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  • Writer's pictureKerwin Donis

Different Cities, Identical Buildings - The Uniformity Crisis In Multifamily Explained

I know you’ve seen one of these buildings if you live anywhere near an urban area.

Now, “cookie-cutter” real estate is not new. But in multifamily, there are similar-looking buildings showing up in major metros across the U.S. that are leaving many asking, “Can you even tell what city you’re in?”

The rising uniformity in new multifamily buildings is a result of multiple different factors. And the debate over whether or not people should even care about design in the face of our nation’s affordable housing crisis has also increased.

We’ve seen these “podium” buildings in cities like Denver, Dallas, Atlanta, and even in our backyard of Durham, NC. Even if design doesn’t matter, this design homogeneity trend is a telling symptom of a few larger occurrences in the real estate industry that even those who don’t focus on construction should be aware of.

Because it is weird to think that you could compare two cities across the country from each other, and not be sure which is which. So let’s explain what is causing what I’m coining the “uniformity crisis” in multifamily, and what it means for the multifamily industry at large.

Affordable Housing Crisis and Housing Trends and Apartment Construction Trends

420,000 apartment units were built in the U.S. in 2022, a half-century record. This was still not enough to keep up with demand. The nation faces a massive housing shortage, which has driven up rents and spurred developers to inject more supply into the market.

The affordable housing crisis is relevant because it explains why there is so much demand for housing - even homogenous multifamily housing.

Multifamily complexes might not be the most uniquely designed, but they are a promising solution that offers more affordable and efficient housing to the millions of Americans who struggle to keep up with the rising cost of living. Inflation, low housing inventory, and rising construction costs have only exacerbated the affordable housing crisis that existed long before COVID.

According to Liz Falleta, an architect and professor at the USC Sol Price School of Public Policy, building these similar multifamily properties - which have been called “podiums” is beneficial to every part of the development process, “from lenders to contractors to communities, are very familiar with the type, which should make them easier and faster to build.”

Of course, the resulting product that looks similar across the country has been received with criticism. While some might wonder why it even matters what these properties look like if they’re addressing the affordable housing crisis, others argue that design is important to the integrity of a city, the same way artwork should be unique.

It is important to note that this isn’t the first time a building design has seen widespread adoption. Both “the monotony of American suburbs…[and] trailer parks” grew in popularity in earlier years and were seen by critics as “cookie-cutter.”

Aside from the affordable housing crisis, other factors have made podium buildings so popular.

Reason #1: City Guidelines and Zoning

In cities like Seattle, Washington, there is a city board that oversees the construction of new buildings. Called “design review boards,” the guidelines of these boards require developers to design their buildings so that it matches the aesthetic of similar buildings nearby.

Similarly, the limited supply of land zoned for multifamily development has added constraints on developer’s ability to create unique looking properties while still maximizing the space they have available. This buildable land is “small yet concentrated,” which obviously leads to these podium buildings being built right next to each other. In Seattle, about 75% of residential land is zoned for single family properties. This means that multifamily developers need to maximize the remaining areas, and these are clustered in certain parts of the city.

Building codes also influence this design trend. Since a majority of cities in the U.S. have the same building code, it makes sense that developers will follow the same rule book. Building codes have adapted to allow developers to opt for “stick-construction” instead of brick or cement. As a result, more buildings are being built using wood materials, a more cost-effective alternative, but not without its own downsides.

Reason #2: Expenses and Costs

Developers don’t want to lose money. This simple principle explains a large reason for why podium buildings are becoming much more prevalent.

For one, podium buildings are built with wood. Wood is about “...20 percent to 40 percent less than building with cement, steel, or masonry.” This wood design typically uses “flat windows that are easy to install,” and “Hardie panels, a facade covering made from fiber cement.” These make it cheaper to design podium buildings, while still allowing for a good final product.

If you’re in real estate, then you’re aware that construction costs have gone up substantially in recent months. So, in order to reduce expenses, developers are using cheaper designs. A unique design is simply more expensive and labor intensive. Making a variety of unit sizes and designing complex construction plans eats into the profitability of a developer. Most of these deals are being developed to sell to a REIT or are being funded with institutional capital or private equity, which incentivizes the developer to make similar products across the board.

Reason #3: Concentration Of Development

Another factor that has contributed to this rise in podium buildings is the concentration of development groups. According to the National Multifamily Housing Council, five of the 35 biggest developers built about 40% of the multifamily units in the nation. The same developers developing more of the supply is likely to result in some patterns.

Reason #4: Cheaper Labor

As we mentioned earlier, costs of construction have been increasing. So, stick construction has become more attractive not only because of the cheaper cost of materials, but also of labor. Workers don’t have to be as skilled as with cement or steel workers. Stick construction also makes it easier to add plumbing and electricity to buildings through the open spaces.

There are lots of benefits to building with wood. Wood is more flexible, so construction workers can cut around mistakes. Concrete and steel require a lot more work to address issues.

Why Wood Is Problematic

However, there are some downsides to wood. The Great Chicago Fire of 1871 is proof of this. It destroyed thousands of buildings that were built with wooden “balloon-frames” similar to those being used today in podium buildings. After this, Chicago banned wood construction, which still has echoes today. New York saw similar measures to prevent fires. Stick construction had essentially been banned aside from suburban homes in major metros.

Wood Makes A Comeback

Eventually, building codes evolved as insurance and fire safety improved. Wood frame apartment buildings became allowed, first at three stories, then four, until the first “five-over-one” building was opened in 1996 in Los Angeles.

Looking Forward

Critics of podium buildings dislike the aesthetic of these properties. This is not unlike the way people criticized neighborhoods with copy-and-paste homes that have now become sacred historic districts.

What was once considered a waste of land and uninspired is now protected and celebrated.

So maybe this suggests that despite the heat podium buildings are receiving today, one day, they’ll be enshrined as relics of the past that ought to be preserved. Until then, developers will have to grapple with this unexpected cost of efficiency - and that’s disdain from the architects and design aficionados.

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