Mixed Use Density – the Absorption Cap

Density in mixed use projects are capped by local market absorption rates.  In the Midwest, absorption rates approximate 8 – 12 units monthly, with maximum annual absorption arguably 100 units.  Suburban projects deliver in 12, 24, and 36 unit increments, allowing immediate occupancy at a rate approximately equal with market absorption.  However, this equilibrium is impossible in midrise development.  With average Midwest projects hovering around 200 units, and 75 – 100 unit an acre production capacity with wood frame midrise buildings, it is unlikely that high-rise residential product will be viable for the foreseeable future in most Midwest cities.  (Note for this I am considering all product that exceeds any wood frame constructibility as a high-rise).

I love the idea and concept of high rise living, and I look forward to the day when my neighborhood in downtown Indianapolis reaches the point where its market is ready to accept that development approach, however, I want to be realistic on what I can accomplish, and I know that the absorption cap is something that we must remember in the design of our urban and mixed use redevelopment throughout the Midwest.  Hopefully we will create such a dynamic and attractive market in downtown Indianapolis this will change, however, it is not going to happen overnight.


About taddmiller

Mixed Use and Urban Infill Real Estate Development
This entry was posted in Design, Finance, Getting it done, Housing and tagged , , . Bookmark the permalink.

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