Accessory dwelling units are going mainstream.

Once a curiosity, ADUs are being constructed in Portland at a rate that is rapidly nearing two per day. In many East Portland neighborhoods, the sight of an ADU going up next to a house is becoming commonplace.

As demand for ADUs has increased, general contractors and architects have jumped into the business. Some small builders are tackling ADUs along with single-family homes and renovations. Meanwhile, entrepreneurs are competing to find ways to cut costs and scale up ADU business with modular construction.

In 2016, the city of Portland issued 615 building permits for ADUs, a 27 percent jump from the previous year. The increased pace of ADU construction has coincided with the city’s decision to continue waiving system development charges (SDCs) for such projects and maintain relatively friendly zoning rules.

The city has repeatedly waived SDCs for ADUs. The waiver is currently scheduled to expire on July 31, 2018, unless the City Council again extends it.

ADUs are providing close-in neighborhoods the density that city officials say they want. City officials are backing increased density through initiatives including the Residential Infill Project.

Amanda Petretti, founder of Studio Petretti, a Portland architecture firm, said it makes sense for the city to extend the SDC waiver on ADUs.

“From a sustainability perspective, it’s low-hanging fruit for the city to incentivize, and they should,” she said.

Some local residents have gotten involved with pro-density groups such as Portland for Everyone, which seeks to serve as a counterweight to neighborhood associations and historic preservation advocates who often oppose ADU infill.

Joe Robertson, owner of Shelter Solutions, is a senior figure among Portland’s ADU builders. He started building ADUs in 1998, when almost no one was building the auxiliary buildings in Portland. Now, he has a lot more competition.

“Ever since the recession, when builders had to branch out and do remodeling, it’s grown and grown and grown,” he said. “With the lack of building lots, it’s just another opportunity to build a product. It’s grown exponentially the last couple of years.”

Robertson built one to two ADUs per year until 2010, when he founded Shelter Solutions to focus on ADUs. Now, Shelter Solutions builds about 25 ADUs per year. He has three employees and a network of longtime subcontractors.

Also known as mother-in-law apartments or “granny flats,” ADUs are small dwellings built alongside an existing single-family home. Under Portland’s zoning code, they must be smaller than the original home, limited to 75 percent of the existing home or 800 square feet, whichever is smaller.

Costs vary widely. A simple garage conversion can be done for $80,000 to $90,000, Robertson said. Building an 800-square-foot detached ADU would cost $160,000 to $190,000. Some units with high-end finishes can cost more than $200,000.

Alan Armstrong of Strongwork Architecture is among Portland’s ADU designers. He tells customers – who often come in expecting to pay less – that $150,000 is a standard figure.

“That’s what you should expect,” he said.

Financing remains largely a missing piece for ADUs. Most property owners who build ADUs either pay cash or use home-equity loans, builders and architects said.

Property owners build ADUs for a number of reasons. The most lucrative investment is to rent them out as short-term rentals via websites such as Airbnb.

Robertson said one customer told him he expects to have earned back his investment on an ADU in five years.

“They typically do pay for themselves pretty well for the customers,” Robertson said.

Other ADU owners use them as traditional long-term rentals. Some build ADUs to house family members, typically aging parents or so-called “boomerang” kids. In some cases, an aging parent has paid to build an ADU on their adult child’s property to move into, Robertson said.

In Portland, ADU construction is concentrated in North, Northeast and Southeast neighborhoods.

Robertson said he hadn’t encountered outright opposition from any neighborhood association. Even historic neighborhoods have bowed to the trend.

“Eastmoreland might be the most stringent, but as long as you comply with what the code requires, you’re OK,” Robertson said.

As ADUs become more popular, builders and entrepreneurs are seeking to drive down costs and make the process more easily replicable. Builders clear only a modest profit on each unit, making a larger scale appealing.

“The next nut to crack is to figure out how to get more efficiency of scale for ADUs,” said Eli Spevak, owner of Orange Splot, a general contractor that has built ADUs. “There are a lot of people working on modular prototypes. I think that’s the next frontier locally.”

Shelter Solutions has four models designed in-house that range up to 500 square feet.

Studio Petretti in early November rolled out a line of prefabricated ADUs called “Stuga” – the Swedish word for “cottage.” Studio Petretti is working with builders Mods PDX, TaylorSmith Sustainable Construction and Akos Construction on the units.

The prefabricated models cut construction time, costs and the myriad of decisions ADU buyers are confronted with, Petretti said.

“We’re trying to balance high design with budget consciousness,” she said.

Patrick Quinton, former executive director of the Portland Development Commission (now Prosper Portland), has founded a startup, Dweller, that is aimed at reducing ADU building costs with modular units.

“Our goal is to be able to build and install ADUs for under $100,000,” he said.

Quinton is working with Champion Homes to manufacture modular units, and hopes to soon install Dweller’s first two projects – one in northeast Portland and one in Southeast Portland.

“It’s a good time to be in the market,” he said. “That means more competition, but hopefully that’s a good thing for the market.”

Quinton also is working to get state approval on a standard design. That way, Dweller would not have to go through design review for each project.

“We think it’s a more efficient process for us as we grow,” he said.

Other firms are at work on “tiny homes” and other modular designs. SQFT Studios advertises a compact ADU, 16 feet by 24 feet, for an average of $120,000 to $150,000. The company also does custom designs.

As demand for ADUs continues to gain steam, more designers are doing the work. Propel Studio, Environs and Polyphon Architecture & Design and Mitchell Snyder Architecture all design ADUs.

Some of these architects hold competitive bidding to solicit ADU builders.

Portland State University recently hosted a conference for the ADU industry, and the school’s Institute for Sustainable Solutions has spearheaded the Backyard Initiative to examine ADU-related issues.

Multnomah County is also pushing ADUs with a $350,000 pilot project. The program, , is paying for the design and installation of ADUs with contractor Enhabit on four homeowners’ properties in exchange for hosting residents rent-free for five years.

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Portland’s new bike-centered amenity, Gateway Green, represents a bit of a paradox. The 25-acre parcel is highly visible, wedged as it is between two well-traveled interstate highways in East Portland. But park booster Linda Robinson acknowledges there’s a problem.

“People can’t find it,” said Robinson, a Friends of Gateway Green (FoGG) board member. “People can’t even find the bike path to get there.”

This became obvious to Robinson early in the park’s , when she would arrange meetings with other stakeholders at the parcel, and they’d consistently get lost trying to reach it. The park is accessible only via a spur off the Interstate 205 multiuse path, and the nearest one can park a vehicle is the Gateway transit center a quarter-mile away.

So now, local design firm Propel Studio is finalizing concepts for a package of wayfinding and signage options for the Gateway neighborhood, to help bicyclists – plus residents – find the off-road facility. The 4-year-old firm’s work is being paid for by a $50,000 Prosper Portland grant.

And it’s not just the park. The entire business district is difficult for outsiders to locate, said Tom Badrick, a FoGG board member.

“If you hop on light rail and get off at the Gateway transit center, you can’t find anything from there,” he said. “Nothing is obvious.”

Also, with a shortage of public streets, is difficult to navigate, according to Badrick. He remembers shopping at the old Fred Meyer store – more open-air promenade than big-box – as a child growing up in Gateway. He moved back eight years ago and has been involved with a number of community groups, including the Gateway Area Business Association.

“Some areas are different, but some areas, it just seems like time stood still,” he said. “Still, it’s not very pedestrian-friendly. It used to be a lot more pedestrian-friendly.”

But before Propel could address signage in Gateway and the issue of directing people to Gateway Green, it first had to tackle another, broader issue, according to partner Lucas Gray.

“It’s hard to design signage and wayfinding if there’s no overarching logos, texts, fonts, colors, etc. to work from,” he said. “So we started to think big picture – what is the identity of the Gateway district?”

The Gateway area was founded by Fred Meyer himself. Continually trying to evade city regulations, the one-stop-shopping innovator in 1954 established a new shopping center amid the orchards east of Portland. Included in the design was a prominent arch, like a scaled-down version of St. Louis’ Gateway Arch.

Suburban sprawl continued for the next five decades, and the Gateway arch was taken down in 1991 due to deterioration. Gateway’s location at the confluence of two interstates and with easy access to downtown and the Portland International Airport continue to make it a target for development; however, zoning requirements challenge developers, and connectivity and access to parks challenge residents.

Gateway was designated one of seven regional urban centers in the Metro 2040 Growth Concept planning document, with the area scheduled to receive millions of dollars’ worth of transit and highway improvements in the coming years.

Young people who settle in East Portland, priced out of hipper neighborhoods, still expect urban amenities like reliable transit and fine dining. Propel Studio’s work crafting signs for Gateway Green has involved striking a balance between old and new, Gray said, and a big sticking point has become the arch.

“Some of the older business owners think of the arch as this really iconic thing, and they are really interested in having that image restored and prevalent in the identity of the area,” Gray said. “And there’s the younger people – and some of the older people – who want it to be a little bit more progressive, and for us to forget the arch. It’s not there anymore and it’s not relevant to the future of the district.”

Most of the aesthetic options Propel has created reference the arch by varying degrees. One option features an arch carved out – or “subtracted” – from a larger space. However, some options leave out the arch altogether.

Funding has yet to be secured for fabrication and installation, and it’s possible the final branding won’t match Propel’s ideas. But incorporating branding into architecture is an exciting, emerging field, according to Gray, and it’s the sort of work Propel would like to do more of.

For the Gateway area, Propel envisions three tiers of “intervention.” The first is a large-scale object that would function as a mix of community meeting point, art installation and simple shelter, similar to the Jorge Pardo-designed streetcar stop at the east end of the Broadway Bridge.

“It hasn’t been 100-percent defined,” Gray said.

The structure might contain bike-friendly amenities, like a tire air pump. The cost for this level of intervention is estimated to run around $100,000 each.

The next tier down would involve medium-scale objects, like information kiosks similar to those designed for the Lents area. Propel envisions rolling out four or five of them at strategic locations, at an anticipated cost of around $10,000 each.

The third level would be small-scale interventions to create pathways through the neighborhoods. These items would be much more affordable and faster to fabricate than the others. Reusable medallions could be used to imprint roads and sidewalks during repavement projects. Sign-toppers made of laser-cut steel could run as little as $10 each, Gray said.

There’s even talk of “tactical urbanism” tactics, like temporary wayfinding devices to help community members become familiar with new routes.

formally opened with a ceremony June 24, a 100-degree day. More than 1,000 people attended, most on bikes.

The moment was a great relief to Robinson, who, along with developer Ted Gilbert, spent more than a decade shepherding the project. But it served as a reminder how much work remains, she said, citing water hookups, restrooms and other work.

As for what Robinson would like the final designs to look like, she said she hasn’t decided if she’d like the arch to be incorporated in Gateway going forward.

“I’m still vacillating back and forth – should we use it, should we not use it?” she said. “I don’t think we should totally ignore it.”

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The founders of Propel Studio Architecture see opportunity in a vacant Southeast Portland lot.

“We’re making a park,” said Lucas Gray, co-founder of the Portland-based startup. “It’s a place that people can gather, kids can play. The community can come together.”

Gray and Propel Studio co-founder Nick Mira are aiming to create a plaza in the heart of the Lents neighborhood. That vision resonated with Portland Development Commission officials, who in January awarded Propel Studio and Portland-based nonprofit ROSE Community Development a $7,500 grant to enliven a PDC-owned property on the corner of Southeast 88th Avenue and Foster Road.

Propel Studio designed a series of walls and benches as well as a stage area constructed with gabion (wire boxes filled with stones) for the 7,142-square-foot site. Also, an exhibit with large portraits of Lents business owners will be incorporated into the plaza.

The project is designed to be temporary and spur more permanent development in the area, PDC spokesman Shawn Uhlman said. The PDC also awarded a grant to The Belmont Goats, a nonprofit, to help relocate a herd of goats from the Belmont area to a PDC-owned lot in Lents, at Southeast 91st Avenue and Foster Road.

“Lents has been an area where there has been a lot of land acquisition work that PDC did over the years,” he said. “What we’ve got now are some opportunities. The interim uses are a great step.”

The PDC, the biggest landowner in the Lents Town Center Urban Renewal Area, wants to revitalize the neighborhood, PDC project program coordinator Alison Wicks said. The agency this month released a draft five-year action plan to create more vibrant, economically healthy commercial districts and neighborhood centers in the URA.

“It’s about bringing in new users (and) new activity … into Lents,” Wicks said.

Propel Studio’s plaza is scheduled to have 18 months to contribute to that effort. Then the PDC will decide whether it should be disassembled or made permanent, Gray said. If the PDC were to sell the property for permanent development, the plaza could come down sooner.

“If we’re really successful, our project won’t last as long,” he said.

The temporary nature of the site is one reason why Propel Studio chose to use gabion as a building material, Gray said. It also fit the budget.

“That’s one of the challenges of talking about the materials choices. In 18 months, we’re responsible for removing all this,” he said. “It’s a relatively cheap material to get and we thought it would be fun to reinterpret it into an interactive space.”

Propel Studio and ROSE Community Development submitted their grant applications separately. It was a pleasant surprise, Mira said, when the PDC paired them because the architecture firm had previously reached out to ROSE to offer its services.

“Separately, it would not be as successful,” he said.

The collaboration complements ROSE’s work to revitalize outer Southeast Portland neighborhoods, ROSE Executive Director Nick Sauvie said.

“I think we really share the same goals in terms of providing a place for people to be in the town center,” he said. “It just needs more activity in general and more distinct places. I think it definitely fits a need.”

Because Propel Studio is a startup, the Lents project is a great asset in its portfolio, Gray said.

“We also felt this was a good opportunity to go after some public work and get our name out there,” he said. “We want to balance making a profit off our projects with helping out our neighbors.”

Nonprofit organization Portland YouthBuilders is scheduled to begin site work on the plaza next month. The aim, Gray said, is for the plaza to be ready in June, in time to attract shoppers attending the Lents International Farmers Market nearby.

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