One thing that comes up time and time again when I’ve discussed smart growth with residents in the area is the inability for families to live that lifestyle. There are thousands of people who, in a perfect world, would love to live close to where they work, but find that the square footage to price does not make sense for small families. Many of these folks would love a townhome sized unit downtown that doesn’t cost more than a single family home in the outer suburbs.
When faced with paying more and getting less square footage, the majority of people continue to want the greater square footage, despite a willingness to concede some size if prices were more normalized. In the case of townhomes near downtowns or metro, the pure drivers are all about land. A lack of developable space means exorbitant costs for land, which in townhome formats is more critical due to surface parking needs and maximum 3 to 4 story heights.
In order to get 385 townhome units in Fairfax County, one would need between 14 and 18 acres due to parking/roads, building footprints, open space, screening/buffers, and storm water management. 16 acres anywhere near a commercial center could easily exceed $150 million… which is why you don’t see many downtown townhome projects. That land cost adds a $400,000 premium to every unit. The ones you do see have to be priced well into the 7-figures in order to return the cost of development.
Row-scraper
A row-scraper would be a skyscraper which incorporates townhome sized layouts as the typical unit. While construction costs for high rise construction is more per square foot than standard timber, the savings occur from reduction in land cost and combined construction costs from multi-purpose design (rainwater harvesting stormwater management reuse for mechanical processes). A 385 unit townhome property of 16 acres can be reduced to a 2 acre row-scraper (with open space), reducing land acquisition costs by $130 million.
Construction costs including land for a 700,000 square foot (550,000 in non-common areas), 385 unit row-scraper would be approximately $165 million. Each unit could be marketed at $530,000 for units on average of 1425 square feet, and still provide a 25% return for the builder. That price seems steep, but consider the fact that townhomes in Arlington within 1 mile of metro are selling for $950,000. Some with a few hundred extra square feet exceed $1.1 million, all above $500 per square foot. The row-scraper would sell for $372 per square foot for a significant profit.
Prices of $530,000 provide a middle ground for young families looking for the additional space but wanting to retain location. In some cases, even when you expand the townhome search out 10 miles from most commercial centers, prices still remain above $700,000 in many areas for new construction, and well into the $400,000 for smaller aging stock. No wonder so many families who like the idea of urban living end up making concessions to live further out than they’d like.
Obviously the $530,000 row-scraper unit is not an affordable solution for lower income families, but it provides a template for how urban areas can still retain families who prioritize location over size. It has the ability to add supply to the under served and high demand townhome market, without the need for limited land space. That supply in turn lowers townhome prices outside of the immediate commercial business district.
If we want to make urban areas more heterogeneous, and open to all ages and demographics, we need to incorporate designs and concepts that include families, not just age in place boomers and millennial renters. The row-scraper shows that this can be done in way to meet the niche market in a more cost effective, and therefore market capable, way.