Welcome to our informative blog where we embark on a captivating journey through the world of apartments, also known as multifamily buildings.
With their enduring appeal among investors in the commercial real estate industry, apartments have proven to be a resilient and profitable segment, even during the challenging times brought about by the COVID-19 pandemic.
While other sectors like hotels, offices, and retail spaces experienced setbacks, multifamily properties stood tall, showcasing the strength and stability of the multifamily industry.
The realm of apartment construction has witnessed remarkable innovations over the years. As you delve deeper into the subject, you’ll find yourself navigating through a maze of diverse apartment types, each with its unique advantages, disadvantages, and target demographics. While these apartment structures may appear distinct from one another, they all share one common feature: they are all rental properties.
In this comprehensive article, we will unravel the tapestry of contemporary apartment types that continue to operate successfully. Furthermore, we will delve into the most prevalent and prolific apartment building construction types, gaining a deeper understanding of their characteristics and benefits.
So, fasten your seatbelts as we embark on this insightful exploration of the A-Z of apartments, shedding light on the various building types that dominate the market today.
Types of Apartment Buildings
In our exploration of apartment buildings, we encounter a diverse array of architectural marvels. Let’s unravel the various types of apartment buildings that dominate the landscape today.
- Garden Apartments: Low-rise apartments with multiple buildings surrounded by green spaces in suburban areas.
- Mid-Rise Apartments: Larger buildings, typically between 4 and 9 stories high, are found in urban areas with amenities like fitness centers or rooftop decks.
- High-Rise Apartments: Tall buildings, usually 10 or more stories high, commonly located in densely populated city areas, offering extensive amenities.
- Walk-Up Apartments: Older buildings, less than six stories high, without elevators, requiring residents to use stairs.
- Loft Apartments: Converted commercial or industrial spaces featuring high ceilings, large windows, and exposed brick or unique architectural elements.
- Convertible Apartments: Units with a large living space that can be divided to create an additional room, often converting a studio into a one-bedroom apartment.
- Studio Apartments: Small one-room units with a separate bathroom, serving as a combined bedroom, living room, and kitchen.
- Duplex/Triplex Apartments: Multi-level apartments with two or three separate levels, each functioning as an individual unit.
- Penthouse Apartments: Luxury apartments located on the top floor of a building, offering spacious terraces and panoramic views.
- Micro Apartments: Very small units, typically less than 300 square feet, designed for efficient living in high-demand urban areas.
- Co-Op Apartments: Buildings where residents own shares in a cooperative corporation instead of owning individual units.
- Condominiums: Buildings where each unit is individually owned, with shared ownership of common areas.
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Now that we have explored the various types of apartment buildings, let’s delve deeper into the most common and prolific apartment construction types. Stay tuned for the next section of our journey as we uncover the intricacies of apartment construction methods.
Major Types of Apartments that are popular today
Low-rise Garden Style Apartments: A Popular Choice
When it comes to apartment construction, low-rise garden-style apartments have gained significant popularity in recent times. At Stryker Properties, we specialize in designing and building these sought-after apartment complexes.
Construction and Features
Low-rise garden-style apartments typically consist of 2, 3, or 4-story buildings constructed using wood framing. We prefer to design our properties with 8-10 buildings on 12-15 acres of land, especially in suburban areas where land is abundant and more affordable.
It’s important to differentiate between “Walkup” and “Elevator served” properties within this category.
While walkup buildings do not have elevators, elevator-served properties have the added convenience of elevators. Installing an elevator can cost around $200,000 per unit, which is why it may not be installed in 3-story constructions to maintain affordability.
However, at Stryker Properties, we build in high-income areas and prioritize installing elevators. This not only attracts seniors with mobility issues but also allows us to charge a “View Premium” for top-floor units, as opposed to offering discounts to incentivize tenants to take the stairs.
In the below video, you can checkout the ground-up developement project of Stryker Properties – Opal Lane Apartments, which is a garden-style apartment construction in Kyle, Texas:
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To ensure affordability, we consider a unit as “Affordable” if the tenant’s annual gross income is at least 40 times the monthly rent, with the rent amounting to only 30% of the tenant’s monthly gross income. This approach helps prevent tenants from being considered “Rent Burdened.”
Efficiency and Cost Considerations
Low-rise garden-style apartments are classified as low-density multifamily by zoning and permitting authorities. The number of units that can be built per acre (UPA) varies, ranging from as low as 15 units per acre for 2-story constructions to 30 units per acre for 4-story constructions.
In terms of cost efficiency, 3-story construction proves to be the most favorable. The average hard cost (construction cost) per square foot of net rental area ranges from $150 to $190 in Texas metros as of 2023. Typically, there is a 60-40 mix between 1 and 2-bedroom units, with a few 3-bedroom units available.
The average square footage of units ranges from 800-850 square feet, but there has been a trend toward smaller units in the 700s due to factors such as inflation, labor scarcity, and high material costs. The ceiling height is usually 9 feet high in the units. The rents for newly built market-rate properties are usually from $1.50 to $2/sft, so $1200 to $1600 for 800 Sft apartment units in major Texas metros.
Hard costs generally account for 65-70% of the overall construction costs, while land costs make up around 10-15% of the total. The remaining expenses, known as “Soft Costs,” encompass design, permitting, financing, and developer-related expenses.
Advantages and Disadvantages
Low-rise garden-style apartments offer several advantages and considerations for potential tenants:
Overall, low-rise garden-style apartments provide a serene suburban living environment, particularly suitable for young families who appreciate the tranquility of the suburbs and own a car for commuting purposes.
Spread the Knowledge: Don’t forget to share this blog with your friends and colleagues interested in the multifamily industry. Together, we can create a network of informed investors and enthusiasts.
Wrap Around Apartment Construction: Urban Efficiency and Style
Another popular construction method in the multifamily industry is wrap-around apartment construction.
This innovative approach involves building units 3-7 stories tall using wood or cold-formed steel construction and wrapping them around a multi-story concrete parking garage.
This construction style is often referred to as the “Texas Donut” due to its resemblance to a donut shape when viewed from above, with the parking garage and amenities occupying the central space.
Construction and Location
Wrap-around construction may be more costly compared to garden-style apartments, but it proves to be highly efficient in situations where land costs are high and there is a need to maximize the number of units per acre.
These projects are typically developed on the outskirts of urban areas or in transitional locations. Zoning laws typically permit 50-90 units per acre. Wood construction is utilized for buildings up to 5 stories, while cold-formed steel (CFS) is used for taller structures to provide additional strength.
It’s worth noting that all wrap-around properties are equipped with elevators for residents’ convenience. These properties are strategically located in fairly urban areas with well-developed public transportation, retail centers, and easy access to major highways.
Despite the denser urban environment, ample parking is still provided, typically averaging 1.5 parking spaces per bedroom, housed within the multi-story parking garage. While the parking garage may present a planning challenge when visible from ongoing traffic, it is ingeniously concealed within the design of the units, offering an appealing visual aesthetic while ensuring resident security.
Feasibility and Cost Considerations
Wrap-around construction is not typically feasible in low-income areas, requiring a median household income of at least $90,000 in 2023 to make the project financially viable while still offering affordable units. These projects often span 4-8 acres of land, providing ample space for the combined unit and parking garage configuration.
Stryker Properties, for instance, is currently constructing a 300-unit wrap-around property in the affluent downtown of Frisco, Texas, and a 400-unit property in Round Rock, Texas, with frontage on the highly traversed I-35 highway—a significant arterial road that contributes to the success of NAFTA.
In terms of construction costs, as of 2023 wrap-around projects generally range from $225 to $275 per square foot. The average unit size tends to be slightly smaller, averaging around 750 square feet. The unit mix typically consists of a 60-40 split between 1 and 2-bedroom units, with a few 3-bedroom units available. As of 2023, rents in major Texas metros range between $2 to $2.75 per square foot.
Advantages and Disadvantages
Wrap-around apartment construction offers a range of advantages and considerations for potential residents:
Wrap-around apartment construction strikes a balance between urban efficiency, modern aesthetics, and convenient amenities. It provides an excellent housing option for individuals or families seeking a vibrant city life.
Podium Construction Apartment Buildings: Elevating Urban Living
In the realm of high-density infill locations, where land costs are exceptionally high and available land is scarce, podium construction stands out as a remarkable solution.
Primarily found in central business districts of major metropolitan areas, podium-designed apartment buildings offer a unique blend of functionality and aesthetic appeal.
Construction and Location
Podium construction typically involves 1-2 floors of concrete parking garage, accommodating all parking needs and often incorporating lobby spaces, amenities, and even retail establishments.
On top of the parking structure, 4-6 stories of wood or cold-formed steel (CFS) framing, and in some cases, additional floors using steel construction are added.
The concrete podium provides longer spans and taller ceilings, making it an excellent choice for retail and restaurant tenants.
The top of the podium offers space for outdoor amenities such as pools and gardens, enhancing the overall resident experience. With higher densities ranging from 80 to 120+ units per acre, depending on the configuration and number of stories, podium construction maximizes land utilization in high-demand urban areas.
Feasibility and Cost Considerations
Podium construction is the most expensive compared to garden-style and wrap-around apartments. The hard costs typically range from $300 to $400 per square foot of net rental area.
Consequently, podium-designed properties are feasible in very high-income areas where the rental rates can support such costs. For instance, a 700-square-foot apartment may cost a tenant $3,000 per month. Thus, these developments cater to young single professionals or families seeking a high standard of living close to the central business district with minimal commuting and access to a vibrant nightlife.
Advantages and Disadvantages
Podium construction apartment buildings offer a range of advantages and considerations for potential residents:
Podium Construction caters to those seeking an elevated urban living experience, providing convenient access to job centers, a vibrant city lifestyle, and a wide array of amenities. It’s an ideal option for young professionals or families desiring the best that city living has to offer.
Spread the Knowledge: Share this blog with your friends and colleagues interested in the multifamily industry. Let’s continue to grow our network of informed investors and enthusiasts.
In conclusion, understanding the different types of apartment buildings is essential for investors and individuals seeking the ideal living environment. From the popular low-rise garden-style apartments to the efficient wrap-around constructions and the upscale podium-designed buildings, each type offers its unique advantages and considerations.
By exploring these options, we can make informed decisions and create thriving communities for residents across diverse urban landscapes.
