The Olympic Village: A Study in Creative Multifamily Thinking
When you think of the Olympic Village, what comes to mind? Is it scores of world-class athletes working hard to be the fastest or strongest? Maybe it’s a festive atmosphere where people from all walks of life meet and mingle. Most likely, you don’t think of economic development or multifamily.
And yet an Olympic village can have huge economic effects on multifamily in any city. It’s essentially a city within a city, complete with everything a city needs – retail and mixed-use development, parks, amenities and more. And then, two weeks after it opens, it stands completely empty. Or does it? What exactly is the future of an Olympic village?
First, a little about the past:
The first Olympic Village was built for the 1932 Olympics in the Baldwin Hills area of Los Angeles, built on a ranch and dismantled after the games. The 1936 Berlin Olympics built the first permanent structures but those ended up being used as Soviet troop barracks after the WWII. They now sit in ruins, like those in Athens and Sarajevo. And while some venues have had other uses (like 1980’s Lake Placid village converting to a prison), most have become residential housing. Multifamily, in particular.
The Olympic Village from the 1952 Helsinki Games, started it all. Its village in Käpylä still stands today as a respected residential community. The same is true for the 1968 Mexico City village, which was sold to individual owners who started their own homeowner’s organization for upkeep.
As the Olympics grew in size, the Village also had to grow to house thousands of athletes instead of hundreds. This obviously made post-Olympics logistics more difficult. In the U.S., host cities like Atlanta (‘96) and Los Angeles (‘80) opted to convert theirs to student housing for local universities.
But what about rental housing?
Well, look no further than Montreal, Canada, which turned two 23-story towers from the ’76 games into coveted apartments just 3 years later. By the following year, all 981 apartments were rented. And they’re still popular today.
Another Olympic Village multifamily success story comes from another Canadian city, Vancouver. Built for the 2010 Olympics in an industrial area of the city, the new neighborhood has everything: a green design, a lot of great amenities and even some affordable housing. Something for everyone. Much of it was sold to individual owners but many of those have rented out their units.
But False Creek, as its now names, was used as the foundation for an entirely new community. Several new buildings and businesses are planned as well, including a community center, fitness facility, dining, and retail. It’s also one of the greenest urban communities anywhere. Best of all, the city not only made its money back but also earned an additional $70 million.
Finally, there’s London, whose 2012 Olympic village was turned into affordable-housing as well as businesses. Today, it’s becoming so popular that property values are going up.
Now that we’ve seen a few success stories, is an Olympic village really a good idea as a multifamily investment for any growing U.S. city?
After talking with Jay Board, Analyst with trusted apartment market intelligence source, MPF Research, it’s a mixed bag.
“It’s really hard to predict anything for U.S. metro areas because it’s never happened,” he says. “Atlanta, LA and Salt Lake used their Olympic housing as student housing. It’s also a different model because the number of residents there has grown.”
Board is referring to the number of Olympic competitors. Looking at only the Summer Olympics, the number of participating athletes has grown substantially, from 241 in Athens 1896 to well over 11,000 athletes at the 2016 Rio games in Brazil. In fact, 2016 boasted the most athletes ever. That’s not mentioning coaches, trainers, and other personnel. This naturally means the biggest village ever.
Of course, most Olympic housing is set up like student housing, with single rooms, roommate situations and shared bathrooms in some cases. That layout likely wouldn’t work for market-rate rental housing, so much of the housing would need some renovation.
In the Montreal situation, developers turned housing for over 11,000 people into 981 units for about 2,000 residents. The Rio Olympics village has room for 17,950 people in 3,604 flats. That’s 31 high-rise, 17-story buildings, a tremendous amount of living space on just 185 acres. What does that mean for the Rio real estate market?
“Well, from a purely numbers standpoint, that’s an extremely large number of units to suddenly put into such a small area here in the states,” Board points out. “The average number of new apartments for a major U.S. metropolitan area is currently around 4,000. And that’s for a whole year. If you inject almost half of that, even into a growing market, you’re still going to have a negative effect on the market. If we’re talking a best-case scenario−an underdeveloped market with high economic possibilities−then prices are likely to level out, at best, until the market absorbs the new product.”
In Rio’s case, its present economy might not support its current plans to have luxury apartments and offices. However, when it was chosen as Olympic host city in 2010, apartments were at a premium.
“The key is to have a careful business plan for the buildings after the games are over, whether it’s student, affordable or conventional product,” says Board.
So check the cycles, choose the right location and with a little luck, it could transform your city.