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One way to build apartments for a reasonable price is to simply make them smaller.

At least that’s the plan behind Portland-based ‘ newest project: a four-story, mixed-used apartment building at 3339 S.E. Division St.

鈥淭here is quite a bit of larger-unit product in the area, much of which Joe Weston built years ago, so renters already have options in inner east side for larger units,鈥� Eric Cress, a UDP principal, said via email. 鈥淲e are filling the need for smaller units, for singles and couples, which is not currently being satisfied by the existing inventory.鈥�

The 31,000-square-foot building will feature 31 studio or one-bedroom apartments. Though those units will be market rate, they will range in size from 420 to 570 square feet. In addition, the building will have four small office spaces and ground-floor retail space.

Cress said he couldn’t comment on whether the company had already leased those commercial spaces, but he expressed confidence that the project would work because of the success of two other UDP projects in the neighborhood: a 24-unit, mixed-use apartment building at 3810 S.E. Division St., and a 13-unit, mixed-use apartment complex at 3103 S.E. Division St. Both buildings are generally remaining fully leased.

Gary Winkler, managing broker at , believes the project can succeed.

鈥淭here’s really not anything all that new over there that’s reasonable,鈥� he said. 鈥淚 think with construction costs being what they are, I would believe that it’s probably a product that’s in need. As long as they can keep the price point for the rentals down, they’re going to do quite well.鈥�

UDP wouldn’t say the cost it anticipates per square foot; however, the average price in the area is approximately $1.10 per square foot for one-bedroom apartments, and approximately $1.55 per square foot for studio apartments, according to the Portland State University Center for Real Estate’s most recent quarterly report on multifamily properties.

Gerald Mildner, the center’s director, said he formerly lived near Southeast Division Street and that he thinks the corridor is following in the footsteps of the Hawthorne area.

鈥�(Southeast Division) is a market that changed in the 14 years that we lived there 鈥︹�� he said. 鈥淥ver time, more and more of those single-family rentals became owner-occupied, and the market prices appreciated very rapidly. And that in turn has led for the periodic construction of some pretty high-end apartment and condo projects.鈥�

Late last year, the Beverly Condominiums 鈥� a 54-unit, Class A building in the Hollywood District 鈥� sold for $29 million, according to the PSU report. Other 30-something-unit, inner-city Portland apartment complexes have sold consistently for approximately $3 million, according to research by Winkler and Dupont. UDP purchased its Southeast Division property in May 2011 for $645,000, according to Portlandmaps.

UDP isn’t the only developer showing interest in the area. News broke last week that Miami-based Urban Development Group is planning to construct a four-story, 82-unit apartment building at Southeast Division Street and 37th Avenue.

That project drew fire from neighborhood residents because the plan doesn’t include parking. Neither does UDP’s plan for the 3339 S.E. Division St. project.

鈥淲e have met with the Richmond Neighborhood Association and I would say that there is a pretty consistent concern among single-family dwelling owners about parking,鈥� said Neeley Wells of UDP. She added that the company plans to work with neighbors to address those worries.

Robin Wilcox of THA Architecture Inc., the project’s designer, said the facility will have 45 bicycle spaces inside and 10 spaces outside.

Allen Field, Richmond Neighborhood Association co-chairman, said the group has not taken an official stance on the project; however, parking is a contentious issue.

鈥淪ome people welcome the new restaurants and businesses on Division; some people are in favor of the increased density along transit corridors like Division, while others are not; and often, the nearby neighbors express their concern about the impact on parking and livability when these buildings do not provide parking, which they’re not required to do,鈥� he wrote in an email. 鈥淒ivision is certainly going through a lot of changes.鈥�

Wilcox said the building will feature flow-through planters for stormwater management, low-flow and high-efficient appliances, and green rooftops. He said the team is targeting a Leadership in Energy and Environmental Design platinum rating.

The exterior facade will feature a mixture of stucco and fiber cement materials, as well as patios that open up onto Southeast Division Street. Wilcox said the building will wrap around an interior courtyard.

鈥淭hat is to deal with the mass of the building, but also to bring light and air into the units so that most units have two sides that have operable windows,鈥� Wilcox said.

Wells said UDP plans to tear down a former scooter repair and retail shop on the property so that construction can start. The company recently filed for a building permit, and Wells said it hopes to begin work by June.

Mildner said rising rental prices were making studio and one-bedroom apartments an increasingly attractive option in Southeast Portland.

鈥淚t’s ripe for this kind of thing,鈥� he said.