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In a Portland couple’s backyard, a small cottage looks like it could have been dropped in from Scandinavia.

The accessory dwelling unit, owned by Alex and Monica Seidel, has only 462 square feet of interior space. Large sliding glass doors and windows let in natural light. Cedar is employed extensively on the siding and attached storage, adding warmth.

The ADU was designed by Webster Wilson, one of several Portland architects who has found a niche designing some of the smallest buildings in the city. Wilson’s ADU design recently won a merit award from the American Institute of Architects’ Portland chapter. Local architect Scott Mooney also won a merit award for an ADU design that followed a pinwheel concept, with the floor plan spinning around a series of walls.

Startups are racing to design and build prefabricated ADUs and potentially meet the demand in Portland for several hundred units annually. Yet some homeowners are going the opposite route, paying for boutique designs and high-end materials.

The Seidels’ ADU, on North Fowler Avenue, cost about $325,000 to build.

鈥淲e were paying for some more aesthetics and longevity,鈥� Alex Seidel said.

For architects, ADUs present a variety of unique design challenges. The Seidels’ ADU includes space-saving features such as a flip-up bed and California closets.

鈥淵ou’re squeezing all of the functions of a house 鈥� like kitchens and bathrooms 鈥� and condensing it down to a small envelope,鈥� Wilson said. 鈥淭hat’s the inherent challenge of ADUs.鈥�

City rules require ADUs to be 800 square feet (or smaller), or 75 percent of the single-family home’s size, whichever is less. Furthermore, ADUs are almost always built on constrained sites so creativity often is required.

鈥淭hat’s both part of the challenge and part of the excitement of them,鈥� Wilson said. 鈥淭hey’re fun as a design puzzle.鈥�

The projects are typically crafted on tight budgets by middle-class homeowners looking to house relatives or generate extra income. Local architects use ADU designs to demonstrate craft rather than boost earnings, Wilson said.

鈥淭hey’re not lucrative from a business point of view for architects,鈥� he said. 鈥淭hey’re definitely more of portfolio pieces.鈥�

City leaders have encouraged the development of ADUs as a tool to help solve the city’s housing crisis. The City Council waived system development charges, and the city’s Residential Infill Project would expand the zoning where ADUs are allowed. ADUs can avoid design review if they’re shorter than 15 feet.

ADUs are no longer a new concept in Portland, but that’s not necessarily the case across the country. One of the Philadelphia architects who judged the 2018 Portland Architecture Awards said he’d learned the term ADU from the contest submissions.

Momentum to build ADUs is growing in California, which also faces a historic housing crisis. State legislation cleared the way last year. A pilot program funded by billionaire Michael Bloomberg is beginning, and Los Angeles is among the cities crafting ADU ordinances, according to media reports.

The Seidels’ ADU was completed in May behind their 1920s-era single-family home in the Arbor Lodge neighborhood near the University of Portland. The single-story ADU has numerous design features meant to accommodate Monica Seidel’s parents as they age. These include a deck that links the ADU and the main house, a wide hallway and low-mounted handles.

鈥淚t’s meant to be a place where they can age gracefully with beauty,鈥� said Alex Seidel, a therapist.

Until then, the Seidels are renting out the backyard cottage nightly through Airbnb. (The ADU has a short-term rental permit required by the city, public records show). The ADU is rented out approximately 22 nights a month, Alex Seidel said. Pricing varies, but it is typically rented for about $100, although he added he believes it’s underpriced relative to the market.

The backyard cottage replaced a garage that was poorly positioned to store vehicles.

鈥淚 never was able to park in it,鈥� Alex Seidel said.

Neighbors did not object to the construction, and the builders even became friends with the Seidels’ children, Alex Seidel said. Structure PDX served as the contractor.

鈥淓verybody’s been supportive,鈥� Alex Seidel said. 鈥淚t’s a very light impact on the neighborhood.鈥�

Alex Seidel said the process for building an ADU was not the headache he had been told to fear.

鈥淚t was 鈥� I’ve got to say 鈥� smooth,鈥� he said.