Against a litany of cross-currents and headwinds, builders in many markets need a product mix and community design that meet density requirements, attracts buyers and pencils financially.
While density mandates may be most familiar in land-constrained markets such as coastal California, density ranks as a growing concern in more sparsely populated markets like Montana. For builders, the key is recognizing that density does not translate as a one-size-fits-all equation across markets.
Rather, it must be approached in the context of each market’s unique constraints, opportunities and buyer preferences.
This dynamic served as the basis for a session at the Pacific Coast Builders Conference (PCBC) on July 28. Panelists agreed that meeting density goals is highly market-specific and requires product strategies, amenities, and site plans that align with local buyer expectations. While relying on townhomes and apartments is a tried-and-true strategy, there are many ways to achieve density.
“Cities give us a density. Design tells us how many ways we can achieve that, and then the market ultimately tells us if we’re a success or not,” Jonathan Boriack, Principal at KTGY, said when opening up the conversation.
Tailoring a product mix to density requirements
Emily Boyd, Director of Business Strategies at Brookfield Residential Land, explained that in the San Francisco Bay Area, where she works, buyers are attracted to a wide variety of product types. While the entitlement picture in California can be complex, this dynamic allows developers flexibility when designing higher-density projects.
“We have the benefit in the Bay Area of having a very wide breadth of acceptability for products. So we can do four-story stacked flats where you’ve got a two-level townhome over another two-level townhome. You’ve got three-level detached and three-level attached,” Boyd explained.
In Brookfield Residential’s Bay Area communities, a three-story detached townhome sells for a premium over a similar three-story attached product. Therefore, by incorporating closely separated detached homes, local builders can help satisfy density while capturing the premium associated with detached products.
“Detached always had this premium. You’re not sharing walls. That’s great. But the fact of the matter was, when it got to the market, it lives like a three-story townhouse with a double end unit premium,” Boyd noted.
In land-constrained markets like Silicon Valley, creative building layouts can add density while preserving the visual character of a single-family neighborhood, Boyd explained. Alley-loaded homes, porches, sidewalks and a stacked configuration can make the neighborhood look and feel like detached homes from the street, even though the units are more compact and efficiently arranged than a traditional single-family community.
“You’re able to get a little bit more density without compromising the character,” Boyd said.
However, what works in pricey Silicon Valley doesn’t necessarily work elsewhere in the country, or even elsewhere in California. While a three-story townhome product appeals to buyers and planning boards in the Bay Area, this isn’t the case in other regions.
“If you go up to Sacramento…they might say it’s a two-story townhome. And if you go up to Chico, their expectation is that it’s a one-story unit. They’re going to have resistance even going two-story in that market. These are all Northern California markets,” Barry Long, Managing Principal at Urban Design Associates, said during the session.
However, even when going vertical isn’t an option, there are still creative ways to design for density.
“We can drive density by using more creative typology. Up in Chico, we’re building courts and very small units. It’s 900 square feet or less. Even if it’s one story, you can really increase the density, which is great,” Long explained.
Grant Syth, Principal at Montana-based Bridger Land Group, said that, even in Montana, developers must build for density. The key, Syth said, is delivering a community that looks, functions and feels different from the competition.
“There is a glut of supply that looks all very similar, so we can get creative on what our density looks like and do a slightly different product. All of a sudden, yes, there’s oversupply, but there’s still high demand for this more unique-looking density. That is really where we find opportunities,” Syth explained.
In one community that KTGY Principal Bill Ramsey worked on, the developer replaced costly two-car garages with a single garage and a parking pad, reducing construction costs and using land more efficiently. The approach helped increase density and affordability while still providing residents with convenient parking.
Parking preferences are also highly market-specific. In dense cities like San Francisco, Boston or Chicago, dedicated parking can be an in-demand luxury that buyers are willing to pay for, so developers shouldn’t assume a density strategy that works in one market will work in another.
Designing a diverse product mix
While product selection will ultimately depend on which market the community is in, the panelists underscored the value of offering a diverse mix of product types.
“What I like about the technique of using multiple products is it gives you the ability to segment too. You can then be targeting more buyer profiles, more price points, more square footage bands by segmenting instead of just putting out 1,800-square-foot townhouses,” KTGY’s Ramsey said.
“There’s creative solutions out there, but just being creative doesn’t make it right,” Ramsey added. “You’ve got to make sure whatever tricks you’re playing are…not just to hit a number and not just hitting that density minimum. You’re creating something desirable to hit the market.”
In the Bay Area, where communities must include a minimum number of affordable units, developers like Brookfield Residential can allocate different densities and uses in different parts of the development. Affordable housing can be concentrated in one portion of a development, while market-rate accounts for the rest.
This blended density allows the affordable and market-rate components to each be optimized financially rather than forcing the entire project to absorb the same economics.
Matching amenities to market demand
Amenities only generate value when they match what the local market actually wants and can absorb. Generally, large communities with enough units can justify the inclusion of high-end amenities in a way that smaller ones can’t.
“We learned the hard way on this one. We built a small boutique 60-unit apartment complex right next door to a 400-unit complex. Our units are Class A. We won awards for the design. They turned out great, and we love the look of it. But we cannot achieve the same rents that the 400-unit apartment complex gets. We have a 5% discount on our rents to this, call it a Class B-minus apartment, but they have Class A amenities,” Syth explained.
However, even smaller communities can have relatively inexpensive design features and amenities that can boost their overall marketability without taking up too much space.
In many markets, walking trails are a popular and relatively inexpensive community amenity, with developers increasingly incorporating extensive trail networks into parks and neighborhood infrastructure to promote connectivity.
“It’s much more about placemaking and lifestyle maybe than it used to be. We used to think the sidewalk was adequate, but I think we’re now much more focused on trails and different modes of transportation. Whether it’s now accommodating e-bikes, which are really motorcycles, things like that are definitely part of our work,” Long explained.
