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ULI Spring Meeting

Build up, down or tiny: Experts address growth and density

Build up or increase density — those are the options for San Diego real estate professionals who are trying to figure out how to accommodate a growing population with land that’s about 95 percent built.

One of the biggest challenges is the community’s perception that more traffic is instantly bad, regardless of how it flows, said Robert Little, vice president of development at Kilroy Realty.

Kilroy Realty is seeking approval for its One Paseo project in Carmel Valley, a mixed-use, vertically integrated project with office, hotel, retail and residential uses.

Little and other local professionals participated in a panel on building vertical at the ULI Spring Meeting last week.

“It is a challenge. Any sort of change in a small community is a challenge,” said Kathleen Garcia, planning and community development director in the city of Del Mar.

Garcia faces restrictions in Del Mar that limit buildings to 14 feet in height downtown and 16 feet in residential areas. The density in Del Mar is created by building basements, she said.

“The right amount of density is very different for every single community,” Garcia said.

Leo Wilson, chair of Uptown Planners, said each community has different concerns that range from anti-growth to pro-growth.

Jonathon Segal, principal at Jonathan Segal Architect, bypasses this challenge by avoiding the community review.

“I don’t think you can mandate good design,” Segal said, adding that if good architects are hired, there will be good outcomes.

Anthony J.H. Pauker, vice president of development at City Ventures, said Segal has received 60 awards for 19 projects and hasn’t had a community review. Segal checks planning manuals when looking for a piece of property to see if he can go under a zoning threshold to avoid the community review.

Wilson said that going through the planning groups can sometimes produce a better building. Regulations, such as the number of street trees, were “meant for the good,” but Wilson said dozens of pages of regulations are a “cumulative burden” that makes them not worth the benefit they might offer.

When choosing a location for a mixed-use development, Little said it’s important that the existing community is willing to accept change. It’s also necessary for developers to work closely with the community to develop a project that is the right size and the uses are appropriately planned for the site.

He said Carmel Valley, where One Paseo is planned, is “very well-balanced” with an employment center and a strong residential base, but is lacking in retail services.

“In Carmel Valley, $1.5 billion leaves the trade area each year,” Little said.

Parking density and traffic can be reduced with the use of a car service like Car2Go, Segal said. He added that “density reduction for affordable housing is magic.” Pauker said there could be a 30 percent density bonus by including affordable projects.

Another session at ULI’s Spring Meeting focused on smaller multifamily projects — some with an average unit size from 100 to 200 square feet.

“People will innovate and use the space the way they want to use it,” said David Adelman, principal of AREA Real Estate LLC.

Adelman’s first project was a 247-unit midrise in downtown San Antonio with an average unit size of less than 850 square feet. He said he plans to continue to reduce the square footage in future projects. The amenities include two swimming pools, courtyards, outdoor tables, gas grills, a boxing gym and dog park.

“We welcome all pets — as many as people want to bring,” Adelman said. “We have 80 pets living on-site. If anything, the dog park is too small and not dynamic enough. There’s a social community around the dog park. It’s a huge amenity and huge differentiator in the market.”

The building is also food-truck friendly, providing another amenity that he said is atypical. The less space the individual has in the apartment, the more important the amenities are.

“Every nook and cranny — we try to program for usability,” Adelman said.

One project includes a 456-square-foot unit for $755 a month; another has a 614-square-foot unit for $1,167 a month, Adelman said.

“People aren’t maxing out their incomes on these projects,” Adelman said, adding that the resident’s income can be four to five times the rent they pay.

More males tend to live in these units, he said, but that number has dropped from a few years ago. The residents are predominately single. And while Adelman expected to be building for 20- to 30-year-olds, he finds more 30- to 39-year-olds than expected, as well as people over 60.

James Potter, chairman of Kauri Investments Ltd., said customers want different things. His projects have an average unit size of 100 to 200 square feet. His company’s brand is Footprint, and they work on small projects that fit in neighborhoods, he said.

In Portland, Potter’s company has a 40-by-100-foot lot with 54 rooms. There’s a central kitchen unit, access to transportation and it's within walking distance of stores. Most of the projects don’t have parking spots. The units have a bathroom and come with a bed, table and chair.

“The amenity is the community they live in,” Potter said.

He finds his residents to be in their early 30s, some tired of having roommates, some using the unit as a place to sleep during the week because of a long commute. The average length of stay is more than one year, Potter said, and residents typically sign a 90-day lease.

A project in Oakland includes 80 rooms on a 50-by-125-foot lot.

“They’re calling it a hotel because that’s the easiest way for them to understand it in their system,” Potter said.

The competition has been increasing over the years, Adelman said.

“The thundering herd of developers is quickly running us down. We were the only guys five years ago, now we’re facing tremendous competition,” Adelman said.

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