Because they are parasites, pure and simple…
Multifamily investors descended on the Puget Sound region at the end of last year, snapping up $477.5 million of large assets in King County alone in December.
“For many of (the sellers) it’s time to cash in the chips, and Seattle is always a very popular region to buy in,” said Brian O’Connor, principal at O’Connor Consulting Group in Seattle.
The flurry of year-end activity is typical and this time comes against a backdrop of rising rents due to a lack of supply.
“We’re doing our latest studies, and oh man, we are undersupplied everywhere. I mean, like really undersupplied. Rents are really going to go up,” he said.
Large institutional investors are among the buyers.
This is what you get when you put something as essential — and scarce — as land and, by extension, housing in the market as a tradable commodity.
[F]easibility studies showed that a lot of new construction jobs were only around break-even propositions. “I’m telling people that I don’t believe the rents have gone up enough yet to find that equilibrium between cost and rents,” he said.
Of course, those costs would be lower if the price to acquire land was lower, if instead of paying millions of dollars for land, you could acquire it under a lease for a fraction of that cost, lowering the need to charge high rents or develop properties only investors can afford. Ground rents aren’t new…Seattle has many examples, from disused school sites that are now commercial properties to other commercial real estate where the land is leased, not sold. If it’s a good play for business, it’s probably a good play for the city or county as well. Where are all my “let’s run government like a business” types now? They should be all about holding the land and recapturing the value through ground rents, but for their allergy to anything that improves life for people they don’t know.