Urban Solutions For Housing Crisis Offer Prime Location, Lower Costs

From office conversions to co-living, housing providers are looking at unique ways to deliver much needed housing supply in urban areas. A variety of new approaches offer solutions to the housing crisis that are both sustainable and affordable.

The Combo Approach

Real estate development company Behring Companies is introducing a new real estate asset class: the “full stack” ecosystem that includes ‘live-work-play-go’ that reimagines a user’s living experience. Plus, the model lowers the costs—a win-win.

The company’s project in Oakland, California demonstrates the cost savings from the holistic approach to living.

“There are certain things that are unavoidable, or the cost of doing business,” said Colin Behring, founder and CEO at Behring. “We are addicted to cars in California and the cost of owning a car in an urban city, paying for parking, is $1,400 per month. So, that car costs more than $18,000 per year. With STAK, you eliminate the need for personal ownership, and still have access to a car.”

Behring created the shared living approach after a 10 year stay in Shanghai’s high density urban setting.

“Transit was so convenient, and at such a low cost,” he said after his time abroad. “It was so easy to go places and the connectiveness was so seamless. There was a quality of life that we don’t have here in California in a big way.”

On top of that life experience, Behring also started factoring in the impacts of urban flight after COVID. Urban residents were attracted to suburbs where they could still do the same work, but at a lower cost. After COVID, urban spaces have tried to adjust.

“They needed to offer more amenities in less space,” he said. “To have that full blown integration was our concept with STAK. If you are living and working in the same place, there are tremendous efficiencies with time, money, and effectively, on the corporate dime.”

Large office complexes have attractive amenities to lure in and retain workers, and when those amenities are offered by the property, they are tax deductible. An individual cannot have the same amenity with the same benefit. Plus, one person wouldn’t be able to use and leverage amenities on a daily basis.

Behring is attempting to deliver the same assets and the same utility in his live, work, play, and go model with 30% less cost. The property offers an on-site private Tesla fleet that comes with the experience, which costs significantly less when factoring for the purchase, maintenance, charging and parking for one user versus spread across dozens of users.

STAK wants to offer naturally occurring benefits that come along with being in a vibrant urban space. The property’s full amenities are available through membership tiers that expose different discounts and that offer just work; work and play; or live, work, and play.

Plus, there are packages for community-based startups and accelerators that offer housing discounts for the team.

Bringing Housing Opportunities To Life

inCitu is promoting the production of new homes in urban areas using Augmented Reality to visualize a project before any work starts. For instance, some estimates say that New York City is short 500,000 homes, but being able to address this shortage is difficult before a vision is shared and agreed.

“It is too dramatic to perceive,” said Dana Chermesh-Reshef, the founder and CEO at inCitu. “If you can communicate it on the block level with the building typology, people can see what it would look like in their backyard and relate and see that the demand is not too scary. It’s about getting the unimaginable ideas and bringing them to something that people can digest and relate to.”

inCitu also has been used to create efficiencies in the planning workflow that cut costs. Don Edmonds, solution engineer at mapping technology company Esri, is working to generate a site-specific design to be viewed in full scale in a matter of minutes. The technology could be applied to the accessory dwelling unit (ADU) opportunity that many cities are legalizing to provide more housing supply.

“Augmented reality should be another extension of how we see the future, give comments, and share, by conversations enabled by the technology and tool,” said Chermesh-Reshef. “We have great tools, but we are failing at communicating our ideas to different stakeholders – client, developer, community, planning hearings. When you have an idea, you should be able to show it to people as if it is built.”

Not only does the inCitu technology help in the planning process, but it can look at the climate risk that is so challenging in today’s changing environment.

“We worked with two planners in Tampa Bay to use the tool to communicate flood issues,” she said. “Then, we were able to communicate updating building codes, which is a very intangible thing but we were able to put different building typologies on the beach in Tampa and show the sea level rise to elevate the conversations.”

As they say, seeing is believing, and I’m sure everyone was for the massive cost savings that would come from avoiding a flood disaster.

Co-Living Cuts Costs And Carbon

Increasing remote work options means that urban office space around the world is sitting vacant. Innovative developers are converting that space to much needed housing supply.

In Toronto, the think tank Youthful Cities created a co-living solution called Toboggan Flats that uses vacant downtown office space to create affordable, purpose-built apartments for young professionals where they want to live, work and play.

Toboggan Flats offers residents a private room connected to shared kitchens, bathrooms, laundry and lounges, built out from, and taking advantage of, a vacant office building’s existing mechanical, electrical and plumbing infrastructure.

These adaptive projects can be move-in ready in months, compared to the years it would take for new construction, and have rent at about half the price.

Lowering Cost and Carbon

London developer HUB created a co-living design study with global architecture firm MVRDV to show a number of housing typologies that represent this conversion opportunity of commercial real estate in urban areas.

In its 139 pages, the study proposes new solutions that reflect societal attitudes on sharing, community, flexibility, mobility, and working from home. Impact investor Bridges Fund Management also participated in the study to give expression to the challenges of climate change, affordability, and sustainability.

Based on the report’s findings, HUB is completing a number of projects, including one with 174 co-living homes. That project saved 34% of the embodied carbon by reusing the existing building frame.

Hotel To Housing

Another adaptive reuse angle with less intense construction and design requirements is converting hotels to housing. Hotels have the basic infrastructure needed in a typical housing project, so don’t require as much overhaul as the office to housing conversions taking place in so many metro areas.

Most of the work is in surface upgrades to flooring finishes, kitchenettes and parking transitions and in the mechanical work and changing out the lobby and reception area.

Jeremy Lack, is a partner at Microloft Studios and explains that it’s too difficult to provide new housing that isn’t high rent due to the current costs of construction.

“So, hotels are pretty obvious because they are already equipped with MEP and can be modified to 1- or 2-bedroom apartments,” he said. “Traditional 280-square-foot hotel rooms are best as studios. We work with investors and the numbers line up without relying on the government. This is more sustainable longer.”

The conversions can be more cost effective than one- or two-bedroom apartments against area comps. Lack’s numbers show that converted studios are about 25% lower than Class A studios and cheaper than 1-bedroom.

“We want to be the best value so people can have somewhere to live and still buy groceries until they can afford different housing,” he said.

In most cities, hotels are just outside of town, but older hotels are in city centers, which are ideal for conversion because those locations are walkable to shopping and transportation.

“We’re excited to offer a product that isn’t being offered right now,” he said. “We were surprised to see that crime rates are going down at these properties when operated as housing because of the care and the increased standards of a housing property manager. This is another way we can make a difference by bringing workforce housing online.”

These hotel conversions are proving to be a great investment where there is a quick payback, and the project can be refinanced within two years.

“People staying in these hotels already enjoy a lower rate than what they currently pay and its lower than the weekly rate,” Lack said. “We also can usually pay the hotel owner more than they would have received from another hotel operator since we are converting the asset to a new use.”

Property Evaluation Made Easy

Architect Steven Paynter with global firm Gensler created a way to quickly and easily evaluate the potential of a commercial real estate conversion to housing with a digital tool.

The data-based online calculator speeds up the assessment process to just a matter of days and includes factors such as site context, building form, floor plate, envelope and servicing. Each is weighted on values that the team scoped after analyzing more than 1,400 buildings in 130 cities.

Gensler’s Conversions+ solution, which won one of Fast Company’s Most Innovative Companies awards in 2024, has been used to convert many projects. The most recent was Pearl House where 480,000 square feet of office space was repurposed to create 588 homes, while saving more than 20,000 metric tons of carbon.

“We continuously refine and evolve our assessment criteria, and while the scorecard can provide quick feedback on a property’s site context, building form, floor plate, building envelope, and servicing features, we’ve learned that there is no substitute for experience, creativity and ingenuity when it comes to making these projects work,” said Robert Fuller, a principal with the firm.

Gensler is currently transforming more than 3.7 million square feet of real estate in New York City to add more than 4,800 housing units.

“We think increasing supply – whether through new construction or conversions – is an important first step towards addressing the general shortage of housing and the resultant affordability challenges that have been exacerbated by the fact that – for many years now – new housing supply has not kept up with demand,” Fuller said.

The state has passed tax incentives that will work with proposed city zoning changes to make conversion projects easier and be an example across the country.

“The feasibility of any conversion policy will require a thoughtful balance of zoning amendments, incentives, and affordability requirements,” he shared. “Conversions certainly won’t solve the problem, but they can be one effective step in addressing it.”

These tools, technologies, designs, and innovations are providing much needed solutions to the challenges of the housing crisis that will make our built environment and communities stronger today and tomorrow.