Garden-Style Apartments: The Market Finally Catches Up to Us

By Broker William Mears, CCIM, SIOR

Coldwell Banker Commercial just published a piece on why institutional capital is rotating back toward garden-style apartment communities after a decade of chasing luxury high-rise towers. Worth reading in full, but worth translating for our market, too, because the trend they're describing nationally is basically a description of what South-Central Wisconsin has been building for fifty years.

What "garden-style" actually means. Forget the mental image some people default to: a dated, two-story brick complex from 1978 with a reputation problem. That's a stereotype, not a definition. Garden-style just means low-rise (typically 2-3 stories), surface-parked, walk-up buildings, often arranged around courtyards or green space, as opposed to mid-rise buildings with structured parking or high-rise towers with elevators and underground garages. Today's garden-style product is built and renovated to the same finish levels and management standards as anything else; it's the building format that's "garden," not the quality.

Why capital is coming back to it. Construction costs, insurance, and interest rates have made high-rise development pencil poorly almost everywhere outside the deepest gateway markets. Garden-style is cheaper to build, faster to deliver, and carries lower replacement cost, which means it can hit acceptable returns at rents that are actually achievable for the renter base that exists, not the renter base a pro forma wishes existed. The data CBC cites (AFIRE/NCREIF) shows garden-style apartments outperformed high-rise on total return over the last twenty years, and did so every single year from 2014-2021, while institutional ownership remains disproportionately weighted toward the high-rise product that performed worse.

We didn't need to pivot. Janesville and Beloit were never going to support elevator towers with structured parking; the rents don't support that cost structure here and never will. This market has always built garden-style. What's changing is that the capital that spent the last decade chasing high-rise trophy assets in Austin, Nashville, and Denver is now looking at markets and formats like ours with fresh eyes. That's a real tailwind for well-located garden communities and for owners who've carried this product type through a decade when it wasn't fashionable.

Where this shows up in our work. Most of what we do day-to-day is on the site side, working with developers to find and evaluate land for exactly this kind of project. Lower replacement costs and simpler construction mean garden-style pencils on parcels that would never support a mid-rise or high-rise deal, which widens the pool of sites developers can actually build on here. We saw this play out directly: we sold the site for Idylwood Residences, a 219-unit garden-style community on Janesville's east side with resort-style amenities and a park-like setting. It's a good local example of the exact dynamic CBC is describing: the format pencils nationally, it leases, and it fits the site economics of a market like ours.

Now the part I actually want to talk about: density and the objection pattern. Every time a multifamily project comes up for approval here, the same objections show up: traffic, "the neighborhood can't handle it," property values. We saw it again this past year on Janesville's south side, where neighbors pushed back hard on a subdivision partly because it included duplexes even as the city's own planning director stood up and said the region is critically short of housing. The city's housing services director has made the same point publicly: the loudest voices in these fights are rarely the people who need the housing most.

Here's what the density numbers actually say. Garden-style communities typically run 15-25 units per acre. Mid-rise product with structured parking runs 40-60. High-rise towers can push 80-150+ per acre on a fraction of the land. Garden-style is the least dense multifamily format that still meaningfully adds housing units; it spreads impact over more land, keeps parking at grade instead of stacked, and functions a lot closer to the surrounding neighborhood than anything with an elevator in it. If traffic and "neighborhood character" are the real concern, garden-style is close to the best-case format for addressing it. The fact that it draws the same objections as everything else tells you the objection usually isn't really about density or trip counts; it's about who might live there.

Bottom line. We're not watching a trend arrive; we're watching the rest of the country's capital catch up to a format this market has quietly proven out for decades. For anyone holding well-located garden-style product in this MSA, or looking to acquire it, that's a tailwind worth paying attention to. And for anyone still reflexively fighting every multifamily proposal that comes before a plan commission: the housing math doesn't work without adding units somewhere, and garden-style is about as low-impact a "somewhere" as this business builds.

Source: Coldwell Banker Commercial, "Market Shifts Renew Interest for Garden-Style Communities" — https://www.cbcworldwide.com/blog/market-shifts-renew-interest-for-garden-style-communities

As always, if you want to talk through what this means for a specific property or decision, give me a call.

Bill Mears, CCIM, SIOR Coldwell Banker Commercial McGuire Mears & Associates