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Is a Millennial’s Dream Apartment 400 Square Feet, Breakfast Included?

by Lark Turner

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Rendering of proposed Blagden Alley development.

SB-Urban, the development company with plans to build hundreds of small, luxury units in DC’s most sought-after neighborhoods, revealed a bit more about its business plan at an ANC 2F meeting on Wednesday night. For its new projects in Shaw, Dupont Circle and Georgetown, the company is planning to target big-spending millennials who aren’t looking for a long-term living arrangement.

Several ANC commissioners and others SB-Urban has encountered in the review process assume the developer is targeting the corporate housing market with its furnished, small-scale units. But the shortest lease SB-Urban said it plans to offer is 90 days, and the company has said it expects most tenants to stay for 7-8 months. That’s a big longer than the average corporate stay of 88 days, according to the Corporate Housing Providers Association. SB-Urban has proposed building 90 furnished micro-units in the Patterson Mansion on Dupont Circle; 125 small studios in Blagden Alley; and about 120 units in the former Latham Hotel in Georgetown.

When asked prior to Wednesday’s meeting who their target market was — millennials or businesspeople — SB-Urban’s Brook Katzen suggested that as millennials age, they’re becoming the businesspeople to target.

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Katzen told the ANC committee that the units in the Shaw project, which will measure about 400 square feet, are not micro-units. (Varying definitions of micro-units exist, but many say the definition is less about the size of the unit and more about the unit design and emphasis on community amenities, including spaces to gather outside the small units and excellent access to transit. By that definition, the units would be micro-units, though large ones.) And since they’re not micro-units, his answer suggested, they won’t come at a micro-price.

“We’re targeting a slightly higher-income, more upscale, sophisticated tenant than a typical micro-unit might be targeting,” Katzen said. “Our demographic is single, urban professionals aged 25-35 earning $150,000-$200,000 a year. That income level is based on the fact that these units will be fully furnished, all utilities included.” Katzen even said that the project may offer a complimentary weekday breakfast.

“It’s an all-inclusive package based on the idea that someone moving to Washington on short notice can show up with little more than credit cards and a laptop and a couple suitcases … and be settled day 1,” Katzen said.

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It seems far-fetched to believe a person making $150,000 will pick a 400 square foot studio and a Murphy bed over, say, a swanky apartment — until you consider the growing importance of convenience for a younger, wealthier generation that’s settling down much later. SB-Urban’s plan, if successful, would be a part of a sea change in the way people think about amenities. If the amenity war represents the “hotelization” of apartment buildings, SB-Urban’s B&B-style concept would be the granddaddy of them all.

Committee member Ron Rubin asked what kind of research SB-Urban had done to make them feel so confident their model will work.

“We’ve done quite a bit of research,” Katzen said, describing a DC population boom fueled mostly by young single professionals. Data do show an emerging market for such units, according to David Versel, a researcher for George Mason University who spoke about the growing trend at a micro-unit conference earlier this year. Versel’s suggested the District could stand to build 10-20,000 micro-units over the next 10 years. But SB-Urban’s units will be targeting only a small part of that population boom. Most of the young, single people moving to DC in the next decade will be able to afford, at the high end, small units priced up to $1,750 a month, Versel’s research shows. However, he’s previously noted that the micro-unit trend will likely start on the luxury end before trickling down to units that are more affordable for more people.

But in referencing a committee member’s question about the transience of the development’s residents, Katzen’s response suggests that the people footing the bill for the pricey apartments may not always be the tenants themselves (read: the parents will be paying the rent). He noted the development’s proximity to Georgetown Law School and added that, in addition to grad students, fellows or other short-term employees at places like Brookings and Cato may be interested in renting the apartments. That’s not exactly living on a $150-$200,000 salary, so it’s fair to expect at least some of these leases will have a lot of very wealthy cosigners.

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As for the design of SB-Urban’s Blagden Alley development, it’s been received well by the ANC and members of the community, despite the usual fear of developments proposed without parking. Commissioner Greg Melcher said the community generally supported the idea of a development that comes without car traffic. (UrbanTurf previously delved into the enforcement issues that come along with proposing carless developments.)

The 125-unit Blagden Alley project was seeking support from the ANC 2F Community Development Committee (CDC) for their project’s design prior to a Historic Preservation Review Board (HPRB) meeting scheduled for later this month. The project has facades on both 9th and M Streets NW (map). At an earlier meeting on the project, commissioners said they were looking for a more differentiated design on 9th Street, and SB-Urban, which is working with architect Hickok Cole on the project, responded by adding some small changes to the facades. Members of the committee, especially at-large member Joel Heisey, said the 9th Street facade didn’t fit with the more “fine-grained” architecture and pacing of that street, though commissioners still said the buildings looked nice and supported an industrial design for a pedestrian bridge that will connect the two separate buildings. The 9th Street building will have about 50, while the larger M Street building will have about 80.

The CDC ultimately passed a resolution supporting the bulk of SB-Urban’s proposal, including the bridge, though it declined to support the plan for the 9th Street facade.

See other articles related to: shaw, sb-urban, microunits, micro-units, micro units, blagden alley

This article originally published at http://dc.urbanturf.com/articles/blog/sb-urbans_business_plan_will_target_wealthy_millennials/8434

19 Comments

  1. Vance said at 1:32 pm on Thursday May 1, 2014:

    I wish there had been something like this in existence when I moved here five months ago.

    I have three months left on my assignment and then will need to find a subletter who wants to take the remaining four months of my year-long lease, not to mention someone who wants to buy my furniture.

    400 square feet would’ve been a little smaller than I wanted, though.

  1. nk said at 2:04 pm on Thursday May 1, 2014:

    j****s c****t these are going to be overpriced… just what dc needs more upscale development

  1. justin s said at 3:35 pm on Thursday May 1, 2014:

    Wow, so now developers are officially building units for the children of plutocrats? It’s nice to see someone being honest about it, but man, what a downer.  To think that you know not only have to beat out 5,000 other applicants to get that top-tier internship/starter job, but also need parents who can cover rent that costs more than a full time job might pay.  Sad times… glad I’m not just starting out! It was bad enough in the early 00’s. I’d never have made it here on today’s prices.

  1. skidrowe said at 5:14 pm on Thursday May 1, 2014:

    Agreed, justin s!  It’s a legal use, but certainly depressing to those who have a sense of socioeconomic fairness—or an aspiration for “community” in a meaningful (i.e. non-virtual) sense of the world.  In both respects, this form of “luxury” microunit is even worse than regular microunits.

    The architecture of the featured development (Blagden Alley) is a little ho-hum, but maybe the details will carry it through. The bridge over the alley (which is quite wide at that point) seems excessive though, and I don’t see how that could be by-right.  I suspect it will vanish one day, and then the developer will face the horrible decision: force the privileged tenants on one side to go outdoors (and back in) for their breakfast, or provide a dining room for both buildings, dropping the efficiency of the operation?

    But what’s really sad architecturally is to imagine the grand Patterson mansion chopped up into tiny apartments.  Presumably those irreplaceable interiors—elaborate cornices, wainscots, chandeliers, and so forth—will have to go.  I guess a handful of rooms will be retained for “amenity” spaces for people who have no time to use them and plenty of money to go elsewhere.  Sigh.

  1. AlesiaMichelle said at 6:24 pm on Thursday May 1, 2014:

    “Most of the young, single people moving to DC in the next decade will be able to afford, at the high end, small units priced up to $1,750 a month…”
    I need to see this research because it is clearly flawed. I’m 25 and have 3 years of professional experience and ummm… Even my friends in their 30s couldn’t afford to pay that much in rent (except for my lawyer friends-but their student loans are killing them).

    When will these developers start to actually make apartments for young adults.

    Seems like the group house revolution will keep on keeping on…

  1. Lark Turner said at 6:31 pm on Thursday May 1, 2014:

    Hi AlesiaMichelle,
    We wrote a little more about the research here. That is the very top end of what the incoming single professionals can afford.
    Hope that’s helpful — 
    Lark

  1. Jay said at 10:46 pm on Thursday May 1, 2014:

    This is the lemming, being told what is hip.  No different than U St, H St, Union Market, etc.  Few of these followers grew up in comfort or style, yet they “deserve” 10,000 count Frette sheets.  It’s all BS.

  1. DC225 said at 12:12 am on Friday May 2, 2014:

    I am in this developer’s target demographic.  So are a large number of my friends and coworkers.  Nobody I know wants to live in a tiny apartment - myself included. I hear all the time “I’d like a bigger place,” “I’d like a guest room,” or “I’d love a patio where I can grill,” but nobody I know making $150K-200K a year says, “Oh sign me up for a walk-in-closet sized apartment with fancy finishes and a couch 5 inches away from the stove.”  These tiny/micro units might appeal to 21-25 year olds who are still in party mode, but most people in DC making big salaries only older (at the salary range quoted, most likely you’ll be 30+), and at that stage in life a micro unit probably won’t align well with your priorities (a spouse, more quiet nights at home, visits from the in laws, etc.).

  1. NotDavidRicardo said at 9:15 am on Friday May 2, 2014:

    Think about it folks. The number of students at Georgetown Law, or short term empolyees at Brookings, is going to be the same if this gets built or not. So the folks living here would otherwise have been living elsewhere and driving up rents.  This development will thus help (all other things being equal) to lower rents. And it will also lead some wealthy folks to live reltively energy efficient lives.  The notion that allowing this to be built is socioeconomic unfairness is silly.  If you don’t like the distribution of income and wealth in this country, by all means protest that, but don’t think you are changing it by protesting development.

    Someone said worse than regular microunits. Why are regular micro units a bad thing - they respond to what people want, and enable housing to people who do not need or want large amounts of space, or who have large amounts of stuff, but who value location more.

  1. bjk said at 9:22 am on Friday May 2, 2014:

    Hey genius, nobody making $200k is looking at micro units. Also not looking for furniture on craigslist and not looking to drive a used Ford Fiesta. Also, you don’t have any friends making $200k.

  1. corey said at 9:22 am on Friday May 2, 2014:

    25-35 year olds making 150,000-200,000? Are you joking? First of all those people will kill the spirit of the area and force the young mellenials upward and outward (think petworth and H street), which is fine by all means however, this area will die a slow painful boring death. And i dont know a single person who is under 30 making even close to 100k a year. And i come from a very well off family, educated, ect

  1. RL said at 9:48 am on Friday May 2, 2014:

    Agreed that it will work as temporary housing quarters for someone new to the area, although I think it would be cheaper just to stay in a hotel. With the plethora of housing options in the city it just doesn’t seem viable ,however,i’m sure there’s a market out there for it. However, for someone established in the area in that income range, purchasing a home seems to be the most logical next step. A micro unit seems to be a waste of money and for most people in that price & age range or at least for me in my early 30s investing in a home, having a garage for my cars and bicycles, and contributing heavily to my retirement makes more sense than renting an extremely under-sized and excessively over-priced apartment.

  1. Adam Smith said at 10:46 am on Friday May 2, 2014:

    Let ‘em build it and then go bankrupt.  This plan has “FAIL” written all over it.

  1. jorge said at 11:04 am on Friday May 2, 2014:

    @AlesiaMichelle I totally agree; I and most of my friends are in the same demographic (a couple years older) and most of my young professional friends can afford in the range of $700-1,200, mostly in the lower part of that.

    I really have to wonder what these people are trying to accomplish. They’re clearly not building for people. You’d assume they’re building for profits, but is that still really the best profit-seeking strategy, to continue to fight over the top-earning 5% of millenials? (And someone else said it, but really, are young singles making over $150,000 going to want 400 square foot apartments? Good luck…)

    I don’t know how the decision-makers at SB-Urban go to sleep feeling good about their day’s work.

  1. NotDavidRicardo said at 1:08 pm on Friday May 2, 2014:

    “They’re clearly not building for people. You’d assume they’re building for profits”

    How will they make profits if people do not rent the units? 

    I would sleep feeling fine if I had developed those.  Lots of people sell goods and services to rich people.  As long as we have rich people, I don’t think theres anything wrong with selling to them. Better to sell them microunits than energy hog McMansions that chew up the countryside.

    Hi Adam Smith, how ya doin?

  1. NotDavidRicardo said at 1:19 pm on Friday May 2, 2014:

    I mean if homeowners charging $1500 a month for some dark basement apartment can sleep at night, well ....

  1. charlie said at 12:37 pm on Monday May 5, 2014:

    the long dreaded airBNBiaztion of the real estate market is here?

    Huge potential market for shorter term rentals in DC but most buildings ban them.

  1. Studio said at 12:48 pm on Monday May 5, 2014:

    Lord, how depressing.  I am not in the target demographic for these units - older and far poorer. However I do live in what amounts to a micro unit- one room studio which I can just afford.  I can justify it (to myself) because it’s in a great location which provides me everything I need to live, without a car.  So, I am OK, but it’s taken some time to get here.  It’s the thought of the folks 20+ years younger than me who will waltz into these units (paying 30% higher rents) that just depresses me. Why or why didn’t I choose rich parents?

  1. DCnDE said at 7:13 pm on Wednesday December 17, 2014:

    *I* don’t want to live there, but I don’t know what all the fuss is about. These are for short-term rentals, people, a demographic that is big in DC, and for which we don’t have a bunch of great options.  And at 3 or 4 buildings, it’s not like it’s a huge wave of the future. It is, quite simply, another option that will be available, diversifying what we have now.  YES, RIGHT, MOST millenials will not want to live in these places—and, hey look, MOST apartment offerings are not like these.

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