Can "Dense Urban Living" be affordable?

[sgrizzle]

This thread was inspired by some comments by DoubleA so I'd like to hear his input. Thus far all the recent "Dense Urban Living" projects have been high dollar units with expensive finishes. Is their no way to make units for the common folk or are people just trying to capitalize on the higher profit sector first?

Also, why is ever loft so far decked out with expensive lighting and finishes? Where are the plain lofts where you get a bathroom and a kitchenette and the rest is open space?

[Gaspar]

quote:Originally posted by sgrizzle

This thread was inspired by some comments by DoubleA so I'd like to hear his input. Thus far all the recent "Dense Urban Living" projects have been high dollar units with expensive finishes. Is their no way to make units for the common folk or are people just trying to capitalize on the higher profit sector first?

Also, why is ever loft so far decked out with expensive lighting and finishes? Where are the plain lofts where you get a bathroom and a kitchenette and the rest is open space?

The use of the term "loft" has simply become a marketing term now for any urban apartment style condo.  I have even seen it applied to single story units.

It has been corrupted, much like the terms Country French, Tuscan, or Mediterranean.

We have done, and continue to do a number of expensive "loft" projects.  The demand (from the builders) is for the high end materials, lighting and highly engineered spaces.  

I, like you, believe that the demand from the consumer is more in line with a workable, affordable urban pallet that the owner has more freedom to manipulate.

I also think that Loft developments with units in the $150K to $250k would be far more popular and really expand development and increase the trend towards density and urban re-population, but I am not a builder.

The real obstacle is that building or remodeling structures to create "lofts" in this price range will not produce enough profit to be worth while to a builder with a permanent lending mechanism.  He/she would be lucky to break even.

Developers who constantly court banks to back their concepts would find it very difficult if not impossible to get funding for such a development.

You have to build and sell a lot of Chevys to make a profit on Chevys, but you only have to sell one Ferarri to make a profit on a Ferrari.

[TheArtist]

Of course it can be affordable. There are lots of VERY inexpensive apartments in and near Brookside right next to places that will be selling for 400,000$  Same basic location, huge difference in price. However.....

As the area becomes more desirable, either the inexpensive apartments will start charging more, or they will be bought up, fixed up and charge more, or torn down and replaced with more expensive units.  Either way they will likely end up costing more.

Right now, dense urban living, in pedestrian friendly environments is very desirable.



There are at least 2 ways I can see more affordable housing going in these areas.

1. Right now the market is trying to tap out the most profitable sector. Those who are willing and able to pay a premium. Why build   and make a little when you can build and make a lot? Once that market gets saturated, I bet you will indeed see more affordable loft and urban apartments going in. I think there is a large market for the less expensive units, but again, the developers are going for the money right now. The developers already say that a lot of people want something around the 150,000 range, but people are still buying up the 300,000-400,000 dollar stuff. So they are going to build the more expensive stuff, then they will over build it, and THEN you will see them start offering and building the less expensive units. This being Tulsa, the saturation point for the high end stuff will happen fairly quickly. I think that even the stuff that is in the pipeline now, once it all comes online, that will be the main saturation point. Then you will see the more affordable stuff come into the mix.

2. I think the city officials and the people have to decide that having mixed income in dense,urban areas is a desirable outcome. Once this is recognized actions need to be taken to make sure it comes to pass. Such as... the property around the new Ballpark, there should have been some note that a percentage of new housing units should be affordable housing. If the city promotes and allows development in areas like the West Bank and Fin Tube properties that it owns, especially if a rail ever goes to those areas, we should absolutely demand that if you want to build there a percentage has to be affordable housing.

When the person from Austin was here speaking about rail, she said its very important that the city buy up property around potential rail stops. Those areas that you want dense urban, pedestrian friendly, TOD to happen. One of the main reasons is so that you can then have leverage to push developers to make a percentage of their units be affordable housing. We cant allow TOD development to just be for the well to do. It has to be for everyone.

I would have even said it would have been wise to try and push the Bomasada group to have some affordable units in its development. If they wanted an exception to build higher, you could ask that they even do just a few 5 perhaps 10 units that were more affordable.

I would also be interested to see how they do it in London and other places. I have heard of complexes that are a mixture of price ranges. Essentially the more expensive units subsidize the less expensive ones. If the area is desirable, the more wealthy are willing to pay the little bit extra and everyone agrees that having a mixture of affordability is important. If you have one of the low income units and start making above a certain amount you pay more, or move.  

We just have to decide whether having mixed income, urban neighborhoods is something we think is a good thing. And if we do, then take steps to help that happen.

There are other ways to help assure that different income levels can be in a desirable area and am very interested to learn how other places do that so we can ask our officials to do the same.

[Renaissance]

It's never going to be really cheap, though.  Look at it this way--any time you've got a 2-3 story, 1,700 sq ft home with an elevated patio and two car garage (standard townhouse configuration) you're going to have minimum construction costs that push the price above $125/sq ft.  So it makes sense to push into the luxury range and increase the profit margin.

[PonderInc]

I think there are a lot of buildings in/near downtown that could easily provide cool urban loft space.  What's the deal?  Why dont' more property owners open up their buildings to residential ownership/leases?  Is there some code preventing this?  

I've seen other lofts in other cities (near/in downtown) where the buildings were safe, but not fixed up, and creative people bought the lofts and did the work themselves.  Why doesn't this happen here?  Are all the downtown property owners just holding out for millions of dollars in some idyllic future world...while the buildings sit vacant and rotting... and downtown stagnates?

[Double A]

quote:Originally posted by sgrizzle

This thread was inspired by some comments by DoubleA so I'd like to hear his input. Thus far all the recent "Dense Urban Living" projects have been high dollar units with expensive finishes. Is their no way to make units for the common folk or are people just trying to capitalize on the higher profit sector first?

Also, why is ever loft so far decked out with expensive lighting and finishes? Where are the plain lofts where you get a bathroom and a kitchenette and the rest is open space?

There are cities that require that new residential developments set aside a percentage of the developments for low and middle income housing. If you truly want Tulsa to be a diverse desegregated city, mixed income infill is a good way to achieve it.

[Double A]

Don't forget the most disgusting thing about the lofts downtown IMO, many of them are taxpayer subsidized luxury lofts.

[Gaspar]

quote:Originally posted by PonderInc

I think there are a lot of buildings in/near downtown that could easily provide cool urban loft space.  What's the deal?  Why dont' more property owners open up their buildings to residential ownership/leases?  Is there some code preventing this?  

I've seen other lofts in other cities (near/in downtown) where the buildings were safe, but not fixed up, and creative people bought the lofts and did the work themselves.  Why doesn't this happen here?  Are all the downtown property owners just holding out for millions of dollars in some idyllic future world...while the buildings sit vacant and rotting... and downtown stagnates?

I love that idea.  Back in the 80's and 90's I used to see it all over the country and glamorized in television shows, but now the building owner/developer faces new obstacles that force the space to require a larger investment before it can be rented or sold as residential space.

Asbestos, mold, lead, and more stringent (for good reason) structural and fire requirements make it necessary to develop a safe environment and safeguard the owner/developer/bank from litigation.

When you run the numbers, most developers want to get the biggest bang for their buck, so if you're going to tear out the walls, re-plumb, re-wire, you might as well remodel and get more for your money.

So, I guess it could be considered a code thing, but the codes are there for a reason.  You can't just turn around, rezone and rent/sell anymore, or at least not as easy as you used to.

[TheArtist]

quote:Originally posted by Double A

Don't forget the most disgusting thing about the lofts downtown IMO, many of them are taxpayer subsidized luxury lofts.

To me those should have definitely had a number of them that were for lower and mid income people. When the city has some say, is when the city should SAY something lol. I am actually suprised that the "2025 lofts" dont have affordable units as part of the deal?

Perhaps because the issue was so new, and they just wanted and hoped that something would get started, that they werent considering that at the time. But now its time to consider this type of thing from now on.

Is there any way to get the ballpark development to have a percentage of affordable units? The taxpayers are helping to pay for it so it seems a reasonable thing to ask for.


Perhaps this is an issue TN should be involved with. Do some research on the subject, have a public forum and perhaps find speakers who have delt with the issue in other cities. Find "best practices", educate our leadership and get some policies going.

[TheArtist]

quote:Originally posted by Floyd

It's never going to be really cheap, though.  Look at it this way--any time you've got a 2-3 story, 1,700 sq ft home with an elevated patio and two car garage (standard townhouse configuration) you're going to have minimum construction costs that push the price above $125/sq ft.  So it makes sense to push into the luxury range and increase the profit margin.

There are some apartments in South Tulsa that arent that expensive that are indeed just as you describe. Though they arent the quality most of the new units are in these new places.

But, I also think that if we as a city want to have mixed use, pedestrian friendly, urban/mass transit type areas that are a mix of incomes... you do what other cities do and, to put it bluntly, have the wealthy support the non wealthy. The developer is allowed to build in a certain area, allowed to make a killing on most units, IF he sets aside a few to be rented at a more moderate price point.

You want to build by this snazzy new ballpark?... Well heres the deal.

You want to build on the west bank, the Fin Tube property?... Well heres the deal.  

You want to build by this new rail station on the property the city owns by it?...Well heres the deal.

You want a tif or a height/zoning exception?... Perhaps, but heres the deal.

You want to build where the old city hall was, the Hartford Building property, etc. etc.?...Well heres the deal.


 

[Renaissance]

quote:Originally posted by TheArtist

quote:Originally posted by Floyd

It's never going to be really cheap, though.  Look at it this way--any time you've got a 2-3 story, 1,700 sq ft home with an elevated patio and two car garage (standard townhouse configuration) you're going to have minimum construction costs that push the price above $125/sq ft.  So it makes sense to push into the luxury range and increase the profit margin.

There are some apartments in South Tulsa that arent that expensive that are indeed just as you describe. Though they arent the quality most of the new units are in these new places.  

I didn't know they were putting up townhouse/loft blocks out south.  Are they standard cardboard and glue construction?  

Seems to me that the brand new stuff will never be priced low.  Best option is that, as these newer luxury units come on line, the older flats around the Riverside area will decrease in price.  

Alternatively, it makes sense eventually that when the downtown vacant lots begin to fill, most parts of the market will be served.  Or else there just won't be that many units built.

[pfox]

the primary problem with creating affordable housing downtown is that the places where that sort of housing should be located were torn down, i.e. the Tulsa Apartments across from Holy Family.  

Look, if developers can build at a large enough scale, they can absorb costs associated with creating 'affordable' housing.  This is why this type of housing is often subsidized, but believe me, if developers could expand their market to include those who are looking for more moderately priced housing, they would.

New housing is going to cost "X" to build.  They have to sell it for a profit.  They SHOULD sell it at a profit, I should say.  Hopefully they can sell them, period.  I happen to think that there is a huge untapped market, but that is another topic.  The bottom line is, it is expensive to build new housing.  Construction costs have skyrocketed.  Moderately priced housing can be built, but one cant expect the amenities associated with long term viability of a project.  The walls will be thinner, the appliances will be cheaper, and it will be less likely to be 'green'.  It is a true catch 22...

Again, I feel like the solution is to create projects that are on a scale that can absorb the costs to set aside a certain number of affordable units.

[mlofts]

So i have a question:

How much would one of you think is fair for say a downtown (or very close to downtown) empty shell unit?  Say 1000 sq ft, you finish the inside.  First realize that getting financing for this would be difficult so lets just say i carry all but 10% down payment...and you do the improvements.  Say the building already has electric, HVAC, plumbing etc.  It has no sheetrock on the walls, no interior framing and location is considered better than fair.

[sgrizzle]

quote:Originally posted by mlofts

So i have a question:

How much would one of you think is fair for say a downtown (or very close to downtown) empty shell unit?  Say 1000 sq ft, you finish the inside.  First realize that getting financing for this would be difficult so lets just say i carry all but 10% down payment...and you do the improvements.  Say the building already has electric, HVAC, plumbing etc.  It has no sheetrock on the walls, no interior framing and location is considered better than fair.

$65,000 - $75,000 off the top of my head. Although I would prefer a lower downpayment or free homedepot gift card with purchase so they can afford to get some sheetrock and fixtures in on move-in.

[Renaissance]

quote:Originally posted by sgrizzle

quote:Originally posted by mlofts

So i have a question:

How much would one of you think is fair for say a downtown (or very close to downtown) empty shell unit?  Say 1000 sq ft, you finish the inside.  First realize that getting financing for this would be difficult so lets just say i carry all but 10% down payment...and you do the improvements.  Say the building already has electric, HVAC, plumbing etc.  It has no sheetrock on the walls, no interior framing and location is considered better than fair.

$65,000 - $75,000 off the top of my head. Although I would prefer a lower downpayment or free homedepot gift card with purchase so they can afford to get some sheetrock and fixtures in on move-in.

Innnnnnteresting.  SGrizzle's price sounds about right, although in the right spot I could see more like $100,000.  Would be hard to go a lot above $100/ft.  A low-end custom buildout with framing, electric and plumbing is going to cost at least another $75 - 100k unless you're just going totally minimalist.  I guess if you're good you could DIY at least a part of it.