Atlanta: Small Scale Developers Boot Camp

This piece was originally posted on Granola Shotgun, the blog of one of our members, Johnny Sanphillippo. It is reprinted here with his permission.

I was in Atlanta earlier this month to attend a conference for small scale developers. The focus was on the “missing middle” which has long been neglected by production builders, bankers, and regulators. I should start with some basic definitions.

We’re all familiar with suburban subdivisions. A well established home builder will buy a large tract of land and develop four or five hundred units complete with a ready made HOA, roads, water and sewer infrastructure, power, and communication cables.

And we all recognize the large scale infill development where the “urban” arm of a similar production builder will construct a three or four hundred unit apartment or condo complex with a multi-level parking deck.

Commercial development follows the same pattern. A large plot of land is purchased and national chain retailers occupy the big boxes and strip malls.

The “missing middle” is all the stuff in between a single family home and the much larger building types. The simplest version is the common duplex which looks and functions a lot like a regular single family home. These blend in to residential neighborhoods with ease and allow an owner occupant to draw rental income from one half to help pay the mortgage on the entire building. It’s a great wealth-building model that also supplies modest affordable accommodations without the need for segregated low income housing.

Here’s an example of a courtyard of cottages that provide individual small homes. This is an ideal arrangement for older people as well as young folks just starting out on their own. This lot might otherwise contain just one large bland anonymous rental building with the same number of units, but with far less charm.

The next step up is the row house. These are typically duplexes or three or four unit buildings that take a more urban rather than suburban form.

Here’s the scale of retail development from the early part of the twentieth century. These aren’t radically different from today’s strip malls, except they offer stand alone fee simple ownership of each separate shop instead  of a dozen shops inhabiting one far more expensive structure.

And here are examples of a lost race of small mixed use buildings that manage to provide retail space on the ground floor and residential units upstairs. In most locations in North America these buildings are explicitly forbidden by zoning and building codes and are nearly impossible to finance with traditional bank loans. Yet these are often the most desirable locations in many towns. Compare this arrangement to the usual “garden apartment” complex and commercial strip out on the side of the highway.

The purpose of the Small Scale Developers Boot Camps are to instruct would-be builders about how to navigate the economic and bureaucratic waters of bringing these kinds of buildings back to our towns in spite of all the obstacles. And because these places are both rare and highly sought after there’s money to be made in supplying the pent up demand.

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