The micro-apartment topic tends to be framed around micro-studios. But the hefty development costs of building an NYC micro studio result in a rent which is 115% of the AMI (area median income).
The problem is studios require the same plumbing and electric work as larger units (which is why shared kitchen/bath SROs make so much sense). So developers default to building two and three bedroom units, where plumbing and electric costs can be distributed across more beds. Larger units are also seen as a more reliable unit type by lenders, probably because they can be adapted to roommates, couples, and families.
Cheaper development costs and cheaper debt mean two and three beds can be offered at cheaper price points…to an extent.
Square feet still cost money. A luxury square foot rents for around $6/month in Manhattan, which means a 900 sf two bedroom will set you back $5400. This is a good chunk of change for most.
The world belongs to the developer who can figure out how to bring new units to market without giving away $5k gift baskets.
Ranger Properties might onto to something with “The Lanes.” Their Long Island City building features 57 micro two and three bedroom apartments—490 and 735 sf, respectively (compared to 900 and 1,200 sf for more conventional units). By shrinking unit sizes, Ranger presumably achieves the economy of scale that keeps development costs low on larger units. But because units are small, they can charge a solid $/sf without elevating rents too much, especially when compared to market comps. Continue reading “Sky’s the limit with biggie smalls apartment”
When big cities gutted their single room occupancy (SRO) inventory in the mid-to-late 20th century—and failed to replace them with Section 8 or anything else—it left a big gap in the market for cheap and flexible housing. The vanishing SRO can be blamed for the birth of the roommate and its consequent squeeze on family-friendly urban housing and—more critically—the birth of the modern homeless crisis. One poll from 1980 found that half of NYC’s homeless population had once lived in SROs. Moreover, what SROs survived the purge became de facto bastions for the uber-poor, reinforcing negative stereotypes about the housing type.
A recent report by NYU’s Furman Center is renewing interest in the SRO as a viable market-rate housing typology. They argue that small efficiency apartments with shared kitchens and baths (i.e. SRO units) can achieve development and operating costs far lower than conventional apartments; for example, per unit hard costs on SROs are 67% less than normal studio apartments.
Continue reading “Got me looking SRO crazy right now”
Newark. Yes, it’s impoverished and crime-ridden. Like most failing cities, it has crappy schools, a crumbling infrastructure, and inadequate public transit. But it’s also got an international airport, a walkable downtown with cool old buildings, and it’s less than a half-hour to NYC’s Penn Station.
The importance of this last point cannot be understated. One by one, never-going-to-turn places near Manhattan—the Bronx, Mt. Vernon, Jersey City, Hoboken, and others—are or have been gentrified by middle and upper middle refugees in search of bigger homes and cheaper costs of living. Why not Newark? (Yes, we know about the murders.)
Continue reading “Amazon HQ2: Two Day Gentrification Guaranteed”
Robbie Antonio is a Filipino self-portrait collector, Trump friend, and real estate mogul (or the scion of one…not clear). He’s also the dude behind Revolution Pre-crafted Properties, a company offering design-y prefab homes that can supposedly be shipped anywhere in the world. Their portfolio features designs from starchitectural offices such as Libeskind Design and that of Jean Nouvel.
RRP is now getting in the city-building business with a development called “Batulao Artscapes.” BA will be “The World’s First Livable Art Park” (we know how many people want to live in art parks).
BA sits on 346 acres 50 miles outside Manilla away from any coasts. It will, according to CNN, feature “12 different styles of [factory-built] home[s] set across four ‘villages.’….residents can choose from prefabs designed by notable creatives, from artist David Salle to the musician-turned-interior-designer Lenny Kravitz.”
So far as we know, this is the largest prefab development ever conceived. The project’s ambitions are only matched by the number of unanswered questions we have: ones like who, in a country with a per capita GDP of $3K, is going to buy funky modernist homes costing $50K-$1M (USD) set Florida-retirement-community-style in the middle of a jungle?
With a completion date said to be in 2020, our questions may soon be answered.
One thing that will surely affect our orientation to the city mouse/suburban mouse real estate and economic divide are new forms of mobility. It’s said that ride-hailing apps are already having a flattening effect on residential real estate values in NYC. Because getting around is so easy, one-percent New Yorkers are doing the unthinkable: cross-shopping properties in the East 70s with those in the West 80s!
But ride-hailing will be gentle kneading compared to the rolling pin of autonomous vehicles (AVs). Locations that were unthinkably far away when accessed in regular vehicles will become thinkable in AVs—it’s the difference road-raging during your 1.5 hour commute or binge-watching Narcos.
Quantifying this changing orientation to location is exactly what Phil Levin’s new consultancy 99mph is doing. He expects a $1 trillion movement of capital due to AVs flattening effect on real estate. And though full autonomous vehicles are a few years off, the long horizon of real estate investment makes this a timely concern.
Every six months or so, an article comes out saying that, despite ideas to the contrary, millennials love suburbs, not cities. What these articles seldom mention is the socioeconomic composition of these suburbaphiles. While populations boom in the burbs, educated elites still have a strong preference for cities, according to data recently released by City Observatory. They state, for example, that “the number of well-educated young adults living in the nation’s largest cities increased 19 percent between 2012 and 2016, about 50 percent faster than the increase outside these large cities.”
The proximity-enabled network effect of cities can be an economic multiplier, which is a strong draw for money-loving people and businesses alike. In contrast, many suburbs have fewer opportunities and may be over-reliant on a handful of large employers. And even though homes are typically more affordable, when lower wages and higher transit costs are factored, the suburban economic advantage is eroded. These conditions might help explain why suburban poverty rates in the early aughts were double those of cities.
While many people truly prefer suburbs, it’s also true that many others want to live closer to urban cores but simply cannot because there are no market-rate housing options that are affordable and attractive. Hell, lots of the educated elite can’t afford city-living. The universe belongs to whoever can provide those housing options in a timely and economical manner.
Alphabet/Google came out guns blazing last year with the announcement of Quayside, a planned city-within-a-city (Toronto) whose technological infrastructure will put Masdar City and Agrosanti to shame. According to The Atlantic’s Laura Bliss, Quayside will have a “self-contained thermal grid” with recirculating energy, carless sections, autonomous transit shuttles, convertible modular buildings, and much, much more.
Sounds dope. But there’s another aspect that’s less dopey: “a data-harvesting, wifi-beaming ‘digital layer’” covering the city. This layer is ostensibly designed to improve urban UX, but Bliss asks, “But to whom, and how, would this data be made available? And what would such an arrangement mean for any Quaysider who doesn’t wish to be monitored?” In other words, would you want Google or former Toronto mayor Rob Ford’s administration to know your every move? Would Ford have wanted anyone knowing any of his every move?
Lest we get too worked up about the whole deal, let’s remember building cities is hard—even within existing cities (just ask Tony Hsieh). Sidewalk Labs—Alphabet’s urban lab helmed by city-hating CEO Dan Doctoroff—has pledged $50 million to Quayside. That should cover a four-story mixed use building, and maybe a bus stop. The rest of the funds will likely come from private developers, who will no doubt make the Sidewalk project more pedestrian.
Any way you look at it, using cities-as-data-mines will be a big deal in the coming years for cities new and old alike. Expect many questions in this realm as well as a growing focus on how data harvesting affects real estate valuation.
Last week was NAHB International Builders Show (IBS) in Orlando, Florida. Per tradition, the show builds The New American Home (TNAH), an offsite showcase for the latest and greatest in single-family home design and construction.
This year’s entry put the “NAH” in TNAH (it’s also like real estate’s case of IBS…so many puns to choose from). The 6,533 square foot “Tuscan” five bedroom behemoth featured two double garages and a master bathroom suitable for bathing at rhinoceros. Read Treehugger’s Lloyd concise takedown of this monstrosity.
The house is a sad commentary on the mindset of American builders.
Single-family housing is still the main type of American housing, making up 76% of the housing stock. And there’s a huge deficit of low-and-mid-market new housing. Harvard reported last year that “Between 2004 and 2015, completions of smaller single-family homes (under 1,800 square feet) fell from nearly 500,000 units to only 136,000. Similarly, the number of townhouses started in 2016 (98,000) was less than half the number started in 2005.”
This deficit at the middle and bottom exacerbate an already-bleak housing situation. And while there are intermittent signals that builders are interested new, modest models of single-family housing, the TNAH shows that, despite its bad press, the McMansion is alive and well.