Looking at renderings of Union Wharf, a project that broke ground in December in Baltimore’s historic Fells Point waterfront community, it’s difficult at first to decipher who the project serves. The mid-rise structure could be a resort, with its infinity pool and yoga studio overlooking the city’s harbor. It could be a boutique hotel, with its modest but airy loftlike rooms capping a podium of amenities, including a movie theater, bar, lounge, and business center. In truth, Union Wharf is a new multifamily housing project. Surprisingly, all these amenities aren’t meant to attract homeowners. They’re to draw renters.
Toby Bozzuto, president of Bozzuto Development Co. and developer of Union Wharf, says that rentals now rule the multifamily typology. His company has more than 4,100 rental units in the works or under construction throughout the Mid-Atlantic and Northeast. This mirrors what market analysts such as Cushman & Wakefield are seeing in the broader multifamily market. Brian Whitmer of Cushman & Wakefield recently told The New York Times that rentals “could be on pace to revisit prerecession conditions in the near term.”
Bozzuto attributes the rise in high-end rentals to the needs of Gen Y. “Gen Y is the largest demographic boom since the baby boomers,” Bozzuto says. “They are coming into the market and, assuming they find jobs, they are looking for places to live. Eight years ago, they might have tried to stretch and buy a house, but in this new world, they are more inclined to rent. We have this perfect captive audience looking for apartments.”
The lifestyle of this audience is changing the floor plan for multifamily. “Gen Y spends the least amount of their time in their unit, so we’re spending more money in enlarging the amenity areas,” says Sanford Steinberg, AIA, principal of Steinberg Design Collaborative and past chairman of the AIA’s National Residential Knowledge Community. Pools, courtyards, outdoor fireplaces, bars and cafés, fitness centers, and high-tech business centers are among the many benefits luring renters to sign leases.
Smaller unit sizes also mean cheaper rents for residents and more density for developers. Unit sizes have shrunk from an average of 925 square feet to below 700 square feet, according to Bozzuto. “A lot of my competition is trying to race to design the best microunit,” he says. “People are trying to understand what you can do to make an excellent small unit without sacrificing anything.”
Underused spaces, such as the dining room, were the first to go. Most new apartments emulate a loft with a small kitchen that opens to a living space. Bozzuto predicts that the kitchen will be the next room to dramatically shrink as appliance manufacturers recognize the market demand for space-saving items such as microfridges.
Outside the unit, however, things are only getting bigger. Chris Harvey, a principal and director of design at Hord Coplan Macht (HCM), says that many of the firm’s multifamily projects are seeing major retail on the first floor, such as grocery stores and coffee shops, as well as resident amenities. Take, for example, the pool at Union Wharf, a project designed by HCM for Bozzuto Development Co. Set in a landscaped courtyard, the 175-foot infinity pool will include a wet deck where guests may place deck chairs in the water. Nestled amongst this vast outdoor space will be private areas for tenants to have a quiet dinner with friends.
Bozzuto says that it’s this emphasis on design that helps yield strong rental returns. “I believe that architecture and design make a massive impact as to whether someone will rent in your project,” he says.
What appeals to Gen Y also appeals to other markets, according to both Harvey and Steinberg. “The level of fit and finish is so high in many of these projects that there are some empty nesters coming into these as well,” Harvey says.
While the rental market may be blowing up, and with it lines of credit for veteran developers to bring projects to completion, budgets are still tight. The result: High-rises are being replaced, in many cases, with more-affordable, podium-based mid-rises to keep construction costs lean. “We’re seeing a one-level podium of concrete and four or five levels of wood on top all over the Mid-Atlantic,” Harvey says. “It’s more affordable and you still get density.”
The placement of these projects is another interesting trend: many are located on urban brownfield sites. “Developers are focused on transit-oriented development. Any site that happens to be near a metro stop or a light-rail or a train line is a very hot property,” Harvey says. “People are looking for a place to live where they can wake up, go downstairs and get a coffee, work out, and then jump on the metro and get to work. Then they can come home and go to the grocery store in the base of the building.”
Market-rate rental isn’t the only project type seeking transit-oriented brownfield development packaged in smart design. The West Hollywood Community Housing Corp. (WHCHC), a California nonprofit development company focused on affordable housing, selected a busy urban site on Santa Monica Boulevard for its Sierra Bonita project, which opened in 2011. Composed of 42 one-bedroom units sized at about 620 square feet each, the rentals are reserved for people with disabilities and HIV.
Patrick Tighe, FAIA, of Patrick Tighe Architecture designed the $14 million project to be a showcase building. “There is a lot of stigma associated with housing low-income folks, so you have to say that you’re going to do a high-quality design when bringing a project to a neighborhood,” says Rose Olson, AIA, director of housing and real estate development for WHCHC.
“We didn’t want the building to look like an affordable-housing project,” Tighe says. “We wanted it to have movement and light and strength.”
He achieved this by designing the apartments around a central courtyard supported by a steel-braced frame. He used that steel frame as a design element, developing a five-story lattice structure in the courtyard and then taking that motif to other parts of the building, such as a screening device at the front of the project. Photovoltaics power the common areas and solar thermal on the roof heats water for residents for free.
Tighe, collaborating with architect John V. Mutlow, FAIA, is now designing a second affordable-housing project with WHCHC, a $15.3 million development called La Brea Affordable Housing. The scheme centers on a courtyard theme, but it will include a mix of apartment sizes. Located at the prominent corner of Santa Monica Boulevard and La Brea, Tighe played with the elevations of the corner piece so that it becomes a sculptural public face as well as major circulation for the building.
Tighe is testing a new building technique for this façade element: a fiberglass-reinforced polypropylene panel that will be manufactured and then cut into ribbon panels in a shop. “By using this new material, we’re hoping to get bold results within our price point,” he says, which is about $200 per square foot.
While this latest housing boom in rentals has been promising, Bozzuto predicts that lenders will soon stem the tide of financing in order to assess the future. “It’s been incredibly robust and healthy the past 12 months, but financing is starting to slow down,” he says. “Banks made a lot of bets in 2011, now they want to see how they pan out. Next year may be much harder to finance.”