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Local Land Use Decisions, NIMBYism Are Leading Causes Behind Southern California’s Lack of Housing Production Across Price Levels

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Region is Further Behind Other Locations in Developing Lower-Income Housing; New Study Recommends Zoning Based on Existing Demand 
April 11, 2019— RIVERSIDE, Calif. (www.ucr.edu) — Local land use and zoning laws, as well as opposition to development by residents, are primary obstacles to building badly needed housing across Southern California, according to a new analysis released today by the UCR School of Business Center for Economic Forecasting and Development. The report examines Southern California’s progress under the state’s Regional Housing Needs Assessment (RHNA), which mandates how many and what types of housing units each jurisdiction in California needs to allocate and plan for in order to meet local housing needs at all levels of affordability.
Compared to all jurisdictions in the state, Southern California turns in an ‘average’ performance in terms of complying with RHNA’s reporting requirements but that is not indicative of average or more housing production. The analysis examines the Southern California Association of Governments’ jurisdiction under RHNA, which includes Imperial, Los Angeles, Orange, Riverside, San Bernardino, and Ventura Counties. To date, across these areas, less than 30% of the housing units mandated by RHNA for all affordability levels have been permitted for building.
“Because of the sheer size of the region, that statistic helps to illustrate just how chronically behind most jurisdictions in California are in terms of developing new housing,” said Adam Fowler Director of Research at the Center for Economic Forecasting and one of the report authors. “We’re now halfway through the current 8-year RHNA cycle and ideally would want to see a number closer to 50%.”
Fowler and his co-author Hoyu Chong a Senior Research Associate at the Center, emphasize that the Southern California region studied in the analysis is especially critical because it is home to more than 70% of the state’s population.
Given the dominant share of residents who live in the region, and California’s acute housing shortage, it’s particularly problematic that the analysis finds the area is further behind in producing low- and moderate-income housing. In fact, the only housing units that have seen significant progress, and are closer to meeting the RHNA mandate, are units that are affordable for those with above-moderate-income levels. Across the six-county Southern California jurisdiction, more than half (52%) of these units have been permitted compared to just 9% of very-low-income, 9% of low-income, and 16% of moderate-income units. Looked at another way, 77% of all the housing units permitted within the region under the current cycle have been for the above-moderate-income level despite the fact that just 42% of the units mandated by RHNA are allocated for that level.
The same general pattern persists in all of the six counties except Imperial, where just 4% of housing units for above-moderate-income households have been permitted versus 30% for moderate-income households. Los Angeles County has the worst imbalance, with 5 out of every 6 housing units permitted falling within the above-moderate-income level, even though just 3 out of every 7 housing units mandated by RHNA are allocated for that level.
According to the analysis, the key reasons behind the lack of housing production across income levels, but especially among lower-income units, include local opposition to development and local zoning and land use laws that are simply not conducive to developing affordable housing. Within the Southern California jurisdiction, for example, the median minimum lot size is bigger than in the rest of California. Moreover, both the minimum and maximum number of single-family homes allowed per acre is lower, and the minimum unit size is considerably bigger.
“There are some really fundamental obstacles facing Southern California and jurisdictions across the state in terms of developing smaller, denser, less expensive housing,” says Fowler. The study’s authors argue that local jurisdictions should take steps that include redefining housing needs, developing zoning regulations based on existing demand, and aligning housing development with projected demographic changes.
The new report follows an analysis released by public policy group Next 10 that examined all the state’s RHNA jurisdictions and found most to be behind in permitting new homes and significant numbers not participating in the reporting process at all.
The complete analysis, California’s Housing Crisis: Goals and Production in Southern California, is available here.
The UC Riverside School of Business Center for Economic Forecasting and Development is the first major university forecasting center in Inland Southern California. The Center is dedicated to economic forecasting and policy research focused on the region, state, and nation. Learn more at UCREconomicForecast.org

The Inland Empire Business Journal (IEBJ) is the official business news publication of Southern California’s Inland Empire region - covering San Bernardino & Riverside Counties.

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Commercial Real Estate

CBRE Completes $6.3 Million Sale of 25-Unit Multifamily Community in Fontana, California to Private Local Buyer

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CBRE announced the sale of a 25-unit multifamily community in Fontana, California to a local private investor for $6.3 million.

Eric Chen, Blake Torgerson and Hunter Wetton of CBRE represented both the private seller and private buyer in the transaction.

Located at 8919 Mango Ave. in Fontana, the property, built in 1973, offers a mix of one-bedroom, two-bedroom (townhouse-style), and three-bedroom floorplans with an average unit size of 787 square feet. Units feature high speed internet access, air conditioning and heating, and kitchen appliances. Property amenities include on-site laundry, carport and surface parking, secure entry gate and lush landscaping.

“This 25-unit property is a quality asset with substantial value-add upside potential in one of the best performing cities of the Inland Empire,” said Torgerson. “The property has historically performed well and is poised for future rent growth as the new owner plans to strategically renovate the interior and exterior of the property.”

He added, “This was a transaction in which our team negotiated seller financing, allowing the seller to achieve their target pricing while simultaneously enabling the buyer to immediately cash flow.”

The community is walking distance to Veterans Park, Chaffey College Fontana Campus and various restaurant options. It is also near Kaiser Hospital Fontana, the Fontana Metrolink Transit Station, retailers and Interstate 10.

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Commercial Real Estate

Progressive Real Estate Partners Arranges $6.5M Sale of Land for New Home Development in Upland, CA

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COMMERCIAL REAL ESTATE TRANSACTION ALERT

Progressive Real Estate Partners, the leading SoCal Inland Empire retail real estate brokerage firm, announced the sale of 4.84 acres of land at 1400 E. Arrow Highway in Upland, CA for $6.5M in an all-cash transaction.

The Landmark Company, which is a SoCal based real estate investment and development company, purchased the land and has partnered with Century Communities to build the Rose Glen residential development.

The neighborhood will feature 64 two-story single family detached homes with two-car attached garages for an overall density of 13.2 dwelling units per acre.  The homes are approximately 1,540 square-feet and will feature a Spanish Colonial and Santa Barbara architectural style. Additional neighborhood features will include open space to accommodate play areas, picnic tables, fitness stations and barbeque areas.  Grading is projected to start in July with the first Rose Glen homes being available in the 2nd quarter of 2024.

Progressive Real Estate Partners’ Senior VP Paul Galmarini and Investment Land & Sales specialist Chris Lindholm represented both the Inland Empire based private-party seller and The Landmark Company in the transaction.

Century Communities, Inc. is a publicly traded (NYSE: CCS) top 10 national homebuilder, offering new homes under the Century Communities and Century Complete brands. The Colorado-based company operates in 18 states and over 45 markets including several developments in Southern California’s Inland Empire.

According to Galmarini, “Although the land was zoned light industrial the City of Upland had identified the area as being well suited for residential based on the adjacent uses and proximity to schools and other amenities. With the current housing shortage and California mandates to build more homes, cities across the Inland Empire are being very pro-active to identify new residential opportunities. The rezoning and entitlement process took approximately two years and during that time we worked closely with Landmark to obtain the necessary approvals.”

Lindholm added, “Rose Glen will be an excellent addition to the Upland community and offer prospective homebuyers a great opportunity to acquire a new home with modern interior features and convenient amenities. The property is also just a short distance from Downtown Upland which is undergoing a revitalization and features a variety of shops and restaurants with several new eateries opening this year. Additionally, the Downtown Upland Metrolink train station provides residents easy travel options between San Bernardino and Los Angeles.”

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Commercial Real Estate

CBRE Arranges $27.7 Million Sale of Meadows Village Center, a 67,336 SF Center Anchored by Regional Grocer Barons Market, Wells Fargo, Palomar Health, and others in Temecula, Calif.

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Multiple Bids Validates Continued Investor Demand for High-Performing, Grocery-Anchored Retail

CBRE announced the sale of Meadows Village Center, a 67,336-square-foot neighborhood grocery-anchored center featuring Barons Market and CVS Pharmacy (not a part of the sale) in Temecula, California, to Newport Beach, California-based investor, RA Centers, for $27.7 million.

Jimmy Slusher, Philip Voorhees, and James Tyrrell of CBRE’s National Retail Partners – West (NRP-West) represented the seller, funds managed by affiliates of Fortress Investment Group LLC, in the transaction. The buyer, RA Centers, completed a 1031 exchange from a property previously sold by NRP-West in Rancho Cucamonga, California.

Meadows Village Center is located at 31963 Rancho California Road on 7.98 acres in Temecula. The property is 96% leased, with a merchandising mix of 19 local, national, and regional retailers, including Barons Market, CVS Pharmacy (NAP), Starbucks, Wells Fargo, Palomar Health, Subway, Crumbl Cookies, UPS Store, and Pacific Dental.

“Meadows Village Center’s traditional grocery and pharmacy offering, suburban neighborhood location, recent renovations including upgraded signage, landscaping, common areas, and more, proved to support increasing tenant performance at the property,” noted Slusher.

“CBRE generated significant offer activity from private 1031 exchange buyers and professional investors, largely fueled by the established Temecula location, Barons Market’s recent lease renewal and the seller’s investment in the property,” continues Slusher. “This sale validates that investor demand for high-performing, grocery-anchored retail continues to drive competitive bid scenarios.”

Originally developed in 2006, Meadows Village Center serves residents of Temecula’s most affluent communities, along with visitors to the region en route to wine country properties accessible along Rancho California Road (22,550 CPD), connecting Meadows Village and Interestate-15 to the west.

Slusher, Voorhees, and Tyrrell, based in CBRE’s Newport Beach office, handle National Retail Partners retail investment assignments in the western states, including California, Oregon, Washington, Nevada, Arizona, and Hawaii, representing the most accomplished retail investors in the U.S.

The team’s ability to collaborate across CBRE’s multi-discipline platform enhances its role as strategic advisors to western U.S. clients in the disposition and acquisition of retail properties, and also ensures the delivery of superior results in today’s investment market. Long recognized as industry-leading investment experts, the NRP-West team continues to specialize in portfolio sales, anchored centers, strip centers, single-tenant assets, specialty retail projects, REO and Receivership assets, and parcelized disposition strategy opportunities.

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