Except for a few pockets of ultra-luxury condo action—New York, San Francisco, and parts of Florida, Hawaii, and metro Washington, D.C.—today’s multifamily story is all about rentals. “The apartment sector has been a darling for investors over the past two years,” notes the Urban Land Institute in its recent Real Estate Consensus Forecast. Vacancy rates are at an enticing 5.0%, and rental rates should be up 5.0% this year, although ULI does forecast some slippage next year, to 4.0%.
“Investors continue to view apartments as a preferred asset class in today’s environment,” says Dale Connor, Lend Lease’s Managing Director, Project Management & Construction, Americas. He sees developers playing catch-up to meet the growing demand for apartments, especially in the top five rental markets: New York City, Washington, D.C., Boston, Chicago, and Los Angeles.
SCROLL DOWN FOR GIANTS 300 MULTIFAMILY FIRM RANKINGS
Savvy market-rate developers are looking for locations around universities, innovation incubators, and teaching hospitals, says Ray Kimsey, AIA, LEED AP, President of Atlanta-based Niles Bolton Associates. Land that was once set aside for retail or office development is being looked at for multifamily, especially if served by urban transit.
“If you look at the hottest neighborhoods around Washington, D.C., Pittsburgh, or Baltimore, they all have an influx of Gen-Y people graduating and wanting to stay in that environment,” he says. Kimsey says there’s even a movement toward walk-up, garden-style apartments in some suburbs and second- and third-tier cities.
The use of urban infill sites is adding to the popularity of podium-style multifamily construction, says Mathew Dougherty, PE, Vice President with McShane Construction, Rosemont, Ill. “The podium ‘stacks’ uses vertically within the existing floor plate, thereby allowing a mixed format of ground-floor retail, parking floors, and residential floor plates,” he says.
According to John Lahey, AIA, Managing Principal at Chicago-based Solomon Cordwell Buenz Associates, the rental market is being shaped by two factors: service and community.
“Service” refers to the heightened demand for amenities: party rooms, surround-sound movie theaters, fully equipped fitness centers, mega-size video screens in common areas, computer golf games that let you play any course in the world, I-GO car rentals—even “restaurant days,” where a local restaurant comes in and sells takeout dinners one night a week.
There are even amenities for canine occupants. “People love their dogs,” says Lahey, so dog walks, dog parks, dog washing bays, and dog walking and grooming services are becoming de rigueur in many large (>400 units) complexes. “People want their lives to be easier,” he says. “They want to be taken care of.”
Tenants are demanding more green amenities, says Kimsey. “Expectations about energy conservation and sustainable features are now viewed as a basic right by many tenants,” he says. “If they lived in a LEED-certified residence hall in college they want a LEED apartment”—but not if it costs more than market rate.
“Community” refers to the renter’s need for connection, says Lahey. In past decades, apartment dwellers put a premium on privacy. Less so today. “A lot of people who move back into the city, they’re not confirmed urban dwellers, and they want to meet people,” he says. “The Starbucks in your building becomes the meeting place to get integrated into the larger community.” McShane’s Dougherty says wifi connectivity has become a given in new and renovated rental projects.
“The design must be hot,” says Kimsey. The units themselves may be “smaller, tighter,” but that means they must be more elegant and efficient, with open layouts and near-condo-like finishes. McShane’s Dougherty says granite countertops, stainless steel appliances, upgraded bathrooms, and high-quality flooring are expected, even in suburban garden apartments. Developers are increasingly concerned about sound attenuation, he says, so insulation choices, assembly details, and materials selection are crucial.
Looking ahead, SCB’s Lahey says that, unlike the condo market, apartment development needs to be left to the pros—firms like AMLI, Avalon Bay, Equity Residential, Forest City, The Habitat Company. “They have the track record, and they really do know what they’re doing,” he says.
“The money is out there,” says Kimsey, but it’s split between smaller projects being funded by S&Ls and smaller banks, and big projects attracting institutional and private-equity investors. Holding back the pent-up demand: anemic job creation, which limits new household formation.
Even with low mortgage rates, many potential buyers have become skittish about purchasing a home, says Lend Lease’s Connor. SCB’s Lahey cites mobility as another factor in rental’s favor, especially with the younger generation.
“People will like living closer in, and units will get bigger, something decent in size, and they’ll be willing to pay for it,” he says. “They’ll see a home as a place in which to live, not necessarily as an investment.” +
TOP 25 MULTIFAMILY SECTOR ARCHITECTURE FIRMS
Rank | Company | 2011 Multifamily Sector Revenue ($) |
1 | IBI Group | 38,489,114 |
2 | Niles Bolton Associates | 13,772,650 |
3 | Solomon Cordwell Buenz | 12,000,000 |
4 | RTKL Associates | 11,397,556 |
5 | WDG Architecture | 9,817,297 |
6 | Perkins Eastman | 9,100,000 |
7 | HOK | 8,715,422 |
8 | Perkins+Will | 7,193,120 |
9 | ZGF Architects | 6,225,112 |
10 | Cooper Carry | 5,708,482 |
11 | Kohn Pedersen Fox Associates | 5,280,000 |
12 | Ziegler Cooper Architects | 4,853,598 |
13 | Harley Ellis Devereaux | 4,800,000 |
14 | PGAL | 4,607,900 |
15 | OZ Architecture | 4,104,475 |
16 | GBBN Architects | 3,700,000 |
17 | Smallwood, Reynolds, Stewart, Stewart & Associates | 3,605,928 |
18 | VOA Associates | 3,367,000 |
19 | Carrier Johnson + CULTURE | 3,324,072 |
20 | Skidmore, Owings & Merrill | 3,074,000 |
21 | Gensler | 2,800,000 |
22 | Rule Joy Trammell + Rubio | 2,600,000 |
23 | FXFOWLE Architects | 2,399,900 |
24 | HKS | 2,398,926 |
25 | Mithun | 1,906,000 |
TOP 25 MULTIFAMILY SECTOR ENGINEERING FIRMS
Rank | Company | 2011 Multifamily Sector Revenue ($) |
1 | STV | 119,671,000 |
2 | AECOM Technology Corp. | 36,000,000 |
3 | Parsons Brinckerhoff | 32,800,000 |
4 | URS Corp. | 28,500,000 |
5 | Michael Baker Jr., Inc. | 23,620,000 |
6 | WSP USA | 17,200,000 |
7 | Jacobs | 16,000,000 |
8 | Atkins North America | 15,368,901 |
9 | Wiss, Janney, Elstner Associates | 14,372,000 |
10 | KPFF Consulting Engineers | 12,000,000 |
11 | Simpson Gumpertz & Heger | 9,740,000 |
12 | Thornton Tomasetti | 7,610,000 |
13 | Stantec | 6,345,000 |
14 | Clark Nexsen | 5,308,534 |
15 | Arup | 4,600,161 |
16 | Coffman Engineers | 4,000,000 |
17 | Magnusson Klemencic Associates | 3,556,559 |
18 | Rolf Jensen & Associates | 2,600,000 |
19 | Aon Fire Protection Engineering | 2,250,000 |
20 | Smith Seckman Reid | 2,227,000 |
21 | Paulus, Sokolowski and Sartor | 1,800,000 |
22 | Science Applications International Corp. | 1,530,000 |
23 | Lilker Associates Consulting Engineers | 1,500,000 |
24 | French & Parrello Associates | 1,396,720 |
25 | AKF Group | 1,300,000 |
TOP 25 MULTIFAMILY SECTOR CONSTRUCTION FIRMS
Rank | Company | 2011 Multifamily Sector Revenue ($) |
1 | Lend Lease | 734,160,150 |
2 | Clark Group | 612,803,196 |
3 | Balfour Beatty US | 441,602,518 |
4 | Walsh Group, The | 342,877,063 |
5 | Whiting-Turner Contracting Co., The | 283,477,065 |
6 | Turner Corp., The | 223,410,000 |
7 | Swinerton | 186,340,000 |
8 | Harkins Builders | 180,000,000 |
9 | McShane Co., The | 175,000,000 |
10 | Yates Co., The | 173,900,000 |
11 | PCL Construction Enterprises | 159,105,415 |
12 | Bernards | 144,000,000 |
13 | Paric Corp. | 138,000,000 |
14 | Hensel Phelps Construction Co. | 137,700,000 |
15 | Weis Builders | 131,960,000 |
16 | CORE Construction | 125,513,227 |
17 | Suffolk Construction | 111,885,268 |
18 | Power Construction | 106,000,000 |
19 | Weitz Company., The | 82,000,000 |
20 | Austin Industries | 77,074,905 |
21 | Brasfield & Gorrie | 67,682,938 |
22 | Absher Construction | 61,807,647 |
23 | James McHugh Construction | 54,624,665 |
24 | Bette Co., The | 54,000,000 |
25 | Choate Construction Co. | 51,875,781 |
Related Stories
| Jun 25, 2013
Mirvish, Gehry revise plans for triad of Toronto towers
A trio of mixed-use towers planned for an urban redevelopment project in Toronto has been redesigned by planners David Mirvish and Frank Gehry. The plan was announced last October but has recently been substantially revised.
| Jun 25, 2013
First look: Herzog & de Meuron's Jade Signature condo tower in Florida
Real estate developer Fortune International has released details of its new Jade Signature property, to be developed in Sunny Isles Beach near Miami. The luxury waterfront condo building will include 192 units in a 57-story building near high-end retail destinations and cultural venues.
| Jun 25, 2013
DC commission approves Gehry's redesign for Eisenhower memorial
Frank Gehry's updated for a new Dwight D. Eisenhower memorial in Washington, D.C., has been approved by the Eisenhower Memorial Commission, reports the Washington Post. The commission voted unanimously to approve the $110 million project, which has been gestating for 14 years.
| Jun 21, 2013
AIA report: Greater collaboration, stiffer competition among top trends in architecture
A new 34-page report from AIA highlights key trends in the architecture marketplace and their impact on business and growth.
| Jun 20, 2013
Virtual meetings enhance design of University at Buffalo Medical School
HOK designers in New York, St. Louis and Atlanta are using virtual meetings with their University at Buffalo (UB) client team to improve the design process for UB’s new School of Medicine and Biomedical Sciences on the Buffalo Niagara Medical Campus.
| Jun 19, 2013
Architects upbeat about the construction market
Following the first reversal into negative territory in ten months in April, AIA's Architecture Billings Index bounced back in May, reaching 52.9.
| Jun 19, 2013
NSF Sustainability begins verifying EPDs that can be used for LEED V4
NSF Sustainability has verified Environmental Product Declarations (EPDs) for nylon carpet styles and colors manufactured by Mannington Commercial and for J+J Flooring Group’s Kinetex® flooring product and Invision brand modular styles that use eKo® backing.
| Jun 19, 2013
Florida is latest battleground over LEED standards centered on certified wood
A nationwide battle over forest certification standards continues to be played out nationally and in Florida with legislation passed this month.
| Jun 19, 2013
Construction site safety improved in 2011
On-the-job construction fatalities dropped from 802 in 2010 to 781 in 2011, and recordable injuries fell from 4.7 per 100 workers in 2008 to 3.9 per 100 in 2011, according to data from the Bureau of Labor Statistics.
| Jun 19, 2013
New York City considers new construction standards for hospitals, multifamily buildings
Mayor Michael Bloomberg’s administration has proposed new building codes for hospitals and multifamily dwellings in New York City to help them be more resilient in the event of severe weather resulting from climate change.