Layla Zulfa
The residential construction industry, grappling with a complex interplay of regulatory pressures, evolving buyer preferences, and economic headwinds, is increasingly reliant on sophisticated product mixes and community designs to achieve crucial density requirements while remaining financially sound and appealing to a broad buyer base. This challenge, once largely confined to land-scarce coastal markets, is now a pressing concern for builders across a spectrum of geographies, from the densely populated Bay Area to more expansive regions like Montana. The fundamental insight emerging from industry discourse is that density is not a monolithic concept; its successful implementation hinges on a nuanced understanding of each market’s unique constraints, opportunities, and the specific desires of its potential homeowners.
This critical dialogue formed the centerpiece of a prominent session held at the Pacific Coast Builders Conference (PCBC) on July 28th. Esteemed panelists, representing diverse backgrounds in development, design, and land strategy, converged to dissect the multifaceted challenges and innovative solutions surrounding density in modern homebuilding. The consensus was clear: achieving density mandates is an inherently market-specific endeavor, demanding tailored product strategies, thoughtfully curated amenities, and site plans that resonate with local buyer expectations. While traditional approaches like townhomes and apartments remain viable, the conversation underscored the imperative for creative, adaptable strategies to unlock higher housing yields.
"Cities give us a density. Design tells us how many ways we can achieve that, and then the market ultimately tells us if we’re a success or not," articulated Jonathan Boriack, Principal at KTGY, setting the stage for a comprehensive exploration of the topic. This foundational statement encapsulated the tripartite relationship between regulatory frameworks, design ingenuity, and market validation that builders must navigate. The PCBC, a premier event for the building industry, annually draws thousands of professionals to discuss emerging trends, regulatory shifts, and technological advancements. This year’s focus on density reflects its growing prominence as a national housing policy objective, driven by concerns about affordability, environmental impact, and urban sprawl.
Tailoring Product Mixes to Evolving Density Mandates
The intricate dance between regulatory density goals and market acceptance was vividly illustrated by Emily Boyd, Director of Business Strategies at Brookfield Residential Land, whose work in the San Francisco Bay Area offers a compelling case study. In this intensely land-constrained region, where entitlement processes can be notoriously complex, Boyd highlighted the advantage of a broad spectrum of buyer acceptance for diverse housing typologies. "We have the benefit in the Bay Area of having a very wide breadth of acceptability for products," Boyd explained. "So we can do four-story stacked flats where you’ve got a two-level townhome over another two-level townhome. You’ve got three-level detached and three-level attached." This flexibility allows developers to maximize housing units on a given parcel.
A particularly insightful strategy employed by Brookfield Residential in the Bay Area involves the careful integration of detached homes within higher-density projects. Boyd noted that, in their communities, a three-story detached townhome commands a premium over a similar three-story attached product. By strategically positioning closely separated detached homes, builders can not only satisfy density requirements but also capture the higher price points associated with the perception of independent living. "Detached always had this premium. You’re not sharing walls. That’s great. But the fact of the matter was, when it got to the market, it lives like a three-story townhouse with a double end unit premium," Boyd observed. This approach skillfully leverages buyer psychology and preferences to enhance financial returns while adhering to density targets.
Boyd further elaborated on creative design solutions for increasing density without compromising neighborhood aesthetics, particularly in areas like Silicon Valley. "Alley-loaded homes, porches, sidewalks and a stacked configuration can make the neighborhood look and feel like detached homes from the street, even though the units are more compact and efficiently arranged than a traditional single-family community," she stated. This technique, often referred to as "missing middle" housing, allows for higher unit counts while maintaining a street-facing character that aligns with established community perceptions. The ability to "get a little bit more density without compromising the character" is a critical win for both developers and residents.
However, the panelists universally emphasized that strategies successful in one market are not universally applicable. Barry Long, Managing Principal at Urban Design Associates, provided a stark contrast, illustrating how market expectations for verticality can differ dramatically even within the same state. "If you go up to Sacramento…they might say it’s a two-story townhome. And if you go up to Chico, their expectation is that it’s a one-story unit. They’re going to have resistance even going two-story in that market. These are all Northern California markets," Long remarked. This highlights the critical need for builders to conduct granular market research and adapt their product offerings accordingly.
Even where vertical construction is less feasible or desirable, Long pointed to innovative typological solutions for achieving density. "We can drive density by using more creative typology. Up in Chico, we’re building courts and very small units. It’s 900 square feet or less. Even if it’s one story, you can really increase the density, which is great," he explained. This demonstrates that density can be achieved through intelligent subdivision of land and the creation of compact, well-designed living spaces, regardless of building height.
Grant Syth, Principal at Montana-based Bridger Land Group, brought a perspective from a less traditionally dense market, underscoring that density is becoming a national imperative. "There is a glut of supply that looks all very similar, so we can get creative on what our density looks like and do a slightly different product," Syth stated. He emphasized that in markets like Montana, where the visual homogeneity of housing stock is prevalent, offering a unique, density-achieving product can capture significant market share. "All of a sudden, yes, there’s oversupply, but there’s still high demand for this more unique-looking density. That is really where we find opportunities." This points to a strategic advantage for builders who can innovate beyond the conventional.
The challenge of parking, a significant factor in both density and affordability, was also addressed. In one illustrative example, KTGY Principal Bill Ramsey shared a project where developers optimized land use and construction costs by replacing two-car garages with a single garage and a parking pad. This seemingly minor adjustment not only increased density and affordability but also maintained convenient parking for residents, demonstrating how thoughtful design choices can have a cascading positive effect. Ramsey cautioned, however, that parking preferences are highly market-specific. "In dense cities like San Francisco, Boston or Chicago, dedicated parking can be an in-demand luxury that buyers are willing to pay for, so developers shouldn’t assume a density strategy that works in one market will work in another."
Designing a Diverse Product Mix for Broader Appeal
Beyond the sheer number of units, the panelists unanimously underscored the strategic value of offering a diverse product mix within a single development. This approach allows builders to cater to a wider range of buyer profiles, price points, and spatial needs, thereby maximizing market penetration and sales velocity. "What I like about the technique of using multiple products is it gives you the ability to segment too. You can then be targeting more buyer profiles, more price points, more square footage bands by segmenting instead of just putting out 1,800-square-foot townhouses," said KTGY’s Ramsey. This segmentation strategy acknowledges that a single product type, or a narrow range of product types, may not satisfy the varied demands of a contemporary housing market.
Ramsey also issued a crucial caveat: creativity in design must be married to market desirability. "There’s creative solutions out there, but just being creative doesn’t make it right," he cautioned. "You’ve got to make sure whatever tricks you’re playing are…not just to hit a number and not just hitting that density minimum. You’re creating something desirable to hit the market." This principle emphasizes that the ultimate success of any density strategy rests on its ability to create homes that people genuinely want to buy and live in.
The complex issue of affordable housing mandates, particularly prevalent in California, was also discussed. Boyd explained how developers like Brookfield Residential in the Bay Area can strategically allocate different densities and uses across a development. "Affordable housing can be concentrated in one portion of a development, while market-rate accounts for the rest. This blended density allows the affordable and market-rate components to each be optimized financially rather than forcing the entire project to absorb the same economics." This financial optimization allows for greater flexibility and potentially better economic outcomes for both affordable and market-rate components, a crucial consideration in development planning.
Matching Amenities to Market Demand: A Strategic Imperative
The discussion then shifted to the critical role of amenities in enhancing the appeal and value of residential communities. The overarching theme was that amenities must align with local market demand and the scale of the development to be economically viable and genuinely valued by residents. "We learned the hard way on this one," admitted Syth, recounting an experience with a small, boutique apartment complex that, despite its award-winning design, could not command the same rents as a larger, adjacent Class B-minus complex with superior amenities. "Our units are Class A. We won awards for the design. They turned out great, and we love the look of it. But we cannot achieve the same rents that the 400-unit apartment complex gets." This anecdote underscores the importance of scale in supporting high-end amenities and the potential for over-investment in features that the market may not fully support.
However, even smaller communities can incorporate relatively low-cost design features and amenities that significantly boost marketability without excessive space requirements. Walking trails, for instance, have emerged as a highly popular and cost-effective community amenity. Developers are increasingly integrating extensive trail networks into parks and neighborhood infrastructure to foster connectivity and promote active lifestyles.
Long highlighted the evolving landscape of community design, moving beyond basic infrastructure to a focus on "placemaking and lifestyle." He noted, "We used to think the sidewalk was adequate, but I think we’re now much more focused on trails and different modes of transportation. Whether it’s now accommodating e-bikes, which are really motorcycles, things like that are definitely part of our work." This reflects a broader societal shift towards prioritizing active transportation, outdoor recreation, and a more integrated living experience. The inclusion of infrastructure to support emerging transportation modes, such as e-bikes, signifies a forward-thinking approach to community development that anticipates future resident needs.
In conclusion, the insights shared at the PCBC session reveal a construction industry at a pivotal juncture. The imperative to build denser housing, driven by a confluence of economic, social, and environmental factors, requires a departure from one-size-fits-all solutions. Builders must embrace a data-driven, market-specific approach, meticulously tailoring product mixes, community designs, and amenity offerings to resonate with local buyer preferences and financial realities. The success of future housing developments will undoubtedly hinge on this ability to innovate creatively while remaining grounded in a deep understanding of the markets they serve, ensuring that increased density translates not only into more homes but also into desirable, sustainable, and financially viable communities.
