Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.
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www.REBusinessOnline.com Western Real Estate Business • September 2015 • 51 which allow build- ers to go up, not out — can easily accom- modate a separate sleeping space, just as foor-to-ceiling windows can act as an extension of the outdoor space sur- rounding the unit. Alder Flats also features galley kitchenettes, a space-saving design that originally referred to the kitch- ens on ships that would have to be arranged efciently to maximize a limited area. The small unit size also means residents cannot allot space for a separate dining room table or eat- ing area, as every square foot counts, and each nook is performing "double duty," as Senden stated. "There are more options available these days for compact appliances to help the kitchen play a less prominent role within the unit," he continues. "Besides, no one eats at home when there are such good restaurants right around the corner. The idea is that the unit is a place simply for sleeping and showering. The rest of the time is spent working and socializing. Why waste money on space that's not go- ing to be used?" Rather than put money toward that, Alder Flats invested in the common areas, adding a barbecue grilling sta- tion and large community room with a full-size kitchen for those rare times when a resident does want to cook. It also created a rooftop deck that over- looks Downtown, Mount Rainier and Elliott Bay. Bike storage was another important component of this project, since housing a bulky bike in-unit is out of the question, even for the most space-savvy resident. Looking at Logistics Building a microsuite project that satiates some of the demand for down- town dwellings may sound like a no- brainer for developers, but these proj- ects aren't easy to get of the ground. One of the ironies of this trend is that land is so tight in these popular neigh- borhoods that developers oftentimes can't give the people what they want, even if they wanted to. "Finding land on which to develop new properties is the most challeng- ing aspect, as the developments large- ly require new construction," Neman notes. "There are some existing build- ings that can be converted into micro- suites, most notably small bachelor singles in buildings built just after the beginning of the 20th century. Usu- ally, however, land must be bought fresh or an existing building must be demolished to make way for the new development." Developers must also deal with the cities, which can impose density lim- its, parking quotas and accessibility requirements on microsuite projects. Senden notes the latter can afect a bathroom's design, making them larg- er than what would be ideal for such tiny spaces. This can be small potatoes, how- ever, compared to some of the ordi- nances created by cities with an infux of microsuites, like Seattle. The city contained 782 micro-units, with an additional 1,598 in the pipeline earlier this year — a much larger supply than any other city, according to a Seattle Times story released this past March. The Seattle city council responded to this supply by creating an ordinance stating all microsuites must contain at least 220 square feet, including a kitchen and bathroom. It also im- posed minimum parking standards on all new projects going forward. Once the land is found and cities are happy, developers are then tasked with making sure the project still pen- cils. "If an existing building is demol- ished, current tenants must be award- ed a repositioning sum to exit the premises," Neman explains. "Micro- suites generally provide great return on investment, but the investment it- self can be competitive and costly." Zander believes developers who can stick out these challenges will be rewarded in the end, however. "For the developer, they can real- ize a superior rent-per-foot premium for the smallest units," he says. "From an investor's perspective, the cost per foot will be dramatically higher than a standard property due to the achieved rent-per-foot metric, but the price per unit will be below the average. As investors and lenders realize more deliveries of micro-units will lease quickly and fnd an audience, any hesitation or resistance will vanish. As such, there is virtually no diference between the cap rate for a micro-unit development and traditional apart- ments." n Senden ENTERTAIN M ENT EXPERIENCE EVOLUTION February 24-25, 2016 PRODUCED BY www.interfaceconferencegroup.com/EEE2016 MORE IN FO & REGISTRATION L.A. Live, Los Angeles EARLY BIRD REGISTRATION ON LY $700! UNTIL NOV. 13th LEARN. From top retailers, theaters, entertainment venues, restauranteurs, shopping centers and retail developers and owners who have changed the face of retail environments around the world. SHARE. 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