Fighting against McMansion apartment buildings

One commentator suggests apartments enabled by transit oriented development regulations in Los Angeles will be like McMansions in residential neighborhoods:

The development in question is on the 1500 block of South Orange Grove Avenue, a modest residential neighborhood one block east of Fairfax and two blocks south of Pico. The proposed structure is a five story, twenty-eight unit apartment building, replacing a single-family home and a duplex. It would be the tallest building in the neighborhood by two stories. The artist’s rendering above shows how it would impact the neighbors on the abutting block of Ogden.

Yet this particular building is only the first of many to come in Picfair Village and other areas throughout Los Angeles, transforming the character of our neighborhoods and adding boxy, out-of-scale buildings to a city already plagued by terrible traffic and failing infrastructure. Though the planning commission turns up its nose at the unappealing designs, they never fail to move the projects forward…

The bulk of this development is being done under the auspices of Measure JJJ, transformed by the City Planning Commission into Transit Oriented Communities (TOC) Guidelines. Shrugging their shoulders of any responsibility, the City Planning Commission’s members, along with City Planning Department staff (also busy with the equally pernicious Purple Line extension upzoning plan), fondly refer to the TOC Guidelines as “the will of the people,” washing their hands of responsibility…

For whatever reason, City Hall and City Planning Commission members are embracing the TOC Guidelines and fully abetting developers’ plans to move full steam ahead with real estate projects that will drastically alter the character of our neighborhood and many others throughout Los Angeles.

The term McMansion refers to a single-family home. The headline for this commentary – the text of the piece itself does not use the term McMansion – uses the term to describe a certain kind of apartment building: ones that will tower over blocks of single-family homes. While these apartments are not oversized single-family homes, they may have a similar effect to many McMansions with significant size and a change in scale. The commentator suggests this will alter how these blocks are experienced, particularly for those in homes adjacent to the apartment buildings.

The broader use of the term McMansion could be applied to a number of items. For example, I recall seeing articles in the early 2000s comparing boats and other consumer goods to McMansions. Generally, this use would refer to a supersized and/or extra luxurious model. Applying the idea to other kinds of housing could prove trickier. Could you have a McMansion tiny house? A McMansion accessory dwelling unit? A McMansion condo high-rise? Broadening the term to more housing could make a fairly complex idea – with at least four traits – even more complicated.

Who owns large apartment complexes in downtown Wheaton?

The national and international flow of capital in real estate is a well-established phenomena in the biggest cities but it is recognized less in suburbs. Here is an example of this in Wheaton, Illinois:

In the bigger deal, San Francisco-based FPA Multifamily acquired Wheaton Center, a 758-unit property in downtown Wheaton, from Edge Principal Advisors of New York, according to a statement from HFF, the brokerage that arranged the sale.

It’s unclear how much FPA paid—the statement did not include a price and FPA and Edge representatives did not return calls—but the property was expected to fetch about $135 million, according to Real Estate Alert, a trade publication. At that price, the sale would generate a big profit for Edge, which paid $44 million for Wheaton Center in 2014 and invested about $40 million in a major renovation.

The seller of the other property might want to forget about Wheaton altogether. Invesco, an Atlanta-based pension fund adviser, sold Wheaton 121, a 306-unit apartment complex that opened in 2014, for $72 million, according to Connor Group, the Ohio investment firm that bought the property. That’s nearly 25 percent less than the $95.8 million Invesco paid in 2015 for the complex, 121 N. Cross St.

The main culprit: property taxes. Wheaton 121’s taxes rose so much after Invesco bought it that the added expense significantly depressed the property’s value, according to people familiar with the complex. A jump in the property’s assessed value pushed Invesco’s 2018 tax bill up to $2.0 million, a whopping 47 percent increase from 2016, according to DuPage County records.

I suspect most suburbanites know little about who owns major pieces of land in their community, let alone who owns large apartment buildings (which may be more or less common depending on the suburb). Unless the owner makes a big deal of their ownership with signs or presence in the community, daily life just moves on.

But, this infusion of money from far away could have a significant influence on a suburb. Local developers may not be interested in sizable projects or may not be able to access the same amounts of capital. At the same time, a local developer may be more attuned to local conditions. Presumably, all the owners of nicer properties want to be seen as good actors in the suburb but they may have varying levels of involvement and commitment to the exact community.

The joint spread of McMansions and apartments in Charlotte

Rarely are the evils of McMansions and apartment complexes joined together but one observer in Charlotte suggests this is exactly the case:

As a 20-year resident of Charlotte, I’ve long observed that shoehorning apartment complexes and oversized homes in and around uptown does not prevent sprawl. Apartment complexes and McMansions are popping up like mushrooms in our historic uptown neighborhoods, yet sprawl has accelerated.

I strongly suspect we’re being sold a bill of goods by elected officials who are firmly under the thumbs of developers. Developers need us to believe they’re doing something for the greater good so we’ll allow them to destroy the character and design of our historic neighborhoods.

At first glance, these are two very different kinds of development. Apartments bring density and certain kinds of residents (whether lower-status residents in the eyes of neighbors or wealthy renters who are gentrifying places). They may include tall buildings or a lot of buildings. In contrast, McMansions are large ostentatious homes that may be teardowns (replacing smaller, older homes). They may not loom over surrounding area like apartments and generally McMansion residents are well off but the change in housing unit may be just as stark.

What appears to be the common thread of concern from this one resident is that both kinds of development are different than what is currently there. If I had to guess, these “historic uptown neighborhoods” are filled with well-kept, single-family homes with decent sized lots built decades ago. Both the McMansions and apartments, in their own ways, present very different kinds of structures. The same concerns might be leveled against an ultra-modernist home or a block of row houses: they are not like what is already in the neighborhood.

Often, McMansions or apartments are restricted to areas of similar structures. This is typically the purpose of zoning: keeping single-family homes away from land uses that residents fear might disturb the neighborhood’s character, and, ultimately, their property values. When developers or local officials start mixing uses, particularly in established areas, this may not go well at the beginning.

Construction of apartments increases in the Chicago suburbs

The pace of apartment construction is at the highest in the Chicago region since 2004:

Rental construction reached its highest level in more than a decade last year in the Chicago suburbs, and 2018 is shaping up as another busy year. More than 4,200 units were completed in 2017, and about 3,900 more units are projected for this year, according to data from Marcus & Millichap and MPF Research…

The rental resurgence is the result of several factors, including a rising disparity between suburban and downtown rents, pent-up demand after little new construction over the past decade, and declining home ownership, industry experts say…

Unlike downtown Chicago, where much of the development is clustered together, many suburban projects are miles from another new development, meaning they face minimal competition for new renters…

“Now, with condo development just about going away, you’re seeing towns and cities giving building permits to apartment projects they wouldn’t have considered a few years ago. Also, I think apartments have lost some of their stigma because now they’re so damn nice.”

Three quick thoughts:

  1. While this may be an increase in apartment units, this is still behind the construction of single-family homes. For example, the Chicago region had 6,000+ new housing starts for single-family homes in 2016.
  2. It is interesting to note where the apartments are being built: probably in desirable communities (relatively wealthy, close to jobs and amenities) and often in downtown areas (this is cited in this same article). To flip this around, apartments are not desired everywhere or by all suburban communities.
  3. Will the trend toward apartments in the suburbs continue to increase? This might be a correction to a lack of apartment construction in the last decade or it might represent an enduring change as suburban residents desire more rental units.

Overall, apartments in the suburbs are relatively unique compared to the overwhelming preference for owner-occupied units. Thus, the numbers regarding apartment construction in the suburbs bears watching.

Arms race among new luxury apartments includes live-in musicians

If you have the resources, you have some options in shopping for a nice new apartment including a building musician:

Amenities for high rise buildings are generally culled from a well-honed list of known popular offerings—a lounge, gym, a pool, an outdoor deck, and grilling stations wouldn’t really lead anyone to blink an eyelash. Being LEED certified is often expected.

At the 34-story, 298-unit Exhibit on Superior, amenities for the studio, convertible, and 1 to 3-bedroom units include those, as well as keyless entry with smartphone integration, stainless steel appliances, in-unit washer and dryer and more. Quite nice—but the downtown luxury apartment market glut has led to an arms race to attract new residents and keep rents from being slashed.

And even though the price point is comparably lower (and the floor plans are comparably smaller) than other neighborhood offerings to attract a younger demographic, developer Magellan Development Group and MAC Management wanted to bring some artistry and magic to their building (and to their other properties, if this catches on). Here’s the idea.

A contest is open for the best acoustic guitarist and vocalist to live and play for one year at Exhibit on Superior. The winning musician gets free rent at an unfurnished studio for a year, the title of Musician in Residence, and the chance to hone their skills while playing against any number of cool nooks and spaces in the bKL Architecture-designed building. The residents get in-house live entertainment and bragging rights to live in a building with the first so-called Exhibit A-Lister.

My first thought was that sounds like the arms race among colleges to provide amenities for prospective students ranging from excellent food, state of the art gyms, and private and luxurious dorms. Then it hit me: these luxury apartment buildings may be going after that same demographic: college graduates who want the excitement of the city. If we could narrow it even more, perhaps they are employed in a creative industry or field.

After thinking this through a bit, it is clever to pair residential real estate with music. We might expect something like this in commercial spaces or privately-owned property that is trying to operate like public space (perhaps a park like area outside a major office building). But, this continues the trend of some of the other “weapons” in this residential arms race: providing building amenities that encourage sociability while simultaneously offering well-appointed private units. Let’s hope all the residents like the acoustic guitar scene…

Apartment construction increases in the Chicago suburbs

The construction of apartments in the Chicago suburbs reached some high marks in 2016:

Meanwhile, in the suburbs, more apartments were opened last year than in any time in the past 20 years and demand for those units meant suburban rents grew more than the increases downtown, according to research by Appraisal Research Counselors…

The rents in new or almost-new units in the suburbs increased 6.7 percent in 2016, while they increased just 2.85 percent downtown, according to Appraisal Research. The median rent was just $1.39 per square foot in the suburbs in 2016, while downtown it was $2.89 a square foot for space in a newer building. In other words, for 1,000 square feet a renter would pay on average $1,390 in the suburbs and $2,890 for one of the new downtown apartments. An older but well-kept Class B building downtown would be $2.52 a square foot, or $2,520 for 1,000 square feet…

The strongest occupancy in 2016 was in DuPage County, with 95.7 percent of the apartments full and the median price of a two-bedroom apartment at $1,315. Northwest Cook County was 95.4 percent full with a two-bedroom apartment averaging $1,390. The weakest area was the North Shore at 93.8 percent occupancy and a two-bedroom apartment at $2,446…

“From Schaumburg to Naperville, you are starting to see new construction,” said Stephen Rappin, president of the Chicagoland Apartment Association. It’s a trend that’s occurring nationally after the surge of construction in downtown areas.

This is where the debate between whether cities are growing or suburbs will win the day breaks down. What if the American future is denser suburban development and a shift away from single-family home ownership even as people stay in the suburbs? This would represent a change from “typical” suburban life – single-family home, lawn, lots of private space – while better mimicking some urban conditions such as denser housing, renting, and giving up a home to be near certain amenities.

As this article suggests, it is not surprising that the suburban apartment demand would be high in places with more economic and quality of life opportunities, places like Schaumburg and Naperville that have little greenfield space but where people would still want to live. Just like Chicago where apartment construction has boomed in the Loop but lagged elsewhere, a similar process will likely take place in the suburbs. This may be good for developers since there will be high demand for certain places but isn’t necessarily good for aiding issues of affordable housing.

Study suggests Chicago has too much apartment parking

A new study finds there are too many parking spots for Chicago apartments:

A single underground parking space can cost $37,000 or more to build, Smith said. Developers in Chicago are generally required to build one parking space for every apartment unit, which has led to a gap between supply and demand, and a fixed cost that is passed on to renters, he said…

As part of its yearlong study, Smith and two colleagues visited 40 residential parking facilities in the middle of the night last summer to survey occupancy. The properties ran the gamut from affordable to luxury rental apartments in Chicago and suburban Cook County and included some older buildings that predated the parking requirements ordinance. The research team discovered lots of open spaces.

On average, the buildings supplied .61 parking spaces for every unit, but used only .34 spaces per unit. Adjusted for occupancy — vacant apartments that don’t need parking — the lots were about two-thirds full, according to the report…

In the suburbs, where public transit is less accessible and car travel is a way of life, municipalities often require developers to provide more than one parking space per apartment unit. The study found the parking oversupply extends to the suburbs as well.

As Americans drove more – even in cities – local officials tried to keep up by building roads and highways, planning communities around automobiles, and writing regulations that provided plenty of parking. All those giant parking lots outside of big box stores or shopping malls are the result of planning for once-a-year parking needs while the rest of the year those lots sit empty, look ugly, and contribute to water runoff issues.

But, what happens if driving habits change? Or, planning as a field changes from emphasizing cars to greener options? As the article notes, Chicago has changed regulations for new apartment developments near mass transit. This seems like a win-win for developers: they have to devote less space for parking which can then go toward units and this may even drive up the price of the parking they do build because there is a tighter supply. At the same time, I wonder if this appeals to certain urban homeowners – particularly younger residents rather than all those Baby Boomers supposedly moving to cities – and not others.