72.9% of the nonresidential category dipped by 3.1% to 2,288 from 2,362 in January 2024.

Institutional permits were also down by 0.6% to 480 while industrial permits fell 13.1% to 193.

Meanwhile, approved agricultural projects went down by 7.6% to 109 from 118 a year earlier. Other nonresidential projects contracted by 26.9 to 68 year on year.

Alteration and repair permits fell by 17% to 977 and were valued at P2.49 billion.

On the other hand, approved permits for additions, construction that increases the height or area of an existing building, surged 24.8% to 463 from 371 in January 2024.

Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had the most approved building projects, accounting for 26.2% of the total, with 3,279 construction projects, followed by the Central Luzon (1,314 permits) and Ilocos Region (1,135 permits).

The PSA said construction statistics are compiled from the copies of original application forms of approved building permits as well as from demolition and fencing permits collected monthly by the agency’s field personnel from the offices of local building officials nationwide.

Source: Business World