Thinking About Space Differently to Create New Affordable Housing
Written by Center for Real Estate Entrepreneurship on . Posted in Events, Research
Jamie Weinbaum, executive vice president of residential developer MidCity and formerly with boutique developer Ditto Residential, challenged Mason real estate students and alumni to think creatively about residential space to make apartments more affordable to a broad range of young professionals and low to middle-income households. Weinbaum addressed the group at the monthly Mason real estate role model networking event held last March 23 in Arlington.
Washington DC has seen a rapid expansion of new rental housing. According to data from Newmark Grubb Knight Frank, since 2014, over 36,000 new units have been added to the region’s apartment inventory – an increase of almost 11% within a short time. Another 31,733 units are under construction with an additional 8,690 units in the planning stages.
Great But Unaffordable for Most
This new supply has been developed to the wants of today’s renters – located in transit-oriented locations (often near Metro), rich in amenities, energy-efficient and sustainably-designed, and reflecting modern, bright and open-layout preferences. These design elements, together with the cost of land and construction in our area, result in some new rental units priced at close to $4.00 per sq. ft. in Washington DC – which would make the monthly rent on say, a two-bedroom 1,000 sq. ft. unit at $4,000, or $48,000 annually.
Housing affordability is often defined as spending about 28% of monthly income on housing expenses (this is one of Fannie Mae’s benchmarks for determining if a borrower can afford to pay a mortgage payment). So to afford a $4.00 per sq. ft. rent for a 1,000 sq. ft. unit, the household income would have to be $171,000. Weinbaum noted that new apartments are not affordable for many DC households, who earn a median income of $76,000.
“For me, that is an untapped market opportunity. Every developer is going after the same renter with high household income – the lawyer that makes $150,000. There are only so many of those renters. If you can figure out how to deliver new apartment construction for these other renters, like federal workers who make $70,000 or $80,000 – it is a much larger market,” said Weinbaum.
Affordable Need Not Mean Old
Some would argue that one should not seek housing affordability in new construction. An often cited analogy is that if one wants to buy an affordable car, one looks in the used car market and not in the new car market. Does that mean that affordability should be limited to older housing stock with obsolete design and marginal locations? Should affordability preclude young professionals or moderate income workers from an enjoyable and productive urban experience? Weinbaum says affordability does not need to make these trade-offs.
“One market response has been the rise of micro-units. But reducing your life to 400 sq. ft. may reduce your rent but may not result in the enhanced urban experience renters desire,” noted Weinbaum. “When I was with Ditto Residential, we talked about the sharing economy and how to use acceptable sharing norms to create affordable space.”
The result was the Oslo, a boutique building with nine 4-bedroom 4-bath units in the Shaw neighborhood in DC, which became the subject of an Urban Land Institute case study for innovative design. Each 1,400 sq. ft. unit has shared living rooms and kitchens but private bedrooms and baths. “This was basically a new take on the typical group house arrangement, except that it was a group house with new modern construction. For $1,200 per month, you could rent in a brand-new bedroom unit for much lower than comparable one-bedrooms in older properties,” noted Weinbaum.
Weinbaum is also working on Mid-City’s new project RIA which is currently a 20-acre redevelopment site on Rhode Island Avenue dominated by old garden-type apartment buildings used for Section 8 subsidized housing. “We want to create a new mixed-use and mixed-income neighborhood with 1,760 residential units and 180,000 sq. ft. of commercial space. Developers typically move Section 8 renters out as they demolish their buildings. The idea is to find ways to retain our Section 8 low-income residents by using the new market rate units to subsidize the development of the new affordable housing,” explained Weinbaum.
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Fortnum & Mason’s new, elegant website increases revenue and conversion rates
Let's make things better.Scaling the site, decreasing drop-outs and bringing the in-store experience, online
When you think of Fortnum & Mason, the iconic eau de nil colour, the beautiful store layout, amazing customer service and the incredibly high quality of products, springs to mind. This unrivalled reputation, held over 300 years, has always been led by the store experience. But with more and more shoppers heading online to make purchases from over 130 different countries, Fortnum’s realised their digital experience didn’t match the service delivered by the physical stores, and something needed to change, quickly.
The old site had an inconsistent design, was inflexible, difficult to update and the underlying technology was nearing the end of its life. The out-dated technology meant that high levels of customers were dropping out at certain stages in the buying process. For example, the presentation of delivery options was confusing and if one element of a customer’s order was unavailable, it could result in the entire order not going out for delivery.
In addition, this site needed to solve the above problems as well as handle complex orders and delivery to more than 130 countries. A scalable, highly flexible new site was needed, and very quickly to avoid more lost revenue.
Do the right thing. Do the thing right.Embracing organisational change and implementing cutting-edge technology
We began with a two-day hackathon to produce a minimum viable product (MVP) to demonstrate our thinking for the new website; a ‘show not tell’ approach.
Project in mind?
Working in a collaborative, Lean way with Fortnum & Mason, our talented design team and knowledgeable tech team, incorporated a progressive selection of open source technology including Spree Commerce, Wombat and Facebook’s React.
We also designed, implemented and managed the Cloud-based architecture upon which the new platform runs. This design allows for a continuous delivery model, meaning that tiny incremental changes are constantly tested and released to production multiple times a day (instead of a few times a year), helping to bid farewell to the age of big bang releases.
The process and technology had the customer at the heart of the project but the key to the success was engaging Fortnum’s customers to help drive the direction of the design and development of the site by allowing them to provide feedback directly to the team. Throughout the project, our design team ran guerrilla testing in the flagship store in Piccadilly to get customer feedback on the look and feel of the site. The in-store historian was also brought into the project to ensure the new design was as aligned to the brand’s heritage as possible.
Once launched, the beta site ran in parallel to the old site to avoid disruption and a number of Fortnum’s customers were gradually switched over to the new site over a two-month period. New site visitors were able to provide feedback to enable further customer-centric amends and builds.
These changes meant that when the full go-live launch took place the site already had features and processes in place that made sense to the user, not just the business. This approach also meant that overall the project has achieved a complete re-platform and design from concept through to delivery, in just eight months and for under £1.3 milllion.
Since the site went live it has had incredible results in increased revenues and conversion rates.
— Zia Zareem-Slade
Customer Experience Director, Fortnum & Mason
Creating lasting change.Increasing conversion, sales and mobile visits and winning multiple awards
The new Badger-created site was one of the only fully responsive retail sites that was live at the time, which ensures that the customer experience is equally superlative no matter what device is used. The site is also built to be scalable and flexible enough to support the company’s future ambitions and peaks of online traffic, such as Christmas.
As well as being beautiful to look at with a consistent design and the famous eau de nil colour prominent throughout, the new site is fast, slick and easy to navigate - and truly responsive, delivering optimal layouts across every view port.
The site reinforces the brand experience that Fortnum & Mason customers expect and since it went fully live it has delivered incredible sales uplift (38% over the Christmas 2015 period) and dramatically increased conversion.
The results in the first few weeks were striking:
The drop-out rate at the delivery options stage was previously 18.8% and has now been reduced to 12.9% (based figures from 17–25th February 2014 vs 2015.)
Other key stats year on year*:
* Statistics are based on launch week to 8th March and same date range last year.
With the site now being much easier to navigate there has been an increase in sales of specific items, for example a 78% increase in grocery sales.
Further to this, fortnumandmason.com won a BIMA Award for ‘Best Web Design & Build’ and an eCommerce Award for ‘Best eCommerce New Design or Re-Design (Under 1 Year)’ in 2015. The project was also nominated for the UK Digital Experience Awards in the Retail sector award and as ‘Best Use of Website to Build Your Brand’. It was also nominated at the Retail Week Tech and Ecommerce Awards in the ‘Best Customer Experience’ category.
Improved conversion in the first week of release
Increase in average order value in the first week of release
Total sales achieving growth year on year
Increase in mobile visits up year on year
Mobile Conversion rate
New customers conversion
Reduction in calls to the Customer Service team
- Create & validate new ideas
- Deliver great quality products & services, fast
- Be bold with technology
- Be more customer centric
- Improve efficiency with lean practices
- Build capability & confidence