By Susan Tjarksen | Forbes
Would you rent an apartment on the first floor of an apartment building? The multifamily industry says no. And some cities don’t allow it. Historically, the first floor of multifamily developments has been allocated for retailers and a lobby. As developers know, the higher the unit, the higher the rent. From the top down, a typical floor plate for a new multifamily development allocates a roof deck, penthouse units on the top floors, apartment units, a lower-level amenity deck, the next floors for parking and the first floor for retail and a lobby. Views command a premium, and as the floor number gets lower, so does the rent.
And what about the first floor? Space historically filled with traditional retail and large parking garages faces a dilemma: online shopping has changed the demand for physical storefronts, and ride-share has reduced the need for high parking ratios. This is the “podium problem”: The lowest floors of a building aren’t bringing in the revenue they used to.