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
Mixed-Use | Aug 8, 2017
Dorte Mandrup’s 74,000-sm masterplan will be highlighted by an IKEA and BIG’s ‘Cacti’
The mixed-use development links a new IKEA store, a hotel, and housing with green space.
High-rise Construction | Aug 1, 2017
Construction on the world’s skinniest tower halts due to ballooning costs
The planned 82-story tower has stalled after completing just 20 stories.
Multifamily Housing | Jul 31, 2017
Chicago’s Ukrainian Village neighborhood adds new co-living space
The new building offers 12 bedrooms across four floors of living space.
Multifamily Housing | Jul 27, 2017
Apartment market index: Business conditions soften, but still solid
Despite some softness at the high end of the apartment market, demand for apartments will continue to be substantial for years to come, according to the National Multifamily Housing Council.
Multifamily Housing | Jul 27, 2017
Game rooms and game simulators popular amenities in multifamily developments
The number of developments providing space for physical therapy was somewhat surprising, according to a new survey.
Multifamily Housing | Jul 25, 2017
Co-living arrives in Queens: Common adds two new co-living homes
Common adds a new coliving home in Brooklyn and its first offering in Queens with Common Lincoln and Common Cornelia.
Multifamily Housing | Jul 19, 2017
Student housing trends: The transformation of co-living in college
The Student Hotel is representative of a new model for delivering housing solutions for students globally.
Multifamily Housing | Jul 19, 2017
KTGY-designed Elan Menlo Park nears completion
The 146-unit apartment community was designed as a series of six interactively connected garden-style apartments.
Multifamily Housing | Jul 12, 2017
Midyear Rent Report: 26 states saw rental price increases in first half of 2017
The most notable rental increases are in growing markets in the South and Southwest: New Orleans, Glendale, Ariz., Houston, Reno, N.V., and Atlanta.