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30 June 2l, 2002 THE BUSINESS JOURNAL twincities.bizjoumals.com SUBURBAN HOUSING Cities demand new vision of ,housing BY FRANK JOSSI CONTRIBUTING WRITER The typical vision of the subm'bs as end- less streets of single-family homes has undergon~ a radical transformation over the past decade. In the sprawling Twin Cities metro area, suburban mtfltifamily housing such as townhouses and apartments have risen in greater ntm~bers than ever before as land for development dwindles. The evidence can be seen from Woodbury to Maple Grove. With the growth of multffamily housing has come suburban density levels in some cities that rival those of Minneapolis and St. Paul. Sttbnrban ~nnltifamfly housing develop- ments also are likely to have features in connnon with an re'ban neighborhood, say panel members invited to speak on the issue by The Business Journal, often with mixed-use development mandated by local governments. Such communities, where retail and office mix attractively with hottsing for everyone from singles to sen- ~ors, invite walking rather than drivmg. In other words, this isn't the suburb you may have grown up in. This is the new sub- urb, where multffamily housing is not frowned upon and which, in most places, isn't facing old fears about urban-style development. With more than 600,000 more people expected to live in the Twin Cities over the next 30 years, many more resi- dents will be living in suburban multffami- ly developments. John (Jack) Brandt, president o£The Hartford Group Inc., Edina. has been developing multJfamily and mixed-use projects f'or over 20 years, including The Regent at Plymouth. The Regent at Burnsville, The Legacy Village at Apple Valley and mixed-use developments in Maplewood and Oakdo lc. Armand Brachman, principal o£ Dominium Development & Acq uisition, Plymouth, handles new prolect work for Dominium, the largest privately held owner/operator of multifamily housing in Minnesota. He Ioined the firm ~n 1979. S. Scott Pollock. vice president of investment services at Bloomington- based United Properties. has spent 2o years in the real estate business the last years in investment brokerage specializing in multifamily, office and retail sa es. He has sold nearly 4,o0o apartment umts, half'in the Twin Cities metro area How would you describe the market for suburban housing? Jack Brandt: The market is generally good throughout the Twin Cities area. There are pockets of problmns, but long term the prognosis is strong. Armand Brachman: I would concur. Where the market has seen a softening in the last three to four months has been in the across-the-board portfolio. Vacancies have gone up, but we're optimistic that when the economy picks back up onr occu- pancies will also go back up. s. Scott Pollock: After a tremendous run in terms of ~-ental growth and vacancies, we're seeing the market leveling off, not unlike the other property markets industrial and office. ~he demand side has cooled somewhat and caused vacancies to rise somewhat. We've seen the first quar- ter-to-qum-ter decrease ill average Fent in 10 years and vacancms have decreased along with thegn. The vacancies that have been reported don't necessarily tell the whole picture, which is the people in the trenches are reporting a little higher vacancy than maybe the averages reported by Apartment Search and others who track that information. How important is city financial support for your multifamily projects? Brandt: Our firm is revolved in five mixed. use projects, in different stages of the development process, encompassing senior housing, general occupancy housing, retail, offices, restaurants and so forth, and in vir. tually all cases there's a TIF flax-increment financing) colnponent and any other kinds of assistance that might be reqnired. Brachman: In order to ha~e a successful development today, I think it is critical that you have the participation of the local municipality to make the numbers work. You really have to have a city participate with TIF and any other soft money that might be available. Pollock: Cities need to be involved because they are also requiring developers to add a mixed-use component to these projects. They all want first-floor retail, depending on the location, for example, and m order to make projects work you're going lo need the city's Involvement in some fashion. There's also a recognition among cities that all these projects have to have an affordability component [for housing]. Why do suburbo n muhifamily develop- ments look better now than, say, 10 years ago? Brandt: The expectations of cities have changed dramatically the last couple of years. We conld not present a project to a city that we might have presented 10 or 15 years ago. For the most part the market and cities reqnire much more attractive produ_ct brick, stucco, higher-quality external materials; Eden Prairie for sever- al years has had a 75 percent-brick require- ment. We present renderings of each por- tion of the product and we certainly bear comments from staff members, mayors and others on what they want to see in the architectural integrity of the product Brach~nan: We're spending a lot more time in the unit layout and design. In the past, most apartment units were fairly straightforward. Because of the higher St. Lores Park officials were targeting residents' wishes for mult family housing and a town center w~th the Exce s or & Grand project which w feature hous ng above reta a ong w th a town green.