Missing Middle Development
Was reading alot over the weekend about how this type of housing is largely not built as much anymore and in some cases illegal. Has anyone here developed any small buildings themselves just to get your reps up?
Trending Content
| +82 | LP coming into deal at higher land basis. How to model returns to GP? | 18 | 13h | |
| +76 | Increasing RE Industry's Cash Compensation, Collectively | 43 | 13h | |
| +72 | Major Decisions | 13 | 1d | |
| +28 | Niche down to an operator or stay an allocator | 9 | 3d | |
| +24 | Breaking into CRE late 20s | 7 | 4d | |
| +23 | Thoughts on joining an early-stage REPE fund | 7 | 11h | |
| +22 | Self Storage ECRI | 9 | 2d | |
| +20 | Doom Loop or Creative Urban Reemergence? | 3 | 6d | |
| +19 | How to get good at RE Modelling? | 16 | 1h | |
| +18 | 3 Hour Condo/Rental Excel Test - What Can Be Expected | 2 | 4d |
Career Resources
What do you mean by "in some cases illegal"
Zoning.
I specialize in mid-rise condo/rental apt here in Toronto. In short, this type of housing/building format is what many people want, but economically tough to execute, especially compared to high-rise condos.
Shoot me with any questions.
What kind of things do you run into up in Canada as far as things like zoning and investors?
I'd say there isn't anything really "Canadian specific" in terms of challenges. In the neighborhoods where we are active, the public/community as well as the city side/planners actually welcome and support what we are trying to build. The real challenge lies in the fact that mid-rise is inherently less efficient than high-rise in the more downtown/intensified areas. Making adjustments on things like total GFA, amenity space, set-backs, unit mix, etc is a must to win approvals, but these typically compromise on the project economics that don't really click with many investors. Overall lots of potential, plus roadblocks.
Be happy to get into specifics if you wish.
Renters/buyers want missing middle housing. Developers want to build missing middle housing because the potential market is huge and no one is really doing it.
The unfortunate reality is, to get a deal to pencil it either needs to be the low end of the market (tax credits and/or low spec as possible) or "luxury" at current market rents due to construction costs. Maybe you undercut high rise rents with a wrap deal or wrap rents with a surface park deal to go for the bargain play, but even that's complicated because of land prices.
Whoever solves this at scale will be filthy rich.
Modular may be the solution... (and more 'enlightened' zoning policies, reduced impact fees, TIFs, etc.)
I was thinking this too. Texas has experimented with modular builds (ppl are building container homes in a number of areas). But is that the easiest way? I hear there are significant upfront costs.
I'm working on something like this now. Doing a 7 acre development of missing middle housing that we are trying to get zoned to be treated like condos.
What exactly is middle development and why is it “illegal”?
"Missing middle" housing is housing that bridges the gap between what you think of as standard commercial multifamily (high rises, wrap deals, etc. with 200-500 units) and single family homes, which are not considered CRE. It is a way to achieve housing affordability for middle class people through form and design and was a huge part of the growth of cities over the decades.
"Illegal" comes because zoning laws in a lot of cities are highly restrictive, particularly in NIMBY single family neighborhoods. NIMBYs don't want missing middle housing to be legal because it lets poor people and minorities into their neighborhoods (even though some of these missing middle units are $500,000-$2,000,000 a piece still). Meanwhile, in places zoned for multifamily, you can't afford to pay market land prices and only build a fourplex when you can fit 150 apartments on there.
It sucks from a social aspect, because there is a growing housing affordability crisis and allowing missing middle housing is a much, much, much better fix than say - rent control. It also sucks from an entrepreneurial development perspective, because I don't have the kind of cash in the bank to do my own 300 unit deals. I would love to cut my teeth on smaller deals, but alas...
Dolores tempora sequi repellendus a voluptatum. Hic eaque inventore at aut et. Enim magnam eligendi non autem occaecati.
Ducimus quas id dicta nesciunt. Et minus excepturi sunt molestias in expedita est. Accusamus alias aut sit praesentium fuga accusantium delectus non. Et aspernatur cumque distinctio alias eos incidunt. Impedit quis sed dolores dolorum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...