Downtown Development Overview

[saintnicster]

$1 a square foot rents for new construction is difficult to justify if someone is looking to make money -  maybe if you could ignore land costs, which we have recently seen at $50 a square by themselves.  But if new construction costs just $100 sq ft, a 30 year note just to cover the mortgage would be ~60 cents a square per month on a 30 year note (the per square is a weird metric, but it fits into this conversation).  20 cents per square would be a reasonable operating cost (less early in the buildings life, more later). 5 cents for taxes and assessment. 5 cents a square for management fees or broker fees. And 10 cents for vacancies (which run at 5% downtown, but your plan better not call for best case scenario).

Play with the numbers. Look up cost of construction and cost of land.  Think through some of the expenses.  It gets hard to do in neighborhoods that are in demand.

Yah.... to get rents that low on a non-slum quality building you generally need some kind of subsidy, usually a low income housing credit.  You could probably get rents around there with a 9% LIHTEC deal, but then the housing is in a special pool of income restricted housing. distributed through a lottery or long waitlist. and doesn't do anything to effect the market rate rents available for most people.

So I may not have been super clear.  I understand that living downtown warrants a premium price point.  I just think that the developers aren't doing themselves any favors by excluding anyone that can't easily afford over $1k a month for a rental.  Downsizing the average square footage on a unit seems like it could be a step in the right direction.  Squeeze more units in that same space - even something as simple as designing 3 600sqft units where 2 1k square foot units would have been.  Granted, it's fuzzy math, but the idea is there.  And the total rent on those 3 units wouldn't equal the cost of two, you're likely making more there.  What's the economic feasibility?

SEMI-EDIT - blegh, and now I just looked at East End and The Edge's price and I just give up.   There is seemingly no middle ground with development.

[Oil Capital]

So I may not have been super clear.  I understand that living downtown warrants a premium price point.  I just think that the developers aren't doing themselves any favors by excluding anyone that can't easily afford over $1k a month for a rental.  Downsizing the average square footage on a unit seems like it could be a step in the right direction.  Squeeze more units in that same space - even something as simple as designing 3 600sqft units where 2 1k square foot units would have been.  Granted, it's fuzzy math, but the idea is there.  And the total rent on those 3 units wouldn't equal the cost of two, you're likely making more there.  What's the economic feasibility?

SEMI-EDIT - blegh, and now I just looked at East End and The Edge's price and I just give up.   There is seemingly no middle ground with development.

Keep in mind, that all things being equal, the construction price per square foot for small units is generally going to be significantly higher than for larger units.  Your hypothetical 2 -1,000 sq ft units will likely have, at most, 4 bathrooms and 2 kitchens (by far the most expensive rooms).  Meanwhile, your hypothetical 3 - 600 sq ft units will have 3 bathrooms (only 1 less) and 3 kitchens (1 additional).

[Vision 2025]

Yah.... to get rents that low on a non-slum quality building you generally need some kind of subsidy, usually a low income housing credit.  You could probably get rents around there with a 9% LIHTEC deal, but then the housing is in a special pool of income restricted housing. distributed through a lottery or long waitlist. and doesn't do anything to effect the market rate rents available for most people.

Market Rate Tax Credits might be a better fit and they are generally easier to obtain in Oklahoma. 

[cannon_fodder]

The Edge is charging right around the $1.70 mark (+/- about 10 cents depending on the specific unit).  They have an awesome website for pricing, floor plan and availability:
http://www.theedgeapartmentsdowntowntulsa.com/floorplans-and-pricing

You also have to cover all of your utilities and parking. They have parking available - uncovered from $40/month and $75 up to $90 per month covered. For that price point you get new construction, in unit washer&dryer, granite, hardwoods, a pool, a workout area, outdoor kitchen area, small dog park, some common areas and an awesome location.
http://www.theedgeapartmentsdowntowntulsa.com/faq

If their website can be believed, a quick glance indicates they have ~41 apartments left open out of 160... and the building just opened. So I'm guessing they aren't too distraught about their decision on the price point.   But your point is well taken, the most affordable apartments appear to be wait listed at this point.  But you can still move in for $1100 for a one bedroom, or $1680 for a two bedroom... that's doable for a single person making $40k (for the single) or a couple making $70k for the double. If you are a tow income household needing a one bedroom its very doable. You're trading space for new construction and other perks, plus the location.

[johrasephoenix]

I don't know if this would fly in Tulsa, but you could significantly drop your development cost by reducing parking.  Parking garages cost ~$20,000 to build per parking spot (vs $100,000+ for underground parking).  On a 150ish unit development like the Edge, they easily spent $3,000,000 on the garage from construction cost alone, before the cost of the land (the land under the Edge's parking lot is big enough for an entire other apartment complex, but that's a complaint for another day).  Seriously, without that hideously long and low parking garage the Edge could probably have 50% more units.   That is a lot of rent to give up. 

Parking on the street in downtown Tulsa is just about the easiest thing in the world.  If you offered to drop my rent several hundred bucks per month and in return I'd park on the street, I'd do it.  I lived in downtown Tulsa in the Brady District without a parking spot with zero inconvenience even on the busiest nights.  I think I once had to carry my groceries three blocks but I lived.  I've also lived in Chicago and Boston without a parking spot, which was a pain in the butt but entirely doable.   

[Conan71]

If you are a tow income household needing a one bedroom its very doable. You're trading space for new construction and other perks, plus the location.

Is that tow boat captain or tow truck driver?

[SXSW]

I don't know if this would fly in Tulsa, but you could significantly drop your development cost by reducing parking.  Parking garages cost ~$20,000 to build per parking spot (vs $100,000+ for underground parking).  On a 150ish unit development like the Edge, they easily spent $3,000,000 on the garage from construction cost alone, before the cost of the land (the land under the Edge's parking lot is big enough for an entire other apartment complex, but that's a complaint for another day).  Seriously, without that hideously long and low parking garage the Edge could probably have 50% more units.   That is a lot of rent to give up. 

Parking on the street in downtown Tulsa is just about the easiest thing in the world.  If you offered to drop my rent several hundred bucks per month and in return I'd park on the street, I'd do it.  I lived in downtown Tulsa in the Brady District without a parking spot with zero inconvenience even on the busiest nights.  I think I once had to carry my groceries three blocks but I lived.  I've also lived in Chicago and Boston without a parking spot, which was a pain in the butt but entirely doable.   

Are there streets that allow 24 hour parking on the east side of downtown?  I thought everything downtown was either metered or restricted to just nights?  When I lived in Denver I drove to work and parked on the street at night just outside downtown since it was 2 hour only during the day outside of 10pm-6am.  Though if you work downtown and your walking or biking that is a problem..

[johrasephoenix]

I'm not sure.  When I was in the Brady the popular streets had signs up saying they were metered but the meters had never been installed.... If you also parked a block or two away say west of Boulder of North of Cameron there weren't any meters.  I got the impression the area had been so desolate for so long the idea of someone paying to park there was just absurd. 

[cannon_fodder]

Some of the new developments do no include parking:  the Enterprise Building and The Edge being two examples.

[DowntownDan]

The Edge built a massive parking garage.

[cannon_fodder]

The Edge built a massive parking garage.

Massive?  Its two stories tall and takes up 1/4 of a block. Im fairly confident it doesn't have the capacity for one car per bedroom.

But my point was parking is NOT included in the rent for the Edge.   Parking is not included with your lease at the Edge. It's separate.  Just like at the Enterprise building they have negotiated with the parking garage across the street - but the agreement isn't included with your rent.  The trend is for apartments to make sure parking is available, but not included.

[Tulsasaurus Rex]

Massive?  Its two stories tall and takes up 1/4 of a block.

Don't try to sugar coat it. The Edge's garage sucks. It's not massive per se, as in number of spaces, but it's laid out poorly and it massively offends the (future) pedestrian experience along that street frontage. They could have and should have hidden it better. Why is it so wide and short? Why not make it twice as tall and half the foot print?

I know the answer is probably cost. But that strikes me as just infuriatingly short-termism on behalf of the owners. You would think that the best thing they could do to ensure future success for their project would be making it desirable to live in the building. That derives from having cool things right next door to the building. If they had built their parking garage up to four stories and halved the footprint it occupies, there could be room on that block for a retail outlet, or restaurant, or bar, or office whose workers would want to live in the edge. It would increase demand for renting an apartment in the Edge, allowing the owners to command higher rents. What they've done is saved $5 today and forgone the opportunity to earn $1 more a day for eternity. It's like a junkie chasing a quick fix.

[saintnicster]

Keep in mind, that all things being equal, the construction price per square foot for small units is generally going to be significantly higher than for larger units.  Your hypothetical 2 -1,000 sq ft units will likely have, at most, 4 bathrooms and 2 kitchens (by far the most expensive rooms).  Meanwhile, your hypothetical 3 - 600 sq ft units will have 3 bathrooms (only 1 less) and 3 kitchens (1 additional).

I missed the line in this post, but above I was talking about most of this was talking about 1 bed apartments (comparing to experiences in GreenArch), so one bath, one kitchen extra, plus washer hookups and whatever else type of spinning rims on the wheels.  

You right that I don't know exactly how things scale, but it feels like there is probably a base raw cost per unit, and then adding on square footage wouldn't scale too much compared to that over a set area.  Again, only comparing one bedroom apts, or even a studio/efficiency.  Going with multiple bedrooms allows but if you go with multiple rooms, you can split that cost with multiple people.

There has to be some type of middle ground between creating flop houses and a luxury apartment that caters $75-100/barrel oil.  If squarefootage alone isn't the answer, so what about amenities?  Maybe try creating smaller apartments middle ground apartments?  Overall, what is the occupancy rate with apartments, especially these new luxury units?  Are we as a city hedging sunk costs in these units when it might be better to target more of the service-industry types?

Meh, I dunno.  It's all navel gazing and armchair quarterbacking.  But I'm seeing this stuff, and it just give me a bad gut feeling overall  Save money where you can.  Not everything needs to be side-by-side/stainless steel, make the dishwasher optional, no in-unit laundry hookups, Formica countertops, whatever.

Parking is not included with your lease at the Edge. It's separate.  Just like at the Enterprise building they have negotiated with the parking garage across the street - but the agreement isn't included with your rent.  The trend is for apartments to make sure parking is available, but not included.

A thing that greenarch did was to allow you to park "for free" in the uncovered spots, but then make probably 80% of it a covered surface lot.

[johrasephoenix]

Don't try to sugar coat it. The Edge's garage sucks. It's not massive per se, as in number of spaces, but it's laid out poorly and it massively offends the (future) pedestrian experience along that street frontage. They could have and should have hidden it better. Why is it so wide and short? Why not make it twice as tall and half the foot print?

That garage on the Edge is pretty awful.  It functionally kills any future streetlife to the east or north of the building, which while abandoned today might very well be active places in 5-10 years.  The long, low on ramp on Hartford is especially bad.  I bet with the right design team they could've brought that garage internal by wrapping the building around it.   Or you could shorten it and make it 3 stories, which gives you a decent extra chunk of buildable land for extra apartments. 

[SXSW]

That garage on the Edge is pretty awful.  It functionally kills any future streetlife to the east or north of the building, which while abandoned today might very well be active places in 5-10 years.  The long, low on ramp on Hartford is especially bad.  I bet with the right design team they could've brought that garage internal by wrapping the building around it.   Or you could shorten it and make it 3 stories, which gives you a decent extra chunk of buildable land for extra apartments. 

I agree it's horrible and should've been wrapped by apartments like what they did at Renaissance on the other side of downtown.  The best thing to hide it now would be to add more landscaping and hope whoever owns the Edge decides to build a phase 2 and reconfigure the garage in the future.