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.

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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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