Your Client Can’t Find a Mini-Mansion? How About a…

Here we are in the summer of 2024 already, and much of the nation is sweltering. Cities are proven to have higher temperatures than rural areas (buildings, roads, and other infrastructure absorb and re-emit the sun's heat more than natural landscapes such as forests and water bodies), but as buildable land close to cities has diminished, and labor and permit prices have increased, many buyers and builders have turned their attention to city cores. With office vacancies way up, Orion’s brokers are seeing renewed interest in conversions to homes.

The goal of developing residential projects in “infill markets” is to help revitalize established neighborhoods and convert underutilized and often run-down space into much-needed housing. Infill is gaining in popularity as suburban locations in many areas Orion does business in become more attractive to prospective home buyers as more home buyers seek out urban amenities. Municipalities encourage infill development as it is more efficient to use existing infrastructure and services than to extend infrastructure and services farther away.

Brokers in downtown areas know that office buildings, however, were not designed to be condo projects. Many office buildings have one or two bathrooms per floor, condos mostly have 2-3 per unit. A successful infill developer needs to be able to work closely with cities and community development agencies to help rebuild neighborhoods. Strong relationships with financial partners and local government agencies can only help a developer succeed.

Orion’s brokers also know that urban infill presents challenges not found in traditional residential development, including fragmented ownership, longer regulatory approval processes, higher capital costs, and the possibility of environmental contaminants or brownfields. Builders and investors, before investing money and time in a property, will investigate it thoroughly to understand who the end buyer will be. Where are the schools? Jobs? Transit hubs?

Any of your clients who are thinking about a speculative purchase will find areas of need. They look for market segments where no new product has been built in a long time and have pent-up demand. They understand submarkets and avoid areas that have been overbuilt. And they study the existing infrastructure. Due diligence on any piece of property means checking out the existing infrastructure, including water and sewer systems.

Orion will be a critical piece in this process. If you have a buyer who is contemplating a home in a downtown building, we have some very good products, so it is worth a chat with your AE!