As the CEO of the Orange County chapter of the Building Industry Association of Southern California, Bryan Starr is in a unique position to see where development stands in the county and where it is headed. The BIA of Southern California is a non-profit trade association representing nearly 1,000 companies employing over 100,000 people affiliated with the home-building industry. And, as Starr tells GlobeSt.com, much of the home-building today is in the multifamily sector. Here's what he recently told GlobeSt.com about the state of development today and his outlook going forward.
GlobeSt.com: Multifamily is one of the few bright spots in development these days. Why is that?
Starr: Multifamily will be one of the key drivers in home construction in Southern California over the next few years. The primary reason behind the boost in multifamily is a result of consumer demand projections in areas with higher priced homes. Understanding that interest and demand for housing in Southern California will always be high, investors are betting that limited access to consumer financing and decreased confidence in home ownership will push demand into the rental housing market.
GlobeSt.com: Can you compare and contrast what the development climate is like in Orange County these days in comparison with other parts of Southern California or even California and the US?
Starr: Orange County is a unique market. I predict that Orange County is poised for recovery in advance of surrounding areas. The unemployment rate is lower than in most Southern California counties. The OC economy isrelatively robust due to the number of high-paying jobs within a diverse group of industries. As a result, our development climate is relatively healthy compared to the rest of the state and seems anxious to accelerate the production of housing.
GlobeSt.com: Orange County is pretty much built out, isn’t it? What does this mean for the availability of development sites and the cost of land?
Starr: This is a common misconception. Beyond the tens of thousands of units that are currently planned in OC cities, there are numerous opportunities for growth in nearly every area of the county. In fact, cities are constantly updating general plans and housing elements to create opportunities for reuse and revitalization. Many jurisdictions welcome creative ways to redevelop their aging housing stock. For the keen land acquisition eye, opportunities in Orange County are bountiful. It is true that land costs are higher in here than elsewhere, but the consumer market can generally support it.
GlobeSt.com: Southern California is known as a place where entitlements are difficult and in some cases nearly impossible to obtain, at least in some jurisdictions.
Starr: The virtual halt of residential construction, as a result of the economic downturn, has had a profound impact on cities and counties. BIA has long touted the positive economic effect of housing. It was not until it stopped that governments finally understood the importance of residential construction to the overall health of their municipal budgets. Local governments are doing all they can to encourage a restart of residential construction. Many cities in Orange County have partnered with the BIA to reduce fees, defer the collection of construction fees, and streamline approvals in an attempt to bolster activity.
GlobeSt.com: Transit-oriented developments including multifamily projects are very popular these days. How practical is the goal of these high-density projects in a place like Southern California with a limited public transit infrastructure?
Starr: It's true that TOD and mixed use developments are a hot topic right now. Municipal planners and academics love the idea of housing next to transit. The problem is there is very little in the way of public transit in Southern California. There has been no real public investment in public transportation and with the decline in gas taxes as a result of more fuel efficient vehicles, it is not likely that transit will be sufficiently funded in the foreseeable future.
GlobeSt.com: What can government officials do to encourage these TODs, or for that matter, other types of housing development?
The truth is, investors will only build in a location that pencils with a product that the market demands. In order for a meaningful recovery to begin, government needs to remove barriers to development. That includes overcoming their desire to legislate design product type.
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