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Lofty Ideals

The Latest Trends in Multi-Family Housing


Trends  in Multi-Family Housing

Free rent! Free rent! We have all seen the brightly colored banners festooned across apartment buildings promising amenities to attract tenants. According to National Real Estate Investor, building owners of multi-family housing are increasingly using a variety of lures, from free rent to free health club memberships, to entice potential renters.

Occupancy rates are down sharply and industry analysts predict building owners may need to continue the offers to attract and retain tenants well into 2003 until a spike in job growth. “Today’s savvy consumers not only demand style, quality, and security, they also require convenience, excitement, and stimulation within the neighborhood they choose to make their home,” says Ricardo Dunin, president, Flagler Holding Group, Miami. Flagler Holding Group, based in Miami, is a major developer in the South Florida real estate market. Already a pioneer for introducing a condominium/hotel to Florida, the company is breaking ground on exciting loft condos this month.

Designed by one of Miami Beach’s most acclaimed architects, Bernard Zyscovich, the new loft project embodies an emerging trend of combining cultural amenities, multi-family housing, and a sense of community. Within walking distance, the area offers dining, entertainment, arts, and fine shopping. The project’s luxurious amenities include a landscaped rooftop pool area with spa; an exclusive penthouse-level fitness center; valet parking and multi-level parking; a conference room; 24-hour security; individual storage facilities; and a concierge. The facility will evoke New York City’s Flatiron building to complement the triangle-shaped construction site.

“The loft is one of the most significant trends in urban development in the past three decades, and The Meridian project embraces the loft’s many inherent charms – vast amounts of light and space, super-high ceilings, and an overall sense of liberation and peace,” says Durin. The loft interiors can be redesigned to suit the needs of the residents. Adds Durin, “The consumer wants to move back into the city. Today’s consumer works longer hours then [he/she] did 30 years ago and no longer wants to waste precious time driving when they can be with their loved ones or doing what they enjoy.” The project is already attracting a diverse group of buyers eager to adopt this lifestyle.

National occupancy rates registered at 94.7 percent, down from 96.1 percent at last year’s mid-year mark, according to Dallas-based M/PF Research. During the same period, rents were down by 1.2 percent. Despite the poor economy, the number of new construction projects hasn’t dropped significantly.

According to the National Apartment Index from Encino, CA-based Marcus & Millichap’s National Multi-Housing Group, a privately held real estate investment company, markets with the lowest expected vacancy rates in 2003 include Philadelphia, northern New Jersey, Los Angeles, Riverside/San Bernardino, Boston, Orange County, San Diego, Oakland, Sacramento, and Washington, D.C. Riverside/San Bernardino ranked as the leader in the index by posting high marks for expected rent growth.

The National Multi-Housing Group is predicting vacancy rates will rise 7 percent, due to several factors, including a loss of jobs in certain markets. These markets include the telecom sectors of Dallas, Austin, and Atlanta. The market has also been adversely affected by the high-tech bust and travel industry-related lay-offs in such high tourist areas as Florida and New York City.

Home ownership rates have increased dramatically nationwide. Roughly 400,000 renters have become homeowners in the last five years. Occupancy and rental rates are linked to job growth and national job growth, which were stagnant during 2002.

“The reality is this apartment recession that we have been through in the last 18 months is one of the mildest we have ever had,” says Linwood Thompson, national director, Multi-Housing Group, Marcus & Millichap, Phoenix. Some markets have felt the recession more than others, but across the country, the effect has been mild. Thompson is very bullish on the apartment market.

“I think we are going to bounce along the bottom during 2003 and work some of the concessions out,” says Thompson. Declining occupancy rates are pushing building owners to offer large-scale concessions to attract residents. In addition to offering free rents and waived apartment fees, building owners are presenting parking, appliances, and retail gift certificates to customers.

The vacancies come from an imbalance of supply and demand, because the industry is still developing more than it needs. “It is like turning an oil tankard. It takes about half a mile before it begins to start to turn. When the economy slows down, a lot of projects were put on hold or not started, but there is the effect of all the things still in process,” says Thompson. He is confident the real estate industry is strong and attentive to the current economic cycle and that it will bounce back soon.

Orenco Station, a small town in Oregon, is living proof that everything old is new again. At the turn of the century, the thriving Oregon Nursery Co. created the town – one of the first planned communities on the West Coast – for its employees. The quaint community, nicknamed Orenco, fell on hard times during the Great Depression and World War II. The streetcars, cozy bungalows, and friendly tree-lined streets gave way to typical postwar sprawl development and, eventually, decline.

Eager to counter years of misuse and neglect, the City of Hillsboro courted development and high-tech businesses near Orenco. Portland, OR-based PacTrust, one of the Northwest’s largest industrial and retail developers, originally planned to build retail projects on the 209-acre site. The expansion of the Westside MAX Light Rail changed everything.

In light of the new transit system, PacTrust teamed with homebuilder Costa Pacific Homes of Portland, OR, to create a New Urbanism designed community – a high-density, mixed-use, mass transit-oriented residential community. The newly reborn and renamed Orenco Station combines a diverse collection of multi-family housing with single-family homes, retail, and office space in a responsive, unique community.

In addition to traditional single-family houses and houses with attached apartments on small lots, Orenco Station features apartment buildings, townhouses, condominiums, loft apartments above retail space, and live/work lofts. “It is a complete community, as opposed to a subdivision,” says Dick Loffelmacher, retail development, PacTrust, Portland, OR.

Portland’s METRO regional government is committed to creating a mix of housing in the region between Portland and Hillsboro, OR, to suit employees in the growing number of high-tech jobs. “One of our objectives was to create a more urban product – more compact, more dense, so we could attract a diverse group of people. To achieve the density levels we wanted, developing these different types of housing was important,” says Loffelmacher.

PacTrust and Costa Pacific Homes initiated planning for the community in 1994. Together, they assembled a team of architects, landscape architects, engineers, and building experts, including Pacific Realty Associates, L.P.; Alpha Engineering; Fletcher Farr Ayotte; and Iverson Associates, all based in Portland, OR. Construction began in 1997 and the build-out should be completed this year. Denver-based Simpson Housing and Fairfield Development of Arlington, TX, developed the condominium and apartment housing. Planners and community design experts from across the nation consulted on the groundbreaking project in a series of charettes.

Currently, multi-family residential housing makes up over 62 acres, approximately 30 percent of the community land-use plan. What sets Orenco Station apart is that the town evokes the pedestrian-oriented communities of the past. Instead of isolated cookie-cutter apartments and houses, the community’s heart is its bustling town center.

The town center includes a grocery store, drugstore, banks, 70,000 square feet of retail, 30,000 square feet of office space, 40,000 square feet of loft apartments, an extended-stay hotel, and live/work lofts, which combine office, retail, and residential quarters. The mix of multi-family housing and small retail space encourages retail owners.

Orenco Station harks back to its roots with generous sidewalks, a town center as a gathering space, and a park within walking distance of every home. Adds Loffelmacher, “Orenco is a radically different form of development.” The housing is carefully situated on the land so that neighbors can live in close quarters – and in harmony.

The entire project echoes the local historic architecture, establishing a connection for the residents to the region’s rich history. “Our architects looked at the older, very nice subdivisions in Portland that had been built at the turn of the century back when those neighborhoods had trolleys or buses, a much more compact form of development. Orenco Station took a lot of cues from that period architecturally and all the housing is in a craftsman-type of style,” says Loffelmacher.

The developers and city planners collaborated to write a radically new zoning ordinance for the committee, such as slender streets and live/work dwellings and mixed-use space that is encouraged in the town center. The town is organized around a pedestrian spine that extends north from the light rail and a central park that is surrounded by easy-to-walk streets. “We were trying to create a community where the business owners and employees would get to know the people within the community,” says Loffelmacher. “From the dry cleaner to the florist to the ubiquitous Starbucks, all of the town center businesses are well-trafficked.”

The planners sought to create a town center that offers a blend of housing, jobs, and amenities. Well-designed, high-density centers in a walkable environment ensure access to goods and services and encourage a sense of community. According to Loffelmacher, the housing has attracted well-educated and affluent tenants and homeowners who could afford bigger, more expensive housing. “The people who are buying into this community and others like it are making a decision based on a lifestyle. They want to be part of a community, they want a town center they can walk to that is a gathering place, that creates a sense of place,” says Loffelmacher.

In terms of environmental stewardship, the Westside MAX line has already surpassed the projections of 25,200 daily rides, and Portland is one of the few areas where transit ridership is outpacing vehicle miles traveled. Green design is a potent new movement that is revolutionizing multi-family housing and the way communities of the future will be designed.

This January, the Washington, D.C.-based National Building Museum began a six-month exhibit: “Big & Green: Toward Sustainable Architecture in the 21st Century,” which explores the history and future of green design in large, commercial facilities, including multi-family housing and mass transit-based, sustainable community design.

In the 1960s and 1970s, green design emerged and in the residential market most sustainable design was of a small scale. Recently, large-scale projects and entire communities have applied environmentally sensitive approaches. The “Big & Green” exhibit offers in-depth profiles of 50 large facilities. “America’s large-scale buildings are using enormous amounts of energy, and, with continuing concerns about global warming, this exhibition will help focus national attention and dialogue on the importance of sustainable design. It will encourage leaders in the building industry to foster the much-needed change in the way we build,” says Jeffrey Abramson, exhibition chair and partner, The Tower Cos., Washington, D.C. The exhibit is broken into five principles: Energy, Light, and Air; Greenery; Water and Waste; Construction; and Urbanism.

Many urban planners are increasingly advocating cities that integrate work and residential zones. Other communities are looking to New Urbanism communities and considering high-rise multi-family housing towers intermixed in park settings.

In The Hungry Gene, Ellen Ruppel Shell’s book on the growing health crisis of obesity, one of the remedies she offers is that “Roads should be made safe for our children – and for us – if not with bike and walking lanes, then with firmly enforced regulations that give pedestrians equal consideration to that given cars. Over the longer term, zoning and tax incentives can be adjusted to encourage the development of living, working, commercial spaces within range of public transportation.” To promote good health, other communities, such as Manhattan’s new green high-rise apartment building 20 River Terrace, are blending skyscrapers with landscaped parks. Orenco Station is a living example that a pedestrian-based community with diverse housing can thrive.

There are many design and economic lessons to be gleaned from this amazing community: learn from successful older communities; build a strong consultant team; bring the jurisdictions on board to stave off major challenges in building codes, as well as local zoning and engineering codes; and involve the public section in the long-term benefits. The most important lesson is that, despite initial higher cost in mixed-use construction, the market is there for mixed-use, high-density pedestrian suburban development.

Orenco Station represents a step forward in traditional multi-family housing by harking back to the past. The experiment is a proven success and will hopefully encourage the development of other vital neighborhoods.

Regina Raiford Babcock ( is senior editor at Buildings magazine.

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