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2017-03-17 15:37:57
How rooftop decks are becoming the must-have

How rooftop decks are becoming the must-have amenity for 2016


A rooftop deck addition can return double-digit profits in some markets

John Burns Real Estate Consulting




When Conrad Lifsey and his partner, Derek Loftin, who own a luxury RV rental company in Palm Springs, bought a house 2015 in a property development called Sol, what sealed the deal for them wasn’t inside, but up on the roof. “No other property in Palm Springs had a rooftop deck and it really set things apart,” said Lifsey, 52. “It’s a place we like to go at sunrise for yoga and sunset for cocktails,” he said.

In fact, three-fourths of the 46 homeowners in Sol have opted to add 150 to 300 square-foot rooftop decks to their property, said Rudy Herrera, principal of Family Development Homes in Palm Desert, Calif. It’s a $50,000 upgrade, but it allows views of the 10,000 foot-high San Jacinto Mountains, the sixth-biggest mountain range in the lower 48 states. “Given the views, it’s criminal not to have one,” he said.

They’re not alone. When it comes to improving your home’s value in 2016, homeowners (and property managers) are finding one way that’s going through the roof, literally. 

Additions of rooftop decks have been accelerating for the past several years, said Pete Reeb, a principal at John Burns Real Estate Consulting in Irvine, Calif. He said about 5% of projects he’s seen currently have rooftop deck plans, but said that number is likely to grow. Builders are finding great success in attracting buyers and beating the competition by offering thoughtfully designed and integrated rooftop decks in new home projects,” he said.

Rooftop decks aren’t new, in fact, many homes, especially Craftsman-era ones built on the West Coast included them as sunlight and fresh air were seen as part of a healthy routine, said Leonard Miller, regional president of Richmond American, a subsidiary of Denver-based MDC Holdings Inc. MDC, -2.55%   But rooftop decks didn’t come without issues, he said. “A flat rooftop deck was notorious for leaking. Now, modern decks have better sealing and better integration into the design of the house,” he said.

Roof decks work best in high-density areas where there isn’t a lot of usable outdoor space, and there’s actually something worth seeing from the deck, like a lake, or an ocean or a city skyline, and have been popping up in the Southwest, Texas, the Pacific Northwest, Southern California, and even the East Coast, said Reeb. Richmond American’s Miller added that his company features rooftop decks on the interior units of lots in developments to help sell them when the homes on the exterior lots can block views.

Marnie Oursler, owner of Marnie Custom Homes in Bethany Beach, Del. said her clients along the mid-Atlantic shore are also asking for rooftop decks. “Homeowners want another place to gather and be outside,” she said. Homeowners are making concessions on the indoor space to accommodate the higher level of finish for the exterior living space such as outdoor kitchens and rooftop decks, she said.

And it’s not just residential rooftop decks that are growing in popularity, commercial properties, apartments and hotels have been adding them as well, alongside features such as as dog-walking parks, pools with waterfalls and even basketball courts.

Akridge, a Washington D.C.-based commercial real estate developer designed its newest office building at 1200 17th Street in Washington D.C. with an 8,000 square foot rooftop terrace (and an environmentally-friendly green roof with grass and planted shrubs) that includes views of the Washington Monument and St. Matthews Cathedral.

“When brokers are touring properties on behalf of their clients, a (rooftop) deck is one of the boxes they have to check,” said Ben Meisel, director of leasing at Akridge. Meisel said that the law firm Pillsbury, which occupies more than half the building at 1200 17th Street, touts the building’s rooftop deck as a way to recruit millennial-aged lawyers who want to work outside and use the deck’s built in Wi-Fi. “It’s not just a place to go eat lunch anymore,” he said.

Alan Schindler Photography

Kimpton’s new Mason & Rook Hotel in Washington D.C. also added a rooftop deck when the San Francisco-based hotel chain rehabbed an older property near Logan Circle to take advantage of the building’s previously untapped rooftop view of the Washington Monument, where the July 4 Independence Day fireworks show is featured. Kimpton hotels have featured several rooftop decks. The Ink48 Hotel on the west side of Manhattan which has a view of the New York skyline and its Hotel Palomar in San Diego has a view of the city’s inner harbor. “It’s certainly a differentiator,” said Donte Johnson, the general manager of the Mason & Rook hotel in Washington D.C.

For a homeowner to add one, the typical cost for a rooftop deck is $25,000 for a basic deck, and a more elaborate deck with an integrated grill, bar or kitchen has to be built in to the framing of the home as well as the foundation, said Marnie Home’s Oursler. And like the Sol property in Palm Springs, they can easily top $50,000.

But, according to Reeb, rooftop decks typically add about $30,000 to $50,000 in value, or about a 6% to 8% to the valuation of an average home. They also can move a home faster, said Reeb, up to 50% shorter time on market.

Adding a wood deck to a home in a real estate market like San Francisco, where it often can be enjoyed year-round, yielded a 147% return, meaning a nearly 50% profit on a $10,000 deck investment, according to an analysis of more than 30 popular home improvement projects published last year in Remodeling Magazine.

In Los Angeles, that investment yielded a 114% return (meaning a 14% profit) and in New York a 100% return. (No profit, but all investment costs recouped) On average, adding a deck recouped 75% of costs in 2016 when it was sold across all real estate markets surveyed, Remodeling Magazine said earlier this year.

But just adding a rooftop deck doesn’t automatically translate into higher valuations, especially if there’s nothing to see, said Reeb, citing an example from a Houston home builder who added them to an infill project. “Even with roof decks, the homes did not have any views, so buyers balked at the price of the homes and the builder had trouble recouping the roof deck cost,” he said.

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