The Development Pipeline and Projected Needs…
The term ‘development pipeline’ gets used frequently as a looming cloud of uncertainty and, therefore, a reason to stop approving future communities. The development pipeline refers to un-built units that have some level of approval (no houses are on the lots in the development pipeline).
Those advocating against the approval of new communities often refer to the pipeline as a reason to deny new projects. This column necessarily digs into the topic of the pipeline and puts it into context.
The development pipeline, in essence, represents the supply side of the supply/demand equation. Like baseball players in Major League Baseball’s farm team system, this supply in the pipeline will not come to market as new houses until many factors occur, such as adequate demand justifying early investment in infrastructure. The development pipeline units aspire to play in the big leagues; the players on the field for the Baltimore Orioles are the newly built homes, ready for new residents to move in with their boxes and furniture.
What follows is a macro-level breakdown of the pipeline. One must recognize that even this general breakdown doesn’t consider additional factors (geography, price-points, demographics, etc…) that affect the supply and demand of every market segment.
The current pipeline, including recently approved and submitted projects, plus all existing recorded, but undeveloped lots, totals approximately 27,500 +/-.
Of this, 4,350 +/- are ‘ready-to-go’ (the AAA Team). These are recorded lots (although nearly half are legacy minor subdivision lots that may never be improved).
Another portion consisting of 16,250 +/- is ‘adequate public facilities ordinance (APFO) approved’ (the AA Team). These are lots that are unrecorded, but have passed their APFO tests, meaning parties have agreed on the schedule of public facility costs to the developer, if any, and the concurrent level of development that may proceed with said improvements.
Finally, there are 6,850 +/- ‘pending’ units (the A Team). These are lots with some level of zoning approval. They are not APFO approved and even with sufficient demand, have many years of planning, engineering and infrastructure improvements that are required before a home can be built.
That’s a total pipeline of 27,500 +/- units in Frederick County, with some remaining lands that have Comprehensive Plan designation, but are nowhere near the point of adding to the pipeline (Again, these are un-built units).
So, how does this dwelling unit total stack up against our future needs?
The Frederick County Community Development Division, the Maryland Department of Planning and Washington Council of Governments projections anticipate the need for 35,000 – 42,000 additional dwelling units to accommodate a population increase of 85,000 – 90,000 by 2040.
These needs are further demonstrated by the county’s assessment in the Comprehensive Plan, which states an additional 34,000-36,000 dwelling units are needed within the next 15-20 years. These projections don’t account for market factors that contribute to an under-build over the years; Maryland Dept. of Planning uses a 25% factor.
Mathematically, and on paper, the total pipeline of ready-to-go, APFO, pending and planned units may accommodate our 20 year need. But this can only occur if all consumer demand is met by the supply of new homes in Frederick County. If the characteristics of the supply do not represent the needs for future families, they will choose other locations.
Therefore, planning for and accommodating an additional 6,500 – 7,500 dwelling units is imperative for planning for the future of Frederick County, even for just the next 25 years.
Unit Mix (single family (SF), townhomes (TH), multi-family (MF)) is one of the characteristics of the pipeline; the unit mix build-out has changed slightly over time, and future housing stock based on approvals and demand will continue to alter the mix. Historically, 65% of the new homes have been SF, 25% TH and 10% MF. Over the last 25 years that mix has changed slightly to a 60% SF, 25% TH, 15% MF mix.
Looking forward, the future mix will probably follow this trend toward a 50% SF, 30% TH, and 20% MF mix. In addition, around 5% of future housing is expected to be Age-Restricted.
Another critical characteristic of the pipeline is the location of the housing, or the sub-markets within Frederick County.
Southeastern Frederick County, comprising the area around Mount Airy/New Market/Linganore/Ballenger Creek and south to Urbana has the largest ‘pending’ (A Team) and ‘APFO approved’ (AA Team) pipeline development, but very little ‘ready to go’ units (AAA Team).
A subset of this market, the I-70/I-270 wedge, has essentially no single-family detached units on water and sewer that are ‘ready-to-go.’ This has been the strongest and fastest growing market. The Villages of Urbana has only townhomes and a handful of neo-traditional SF units ‘ready-to-go,’ which absorb much more slowly than traditional SF (front-loaded garage) units. The Landsdale community will be the first development in this area since the Villages of Urbana with any substantial amount of SF on public water and sewer.
Another sub-market, the City of Frederick, has approximately 5,500 units in the ‘APFO’ (AA Team) pipeline. Again, these are unrecorded, and many have significant infrastructure and phasing conditions before they move ahead; also, consumer demand for homes in the city is challenged by the higher taxes. The mix of units is vastly different from the county as a whole, where the city has approximately 1/3rd of the units spread equally among the SF, TH, and MF housing types.
The other significant existing/planned community in the county is in the City of Brunswick. The remaining municipalities are essentially markets in and of themselves. Less than 200 ‘ready-to-go’ recorded lots currently exist within these remaining municipalities.
While we have done a great deal to replenish the pipeline of future housing, understand that like the Frederick Keys player who eagerly anticipates the call up to Camden Yards, lots in the development pipeline will only appear as houses on the street, ready for move-in, when demand matches supply.