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
Multifamily Housing | Sep 4, 2019
Peloton to multifamily communities: Drop dead
Peloton will no longer sell its bikes to apartment communities.
| Sep 3, 2019
Top 10 indoor amenities in multifamily developments for 2019
In-unit washer/dryer heads our ranking of the top indoor amenities in multifamily housing developments.
AEC Innovators | Aug 27, 2019
7 AEC industry disruptors and their groundbreaking achievements
From building prefab factories in the sky to incubating the next generation of AEC tech startups, our 2019 class of AEC Innovators demonstrates that the industry is poised for a shakeup. Meet BD+C’s 2019 AEC Innovators.
AEC Tech | Aug 25, 2019
Deluxe parking: A condo building in Philadelphia offers its owners a completely automated parking service
This is the first “palletless” system that Westfalia Technologies has installed.
Multifamily Housing | Aug 22, 2019
40-story residential tower to rise near Seattle’s Pike Place Market
Hewitt architects is designing the project.
Multifamily Housing | Aug 19, 2019
Affordable, senior development rises in the Bronx
RKTB Architects is designing the project.
Multifamily Housing | Aug 19, 2019
Top 10 outdoor amenities in multifamily housing for 2019
Top 10 results in the “Outdoor Amenities” category in our Multifamily Design+Construction Amenities Survey 2019.
Market Data | Aug 19, 2019
Multifamily market sustains positive cycle
Year-over-year growth tops 3% for 13th month. Will the economy stifle momentum?
Giants 400 | Aug 15, 2019
Top 140 Multifamily Sector Architecture Firms for 2019
Humphreys & Partners, KTGY, SCB, CallisonRTKL, and Perkins Eastman top the rankings of the nation's largest multifamily sector architecture and architecture engineering (AE) firms, as reported in Building Design+Construction's 2019 Giants 300 Report.
Multifamily Housing | Aug 12, 2019
Multifamily Amenities 2019: Rethinking the $30,000 cup of coffee
What amenities are “must-have” rather than “nice to have” for the local market? Which amenities will attract the renters or buyers you’re targeting? The 2019 Multifamily Amenities Survey measured 113 amenity choices.