Getting to the Solution
We began by thinking about the layout. The first-round layouts we presented included four units on the main level and one above, all between 757 sf and 1183 sf. We estimated the cost for this configuration would be approximately $110/sf for a total construction cost of around $600,000. The owners estimated they would get about $1-$1.10/sf in rent; main level units might rent for around $1,200/mo and the upper level unit for $900/mo. This equated to potential rental income of $5,700/mo at full capacity.
Always seeking the best solution for our clients, we continued to explore additional options. Most of our explorations were revealing between four and six units. At the same time, we continued studying the demographics for the area along with the current market and competitive units. While we do not claim to be real estate market experts, we knew we needed to ask deeper questions for this project and we knew where to go for the answers. (Side note: Being an expert isn’t always about knowing the answer but knowing where to find the answer.)
Some of the questions we found ourselves asking: How will these units compare to the existing stock in the area? What will make these units stand out? What would make a tenant choose this location? What is the ideal size of unit for this market? Consulting with other experts in the community, as well as touring some of the existing stock of units in the market. helped answer those questions.
Small Thinking, Big Returns
This thorough study revealed our strategy: Smaller is better. Going small would not only allow us to offer the least expensive units in the Downtown area, it also provided the perfect opportunity stand out.
By now everyone has heard of “tiny homes.” Have you ever wondered why the tiny homes you see on TV are on some sort of trailer? It’s because residential – and especially commercial – codes do not allow for many of the attributes often found in a tiny home. Putting our building on a trailer was not an option, so we had to design to code minimums.
Understand that many of today’s modern building codes were put into place for good reason in a bygone era. At the time, New York City was seeing an influx of immigrant workers who were laying their heads down in any open area they could find. This led to truly unsafe living conditions. Today the movement back to smaller more efficient living, for most, is a voluntary lifestyle choice. Nevertheless, we had to work closely with the City because ours was the first of its kind in Wichita.
In the end, we designed a total of 16 units. We estimated that this new layout would have a higher cost of construction – by as much as 20%. Cost of construction would be around $130/sf, with a total construction cost of around $720,000. The rent rates were set as follows: Two large studios at $630/mo, two studios at $590/mo, and 12 twelve studios at $565/mo. The total rent income would be around $9,220/mo at full capacity, representing a 60% increase over the rent collected with the five-unit configuration. As an added bonus, a vacant unit would only impact the rent collected by 6% whereas the five-unit layout would have been impacted by 20%.
A New Kind of Rental for Wichita
3ten Studio understands “tiny living” will be attractive to only a niche market of tenants. The units are as small as 234sf, this is smaller than the average American hotel room (325sf). The studios are more of a dorm-style layout, yet each with its own full bath and small kitchen area. We knew storage would be important, so we located a 40sf loft area above the bathrooms. Within the building, the common area includes laundry and a living/kitchen/gathering area, along with some outdoor patio space. At the end of the day, we were not just selling apartment units but a lifestyle.
The building had a lot of natural character before renovation began. A good renovation allows the owner to keep parts and pieces that make it unique while updating the overall feel to meet the tenants’ needs. We always evaluate “character pieces” to see how we can incorporate them into our designs. This includes analyzing the cost impact of maintaining versus covering up and being cognizant of building codes requiring us to cover some items up as well. This is just one more way 3ten Studio goes beyond the “why.”
“Tiny living” may not be for everyone. However, more and more tenants are looking to dramatically downsize, for both lifestyle and cost reasons. Now Wichita’s tiny house hunters can find what they’re looking for right in the core of the city at 140 Lofts.
Wichita Business Journal Article