As short-term renters plan vacations, technology can help property managers ensure everyone’s comfort.

When the pandemic hit and effectively shut down much of the nation, it seemed clear that no one would be going on vacation anytime soon. But after several months of quarantine, many parts of the country are slowly opening—and people are ready to get away.

Earlier this year, 53% of people had scheduled a summer vacation(link is external), with the majority planning to drive to their destinations, according to a survey by the Out of Home Advertising Association of America. Most vacationers aimed to avoid big cities(link is external) and instead visited beaches and rural areas, according to a report from Destination Analysts.

The rebound in vacation planning has mostly been good, but risks still remain for both short-term renters and property managers. In light of the ongoing pandemic, property managers must go out of their way to reassure customers that their properties are clean and safe.

While cleanliness has always been an important factor in rental properties, people want to feel that property owners are doing more than dusting the surfaces. They want to know what protocols have been implemented to protect them from COVID-19. While a thorough disinfection process can help tenants feel safer and more at ease, it’s not the only action property managers should take to protect their properties.

Several steps can help reassure visitors even beyond the pandemic. Here are four technologies—and one more straightforward suggestion—to ensure everyone feels protected:

1. Keyless entry. Smart-home technologies that allow for keyless entry remove a shared point of contact—the key—and allow guests and staff members to enter residences without the need for in-person interactions. Direct-to-home check-ins are safer options that also happen to be more convenient for renters and managers.
2. Smart thermostats. Smart thermostats digitally alert managers and renters of any heating or cooling issues, allowing maintenance to be scheduled and taken care of while guests are away. Managers can also run their HVAC systems remotely before renters arrive to make the space more comfortable, or they can flush air through a high-grade filter, adding another element of cleanliness.
3. Property operations dashboards. If you’re using a property automation platform, dashboards can help track the cleaning process—a crucial part of keeping renters safe. These tools can notify the cleaning staff as soon as guests check out, which allows them to clean immediately without the risk of coming into contact with renters. As a bonus, this means subsequent guests can check in early.
4. Smart security systems. Smart cameras and security systems can not only ensure the safety of renters but also continuously monitor properties during the offseason. Modern smart security systems provide more features than just cameras: They offer motion detectors and contact sensors that can recognize open windows and other potential vulnerabilities.
5. Proper PPE. While it’s less tech-focused than the rest of this list, personal protective equipment is indispensable. Make sure you have enough PPE available for your cleaning staff, and equip them with cleaning supplies proven to kill the coronavirus. You need to be able to say with confidence that you’re doing everything you can to keep renters safe, regardless of how much technology you employ.

The Vacation Rental Housekeeping Professionals and the Vacation Rental Management Association have released more rigorous cleaning protocols(link is external) in response to COVID-19. These guides offer great starting points for taking care of your property.

While COVID-19 has put safety concerns in the spotlight, keeping short-term rental properties safe and clean should be a permanent priority. These features always drive guest enjoyment and provide added peace of mind. By using technology to create safer and cleaner rental properties, you’re taking care of the people who make your business possible— and doing your part to stop the spread of the virus.

©National Association of REALTORS®
Reprinted with permission

Changes to city policies, zoning, and leasing agreements are needed to accommodate the altered commercial landscape brought on by the pandemic.

3 Takeaways:

• Cities are reevaluating policies and zoning laws to help retailers do business during the pandemic.
• Evolving business models are necessary to accommodate consumer behavior.
• Changes to lease structures will help ensure tenants can afford to stay long term.

For the past eight months, independent retailers, big-box chains, and restaurants have grappled with the ongoing pandemic and its effects on brick-and-mortar locations. Retailers of all kinds have had to improvise, pivot, and change amid everything from shutdowns and restrictions to changes in consumer behavior. Meanwhile, cities have been given new insights into how zoning and policies affect a business’s ability to weather crises.

The city of San Francisco, a vibrant community of multiple neighborhoods—each with its own distinctive flavor of retail—has been hit particularly hard by the COVID-19 pandemic. According to a recent Yelp Economic Impact Report(link is external), San Francisco has the third-highest number of retail and restaurant closures in the United States. Only New York City and Los Angeles have seen more businesses shut down.

A panel discussion at the 2020 Urban Land Institute Annual Symposium focused on the inevitable changes needed for brick-and-mortar retail to survive in an age of never-ending uncertainty. The discussion was led by Sheila Nickolopoulos, a senior planner with the city of San Francisco; Laura Sagues Barr, senior vice president of CBRE; and Laurie Thomas, executive director of the Golden Gate Restaurant Association.

As a result of mandates meant to curb the spread of coronavirus, restaurants are currently able to use 25% of their indoor dining spaces to seat patrons. Similarly, local businesses are allowed only a small number of patrons indoors. This has forced owners to pivot to new ways of serving their customers: via curbside pickup, delivery, and outdoor seating and selling.

At the beginning of the pandemic, though, restaurant and retail owners could not use the sidewalks in front of their stores, nor adjacent open spaces or parking spaces for seating or selling products. This, Thomas said, caused significant problems in the retail sector’s ability to evolve as quickly as it needed in order to stay open and serve customers.

The problem, Thomas said, stemmed from city policies that require thousands of dollars in fees and what she called an “arduous permitting process” that could take months. But restaurant owners did not have months to weather the pandemic while waiting on the proper permitting, and most did not have the cash flow to pay the necessary fees.

Policy and Zoning Changes Are the Future

San Francisco has long known that it’s time for a close look and overhaul of retail-related policies, which Nickolopoulos said do not reflect the current retail environment. The city already had plans to reevaluate its policies, but the coronavirus accelerated the process.

A task force composed of city and community leaders came together in an effort to figure out what immediate changes were needed to help businesses survive the pandemic. One resolution that came out of the task force is the Shared Spaces Program, which streamlines the process of allowing restaurants to quickly pivot to outdoor dining, a move Thomas said provides a necessary—but temporary—lifeline for restaurants.

The city continues to work with small businesses and restaurants to make doing business during the pandemic as easy as possible.

Lease Structures Are Changing

The ability to keep a brick-and-mortar retail space open depends on a number of factors: cash flow, business costs, rent prices, demand, and more. The pandemic interrupted cash flow for most businesses in San Francisco and beyond. Also, the retail sector had been dealing with rising rent costs and steady increases in the price of doing business. This combination of factors has made it more difficult for retail and restaurant establishments to make a profit, forcing many businesses to close.

For existing and new businesses, a change in deal structures will likely be needed to ensure tenants can afford to stay long term.

Sagues Barr, who works with many commercial retail investors, said those changes are coming down the pike. The good news, she said, is that she’s seeing an uptick in investors who are ready and able to invest in becoming landlords.

Still, for commercial leasing to be a viable source of revenue for investors, they need tenants to fill the space. Given the pandemic, the investors understand the need for flexibility in deal structures, and Sagues Barr is seeing an implementation of new leasing terms. She identified three deal structures evident in the commercial space:

1. Straight percentage deals for the term of the lease.
2. A set base rent with a percentage structure set for a period of time.
3. Percentage structure for the term of the lease (typically 18 to 24 months) that has a base rent reset based on sales.

Flexibility Is Critical

All three panelists agreed that for commercial sectors to survive the pandemic and beyond, flexibility is nonnegotiable.

From a policy perspective, Nickolopoulos said, this means making short-term changes to accommodate current commercial needs—like the Shared Spaces Program—and looking at current policy that prohibits businesses from pivoting as needed. Long-term fixes will also be necessary to make it easier for businesses to make money.

Retail establishments and restaurants will need to find new, innovative ways to get their product to their customers, Thomas said, which means revolving business models to accommodate consumer behavior and working with the city to break down barriers that prevent businesses from doing just that.

Landlords will also have to take a short-term risk for what’s hopefully a long-term win, said Sagues Barr. She also emphasized the importance of landlords and tenants coming to agreements that work for all parties involved, which means agreements might have to evolve into something new.

The Takeaway

Cities overall are resilient, which is a positive. The brick-and-mortar shopping experience isn’t going anywhere, but it is changing in myriad ways, which means commercial real estate brokers, agents, and investors will have to keep a close watch on many factors. Everything from city policy to leasing agreements will likely change in some way to accommodate the new normal brought on by the pandemic.

Because the United States is still in the midst of the pandemic, it’s hard to predict what the future of commercial real estate will look like. This isn’t the time to gather data on vacancies or business health, said Nickolopoulos, because right now, retailers, investors, and cities alike are simply focused on staying afloat.

©National Association of REALTORS®
Reprinted with permission

With some calling for the repeal of like-kind exchanges, practitioners show how the misunderstood provision can be a boon for communities.

Key Takeaways:

• Section 1031, in place since 1921, allows investors to defer paying capital gains taxes on the sale of investment property as long as the proceeds are invested into a similar (“like-kind”) property.
• Some policymakers and politicians view 1031 exchanges as a way for large investors to dodge taxes rather than defer them, but such claims fail to recognize that most participants are “mom and pop” investors and the transactions rarely lead to a permanent tax deferral.
• A high percentage of like-kind exchanges, as many as 88%, ultimately result in taxable sales. Removing 1031 exchanges entirely would reduce federal revenue and reduce other related economic activities.

Chances are that if 10 people walking down a city street were asked what a like-kind exchange is, nine of them would not know. But the truth is, those transactions are key to keeping communities vibrant.

Now this long-standing part of the tax code that greatly affects real estate, Section 1031, is at risk of being eliminated, an action that some researchers and advocates, including the National Association of REALTORS®, say would have adverse consequences for communities and their economic development. President Joe Biden has proposed doing away with Section 1031 like-kind exchanges to fund services for children and the elderly. Those are worthy services, to be sure, but eliminating like-kind exchanges of real property, which have been available to investors since 1921, won’t accomplish the goal and will hurt the economy, according to new research.

Some policymakers and politicians view 1031 exchanges as a way for large investors to dodge taxes rather than defer them, but such claims fail to recognize that most participants are “mom and pop” investors, and the transactions rarely lead to a permanent tax deferral. Common criticisms of the provision have been countered by recent research by David C. Ling, professor of real estate at the University of Florida, and Milena Petrova, an associate professor in the finance department at Syracuse University. Ling and Petrova analyzed 816,000 commercial property transactions with a median sales price of $1.1 million (not adjusted for inflation) from 2010 to 2020 provided by the commercial data giant CoStar. Among their conclusions:

• The share of like-kind exchanges ranged from 10% to 20% of all commercial real estate transactions and involved mostly smaller deals.
• A high percentage of like-kind exchanges, as many as 88%, ultimately result in taxable sales. Removing 1031 exchanges entirely would reduce federal revenue and reduce other related economic activities.
• Eliminating real estate exchanges likely would reduce transactions in most commercial real estate markets and prices in some markets, at least in the short run.
• Elimination also would probably decrease capital investment on acquired properties and increase investment holding periods and the use of leverage to finance acquisitions.

The researchers found that 1031 exchanges significantly benefit not only commercial real estate owners and operators but also the economy in general. By deferring tax liabilities, exchanges can help preserve scarce investment capital that investors can use to acquire larger properties, upgrade portfolios, and make capital improvements. Those activities create jobs and expand state and local governments’ tax bases.

1031 exchanges also make commercial real estate, which is highly illiquid, more marketable. Increased liquidity is especially important to non-institutional investors in inexpensive properties, who account for most of the like-kind exchange market. And at a time when housing shortages persist in many markets, 1031s offer a viable option for investors interested in transforming underused or vacant commercial properties into multifamily and other residential developments.

The provision is of vital importance to many REALTORS®. Between 2016 and 2019, 68% of all commercial REALTORS® had at least one 1031 exchange transaction, according to NAR research. In addition, 12% of sales by commercial members were 1031s, as were 5% of sales of residential-focused members. More than 90% of NAR members expect property values would fall if 1031s were repealed.

As lawmakers debate the future of this critical yet often misunderstood tax provision, this up-close look at two transactions shows plainly how 1031 exchanges provide major economic benefits to communities as well the investors behind them.

From Eyesore to Welcome Sight

Craig Fernsler’s 95-year-old client knew she wanted to use a 1031 exchange to invest in a replacement property in 2014, but she did not know how to go about it. She had sold a farm in Williamsport, Pa., to a company that wanted to build a plant there. Of the $4 million purchase price, a little under $2 million had gone into a passive investment for her.

“My immediate goal was to find out what the client and her family’s risk tolerance was and what they were really looking for,” says Fernsler, ccim, senior director at KW Commercial in Blue Bell, Pa. “That gave me the direction I needed to search throughout the country for a replacement property.”

What Fernsler found in 2014, and the family chose, was an investment in a new corporate-guaranteed Wendy’s fast-food restaurant in Chicago.

“There were minimal risks,” Fernsler says. “If there’s only five years left on a lease, you’re going to have risk that the tenant will leave in five years. This was a brand-new 15-year lease with increases in rent that Wendy’s would pay my client. And Wendy’s would take care of snow removal, lawn care, and any repairs and maintenance. The [client’s] kids knew this Wendy’s would be staying in business.”

Although the investment risk was minimal, the property had a long and complicated past. “A dilapidated warehouse on the site had to be torn down,” Fernsler says. The building had been vacant for years and was occupied by a range of businesses dating back to 1924, including an auto repair shop, a tool and die manufacturer, and an acrylics factory.

Fast-food chains often attract developers and investors using 1031 like-kind exchanges, Fernsler says. The redevelopment process is complex, involving environmental cleanup and government approvals. It typically takes at least two years. Some chains use a list of approved developers who handle their projects. Investors who are older or have owned residential rental properties may opt for a 1031 exchange investment that generates passive income because they do not want the hassles that come with actively managing a property.

The developer for this project commissioned an environmental site assessment in 2012 that found a 550-gallon underground gasoline storage tank on the property and volatile organic compounds related to a storm sewer detention structure. When it was determined that the groundwater and soil were contaminated, the developer hired a company to oversee removal of the storage tank and collect samples for testing. Eventually, more than 4,200 tons of soil were removed and disposed of in accordance with environmental safety requirements.

Beyond remediation of the property, the cleanup hugely benefited the community, Fernsler says. “Think about the economic vitality added with cleaning up the area. Nobody was working in that run-down warehouse for years, but then employees were working at Wendy’s, in a clean environment.” The restaurant opened at a time when new condo and apartment complexes were emerging, drawing more people to the area, and creating more activity and traffic to nearby businesses.

In addition, the overall redevelopment has generated a lot of employment and significant tax revenue over the past seven years, Fernsler says.

“I worked with an attorney and a title company. The developer hired people to construct the building,” he adds. “Engineers were hired, as well as a surveyor, an attorney who took the project through the approval process with the municipality, and the municipality attorneys. Everybody that touched this was paying regular income taxes. And transfer tax was paid when the transaction happened. This kind of transaction creates a chain reaction, but if you take away 1031s, the chain breaks. If these transactions were done more, it would be a beautiful thing.”

Mall Rejuvenation

When a grocery chain pulls up stakes, the results can ripple through a community for years. That situation began in 2013, when Safeway announced it was closing its Dominick’s Finer Foods stores in the Chicago market, including three locations in suburban Naperville, Ill.

One of those Dominick’s properties anchored a shopping mall called Fox Run Square. “Grocery stores are probably one of the safest types of anchored shopping center,” says Christine Jeffries, president of the Naperville Development Partnership. But the older centers “tend to get dog-eared toward the end of their life and need reinvestment and modernization. Owners typically say, ‘We can’t sell this property for a reasonable price, because we’re going to pay too much in capital gains.’ So, they just sit on the property.”

Not so with the owners of Fox Run Square. The 35 investors strategized with Rahul Sehgal, chief investment officer at Inland Private Property Corp., and moved forward. Bradford Real Estate Corp. bought the mall for $25.6 million in 2014. By using a 1031 exchange, the investment group was able to defer capital gains taxes. Without it, investors would have held onto the property and tried to renegotiate with the bank, says Sehgal. “Our investors did not have the nearly $30 million of additional capital that the developer spent. Even if they had come up with that kind of money with our assistance, that property would have sat vacant for a long time.”

Beyond benefiting the investors and the buyer, the deal led to the construction of a new Mariano’s grocery store on the Dominick’s site in 2016. Most of the mall’s tenants, primarily small businesses, stayed on, continuing the employment and services they had long provided the community. “It’s about keeping and supporting the small businesses,” Sehgal says. “The benefit to the neighborhood is the survival of some of the smaller tenants. You can’t support them unless you have an anchor, no matter how loyal a base they have.”

1031s offer a viable option for investors interested in transforming underused or vacant commercial properties into multifamily and other residential developments.

The two other former Dominick’s properties in Naperville followed a different trajectory. After both were leased by Albertsons Companies, one was still unoccupied in 2020, and the other only recently became home to an Amazon Fresh store. Jeffries said the dark buildings took a toll on the community. “We started seeing a lot of vacancies [nearby]. Albertsons was paying rent, but there wasn’t the same traffic, the same vibrancy you would have had if a grocery store had occupied there immediately. People want to go where there’s business, where the lights are on.”

In addition to supporting small businesses, 1031 exchanges help communities generate sales tax and property tax, Jeffries explains. “Pre-pandemic, Naperville took in more sales tax than property tax. The more sales tax communities bring in, the less property tax they need to bring in. Any time you can reduce your property tax levy by bringing in more sales, residents are happy.”

Today the mall is thriving. “You can go to that Bradford center early Saturday morning, and people are going to the Ace Hardware, the Mariano’s, the UPS Store. They’re getting their hair done,” Jeffries says. “Every single space is filled.”

©National Association of REALTORS®
Reprinted with permission

After one of the swiftest economic declines in history at the start of the COVID-19 pandemic, the U.S. economy has experienced a significant recovery that began in the third quarter of 2020 and is continuing into 2021, experts said on Friday at the Commercial Economic Issues and Trends Forum. The panel discussion during the virtual REALTORS® Legislative Meetings(link is external) explored the implications of the recovery for commercial real estate, predicting that hospitality, retail, multifamily, and industrial are likely to see gains this year. Even the office sector, which has been plagued with higher-than-average vacancy rates, is showing signs of potential.

Personal income is up 10.7% year over year, said Lawrence Yun, the National Association of REALTORS®’ chief economist, and personal savings is up an astonishing 302% for the same period. Considerable capital is likely to be pumped into the economy, he said, with consumers eager to tap into a year’s worth of savings and what remains of their stimulus funds. “If we look at potential, it’s even greater than we could have expected,” said Yun. “We’re looking at ‘revenge’ spending, where people have been stuck at home, saving up money, and now they can go out again.”

Online retail sales have been booming, Yun stated, reaching a peak of $871.2 billion 2021 in February—up from $676.4 billion in April 2019—while in-person sales at department stores have declined slowly but steadily from January 2000 to February 2021, falling from just over $200 billion to approximately $100 billion. Yun indicated that there could still be some potential for recovery for department stores. “It remains to be seen if people are willing to get back into stores,” he said. “They have savings, and now they want to go out again. Let’s see how things play out.”

Yun noted that consumers are still showing caution in their spending on hotels, restaurants, and recreation-based businesses like theaters and live sports, though the general trend is positive. He predicted that the continued easing of pandemic-related restrictions across the nation could help. “The numbers are showing that vaccinations are making progress,” said Yun. “So, going to restaurants, going to recreation, games, all of that could begin to burst out.”

Yun predicted that apartment rent prices, which had been decelerating during the pandemic, will trend upward, noting that while rents have declined in gateway cities like Seattle, Boston, and San Francisco, 93% of smaller metro areas have seen an increase in rent prices as of April.

While the increase in rents is good news for housing providers, Yun does add the caveat that an increase in rent prices could contribute to an increase of pressure on consumers, which combined with other factors, points to an ongoing rise in inflation.

The economy is fully back, Yun stated, but jobs are still lagging, and the U.S. will need 8 million more jobs to reach pre-pandemic levels. At the same time, gasoline prices are up 22% from a year ago, Yun said, adding that consumer price inflation has risen above 2%. In addition, producer prices on construction materials, such as cement, aluminum, and copper, are all likely to rise as the economy strengthens, he said.

“Inflation could possibly stay stubbornly high above 2%,” said Yun, adding that inflation impacts commercial real estate practitioners through mortgage rates. “The mortgage rate can rise if inflation continues to pick up and remains high,” he explained.

Another area of potential concern is office vacancies. Even though workers are returning to the office, he said, and the percent of workers who are telecommuting has fallen to 21% as of March—down from a high of 35.4% in May 2020—more than half of NAR commercial members reported in the first quarter of 2021 that more companies are leasing smaller offices with shorter-term leases of two years or less. “People are becoming cautious about leasing,” said Yun.

Industrial warehouse and land, however, remain bright spots for commercial, Yun noted, showing an increase of 2% and 3% respectively in sales volume year-over-year in the first quarter of 2021.

Overall, Yun forecast GDP growth of 4.5%, job gains of 4 million, and consumer price inflation of 2.7% for 2021. He also predicted vacancy rates of 6.2% for multifamily, 4.8% for industrial, 13.0% for retail, and 16.7% for office for the year.

John Worth, executive vice president for research and investor outreach with Nareit, shared Yun’s optimism on the outlook for commercial real estate in 2021, noting that REIT funds invested in the relatively new sector of digital real estate, which includes cell towers, data centers, and logistics facilities, have performed particularly well. “This is not our parents’ or our grandparents’ commercial real estate,” Worth said. “CRE is changing as the economy changes.”

Worth noted, as Yun did, that telework is impacting office vacancies and causing companies to re-evaluate their use of office space. “I think work-from-home is going to be the single largest outstanding question for commercial real estate coming out of COVID-19,” said Worth.

However, he also maintained that there is a lot of potential in office, predicting a rebound in the sector after a period of experimentation, during which companies try out different ways to organize office space and employees. “One thing a lot of organizations are going to learn is that it’s critical to get younger employees who need to build relationships together in a physical space,” he said. “I am very bullish on the prospects for the future of offices.”

©National Association of REALTORS®
Reprinted with permission

Opportunity zones—federally designated areas that are ripe for investment and revitalization—are benefiting from the housing boom, too, as they see prices increase to the likes of more affluent places. In the first quarter of 2021, 75% of opportunity zones with sufficient data saw median home prices rise annually. Two-thirds of them saw prices rise by at least 10%, according to a new report from ATTOM Data Solutions.

Opportunity zones were established by Congress in the Tax Cuts and Jobs Act of 2017. They offer investors a chance for tax breaks in exchange for making long-term investments in the revitalization of low-income federally designated neighborhoods nationwide.

“Some of the country’s poorest neighborhoods continued riding the long national boom in home prices during the first quarter of the year, reaping increases that pretty much matched those in more affluent areas,” says Todd Teta, chief product officer with ATTOM Data Solutions. “Those ongoing gains emerged in the latest price data showing values in designated opportunity zones rising at about the same pace, or even more, than in other communities.”

Still, home values inside these zones remain quite low compared to the rest of the U.S., Teta notes. “But they are far from immune from the boom,” he adds. “That shows continued interest among home buyers in marginal areas and continues to bode well for the redevelopment that opportunity zone tax breaks are designed to promote.”

About 43% of the opportunity zones tracked by researchers still had median prices of less than $150,000. A year ago, however,, that percentage stood at 50%. The Midwest continued to offer the highest number of opportunity zone tracts with a median home price of less than $150,000 at 68%, followed by the South (51%), the Northeast (43%), and the West (8%).

The states with the largest percentage of opportunity zones where median prices rose annually during the first quarter of 2021 included: Arizona (where median prices are up 84% year-over-year in these zones), Idaho (83%), Oregon (83%), Nevada (82%), and Michigan (82%).

©National Association of REALTORS®
Reprinted with permission

The median rent in the 50 largest metros nationwide increased 2.7% year over year, the largest growth since the beginning of the COVID-19 outbreak, according to a new report from realtor.com®. The nation’s largest tech hubs are seeing some of the biggest rebounds in rental prices as more technology firms announce return-to-the-office plans.

The U.S. median rent in April averaged $1,483, the fastest growth since March 2020. Prior to the pandemic, rents were growing 3.2% annually.

Rents for two-bedroom units are seeing the most growth, now surpassing pre-COVID-19 growth rates—up 5.2% annually, realtor.com® notes.

Rents in the largest tech hubs saw prices fall the most in 2020 due to the growth of remote work. Rents in tech hubs are still down 5.4% from a year ago but that marks an improvement from a 6.6% decline in February, realtor.com® notes.

“In tech centers, rent declines are getting smaller, signaling they are on the path to turnaround,” says Danielle Hale, realtor.com®’s chief economist. “If the trend continues, renters could expect to be paying pre-pandemic rates by as early as this fall.”

The median rent in the nation’s largest tech hubs was $2,086 in April, up 1.1% from March. Still, rents continue to be lower in the largest tech centers like San Jose, Calif. (-12.5%); San Francisco (-10.9%); and Seattle (-7.35). But the declines are lessening, researchers note. On the other hand, Denver and Austin, Texas, are leading the rental market recovery among tech hubs. The median rent in Denver is up 2.2% and is up 1.7% in Austin annually.

“Overall, the U.S. rental market is beginning to return to pre-pandemic levels,” says Hale. “With the largest growth occurring outside of major cities, renters are encountering different scenarios depending on the market in which they are searching and size of the unit they are looking for.”

©National Association of REALTORS®
Reprinted with permission

A new housing development going up in Valencia, Calif., is setting out to be the largest net-zero community in the nation—potentially the world, CNBC reports. More than 21,000 homes will be part of the new community and it will have no carbon footprint.

The development, which is being built by FivePoint(link is external), will include 21,500 homes on 15,000 acres. Major builders like Lennar, Toll Brothers, Tri Pointe, and KB Home will be building in the community, which will include multifamily buildings, affordable housing, and commercial space as well.

To achieve net zero, the homes will have solar panels and have electric vehicle chargers in garages. Each home will have a high-performance attic that aims to reduce the need for air conditioning, heating, and ventilation. All irrigation will use recycled wastewater. The community will have shared electric vehicles—like scooters and e-bikes.

The homes will be priced between $400,000 to more than $1 million. Valencia is about an hour from downtown Los Angeles.

The developers hope the community will serve as a model for other real estate developments in navigating environmental zoning and finding ways to build in a more environmentally friendly way.

“I believe this will be a step forward,” Emile Haddad, CEO of FivePoint, told CNBC. “And our hope is that a lot of people will actually start imitating and start raising the bar higher.”

John Burns, CEO of John Burns Real Estate Consulting, believes it will. “A lot of my clients are saying we’re looking for ESG (environmental, social, governance), and developments like this are going to attract capital, so you’re going to see more people doing developments like this so they can get the capital,” Burns says.

©National Association of REALTORS®
Reprinted with permission