Minneapolis Mayoral Election 2017

Elections - City Councils and Commissions - Policies
EOst
Capella Tower
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Re: Minneapolis Mayoral Election 2017

Postby EOst » December 11th, 2017, 6:49 pm

RailBaronYarr wrote:
December 11th, 2017, 4:28 pm
The simple action of a developer introducing new, nice, expensive units doesn't unlock the older building landlord's *ability* to raise rents.
It certainly does if the new luxury development catalyzes neighborhood change, or anyway a change in perceptions of the neighborhood. This is arguably happening (albeit slowly) in Elliot Park, and would probably be happening faster if so many units there weren't locked-in as affordable.

David Greene
IDS Center
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Joined: December 4th, 2012, 11:41 am

Re: Minneapolis Mayoral Election 2017

Postby David Greene » December 11th, 2017, 10:06 pm

RailBaronYarr wrote:
December 11th, 2017, 4:28 pm
David Greene wrote:
December 11th, 2017, 3:54 pm
Oh yes it does. I saw it in my own neighborhood. Once the luxury buildings went in, some older properties were quickly updated and presumably the rents increased. That's smart business for property owners. Not so great for people trying to stay in place. It's a real effect we have to acknowledge and address.
Again, you are confusing cause with effect. The simple action of a developer introducing new, nice, expensive units doesn't unlock the older building landlord's *ability* to raise rents. If a developer is already penciling an expensive unit, the demand was already there, and existing landlords are already aware of it. It's certainly possible that a small ma/pop landlord just didn't have access to the market information letting them know they can charge more (or, for moral reasons they chose not to for some time), but that's very, very rare. In almost all cases, landlords are leading the rent increase charge while developers follow suit.
The sequence was: Elan goes in, old apartments very quickly updated and a strong advertising campaign was undertaken. The eye test says there's a cause and effect. My sense is this was more of an "OMG we have to compete" rather than an opportunistic money grab. I have no basis for that sense but the timing really made it seem that way.

RailBaronYarr
Capella Tower
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Re: Minneapolis Mayoral Election 2017

Postby RailBaronYarr » December 12th, 2017, 10:05 am

EOst wrote:
December 11th, 2017, 6:49 pm
RailBaronYarr wrote:
December 11th, 2017, 4:28 pm
The simple action of a developer introducing new, nice, expensive units doesn't unlock the older building landlord's *ability* to raise rents.
It certainly does if the new luxury development catalyzes neighborhood change, or anyway a change in perceptions of the neighborhood. This is arguably happening (albeit slowly) in Elliot Park, and would probably be happening faster if so many units there weren't locked-in as affordable.
I spoke to this process specifically in my previous post. Development within an already-desirable/changing neighborhood is different than neighborhood-edge development. I would also argue that new luxury residential development along doesn't catalyze neighborhood change nearly as much as the addition of new commercial services (or even public services like better transit), and in any case all of these are still mostly preceded by neighborhood demographic changes. An example in my mind is the Chroma apartment - a new building in a still-diverse (racial and economic) neighborhood with reasonable (for new construction), but still expensive, units with a ground-level retail presence focused on wealthier residents. One could easily look at it and say it precipitated the high profile CPM rent-jacking half a block away. But the reality is this area has seen a slow but sure march in the commercial scene change along Nicollet and the lower-profile rent increases alongside it. New restaurants, updated facades, the list goes on - and it's hard to pinpoint any individual change as a bad thing, but they all have so much more cumulative effect on existing landlords' actions. Processes like this are almost always slow, step changes rarely happen the way we perceive it.
David Greene wrote:My sense is this was more of an "OMG we have to compete" rather than an opportunistic money grab. I have no basis for that sense but the timing really made it seem that way.
Again, I'm not going to say this is *never* how a landlord works, but isn't the emphasized part of your statement what I'm trying to get at? That many people see Action A, and Action B, and link cause and effect, and then some people (many of them very confidently and vocally) make that claim in newspapers or public policy-shaping-meetings?

amiller92
Wells Fargo Center
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Joined: October 31st, 2014, 12:50 pm

Re: Minneapolis Mayoral Election 2017

Postby amiller92 » December 12th, 2017, 10:18 am

David Greene wrote:
December 11th, 2017, 3:54 pm
Oh yes it does. I saw it in my own neighborhood. Once the luxury buildings went in, some older properties were quickly updated and presumably the rents increased.
What makes you think the luxury buildings were necessary to this change?

David Greene
IDS Center
Posts: 4651
Joined: December 4th, 2012, 11:41 am

Re: Minneapolis Mayoral Election 2017

Postby David Greene » December 12th, 2017, 3:47 pm

I'm saying we don't know. And therefore we can't discount the effect.

David Greene
IDS Center
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Joined: December 4th, 2012, 11:41 am

Re: Minneapolis Mayoral Election 2017

Postby David Greene » December 12th, 2017, 3:52 pm

RailBaronYarr wrote:
December 12th, 2017, 10:05 am
David Greene wrote:My sense is this was more of an "OMG we have to compete" rather than an opportunistic money grab. I have no basis for that sense but the timing really made it seem that way.
Again, I'm not going to say this is *never* how a landlord works, but isn't the emphasized part of your statement what I'm trying to get at? That many people see Action A, and Action B, and link cause and effect, and then some people (many of them very confidently and vocally) make that claim in newspapers or public policy-shaping-meetings?
The highlighted portion was meant to convey that I have no basis in my conclusion that the remodel and (presumed) rent increase was a survival strategy instead of an opportunistic money grab. I wasn't intending to make a comment about cause and effect _vis_a_vis_ luxury housing and housing affordability in general. I had addressed that earlier when I stated such cause and effect is unknowable without some deep research which AFAIK no one has done.

My whole point in all of this is that while it might be tempting to discount arguments about luxury housing making areas unaffordable, I don't think we have any data that lets us do that. We have to consider such effects. That does not mean such concerns should dominate everything else, just that they should be considered in good faith.

amiller92
Wells Fargo Center
Posts: 1399
Joined: October 31st, 2014, 12:50 pm

Re: Minneapolis Mayoral Election 2017

Postby amiller92 » December 12th, 2017, 3:57 pm

David Greene wrote:
December 12th, 2017, 3:47 pm
I'm saying we don't know. And therefore we can't discount the effect.
Except we have a more likely explanation - that the demand for luxury in the area was the cause for both the new building and the renovation - so we can discount the effect as being less likely than the alternative explanation.

Yes, it is theoretically possible that the new luxury building induced greater demand for luxury housing around it. But given the larger changes in the neighborhood it's hard to see it as that localized.


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