Panoramic Interests used modular construction to speed up the process on one of their projects in San Francisco. (Panoramic Interests)

Panoramic Interests used modular construction to speed up the process on one of their projects in San Francisco. (Panoramic Interests)

During a panel at the 2013 ULI Fall Meeting in Chicago, Chris Bledsoe, chief executive officer of Stage 3 Properties, illustrated the ongoing crisis in affordable housing in places like New York City by showing a Craigslist post for a “room” with three-foot (1 m) ceilings. The upside was that the asking rent was only $1,100 a month.

Bledsoe said such listings show there are few affordable places to live in the most expensive U.S. cities for a person earning less than $100,000 per year, which is well above the starting salary for “knowledge workers”—graphic designers, computer programmers, and the like—that cities say they want to attract. Legal shared housing is in chronic undersupply. Kyle Freedman, CEO and founder of RoomMatchers.com, an online matching service, said 30 percent of the site’s users are searching for housing in the $750- to $1,000-per-month range, so the only way they can afford anything is by pairing up.

Harriet_panoramicJerilyn Perine, former commissioner of New York City’s Department of Housing Preservation and Development, said part of the affordable housing conversation is a question of perception. Only 23 percent of U.S. households are composed of two parents living with children under 25 years old, said Perine, now executive director of the Citizens Housing and Planning Council (CHPC), which advances practical public policies through better understanding of New York City’s most pressing housing and neighborhood needs. Singles living alone account for 28 percent of U.S. households, and adults sharing a home represent another 17 percent.

Five years ago, CHPC began its Making Room initiative, which brings together cutting-edge housing and demographic research, new design proposals, and pragmatic policy recommendations that would expand housing options. Its efforts are focused on three new housing types:

  • small, efficient studios designed for single-person households;
  • legal shared housing for unrelated adults; and
  • accessory units to make a single-family home more flexible for extended families or additional renters.

Among the impediments to such housing are city and state policies on maximum occupancy restrictions, minimum room sizes, lot coverage restrictions, and parking requirements.

Jay Valgora, an architect with Studio V Architecture in New York City, says micro-unit projects need to focus on more than just making smaller units. “It’s about making something better—more windows, more light, more modular, and more affordable,” he said.

San Francisco already has some experience with smaller modular units. Cara Houser of Berkeley, California–based Panaromic Interests said her company believes it has found the “just right” size for micro-units with its SmartSpace project in the South of Market neighborhood.

smart-bed

A Panoramic Interests micro-unit uses a “smart” bed/table to economize on space, much like the Murphy beds of old. (Panoramic Interests)

Though Panaromic had experimented with units as small as 166 square feet (15.4 sq m), SmartSpace units measure 275 square feet (26 sq m) and use a combined Murphy bed/table to maximize the usable living space. High-speed internet of up to 200 Mbps is a feature that scales easily, and the site is near a Bay Area Rapid Transit stop, so most residents do not need cars. Forty-one percent of San Francisco’s households are made up of a single person, and renting is on the rise, she said.

Houser said that though the modular construction methods used for SmartSpace units are not significantly cheaper than typical construction, it is much quicker. This is illustrated in this video:

Bledsoe’s company is hoping to combine smaller spaces with an improved shared housing model. The name Stage 3 refers to the life stage of emerging adulthood, which is getting longer as Americans delay having children until their 30s.

During the session, Bledsoe announced a partnership with RoommateMatch that has the goal of leasing the shared spaces more quickly for those who have not arranged for a roommate to share housing. Stage 3 is also working with Aon plc, a London-based risk-management firm, to provide a roommate insurance product protecting the buyer for up to two months if his or her roommate moves out unexpectedly. Bledsoe described a friend’s experience renting a one-bedroom apartment in Manhattan for $2,800 a month. The unit was then divided into three illegal bedrooms, each at $1,300 a month, giving the landlord an extra $1,100 per month in rent—a 40 percent increase in revenue.

Though services like Airbnb—an online service that allows people to rent unused living spaces to guests—are drawing the attention of regulators for a variety of reasons, Perine notes that they are filling a need. Many older people have too much space in their home; renting out a room a few days a month could allow them to continue to age in place rather than downsize.

This topic was crowdsourced via ULI’s Idea Generator, built on the MindMixer platform. Site registrants suggested a variety of potential topics, and then voted on which topic they thought would be the most compelling.