Renovations today are no longer just about updating tired, frayed apartment units with new carpet and a coat of white paint. From the adaptive reuse of shuttered hotels and functionally obsolete office buildings to condo conversions of both older and newer apartment stock, developers are doing their best to give multifamily units warmth, luxury, and a sense of space.
"Developers are being a little more risqué, and consumers are responding to it," says David J. Levey, executive vice president of East Coast development for Forest City Residential in Cleveland.
Across the nation, developers are spending the bulk of their renovation dollars on creating airy, spacious units, adding touches of luxury and using chic colors and unique lighting to differentiate their projects. "Renovations today are much more typical of what you'd find in a house," says Jeff Davis, founder and managing principal of Raleigh, N.C.-based interior design firm JDavis Architects. "The trend is to give people the feeling of single-family home amenities in multifamily units."
Although the amount of capital that developers are spending for renovations varies by market and the type of renter or buyer they're trying to attract, one thing is certain: People want high quality at an affordable price, says Jerry Migdol, principal of The Migdol Organization. The New York-based firm is in the midst of renovating four turn-of-the-century brownstones in Harlem into condominiums that will range from $500,000 to $700,000.
In 2005, total home improvement expenditures reached $291 billion–up 7.5 percent from 2004, according to Global Insight. The Boston-based home improvement research firm predicts that such expenditures will eclipse $305 billion this year. Multifamily renovations account for roughly 25 percent of all renovation expenditures, according to Harvard University's Joint Center for Housing Studies. (See "Home Improvement," page 27.)
Wide-Open Spaces
Creating spacious and airy units is one of the biggest challenges that multifamily firms face today when renovating existing apartment or condo properties or adapting other buildings for residential use. "The attractiveness of a multifamily living unit depends on the perception of space," Davis contends. "When you walk in the room, you want to have a long view. If you're walking into a wall, you feel like you're in a dark, closed-in environment. But if you can see through the unit to windows, you'll have a greater sense of space."
Modern design calls for the living room, dining room, and kitchen to be open and flow from one room to the other, Migdol says. "There's a move away from small rooms and corridors," he notes. His Harlem condo project, dubbed Rockwell Condominiums because one of them was the birthplace of renowned illustrator Norman Rockwell, features a loft-type design with open kitchens and exposed brick walls.
In most older apartment properties, kitchens were closed off from the dining and living rooms by a full wall or by a bank of overhead cabinets and countertops that created a "half-wall." Enclosing kitchens, which already seem small because they typically aren't much larger than 8 feet by 8 feet, really dates a property, says Keith Knight, vice president of capital improvements of Home Properties, a public apartment REIT.
Home, based in Rochester, N.Y., often does extensive kitchen renovations on its properties, especially those in strong markets with a lot of potential for increased rents. With the Chatham Hill Apartments in Chatham, N.J., for example, the company knocked down the wall that separated the kitchen from the other living areas. "We gave the units a new look by adding a bar in the kitchen," Knight says, adding that Home Properties spent $15,000 to $17,000 per unit to renovate Chatham Hill Apartments.
Davis ended up doing much the same thing for Beckanna, a 10-story rental community in Raleigh, N.C., knocking down walls in the kitchens to open up the units. "It's more contemporary to put a bar where the wall used to be," he explains, pointing out that the expense is well worth it.
In some cases, developers will choose to elevate the ceilings to create the illusion of space, says Robert Scarano, founder and principal of Brooklyn, N.Y.-based Scarano Architects. One of the firm's most successful projects, The Arches at Cobble Hill–an adaptive reuse of a church, rectory and related buildings–features 12-foot to 15-foot ceilings to make up for the lack of light in the units. "The higher ceilings created an airy feeling, which helped to sell the condos," he notes.
That Touch of Granite
Ten to 15 years ago, multifamily homes, whether rental or for-sale, rarely boasted upgraded materials such as hardwood floors, all-wood cabinetry, granite countertops, and stainless steel appliances. Today, however, it's rare for a developer to renovate an apartment building or do a condo conversion without including at least a few items that convey luxury.
"When we renovate, we want to add an element of luxury that didn't exist 20 years ago," says Eric Galbut, a principal with Hudson Capital, a Florida-based condo converter. He contends that owners and converters must plan and complete their renovations and conversions with an eye toward differentiating their projects. To that end, Hudson Capital installed granite countertops and decorative cabinet hardware as part of the conversion of the 848-unit Aventine in Miramar, Fla. "We put in granite countertops just to say we had them," he says. "And we made sure that we added hardware in the kitchens because if we had left it off, the kitchen looks five to 10 years older."
In fact, the easiest way to introduce a little luxury into apartment or condo is through the kitchen and bathroom renovations, says Rick Williams, president of The Equity Co., a Miami-based owner, manager, and developer. "The change in residential from 30 years ago and today is that there's much more emphasis on luxury in kitchens and bathrooms today," Williams notes, adding that any money spent upgrading these areas will be returned through higher prices.
Equity Co. is currently finishing up the adaptive reuse of a five-story, red brick elementary school in Medford, Mass. Dubbed The Residences at Franklin School, the property's 20 condos will feature stainless steel appliances and granite countertops in the kitchen, as well as granite bathroom vanities. Moreover, the developer is refinishing the school's original hardwood floors, which give the project an expensive feel, Williams says.
In particular, granite is increasing in popularity and availability, taking the place of laminate countertops. "Ten years ago, you wouldn't think of putting granite in a kitchen, but today hard surfaces are much less expensive because of China," notes Forest City's Levey, referring to China's exporting of granite at cut-rate prices. "In the past, we would only put granite on the high-rise, penthouse levels, but it's almost standard in every one of our units now."
In Forest City's newest adaptive reuse project, the 220-unit, 36-story Mercantile building in downtown Dallas, for example, all countertops in both the kitchen and the bathroom will be granite, Levey says. In addition to granite countertops, the Merc (as it's affectionately called) will also boast cherry cabinetry and stainless steel appliances and cabinet hardware.
Many developers are choosing upgraded materials because the installation (labor) cost is the same, and the return is higher. "Most of what we're seeing now is pretty high-end, even in the rental property," Hamilton says. "The differential between moderate and high-end renovations isn't that big because the cost of some of these luxurious materials isn't that much more expensive."
Moreover, developers who are renovating older Class B and C properties find that the properties lease up more quickly when higher-quality materials are used. "We want to attract the renter by choice, and renters today are accustomed to a higher quality finish," says Jim Ebert, senior vice president of Buchanan Street Partners.
The San Francisco-based firm has acquired more than 5,000 apartment units during the past 18 months, all of which require some level of upgrade ranging from $3,000 to $7,500, according to Ebert. For example, the firm plans to spend more than $7,000 per unit to renovate a Class B complex in Raleigh, N.C., adding maple flooring and granite countertops in the kitchen. Ebert expects that these small touches of luxury materials will firmly push the complex into Class A territory.
Using upgraded materials also helps developers and owners achieve higher rents, says Jonathan Cox, senior vice president of development for the Mid-Atlantic and Midwest for AvalonBay Communities. The apartment REIT, for example, saw its average rents increase by $120 to $140 per month, per unit, after it finished renovating one of its suburban Chicago properties, totally gutting the kitchens and bathrooms by adding upgraded cabinetry, countertops, and flooring. "Today we're trying to get to a timeless, sophisticated look," Cox explains.
Light and Color
Because competition is so strong in multifamily housing, most owners and developers are looking for ways to set their properties apart from the masses. Recent renovations are incorporating bold colors and unique, trendy lighting to attract residents and buyers.
"Color is much more prevalent today than in the past," Levey says. "We use color as a differentiator because the customer base expects something more than a plain vanilla shell."
Migdol agrees: "People want more color today because we were all brought up with eggshell white or linen beige colors, and we're tired of it. Color is a cheap way to make your place look different and stand out."
He noted that incorporating color into units that have few walls can be challenging, which is why he looks to hardwood floors and granite to bring colors to the space.
"In the loft areas, where there are no walls for paint, you have to find other ways to add color," he explains, pointing out that different types of exotic wood such as Brazilian wood bring deep, rich color to otherwise cold spaces.
For more traditional units, color can and should be added in a variety of ways, Galbut suggests. "There's nothing like white walls and white Euro-style cabinets to date a unit," he says, adding that painting the trim the same color as the walls also is a tell-tale sign of age. "The definite trend today is that the walls are a different color than the trim," he notes.
Older multifamily properties tend to lack color as owners typically insisted on installing beige carpeting, white countertops, and cabinets, not to mention beige or white walls as well. "The idea that everything has to be totally neutral is a bit passé," designer Davis says. As part of the Beckanna renovation, for example, his firm chose to add accent walls in all units and then coordinated the color of cabinets and countertops to the accent wall.
Beyond color, new lighting is another way that developers can inexpensively differentiate their units. "Lighting is becoming a critical part of renovations," says Niles Bolton, principal and founder of Niles Bolton Associates, an Atlanta-based design firm. "New lighting not only gets rid of those unflattering fluorescent lights, but it gives a dramatically updated appearance."
From accent lighting to can lighting to under-the-counter lighting, the ways to bring a warm glow to units are becoming limitless. "Lighting has become more stylish, and today there's a huge selection," Knight says. "Developers don't have to put up the little acorn light anymore because they can spend a few dollars more and get something trendy, unique and amazing."
In the Rockwell Condominiums project, Migdol used a lot of recessed halogen lighting to give the units a modern look, he says. Similarly, Davis' Beckanna project features low-voltage track lighting in both the kitchen and living area. "The adjustable curved track with small bulbs is something that gives an upscale feel to the unit," Davis says. "It's definitely something you wouldn't normally find in an apartment a few years ago."
Industry experts contend that future renovations will continue to build on the trends of color and unique lighting, along with luxury materials and open floorplans. "People are looking for elements they see in places like Starbucks and trendy hotels and wonder why they can't have them in their homes," Davis says.
Mosaic
Pretty Pieces: Two office buildings morph into rentals.
For more than 15 years, the 21-story Fidelity Union Building and 32-story Mayflower Building in downtown Dallas sat vacant. With their mid-century modern façades (the buildings were built in 1952 and 1960, respectively), they were too historically valuable to demolish, but too outdated for office space.
The buildings, which are connected on every single floor, are being transformed into luxury rental units by Dallas-based Hamilton Properties, which has renovated two other downtown Dallas landmarks–the Davis Building and the Dallas Power & Light Building.
The new project, named Mosaic because of the millions of tiny, blue-green mosaics that comprise the buildings' façades, will feature 440 units, 18,000 square feet of ground-floor retail space, and a seven-story parking structure. "There are very few modern buildings that have been renovated in the U.S.–usually they're Art Deco," says Ted Hamilton, who heads up the project along with his father, Larry Hamilton.
With a total price tag of more $105 million, or $238,000 per unit, Mosaic will feature high-end finishes and unique amenities, Larry notes. "The units will verge on condo finishes," he says. In addition to historic tax credits, the developer received $9 million in tax-increment financing funds from the city for environmental remediation and demolition and a 15-year, 90 percent tax abatement on added value.
Construction on the project kicked off in 2005, and the first units in the building are expected to be ready later this year, Ted Hamilton says. From an exterior standpoint, the biggest renovation project is adding a curtain wall into part of the building's façade. Beyond that, all of the brick and mosaic tiles will be cleaned and repaired. Hamilton is also constructing an 18,000-square-foot amenity deck on the top of the parking garage. Amenities will include a 140-foot zero-edge pool, two movie screens on the deck, barbeque grills, and a doggie park called Woof. On the ground floor, residents will be able to enjoy Scene, an upscale restaurant, and Pulse, a health club where a DJ spins live music.
Mosaic will feature one-, two- and three-bedroom units ranging from 750 square feet to 3,500 square feet. The units will be finished in one of three unique styles created by three different design firms, Larry Hamilton says. "One of our theories is that the American population has become more individual, and people have a larger sense of style than ever," he contends. "Typical apartment complexes ask you to surrender part of your individuality, but we're trying to make each person feel unique with the various floor plans and design schemes."
The interior of the units will be a mix of hard and soft lofts with polished concrete floors and open ceilings. All kitchens will boast granite countertops, high-end cabinetry and hardware, designer sinks and faucets, and stainless steel appliances. Bathrooms will feature ceiling-high granite in shower and tubs surrounds, and some units will have separate walk-in showers and tubs. Half of the Mosaic units also will offer an indoor-outdoor solarium with sliding windows and ceiling fans.
When the Mosaic is completed, Hamilton Properties expects that the units will rent for $1.40 to $1.50 per square foot.
Landmark Towers
Retro Update: High-rise apartments give way to chic condos.
Once the crown jewel of rental properties in Phoenix, the 42-year-old Landmark Towers had fallen into a state of disrepair when San Diego-based Crown Pacific Properties acquired the 18-story, 255-unit tower in 2004. Since then, the tower has been renovated twice–an update in 2004 to a modern luxury rental and again in 2005 to residential condominiums.
Crown Pacific Properties spent more than $7,000 renovating each unit the first time, and then invested another $7,000 in each unit to convert it to condos, according to Ed Easley, president and CEO of Crown Pacific. "From the very beginning, we knew we had a unique property," he says, adding that Landmark Towers was the city's only high-rise apartment community.
Landmark Towers Mark Boisclair Crown Pacific had completely finished the first set of renovations and had re-leased the tower when the firm decided to take it condo. "It all goes back to the location on Central Avenue–with the new light rail and the excellent views, we felt that there would be a lot of demand for this kind of property," he explains. Located at 4750 N. Central Ave., Landmark Towers is just a few minutes north of downtown, and the future light rail will go right in front of the building.
As part of the first round of renovations, Crown Pacific made some big changes to Landmark Towers floor plans, transforming 32 studio apartments into junior one-bedroom, one-bath units by taking space from the two-bedroom, one-bath units that were adjacent to the studios. When the renovations were complete, the tower had five floor plans ranging from 413 square feet to 947 square feet.
During the initial renovations, Crown Pacific also opened up the closed-off kitchens in the units by removing an interior wall and added black granite countertops, new black appliances, and maple wood floors. The existing cabinets were repainted, and the ceilings were raised from 7 feet to 9 feet and painted black. The final touch in the kitchen was the addition of track lighting.
Although most of the renovation work focused on the kitchen, all of the units received new carpet, crown molding, and a boost of color from accent walls in the living rooms and bedrooms. The units were painted in color palettes that were popular in the 1960s: wine, lime green, and sunshine yellow. Additionally, the bathrooms received all new light fixtures, and the existing retro-style mosaic tile was cleaned and repaired.
"By making the improvements, we went from rents in the 80-cent range to $1.40 per square foot," says Easley, whose firm also renovated Landmark Towers' lobby to feature a new business center and a conference room.
The condo conversion, Easley says, involved big changes to the kitchens and bathrooms. "We took the finish level way up," he notes. Specifically, new maple and cherry cabinets were installed in the kitchens, along with ceramic tile backsplash. The maple wood floors were replaced by ceramic tile, and the black appliances were upgraded to stainless steel in some units. In the bathrooms, the old mosaic tile was replaced by new ceramic tile on the floor and marble tile in the bathtub surround. New vanities, fixtures, and lights were also part of the conversion.
–Jennifer Popovec is a freelance writer in Fort Worth, Texas.
