Why We Don't Build More Apartments for Families

Totally un self interested questions from now from here on out, Now that our years of just doing supply chain episodes are going to come to an end, let's just do episodes about our own personal ground, our own personal frustration of the economy. All right, where are all the dog amenities for apartments? That's my question. That's the thing. Like,

there's plenty of buildings with dog amentities. And as a you know, I have two kids, and sometimes we look at like new apartments and they're like, I want like a building with dog amentities and billiard rooms in gyms and dorman and all that stuff. But they don't make those buildings for like the actual units. And my kids don't play pool. Well, you got to teach them, no. But I think you're right. It seems like a lot of apartment buildings are geared towards young professionals. For the

most part. It's studios, it's one bedrooms. Here in New York, it tends to be larger apartments that have been cut up at one point in time, and you end up with these really weird floor plans where like the bathroom is right next to the kitchen. Yeah, and it's it's

not a very pleasant experience for anyone. But I think there is there is this overarching question of why are these decisions being made in the way that they're being made, right, Like, there must be some reason, And the people who are building these buildings, you know, obviously they have, you know, presumably some good business reasons, but I don't know what they are, and I find it frustrating, And I guess I'd like it to change, but I don't know, like

if any like developers are going to like change their business models. For me, I think the expectation is, like, I just got to move out to the suburbs. My kids are really tired of sharing a punk bit. Okay. What I will say also is I think this is a peculiarly American problem because having lived in many other places, apartments are well designed, even in Hong Kong, where the

average size of apartments tends to be incredibly small. They are designed for that tiny square footage, and so they tend to be quite functional even for families, and certainly in Europe there's much more of a culture of renting versus ownership, so that you do have families who spend decades in the same apartment building. I think you're totally

right here. The basic idea is that if you live in the city in an apartment, you're young, you're single, and then if you have kids at some point, then you move out to the suburbs, and the housing stock is not made for people who would say like to stay in the city and maybe be a renter in one unit or one building for twenty years. Yeah. I think that's exactly right. All right, So what explains the state of affairs? Is there any reason to change it?

We're going to be speaking to two guests I think they were both heard our last episode and then spend a couple of days sort of debating it on Twitter, and so it's like, well, why debate on Twitter when you can come in. So we're going to come talk to us. Yeah, just come talk talk to us. Rather than wasting get all in tweets. We are going to be speaking with Stephen Smith. He is the executive director at the Center for Building in North America, I think

tank around construction policy. And we're also going to be speaking with Bobby Fian. He is a real estate developer and he there's all about apartment floor plans and the thinking behind the business reasons behind these decisions. So, Bobby and Stephen, thank you so much for joining us. Very glad to be here. Yeah, thanks for having me so, Steven,

I'll start with you, but really, are we right? Like, let's start with is the premise that we're talking about that a lot of these new developments really aren't geared towards families? Is that correct? Yeah? I mean the typical new apartment building in the United States, the developer will try to cram in as many studios in one bedrooms as they can. You know, I think it's mostly driven

by policy. You have a lot of there's a lot of planning policy that tries to encourage more family sized units, but they're really pushing against some more fundamental regulations that make it quite difficult to build family sized apartments in any sort of affordable way in not just the US, but also Canada, North America. Stephen can I ask you a quick follow up before we bring in Bobby, But why does it matter? Do we need to have families

in apartments? Why can't everyone just move out to the suburbs. I mean that, you know, that's the that's the safety valve. As you know in America, you can just move out to the suburbs, and we make it quite easy to build family sized houses. So I mean, you know, does it matter? I guess you know, if you want our cities to thrive, if you want, you know, people to be able to raise families in them, you know, for environmental reasons or you know, even for some social reasons. Yeah,

I would say it matters. I don't want to live in I don't want to live in the suburbs. I didn't either. I like living in Manhette. I don't want Joe to have to live in suburbs. Point. Thank you, thank you for recognizing that. All right, Bobby, all right, let's bring you in. So you come from it from the business perspective, What is like the sort of like big picture math in your view of someone builds a new apartment, they have an opportunity, they get the approvals

to put down apartments on a plot of land. Why is it better to target young professionals and the types that don't need that space for children. Well, it is simple math in that smaller units generate higher rent per square foot, and that is the primary driver of returns for ground up apartments in the way that we finance them here in the United States, which is, you know, through private market capitalism, unlike other parts of the world.

So in those places, someone will look at the building in their spreadsheet and they'll look at or comps from the market, and the primary way that they compare units to other units that they say, here's the rent, here's the size, here's the number of bedrooms. I want to

try and make it slightly smaller. So like it's like the power of diminishing marginal turns like in reverse, right, a five hundred ninety nine square foot one bedroom will get basically the same right in a six hundred square feet So that dynamic ends up pushing all units to being smaller. That's the basic math for why realistic developers are incentivized to try and put as many of those types of units they can into the building as possible.

There's a host of other things that I'd say have to do with the different timeline of incentives, but that's the largest driver. So walk us through as a real estate developer. You know, when you are considering a potential investment or a potential new project, what are the things on your spreadsheet that you're looking at? How are you

making those calculations? While I like to think that I make them a little bit differ than other people, but I would say in general, what I and other people are looking at is the trends in the market to see which unit types are getting the highest rents. Those obviously are going to be within the class a new construction sub market, so you're not going to compare yourself to a pre war building unless it's been heavily upgraded. And well, i'd say it really is ends up being

that simple. If there's a large problem that we have within real estate, which I hope to like advance in the future, and I hope like our industry advances, it's that the real estate data is very simplistic. Rents are extremely opaque, and things get i'd say reduced down to

different unit types. There's a lot of different i'd say, like data on new housing inventory that gets added individual markets and that's almost never broken down into type, and even when it's broken down into type, it's definitely never broken down into is this three bedroom, four family or is it essentially three one bedroom suites? Those kinds of

nuances are always lost in data. Yeah, that's something that came up in our kind of in our last episode on rent, which is that you know, we talk about like multifamily, et cetera, but like it's kind of meaningless. What city are they in, how many you know whatever? It is like that sort of drill down is like, you know, desert. It's not all fungible, it's not all

the same. I just realized we should probably talk about what we mean by apartments meant for families, Like what exactly is it that families would like to see here? I mean, I would say fundamentally, what families want is a lot of bedrooms. And you know, Joe, like when you think about like what would you like, you'd probably like, most of all, you'd like just one extra bedroom. You don't need an extra walking closet, you probably don't need

an extra bathroom. You just want one extra bedroom. So fundamentally, I think, you know, a family sized apartment might be a three bedroom, one and a half bath, maybe a three bedroom, two bath, but the second and third bedrooms they don't need walking clos that they don't need on suite bathrooms. And that's what you get in the US. And that's maybe it's not by design, but it is in some sense mandatory based on the building and zoning codes.

I think we should have this. It should really just be Tracy hosting this and I should just be like the third guest. That's I have all these complaints. But clearly, Stephen, like you must view this question somewhat differently than Bobby, to identify zoning and codes as being a driver rather than this simple unit math. Yeah, I mean I would say in the United States to add an X. You know,

let's say, let's imagine your typical new construction apartment. There's a long hallway in the middle of the building, and then perpendicularly a rate off of it, there's apartments, and you enter one of the apartments, and if it's a two bedroom apartment, it's designed in what someone wants called

a bowling alley configuration. So you enter it, you enter in the kitchen, you're about I don't know, thirty feet from the window, probably, and there's not actually a whole lot of window space in the apartment, and it's you know, thirty feet away from you. So on the left you have a bedroom, so you know, you enter in the kitchen and then you go then you go forward and then you see like a living area, and then on the left you have a bedroom. On the right you

have a bedroom and those are by the window. But what do you fill all that other space with. There's a ton of this space that would not exist in Europe or in Asia, mostly because the building is much much thicker than it would be in another country. So you know, when we think about what a family wants, they want another bedroom. In a bedroom typically you know, by codes and customs has to have a window, so you know, you want to capture that extra window space.

But then you need to fill all this space, at least in the United States, and you know, this is square footage. It costs money to build, it cost money to maintain. You have to fill it with something you're probably going to fill it with, you know, bathrooms, which, as you know if anyone's ever done at home renovation,

they're the most expensive part. So in the United States, when you add an extra bedroom to a two betterom apartment or a one bedroom apartment, you typically have to build, you know, just within the apartment about three hundred square

feet of extra space. The bedroom itself is only about you know, ten by ten, one hundred square feet, but then you need to you know, fill all that space in the middle, whereas in other countries in Europe, Latin America, or Asia, to add the extra bedroom you might need an extra I mean, in some cases you can just add an extra hundred square feet, but maybe you'll add another one fifty two hundred, but you're adding much less space to add that bedroom. So, you know, buildings cost

money based on the rent per square foot. When you rent an apartment or buy an apartment, you're probably not looking at it based on a you know, you're not looking for a number of square foot if you're looking for a number of bedrooms. Bobby, you mentioned the lack of floor planned data. What do you mean by that exactly? Because when I think of floor plans, I think that's like the one thing that is potentially available and kind

of standardized across every apartment building in America. Certainly, Oh Tracy, where to begin answering that, Yes, so I'd say this is the that question has been driving me in my career, I'd say for the last like seven years and bothering me. I'd say in looking at my own Excel models, like when I've built ground up apartments, it always intensely bothered me that in Excel there was no differentiation between square footage.

It's always a multiplier, like a base rent per sure multiplier depending on type, right at just like a little pivot table. If if one bedroom multiply by four square four dollars to square foot if two bedroom multiply by usually less three fifty, right, and there's no differentiation between

those two. So I'd say that is something that has bothered me for a while, given that anyone who walks into a unit knows that there are seven hundred squarefret one bedrooms that are great and seven hundred squarefret one bedrooms that are a piece of junk. Right, But it has to be captured like in data somehow or else.

It's like the qualitative difference. I would say, yes, qualitative, but like you have to use some sort of data analytics or some sort of data columns just to say, well, how large is I get similar things like we all

know that height matters, height should increase rent. But what would be the only way to prove that, Well, you would have to go through and measure the height of every place, then equalize for all other like real estate type attributes, and then say, aha, now we know that height matters by this much, when in fact every person knows that to be true, we just don't know exactly hownswer. So I would say that the difficulty on that has

been driving me and my career for a while. It's why I left a real estate development for a little while to start two different sort of technology ventures and now am in, like i'd say, the software data business around floor plan data. I was just about to ask, could you create an algorithm that takes in like data inputs and then tries to spit out I don't know,

like a livability score. Well, I was just gonna say, you know, Bobby, in your Twitter bio, you have quote I don't know who made this quote, maybe you even made it up Bill James of Apartments, Bill James, of course, being the moneyball guy who famously took baseball and tried to get it out of pure sort of like subjective like yeah, that guy, that guy is good hustle and tried to put nu miracle, you know, really quantify the speed that someone could go, or how all these other things.

So how do you go about sort of like taking these things that seems subjective, Yeah, that seems like good, that's nice an area, it's roomy, and try to put

some like hard math behind it. So that is a self that is a self chosen moniker, and it is it is an homage too, I think like the mathematical approach, and it is also meant to me to be a reminder of how long it takes you that for those people who remember the story of Bill James, he was doing this by manually calculating things from box scores that he got in newspapers thirty forty years ago, and it took at least twenty five years for the general approach

to move forward. And the other thing that I also greatly admire about that approach is that none of his particular algorithms or that meaningfloor that that good anymore. But it was the approach of saying, we're going to go through and turn the sweet science into something slightly analytical. So for me, how that works in floor plans is. As you mentioned, Tracy, there are a tremendous number of

floor plans. Every apartment has one. The dimensions on them are nearly always useless because it's not always clear whether it's putting into a wall or whether it ends in the middle of the room. Sometimes the dimensions just incorrect. Sometimes they've taken room names and change them from something useful to something useless, like from bedroom to dream and some other some of the ridiculous things which so which

confuses people. But my basic approach has been to build some software tools to take essentially these low resolution image files and turn them into a lot more usable pieces

of data. So instead of a room or a unit being described as a seven hundred and seventy five score foot one bedroom, it would be described as there is a room that has dimensions X and y. It may or may not have a living room, it may or may not have direct access to a bathroom, and it has a closet with linear feet hanging of Z. And by breaking things down into some more pieces, then you can do some of the fairly straightforward statistical analysis on

apartments to say, in an area, do people want like a kitchen that's fourteen feet or are they okay with eleven? Does someone prefer that extra foot in their bedroom or in their living room given like a fixed space. So I'd say that's where it initially started. The family oriented aspect of those apartments kind of came out of the data and saying they're all lot of apartments and many of them are not being built to these sorts of specifications.

Stephen touched on some of them, which is that the size of closets in the United States is at least two to three times what is in Europe, and I'm not they're huge in Europe. We still use wardrobe, yes, like a piece of furniture that acts like, yeah, Joe's looking at no OA, I had a studio or I had a loft in the financial district. Right, So you have a rail that we're just like, we just bought this like huge sort of yeah wardrobe from Ikea that's

dood like next to our TV. Basically, Stephen is absolutely right that our building form does drive a lot of this stuff. Right. So the general process for real estate development is that a developer is going to go identify piece of land and then first say go to the city and say I would like to build this approximate footprint with this many units, this money, parking spaces, this

amount of like mixed use. It isn't until after the building is approved that then they'll go through and configure units, because you're not going to spend money on full architecture when you don't know the general layout. So once the building footprint is defined, then it's a matter of how do you shift around walls? How do you chop up that space into a unit mix and type that maximizes

your returns. And that's why almost always small ends up like driving small, and deep ends up like really pushing them forward. And once the building is set at being like sixty five feet wide in the long direction, well, now we know the simple math, like your units are going to be about thirty feet deep. Well, then that means your smallest studio can be four hundred and fifty feet a two bedroom. You need to be what what

does deep mean? Deep? So the difference the distance between one window to the other window on the other side of the Oh, so you're looking at it from the street, how far back does the whole apartment go? And it goes In the United States, it typically starts at about sixty five feet. I would say, right, well, yeah, well it depends, it depends on what market, but that is that is quite typical. That is quite typical, I would say.

I mean when when we talk about you know, Bobby was talking about the built form of the building, we don't typically think about real estate as a field like education or healthcare where there's like a lot of government intervention because you know, it is all owned and developed privately. But I think we probably should. I mean, the regulatory burden is quite high in modern day society, even even outside the United States. The architect isn't really designing the building,

you know, the codes are designing the building. So this this form is sort of set from the start, so there's not a ton of flexibility from the architect. And a lot of cities they put out these little diagrams of how the building should look and it's it's very very close to how it actually works. And the architect can do the finishes, they can do the interior layout of the building, but the fundamental form that is pushing you. You know, Bobby mentioned a seven hundred square foot one bedroom.

I mean, that's a concept that just doesn't exist in other countries another countries, a seven hundred square foot apartment would be a two bedroom apartment. And it's not just because you know, our bedrooms are a little wider. They're a little wider. It's not just because we have a lot of more closets. We do have a lot more closets. It's because that's really the only way that you can design the building. If you want a window in the bedroom,

at least that's exactly right. Right, So once the building, once the unit is thirty feet deep, having a window in the bedroom means the unit is going to meet at least be like twenty three twenty four feet wide. Right, So then basic geometry just tells you how your different units step up in size as you had bedrooms. Just to play Devil's advocate, and I know Joe says he

doesn't like the suburbs. But setting Joe aside, what evidence do we have that families, you know, assuming that there were good sized apartments designed for families, what evidence do we have that families would want to stay in that kind of presumably more urban environment. Are there other factors at play where maybe people want to buy a house and build up equity. May be they want different schools, Maybe they want a garden for their kids to play in.

What evidence do we have that families actually want this? Just to add on today, and I agree with I, you know, even though Tracy started at Devil's advocate question, I do wonder like, do people go to the suburbs because the houses are ye or do they go to this, you know, or do they go to the suburbs because they want the suburban lives? I mean, the rent shows

you that there's the demand for it. The rent and the prices, you know, like a typical you know, family family housing unit in New York might be a townhouse, and I mean the prices are extraordinary, so you know, I would say the demand. The evidence of the demand is there is the very low vacancy rate in our

cities and the high price. And you know, you look at other countries that simply allow this kind of family this you know, family oriented apartments, and you have a lot more of a culture of families, you know, living downtown. Just on that note, can you give us some examples of how other countries handle this, because I often think with the US housing market, it's really helpful to look at how other places do it because there's often such

a big contrast. Yeah, So the design of a North American apartment building is very globally unique and it is what in other countries they might think of as a hotel. So you enter the building, um, you might remember it from the movie The Shining. There's a big law hallway and there's you know, there's there's apartment. Great description of American apartments. It's like The Shining. Yeah, and I mean they all look like this, and maybe the hallway will twist and turn a little, but it's going to be

a long hallway. There's going to be units a rate to the left, rate to the right. On the end of the building, there might be some you know, three bedrooms, sort of reasonably sized departments because they're on the corner. In the rest of the world, let's use Europe, because the people have a lot of familiarity with it. Typically there will not be as much of this hallway space,

if at all. So typically what it'll be is it'll be you'll enter the building, there'll be a single staircase till you know, if there's an elevator, it'll probably be a little smaller. It'll definitely be a little smaller and it'll go you know, you'll so you'll have this vertical core of the stair case in the elevator and then a raid off of it. There will be likely between one and four, but probably two apartments on either side,

left and right. So each building, or at least little core of a larger building, will you know, let's say it's a six story building, pretty typical height, there will be you know, twelve apartments in the building. There will not you know, it's not going to be a you know,

one hundred unit building. There's not going to be a long hallway and these units If if you're an American or if you're familiar with New York, I'm really describing a tenement, so you know, these units still go from the front of the building to the back of the building. In the rest of the world, the building will typically be maybe forty five feet deep and the apartment will

go from front to back. So in general, there will be a much higher ratio of surface area to volume, which is to say, you're going to have more windows. So in seven hundred square feet you're going to have two bedrooms. In nine hundred square feet you're going to have three bedrooms, whereas in the US those are one and two better apartments. In the rest of the world, you're much more likely to have windows in the kitchen,

windows in the bathroom. You just have more windows generally, and much more flexibility with laying out the laying out

the plan. It's funny because if someone asked me what the differences between a European and apartment building in the US, apartment building is like, I don't know what I would have said, But then the moment you said, like, oh, those tiny elevators and that single central core staircase, I was like, oh yeah, and I haven't spent that much time traveling in Europe, but I like immediately got that. It's like random Arabians have stayed in like Italy or Paris.

It's not just Europe, it's every you know from you know, Daka to Switzerland, you know, from Bladesha, Switzerland. This is this is how an apartment building is built. And this was how an apartment building was built in America too. If you think about like a Chicago three flat, or in New York City tenement, or you know one of those little two story four unit buildings in Los Angeles, this is how apartment buildings by humans are designed. It's

just in North America we've taken it a different direction. Well, can I ask why has that happened? It's a combination of I would say two things. It's a combination of our very very unique approach to fire safety rules, which are in turn driven by our obsession with building buildings out of lightwood frame. And then it's also, I would say, our obsession with the way our society looks down on apartments and confines them to very small pieces of the city.

So let's take the second one. First. To have an apartment that has a lot of windows, you tend to need a little bit more land. And in America, you know, we have these competing planners, have these competing mandates. On the one hand, there's clearly a housing crisis, and you know, especially in our cities, we need to allow more apartments. On the other hand, you know, the local politics are

such that nobody wants to live near an apartment. Nobody wants it near them, so we confine them to these loud, polluted arterial streets. So if you think about a new apartment building, it's probably not being built on a leafy side street. With a lot of land. So all you know, most of our land is locked up in single family houses and it would be pretty trivial to demolish them

and build something new, but that's not really allowed. So in this attempt to try to fit so many apartments on such a small piece of land, the buildings just get like really thick, really deep. And this is a good way of cramming in a lot of square footage. It's not a great way of cramming in a lot of bedrooms. Then, on the other side of things, the United States has a very unique approach to construction. Something that foreigners are very surprised about when they watch American

TV series. Is you punch through the wall and I mean yeah, drywall. Yeah, you punch through the wall and there's nothing there. It's built out of wood and drywall. So we've traditionally allowed people to build out of lightwood frame, whereas in the rest of the world, again from Bangladesh to Switzerland, you build the building out of concrete. So as a result, the buildings traditionally have been quite flammable.

America has a very high rate of fire deaths. You're much more likely in America than in any other advanced country in a lot of far less advanced countries to die in a building than in other countries. So we have all these mitigations. One of the mitigations, probably the most important one in driving apartment design is two interior staircases. There has to be two ways to get out of the building by staircase. This is very unique globally in

other countries. This is really reserved for skyscrapers. So if you need two entrances and since nine to eleven, in most of the country, except ironically New York, they have to be the term is remote from each other. They have to be at a distance. So if every apartment needs to get out two ways and they need to be a distance from each other, well, the most logical thing to do is have this long haul hotel light corridor in the middle. So that's the simple version of

what's driving all of this. So, Bobby, as a developer and as a floor plan expert floor plan knower, you know, how much does that resonate And when you're thinking about a new building, how much do you feel constrained ultimately in design by some of the rules that Stephen's been talking about. Oh completely, but I would say in sports the way that I sort of approach it as these are the stricters, like I want to try and make things as good as possible within within the bounds of that,

within the bounds of those limitations. So Steven's absolutely right that those are the design limitations. I'd say that there were some other ones too that have to do with capital. It is much more efficient to build a two hundred and fifty unit apartment building double loaded, very quickly and

inexpensive out of wood. And that is one thing that especially across the United States, we have done very well, very very very quickly in Texas in the suburbs, and those projects are the ones that institutional investors want to put their money and their tip. A large developer is typically not going to waste their time doing any project that's under two hundred two hundred and fifty apartments, both from the equity side and just it is just as complicated to build ten as it is to build two

hundred and fifty. So I think you mentioned before we started recording this, but that you yourself are investing in more projects that are explicitly designed for families. How is that process like, how is it in terms of identifying those projects, how common is it that they're being proposed? And then secondly, what are the different calculations that you would make for a family oriented project versus something you know,

I guess more normal for an apartment building. Well, I think about it from a product perspective, which is another area where I believe that real estate is lacking. The product philosophy. Your most apartments, certainly in the United States, is to offend as few people as possible. That's why there's three different color or palettes of cabinet Country, and that's exactly right, right, everyone uses the same light. There's

there's so that's a problem in general. So I would say the way that I start by approaching and is saying, I want to build something that is a product that will actually delight families, which to me means it's going to need to be a smaller project. A two hundred and fifty unite project with kids would be unpleasant for everybody. And I'd also say that I think there's a lot of diversity within family and family oriented, which is why

I sort of use that phrase. I think that I think that it needs to be a product that is appealing to someone who doesn't not just people who have kids. If there was a problem that Another problem that I'd say within US apartments is that it's fairly monolithic. In turn, who goes after right? Like I like billiard rooms, but every building has, every rooming has a billiard room, Like everyone has like a rock climbing wall here in New York, they all have these. They all fit these same things.

So what I want to do is build something different. How does that different differentiate from a typical building. It's going to be smaller, it's going to be about six two one hundred units. That is good for me, and that I am not competing with, say the Trammel Crow and Avalon Bays of the world, who would eat my lunch operationally? And the difference in the type again fitting

within the double loaded quarter or means. One of the metrics that I track in floor plants is something that's called like bedroom ratio, which is the amount of square footage that is behind bedroom doors, and the other one is the ratio of the size of bedroom one to bedroom two or bedroom one to bedroom three. So for a family, the main thing that I look at is

reducing the size of those second and third bedrooms. Yeah, right, because if it's like two roommates, then presumably they want like the same size, whereas like, well, if it's kids, they can have a small they don't need a masterom bedroom, and they don't need an on sweet bath. Yeah that might be nice, but when you're talking about like an urban or expensive suburban markets bases at a premium, and so it's all about making the best change you can.

So this might be one for either Bobby or Stephen. But you know, Stephen talked a little bit about the regulations in the US and how that impacts building designs, specifically around fire safety. Are there additional regulations that kick in if you know you're going to be having small children living in a space. And the reason I ask that is because I know in New York if you live in an apartment, every once in a while you get a form from the city asking you to fill

it out. If you have small children in that apartment, they need to put like bars on the windows so they don't fall out and other safety measures. Is that a consideration or a thing that comes into play generally, not with a new construction. Okay, so there are regulations for children around things like lead. For older buildings, owners have to continually certify. I don't have to have a higher level of certification if there are people under certain

age living there. But for new construction those safety things, I'm not aware of any building regulations or construction regulations that are different for who occupies it. In fact, regulations like the FHA require that anyone be allowed to rent any unit that is there. Now, design will practically discriminate, right, Like if you were design a three hundred and seventy five square foot studio, a family I suppose could rent it, but they're not going to, right Yeah, I mean even

for these big apartments. I mean the reason they don't build them is if they did build them, you couldn't afford it. Yeah, Like Joe, you know you're looking for a bitter apartment. I'm sure you're seeing them. They're just out of your price, right, Yeah, that's what we see is like, Okay, there would be the one bedroom, the studio,

the one bedroom, maybe the two bedroom. And if you you know, I don't even need three bedrooms, I just need too But if you like go to that next level, then a balloon so like the unit to do theoretically exist they're just like so much more expensive. Well, you know, again this gets to some of these questions about families, like really want to live in cities, etc. But if there's one sort of like policy change or prescription that could really prove the family orientedness of the new housing

stock in New York, what would it be. I'm gonna cheat and give you two. Okay, so well, actually in New York, I can just give you one. We need to zone more land for apartments. And I think when people think of land, they think of big corn fields. But most urban land is tied up in single family houses, so you know, a single family you know, including in New York City. So you know, we think about New

York City as you know Brownstone, Brooklyn and Manhattan. But you know, the truth is a lot of New York is Staten Island out of Queens, out out of Brooklyn. So more of that land, more of those lots need to be zoned for you know, low and mid rise apartments. And then some things that need to be changed a little in New York in a lot in other cities is we need to change our building code so that

you can build a building with a single staircase. New York you can in other places you can so maybe make the construction material more resistant to fire, and then if you do that you can achieve similar out with points of egress. You could do that. Although you know, a generation or so ago the United States started requiring

sprinklers in all buildings, which is globally extremely unique. You won't find a sprinkler outside of a high rise skyscraper in Switzerland, so, you know, at least in theory, and I think in practice, a sprinkler should provide the same fire protection that you know, just building the whole thing out of concrete does. So I think, frankly, the buildings are already I mean, the real fire traps in America

are the single family homes. You can still build a single family home pretty much everywhere out of lightwood frame and in most places, especially the places that actually build them without a sprinkler system. So in America we you know, we we we treat apartments as these you know, dangerous things, and you know single family houses you know this, you know, just a right and normal thing. But the truth is

our single family houses are quite dangerous. So I think if we if we applied similar standards, either brought the standards of the single family homes up or I wouldn't do this, but you know, bring this the standards of the apartments down, then I think would make a lot more sense to build apartments. Like right now, it makes a lot more sense for families to live in single family houses, partly because they're you know, they're built as firetops,

so they're a lot cheaper. Bobby, what would you like to see when it comes to maybe encouraging more family oriented apartments in the US. I think developers have the tools to do it. Currently. It is going to require creative partnerships with the right tent, with the right kind of capital. Short term private equity is going to be a lot more difficult in financing these kinds of projects,

but they work, they pencil. Mainly, it requires, i'd say, developers being willing to do the chicken in the egg. I fundamentally believe that families do want to live in cities, taking too sort of like product oriented approach to thinking about real estate and demand for like normal consumer goods, like it goes through fads and changes all the time. Is there do you perceive a fundamental change in demand?

Are there more families like mine? That want to stay in the urban core, and is this something that's different in near twenty twenty three than might have been in the year, say, nineteen ninety three. It's not something that I can show yet, It's only something I can know as being someone who's lived in the city and knowing the number of people who are meeting people in the city, falling in love with the city, like they have kids here.

They move after those things occur, So I would say, at the moment, the option isn't there for them to stay. So I mean, I believe and I'm willing to bet on, and I think other developers should too, that that will work. People in the United States are delaying having families or there are having fewer kids, but they most people still eventually make that decision, and that product is not being built at all, which to me is even just as

an investor, is a compelling thesis. If even just a small percentage of people staying, then at the moment they have no new choices. Bobby and Stephen, I feel like we could get there's so many sort of branches of this conversation that we could take super fascinating. I'd love to have you both back on sometime. Got to leave it there. But seriously, like there's so many interesting like aspects of the housing conversation we could take this. So

I appreciate you both coming on the podcast. Thank you for having me. Thank you. Yeah, that was great, guys, thank you so much. So Tracy, I mean, I know you really want me to move to the suburbisode that you can have more space in New York, etc. But maybe there's an option, maybe it could have it that we could both stay here. I just want more dog amenage department building. Maybe we could have both. No, you

mentioned branches from that episode. And one thing that has always sort of confused me is why in the US the standard like building material is that yeah, that really thin like would framing. I've never understood that. And sometimes when you see especially single family houses going up to Steven's point and you see the framing for those, it really looks like nothing, and it does look like they could a either go up in flames very quickly or

be just fall over with like one good gust of wind. Yeah. You know, another aspect of this that we didn't get into. It's just like you know, homeownership culture or rental culture and whether the perception that you don't need to build as well for rental. Maybe the problem is really just like you know, capitalism and this need for everyone to own a home, or the distortionary impacts of this idea

that everyone needs to own a home. Yeah, there's that, But to me, the big like, yeah, the thing that resonates is this idea that choice of building materials leads to the need for additional regulation, which leads to design choices that are not necessarily optimal. Well, and then you know, you know, I don't know, I think we talked about

this and I haven't found it. There's like this famous like post that someone put on medium about why like all cars will look this same Yeah, and I think it's just because they all have to design for the same safety and fuel standards rags, and so there really

is like sort of one optimal design. And it kind of sounds like, you know, to some extent, that's the same thing that's happened with homes, which is that if mainly you're sort of like feeling like you're optimizing for one sort of set of regulations, then you do just get these endless gray buildings, and then the only places where you can exercise. Some creativity is in the rock climbing wall, and I want there too. I want to, you know, I also want to rock climbing ball. I'm

not against these things. How regulation ruined design? That's a good topic. Okay, shall we leave it there. Let's leave it there. This has been another episode of the Odd Thoughts podcast. I'm Tracy Allaway. You can follow me on Twitter at Tracy Alloway, and I'm Joe Wisenthal. You could follow me on Twitter at the Stalwart. Follow our guests Bobby Fiance He's at Bobby Yon. Stephen tweets under the handle at market Urbanism. Follow our producers Carmen Rodriguez at

Carmen Rman and Dash Bennett at dashbot. And check out all of our podcasts in Bloomberg under the handle at podcasts. And for more odd Lots content, go to Bloomberg dot com slash odd Lots, where we have blog posts, transcripts, and a news limb that comes out every Friday. Go there and side up. Thanks for listening.