Selling Shells

I had heard that in many Asian countries there was no tenant improvement allowance in commercial buildings. Leases are relatively short (often 3 years) but tenants tend to stay if the landlord keeps rents reasonable, since the tenants effectively own an immoveable piece of the asset.

I discovered that in Hong Kong, subsidized housing works the same way. Thirty percent of the population lives in government subsidized housing–“Housing Estates”– as they are called. These units are rented out as bare shells.

Once a family is assigned to a unit, they can’t switch for another one unless their circumstances change dramatically. For instance, since the Hong Kong region is fairly compact and well-connected by rail, change of job doesn’t seem to be a reason to move.

As a result, many people stay in the unit they were first assigned for the rest of thier lives. This, combined with their investment in flooring, cabinetry, appliances, light fixtures and air-conditioning units tends to make them much more connected to their vertical community than what we are able to acheive in many of our subsidized housing projects in the United States.

Further, because the units are let as bare concrete boxes with only as skim coat of plaster (and plumbing conduit running on the outside of the building), the units are less prone to damage and can be more easily cleaned up when a tenant changes over. When I think of the degradation of finishes in may affordable housing projects at home, and the cost created by trying to make them indistructable, the “shell only” model seems like a brilliant solution.

Give people a box with running water, a toilet and a sink. Let them customize it, and let them own the insides. In the end, this is a tremendous lever to allign tentants in a fundamental way with their landlords in success of the asset and of the community as a whole.


About aphurd

better cities...better planet.
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