With more and more people working at home at least part of the week, it's perhaps not surprising that condo developers around the country are beginning to promote live-work units as part of their mix of offerings. Though the concept harks back to days when the corner grocer lived in rooms above the store, the design usually owes more to the artist's loft that has proliferated over the past few decades in renovated commercial buildings found in resurrected downtowns.

In addition to sculptors and painters, these modern, at-home work spaces target professionals and entrepreneurs. While they may appear to be a good solution to such urban problems as sprawl, traffic congestion, rising fuel costs, parking and the mounting price of leased office space, the newness of the concept can present a number of challenges to consumers and developers.

Some developers could find their projects delayed because building codes in most municipalities don't yet have provisions for these residential-commercial hybrids. The type of work the unit owner can engage in will likely come under municipal examination, community scrutiny or both. And some critics question whether the cost of the average live-work unit puts it beyond the economic reach of most young professionals.

Demand for live-work space grows
"Live-work condos are a niche market, but they are, in certain circumstances, attractive to some people," says John McIlwain, senior resident fellow for housing at the Urban Land Institute in Washington, D.C. "Sometimes people use them for an office or a store, sometimes just as extra space they can use or rent out for income."

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There's no doubt that working at home is a growing trend. In 2000, U.S. census found nearly 4.2 million people age 16 or older worked at home most days during the week, up from 3.4 million in 1990. That 23.5% increase over 10 years almost doubled the growth rate of the overall work force. The Census Bureau's most recent estimate, made from community surveys conducted in 2003, raised the number of home-based workers to 4.5 million -- an increase of slightly more than 7% in only three years.

Multiple design features
There's no single definition of what constitutes a live-work unit.

"In some cases, they simply have an extra room that can be used as an office or a bedroom," says McIlwain. "In some cases, there's real showroom space with an apartment upstairs. Sometimes it's more of a loft-style apartment. So they vary."

The Metropolitan, a condo project under construction by Hoyt Street Properties in downtown Portland, Ore., offers prospective buyers a range of possible floor plans to help them visualize possible uses, says Marilyn Andersen, Hoyt Realty Group's principal broker. Those uses range from a contemporary office with several workstations to a small office within a home. 

"While most live-work units require some retrofitting to make them business-ready," Andersen says, "ours are designed as office suites built for immediate business occupancy."

Kubik, a two-tower condo project under construction in Miami, will include adaptable-spaced, bi-level units called LOTS, or living over the studio, units.

"To access your studio or office, you have to go out on the terrace, then down a spiral staircase to the work space," says Camilo Alvarado Boshell, Kubik's architect and developer.

In addition, Boshell says, Kubik's townhomes offer professionals, such as attorneys or writers, the opportunity to have offices with separate entrances on the street and their living quarters above.

These designs are Boshell's solutions to city of Miami zoning codes, which, to date, make no provision for apartments with both commercial and residential uses.

The interior space is adaptable, Boshell says, because "it adapts to your needs. We have movable wall panels that allow people to create their own space configurations, so that each unit is unique."

Kolter City Plaza in West Palm Beach, Fla., an area where zoning is more amenable to live-work buildings, offers upstairs living and downstairs work units connected by an internal staircase, says real-estate attorney Cynthia Spall of Gunster, Yoakley & Stewart, which represents the developer.

A similar layout will be used for live-work units at The Lofts at Hollywood Station in Hollywood, Fla. Developer Richard Lamondin says the project's five floor plans all feature separate work areas and private quarters.

"They are accessible from the street level and the garage, making it easy for both residents and guests to come and go," Lamondin says. "Artists and photographers requiring studio space, salespeople and home-business owners who need a combination of work and living space, are prime candidates for this kind of residence."

Zoning, building code challenges
Code problems arise because the live-work concept usually falls between the cracks, says H. William Freeman, a principal with Freeman, Cotton & Norris in Bloomfield Hills, Mich. As a real-estate attorney, Freeman says he has handled a half-dozen live-work condos in the metropolitan Detroit area.

"Communities don't know whether to treat them as commercial or residential," Freeman says. "And that presents problems because of the stricter commercial codes for things such as fire protection and sewer capacity, the need for compliance with the Americans with Disabilities Act, and so on."

Boshell's solution of having work and living space under one roof, but not interconnected, gets around zoning and code issues, says David Dabby, a real-estate consultant in Coral Gables, Fla., because "people are more accustomed to that idea. The zoning and building codes can embrace it as long as the area is zoned for both commercial and residential use. It's when you get into a single live-work condo unit that you're going to run into problems -- not because the municipality doesn't like the idea, but simply because there's no precedent for it in the codes."

A related problem that comes up often, Freeman says, is that "people don't always live in the living space and work in the work space, so things can get kind of mixed up. Condo communities don't like that. They want working going on only in the work space."

Because of these difficulties, live-work units are most frequently found in master-planned, New Urbanist-style developments, McIlwain says, "where the idea is to try to combine uses, harking back to the old days -- or at least what we imagine the old days were like."

Restrictions on work space uses
For the unit owner, attorney Spall says, "The threshold zoning issue is that clearly only certain uses are going to be allowed in an area that also allows residential use. Buyers need to understand what uses they can and can't have."

These uses are generally spelled out in condo association documents -- or sometimes by the municipality. Portland's Andersen envisions the range in occupations by residents at the Metropolitan as "attorneys to artists, counselors to massage therapists."

At Kolter City Plaza, says Spall, "some uses are preapproved, a second set has yet to be approved by the condo association and a third set is for uses barred under any circumstances -- medical, for example, or an adult bookstore."

Another caveat for buyers of dual-use condominiums, Spall says, is to make sure the condo documents protect the rights of the unit owner.

"Generally there are fewer of these units than there are strictly residential units within the project," she says. "You need to look very carefully at the governing documents to make sure that any amendments to them that would affect your rights would have to be approved by the majority of the live-work unit owners, so your rights don't get trampled on by the majority. For example, make sure that you have the right for perpetuity to do the kind of work you thought you could do when you bought the unit."

Price-prohibitive properties
Can the young professionals, often cited as the likely target market for live-work condos, afford to purchase them? A study of affordability prepared by The Live/Work Institute, a nonprofit organization in Oakland, Calif., founded by architect Thomas Dolan, says the idea is that the owner of such a unit saves money by not paying separate rents for living space and work space, as well as reducing transportation costs.

For instance, the report estimates that couples who can get by with one car instead of two are saving approximately $500 a month in costs related to maintenance, gas, insurance, etc.

That formula may hold true for units in converted properties, but the institute's researchers found that the math doesn't always work with new construction.

"As live-work has moved into the mainstream and becomes an accepted real estate product, prices for such units have gone up, often astronomically, and the likelihood of finding an affordable live-work space has decreased," the report says.

Live-work lofts at Hollywood Station begin in the $400,000s. The units in Portland's Metropolitan are being marketed from the low $500,000s to the low $600,000s. At Miami's Kubik, they run from the $400,000s to $2.5 million.

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For the developer, Freeman points out, price is not a problem. If units within a project are marketed as live-work but don't sell, they can eventually be converted to conventional units.

"There is nothing about the type of unit itself that is more costly," he says, adding that location, as always in real estate, is important.

"It has to be in a walking district," Freeman says, "because if part of the savings comes from not having a car, people need to be able to walk to whatever retail needs they have."

But if they're affordable and well-situated, condo units custom-designed for at-home workers should thrive, say most experts.

"In a way, it's a bit of a hype," says the Urban Land Institute's McIlwain, "because a lot of people work at home at least part of the time. So you could say most Americans reside in live-work units. The difference is that some are designed specifically for different kinds of activity."

By Marilyn Bowden, Bankrate.com