Globe St.: Boutique Developers Push Boundaries
Boutique developers are small and nimble enough to push boundaries in ways that larger developers can’t, and as a result, they are playing an integral role in pioneering innovation in new development. Modular housing and technology implementation like automated parking were some of the examples that experts on the Mixed-Use Panel: Successful Designs for Live/Work/Play discussion at RealShare Apartments gave last week. The panel discussion was led by moderator Adam Artunian, VP at John Burns Real Estate Consulting; Daniel Gehman, studio director at Humphreys & Partners, Architects; and Simon Aftalion, development director at Markwood Enterprises.
“Boutique firms take on new practices with open arms, because we have to, and we are pushing the boundaries in a risk adverse way,” said Aftalion. Gehman agreed, adding that he is seeing more activity from boutique firms. “The exciting thing is that they will look at properties that bigger firms will pass over. They also bring patient capital and legacy properties,” he said on the panel, adding that they have different avenues of getting land sites than larger REITs and institutions and that they try new things that the larger players can’t because they are untested. “The boutique players break new ground, and it eventually gets incorporated into what everyone else is doing,” he said.
Aftalion’s firm, for example, has incorporated automated parking systems into its development projects to accommodate the parking requirement in a denser footprint. On this particular site, adding a parking structure would have killed the deal. “We looked into other means, and automated parking operators approached us,” he said. “I realized this was the future, and I realized that people would have to embrace some form or automated parking.” The project was a success, and Aftalion believes that the proven success will drive more interest from capital. “I think equity will start getting behind that type of development because it is the only way that you can turn out development,” he said.
Boutique developers also help to drive density by building on smaller sites that larger developers overlook. “I think boutique could be a boost to the overall affordability of housing,” said Gehman. Aftalion added that large developments are often “entitlement nightmares” and can take years before ground breaking. He believes that you will never grow the housing stock by taking years to build 200-unit projects.
Aftalion and Gehman are also looking into alternative ways to build sites. “We have been building the same way for 150 years, so there is time for a change,” said Aftalion. One idea is modular projects as a way to expedite development and reduce costs. Gehman says modular can be scaled, much like a hotel development. “We have been looking into modular, and I think eventually we will have a site that works. It is a little tricky, and I think that we are going to get over these hurdles quickly.” Gehman added, “Modular is coming of age. There are rules, so it isn’t there yet.” But, it is coming and there are developers today looking at ways to use modular housing in multifamily.