Bigbrotherville

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.

One Step Forward, 6,533 Steps Back

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.

When cities give you crappy housing options, making housing aid

It will probably take a full-on economic meltdown to move urban housing markets away from high-end condos and rentals in prime locations. I get it, building is tough: the land is crazy expensive, most cities impose money and time consuming regulatory obstacles that would make a Byzantine bureaucrat blush, there’s no labor to build anything, and lenders shy away from any project letting off the faintest fragrance of risk. And then there are the other buyers and renters — those middle-market, debt-saddled, salary-plateauing masses yearning to be housed. Why bother developing accessible “missing middle” housing? In high-end housing, hefty price premiums can be charged for superficial upgrades like a travertine-clad lobby designed by Charo; these premiums help mask and offset the innumerable and inevitable inefficiency-related costs of urban development.

So until that meltdown occurs, until lease-ups on those new $5,000/month one bedrooms start taking years, not months, the quest for more affordable, market-rate housing will be more art than science. Here are a few cool projects that are working within the current market and regulatory conditions to bring more accessible housing to city-centers.

Podshare

One hundred years ago, most cities had housing options for nearly every demographic. Unlike today, pre-housing reform cities didn’t pathologize their citizen’s socioeconomic stations, they capitalized on them. Even the lowliest pauper with a nickel in his pocket could find a covered, out-of-the-elements place to lay his head at night.

The flophouse was the most basic housing option. Flophouses charged a very small amount of money for a bed that was usually located in a room filled with large numbers of other beds. Unfortunately, the lack of regulation resulted in horrific living conditions and most flophouses were shuttered in the second half of the 20th century, along with residential hotels, boarding houses, and other types of housing catering to middle-and-low-income transients.

But just because the execution of the flophouse sucked didn’t mean the basic model sucked too. Cities are perpetual breeding grounds for itinerant workers looking for affordable, flexible housing.

Podshare is taking this historic model and giving it a fresh coat of paint (and lots of 2x4s). The company, founded in 2012, has four locations spread across Los Angeles. They take existing commercial properties and convert them into short and medium-stay bunkhouses.

Podshare “members” pay around $50/night (I’ve got a feeling you can get a monthly break). The charge covers your bunk bed (some of which convert to desk areas), linens, a locker, wifi, an in-pod TV/LCD screen, outlets, and access to kitchens, baths, work tables, events, and other stuff.

While this form of housing might strike some as dystopian, it’s important to remember it’s not for everyone. Different stages of life require different types of housing. For every ten people who will find the lack of privacy abhorrent, one will find it enticing. The key is that Podshare offers clean, flexible, affordable-ish housing in prime locations. Also, it works within existing market and regulatory conditions. And given that they’re packing a large number of people in a relatively small space, I imagine there’s a strong business case for the model.

Homeshare

In the next few years, thousands of new units are coming online in NYC, SF, and other pricey metropolises. Unfortunately, most of those units — for reasons outlined above — are high-end with high rents. This is already leading to a high-end inventory glut which is driving prices down at the top — a descent that is expected to continue in the near future. But because of the astronomic starting rents, even a 5–15% rent reduction has little value for middle and low-end renters, leaving those markets competing for the limited supply of cheaper, older inventory.

SF-based startup Homeshare is capitalizing on this glut of new properties. With buildings in SF, Silicon Valley, and NYC, it is adapting new units for sharing, often converting living rooms into bedrooms with moveable partitions. By increasing unit density, Homeshare can offer approachable rents in otherwise unapproachable buildings and neighborhoods. To illustrate, you can get into a luxury SF rental building for around $1,100 (“converted” rooms cost less than private ones).

 

Like Podshare, Homeshare is not for everyone. Many won’t want to sleep behind a partition, nor might they want someone sleeping in their living room behind that partition. If that’s not your thing, don’t move into one.

However, if you’re into living in a relatively affordable, well-located, well-maintained, clean, amenity-rich home, and you’re not super concerned about privacy, Homeshare gives you an option within our screwed up market conditions.

Nesterly

Boston-based startup Nesterly is building a network of senior-owned homes that are opened up for younger folks in search of affordable rents. In exchange for those low rents, lodgers may be asked to help around the house, or simply provide company for otherwise isolated seniors.

Given that a disproportionate amount of housing in America is owned by older adults, and seeing that that housing is often underutilized, Nesterly is a great match for the lopsided nature of market conditions.

Nesterly’s network is currently in Boston only, but I see great potential in other markets. For example, in my Brooklyn neighborhood there are scores of seniors who purchased large homes 30–40 years ago when they were a fraction of their current value, and when those homes housed the owner’s families. It’s not a stretch to imagine these house-and-space rich seniors enjoying the social aspects of having a young lodger and the supplemental income that comes with.