A city program created in 2010 to entice investors to build on contaminated old industrial sites has been blazingly successful in the last 18 months.
Families are choosing the celebrity enclave of Montecito, California, just east of Santa Barbara, as real estate prices reach historic highs. Since the pandemic began, young families from Seattle to Los Angeles have decided to call this seaside community of about 10,000 residents—and one of the nation’s wealthiest—home.
Riskin Partners Estate Group with Village Properties knows Montecito well after 17 years of racking up sales there. As Montecito’s top-selling luxury real estate team, they’ve seen the market evolve to where it is today.
Partner Robert Riskin drills down the demographics. “We have seen a significant demographic shift since the pandemic. The biggest change has been the increase in young families making Montecito their primary residence. Between January and July of 2020 versus the same time this year, Riskin Partners saw a 160% increase in the number of young families buying homes in Montecito.” These days many Montecito listings mention the coveted Montecito Union School District.
In 2020, Riskin Partners had a hand in 51 transactions, of which 22 included young families purchasing a property. So far in 2021, Riskin Partners has been involved in 32 transactions, of which 21 were young families buying a Montecito property. Comparing the number of young families buying in Montecito from Jan 1-July 1 of 2020 vs. 2021, Riskin Partners saw a 162.5% increase.
As the demographic has trended younger, prices continue to steadily rise. According to June’s Montecito Market Report, the average year-to-date sales price for single-family residences was $6,271,353. The latest numbers show 93% more properties have sold in Montecito this year than in 2020. Montecito properties range from around $4 million for a “needs updating” home to $72.5 million for a 28-acre compound.
“The Montecito market remains incredibly robust. Demand has not waned since early on in the pandemic, and yet we are at all-time lows for inventory,” observes Riskin Partner Jasmine Tennis. “This has resulted in a significant increase in pricing. In some cases, we have seen, an increase in 30 plus % over pre-pandemic pricing,” Tennis adds.
Oprah, Rob Lowe and Ellen De Generes (the latter being a noted Los Angeles and Montecito renovator) are among celebrities who enjoy life in Montecito. While the A-listers live in gated estates with eight-figure price tags, young families often gravitate towards “affordable” properties that offer a similarly laid-back yet sophisticated lifestyle.
Data from two Montecito schools, specifically a spike in 2021 enrollments, speak to the shift in demographics. Cold Spring’s current enrollment for the 2021-2022 school year is 191, and that number may change over the summer. In past years, the school’s enrollment was around 170 students. Montecito Union School began the 2020-2021 school year with 377 students and ended with 390.
“Overall, it’s just a really exciting time in the community. Having grown up here myself, it is fun to see the new and amazing energy coming into our small town. We are so lucky to have incredible outdoor activities between the beaches and mountains, our two Montecito Villages with great shops and restaurants. It’s a wonderful small town that has all of the amenities of a larger city,” Riskin explains.
Here’s what attracts these young families to Montecito, according to Riskin. “The consistent themes we hear are that people are prioritizing quality of life in the forms of being in nature, personal outdoor spaces, beautiful weather, lack of traffic, good schools, and distancing themselves from the hustle and stresses of larger city life. Couple this with so many companies allowing people to work remotely, Montecito is an incredibly attractive choice.”
One question for Montecito and similar luxury markets is what happens when pandemic restrictions ease and young parents must head back to the office? Riskin managing partner Dina Landi lends her thoughts. “People have now experienced what it’s like to live here, and it will be hard to give up. The beauty of Montecito is that it’s close enough to Los Angeles that you can commute there in 1.5 hours or grab a flight out of the charming Santa Barbara Airport, which is only 15 minutes away.”
There are daily flights to and from Santa Barbara originating out of Los Angeles, San Francisco, San Diego, Oakland, Portland, Seattle, Phoenix, Denver, and Las Vegas. If you fly private, take note of the two FBOs (private jet terminals) at the Santa Barbara Airport. Not surprising with all the celebrities that call Montecito home.
Village Properties is an exclusive member of Forbes Global Properties, a consumer marketplace and membership network of elite brokerages selling the world’s most luxurious homes.
After more than a decade in commercial real estate, John Zinati had settled into a comfortable career as a leasing manager at a well-known locally owned Ottawa firm and could have simply counted down the days until retirement.
Instead, he chose a different path. In 2016, he launched Zinati Realty, a boutique brokerage that serves mainly owners and landlords in the office, retail and industrial sectors.
Since then, Zinati has brought on two more brokers and is looking to expand his team further as the industry slowly works its way toward a post-pandemic future. Looking back on his decision to leave the security of an established firm for the uncertainty of life as an entrepreneur, he has no regrets.
“I was just faced with too many limitations, so I made the decision to go out on my own,” Zinati explains.
“Being nimble and quick and working closely with these owners to get their spaces filled or get their buildings sold is really rewarding.”
Zinati is one of a growing number of local real estate executives who’ve left comfortable, secure jobs at established big-name companies to start their own brokerages and advisory firms.
Many of these owner-brokers point to the freedom of being able to make their own decisions and do their own deals without having to answer to corporate bosses as a major factor in making the leap.
“I think commercial real estate brokerage in the boutique setting is one of the last few places where you can just earn more with a little bit more elbow grease,” says Darren Fleming, the CEO of Real Strategy Advisors. “There’s so much upside.”
Before launching his own firm, Fleming spent seven years as managing director of Cresa’s Ottawa office. His lengthy real estate resume also includes four years as a sales representative at Colliers International and a one-year stint as a leasing agent with Montreal-based developer Canderel.
In 2016, Fleming sold his shares in Cresa, left the company and enrolled in the Executive MBA program at the University of Ottawa’s Telfer School of Management.
The following year, he launched Real Strategy Advisors, which provides advisory and brokerage services to office tenants in the tech, professional services and not-for-profit sectors.
He’s never looked back. Too often, Fleming says, strict corporate policies at bigger firms put entrepreneurial-minded brokers in a straightjacket. He points to an example from early in his career, when an employer told him he was storing too much sales data on a company server.
“I think I’m addicted to being an entrepreneur and being my own boss,” Fleming says. “Are there days when you wish someone would sign off on payroll other than you? Yeah, but it’s worth it in the end.”
Graeme Webster is a partner at Ottawa’s KOBLE Commercial Real Estate, a firm that brokers mainly off-market and unlisted office and industrial transactions for buyers such as entrepreneurs and well-heeled professionals looking to build up their investment portfolios.
He and fellow partner Marc Morin founded KOBLE seven and a half years ago after cutting their teeth for more than a decade at large, well-established firms. Webster says he thrives on the feeling of satisfaction he gets from navigating clients through deals that can set them up for retirement or attain assets that can be passed on to future generations.
“Our focus is to help people establish that family legacy,” he says. “Real estate is really just the tool to allow them to do that.”
Now at six employees, KOBLE recently brought Ottawa commercial real estate veteran Richard Getz on board as a senior adviser. The firm is also looking to hire someone to oversee its business operations as it continues to expand.
Webster says that despite the overall uncertainty facing the industry at the moment, KOBLE is thriving. The firm has more deals in its pipeline than at any other time in its history, a development he attributes largely to the city’s reputation for being a safe haven in times of economic turmoil.
“It’s a place where when there’s volatility, people want to jump in (the market),” he explains.
A city program created in 2010 to entice investors to build on contaminated old industrial sites has been blazingly successful in the last 18 months.
In its first six years, uptake on the Brownfield Redevelopment Community Improvement Plan was tepid — just four approvals for grants to help investigate possible contamination and tax breaks to compensate for the considerable costs of cleanup. Things sped up in the next four years with 23 approvals. And since January 2020, interest has kicked into high gear with 15 approvals. The increased interest has been driven by the attractiveness of the incentives and the red-hot demand for housing, says Greg Atkinson, a senior City of Windsor planner who has administered the program since its inception.
“When I put the numbers together I was quite impressed,” he said Wednesday, referring to a recent report on the program’s success and suggested tweaks. Normally, such a review happens after five years but there wasn’t enough data available due to the low initial uptake.
“We’ve got that now,” said Atkinson, referring to the 42 total approvals — most of which happened in the last few years — to spur new projects on these usually vacant properties contaminated by years of use as factories, dry cleaners, fuel depots, landfills and gas stations.
City council has so far approved $13.2 million in incentives to drive redevelopment of derelict old properties. The result is private sector investment to the tune of $182.7 million and a rise in the assessed value of the properties totaling $216.2 million.
“Just doing quick math, it’s close to $14 in private investment for every public dollar in incentives,” Atkinson said. “So value for money, this community improvement plan (one of several created by the city in recent years) is really performing well.”
A study conducted in 2009 identified 137 brownfield properties on 559 acres that had sat unused for many years. “Historically, there has been little interest in redeveloping brownfield sites due to the uncertainty surrounding the extent of contamination and the potential cost of cleanup,” Atkinson’s report said.
Mayor Drew Dilkens said the CIP was designed to change that.
“With the combination of the program and a hot real estate market, we’re seeing a lot of action,” he said, explaining that developers are looking everywhere — including these brownfields — for places to build.
“Having this program … is really instrumental in seeing some of the more difficult land activated in an improved way.”
The first application was approved back in 2012, for redevelopment of a long-abandoned gas station at Dougall Avenue and West Grand Boulevard. Andre and Hoda Abouasli used the grants available to help clean up contamination before building an attractive commercial building. The project served as a visible example of what the CIP can do to transform eyesores throughout the city, Atkinson said.
The projects since have ranged from modest to major. The biggest by far was for up to $12.5 million in incentives to help with the cleanup of the former GM Trim plant on Lauzon Road so that Farhi Holdings could proceed with a massive $250-million residential development that’s one of the biggest in the city’s history. A cleanup costing $6.5 million to remove contaminated soil and remove the footings and concrete from the former building cleared the way for the project, which is well underway.
Other big projects approved recently approved include: $3 million in incentives for the 123-unit Graffiti residential/commercial project at 1200 University Avenue West; $457,700 for an 81-unit apartment project on Argyle Road, formerly the site of a pharmaceutical plant destroyed in a 2018 fire; and $579,185 for a project to build a 24-unit residential building at 840 Wyandotte St. E., formerly a commercial building destroyed in a 2016 fire.
And in June, a committee of council endorsed a CIP application to help with the $81,600 cleanup of an 11-acre former industrial site bounded by Walker Road, Edna Street, St. Luke Road and Richmond Street. The owner, the Sood family, has a plan to build three five-storey towers with 62 units each, plus 90 two-storey townhouses. It’s a development that Atkinson believes will help link up Walkerville and Ford City, which for decades have been separated by industrial wasteland.
The CIP provides grants for 50 per cent of the cost of studies to see how feasible it is to redevelop a brownfield and study what it would cost to clean it up. Those are cheques the city writes in the range of $7,500 to $25,000. The CIP can also reduce development charges by 60 per cent. But the biggest incentives by far are the Brownfields Property Tax Assistance and Brownfield Rehabilitation Grant
programs, which provide annual grants to offset either 70 or 100 per cent of the tax increases that occur after a brownfield site is redeveloped into something more valuable, like an apartment building. The grants are paid out for 10 or 13 years and can end up saving developers many thousands of dollars — after the projects are built.
“The whole premise is the city is not collecting a lot of tax revenue, in some cases almost nothing, from these properties that are negatively impacting their neighbourhoods,” said Atkinson. “So forgoing some of that tax revenue, over a 10-year grant period, is a low price to pay for a redevelopment where you might get 50 dwelling units where you had vacant land before.”
If all 42 of the approvals proceed, the result will be 962 new dwelling units on 119.2 acres of brownfields. Based on a metric from a 2003 national round table, that would prevent 512 acres of greenfield from being developed, according to Atkinson’s report. In addition, the spinoff effect of $182.7 million in private investment is $694 million invested into the economy.
Over the past year billionaire wealth has reached record highs. Now comes the real estate boom as they blow their newly-earned cash on $10 million-plus properties.
So far this year, 785 properties worth more than $10 million have been sold in New York, Los Angeles, Hong Kong, London, Sydney, Singapore and Dubai. Knight Frank, a real estate consultancy, estimates that figure is more than double last year’s and up 52% on 2019’s.
In total, wealthy buyers around the world spent $13.8 billion on homes valued in excess of $10 million during the first six months of this year. “We expect super-prime sales to end 2021 on a high,” comments Liam Bailey, global head of research at Knight Frank.
New York has seen the biggest increase in the super-prime category, with 202 sales above $10 million this year. The city has just clocked its most expensive property listing ever: A penthouse at 432 Park Avenue valued at $169 million.
The penthouse might just sell for its asking price: Already there have been 220 penthouses sold in Manhattan this year, according to Corcoran market research. A separate report from Douglas Elliman and Miller Samuel shows the median price for Manhattan apartments hit $999,000 in the second quarter of this year, a new record.
After New York, Los Angeles has seen the biggest increase in super-prime sales. Transactions of $10 million-plus properties this year are three times higher than the same period last year, which Paddy Dring, global head of prime sales at Knight Frank, says is down to “lifestyle advantages, such as beaches and green space.”
But there is more to this real estate boom than lifestyle needs. The rich have amassed a record amount of wealth in the past year, and, with Covid-19 restrictions easing, they are desperately seeking somewhere to put it.
During the first 12-months of the Covid-19 pandemic, wealth hit record highs. By October 2020, billionaire wealth surpassed $10 trillion for the first time ever. Forbes’ list of billionaires, now at 2,755 individuals, grew their wealth from $8 trillion in 2020 to $13.1 trillion this year.
And it’s not just billionaires: Last month the world’s total net wealth hit $431 trillion, with over a quarter of it controlled by millionaires.
But with inflation around the corner, these billionaires and millionaires are now looking for somewhere to invest this new found wealth. Half of the investors surveyed by UBS in the second quarter believe inflation will accelerate over the next 12 months, and a third of them are planning to invest more in real estate to circumvent it from eroding their wealth.
Doubts over the future of the office are making residential real estate increasingly attractive for investors with cash to burn. There will always be a need for quality housing in New York, Los Angeles, Hong Kong, London, Sydney, Singapore, and Dubai.
But whether the wealthy will follow their money and return to these cities with their newly purchased apartments is still unknown.
By July last year, nearly half of wealthy individuals around the world had fled cities for good. Expats from Singapore and Dubai returned home and brought properties in the suburbs or rural areas. Alongside record $10 million-plus properties, countryside markets have reached record highs this year.
One billionaire, speaking over Zoom from an English vineyard he purchased just before the pandemic, says there is “not a hope” he will return to London full time. And yet he is still eyeing up real estate investments in the capital. Sales of $10 million-plus homes in London are up 10% on last year.
Buying prime property is a “tried and tested” way to ward off inflation, he says. But it is also a vote of confidence that, one day, these cities will again thrive.
890 million-year-old fossils may be oldest sign of animal life on Earth, Canadian geologist says – The Washington Post
QC: Art feeds the soul for Joely BigEagle-Kequahtooway – Regina Leader-Post
Zach Hyman is exactly what was missing in the Edmonton Oilers top-six – Edmonton Sun
N.B. COVID-19 roundup: 4 new cases, 66.1% of eligible population fully vaccinated – CBC.ca
Amid pushback, Alberta health minister defends plan to ease COVID-19 isolation, masking, testing rules – Globalnews.ca
U.S. Economy Grew 1.6% in Second Quarter – The New York Times
Filmer, Janssens capture bronze in women’s rowing pair at Tokyo Olympics – CityNews Toronto
"What are they doing?": Edmonton Oilers a loser of NHL free agency, NHL commentators say – Edmonton Journal