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
| Jan 31, 2013
Map of U.S. illustrates planning times for commercial construction
Stephen Oliner, a UCLA professor doing research for the Federal Reserve Board, has made the first-ever estimate of planning times for commercial construction across the United States.
| Jan 31, 2013
More severe wind storms should prompt nationwide reexamination of building codes, says insurance expert
The increased number and severity of storms with high winds nationally should prompt a reexamination of building codes in every community, says Mory Katz, vice president, Verisk Insurance Solutions Commercial Property, Jersey City, N.J.
| Jan 29, 2013
Trinitas and Harrison Street Break Ground Near University of Kentucky
The 699-bed Collegiate on Angliana, with an anticipated opening date of August 2013, will serve students attending the University of Kentucky (UK).
| Jan 23, 2013
Music-Inspired Apartment Complex Completed in Tampa's Tempo District
Named in honor of jazz artist Ella Fitzgerald, Ella at Encore is the first building to rise from plans to develop a mixed-use, mixed-income urban village in the community.
| Dec 6, 2012
Suffolk Construction awarded Phase Two of Boston’s Old Colony redevelopment project
Project team breaks ground on South Boston public housing project designed for energy efficiency.
| Nov 13, 2012
2012 LEED for Homes Award recipients announced
USGBC recognizes excellence in the green residential building community at its Greenbuild Conference & Expo in San Francisco
| Nov 11, 2012
Greenbuild 2012 Report: Multifamily
Sustainably designed apartments are apples of developers’ eyes
| Oct 5, 2012
2012 Reconstruction Award Silver Winner: 220 Water Street, Brooklyn, N.Y.
The recent rehabilitation of 220 Water Street transforms it from a vacant manufacturing facility to a 134-unit luxury apartment building in Brooklyn’s DUMBO neighborhood.
| Aug 1, 2012
C.W. Driver forms Driver URBAN
Driver URBAN specializes in the construction of multi-family apartments, mixed-use developments, affordable housing, student and senior housing, and hospitality projects.
| Jul 20, 2012
2012 Giants 300 Special Report
Ranking the leading firms in Architecture, Engineering, and Construction.