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July 27, 2017

Parkstone Properties and NexGen have big plans for micro housing

By LYNN PORTER
Journal Staff Reporter

Rendering from Jackson|Main Architecture [enlarge]
Guerdon Modular Buildings made the modules for the four-story Cubix-North Park. They’ll be delivered by truck and installed by crane over two weeks, starting today.

In December, Parkstone Properties expects to open what it says will be the second modular micro-apartment building in the United States: Cubix-North Park, a 108-unit complex at 1008 N. 109th St. in North Seattle.

“We can innovate and provide an affordable product at the same time. It doesn't get any better than that,” said Daniel Stoner, president and owner of the Seattle real estate development and investment firm.

Guerdon Modular Buildings of Boise made the apartment modules, which will be delivered by truck and installed by crane over two weeks, starting today.

Jackson|Main Architecture designed Cubix-North Park. The team also includes DCI Engineers (structural), Decker Consulting Engineers (civil), InSite Group (mechanical, electrical and plumbing), Evergreen Certified (Built Green consultant) and KLLA Landscape Architects.

The site is about half a mile from North Seattle College and a mile from the future Northgate light rail station.

Parkstone introduced the Cubix apartments brand in 2013. In 2015, Stoner recruited David Hanson and Mehul Vora to join him in forming NexGen Housing Partners to build and operate micro apartments in Seattle under the Cubix brand.

Stoner said NexGen now is seeking equity partners to help scale up Cubix in Seattle, and offer affordable housing for the working class.

Parkstone provides construction management and property management for NexGen, and Stoner said the companies may consolidate in the future.

Vora's main focus is NexGen, but he continues to manage real estate investments for his family office. He was associate director of private equity at Allstate Investments in the Chicago area.

Hanson also manages a legacy real estate portfolio, and previously taught philosophy at Gonzaga University.

Stoner received a public relations degree from Gonzaga, where he met Hanson, who introduced him to Vora.

Stoner has been involved in Seattle real estate since 1995, and in the 1990s co-owned The Showbox and 2218 nightclubs.

So far, NexGen has over 260 Cubix apartments in development, and plans 250 more in the next two years, Stoner said. Cubix units are marketed as “Everything you need. Nothing you don't.”

Cubix-North Park will have 101 micro studios — ranging from 225 to 300 square feet — with a small kitchen and bathroom. They will rent for $825 to $995, including utilities and wireless Internet. Seven 300-square-foot live-work units will rent for $995, not including utilities and wireless.

Cubix renters are a mix of millennial professionals, international students, downsizing retirees, and people changing jobs and lifestyles, Stoner said. Some want a smaller carbon footprint and easy access to transit. Cubix projects don't have parking.

Stoner said modular helps keep down development costs because the modules can be installed quickly and the prices can be locked in to counter rising construction costs. He said Parkstone locked in the hard cost for about 70 percent of the Cubix-North Park building 2.5 years ago.

The modules were made in a less expensive labor market than Seattle's, and Stoner said Guerdon did not raise its prices despite a delay in the project.

Stoner said he believes Carmel Place in New York City is the only other modular micro apartment project in the U.S. The New York Times reported that it opened in 2015 and was the city's first micro-unit development. The nine-story building has 55 studios of 260 to 360 square feet. The newspaper said 60,000 people applied for the 14 affordable units.

One of NexGen's projects will be modular. Cubix-Othello at 7339 43rd Ave. S. will have 85 units in a six-story building one block from the light rail station. The 230- to 310-square foot studios and one bedrooms will rent from $895 to $1,295, including utilities and Internet. Stoner said the project will be family-friendly, with larger bathrooms and a community gathering spot overlooking Othello Park. Construction is set to start in October and finish in August 2018.

NexGen has other micro — but not modular — projects in the Seattle area.

Pre-leasing is starting for the three-story, 41-unit Cubix-95 at 714 N. 95th St. in East Greenwood. Units are about 225 square feet and there is bike storage/repair space. Rents range from $875 to $1,150 for lofts.

NexGen plans in March 2018 to start building Cubix-Fremont, a six-story building at 3519 Fremont Place N. with 48 units of 225 to 300 square feet, 3,000 square feet of retail, a rooftop deck, lounge and bike storage/repair space.

Also, the company plans to start construction in October on Cubix-105 at 1307 Northgate Way. The three-story building will have 16 units of about 300 square feet, a laundry and bike storage/repair.

Parkstone's modular project, Cubix-North Park, will have 3,800 square feet of retail — including an office for Parkstone and NexGen, and a coffee shop — along with a rooftop deck, storage and a bike storage/repair room, but no parking. The project is Built Green 4-star certified and will have solar panels on the roof.

Rents for Cubix micros are less overall than for typical apartments, but more per square foot, at $3.25 to $3.50, Stoner said. Renters don't look at the square foot price, he said, and focus more on livability, amenities and proximity to transit, work and restaurants.

Micro units cost more per square foot to build, he said, because there's less square footage over which to spread the cost of systems, which are the most expensive element in apartments.

Parkstone planned to start construction in early 2016 on Cubix-North Park. But Stoner said the city's “strict interpretation of the code” made it impossible to provide carport parking, so the design was changed, and had to be reviewed again. Having more apartments in the revised design softened the blow of the wait, he said.

The delay also let the developer set the modules during the summer and that helps to avoid water intrusion, Stoner said. “We're setting (them) on the day with the least likely chance of rain on the Farmers' Almanac,” he said.

Stoner said he hopes eventually NexGen can build micro condos when condo laws become more favorable. He pointed to cities like Hong Kong where luxury micro housing is in high demand.

“If you look at condos from the 1980s versus now, everything is shrinking because everything is getting (more) expensive to build,” he said.


 


Lynn Porter can be reached by email or by phone at (206) 622-8272.


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