Real Estate Weekly
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Can residential developers meet the demand for day care in their buildings?

In New York City, more apartment complexes offer day care for pets than for children.

The consensus within the city’s real estate world is that the industry is in the midst of an amenities arms race, with both commercial and residential markets seeing a barrage of one-upmanship in the form of coffee shops, game rooms, bowling alleys, basketball courts and, yes, even doggy day spas.

Meanwhile, in the five boroughs and across the nation, single-parent households are facing myriad issues, not least of which is ensuring their children are well cared for during the work day.

“It’s a huge a problem that no one seems to be paying attention to,” Albert Saiz, director of MIT’s Center for Real Estate, said.

Saiz recently co-authored are study examining trends in commercial and residential development in the U.S., using demographic data to analyze trends both current and upcoming in the world of real estate.

One area of need highlighted by the study was for housing that addressed the need for single-parent homes, with amenities such as on-site childcare, homework assistance and counseling resources being floated as potential vessels for support.

Rosemarie Dackerman, executive director of the Single Parent Resource Center in New York, said single-parent families in the city and throughout the country are in need of not only day care for young children, but also after-school programs and other support systems.

“Family engagement really raises protective factors in families and lowers risk factors, from substance abuse to school attendance to delinquency,” Dackerman said. “If buildings could offer services that engage with children of single-parent families, that would really be a great help.”

Citing data from the Pew Research Center, MIT’s report, titled “Real Trends: The Future of Real Estate in the United States,” highlights the steady, decades-long decline in so-called “traditional” family households — those in which a child lives with two parents in their first marriage — and the uptick in single-parent homes.

As of 2015, 26 percent of children lived with a single-parent, a seven percent increase since 1980 and a 17 percent increase since 1960.

Meanwhile, less than half live in a “traditional” household, though there have also been increases in children living in homes with remarried parents or non-married co-habitating partners, which are often unstable situations, Saiz said.

Because of the difficulties of raising children while also maintaining full-time employment, most of these households, the majority of which are headed by women, have low annual incomes and therein lies problem, Saiz said, especially in New York.

“A need is not enough, you need to have the money, the demand in an economic sense, before you see investment,” he explained. “Unfortunately, for a new building [in New York], you really need to target upper, middle and upper-middle income occupants in order to justify the expense of construction.”

This explains the flurry of innovative new amenities, particularly in the luxury market, where the needs of single parents are much less pronounced.

To be sure, today’s luxury developers are in tune with what their customers need and want to make their lives easier.

For example, The Related Companies, the conglomerate behind the Hudson Yards development and numerous other luxury housing structures throughout the U.S. and in the United Arab Emirates, survey tenants when the move in, when they move out and annually to pinpoint their likes and dislikes.

Chris Schmidt, a senior vice president for Related’s rental operation in New York, said on-site childcare has not been identified as an area of need in the properties he oversees. Though if it were, he noted, Related would be ready and able to address it.

“I would say it’s not an immediate need for our portfolio today, but it’s something that can be considered and is easily adaptable in the future,” Schmidt said. “It wouldn’t need to change the physical characteristics of the buildings.”

Across the Hudson in Cliffside Park, New Jersey, Eugene Cordano, Halstead’s executive director of sales, agreed.

“Developers are in the business of developing, not in the business of daycare, but if this was something their buyers were desirous of, spaces could be created within a building to accommodate that.ˮ

Like Related, Cordano said Halstead’s new development marketing teams carry out extensive research and outreach among past, present and future residents in the early stages of a buildingʼs creation.

In the case of One Park, the new luxury condo the company has just launched for Chinese developer DMG Investments in Cliffside Park, Cordano explained, “Once the building is complete, ownership turns over to the condo owners, then it would be up to them to decide if they wanted to turn, say, the children’s playroom [included within the building’s current amenity package] into a daycare.

“There are all sorts of licensing issues that go along with that, but renting the space to a registered carer would be one option.ˮ

TF Cornerstone, a key developer behind Long Island City’s decade-long revitalization effort, takes a similar approach, focusing on adapting to its customers’ needs and wants.

Although it anticipated its projects in Long Island City would primarily attract young, single, working professionals, Zoe Elghanayan, a vice president with the company, said she has seen a rise in the number of families moving into area, though her company sees childcare as something better left to the commercial sector because of the particular licensing required.

However, Elghanayan said TF Cornerstone took a holistic approach with its Long Island City developments, focusing not only on the buildings themselves, but also the surrounding neighborhoods, even going so far as to subsidize retail operations to help meet residents’ needs.

Such a desire has not been expressed for child services, but she said the company would be open to helping with those types of businesses as well, if it were a need.

“Luxury housing is more community based than it has been in the past and the reason for that is all the amenities being offered,” she said. “There’s also going to be more consideration for the neighboring commercial components when we work on a new development.”

Although child services are not a focal point of their luxury offerings, both Related and TF Cornerstone have implemented elaborate shared work spaces into their residential buildings, offering facilities with state-of-the-art office furniture, conference rooms and even video conferencing equipment. Representatives from each company pointed to this as a means for helping parents work from home.

So while there has been great innovation for the higher end market, there is not an equivalent force on the other end of the spectrum, Saiz said, pointing to the existing short supply of affordable housing nationwide that is only poised to fall further beyond industry demand.

Part of the issue is that no one seems to have a feasible fix for this problem, Saiz said. Other countries, particularly in Scandinavia, struggle with this issue to a lesser degree, but that’s largely because of their older, smaller housing stock that’s better suited for single-parent families, as well as their expansive welfare states, neither of which are likely to catch on in the U.S.

Saiz praised New York’s policies favoring affordable housing and inclusionary zoning as among the best in the country, but he said the type of affordable housing has remained stagnant.

Addressing the issues created in single-parent households will require creative housing solutions that New York is not well suited to produce.

“This might not start in New York, it might start in Memphis or Chattanooga or somewhere with cheaper land and development costs,” he said. “Once you have the typology figured out, that model can be adapted to other markets.”

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