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Affordable Housing, Economics, Home Prices, Housing, Housing Trends, Minneapolis / St. Paul Housing, Multifamily, Twin Cities Real Estate

St. Thomas real estate analysis for July: Tight market is the result of several long-term trends that won’t change soon

Current trends, including the low number of moderately priced homes, are expected to continue through the end of 2017.mortgages

Current real estate trends in the 13-county Twin Cities region, including the historically low number of moderately priced homes available to purchase, are the result of several long-term trends that are expected to change slowly over time. That’s the conclusion reached by the Shenehon Center for Real Estate at the University of St. Thomas’ Opus College of Business. The center examined the Twin Cities’ long-term trends, expected to continue through the end of 2017, in its monthly analysis of metro area real estate data. “The historically low-supply-of-homes-for-sale situation has been with us for the last several years although it has been most acute since mid-2015,” said Herb Tousley, director of real estate programs at the university.

He cited five statistics that illustrate the housing supply-and-demand situation in the Twin Cities:

  • Days on Market:       It was 53 days in July. That’s 15 percent less than a year ago and the fastest turnover since 2007.
  • Month’s Supply: It was 2.9 months in July. That’s 24 percent less than a year ago and the lowest 12-month average since 2005.
  • New Listings: It was 7,522 in July. Down 14 percent from June and 6 percent from a year ago.
  • Closed Sales: It was 6,030 in July. The annualized number of homes sold has increased 59 percent since early 2011.
  • Homes for Sale: It was 14,457 in July. The annualized number of homes for sale has decreased 48 percent since early 2011.

The shortage of homes is most pronounced for homes selling for less than $200,000 and for those selling between $200,000 and $399,000.

For example, in July there was only a two-month supply of homes selling for less than $200,000 and a 2.6-month supply for homes selling between $200,000 and $399,000. However, there was 5.2-month supply of homes selling between $400,000 and $599,000 and a 10.5-month supply of homes selling for more than $600,000.

Also in July, 56.3 percent of homes available for purchase were under $400,000 while 81.7 percent of homes sold were under $400,000.

The median price for homes sold in the Twin Cities in July was $239,000. That’s down $6,000 from the all-time high median sale price of $245,900 that was set in June. However, it still is in record territory; the previous high was $238,000 set in June 2006.

Supply Side Trends

The Shenehon report cited these long-term underlying trends on the supply side of the Twin Cities market.

  • Americans are keep their homes longer. CoreLogic reported recently that the number of years homeowners owned their homes increased by three years between 2007 and 2013 and it has increased an additional year since then.
  • The homeownership in the Twin Cities, as reported by the U.S. Census Bureau, was 68.6 percent in the second quarter of 2016. That’s the highest rate of any major metro area in the nation. Nationally, the rate is 62.9 percent.

“Since we have a very high ownership rate and homeowners are keeping their homes longer, the result is fewer existing homes being listed and a shortage of homes available for sale,” Tousley said.

Demand Side Trends

According to this month’s Shenehon report, “On the demand side the simple answer is that people want to live here.”

  • The Twin Cities population has been increasing and is expected to increase for at least the next 10 to 15 years. This is mainly due to migration from rural areas and other parts of the country, and immigration.
  • Housing is affordable. According to a recent Bloomberg News report, the Twin Cities area ranks fourth in the top-10 list of most affordable places for people between the ages of 24 and 44 to purchase a home.

“These people are going to need a place to live here,” Tousley said. “Our diverse economy, strong job growth and high median income attracts people to the area.

“Favorable economic conditions coupled with historically low interest rates and an increasing number of potential home buyers will continue to create strong demand for single-family homes.”

How long will the shortage last?

According to the Metropolitan Council, the Twin Cities region had 1,176,600 owned or rented households in 2015, up almost 59,000 since 2010. During that time, however, only 43,000 housing units were added. The remaining 16,000 new households moved into existing housing, and that in turn reduced the vacancy rate. “This growth pattern is expected to continue for at least the next five years,” Tousley said. “It is unlikely that we will be able to build our way out of this situation in the near term. “Single family home builders have not yet returned to pre-recession production levels. Over the last several years there has been a great deal of multi-family construction but much of this new product has been high-end luxury units, beyond the financial reach of many households. “For the housing market to become more balanced between buyers and sellers we are going to have to add a significant number of affordably priced rental and for-sale housing units. “These units need to be affordable to households who earn the area median income in order to keep up with the expected population growth in the Twin Cities market area. As this happens the market should begin to slowly come back into balance. “However, this is a process that is going to take a number of years and until then we should expect similar market conditions to what we have experienced over the last couple of years. “In the meantime, expect to see solid annual price appreciation for existing homeowners. As you can see from the table below in the past year the supply of homes for sale has become even tighter, especially for homes are priced at less than $400,000

The St. Thomas indexes.

Here are the Shenehon Center’s monthly composite index scores for July 2016. The index, which tracks nine data elements for the three types of sales (traditional, short sales and foreclosures), started in January 2005. For that month, the center gave each of the three indexes a value of 1,000.

  • The July 2016 index score for traditional sales was 1,192, up .3 percent from June 2016 and up 5.7 percent from July 2015.

 

  • The July 2016 index score for short sales was 1,031, up 2.1 percent from June 2016 and up 5.9 percent from July 2015.

 

  • The July 2016 index score for foreclosures was 875, which is unchanged from June 2016 and up 7.1% from July 2015.

For the third consecutive month, the score for traditional sales set new record highs. “Although the increase was small in July, it is the result of a continuing tight supply of homes for sale couple with very low interest rates,” Tousley said in Shenehon Center’s July report.

 More information online

The Shenehon Center’s complete online report for July can be found at: http://www.stthomas.edu/business/centers/shenehon/research/default.html.

The report is available free via email from Tousley at hwtousley1@stthomas.edu.

 

 

 

Economics, Home Prices, Housing, Housing Trends, Industry News, Minneapolis / St. Paul Housing, Multifamily, Real Estate Lending, Real Estate Trends, Residential Real Estate, Residential Real Estate Index, Twin Cities Real Estate

A Brief Summary of the 2015 Twin Cities Housing Market. This Year was a Good Year, What About 2016?

We examine some of the more important questions about the Twin Cities housing market in 2016 and offer some thoughts Houseforsaleabout where the market is headed.

An analysis of Twin Cities real estate data for 2015 through November shows that the housing market is continuing to recover along with the economy; home prices, the number of closed sales, pending sales, new listings, and the percentage of traditional sales (not foreclosures) are all on the upswing.Meanwhile, a historically low number of homes on the market is continues constrain the number closed sales. This has created an imbalance in the market where buyers outnumber sellers and leads to situations involving multiple offers and homes selling above asking price.

Will 2016 bring more of the same? In this month’s Residential Real Estate Report Herb Tousley, director of real estate programs at the university will examine some of the more important questions about expectations for 2016. These questions are;

  • What will happen with median home sale prices in 2016? How long will it take for them to approach pre-crash levels? Look for an increase of 6% – 8% in the median sale price of homes sold in the Twin Cities. **
  • What will happen to the number of homes sold during the year? Look for an increase of 4% – 6% in the number of closed sales in 2016. **
  • What will happen with the number of homes available for sale in 2016? We are expecting an increase in the inventory of homes for sale of 1% – 3% compared to the previous year’s levels. **
  • Will interest rates and mortgage rates continue to rise in 2016 and if so, what effect will it have on the housing market? In 2016 look for rates to drift from just under 4% to slightly over 4% by the end of the year. **
  • What will happen with new housing starts in 2016? Will home builders break out of the doldrums next year?   In 2016 I am expecting an increase in the number of permits issued of about 10%. **
  • What will happen with apartment development and rent levels? Will the market continue to be able to absorb the expected number of units in the pipeline?   Our expectation is that next year will be another good year for apartment developers with an additional 3,800 – 4,000 market rate units being added to the existing stock. We also we expect that the strong local economy and continued employment growth will sustain continued rent growth of 2% – 2.5% in 2016. **

 **For a more detailed explanation of the above answers you can download the complete November Residential Real Estate Report at: http://www.stthomas.edu/business/centers/shenehon/research/default.html.

Real-Estate-Supply-and-Demand-300x259The Residential Real Estate Report is a monthly analysis of the 13-county metro area prepared by the Shenehon Center for Real Estate at St. Thomas’ Opus College of Business. Each month the center tracks nine housing-market data elements, including the median price for three types of sales: nondistressed (traditional-type sales), foreclosures, and short sales (when a home is sold for less than the outstanding mortgage balance). More details about the market, including an analysis of distressed-property sales during the winter months, can be found on the Shenehon Center’s website: http://www.stthomas.edu/business/centers/shenehon/research/default.html.

Research for the monthly reports is conducted by Tousley. The index is available free via email from Tousley at hwtousley1@stthomas.edu.

 

 

Commercial Real Estate, Development, Economics, Housing, Housing Trends, Industry News, Multifamily, Real Estate Trends, Residential Real Estate, Uncategorized

Developer Makes a Bet on Prairie-Home Boom

Related Paid $300 Million for Apartments in Texas, North Dakota

 This article was reposted from the Wall Street Journal on March 18, 2014. It was written by Craig Karmin and Eliot Brown

A two-bedroom recreational vehicle at North Dakota Housing’s RV Park in Watford City rents for $2,350 a month.  -North Dakota Housing

Related Cos., the developer best known for luxury condominiums and big commercial projects, is turning its sights to low-slung apartments on the North Dakota and Texas prairie, where a shortage of housing tied to the energy boom is allowing landlords to command some of the highest rents in the country.

The company, run by Miami Dolphins owner Stephen Ross, last week paid around $300 million for 20 apartment complexes with 3,000 units in Midland and Odessa, Texas, according to people familiar with the transaction. It also is in advanced talks for a deal on an existing project in North Dakota’s Bakken region, and plans to raise up to $300 million for a fund focused on shale-rich communities from desert areas near the Mexican border to the Appalachian basin in the East, the people said.

Mr. Ross is following a small band of investors, including private-equity giant KKR & Co. and real-estate firm Westport Capital Partners, into the residential and commercial markets of new and resurgent energy towns a world away from the cities and suburbs where they usually build or buy. They are drawn by rents that would seem more reasonable in Midtown Manhattan and Silicon Valley, the result of almost nonexistent unemployment and low supply.

A two-bedroom apartment in Williston, N.D., for example, can go for $3,000 a month, or more. In nearby Watford City, North Dakota Housing LLC rents a two-bedroom trailer for $2,350 a month. The same rent could fetch a spacious luxury apartment in cities like Las Vegas or Phoenix, or a studio in new towers in New York.

“We think it’s a unique opportunity,” says Justin Metz, managing principal of Related’s fund-management group.

The boomtowns in Texas have been around since oil-drilling rushes of previous decades, but those in North Dakota began sprouting about five years ago as energy companies started to pull oil and natural gas from shale-rock formations through a process known as fracking. Their populations have skyrocketed, overwhelming the existing housing stock. Many workers continue to be housed in barrack-like “man-camps.” While riding a boom is risky, investors point out that they are getting compensated with high yields. For example, Related is expecting the initial annual income from the apartment portfolio it purchased last week will be more than 10% of the purchase price, according to people familiar with the matter.

By comparison, investors on average are getting a yield of about 6% on rental-apartment acquisitions and that figure can dip below 4% in major cities like New York, according to data firm Real Capital Analytics. “Typically, pricing gets ahead of real-estate fundamentals,” says Mr. Metz of Related, referring to high employment and rapid economic growth in the oil and gas-rich regions. “Here you have strong real estate fundamentals and pricing hasn’t caught up with it yet.”

Still, some analysts are warning that job growth eventually will level off and begin to fall after the initial labor-intensive effort of drilling wells is complete. Employment in the rapidly growing petroleum sector of the North Dakota Williston Basin, for instance, is projected to rise from 14,153 in 2009 to more than 53,000 in 2020, before falling to 40,000 by 2030, according to North Dakota State University’s Department of Agribusiness and Applied Economics.

Meanwhile, developers already are adding to supply, causing Moody’s Investors Service last month to issue a report warning that rents in North Dakota boomtowns are “well above sustainable” levels. “It really intrinsically doesn’t make sense for a town with no physical barriers to entry to command the same rents as New York or San Francisco,” says Tad Philipp, director of commercial real-estate research at Moody’s Investors Service.

Not all bets have been winners. For example, Flathead Glacier Group LLC, a Bozeman, Mont., real-estate company, defaulted on a $24 million loan backed by 134 rental apartments in Williston and Watford City just four months after it was sold into a mortgage bond, according to Trepp LLC. Last week, Trepp reported the loan went to 90 days delinquent from 60 days. Inquiries to Flathead were directed to a firm run by loan sponsor John Dunlap, who didn’t respond. But a spokeswoman for Halliburton Co. confirmed that it terminated its lease for 40 units owned by Flathead in August when Halliburton completed construction of housing for its workers in Williston.

Still, many investors and planners believe it could be years more before supply catches up with demand, pushing rents down. For some of the early real-estate investors in the latest boom, cash is pouring in as rents rise. Average rents in Williston have risen from about $1,000 a month in 2009 to nearly $2,500 at the end of 2012, the latest available data, according to the Williston Regional Economic Development Corp.

KKR was one of the first big-name investors to show up, announcing a 164-acre master-planned community in Williston in 2012. The private-equity firm expects to complete this summer eight rental apartment buildings on the site. The apartments have been coming to market gradually and KKR officials say they are leasing 20 to 25 a week. KKR and its partners are spending about $150 million to build the apartments, and to prepare vacant lots that they are selling separately to home builders.

Follow this link to the article: http://online.wsj.com/news/articles/SB10001424052702303287804579447463140236306?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303287804579447463140236306.html&fpid=2,7,121,122,201,401,641,1009

Write to Craig Karmin at craig.karmin@wsj.com and Eliot Brown at eliot.brown@wsj.com

 

Affordable Housing, Architecture & Design, Development, Economics, Home Prices, Housing, Housing Trends, Industry News, Multifamily, Real Estate Trends, Residential Real Estate, Think Outside The Box

Micro Apartments Yield A Big Boom in the Small Space Sector

microapt2

The following commentary by Ori Klein was reposted from DSNews. Micro Apartments are becoming more popular in cities where land prices are very high near the most desirable locations.  How long until this trend arrives in Minneapolis / St. Paul? Don’t be supprised to see a development like this before long in the Uptown or downtown Minneapolis submarkets.       -Editor

Ever since the economy took a hit in 2008, downsizing has been a top priority for many homeowners and renters. The McMansion is out; low-maintenance living is in.

You can see it in traditional listings as well as on the real estate auction block—for the past several years, capacious luxury mansions have been sold via auction due to previously languishing on standard real estate listings; this continues to be a popular method of sale for owners looking to liquidate these mammoth estates (just ask Michael Jordan). With finances still in flux for most Americans, cutting back on monthly costs of maintaining a home or apartment is essential. Enter the micro apartment—the latest trend in economical living space.

Being scooped up by young urban singles, service workers, recent grads, and retirees on a fixed income, the micro apartment is the epitome of the downsize. Typically weighing in between 200 and 350 square feet (at most), these units often include private bathrooms and modern building amenities, yet require sharing a kitchen and patio with other micro dwellers. Many consider this a small sacrifice due to the clever space-saving floor plan that offers such furnishings as a dining room table which transforms into a bed, as well as a host of built-in shelves for storage. Bundle that with Internet access and an optimal location near city hot spots and transportation, and micros can be the ideal home for some. Micro apartments have become favored dwellings in leading metropolitan areas such as New York, Boston, San Francisco, and Seattle.

microapt1USA Today recently covered this real estate sector uptick, reporting, “Though tiny has long been typical in Manhattan, mini-apartments are popping up in more U.S. cities where land is finite, downtowns have regained cachet, and rents have risen. In a digital age when library-sized book collections can be kept on a hand-held device, more Americans see downsizing as not only feasible but also economical and eco-friendly. . . . Developers say they can’t build micro-housing fast enough.”

Seattle, in particular, is leading the way with micros, where this style of living is exceptionally popular for young singles who want to reside within city limits. Jim Potter, founder of Footprint Investments and chairperson of Kauri Investments, a real estate investment and development company, has already completed six buildings with 40 to 60 micro apartments each in Seattle and is in the process of developing similar buildings this year in Portland, Oregon, and Jersey City.microapt3

“We don’t do any advertising, and we’re 100 percent occupied all the time,” Potter said. “It is a national phenomenon and Seattle is ahead of the pack. . . . Nobody else is producing something at this moderately priced range. You get a brand new building with a new bathroom. You get Internet access and it’s fully furnished. In general, our buildings are on major bus lines and/or light rail.”

Seattle may be ahead in the micro-space now, but it may not be for long. Despite a blanket 400 square-foot requirement on all apartments in New York City, the Big Apple is also entering the micro arena.

“Last year [Mayor Michael] Bloomberg, along with the Department of Housing Preservation and Development Commissioner, Mathew M. Wambua, launched the adAPT NYC Competition, a pilot program to develop a rental building composed of micro-units,” AOL Real Estate reports. “The winner of the competition proposed 55 units ranging from 250 to 370 square feet (23 to 34 square meters), made of prefab modules. The building is scheduled for completion in Manhattan by September 2015, and will include a rooftop garden, lounges, a deck, laundry, bike storage, a cafe, and fitness room.”

San Francisco and Boston are getting in on the micro action as well, where these “aPodments,” “micro lofts,” or “metro suites,” as they are often called, are being sought after by service workers who want close proximity to their jobs, as well as techies who consider utilizing a micro as a second home for late nights in the city. The economical rent is the greatest draw.

Continue Reading

Affordable Housing, Government Policy, Multifamily, Property Management, Real Estate Law, UST Real Estate in the News

Should Property Owners Be Required to Provide Air Conditioning to Tenants?

Steve Katkov, UST Real Estate Professor and business and real estate attorney at Thompson Hall, talks to Fox 9 about renter’s rights in the summer months. Should landlords be required to provide air conditioning to their tenants in the summer similar to the cold weather rule in the winter? Here is what Professor Katkov had to say:

KMSP-TV
Industry News, Multifamily, Twin Cities Real Estate

Minnesota Shed 11,400 Jobs in April, but Metro Area Showing Growth

A press release from the Minnesota Department of Employment and Economic Development (DEED) highlighted 11,400 jobs lost statewide in April of this year. The largest losses occurred in trade, transportation, utilities, and government sectors. The information, education, and health care sectors all grew during the month.

DEED May 2013 Jobs Report

DEED May 2013 Jobs Report

The Twin Cities Metro Area has bucked the statewide trend, having added 26,000 jobs over the past year. A market report by Marcus & Millichap predicts that the metro will add 49,000 jobs during 2013, of which a significant number will be in the health services sector. This employment growth, couple with stronger renter demand, has kept multifamily vacancy in the range of 2.5%, among the lowest rates in the nation.

The Twin Cities metro has added jobs every year since 2009 (source: Marcus & Milllichap)

Multifamily vacancy has remained low despite increasing supply (source: Marcus & Millichap)

Commercial Real Estate, Development, Economics, Investment Real Estate, Multifamily, Office Real Estate, Real Estate Trends, Retail Real Estate

AIA: Architecture Billings Index increases, Strongest Growth since 2007

In another sign of improvement in commercial real estate the Calculated Risk blog in a recent posting notes a continuing increase in the AIA Architecture Billings Index.  When architects get busier that usually indicates an increase in new construction is not far behind.

Arch. BillingsNote: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From AIA: Architecture Billings Index Continues to Improve at a Healthy Pace

With increasing demand for design services, the Architecture Billings Index (ABI) is continuing to strengthen. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the February ABI score was 54.9, up slightly from a mark of 54.2 in January. This score reflects a strong increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 64.8, higher than the reading of 63.2 the previous month – and its highest mark since January 2007.

Conditions have been strengthening in all regions and construction sectors for the last several months,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Still, we also continue to hear a mix of business conditions in the marketplace as this hesitant recovery continues to unfold.”

• Regional averages: Northeast (56.7), Midwest (54.7), West (54.7), South (52.7)

• Sector index breakdown: multi-family residential (60.9), mixed practice (56.9), commercial / industrial (53.3), institutional (50.7)
emphasis added

This graph shows the Architecture Billings Index since 1996. The index was at 54.9 in February, up from 54.2 in January. Anything above 50 indicates expansion in demand for architects’ services.

Every building sector is now expanding and new project inquiries are strongly positive (highest since January 2007). Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an “approximate nine to twelve month lag time between architecture billings and construction spending” on non-residential construction.  This index has been positive for seven consecutive months and suggests some increase in CRE investment in the second half of 2013.

Affordable Housing, Development, Multifamily

Seward Commons, A Sustainable Transit Oriented Development

In the Seward neighborhood of Minneapolis, Redesign, Inc. is close to finishing construction on the first building in a multi-phase transit-oriented development called Seward Commons. The project is happening on light industrial property to the southeast of the Franklin Avenue light rail station on the Hiawatha Line. Phase I of the project is a $10 million, 4-story, 60-unit supportive housing project developed in partnership with Project for Pride in Living. Seward Commons will ultimately encompass 4 acres and include a mix of 300 multifamily units and approximately 20,000 SF of commercial space developed in six phases.

An aerial view of the Seward Commons site (Source: Redesign)

An aerial view of the Seward Commons site (Source: Redesign)

Redesign worked closely with the local neighborhood group and business association to develop a shared vision for the site, which includes transit-oriented design principles and a focus on sustainable stormwater management methods. As a non-profit, Redesign has a mission-based approach to development. While they do use traditional market fundamentals to analyze the feasibility of a project, their real estate decisions are based on their mission to build healthy neighborhoods and engage community members.

Redesign was drawn to the Seward Commons site in part because of the opportunity to better connect residential areas of the Seward neighborhood to the nearby Hiawatha Light Rail station. In order to accomplish that, they worked closely with the City of Minneapolis to improve the transportation infrastructure in and around the site, including adding a street connection to Cedar Avenue and bicycle access from 24th Street to the Hiawatha trail which runs parallel to the Hiawatha Light Rail line adjacent to the site. These improvements where consistent with transit-oriented principles of improving street grid connectivity and walkability. They also added value to the Seward Commons site by making it more accessible, which may improve the feasibility of retail development in future phases.

Seward Commons site map, showing planned development phases and infrastructure improvements to 22nd and 24th Streets (Source: Redesign)

Seward Commons site map, showing planned development phases and infrastructure improvements to 22nd and 24th Streets (Source: Redesign)

The project has not been without its challenges. According to Eddie Landenberger, Senior Project Manager at Redesign, the biggest hurdle thus far was securing the acquisition finance package, which included a mix of private loans and public funding from Hennepin County and the City of Minneapolis. Eddie also noted the complications associated with managing short-term industrial tenants in the properties on the site which are planned for redevelopment in future phases. Those short-term tenants provide cash flow which is vital to defray operating costs during the long-term redevelopment process, but lease agreements must be carefully structured to allow flexibility when the time comes for the next phase of redevelopment.

Redesign is now working on closing on Phase II of the project, which will be a HUD 202 senior housing project co-developed by Common Bond. Phase III is currently in the planning stage and will likely involve market-rate apartments. The final phases will be developed according to market conditions at the time, but will likely involve some amount of retail space.

Source: Eddie Landenberger, Senior Project Manager, Redesign

Affordable Housing, Commercial Real Estate, Development, International Real Estate, Multifamily, Real Estate Trends, Retail Real Estate, Think Outside The Box, Urban Planning

IKEA expands into new territory: International property development

This post was written by Dan Jackson, a 2012 UST MBA graduate. Dan completed many of his electives in real estate including participation in the spring 2012 REAL 714 International Real Estate Development course in the Cayman Islands.

Photo credit: IKEA

The Big Blue Box… furniture products that are easy to assemble… cheap and affordable, yet chic items… Swedish meatballs and cheap meals are all items that remind people of the retail giant IKEA.  But the retailer now wants to get you to think outside of the big blue box.

The popular Swedish home furniture products company IKEA has its sights set on expanding its well-known footprint.  The next endeavor for the company, which already has a large international presence, revolves around building entire communities where people will be able to live, work, stay and play.  According to the Globe and Mail  IKEA is “launching a bold push into the business of designing, building and operating entire urban neighbourhoods.”  The Globe continues to state that while this is a new and bold endeavor for the furniture icon they still want these new neighborhoods to have an emphasis on the traditional affordability concept that IKEA is well-known for with its furniture products model.  One of IKEA’s current slogans is “Affordable solutions for living better,” and this is the type of slogan that the property development division anticipates as they move forward into the first phase of development of these new communities.  The property development team wants to create communities that are beautiful, well-maintained and allow for a maximum lifestyle benefit, but yet still affordable for families and individuals. Continue Reading

Affordable Housing, Commercial Real Estate, Development, Green Building, Industry News, Multifamily, Real Estate Trends, Residential Real Estate, Think Outside The Box, Urban Planning

Will Micro Apartments Go Macro?

Several urban job centers have committed to building tiny, affordable housing units.

There is a new multi-family housing trend beginning to appear in some of the higher priced housing markets around the country.  Ultra small “mirco-apartments” are one answer that can make apartments affordable to young renters in these high priced areas.  Will this trend find it’s way to the Minneapolis / St. Paul Market?  This article by John Caulfield recently appeared in BUILDER

From: BUILDER 2012

By John Caulfield 

An 11,775-square-foot building with 23 micro apartments is being wedged onto a 3,750-square-foot lot between two other buildings in San Francisco’s SoMa district.

Construction has begun on an infill project at 38 Harriet Street in San Francisco that its developer, builder, and module supplier believe could determine whether micro apartments remain a highly publicized curiosity or are seen as legitimate housing alternatives for young urban professionals seeking cheaper, greener, and walkable living spaces.

“There are a lot of eyes on this project, a lot of interest,” says Naomi Porat, president and co-founder of Zeta Communities, whose factory in Sacramento, Calif., is close to completing the 12- by 65-foot modules that will be used to construct an 11,775-square-foot four-story wood-framed building squeezed onto a 3,750-square-foot lot in this city’s South of Market Street (SoMa) district. That building will contain 23 micro apartments measuring around 300 square feet each, with nine-foot ceilings, kitchens and baths, washers and dryers, and multipurpose built-ins for storage and workspaces that can convert to sleeping areas.

These apartments reflect a “Smart Space” concept that the project’s developer, Panoramic Interests, created with a team of architects and designers to address the needs of millenials poring into urban job centers where affordable housing is perennially in short supply.

“In San Francisco, 8,000 new tech workers have been hired this year alone,” says Patrick Kennedy, the owner of Panoramic Interests, to illustrate the potential demand for micro apartments. His firm test-drove its Smart Space design with a 160-square-foot prototype it built in a warehouse in Berkeley, Calif., and housed an MIT grad student for three weeks who provided feedback about what he thought did and didn’t work.

Kennedy told the San Francisco Chronicle that prospective residents of micro apartments are looking for a “launching space as they get established.” In an interview with Builder, he described micro apartments as “a return to more collaborative communal living.” He observed that millenials view apartments in the context of a lifestyle that is more socially and technologically defined. “They’ll trade 100 square feet of space for 100 more megabytes of Internet,” he quips.

And with monthly rents expected to start at $1,500 (with five of the 23 apartments being offered at a below-market rate of $910 per month), these micro apartments should be available for significantly less than the $2,000-plus per month an under-500-square-foot studio apartment fetches, on average, in San Francisco.

Read the entire article: http://www.builderonline.com/construction-trends/will-micro-apartments-go-macro-.aspx

John Caulfield is senior editor for Builder magazine.

 

The 300-square-foot apartments will feature 9-foot ceilings, kitchens and baths, storage, and flexible built-ins.

Panoramic Interests

These renderings show how renters can manipulate the space inside the apartments to turn a sleeping area into a work or eating space.

  • Panoramic InterestsLarge windows and high ceilings give these tiny spaces a more capacious feeling.