From the grilled calamari to the eight hours of sauna-like heat, these treats and tribulations were just side notes of a well-organized, professional educational trip to Philadelphia. The caliber of meetings and presentations put before the MRED students was exceptional, and we shared the room with leaders in the design and development industry. The scope of information presented is too vast to form a synopsis therefore I will focus on the elements that roused my curiosity for further investigation. These included modular structures, energy efficient technology and certifications, and political involvement or incentive programs.
Onion Flats offered an opportunity to see first-hand s building features that are of interest to me. In the past I have researched modular construction and various ways it can be used to achieve a more permanent, site-built aesthetic. I believe that this method of construction will rise to prominence in the future due to many factors. This factory-built method can be wall panels or finished rooms and various stages between. The uses I have particularly investigated were for small school buildings that would create a more “historic” campus layout. Each building would be a two-classroom style one-story structure arranged with a green space square in the middle. This is a Duany Plater-Zyberk concept that was based on traditional schools. The other modular concept I previously investigated was with an architect with the intent to price the difference between a one-story home approximately 1900 sq. ft. in size to be built in a factory (priced by Rose outside of Birmingham) versus site construction. It was actually less expensive to site build in this instance, but that did not change my opinion about future growth in the modular industry. Like all things, there is a time and a place. I believe Onion Flats is using it correctly – being an owner in the modular company, using it for multi-story buildings, or multifamily property. It is beneficial to use in ‘crawl-space friendly’ locations because the piers needed for modular will blend in nicely. To truly conclude an opinion on the financials of this project, one would need much more information, but from the site visit, this particular project sounds rare. A budget of this type for only three Section 8 townhomes seems like a misuse of funds, but I know how bureaucracies can works. This was another example of ‘there is a time and a place,’ and the set budget was for three townhomes with no reason to contest otherwise. Because of this I do believe the builder is doing an admirable thing. I am fascinated with the passive house concept and the HVAC system he showed us. This certainly warrants more investigation. Through Internet searches, I have not found the ‘air-handler-in-one’ type system that he said has been used for years in Europe, but I have found the ERV (energy recovery ventilation) device and begun some reading.
All of the projects we viewed peaked my interest about green roofs, solar panels, and various other green features. Frankly, I don’t know very much about either, and I have heard the frequent “maintenance nightmare” comments. Living in a city like Montgomery does bring up warranty concerns since there may be no local installer at this point. These applications are also difficult to adapt to many architectural styles (on small lot footprints). But there is some level of ‘green’ that can work in any project. Liberty Property Trust and Onion Flats are great examples of the financial feasibility and profitability of some element of ‘green’. Liberty would not have invested $1 billion in sustainability if there were no benefit for its shareholders. Tax credits are available but these can vary from locales. I read in an article about Onion Flats that Philadelphia is as aggressive as ever before with tax incentives. A project’s market does have an effect on product and marketability of these green features because third tier markets either can’t afford or simply will not choose the upgrade. The difficulty in the Montgomery market is finding the features that work for all buyers. Few developers have the opportunity that was presented to Onion Flats: building multifamily sustainability on a large government budget (and as a test site for their next private development). But one of the best places to start ‘testing’ features in on your own home. I will continue to explore the Solar Panel possibilities to energize a portion of my home because I do have a perfect location available.
Financial elements of the projects we viewed are harder to analyze because the additional data and time were beyond the scope of meetings. But a few points I enjoyed hearing were Liberty’s emphasis on all cost in relation to rentable square feet. I know that this is prominent in commercial real estate, but I was reminded to sharpen my skills of comparable costs per RSF. Too often I think of total costs figures. It was also interesting that Brian noted that there was a $10-15 PSF premium on the foundation expense due to the poor soil condition that included surcharging.
An important point we heard is the critical involvement of the government, and the required power of influence, politically, by the developers. Liberty Property Trust would not have had the ability to develop the Navy Yard nor the Penn. Hospital building without government support. The Philadelphia Industrial Dev. Corp. and the Philadelphia Industrial Authority of Development were critical players in the financial feasibility of the project. It essentially allowed public funds to be used during the lengthy initial phases, protecting Liberty from lost opportunity cost and cash flow/TVM issues. For the hospital, the air rights and the design’s ROW intrusion would not have been possible without the Redevelopment Authority and local government support for city ordinance changes. Tower Investments took the perspective of being a large donor to local politicians, and wanting them to ‘stay out of his way’. I can imagine that his hoped-for casino project is going to take a great deal of political influence.
I also enjoyed hearing the Erdy McHenry Architecture’s perspective on working with the developer on their goals and designing from the inside and moving outward. This allows the exterior to be dictated for the most part and both parties to be on a more common ground as the exterior is finalized instead of opposition. This opposition between architects and developers is all too common and a detriment to the industry. The success or failure of either has an effect on both. The monetary benefit in picking the right architect was perfectly illustrated by the unit layout creating dual exterior views, minimizing common hallways, and allowing 35,000 sq. ft. to be saved and reused in a separate office building.
One of the major reasons I am in the MRED program is to learn more about design and eco-friendly construction features. The Philadelphia trip coincided strongly with this aspect of the program, and I am impressed with the quality of professionalism we were exposed to on the trip. The field studies will prove to be an invaluable facet of the MRED program.
Written by Josh Lowder, CCIM MRED, 2012