Why We Don't Build More Apartments for Families

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:17)

Tracy, you know, we did a recent episode on rent and whether the price of rent is ever going to go down. And I asked the question, like, why don't they ever build new apartment buildings for families?

Tracy Alloway (0:28)

Totally unself-interested question.

Joe Weisenthal (0:30)

From now, from here on out, now that our years of just doing supply chain episodes are going to come to an end, let's just do episodes about our own personal grunts, our own personal frustrations, the state of the economy.

Tracy Alloway (0:42)

Where are all the dog amenities for apartments?

Joe Weisenthal (0:45)

That's the thing. Like, there's plenty of buildings with dog amenities. And as a, you know, I have two kids, and sometimes we look at like new apartments and they're like, I want like a building with dog amenities and billiard rooms and gyms and dormant and all that stuff.

But they don't make those buildings for like the actual unit. And my kids don't play pool.

Tracy Alloway (1:09)

Well, you got to teach them. No, but I think you're right. It seems like a lot of apartment buildings are geared towards young professionals for the most part. It's studios, it's one bedrooms. Here in New York, it tends to be larger apartments that have been cut up at one point in time. And you end up with these really weird floor plans where like the bathroom is right next to the kitchen.

And it's not a very pleasant experience for anyone. But I think there is this overarching question of why are these decisions being made in the way that they're being made?

Joe Weisenthal (1:43)

Right, like there must be some reason. And the people who are building these buildings, obviously they have presumably some good business reasons, but I don't know what they are.

And I find it frustrating. And I guess I'd like it to change, but I don't know if any developers are gonna change their business models for me. I think the expectation is like, I just gotta move out to the suburbs. My kids are really tired of sharing a bunk bed.

Tracy Alloway (2:07)

Okay, what I will say also is, I think this is a peculiarly American problem because having lived in many other places, apartments are well designed. Even in Hong Kong, where the average size of apartments tends to be incredibly small, they are designed for that tiny square footage. And so they tend to be quite functional even for families. And certainly in Europe, there's much more of a culture of renting versus ownership so that you do have families who spend decades in the same apartment building.

Joe Weisenthal (2:41)

I think you're totally right. Here the basic idea is that if you live in the city in an apartment, you're young, you're single, and then if you have kids at some point, then you move out to the suburbs. And the housing stock is not made for people who would say, like to stay in the city and maybe be a renter in one unit or one building for 20 years.

Tracy Alloway (3:01)

Yeah, I think that's exactly right.

Joe Weisenthal (3:02)

All right, so what explains the state of affairs? Is there any reason to change it? We're going to be speaking to two guests. I think they were both heard our last episode and then spent a couple of days sort of debating it on Twitter. And so it's like, well, why debate on Twitter when you can come in? So we are going to...

Yeah, just come talk to us rather than wasting it all in tweets. We are going to be speaking with Stephen Smith. He is the executive director at the Center for Building in North America, a think tank around construction policy. We're also going to be speaking with Bobby Fijan. He is a real estate developer and he knows all about apartment floor plans and the thinking behind the business reasons behind these decisions.

So Bobby and Stephen, thank you so much for joining us.

Bobby Fijan (3:46)

Very glad to be here.

Stephen Jacob Smith (3:47)

Yeah, thanks for having me.

Joe Weisenthal (3:48)

So Stephen, I'll start with you, but really, are we right? Like, let's start with, is the premise that we're talking about, that a lot of these new developments really aren't geared towards families?

Is that correct?

Stephen Jacob Smith (4:03)

Yeah, I mean, the typical new apartment building in the United States, the developer will try to cram in as many studios and one bedrooms as they can. You know, I think it's mostly driven by policy. You have a lot of, there's a lot of planning policy that tries to encourage more family-sized units, but they're really pushing against some more fundamental regulations that make it quite difficult to build family-sized apartments in any sort of affordable way in not just the US., but also Canada and North America.