As it continues to rise on 400 South adjacent to Library Square and the Public Safety Building, The Exchange Project is many things.
The end-cap to Salt Lake City’s civic campus. Food service business incubator. Co-working space. Mixed-use and mixed-income. All-electric and carbon-neutral (nearly).
Design-wise, it is some of the sexiest architecture Salt Lake City has seen in years.
The Exchange is also a demonstration project. Its nascent financing model aims to show market-rate developers how high-end luxury can co-exist with deeply-affordable units – and make just as much or more money as conventional market-rate buildings.
We visited on site with Giv Development’s Chris Parker last week to check in on The Exchange’s progress. On the tour, Parker spoke to Giv’s philosophies and strategies.
Project specs + elements
The Exchange is two buildings – the muscular, steel-girded, 9-story “Avia” on the west and the 5-story “Mya” on the east (the narrow, squiggly building). Although the Avia is Phase 1 of the project, the squiggly building will be completed first, this Fall in fact. The Avia will open in Spring-Summer 2021.
The Avia’s 286 units include studios, 1 + 2 bedrooms, and it will have “very high-end units – these will be among the nicest and most expensive in the state,” Parker told us. “And yet we’re still getting affordability in that same building.” 20% of its units will be set aside for residents making 50% or less of AMI.
The ground floor of the building will be wrapped with 14,00 sf of retail, facing 400 S., 300 E., and People’s Way (the east-west woonerf north of the Public Safety Building). It will feature a food hall that will have booths for conventional restaurateurs as well as start-up spaces that will rent for a couple hundred dollars a month and be linked with the Spice Kitchen incubator project of the International Rescue Committee (IRC), which serves Salt Lake’s refugee community.
The idea is to share the expensive spaces (kitchen and dining room), and increase the volume of customers for everyone – since food courts are an easy answer for a group debating where to eat.
The Avia is parked at a 1 : 1 ratio (~280 stalls). Its cost per unit is “north of $300,000” Parker said. He noted that’s mostly due to steel construction and high-end finishes.
The Mya, on the east, will add 126 units, all “micro-1 bedroom” (350 sf avg), 30,000 sf of co-working office space dubbed “The Shop,” and 2700 sf of ground-floor retail facing 400 S.
One third of its units will be available to people making 40% of AMI, one third for people at 80%, and one-third will be market-rate.
The units are small, but the finishes will be fine, Parker assures. “What we’re trying to do is not make them cheap so people can afford them, but make quality accessible to everyone. By compressing the unit size, you get quality that everyone would want, because there’s less of it.”
Each unit qualifies as a 1-bdrm because of the micro-partition that separates the living space at the window from the bedroom toward the back of the unit.
The building is parked at a .5 : 1 ratio (just over 60 stalls), and unit cost is about $150,000, half of the Avia’s.
The Shop, the building’s three-floor, 30,000 sf office space, will offer high-end design and finishes and be the only all-electric, carbon-neutral office space in the state, Parker claims. It also offers more private space for members than usual co-working arrangements – 1 or 2 people in the same space usually allocated to 4-6 people.
Giv’s urban vision
The Exchange’s 2.24 acres is land that was assembled by the city for the Public Safety Building, the Becker Administration (2008-16) seeing the potential for a TOD on 400 S.
The project is a mirror of Parker’s vision for Salt Lake City – a place for everyone. ‘What does it mean to be a building for kind of the whole city?’ Not only do you have the entire spectrum of incomes represented in the building – someone paying several thousand dollars a unit all the way down to someone making $10-12 an hour, but we also wanted to have an opportunity for people to start or launch a business also along that scale.”
“For me, a healthy city is one that has a really strong ability to do whatever it is that your dream is, wherever you might be in life.”
“How do we open up downtown?” he asks, “Because we’ve been producing a ton of units for people who are lucky enough to be on the end of the spectrum that allows them to afford anything.”
Affordability is key, and Utah has the opportunity to “lock in” the affordable units it needs in the next cycle – so that we don’t fall prey to the gentrification forces that have hit San Francisco, Parker contends.
“How could you go ahead and make sure that as the vegan donut shops and the $10 latte places come into town that everybody gets to participate in that sort of expansion rather than it coming at the expense of people who have historically lived here?”
Proof of concept: affordable units can equal financial return
Giv’s answer to the housing crisis is to use an abundant resource – 4% federal tax credits – to achieve deeply affordable units and mix them with high-end market-rate apartments. The Avia will have 20% of its units for people at 50% AMI, usually the purview of the over-subscribed 9% tax credits.
Parker thinks that this mix – which his development partner Domain Companies has successfully achieved in New Orleans – will give financial return equal to or greater than a purely market-rate project.
If so, this clearly changes the equation for market-rate developers who insist that adding affordable units to a project is impossible to pencil.
The attraction of urban policymakers to “inclusionary zoning” is that by requiring say 20% of any new building to be affordable, little by little the gap between affordable demand and supply is narrowed.
Yet political opposition on Utah’s Capitol Hill to inclusionary zoning legislation has been fierce – cities seem to have gotten the message not to touch it.
As Parker sees it, “If 10% of the market-rate projects done in the last few years had been affordable, we wouldn’t have a housing crisis right now”
The financing question that The Exchange is meant to answer is, in Parker’s words, “How can you incent market developers to do affordability that doesn’t require them to be Mother Teresa?”
“We want to show that if you organize it in a certain way, you might actually make a little more money doing it that way than doing just a pure market-rate building.”
The magic of mixed-income environments
In attempting to be a project for the entire city, The Exchange not only gives access to people of varying incomes but is attempting to leverage that diversity.
“Someone who has a great idea, but doesn’t have the background to know what to do with it is going to be in the elevator with someone who has run a successful company. That’s worth so much – forget whatever amenity you thought you wanted in your building, that’s the amenity, for both ends of the spectrum.”
Parker tells a story about Giv’s first project in Salt Lake City, the mixed-income North Sixth project on 600 W. near N. Temple.
“We design our buildings so you actually have no idea how much your neighbor makes. When I lived at North Sixth, we had someone who worked for Goldman Sachs who lived literally next door to someone just exiting the Road Home. And they ended up meeting each other and becoming friends. It never would have happened otherwise.”
“The idea that someone living in a 40% AMI unit can open a food service business in the same place that a CEO of a tech company who works next door in their small office in the Shop, that’s the idea.”