Re-thinking site selection for real estate developers

Site Identify for site identification

What is the typical process for site selection? Typically it is a very bottom-up approach. Talking to brokers, driving around looking, or hearing about one at a happy hour. With the power of public records and massive amounts of data, we can look to software for a different route.

What is a top-down approach to site selection?

I am going to need to know two things, minimally, in order to run an economic model on new potential sites. First, where it is, and second, what kind of building (if any) does it have on it. For this workflow I will use two different platforms.

  1. Site Identify is a tool to do massive search functions on parcel + assemblage data.
  2. TestFit is a tool to solve site plans quickly.

For this search I have a specific building criteria in mind:

  • Building Type: Multifamily (TestFit specializes in this)
  • Construction Type: 4 Story Stick (type v) wrapping a garage (1.5 stalls per unit)
  • Total Units: Roughly 270 (900 sf avg)
  • Roughly a 60 DU/AC density

Some math: 270 units / 60 units per acre = 4.5 acres zoned for multifamily. This helps me to target the minimum and maximum sized site for development.

Taking this criteria, I can program the search into Site Identify:

  • Market: San Antonio (inside loop 410)
  • Acreage: 4-5 Acres
  • Existing Improvement Age: Built before 1968 (50 years)

This search yielded twelve possibilities, the first four are a no-go, the middle four are maybes, and the final four are pretty good: link to map

The two most promising of these twelve are definitely 421 Roosevelt and 815 E. Ashby. I am going to plug them into Residential Engine to get a site plan to work with.

421 Roosevelt easily yields more than 275 units in a four level wrap.

815 E Ashby Knocks it out of the park at first glance, but it has a freeway lining its north side:

I am going to flip to a two tray garage and try to turn my back on 281 as much as possible. Here are the results:

I think the second option is much more realistic for the location. Here is a video of how this workflow looked in Residential Engine:

To Plug into the Pro-Forma:

421 Roosevelt: 281 Units / 887 Average Unit Size on 4.76 Acres

815 E Ashby: 273 Units / 880 Average Unit Size on 5.02 Acres

Final Thoughts

While this is not an ordinary workflow, this could be the blueprint for the future of development. Instead of waiting for something to come along, parcels could be targeted during a down-cycle and relationships made with land-owners, and then executed during the next cycle.

Just to recap: We looked at San Antonio (inside loop 410) and found 12 parcels (not assemblages) that could be developed into a 4 level wrap apartment community. We culled out sites that were not very desirable and landed on two to test for a site plan. Residential Engine gave us a few options to consider with our financial model.

A special thanks to Site Identify for allowing me to test their awesome online software! If you are interested in it contact David Morin.

Boosting Building Unit Yield 101

Lower unit average

The pro-forma calls for X building units in order to make a project viable. This makes X, or better, the target to achieve for a density study. There are several levers to pull, but each lever has an impact on an overall design. To demonstrate these different concepts, I am using TestFit, a parametric multifamily modeling tool on a theoretical site. Any modeling tool will suffice for these levers, and should work with pencil on trace, CAD, or any other kind of workflow.

Here are some levers:

Lever 1: Lower the unit average

This option will require less space for each unit, therefore boosting the yield. This is a win right? Not so much. The market might be demanding larger units, and smaller units will grow construction cost per square foot. However, If I have some leeway I can get a few more units this way.

This adds ~10 units to the density study.

Lever 2: Grow the garage vertically

The point of this option is to minimize the footprint of the garage while maintaining the correct parking demand. If the footprint can be cut down significantly, the same area that used to be occupied by the garage can now be used for units. Is this a win? Depends upon what kind of construction is used for the garage, or if zoning caps the height of the garage. If it is capped, then below grade might be the answer (very expensive). If height is uncapped, an additional level of garage above the wrap building does not look too atrocious. Some designers use this as an opportunity for a “sky deck.”

This adds ~10 units to the density study.

Lever 3: Increase unit depth

Consider the following two units.

  • A1 is 25′ wide, 30′ deep, 750 NRSF
  • A2 is 30′ wide, 25′ deep, 750 NRSF

To a pro-forma these units both represent the same thing, but spatially the A1 is significantly better to use from a unit yield perspective. On a 150′ long building mass, 6 A1s fit and only 5 A2s fit. The major difference between these two units? not much. In Residential Engine we accomplish this by increasing the building mass width from 56′ to 66′.

This adds ~15 units to the density study.

Lever 4: Add levels to the building

Probably the most simple solution. Going from 3 to 4 floors means there needs to be elevators. Going from 4 to 5 means a change in structure on floor 1. Going from 5 to 6 means another change in structure for floors 1 and 2. This is a simple way to boost unit yield, yet it is the costliest. I flipped to 3D mode for a better explanation of what is happening behind the math.

This strategy adds units, but with diminishing returns if the parking structure is not adjusted in vertical height (as it needs to grow horizontally to compensate for parking demand).

Lever 5: Remove or minimize balconies

If the building in question is in Texas, that balcony will be used to collect dust and provide horizontal sun shading for the unit below you (sorry top floor residents). The problem with “diving board” balconies? They push your entire building away from the perimeter of the property line, squeezing the whole building. This might not be a choice in many markets, however.

This strategy adds ~10 units, and does not require balconies to be removed completely.

Pulling Several Levers

In this example, I need 210 units for the economics to pencil. I will use several of the levers above to get there. After adjusting the mass width, adding a couple of levels to the garage, testing balconies, and lowering the average, I know what it takes to get to 210 on our theoretical site.

Using several strategies outlined above, our yield grew from 157 units to 210.

Have I missed any strategies? Let us know.

Future Real Estate Tech…Today

Future real estate tech - today

A great question by Cameron Pawelek at a ULI event, “What does the future of real estate technology look like?” and I did not have a great answer. My work on TestFit (instant multifamily planning) over the past year has blurred out everything else. But what I do have is a list of around 100 companies I have bookmarked. Here are the top ten companies or ideas I have come across:

  1. Floored – This company can take a 3d scan and turn it into 3d marketing and test fits for office spaces. This is them at Tech Crunch in 2013. They have since been acquired by CBRE
  2. FLUX – This company started out analyzing the real world and selling 3d models of maximum building envelopes–when that got too complicated (I guess?) they pivoted to data exchange for design software. Incredibly, with their plugin you can design a building in Excel and push it to Sketchup or Rhino. Here is how it works.
  3. Sidewalk Labs – (owned by Google) Internet of things applied to the built environment. Their idea is to make things like parking spaces smarter. Imagine typing into google maps a location downtown and it automatically routes you to the nearest parking space. Toronto is the lucky winner for all of that Google money!
  4. Abvent – Their product, Twinmotion, is incredible for real-time visualization of BIM models. Just watch this. This might be the most impressive display of technology on this list. Owners and Architects can easily see design with the best method we have: photo-realistic renderings.
  5. Archilogic – Send them a floor plan, and they send you back a 3d world for you to populate with furniture and other assets. Check it out. This company is related to Floored, but with a focus on other building types.
  6. StreetMix – Easily create and share street sections. This is not a company, but an open source effort. Try it for yourself. This tool allows new-urbanist ideas to be shared easily.
  7. WhyHotel – This is an outstanding idea. During lease-up, if you have a large number of vacancies, turn your building into a hotel. This might help your IRR a smidgen (or a lot?). They have a great video explaining it. I am not sure of the economics behind it, but if they figure it out, AirBNB might have found some competition.
  8. Pair – Want to see how that massive couch will fit in your tiny living room? Go no further. Pair 3d has an app for that. This is a great consumer-focused application that gives 3d modeling to anyone with a smartphone.
  9. City Form Lab – This group of geniuses at MIT solve city-related problems. I recommend watching this video on Urban Network Analysis. This helps give scientific tools to analyze the connectivity of a city or region.
  10. Automated Parking Garages – These are typically steel-framed structures, meaning they will be easily disassembled in a future where there is no parking garages (right?) and they are extremely efficient with their land use.

Does anyone else have an impressive tech company or idea centered on Real Estate I should know about?

If you are interested in instant multifamily site planning, feel free to try TestFit today.