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Chapter Template ` Copyright by Andres Ignacio Galindo Gimon 2012 THE REPORT COMMITTEE FOR ANDRES IGNACIO GALINDO GIMON CERTIFIES THAT THIS IS THE APPROVED VERSION OF THE FOLLOWING REPORT: ARE SMALL EFFICIENCY DWELLING UNITS THE NEXT WAVE FOR URBAN DWELLERS IN AUSTIN’S INFILL DEVELOPMENT? EXPLORING THE DEVELOPMENT FEASIBILITY FOR SMALL EFFICIENCY DWELLING UNITS IN AUSTIN’S TODS APPROVED BY SUPERVISING COMMITTEE: Supervisor: Terry Kahn Joseph Cahoon ARE SMALL EFFICIENCY DWELLING UNITS THE NEXT WAVE FOR URBAN DWELLERS IN AUSTIN’S INFILL DEVELOPMENT? EXPLORING THE DEVELOPMENT FEASIBILITY FOR SMALL EFFICIENCY DWELLING UNITS IN AUSTIN’S TODS by ANDRES IGNACIO GALINDO GIMON, TITULO ARQUITECTO REPORT Presented to the Faculty of the Graduate School of The University of Texas at Austin in Partial Fulfillment of the Requirements for the Degree of MASTER OF SCIENCE IN COMMUNITY AND REGIONAL PLANNING THE UNIVERSITY OF TEXAS AT AUSTIN DECEMBER 2012 Dedication To my beloved wife Jimena and my daughter Camila Acknowledgements This Masters would not have happened without the support of my wife and my family. To my parents and my in-laws, a special acknowledgement. They are the greatest source of stability and trust, and I thank them for being always there when I needed. To my brothers Tony and Ricardo, who I always think of and are part of my success. To my spectacular brothers-in-law Giovanna and Patrick, they contributed to make these years here some of the most rewarding and amazing of my life. I cannot imagine all this experience without their company and love. My thanks and appreciation to Terry Kahn and Joseph Cahoon for being the great persons and magnificent professors that they are. I must appreciate them for guiding me throughout this process with patience and great expertise. I would also like to thank to all the faculty members of the CRP program that in one way or another contributed in making this experience was one of the most important and formative of my life. I would like to express my gratitude to Liana Hervas for helping me with meticulous reviews of my writing. To my country that I wish soon will overcome all the challenges that currently faces. v Abstract ARE SMALL EFFICIENCY DWELLING UNITS THE NEXT WAVE FOR URBAN DWELLERS IN AUSTIN’S INFILL DEVELOPMENT? EXPLORING THE DEVELOPMENT FEASIBILITY FOR SMALL EFFICIENCY DWELLING UNITS IN AUSTIN’S TODS Andres Ignacio Galindo Gimon, M.S.C.R.P. The University of Texas at Austin, 2012 Supervisor: Terry Kahn The following report details research and analysis in order to assess the background market and market-based feasibility of the development of efficiency apartment units in the central Austin Area. It explores the potential and opportunities of reducing the size of apartments and promoting efficiency apartment unit development as a strategy to improve housing affordability for the Generation Y (Gen Y) population while taking advantage of urban redevelopment investments near Austin’s main TODs. The body of this study will discuss: (1) Generation Y and its impact on Austin’s housing market; (2) concepts and facts related to housing affordability; (3) strategies used by the city of Austin to promote infill development and existing transit oriented development sites; and (4) an overview of key housing development strategies and the real estate development process, including market analysis and absorption forecast under current housing market conditions. The study evaluates the implications of a significant demand vi for less expensive and smaller alternative housing products for a growing population group near downtown Austin. This report may contributes to the policy discussion about different approaches to housing affordability and offers an assessment guide for new housing development opportunities for a diverse range of city residents. vii Table of Contents List of Tables ...........................................................................................................x List of Figures ........................................................................................................ xi RESEARCH QUESTION 1 INTRODUCTION 2 The Housing Problem .....................................................................................2 Report Organization ........................................................................................7 CHAPTER 1 11 Generation Y (Gen Y) and Austin .........................................................................11 Definition of Gen Y ......................................................................................11 Generational changes ....................................................................................12 Renter Characteristics and Future Housing Preferences ...............................17 Work vs. Life ................................................................................................19 Transportation and Accessibility ..................................................................21 Employment and Debt ..................................................................................23 Austin and the Gen Y ....................................................................................24 CHAPTER 2 28 Housing Affordability ............................................................................................28 Background of Austin ...................................................................................28 Addressing the Housing Problem .................................................................32 Efforts in San Francisco ................................................................................34 Efforts in New York ......................................................................................36 viii CHAPTER 3 39 Infill Development .................................................................................................39 Current Policy ...............................................................................................39 Transit Oriented Developments (TODs) .......................................................40 Design Standards and Mixed Use Regulations .............................................42 Mixed Use Districts ......................................................................................43 CHAPTER 4 49 Market Analysis and Absorption Forecast .............................................................49 Market Analysis and Absorption Forecast ....................................................49 Methodology .................................................................................................52 Austin Area Analysis ....................................................................................55 Population Projection ....................................................................................55 Austin’s Job market and Key Industries. ......................................................56 Austin Multi-family Demand ........................................................................62 Historical Housing Construction Activity ....................................................65 Housing Tenure .............................................................................................66 Housing Tenure by Age ................................................................................67 Housing Size and Unit Mix ...........................................................................71 Market Area Analysis ...................................................................................72 Market Area Population Projection and Multi-family Demand ...................75 Market Area Multi-Family Demand by Household Income .........................81 Multi-family Rents, Occupancy and Absorption ..........................................85 Multi-family Unit Types and Age of Structures ...........................................87 Property Amenities Profile ...........................................................................93 Summary and Key Findings..........................................................................96 CONCLUSIONS 99 BIBLIOGRAPHY 104 ix List of Tables Table 1: ULI Generation Y Survey, 2011 ......................................................................... 11 Table 2: Gen Y Housing Tenure by Age and Ethnicity .................................................... 18 Table 3: Expected Housing Tenure in 2015 ..................................................................... 18 Table 4: Anticipating Housing in 2015 ............................................................................. 19 Table 5: Percentage of Gen Y population by income level .............................................. 20 Table 6: Generation Y Austin's Population ...................................................................... 25 Table 7: Gross Rent as a Percentage of Household Income ............................................. 29 Table 8: Moderate-High Density Residential Regulations ............................................... 47 Table 9: Austin Population Projections ............................................................................ 56 Table 10: Employment in Austin, Round Rock and San Marcos, TX from 1990 to 2012 58 Table 11: Austin Population Projections .......................................................................... 64 Table 12: Austin Construction Activity 2009-2012 .......................................................... 66 Table 13: Housing Tenure changes 200-2010 .................................................................
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