What's Ahead for Multifamily?
Texas led the multifamily pack coming out of the down cycle, but it’s no longer the top dog; the rest of the country has caught up, says Gables Residential CEO Sue Ansel (center, between Walsh Construction’s Daniel Walsh and AMLI CEO Gregory Mutz). Sue says Gables’ strongest markets in 2014 were in Atlanta and South Florida, which have also led 2015 YTD, along with Southern California. Job growth nationwide is creating strong demand, which is still outpacing supply, she says. Greg says if the demand drops out, it’s going to be a bloodbath for multifamily that, like AMLI, are still building new properties. Supply is what keeps him up at night, he says.
Event panelists: BGO Architects partner Erik Earnshaw, Sue, Greg, IPA Texas director Drew Kile, Cadence McShane Construction VP Dave Tague and Milestone COO Steve Lamberti. Dave says construction costs will likely tick up at .75 to 1% per month. Wood has remained relatively flat, but that could change if single-family home construction takes off. Increased upfront costs are being attributed to building “greener” with improved insulation, more efficient heat pumps and water heaters, etc, to the tune of about $1,500/unit in increased costs. Erik says he’s seeing owners looking for ways to cut costs and still remain competitive in the amenity-rich environment. It’s a balancing act to put higher-end finishes like granite in units while trying to achieve the rents they need for ROI.