Mixed Use Density Capped by Costs

Mixed use projects in the Midwest are traditionally limited to wood frame construction because of market rents/pricing vs. construction costs. Take into account that 3 story, non-elevator, surfaced parked product costs +/- $65 pnrsf (15 – 22 units/acre), a midrise, underground parked, common corridor, elevatored building +/- $125 pnrsf (22 – 100 units/acre), further dwarfed by the previous example in steel/concrete at +/- $155 pnrsf (75+ units/acre).

Basically, any residentially based steel/concrete frame product in Midwest the market is a viability non-starter, as there is absolutely no way to make an increase in density make up for the 30 – 100% construction cost increase! The argument is often made that increasing density increases value, therefore making it make sense, however, this is like trying to make money in volume in a product that has no profit/margin to begin with. See this comparison (milhaus-construction-type-comparison.pdf) of a project that shows the difference between the three construction types on a specific site.