Vegas Rail Receives Grant... Lawmakers Chase CEQA Reform... and Inventory Remains Tight
Local and market related news
Before we get into the news, I want to mention an 80 acre property that I am co-listing with Randy Coe of Land Advisors. I’m mentioning the property in this newsletter because I think there is an interesting trend visible in current land prices which is:
industrial land priced as if millions of square feet of space will be developed in the High Desert in the very near future. Specifically I mean well located industrial land selling for $7/sf and very speculative1 industrial land selling for $1.50/sf.
Land for other space types priced as if it is completely unaffected by the first point.
I have a hard time reconciling these pricing realities. It seems to me that the industrial boom, implied by current land prices2, will probably bring need for other space types. Housing for warehouse/construction workers, which would generate retail demand, etc.
You can download the marketing package for the 80 acres, which offers an opportunity to take advantage of this apparent pricing discrepancy.
I’ll be writing about this trend more in the future with some concrete examples to illustrate the idea. Until then here’s the latest news:
Market News
High-Speed Rail Stations to Connect Las Vegas and Rancho Cucamonga Metrolink Station in Hesperia and Apple Valley
- San Bernardino County Transportation Authority and Brightline West receive $25 million federal grant to build High Desert high-speed train stations.
- The project has potential to reduce commute times, increase job opportunities, and improve the quality of life for residents in the region.
Related:
Southern California Allocates $80 Million in State Grants for Transportation and Land-Use Projects (Source)
$25 Million Grant Awarded for California Passenger Rail Station Construction to Connect Las Vegas and Los Angeles (Source)
Brightline West awarded $25 million grant for two new intercity passenger rail stations in California's High Desert (Source)
California State Senator Scott Wilk Supports Reform of Environmental Quality Act, Benefits Local Infrastructure
- Senator Wilk voted in favor of several bills to reform the California Environmental Quality Act, making it easier to build key infrastructure projects in the state.
- Antelope Valley groundwater recharge project and rail line connecting High Desert to Inland Empire and Las Vegas are among the local beneficiaries of these bills, supporting constituents and the state's climate goals.
Related:
Inland Empire's Logistics Industry Drives Post-COVID19 Job Recovery with Second Highest Job Recovery Rate among 10 Largest California MSAs in January 2023 (Source)
California lawmakers set to speed up lawsuits for large projects, relax protection for wildlife species (Source)
California Governor Rejects Idea of Mass Exodus from the State
- Governor Newsom says California's performance is better than states like Mississippi, West Virginia, and Louisiana
- Despite desirable benefits, more Californians are moving out than moving in, with the state losing 343,000 net domestic migrants in 2022
Newly-built homes in high demand as resale market offers few options
- Mortgage applications for new homes increased 16% from last year and 8% from April to May
- Sales of newly-built homes jumped by 12.2% in May and are 20% above year-ago levels, as more homebuyers turn to new homes due to the shrinking inventory of previously-owned homes.
US Housing Inventory Drops Below 2022 Levels Before July 4th
- Active listings grow by 5,848 compared to 30,940 in the same week last year
- Despite rising mortgage rates, third week of positive purchase application data
$11.5 Million Awarded to Transportation Projects in Riverside County
- Five transportation projects in Riverside County to receive $11.5 million in state funds for further development
- Funds made available under a $237 million Caltrans Housing & Development award, with the largest allocation being $3 million for the Riverside County Transportation Commission's transit study.
American Renters' High Rental Payments Could Spell Trouble for Real Estate Investors
- American renters are paying an average of 30% or more of their income for rent, putting them at risk of being rent burdened.
- This trend could potentially harm the profits of real estate investment trusts (REITs), as their main strategy is to raise rents and increase the value of their assets through appreciation.
Thriving industrial real estate market creates challenges for tenants and buyers
- High demand and low vacancy rates drive up rental rates and purchase prices
- Northeast Ohio region also impacted with difficulties in finding suitable space for growth
Blackstone sells $3.1 billion industrial real estate portfolio to Prologis
- Blackstone's opportunistic funds sell $3.1 billion worth of its industrial real estate portfolio to Prologis Inc.
- The move suggests continued resilience in the industrial/warehouse sector, which has seen year-on-year growth, even as many commercial sectors suffer in the current environment.
US construction spending rises in May driven by rebound in housing market
- Spending on construction projects rose 0.9% in May, beating analyst expectations.
- Private construction projects, led by residential construction, saw the highest spending increase of 11%.
New all-electric homes in Menifee offer glimpse of zero-emission future
- Durango and Oak Shade at Shadow Mountain communities offer all-electric homes without natural gas hookups or appliances
- Homes feature rooftop solar panels, heat pumps, induction cooktops, smart electrical panel, battery storage system, and will soon be connected to a shared community battery storage facility. These homes start around $520,000.
National CORE Begins Construction on Affordable Housing Project, Oak View Ranch, in Murrieta
- 200 apartments to be built for families and seniors earning less than 60% of the area's median income
- Phase one includes 119 homes, with an estimated completion in spring 2025, while phase two consists of 81 senior homes with a completion in fall 2025, supply chain and labor issues may affect the timeline.
LRE unveils first standalone battery energy storage system in California
- LRE has launched its first standalone battery energy storage system (BESS) in California, capable of storing over 500 MWhs of clean power
- The Antelope Valley BESS is located adjacent to LRES's solar and storage Rabbitbrush and Chapparal Springs projects, and is designed to enhance grid reliability and meet stringent safety requirements while creating approximately 70 union jobs during peak construction
Related:
Ormat Technologies to Build Solar and Storage Project for San Diego Community Power in California (Source)
Where the land’s access to paved roads, and utilities is minimal or non-existent.
I say implied because it’s also possible that industrial land prices are simply wrong.