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Throughout California, and probably most of the country, underperforming regional malls and shopping centers are being surveyed for their redevelopment potential, particularly as they deteriorate into a distressed status. The critical element that makes these projects similar is that they take advantage of the real estate available on expansive existing fields of surface parking. This one aspect is the key ingredient in finding an existing retail/commercial center that will be a good candidate for redevelopment. As these “greyfields,” as they are often known, function like open land from a planning perspective, they are what makes the opportunities so attractive.
Redeveloping an aging or dying mall or shopping center is hardly a fresh idea, but it remains a good one. Today there are a number of significant such projects in the development pipeline, including Main Place Mall in Santa Ana, California, where a very ambitious program of hotels, offices, apartments, and other uses is proposed, or the former Laguna Hills Mall, also in California, where a similar blend of ingredients is anticipated. Placing denser housing on these properties makes complete sense because many of them are already near better performing commercial centers, and the resulting “village” should be able to provide some of the benefits of a traditional town center if it includes sufficient resident serving amenities, such as bars and restaurants, among other services. Constructing new housing on underused surface parking is just a good idea, almost no matter how you slice it.
The mall redevelopment projects cited here, in addition to many others, are substantial undertakings, but they’re not the only opportunities. There are many smaller retail centers on properties that are equally attractive due to their proximity to other shopping, jobs, and resident services that might be in easy walking distance or have convenient access to transit; not every redevelopment needs to focus on a seventy-acre regional mall in order to help whittle away at the seemingly intractable undersupply of housing. These locations have access to existing infrastructure and services, so arrive at the starting line with more going for them than a traditional green field. What is the obstacle to the widespread implementation of this strategy?
Perhaps the biggest problem with the wide-scale redevelopment of retail/commercial properties is what used to be known as the “fiscalization of land use.” That’s a fancy way to say it’s politically hard to change a use on a site from one which produces a generous income stream for the municipality to one that doesn’t—such as changing from a retail center, or worse yet, an outdated auto dealership, to multifamily housing, which generates far fewer dollars for the City coffers. This underlying dilemma is a consistent fly in the ointment of proposed commercial-to-residential or mixed-use redevelopments. Main Place, because of its sheer mass, was probably able to navigate that income stream quandary by including a ton of commercial space and hotel rooms, both of which generate cash flow. A cooperative approach is suggested here—that the developer and the City meet extremely early in the process to discuss the mix of uses that would not only provide the desired housing, but also include ingredients that could continue to generate tax and fee income, and hence make the project approvable.
Do we need new laws to help make the process easier? A California State Senator recently proposed a bill that would theoretically make it easier for developers to propose major makeovers to existing underperforming or dying malls and shopping centers, provided the final mix included some affordable housing. Seems to make sense, but it also came with a bunch of strings attached, which is a standard issue with many government-initiated “incentives.” At the end of the day, after all the community stakeholders had been satisfied, the underlying zoning requirements met, and the subs lined up to do the construction were receiving prevailing wages, the apparent benefits available felt overshadowed, outweighed by the other obligations.
It appears the projects mentioned above, in addition to some in the Bay Area, LA, and Inland Empire, accomplished their development objectives through the existing zone change and municipal review process. Main Place Mall, with its proposed program of 1,900 dwellings, 400 hotel keys, 750,000 square feet of office space, and nearly a million and a half square feet of commercial uses, was of such a mass that it needed to generate its own Specific Plan. While this thorough entitlement process can be a grind, in the end there tend to be fewer problematic add-on requirements, such as would come along with the supposedly helpful state law, and they can all be negotiated along the way.
While the proposed State law started with a good intention, it just got burdened by bureaucracy, and by the potential to tread on the sacred ground of loss of local control, which is one of the threats of the RHNA (Regional Housing Needs Assessment) process. How could municipalities possibly have their cake and eat it too with regard to these retail and commercial redevelopments? Creating an overlay zone that could be generously applied over existing commercial properties would accomplish a couple of things. First and foremost, if it were straightforward enough, it would provide that elusive assurance developers always seek—predictability. That is, the overlay zone would make it “by-right” to develop multifamily housing on a retail site, even if it includes guidelines and policies to encourage harmony with the existing community context. Perhaps if the project includes attainable housing, it becomes a ministerial review, which would be a tremendous time-saver. In other words, the cities and counties take from the State what it otherwise intends to impose on them, and just do it themselves. The combination of defined parameters of the overlay zone plus the ministerial review would have the guaranteed effect of expediting the delivery of desperately needed housing while enhancing the built environment, all under local control.
Finding the right density and product for a greyfield site of any size is key to success. The state law had a complicated formula for requiring certain minimum densities which were theoretically driven by the fabric of the surrounding context, with the intent of developing something not wildly out of proportion or character with its surroundings. While the search for the proper formula is driven by proximity, land values, and achievable rents, it is also generally true that the closer a property is to an urban core, the bigger the proposed buildings will be. Placing new apartment buildings around Main Place Mall while structuring thousands of parking spaces to compensate for those lost demands large buildings. However, in less urban or even suburban redevelopment opportunities—areas where projected rents are lower—it may be best to pursue less expensive, and hence less dense wood-framed dwelling units. I’ve seen instances where a site seemed to demand at least wrap density, but actually penciled better with a four-story town-over-flat scenario or even 3-story stacked flats. Creativity in imagining what solutions would best bring these smaller properties back to life is critical.
For the State to consider a tool to help achieve many of the goals discussed here is a very good thing. However, reclaiming control of the process for the local jurisdiction seems to be a more promising pathway, where the development team can work directly with City staff to achieve a win-win outcome. Thoughtful overlay zones that can be broadly applied across a City can help to resuscitate even the properties that are of a more modest scale.
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Above Image Shows An iDA Lab Low-Density Redevelopment Concept – 10 Homes On 2 Lots With A Community Room.
We, the residential development community at large, are entering an unprecedented season of public/private partnership with an unassailably noble goal of housing everybody in our beloved and beleaguered California. Forces of supply, demand, and policy are aligning at a moment in history when it could not be more sorely needed. At the center of this perfect storm? RHNA, the Regional Housing Needs Assessment.
The Regional Housing Needs Assessment is a tool used by the California State Department of Housing and Community Development to establish the quantity of additional housing units presumed to be needed throughout the state using the criteria of population, jobs base, transportation, and other factors. Numbers are established on a regional basis, and the local Council of Governments (COG) assigns a share to each city within the region. Cities respond by updating their Housing Element, a component of the city’s General Plan that demonstrates how sufficient potential building sites are available in the jurisdiction and zoned to accommodate the designated allotment of new homes, at a range of affordability levels. The current assessment, coming in the midst of an intractable housing crisis, allots a very high proportion of the total number to units affordable to extremely low- and very low-income households.
A housing element is updated about every 8 years. From the previous cycle to the current, the leap in required allotments was substantial for most municipalities, and many are reeling from the load they are being requested to carry. To put that into perspective, the updated RHNA number for SOUTHERN California is 1,342,827 new dwellings spread over 191 cities. On a practical level, it is necessary to produce 180,000 units annually in California to keep up with demand; since the financial crisis, the pace has been about 100,000 per year, so supply continues to fall behind. It would take nearly 170,000 unit deliveries per year over the cycle period to produce the assigned number.
Nearly 50 cities in the region have appealed to the State to challenge their allotments; almost all have been denied. In the previous RHNA cycle, only a tiny percentage of municipalities delivered on their numbers, and it is generally observed there was no real penalty for missing them. In the current cycle, that has changed; cities now face consequences from the State if they fail to produce, by the deadline in October, an updated Housing Element certifiable by the HCD. These consequences can include the changing of the City’s RHNA cycle from 8 years to 4, which would impose a horrendous workload on the Planning Department, or the imposition of moratoria on the issuing of ANY building permits, or even the mandated approval of proposed housing developments. In other words, California State law has grown teeth.
Demand for housing continually increases in California, even in spite of the State’s much-lamented recent net out-migration of households. It is difficult to ignore the underlying fundamentals of supply and demand, and the more than 40% of existing households who are “housing stressed,” devoting more than 35% of their monthly household income to cover their housing costs. These households comprise the majority of those leaving the state in search of more affordable living situations. Thus, the RHNA numbers emphasize the production of housing that will encourage more of these folks to stay.
As the demand for housing, particularly affordable housing grows continually, available land for housing development, of course, is decreasing. This imbalance sets up a fundamental tension for most cities, particularly those who already feel they are “built out.” In the City where I work, the RHNA requirement would demand enough dwelling units to accommodate over 20% of the existing population based on the City’s average household size. That is a major load, by anyone’s estimation. Of those, nearly half are earmarked to be affordable to households earning between 0 – 80% AMI.
Many Cities are holding public workshops to consider plausible alternative approaches to possibly reach these intimidating numbers. Unless a City happens to be surrounded by vast tracts of open land that are not already dedicated to public open space, and therefore inviolable, the search for developable parcels to hit the allotted numbers will be a scrappy affair. Thankfully, with the State’s new ADU law, there’s a resource hiding in plain sight, which is existing backyards of single family dwellings. That’s a start, and it’s a bonus that most accessory dwelling units, or “granny flats” tend to be more affordable than an apartment in a managed community with amenities. If there is any undeveloped land large enough to support a neighborhood of single family detached housing, then to improve it with a design that incorporates both an ADU and perhaps a Junior ADU on each lot would yield more than double the density for that neighborhood that one might normally expect from SFD tracts.
But ADUs, great as they are, will ultimately represent only the tiniest little trickle of production. It is obviously necessary to scout locations for multifamily projects at varying ranges of density, and that’s really where the rub is, as those properties are in extremely short supply; that is, at least under the current zoning. The State has recognized that developments up to 30 dwelling units per acre are considered affordable and can count toward the designated total. At a recent City Housing Element update workshop, I posed a question about the need for re-zoning and up-zoning of entire swaths of the City, particularly large lots, in order to reach the RHNA numbers. The response was quite encouraging; it was agreed that yes, in order to have a prayer at identifying sufficient sites with adequate capacity for new housing, it would be necessary to amend underlying zoning, either by overlay, such as a Conditional Use Permit (CUP), or by outright zone changes. If new zoning is proposed, it would also require an update of the City’s General Plan, so the assumptions made in the Housing Element could legally be supported and encouraged by City policy. It was evident the City was seeking help from its citizens to identify such potential sites, as they indicated that if a participant owned land that needed a re-zone, and they were considering housing, they should approach the planning staff with a proposal, which would be given serious consideration.
How awesome is that? I know the behavior of brokers and land acquisition people seeking to find deals; they drive by an underutilized site, in a good location, and wonder “Huh; could we make this work?” I believe the position of the City on this is that they will take any reasonably plausible lead that can be brought to their attention. When it is necessary to conjure 20,000+ new dwellings, no reasonable offer will be refused for consideration. Of course, there will still be an entitlement process required to make it possible, but we’re veterans of that process and used to it.
I deeply and sincerely hope this process will usher in a new season of profound cooperation between the Cities and the private developers who will actually produce the dwellings. Remember the City only has to identify the potential sites; they are still almost entirely dependent on the development community to deliver the new homes. In a sense, almost anyone can be a developer at some level, and all are needed—from the typical empty nester, high equity homeowner seeking to increase the value of their investment with an ADU to the large institutional organizations with the clout to produce hundreds of units at a time.
So keep your eyes open for awesome opportunities that didn’t exist yesterday! Working together we can accomplish the impossible.
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*Original article was written by Daniel Gehman, AIA, LEED AP, for and published in the MFE 2020 Concept Community Report
As we endure this unprecedented global pandemic we have all been in a season of mental reframing—adjusting expectations, strategies, and anticipated outcomes. By the time you read this, I hope the dust will be settling on the qualities and characteristics of life that best provide meaning and definition. With everything still fluid as we struggle to arrive at the “new normal,” I want to seize the moment and suggest we consider altering our expectations of what is beautiful in housing. Gen Z is a generation coming of age and entering the household formation years having been branded not only by this crisis but possibly by their parents’ experience in the Great Recession. This generation has been described as motivated by a heightened sense of pragmatism coupled with “ethical consumption” and a search for “truth.” What will this mean when it comes to their choice in housing, especially from an aesthetics perspective?
Personal pragmatism in action can be characterized by a desire to balance one’s expenses, not over-reaching for either status or luxury before they can be afforded. Partnered with this mindset is often a conviction not to consume more than what is needed, but to understand, without pretense, exactly what it is they will be getting for their money.
When “beauty” and “housing” are mentioned together, most of our minds turn to cosmetic or distinctly surface is-sues. We know that “beauty is in the eye of the beholder,” but it has also been said that “beauty is only skin deep.” What if the holistic understanding of beauty was expanded beyond mere packaging?
Dictionary.com defines beauty as: “The quality present in a thing or person that gives intense pleasure or deep satisfaction to the mind, whether arising from sensory manifestations (as shape, color, sound, etc.), a meaningful design or pattern, or something else (as a personality in which high spiritual qualities are manifest).
“Beauty” in architecture is a wildly subjective topic. There are voices in our industry that pursue “harmony” or “compatibility” of a proposed structure within its given context as if it were the highest imaginable objective. This often gives rise to design solutions, in the quest for community/agency approvals, that unnecessarily complicate the envelope (through excessive ornamentation, geometric modulation, or both), increasing the cost of the building, which in turn raises the rent.
There is also a “keeping up with the Joneses” phenomenon in multifamily that suggests a project’s amenity offerings must be over the top in order to be competitive. But what if I don’t need or ever plan to enjoy a bowling lane or climbing wall? If I don’t use it, I still have to pay for it, along with everyone else in the community, and, again, the rent climbs.
What if we shifted the lens of our mental cameras to view the values of simplicity, commodity, functionality, and an agreeable atmosphere as beautiful? Over 2,000 years ago Vitruvius, the Roman architect, engineer, and soldier, argued for the beauty of simple but pure forms and pleasing proportionality, suggesting that abundant ornamentation was superfluous or even distracting. He also valued “functionality” (or “commodity”) along with strength and beauty. In fact, in his well-known statement of what defined quality building design, “commodity” precedes firmness or delight, so maybe he was on to something in his order-ing of priorities by putting usefulness upfront.
In a search for a home that fits, could focus on a dwelling that provides what one needs without pro-viding (and charging for) things one does not need be of high importance to a Gen Z? What if a developer, propelled by passion, intention, and discipline, deliberately chose to pursue functionality first, including only the most necessary components of functional, comfortable living to deliver homes in the most efficient manner that cost less to rent, accommodating many more households? What if being disciplined in every aspect of the community design and construction could allow this type of development to be done while still making a modest profit, without subsidy? Wouldn’t making housing for many more people pro-vide a deep satisfaction to the mind? What if all this disruption by the pandemic and its lingering impacts caused this kind of thinking to lead to a huge increase in the amount of housing being created that is attainable for many at manageable costs? Now that would be a thing of beauty.
Increasing Demand for Attainable Housing
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In our recent industry-wide survey, nearly 50% of Millennials who identified as “currently renting” said they plan to purchase a home in the next two years despite the pandemic and economic uncertainty. With many individuals riding out quarantines in one-bedroom apartments or living with roommates, will this be the catalyst for additional first-time homebuyers entering the housing market, effectively further increasing demand for attainable housing? There was already a significant shortage of this product type across many markets, and we expect to see strong demand continue to grow.
Sales in this product segment have remained strong throughout the first half of 2020, with lower price point homes outselling move-ups and other products nearly 3 to 1. Ali Wolf, Chief Economist for Meyers Research, reported this week how low mortgage rates and the strength of the ‘hypothetical buyer pool’ will continue to fuel demand.
Our team has been hard at work designing homes that provide first-time buyers with purchase opportunities and offer alternatives to apartment living. Take a sneak peek at one of Danielian’s iDA Lab concepts designed to help meet the growing demand for attainable housing.
Danielian iDA Lab ‘Attainable Housing’ Concept Plans
Originally designed to provide Millennials an alternative to apartment living, these floor plans were created to maximize interior square footage and provide meaningful outdoor space thanks to use easements and alternative parking arrangements. Open floor plans with flexible spaces provide the homebuyer opportunities to create their own personal living experience that is best suited to their individual needs.
The above floor plan concepts take advantage of 34 x 40 lot dimensions while yielding 1,075 SF in Plan 2 and 1,000 SF in Plan 1.
In order for these small footprints to feel open and liveable, we focused on maximizing indoor / outdoor living connections and placed them off both the living rooms and kitchens. These outdoor spaces are then interconnected, to maximize yard size and usability. Plan 1 uses a single car garage along with an outdoor parking space that shares outdoor flex space that can also be used for outdoor dining. Plan 2 focuses its outdoor space off the front yard and utilizes a tandem outdoor parking layout with a sizeable storage room, in lieu of a standard garage. Of course, municipalities and local buyer demographics would factor into actual parking considerations.
These plans represent just one of our many R&D solutions we have developed in response to today’s homebuilding challenges. These plans can be adapted to meets the needs of both for sale residential and single family rental communities, with elevation styles tailored to meet local buyer demographics.
The Danielian Team is very excited to announce that we have several of these plans under construction with builder clients in various locations and look forward to sharing details of the built communities in the very near future!