Housing in motion

The world’s most economically dynamic cities share one common challenge: a housing market that is failing to keep up with demand. Here, Stephen Engblom and Paul Peninger describe the trends driving increased flexibility in urban housing and offer recommendations for how policymakers can embrace these models to advance urban policy goals and solve the global housing supply and affordability crisis.

In most thriving cities, the familiar model of buying a home with a mortgage is now looking outdated. Demand is growing among renters and buyers for housing that better suits their 21st century lifestyles and fluid work patterns. They want flexible types of smaller space, sometimes for just short lengths of time. And of course affordability is key.

Making housing more accessible

Digital platforms are transformational. Services like Airbnb, Roam, and FlipLease make it easier to increment time and customize occupancy durations depending on the needs of renters and the availability of providers. This helps optimize the overall housing market by matching supply and demand for short- to mid-duration stays. While the evidence is mixed on the effect these platforms have on urban rents[1], one thing is clear: they have opened latent market segments to serve people in need of flexible living arrangements.

Emerging design concepts are appearing too. These partition floor area into smaller living spaces, opting instead to allocate space to shared amenities. For example, WeWork’s WeLive apartments and developments managed by StarCity and Ollie embrace urban co-living, offering furnished units and communal conveniences. These also offer relatively flexible leasing terms and social networking opportunities. A great example is The Collective in the Old Oak Common area, London, which links all-inclusive living, working, and playing with robust connectivity to public transportation; creating dense, transit-oriented environments.

Delivering homes faster and cheaper

Housing design and delivery are also rapidly evolving. Modular construction is becoming more commonplace, with companies like FactoryOS in San Francisco offering products that can be built quicker and cheaper than traditional delivery methods. It can also ensure a more consistent flow of housing provision and construction jobs. In the UK, an estimated 240,000 to 300,000 new homes per year are needed in England; yet, in 2016 only 217,000 units were delivered. New methods of upscaling the housing provision flow is critical to keeping up with population growth and economic development. Modular housing construction, and new models of public-private delivery are needed to close England’s housing gap and deliver residential units faster and more affordably.[2]

These new ways of buying and delivering housing are rapidly changing the housing landscape and pipeline in the most progressive urban markets around the world. Airbnb has a program with real-estate developers to allocate portions of their building as short-term rentals on the platform,[3] while others have also begun incorporating modular design into their housing units, making it simple to partition floor area within apartments and within buildings. For example, the Songpa micro-units in Seoul, South Korea, billed as “the perfect apartments for breaking up”[4], include 120-square-foot apartments that can easily be combined or separated as needed, along with communal amenities including a café, auditorium, and art gallery.

To date, much of this housing innovation has catered for the upper end of the income spectrum. But this is changing too. In fact, some for the fastest growing segments of Airbnb hosts and guests are in the lower economic strata. Airbnb has partnered with civil rights organization The National Association for the Advancement of Colored People (NAACP) to offer host training – to help introduce housing alternatives to some of the most vulnerable housing crisis populations.[5]

In Australian cities, the lack of a rental-housing development sector[6] has long been a missing link to providing housing consumers with a full range of choice, especially in dynamic urban centers like Sydney and Melbourne, where the rate of population growth is twice that of California. Here we are seeing change too, such as the emergence of new (lower cost and relatively easy to deploy) platforms that connect landlords to renters in need of more flexible (in terms of timing and physical form) housing options that meet the rapidly changing needs of Australia’s dynamic economy and increasingly diverse, younger, and mobile workforce.

How can policymakers embrace housing innovation?

Innovations in flexible housing present an opportunity for policymakers to further important urban policy priorities. Housing units with smaller footprints inherently lead to increased density and may promote more efficient and sustainable use of resources. While per-square-foot rents in many existing micro-units exceed that of their larger counterparts, per-unit rents can be lower, providing more housing within ranges that more people can afford. Additionally, flexible options and digital platforms may help optimize the housing market by better matching supply with demand, reducing the amount of stock that sits idle and offering more fluid options.

Here are three ways city policymakers and developers can realize the benefits of flexible housing and leverage these innovations to close the affordability gap for low- and middle-income housing-seekers:

  • Collaborate with innovators, developers, designers, and builders to co-design flexible housing pilot programs that support important policy goals and can be scaled if successful. For example, Seattle recently committed $12 million to pilot three modular micro dwelling unit projects designed to support 200 of the city’s homeless.[7]
  • Regulate and zone with flexible footprints and occupancy durations in mind. Many municipalities, including San Francisco[8] and Austin[9], have revisited city ordinances in recent years to reduce minimum footprints and facilitate increased micro-unit development. Regulations on short-term rentals have ranged from outright bans to watchful waiting. Cities should strive to balance the potentially adverse effects of these rentals by harnessing the local economic opportunities they provide to residents and flexible accommodation options they offer to vacationers and nomadic workers alike, as well as for the lowest income brackets.
  • Sync flexible housing approaches with broader housing and urban development strategies, especially regarding provision of affordable housing. Accommodations that flex to people’s needs for floor area and occupancy duration help to fill gaps left by more traditional housing delivery models. These approaches should therefore be considered important elements of regional housing strategies aimed at achieving accessibility, affordability, and equity—in particular, to bring housing within reach for those with lower household incomes and/or temporary work arrangements.

A longer version of this article was published by the author on LinkedIn:

https://www.linkedin.com/pulse/houses-motion-stephen-engblom-1c/

Image caption: WREN Apartments, South Park, Los Angeles: WREN combines art, culture, entertainment, and community in a purpose-built rental apartment development; catering to the influx of new urban residents located close to Downtown LA’s major attractions and convenient public transport.

Image credit: Copyright © 2017 Kevin C Korczyk

References

[1] http://www.jll.com.au/australia/en-au/Research/Build%20to%20rent%20residential_Australias%20missing%20sector%20September%202017.pdf

[2] http://researchbriefings.files.parliament.uk/documents/CBP-7671/CBP-7671.pdf

[3] https://www.ft.com/content/afb21842-aece-11e7-aab9-abaa44b1e130

[4] https://www.fastcompany.com/3038078/the-perfect-apartment-for-breaking-up

[5] https://www.naacp.org/latest/naacp-airbnb-partner-promote-travel-offer-new-economic-opportunities-communities-color/

[6] http://www.jll.com.au/australia/en-au/Research/Build%20to%20rent%20residential_Australias%20missing%20sector%20September%202017.pdf

[7] Hickman, M. (2018 Sep 06). Seattle commits to $12 million in modular housing for the homeless. Mother Nature Network. Retrieved from https://www.mnn.com/your-home/remodeling-design/blogs/seattle-commits-12-million-modular-housing-homeless

[8] https://www.nbcbayarea.com/news/local/Minimum-Living-Space-in-SF-Now-220-Sq-Feet-180257571.html

[9] City of Austin. (2014). C20-2014-001: Micro-Units – Consider an amendment to Title 25 of the City Code to remove barriers to micro-unit development. Retrieved from http://www.ci.austin.tx.us/edims/document.cfm?id=223872


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