ARES Urbanexus Update #173
The American Real Estate Society (ARES) distributes this monthly newsletter, which features news and information about real estate and metropolitan development curated by H. Pike Oliver.
Retail
A lonely living mall
The lights and stores are open, but it’s quiet — not a soul in sight — as if people had only enough time to flee whatever happened to this place. A faint smell of sewage drifts through the air. Escalators are frozen. The lower levels of the parking garage are sterile and lifeless — a liminal space of flickering lights and no cars. But it’s not a scene from the post-apocalypse. It’s Mission Viejo, the year 2025, at Kaleidoscope, the loneliest living mall in Southern California.
Mall culture continues to thrive in parts of Southern California, where supercenters like South Coast Plaza in Costa Mesa, the Grove in L.A., Fashion Valley in San Diego, and Westfield Century City attract tens of millions of shoppers each year. Meanwhile, others, such as Laguna Hills Mall and Brea Mall, have diminished in the era of online shopping and are being repurposed into mixed-use spaces.
Kaleidoscope was built for $55 million in 1998, and in the decades since it has faced numerous challenges due to design and execution flaws. A confusing parking garage deterred visitors, and its cloistered design failed to advertise the businesses inside to the many cars driving down I-5.
Perhaps more importantly, Kaleidoscope sits directly across from another, larger mall, the Shops at Mission Viejo, which opened in 1979 and underwent a $ 150 million expansion a year after Kaleidoscope opened, growing to five times its size. Over the next decade, the Shops at Mission Viejo tripled its tax revenue while Kaleidoscope struggled, according to the Voice of OC.
Westport Capital Partners bought the property in 2010 for $22 million. They tried to shake things up by adding the 28,000-square-foot Union Market, but occupancy hovered at roughly 50% when they sold it for $33.5 million in 2023. The new owner is Continuum Analytics, an investment firm in Newport Beach.
At the time, Michael Kluchin, director of operations at Continuum, told the Orange County Business Journal that they were focused on bringing back foot traffic and potentially finding a new long-term use for the property. New tenants included an offshoot of Mariners Church, a nondenominational mega-church in Irvine, and a new Department of Motor Vehicles office, which the Mission Viejo City Council rejected due to safety and traffic concerns.
Learn more here.
Forever 21 files for bankruptcy—again
Forever 21 has filed for bankruptcy protection for the second time in six years. The retailer’s operating company is expected to cease all operations in the U.S.. It has already begun liquidation sales at more than 350 locations. The company’s latest bankruptcy filing comes six years after it emerged from its first filing only to face the Covid-19 pandemic, the highest inflation in decades, and new competition from Chinese-founded upstarts like Shein and Temu.
Learn more here.
Dollar Tree selling Family Dollar
Dollar Tree Inc. (NASDAQ: DLTR) has agreed to sell the Family Dollar business segment to Brigade Capital Management LP and Macellum Capital Management LLC for $1 billion. This sales price represents only a fraction of the $8.5 billion that Dollar Tree paid for the discount brand in 2015.
Family Dollar, which caters to low-income customers with its roughly 8,000 U.S. stores, has struggled in recent years. In March 2024, Dollar Tree unveiled plans to close approximately 970 underperforming Family Dollar stores.
Learn more here.
Public-private partnerships
The case for the government as a developer
Debra Lind tells us we live in a time when people are suspicious of the government. Congress has the lowest approval ratings of any institution (other than the media). Two recent books—Why Nothing Works and Abundance — are capturing the shared frustration that spans across the political spectrum: Government is hindering us. We could achieve remarkable things if we weren’t weighed down by bureaucratic policies and processes.
There is some truth to this. But we are throwing the baby out with the bathwater right now at the federal level. Many people believe that shock-and-awe actions are necessary to force real change. Incrementalism is dead; radicalism is in.
Constantly debasing the government has consequences. If we are constantly fed media telling us that the government doesn’t work, that its problems are so severe they cannot be addressed, most people will cheer a “technological coup.” We can lose sight of the fact that government sometimes does work and does build. Even in San Francisco!
When Debra stood in a building constructed on government land in San Francisco overlooking the SF Giants’ Oracle Park, she thought, “I wished we talked about government less in absolutes and more in terms of batting averages.” She writes about the story of two San Francisco projects, Pier 70 and Mission Rock, that got on base. She argues that somehow we must find a way to celebrate those hits rather than only focusing on the strikeouts.
Learn more here.
Regional and metropolitan trends
Where people live longer
For years, the concept of Blue Zones—regions with exceptionally high life expectancy—has influenced discussions about longevity. However, recent research by Dr. Saul Justin Newman of UCLA has called some of these claims into question, suggesting that historical inaccuracies in birth and death records may have inflated lifespan data in specific areas. Rather than relying on anecdotal longevity hubs, our list emphasizes verifiable life expectancy data, infrastructure-driven health factors, and well-documented wellness behaviors.
To determine the best longevity hotspots, Super Age analyzed multiple data sources, including global life expectancy reports, healthcare rankings, lifestyle studies, and socio-economic factors. Here’s what they looked at:
Life Expectancy Data: We pulled numbers from the World Health Organization (WHO), United Nations, and national statistics agencies.
Healthcare Quality: Cities with universal healthcare, accessible medical services, and a strong emphasis on preventative care made the cut.
Diet and Nutrition: Places where whole foods, Mediterranean diets, and heart-healthy eating habits are the norm ranked highly.
Active Lifestyles: We considered regions with walkable cities, public transit, outdoor recreation, and cultural emphasis on movement.
Community and Social Well-Being: Social connection plays a huge role in longevity, so we focused on cities with strong community bonds, low crime rates, and high levels of life satisfaction.
Work-Life Balance: Stress is a silent killer. We highlighted cities with reasonable working hours, paid leave policies, and government-supported wellness initiatives.
By combining these factors, Super Age curated a list of cities that not only support long lifespans but also promote high-quality, fulfilling living experiences. The top ten cities are:
Madrid, Spain - Life expectancy = 85.4 years
Tokyo, Japan - Life expectancy = 84.6 years
Zurich, Switzerland - Life expectancy = 84.0 years
Singapore - Life expectancy = 83.6 years
Seoul, South Korea - Life expectancy = 83.5 years
Melbourne, Australia - Life expectancy = 83.2 years
Oslo, Norway - Life expectancy 83.0 yearsQuebec City, Canada - Lefe expectancy = 82.5 years
Boulder, Colorado - Life expectancy 82.4 years
Copenhagen, Denmark - Life expectancy = 81.3 years
Learn more here.
Cities aren’t back
Every year, the Census releases local population estimates for counties and metropolitan areas in the U.S. Jed Kolko points out that the latest release shows that in 2024, urban counties grew at their fastest rate in eleven years. But this doesn’t herald the return of last decade’s (overstated and misunderstood) urban revival. Rather, recent urban growth was driven by a temporary national immigration surge and is likely to reverse:
Both urban residential areas and downtown neighborhoods have grown more slowly since 2019 than before the pandemic, falling farther behind suburban growth in the vast majority of metro areas.
Home prices have risen more slowly in urban than in suburban and rural areas, pointing to a shift in demand away from cities rather than just constrained supply.
The people who led last decade’s urban revival — college-educated young adults without school-age kids — are increasingly choosing suburbs.
The broader story is that the pandemic accelerated the pre-pandemic trend toward suburbanization. Learn more here.
Office
More questions than answers about a federal government sell-off
A list of hundreds of properties owned by the federal government deemed non-core and targeted for disposal was released by the General Services Administration in the first week of March 2025, only to be removed the next day. While the future of all 443 properties on the list — with 123 in the Washington, D.C., metro area — remains unclear, the potential of unloading so much property has long-reaching implications for commercial real estate markets far outside of the District.
The federal government's real estate portfolio has been reduced by about 28% in the past decade, said Scott Homa, Americas head of property sectors research at Jones Lang Lasalle Inc. (NYSE: JLL), who is based in Washington, D.C. So, while real estate reductions by the federal government aren't unprecedented, the approach, magnitude and speed with which the current administration is looking to cut space are.
Learn more here.
A big office conversion project
When the developer of a 3.4 million-square-foot office and retail campus planned in downtown San Jose, CA, (San Francisco Bay Area) pressed pause on the project last year due to tough market conditions, the delay was expected to last for years. But, now, an office-to-housing conversion plan fueled by a list of concessions from the city could jump-start construction at the site.
Developer Jay Paul Co. has submitted plans to the city to convert four existing office buildings at the site of the upcoming CityView Plaza project — located at the northeast corner of Almaden Boulevard and Park Avenue — into 320 homes. Additionally, a 293-foot residential high-rise is planned for the future as part of the project’s second phase. Overall, the project’s residential component will provide 680 new homes.
According to a developer statement, the buildings now earmarked for conversion into housing will undergo “comprehensive seismic and core system upgrades, including mechanical, electrical, and plumbing to ensure an exceptional residential experience.” Solomon Cordwell Buenz architects designed the adaptive reuse project.
The project’s initial phase will also incorporate a 35,000-square-foot retail and restaurant component, called the Shops at CityView, along with the modernization of 150 Almaden, a 15-story office tower located at the site. Once the adaptive reuse project concludes, the second phase envisions a 360-unit, 27-story luxury housing tower at 121 S. Market St.
Learn more here.
CityView Plaza, San Jose, CA, USA — post renovation rendering
Housing
What Trump’s DEI orders mean for affordable housing programs
For those seeking to understand the implications of Trump’s recent executive orders on housing programs in America, Shelterforce Magazine provides a valuable in-depth analysis of each order, including detailed interviews with affected federal grantees.
This piece primarily addresses three orders: one concerning DEI, accessibility, and environmental justice; one focusing on intersex and transgender individuals; and one covering the Inflation Reduction and Infrastructure Investment and Jobs Acts.
Although the picture painted in the piece is bleak, highlighting that many housing programs for specific at-risk populations are now at risk, it also underscores that the implementation of the orders is still in question.
Learn more here.
High insurance costs affecting housing affordability
Rising insurance costs hinder the construction of more affordable housing. A survey conducted by the National Multifamily Housing Council (NMHC) revealed that approximately 77 percent of owner/developer firms experienced rate increases of up to 20 percent or more compared to 2023 costs.
NMHC’s 2024 State of Multifamily Risk Report attributes the high costs to several factors, including increased cost valuation, limited capacity in the reinsurance market, shrinking underwriting capacity, and restricted availability of guaranteed cost or zero deductible programs.
The report included a survey that gathered responses from 52 multifamily firms with varying portfolio sizes, geographic concentrations, and property types. Each company was represented in the responses only once. FHS Risk Management, an insurance and risk management consulting firm based in New York City, compiled and reported on the data.
Click here to obtain a summary of the report.
Wealthy renters are taking over more of the U.S. rental market
New data from Redfin reveals that nearly three-quarters of the most populous U.S. metro areas (35 out of 50) have experienced a rise in wealthy renters, with Raleigh, NC, and Orlando, FL, at the forefront of this trend.
In Raleigh, the percentage of affluent renters has increased from 4.8% in 2019 to 7.7%, marking the largest jump among the top 50 metros. Orlando follows with 10.8% (up from 8.5%), along with Buffalo, NY (6.6%, up from 4.6%), Tampa, FL (9.4%, up from 7.9%), and San Diego (9.3%, up from 8%).
According to Redfin Senior Economist Elijah de la Campa, "Many affluent Americans are choosing to rent instead of buy because home prices have increased significantly more than rental costs in recent years. With mortgage rates close to 7%, renting enables them to allocate funds toward other, potentially more profitable investments."
In each of the metros mentioned above, the typical wealthy renter earns more than enough to purchase a median-priced home. However, home prices in these areas have increased significantly since 2019, making renting a more appealing option. Four of the five top metros in this trend are located in the Sun Belt, where home prices soared during the pandemic.
Learn more here.
Land banking for home building
As land-light operating models gain popularity among home builders, land banking is taking on a more important role in the industry.
Many public home builders have indicated shifts in land strategy during earnings calls over the past several years, moving away from extensive land strategies in favor of a more asset-light model. The land-light approach enables builders to balance risk, emphasizes optionality and capital efficiency to enhance returns, and limits exposure to market risk.
One prominent strategy among builders is to utilize off-balance-sheet land banking arrangements to support land-light models. Land banking involves acquiring and holding land for future construction, providing builders with capital as well as an off-balance-sheet vehicle. Land bankers act as capital partners for builders, offering a debt-like instrument to acquire paper lots and fund land development while holding finished lots.
Under a typical structure, the builder sources land for future development while securing zoning and entitlement. Before or upon closing on the land parcel, the builder and land banking partner agree on a development budget, takedown schedule, and price per finished lot. The land banker then holds title to the land until all finished lots are purchased.
Learn more here.
Hospitality
Hotel sector in the U.S. faces trade war challenges
U.S. trade policies and economic uncertainty are beginning to pressure people's ability and willingness to travel to or within the United States.
A recent report from Tourism Economics, part of Oxford Economics, indicated that due to tensions spurred by President Donald Trump's tariffs, increased costs from the new tariffs and retaliatory measures, as well as a decline in travel sentiment towards the U.S. for other political reasons- such as Russia's war in Ukraine- total U.S. travel spending could decrease by up to $64 billion in 2025.
If any slowdown occurs, it would certainly have ripple effects on the national hotel market. Tourism Economics is already predicting a 1.9% decline in hotel-room demand under its baseline trade-war scenario.
The U.S. Travel Association, a trade group for the industry, in January predicted U.S. travel spending would grow 3.9%, to $1.35 trillion, in 2025. At the time, it was also forecasting 8.8% growth for inbound international visits this year.
Already, though, there are signs of international travelers pulling back on travel to the U.S. — including from the United States' top source of international travel: Canada, which has been the recipient of significant tariffs alongside China and Mexico.
Learn more here.
Mixed-use
A hotel, office space and a fire station in San Francisco
The next big tower on San Francisco’s skyline could be a 41-story skyscraper with hotel and office space that would anchor a block across from the Transamerica Pyramid. And it may rise a lot sooner than most people imagine.
Despite a 37% vacancy rate in the city’s office market, executives from Related California express optimism about a proposed 544-foot-tall high-rise at 530 Sansome St. This project would encompass 360,000 square feet of office space, a five-star hotel, and a new firehouse for the city. Related aims to secure city approvals by October, paving the way for construction to commence as early as late 2026. The building is expected to be completed by 2030. It would be the first building delivered in the Northern Financial District since 350 Bush St. opened in 2018, and the first new ground-up five-star hotel in 30 years.
Learn more here.
San Francisco’s 20-something exodus isn’t just about cost of living
At a time when many millennials and Gen Zers can’t expect to earn more money than their parents did, the relatively small percentage of young adults who can afford to live in San Francisco are struggling to justify the costs. In interviews with the Chronicle, over a dozen young people who left San Francisco in the past decade or opted not to move there summed up their views on the city in three words: Not worth it.
After seeing its population of 20-somethings spike after the recession of 2007-09, San Francisco remained a top destination for young people for about a decade, only for the pandemic — and remote work — to trigger the departure of more than a fifth of the city’s 20-somethings over two years. Perhaps most troubling for city leaders: Since COVID-19 restrictions were lifted and companies began calling employees back to the office, San Francisco’s number of young people has continued its decline.
But it’s not just about costs. Young folks who have departed the city cite other factors, such as a lack of diversity in people's occupations. Even tech workers tire of being around technology workers all the time. This may explain why, despite high housing costs, New York City is doing better at attracting twenty-somethings. See the table below and learn more here.
Development approvals
Resistance to new developments
A national consensus strategies survey conducted by Emerson College Polling in January 2025 has sparked considerable discussion in the real estate sector. According to the poll, 73 percent of Americans are not open to new development, believing their neighborhoods are either fine as they are or already overdeveloped. Additionally, 71 percent of respondents indicate that the relationships between developers and elected officials lead to an unfair planning and zoning approval process. More than half of the surveyed Americans (57 percent) rate their local government’s management of new development as “Fair” to “Poor,” and a quarter of the respondents (26 percent) admit to having actively opposed development in their community.
Such heightened skepticism regarding growth, density, and change is not merely a fad. Over the past several decades, local groups have refined their ability to organize, gather data, and influence policy in ways that either hinder or completely halt large-scale projects. However, what is different, according to this poll, is the unprecedented scale of opposition and the public’s deep-seated lack of trust in how development decisions are made. Several recent high-profile projects have succumbed to public pushback, yet there are ways in which developers can (and sometimes do) adapt to foster community support.
The article about the survey highlights several projects around the USA that have faced significant opposition.
Resilience and sustainability
Zero-emission zones (ZE Zones)
Several global cities are working to address air quality by implementing zero-emission zones (ZE Zones) to reduce pollution and congestion and achieve climate goals. See a brief introductory video here.
Around the world
Shopping centers housed in architectural marvels
Across the world, cloud-piercing skyscrapers push construction techniques to new heights, while sustainable and unique homes provide a blueprint for the future. In commercial districts, a desire to create something remarkable has resulted in many innovative and beautiful stores. These buildings are sometimes bespoke designs created with retail in mind. Other times, repurposing a building into a place to shop saves a treasured existing structure from an ignominious fate. Daily Passport offers a glimpse of some of the world’s retail stores housed in repurposed architectural landmarks. See them here.
Las Bóvedas, Cartagena, Columbia
