For the past few years, several production and semi-custom home builders have ventured outside of their for-sale comfort zones to engage in construction for rental customers.
Toll Brothers, the industry’s 13th-largest builder, told analysts in October that it had plans for five joint-venture projects to build a total of 1,900 rental apartment units, and had another 2,500 apartments already in its production pipeline. The builder’s City Living division has a number of mid- and high-rise rental buildings either operating or under construction in New York, Philadelphia, and Washington D.C.
CEO Doug Yearley said Toll Brothers would contribute one-quarter of the total equity for the JVs. He referred to rental as a market “hedge” that is synergistic with Toll’s core business model.
For more on the multifamily housing sector, read BD+C's Special Report: "5 intriguing trends to track in the multifamily housing game"
In 2012-13, Lennar, the industry’s second-largest builder, launched Lennar Multifamily. Through August 31, this division had completed 19 rental communities, with another 16 under construction. Lennar uses third-party property managers to lease and manage its apartments.
These and other builders—notably Arbor Custom Homes in the Pacific Northwest, and Sares-Regis Group and MBK Homes in California—have delved deeper into metro areas facing severe shortages of rental units. In San Francisco alone, 90% of the 7,000 residential units under construction are rentals.
It’s important to note, however, that the majority of production builders with townhouses and condos in their portfolios still target buyers, not renters. One of these is San Francisco-based Trumark Urban, a division of Trumark Homes. As of late October, Trumark Urban had nine for-sale condo projects with 1,000 units in the works, seven of them in its hometown. Its total investment in these projects: $700 million.
Unlike other production builders that have dipped their toes in the apartment arena, Trumark has stuck with for-sale condos, and has nine such projects in development in California. Photo: ©Christopher Mayer Photography
Arden Hearing, Trumark Urban’s Managing Director, says condo customers run the gamut from Millennials to empty nesters and age groups in between––“anyone who values the urban fabric.”
For Amero, which broke ground in San Francisco in November 2013, Trumark Urban offered two- and three-bedroom condos from 1,000 to 2,500 sf, selling at $1,100 to $2,000 per sf. Amero offers what Hearing says is a world-class roof deck. There’s a bike-parking space for every tenant, and a bike shop that’s managed by the homeowners’ association.
Hearing says the firm can be selective about what amenities it offers in San Francisco because the neighborhood itself is the biggest amenity. “It’s transit oriented and walkable,” he says. “I bet there are 15 bars within a short walk of Amero.” No need for an on-site gym either: there are numerous fitness centers close by.
Trumark’s projects in Los Angeles, however, have more extensive on-premises amenities. A 150-unit downtown building, three blocks from the Staples Center, has a 6,000-sf pool deck with grilling, private rooms, and yoga studios.
Hearing says his company has avoided marketing its condos as “luxury” in San Francisco, “where that’s a four-letter word.” But that label might be unavoidable for a $150 million, 77-unit condo project that Trumark broke ground on in October in San Francisco’s toney Pacific Heights neighborhood.
Trumark Urban is currently looking for opportunities in Seattle, San Diego, and international markets. “We want to go where people want to live,” says Hearing.
Related Stories
| Jul 28, 2014
Reconstruction Sector Engineering Firms [2014 Giants 300 Report]
Jacobs, URS, and Wiss, Janney, Elstner top Building Design+Construction's 2014 ranking of the largest reconstruction engineering and engineering/architecture firms in the U.S.
| Jul 28, 2014
Reconstruction Sector Architecture Firms [2014 Giants 300 Report]
Stantec, HDR, and HOK top Building Design+Construction's 2014 ranking of the largest reconstruction architecture and architecture/engineering firms in the U.S.
| Jul 23, 2014
Architecture Billings Index up nearly a point in June
AIA reported the June ABI score was 53.5, up from a mark of 52.6 in May.
| Jul 22, 2014
Herzog & de Meuron unveil curvy concrete condo in Manhattan
Herzog & de Meuron have released renderings of their new $250 million New York building, a 12-story condominium with 88 luxury apartments.
| Jul 21, 2014
Economists ponder uneven recovery, weigh benefits of big infrastructure [2014 Giants 300 Report]
According to expert forecasters, multifamily projects, the Panama Canal expansion, and the petroleum industry’s “shale gale” could be saving graces for commercial AEC firms seeking growth opportunities in an economy that’s provided its share of recent disappointments.
| Jul 18, 2014
Contractors warm up to new technologies, invent new management schemes [2014 Giants 300 Report]
“UAV.” “LATISTA.” “CMST.” If BD+C Giants 300 contractors have anything to say about it, these new terms may someday be as well known as “BIM” or “LEED.” Here’s a sampling of what Giant GCs and CMs are doing by way of technological and managerial innovation.
| Jul 18, 2014
Top Construction Management Firms [2014 Giants 300 Report]
Jacobs, Barton Malow, Hill International top Building Design+Construction's 2014 ranking of the largest construction management and project management firms in the United States.
| Jul 18, 2014
Top Contractors [2014 Giants 300 Report]
Turner, Whiting-Turner, Skanska top Building Design+Construction's 2014 ranking of the largest contractors in the United States.
| Jul 18, 2014
Engineering firms look to bolster growth through new services, technology [2014 Giants 300 Report]
Following solid revenue growth in 2013, the majority of U.S.-based engineering and engineering/architecture firms expect more of the same this year, according to BD+C’s 2014 Giants 300 report.
| Jul 18, 2014
Top Engineering/Architecture Firms [2014 Giants 300 Report]
Jacobs, AECOM, Parsons Brinckerhoff top Building Design+Construction's 2014 ranking of the largest engineering/architecture firms in the United States.
