Developing And Differentiating This Late In The Cycle
Development deals are getting harder, even compared to this time last year, StreetLights Residential president of development Tom Bakewell says.
Panelists at Bisnow's 2016 Dallas Multifamily Surge agreed. For Greystar director of development JR Thulin, debt has become more elusive. He's finding that banks have reached their debt allocations and are now syndicating loans.
But to need debt, you first need land. Genesis Real Estate Group president and CEO Gordon Ip has found that land sellers generally don't have the market knowledge developers have. They still think they can demand whatever price and get it quick so developers must combat those expectations, Gordon says.
This late in the development cycle, whatever site you eventually acquire inevitably has issues, Tom says. (JR would certainly agree given the complexities of Greystar's project in Fort Worth's West 7th Corridor.) And when running a development at 60% labor, getting foremen and subs who have enough experience to tackle those issues isn't easy.
Here are panel moderator Jordan Foster Construction managing director JJ Williams, Tom, Gordon and JR.
But multifamily deals still get done. And when they do, every developer competes for residents.
Greystar has seen great success with package delivery and storage lockers, JR says.
Gordon, Tom (here with Marvin F. Poer senior account relationship exec Justin Goertz) and JR all agree that technology can be a game-changer for residents.
StreetLights opts for wireless technology if at all possible, after years of converting old iPod docking stations to new iPhone converters to Bluetooth and, finally, to wireless connections.
But the question isn't whether technology is a useful tool to retain residents, but often "at this juncture, should we spend this much money on this technology?" Gordon says.
But as Gordon puts it, all these issues are mitigated as they come along. With deals getting tougher and tougher to deliver, Tom is that much more excited about the ones that do.
Foreign capital can be a telltale sign. Foreign investors are still putting their money in the US because they feel it's the safest place for it, JR says.
