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Realtor sets stage for tiny-home development near University of Minnesota Duluth campus

He predicts the project will prove an attractive investment opportunity even in a time of economic uncertainty.

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Realtor Mike Peller has successfully applied for and received a special-use permit to develop a cluster of tiny homes near the University of Minnesota Duluth. But he's not planning to push ahead with the project at the corner of St. Marie Street and Carver Avenue himself.

Rather, Peller said he aims to put the property on the market in the next week or so and shop out the approved plan to another developer with more experience as a builder.

Despite recent economic uncertainties brought on by the COVID-19 pandemic, Peller expressed confidence the proposed nine-home project will attract strong interest in the development community.

"It's a super-high-demand area just across the street from the university. So, I'm imagining it being students who want a one- or two-bedroom place or a faculty member who wants their own home," Peller said.

He noted that the fundamentals of the project remain strong even during a period of economic upheaval.

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"For somebody who's looking long-term, then it's fine. As long as you assume that there will be college students here for the next 20 years," Peller said.

He noted that the current low interest rates should make financing the development quite manageable, and the homes have practically a guaranteed market.

"As long as the campus is there, these will be filled forever," Peller predicted.

The 0.6-acre property that would accommodate the development is now home to a double-wide mobile home and an old eight-bedroom duplex.

Peller said the nine tiny homes he proposes to construct in their place should make for an attractive substitution.

"I think they could be kind of cute, and they'd be replacing something that isn't very cute. So, I like that," he said.

The Duluth City Council approved changes to the city code in late 2019, opening the door for tiny houses and cottage home park developments. Peller's project is the first of its kind to come forward, but Adam Fulton, deputy director of Duluth's planning and economic development division, said he expects to see more, based on the interest the idea has garnered.

Fulton described the cottage home park concept as "simply multiple tiny houses on a parcel of land that's of an appropriate size to provide for parking and some level of shared amenities."

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The houses, ranging in size from 400-600 square feet, would front the street, with 15 parking spaces, benches, a picnic area and a fire pit all tucked around the backside.

While noting that there has been sustained community interest in tiny-house developments, Fulton said some of the challenges lie in finding an appropriate site, accommodating the necessary parking and managing the costs of construction and utilities.

"The value inherent in a project like this is that the developer obviously thinks they've got a product type where there's demand for this type of smaller housing, whether that appeals to someone because it's at an affordable price point or because that's a lifestyle that they are looking to pursue — living with a smaller footprint, maybe a smaller carbon footprint, too," Fulton said.

Fulton said diminutive houses could provide a valuable alternative to other higher-profile types of multi-family housing.

"The thing that's really important about the tiny-house concept is that it does introduce a means by which we can add a little bit of density in a residential neighborhood without changing drastically the character of those neighborhoods," he said.

"Whereas, I think traditionally people often thought of adding density as tearing down single-family houses and constructing an apartment building, this is introducing a housing concept that really in design will be quite similar to existing housing in the neighborhood," Fulton said.

Related Topics: REAL ESTATEHOUSING
Peter Passi covers city government for the Duluth News Tribune. He joined the paper in April 2000, initially as a business reporter but has worked a number of beats through the years.
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