Partners Christian Hart and Joe Seager have developed multiple affordable housing projects throughout California and the Southwest since launching their company, Community Builders Group (CBG), in 1999. But the idea of creating affordable multifamily microunits wasn’t a consideration. That is, until a series of events converged into what Hart told Connect CRE was “the perfect timing mechanism.”
Those events included the availability of a small land parcel near other CBG developments (in conjunction with cityLAB UCLA) and the city of Pasadena’s ongoing hunger for more affordable residential units to offset housing shortages.
“The city wanted to create more units,” Hart explained. “Between Pasadena’s efforts in providing an efficient entitlement platform and friends who brought the land opportunity to us, we decided to move forward on the transaction and process.”
The result was Pasadena Studios, a 180-unit multifamily property at 280 N. Oakland Ave. near Old Town Pasadena and LA Metro’s Gold Line. The project, which opened in 2023, leased up in four months and has remained fully occupied since then.
The Story Behind the Build
Hart said the project was somewhat unique because affordability was blended into microunits. He pointed out that the bond world hadn’t allocated debt bonds toward constructing affordable microunits in the past. In fact, at one time, California renters demanded larger apartment units that could fit families.
However, moving forward, “the units started shrinking in size because fewer families were moving in and more roommate arrangements,” Hart said. Then the concept of roommates morphed into single renters. “More and more, individuals wanted to live by themselves,” Hart said. “They wanted the freedom to decorate their unit to fit their lifestyles. So you’ve gone from family-size units to one-bedroom-size units and now, singles and microunits.”
Fueling the microunit migration and construction has been an increase in land prices. That, plus higher demand for more affordable housing, “inspired folks to look at different options,” Hart observed.
To finance this particular option, CBG relied on California tax-exempt bonds and state and federal tax credits. “Typically, you’re laying on multiple sources to ensure that the transaction will be viable,” Hart commented. “In this context, we bought right, we financed right, we built right, and it was designed right.”
The Ideal Tenants
Pasadena Studios units range from 245 to 270 square feet and are geared toward renters earning a maximum annual salary of $53,000. The plentiful amenities include a landscaped rooftop deck and courtyards with seating, multiple gathering spaces, a community room/business center, fitness center, bicycle storage, a barbecue area and fire pits.
The project was envisioned as transitional housing geared to younger adults who were trying to figure out the next steps in their lives. “Folks who haven’t graduated yet or found their career path might be working at a temporary job,” Hart said, adding that some renters might still have student debt, which supported the need for affordable rentals while residents figured things out.
However, Hart said that surprisingly, Pasadena Studios’ rental population includes senior citizens. “They’re downsizing, so all of the things they acquired in a lifetime are going away,” he explained. “Then they move into microunits because they’re affordable, and it fits their lifestyles.” As a result, “we have an interesting tenant mix, with a lot of young people and a lot of seniors,” Hart said. “You’re seeing two different populations interact. Sometimes, housing crises force people to live in situations they might not have envisioned. But this project has been successful beyond my expectations.”
Moving Forward . . .
Hart said CBG plans to build additional affordable microunit properties throughout California. However, the lack of labor, tariff confusion, and increasing construction costs are temporarily holding up this plan. “Our projects are planned years in advance, so we have to address issues with reserves and inflation rates now; at this point, it’s having an impact on our ability to build more,” he noted.
The good news is that the Pasadena Studios concept now has a viewable, touchable model, which has provided CBG with a microunit template to show to interested parties. “I’ve given a lot of tours of the property,” Hart said. “Our team is giving a tour of Pasadena Studios at least once a week.”
Hart said he believes that affordable microunit projects are here to stay. He also cautioned that such projects are not the only or best solution to the affordable housing crisis. “It’s part of an overall solution,” he said.
An earlier version of this article is available on ApartmentBuildings.com.
The post CBG Finds Success with Affordable Microunit Project appeared first on Connect CRE.
