When developers provide multifamily housing, especially affordable options, it leads to creating healthy, resilient communities, according to presenters at MetroWire Media’s 2023 St. Louis Multifamily Summit, held at the LaunchCode technical training center on Delmar Blvd. Alan Bergfeld, business development manager with ARCO Construction, moderated the discussion.
“Development is important because everyone wants a neighborhood where they can live, work and play,” said Abdul Kaba Abdullah, executive director of Park Central Development, a Community Development Corporation (CDC). “You can shape who’s in the space.”
MetroWire Media STL event attendees enjoyed brunch and networking in the LaunchCode lobby prior to the panel discussion. Photo credit: MWM STL
While current trends are to create mixed-use projects, “There is a cost to having a mixed-income community,” Abdullah noted. “If it’s planned from the beginning with levels for everyone to be part of the process, you have an opportunity to create a neighborhood people will come to.” He cited Norfolk Street in the Grove as an example of a successful mix of housing and income.
Developers should be looking at how they can do projects that are inclusive, he said. “We have to be very intentional because it’s 40 percent more expensive to do a project than it was two years ago and interest rates are high — but mixed incomes can help.”
“Be honest and be open. Another key to success is being flexible. Be ready to change the project,” Abdullah said. “The key is doing more development work before you break ground.”
According to Brian Pratt, president & CEO of BallastCRE, trends in multifamily housing are being driven by how people communicate today. “Community-level engagement has changed — social media has changed everything,” he said. Neighborhood associations are often involved in these projects as well.
For a project to succeed these days, “Being involved and engaged with the community and having conversations is essential,” said Rania Lombera, director of multifamily operations, Intelica CRE. “Fostering relationships and giving back to the community is the only way to make it work.”
John Mueller, partner and designer with JEMA, suggested starting a multifamily project by figuring out “what people in the neighborhood are in love with. Once you understand that you can create buildings that foster emotional connections to the built university.”
Asked how developers can maintain affordability in multifamily projects, Pratt noted that the model for affordable housing is “completely different from market-rate. You need more resources and developers who are willing to commit. You have to build capacity and bring in more capital resources. You need the design and construction industries to buy in and help you find ways to lower costs in the least timelines.”
Mueller is seeing that “quality of life, materials and layouts are more important than square footage” now and hopes that “the days of McMansions are over.” “We’re seeing apartments and houses getting smaller,” he said. “People feel they want quality over quantity.”
For a project to succeed, “make sure your vision doesn’t get lost,” Lombera said. She sees amenities as creating a community feeling that goes beyond space to work or swim. “People want their new homes to be easy and convenient,” she said. “They see larger common areas as an extension of a rental home.”
Providing increasingly extensive amenities will continue to play an important role in delivering successful multifamily projects, Mueller said. “Something happened in 2007 that changed behavior for all of us: the iPhone.” It’s vital to understand how such technology affects lives, he said. The pandemic furthered the importance of technology, he added. “The effect has filtered into design trends and how we live (and work) in our homes. Amenities connect us and have the power to pull us out of our phones and bring us together. I love seeing larger buildings that have a community within a community.”
Mueller predicted that artificial intelligence (AI) will be “the next wave to hit us,” and that developers will have to understand how that technology affects lives and drives behavior.
Lombera agreed, “AI is probably on everybody’s minds,” she said. “We have fewer staff, so we have to understand how AI integrates with a project. It’s how we will communicate. Co-living spaces are starting to take off, especially for people aged 55-plus. It’s like college living for adults.”
The strategy for success requires shifting from a for-profit perspective, Abdullah said. “The challenge for each developer is to work with a CDC because they have access to tax credits. “You don’t always have to create a new entity — you can develop partnerships to provide technology and infrastructure.”
Pratt cited construction costs and bank liquidity as continuing issues, along with uncertainty about where interest rates are going. “I don’t think multifamily will be distressed, but I think we’re going to see a slowdown in development,” he said. With large, 100-plus-unit projects versus neighborhood-scale ones, offering popular amenities like a dog-washing station can save money in ongoing expenses. “About 50 percent of tenants have four-legged friends. A dog-washing amenity means one point for clogged drains versus dozens.”
“Consulting with operations teams will be very helpful,” Lombera said. “Business-to-business partnerships are huge. If a multifamily building can’t have a dog park in it, the developer can create such partnerships with neighborhood businesses to give residents shopping, medical and similar services at their doors, often with discounts. People will pay for such services."
“Amenities can be operational," Pratt added. “Everything in security is done via apps, which can make an existing project feel like a brand-new building.”
Abdullah highlighted safety and security amenities as the primary concerns for renters, including parents of students in rental housing. “The challenge is how to make the space look safe without appearing like a prison,” he said. “Lighting can be a factor” in combining attractive décor with safe space.
Adaptive reuse can be an important factor in creating more affordable housing by making creative use of existing buildings, panelists agreed.
“Transformation can happen in any building, no matter its age,” Mueller said. “The shape of a building is a major factor when converting an office property into residential. Light and windows are the biggest challenges. To radically transform a building is also very costly. It goes back to quality — older buildings have a distinct quality and continuing to make those conversions will remain important, even if we haven’t solved all of the challenges yet.”
“It will completely transform a community if developers can convert such buildings and bring new life to them,” she said. "One way to encourage community support for (these) projects is to use signage, social media, and marketing to illustrate what a building looked like originally and the stages of a conversion project as it proceeds."
Asked by the audience about what other cities are doing that isn’t occurring in St. Louis, Pratt noted purpose-built residential family communities and rental by choice. On the positive side, the St. Louis area is not experiencing the same insurability issues based on natural disasters as places like Florida are currently facing.
Building codes haven’t yet caught up with the need for larger gutters these days. New multifamily buildings are becoming more resilient to weather conditions, Mueller said.
“You can plan for minimizing risk in the process of developing a multifamily project,” Lombera said.
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MetroWire Media would like to thank sponsors MMG Real Estate Advisors, JEMA, McConnell & Associates, LaunchCode and Brinkmann Constructors for their support of MWM's 2023 STL Multifamily Summit. Mark your calendars for the next MWM STL event - Sports & Entertainment Summit on August 10, 2023. Make sure you are subscribed to our newsletters to receive event info and updates. Email lisa@metrowiremedia.com if you are interested in being on the panel, hosting or sponsoring the event.