Monday, March 15, 2010

Stamford fills the housing "donut hole"

I guess someone finally realized that there are people in Stamford who make more than $20,000 but significantly less than $1 million, so the Zoning Board passed an amendment "that will permit developers to expand the affordability range to include families earning between 25 percent and 80 percent of the area median income." Here's the Advocate article.

The upside is that middle-class people (like me) will actually have a shot at staying in Stamford. The downside, at least for the frou-frous, is that when they're not polishing their marble countertops, they might run into riff-raff like Stamford bloggers. The horror!

All joking aside, this is a good move by the city. It should allow more people to afford all the gleaming new apartments and reverse the trend of sticking all the poor people in housing projects in not-so-great neighborhoods. Here's hoping the developers don't try to pay their way out of letting us regular folk into their ivory towers!

15 comments:

StamfordNotes said...

Now if they can just fix the regular hole.

Streets of Stamford said...

Heck, I'll settle for fixing the gaping pothole on Morgan Street near Rite-Aid!

Anonymous said...

you know, its not necessarily greed that prevents the creation of any new middle class housing in Stamford, its plain life or death economics. the building trades are so ridiculously expensive around here (plumbing, electrical, concrete, general contracting etc) that by the time you get something built a landlord fairs much better by spending what is relatively a few dollars more to on a "fancy" landscaping, lobby or countertops which in turn allow for a substantive increase on the possible rent. I suppose autos are similar. They cant make a dime on the base model, but once you add on that fancy amenity package for $3k, which costs them $1k, they finally made 2k on the vehicle.

aside from true edge locations on the west and east side of downtown, you wont see much, if any, middle class housing built because the numbers simply dont pencil out.

Streets of Stamford said...

Anon: Don't forget about the price of steel and the most expensive ingredient of all: land! Of course I realize that it's expensive to build apartments around here. That said, if everything is "luxury" and rents for $2500 and up, you run a good risk of running out of potential tenants. Even if the apartments do fill up, you risk ending up with a bland, soulless city. Personally, I like a little grit in my city; that's what makes it a city!

If you kick out all the working-class people and replace their neighborhoods with gleaming glass bubbles, what do you really have left?

I would never deny any business the right to make a profit (legally), but I'm glad the city is looking at the bigger picture and trying to create a diverse, interesting place to live.

Anonymous said...

Streets, you missing my point. If $ could be made creating so called middle class housing, developers would be creating the product. I work in this field. I've crunched the numbers on hundreds of apartment complexes around the country for new construction. In florida the land/building cost/local income dynamics support the creation of profitable middle class housing. in coastal NE it just doesnt work. the cost of construction is darn high, that like i said, unless you try to market your product as luxury and get max rents, you'll never make the numbers work.

think about what i said. building in stamford is very much like the problem us auto makers have. if you follow the auto industry you know that on small cars detroit losses money. why? because there is no way under their cost structure to squeeze in a product. meanwhile, when you look at their light trucks where everyone gets the leather and sunroof, presto, they can profit.

Streets of Stamford said...

Hey Anon,

I understand the financial side of it. I guess I look at things from an overall quality-of-life or "how does this affect the city" point of view.

So let me ask you this: if the luxury trend continues, and all these expensive places are filled, what happens to the regular folk? I'm not talking about the people who qualify for federal housing aid and whatnot. I mean the teachers, garbagemen, plumbers and cops who make, say $40-80K.

I'm not trying to be argumentative or fight for "the little guy"; I want to see what you think the outcome would be in that scenario. I don't think you can create and sustain a market like that, where you aim high and shove everyone else out of the way -- at least not outside of Manhattan or San Francisco.

Streets of Stamford said...

I'll even expand it to the retail sector. Say each new luxury development has ground-floor retail, but it's so expensive that small, independent businesses can't even touch it. What do you get? Block after block of the same: Starbucks, Gap, Sephora and 101 banks, because only large chains and banks can afford the astronomical rents. (By the way, this is happening in New York City at an alarming rate. Long-time tenants are being forced out when their rent quadruples or when their building comes down to build yet another glass fortress of solitude.)

To quote Kip Bergstrom in Pivot Point, the latest publication from Reinventing Stamford: "If every space is newly constructed or newly renovated and commands top market rent, what you get is a bland place - filled with large, established businesses, upscale chain retail and higher income residents."

Is this what we want our city to look like, to the point that it's indistinguishable from every other city?

If not - what can we do about it?

Anonymous said...

Streets,

You are still missing my point. If there was a way to make a profit constructing so called middle class housing developers would pursue it virgorously. That is my central point. Think about it. I know my firm would jump on it could it be done.

The rest of my post is a bit of a ramble....

The development business is crazy difficult. If there is a product that can be brought to market at a profit, you would see it. No one is sitting around their office with a fabulous and profitable plan for middle class housing and sitting on it. No developer is going to forsake a profitable plan.

The dymanics of construction costs, land costs, local incomes , customer expectations and operating costs just dont allow the creation of mass middle class housing in coastal NE. Not unless you want to see something that looks like Co-Op city in the Bronx and then you have to ask, would middle class suburbinites live in such feature less / amenity less shoebox towers. My money is on no. Moreover, you'd be dissappointed to see that in todays world of construction costs, if Co-op city were to be built next to the trump, its rents wouldnt be more than 25% less for a ton less building (back to my earlier point, the high end features deliver more bang for the $). I dont think there is a market for a concrete highrise without any building features in Stamford. A building with 8ft ceilings and ultra basic apartments that run 20% smaller than what is typical today. due to a lack of land, there is absolutely no place in town to building any middle class single family product. the infrastructure costs alone (sewers, roads) can be mind blowing (enter florida again, where building on sand is cheap).

to be continued...

Anonymous said...

part II


historically, as you drive through new england towns, i have noticed something that is now rather obvious. when it comes to apartment buildings, what was once luxury is now middle class, what was once middle class is now econo and what was once econo is now garbage. as time ticks by much of what is marketed today as high end will fade over the coming 50 years into ever lower status as the new product of its time will make it feel obsolete.

now, to answer your societal programming concerns; i dont think anything more can be done beyond these 10% affordablility requirements. any effort beyond that is going to require tax dollars to subsidize at some capacity. the city will be a better city with new housing, even if it is expensive, rather than stifling new housing growth over affordability issues. as time ticks, the expensive housing will fade into nice middle class housing (just look at the other new england cities that have built no housing in 50 years; they are precipice of having 100% lower-middle and garbage housing because if it). i was just in one of those less than 10 years old 150+ unit apartment buildings in downtown that is marketed as luxury rental housing. my feeling after being inside the unit is that they are already well on their way to becoming middle class housing, give it 10 more years. The rents actually already prove my point: $1650 for a 1 bedroom loft on the 4th floor with about 900 sq ft. Thats a rent that is down from the height of the market and from what I can tell, in a building that is struggling to maintain 90% occupany (buildings really need to be 97% occuppied to make good $). Moreover, its a rent level that hasnt grown since the building came on line 7 or 8 years ago.

I've crunched the numbers, 1650 is not enough rent to pay to replace that building today. A soft rental market and high construction costs have put all the proposed rental buildins on ice.

its pretty amazing that with all the help Corcoran jennison has had with the Parkwest site they never got the next building out of the ground. again, i've cruch some guestimate numbers using similar projects from NYC and concluded that the market in stamford just isnt strong enough to pay for the cost of construction. rents are too low, cost too high. downtown stamford has a cost of construction that isnt far off from manhattan, but without manhattan rents and its precious 98% occupancy.

one final thought, the poor performance of street level retail has to be another killer for these proposed new developments like parkwest. if you can get that commercial space rented, it is an enormous lift to the bottom line and subsequently subsidizes the cost of construction for the residential portion. if you cant get the space rented (ie houlihans in the target building) its a tremendous drag to the bottomline.

Anonymous said...

you cant combine modern building code requirements + modern taste (darn it why do people making 40-80k expect so much?) + modern construction costs + modern planning/zonning/regulatory costs and generate housing that middle income people actually want in urban setting like downtown stamford.

its plan simple economics. find a way to reduce many of these costs and you'll get what you want.

until then, what did you expect the planner to say in the report? they always make statements like that in these studies. its a heck of a lot easier to be a critic and idealist planner than to actually build anything. lets see how in love anyone is when they have to fork over $ for $ losing ideas. its easy to tell an audience how to do something but never have accomplished it themselves.

that said, i actually do enjoy these planning studies...until they wade too heavily into the social issues which are filled with classism but not economic reality.

Anonymous said...

in order to kick start substative apartment growth in downtown stamford again, you need to see rents closer to manhattan's non doorman rents. land costs are much lower in stamford, while cost of construction isnt much lower.
http://therealdeal.com/newyork/articles/residential-rental-market-stagnant-report

Streets of Stamford said...

I get it. I really do. It's a shame that land prices, construction costs and everything else are so high. I'm curious to see how Highgrove, Trump Parc, and their future luxury cousins do in a small satellite city like Stamford. That may have an effect on what gets built in the future.

Even if the luxury trend continues, any increase in Stamford's housing stock can only help to mitigate prices (even if only in the long run).

That said, I have even more questions!

Is it possible to build nice, average apartment buildings sans giant windows and granite counters? (Like some of the high-rises on Strawberry Hill Avenue?)

How did the Malkins manage to build Metro Green, the affordable-housing building behind the train station?

How can developers revitalize a delapidated urban core populated by low-income residents, i.e. Poughkeepsie, NY? There's zero market for luxury apartments in a place like that, so does the city just have to lay fallow until someone comes along who's willing to take a loss?

Anonymous said...

hey, i just saw your post. when i get the time in the coming weeks, i will respond to your questions.

i am well aware how metro-green was constructed. its under section 42 of the tax code. google that nugget.

Anonymous said...

Sorry for the long delay.

1) Is it possible to build nice, average apartment buildings sans giant windows and granite counters? (Like some of the high-rises on Strawberry Hill Avenue?)

<---yes, its possible...but its perceived as unwise. the feeling is there isnt a significant market for new construction bare bones highrises. if it fails, you really have a turd. again, as i have been trying to explain, the cost of adding "luxary" is relatively low compared to pricing premium generated by said luxary. todays entry level new construction is better represented by the Adams (do I have the name right) over on Broad Street oppostive of the VW dealership than recreating the 70s era bare bones towers. If this product could be built and sold at a profit developer would jumpp it it. A small profit is better than none and none is all they have had for sometime now.

2) How did the Malkins manage to build Metro Green, the affordable-housing building behind the train station?

<--check out Section 42 of the tax code. a program called the Low Income Housing Credit was created in 1986 to induce the private development of income restricted housing. Each state doles out a certain amount of these federal tax credits based on the state population for private proposals to fulfill state affordable housing agendas. Southwood Square was built with LIHTC as well as the new developments on the west side (both built and planned). So the short answer is that Metro Green is a federally subsidized building.

3) How can developers revitalize a delapidated urban core populated by low-income residents, i.e. Poughkeepsie, NY? There's zero market for luxury apartments in a place like that, so does the city just have to lay fallow until someone comes along who's willing to take a loss?

<---pretty much, yes. however many states (it varies by state) make a good effort to do this with your tax dollars via the LIHTC program and other programs to steer housing into blighted areas to stir new private development. sometimes its successful and sometimes not. poughkeepsie's problem like much of america's small and medium sized cities is that economically there is no advantage to living in their downtown. Not one. Unlike stamford, where the surrounding towns are expensive and where people are more accustom (via NYC) to high density living, its a real challenge convincing anyone but college students and artists to live in a downtown atmosphere. College towns (sorry vasser is too small to count) nationwide are the only exception to this rule. Plus, circuling back to Stamford, a viable downtown area needs to also carry weight as a job center. Stamford is a job center, Poughkeepsie is not...at least, not in a meaningful way.

If there where easy answers to revitalize Poughkeepsie, just me, it would be done by now. Developers will execute any plan to make a dollar. In Poughkeepsie and the like, they see nothing but losses.

Anonymous said...

sorry for that sloppy post last night with the poor grammar and misspellings (its luxury!). it was late and i didn’t reread my work.