Except for a few pockets of ultra-luxury condo action—New York, San Francisco, and parts of Florida, Hawaii, and metro Washington, D.C.—today’s multifamily story is all about rentals. “The apartment sector has been a darling for investors over the past two years,” notes the Urban Land Institute in its recent Real Estate Consensus Forecast. Vacancy rates are at an enticing 5.0%, and rental rates should be up 5.0% this year, although ULI does forecast some slippage next year, to 4.0%.
“Investors continue to view apartments as a preferred asset class in today’s environment,” says Dale Connor, Lend Lease’s Managing Director, Project Management & Construction, Americas. He sees developers playing catch-up to meet the growing demand for apartments, especially in the top five rental markets: New York City, Washington, D.C., Boston, Chicago, and Los Angeles.
SCROLL DOWN FOR GIANTS 300 MULTIFAMILY FIRM RANKINGS
Savvy market-rate developers are looking for locations around universities, innovation incubators, and teaching hospitals, says Ray Kimsey, AIA, LEED AP, President of Atlanta-based Niles Bolton Associates. Land that was once set aside for retail or office development is being looked at for multifamily, especially if served by urban transit.
“If you look at the hottest neighborhoods around Washington, D.C., Pittsburgh, or Baltimore, they all have an influx of Gen-Y people graduating and wanting to stay in that environment,” he says. Kimsey says there’s even a movement toward walk-up, garden-style apartments in some suburbs and second- and third-tier cities.
The use of urban infill sites is adding to the popularity of podium-style multifamily construction, says Mathew Dougherty, PE, Vice President with McShane Construction, Rosemont, Ill. “The podium ‘stacks’ uses vertically within the existing floor plate, thereby allowing a mixed format of ground-floor retail, parking floors, and residential floor plates,” he says.
According to John Lahey, AIA, Managing Principal at Chicago-based Solomon Cordwell Buenz Associates, the rental market is being shaped by two factors: service and community.
“Service” refers to the heightened demand for amenities: party rooms, surround-sound movie theaters, fully equipped fitness centers, mega-size video screens in common areas, computer golf games that let you play any course in the world, I-GO car rentals—even “restaurant days,” where a local restaurant comes in and sells takeout dinners one night a week.
There are even amenities for canine occupants. “People love their dogs,” says Lahey, so dog walks, dog parks, dog washing bays, and dog walking and grooming services are becoming de rigueur in many large (>400 units) complexes. “People want their lives to be easier,” he says. “They want to be taken care of.”
Tenants are demanding more green amenities, says Kimsey. “Expectations about energy conservation and sustainable features are now viewed as a basic right by many tenants,” he says. “If they lived in a LEED-certified residence hall in college they want a LEED apartment”—but not if it costs more than market rate.
“Community” refers to the renter’s need for connection, says Lahey. In past decades, apartment dwellers put a premium on privacy. Less so today. “A lot of people who move back into the city, they’re not confirmed urban dwellers, and they want to meet people,” he says. “The Starbucks in your building becomes the meeting place to get integrated into the larger community.” McShane’s Dougherty says wifi connectivity has become a given in new and renovated rental projects.
“The design must be hot,” says Kimsey. The units themselves may be “smaller, tighter,” but that means they must be more elegant and efficient, with open layouts and near-condo-like finishes. McShane’s Dougherty says granite countertops, stainless steel appliances, upgraded bathrooms, and high-quality flooring are expected, even in suburban garden apartments. Developers are increasingly concerned about sound attenuation, he says, so insulation choices, assembly details, and materials selection are crucial.
Looking ahead, SCB’s Lahey says that, unlike the condo market, apartment development needs to be left to the pros—firms like AMLI, Avalon Bay, Equity Residential, Forest City, The Habitat Company. “They have the track record, and they really do know what they’re doing,” he says.
“The money is out there,” says Kimsey, but it’s split between smaller projects being funded by S&Ls and smaller banks, and big projects attracting institutional and private-equity investors. Holding back the pent-up demand: anemic job creation, which limits new household formation.
Even with low mortgage rates, many potential buyers have become skittish about purchasing a home, says Lend Lease’s Connor. SCB’s Lahey cites mobility as another factor in rental’s favor, especially with the younger generation.
“People will like living closer in, and units will get bigger, something decent in size, and they’ll be willing to pay for it,” he says. “They’ll see a home as a place in which to live, not necessarily as an investment.” +
TOP 25 MULTIFAMILY SECTOR ARCHITECTURE FIRMS
Rank | Company | 2011 Multifamily Sector Revenue ($) |
1 | IBI Group | 38,489,114 |
2 | Niles Bolton Associates | 13,772,650 |
3 | Solomon Cordwell Buenz | 12,000,000 |
4 | RTKL Associates | 11,397,556 |
5 | WDG Architecture | 9,817,297 |
6 | Perkins Eastman | 9,100,000 |
7 | HOK | 8,715,422 |
8 | Perkins+Will | 7,193,120 |
9 | ZGF Architects | 6,225,112 |
10 | Cooper Carry | 5,708,482 |
11 | Kohn Pedersen Fox Associates | 5,280,000 |
12 | Ziegler Cooper Architects | 4,853,598 |
13 | Harley Ellis Devereaux | 4,800,000 |
14 | PGAL | 4,607,900 |
15 | OZ Architecture | 4,104,475 |
16 | GBBN Architects | 3,700,000 |
17 | Smallwood, Reynolds, Stewart, Stewart & Associates | 3,605,928 |
18 | VOA Associates | 3,367,000 |
19 | Carrier Johnson + CULTURE | 3,324,072 |
20 | Skidmore, Owings & Merrill | 3,074,000 |
21 | Gensler | 2,800,000 |
22 | Rule Joy Trammell + Rubio | 2,600,000 |
23 | FXFOWLE Architects | 2,399,900 |
24 | HKS | 2,398,926 |
25 | Mithun | 1,906,000 |
TOP 25 MULTIFAMILY SECTOR ENGINEERING FIRMS
Rank | Company | 2011 Multifamily Sector Revenue ($) |
1 | STV | 119,671,000 |
2 | AECOM Technology Corp. | 36,000,000 |
3 | Parsons Brinckerhoff | 32,800,000 |
4 | URS Corp. | 28,500,000 |
5 | Michael Baker Jr., Inc. | 23,620,000 |
6 | WSP USA | 17,200,000 |
7 | Jacobs | 16,000,000 |
8 | Atkins North America | 15,368,901 |
9 | Wiss, Janney, Elstner Associates | 14,372,000 |
10 | KPFF Consulting Engineers | 12,000,000 |
11 | Simpson Gumpertz & Heger | 9,740,000 |
12 | Thornton Tomasetti | 7,610,000 |
13 | Stantec | 6,345,000 |
14 | Clark Nexsen | 5,308,534 |
15 | Arup | 4,600,161 |
16 | Coffman Engineers | 4,000,000 |
17 | Magnusson Klemencic Associates | 3,556,559 |
18 | Rolf Jensen & Associates | 2,600,000 |
19 | Aon Fire Protection Engineering | 2,250,000 |
20 | Smith Seckman Reid | 2,227,000 |
21 | Paulus, Sokolowski and Sartor | 1,800,000 |
22 | Science Applications International Corp. | 1,530,000 |
23 | Lilker Associates Consulting Engineers | 1,500,000 |
24 | French & Parrello Associates | 1,396,720 |
25 | AKF Group | 1,300,000 |
TOP 25 MULTIFAMILY SECTOR CONSTRUCTION FIRMS
Rank | Company | 2011 Multifamily Sector Revenue ($) |
1 | Lend Lease | 734,160,150 |
2 | Clark Group | 612,803,196 |
3 | Balfour Beatty US | 441,602,518 |
4 | Walsh Group, The | 342,877,063 |
5 | Whiting-Turner Contracting Co., The | 283,477,065 |
6 | Turner Corp., The | 223,410,000 |
7 | Swinerton | 186,340,000 |
8 | Harkins Builders | 180,000,000 |
9 | McShane Co., The | 175,000,000 |
10 | Yates Co., The | 173,900,000 |
11 | PCL Construction Enterprises | 159,105,415 |
12 | Bernards | 144,000,000 |
13 | Paric Corp. | 138,000,000 |
14 | Hensel Phelps Construction Co. | 137,700,000 |
15 | Weis Builders | 131,960,000 |
16 | CORE Construction | 125,513,227 |
17 | Suffolk Construction | 111,885,268 |
18 | Power Construction | 106,000,000 |
19 | Weitz Company., The | 82,000,000 |
20 | Austin Industries | 77,074,905 |
21 | Brasfield & Gorrie | 67,682,938 |
22 | Absher Construction | 61,807,647 |
23 | James McHugh Construction | 54,624,665 |
24 | Bette Co., The | 54,000,000 |
25 | Choate Construction Co. | 51,875,781 |
Related Stories
Multifamily Housing | May 19, 2016
Architect Jean Nouvel designs flood-resilient Monad Terrace in Miami Beach
A man-made lagoon with lush vegetation at the base of the complex is expected to adapt to climate change and rising sea levels.
Building Team Awards | May 19, 2016
Chinatown library unites and serves two emerging Chicago neighborhoods
The 16,000-sf, pebble-shaped Chinatown Branch Library was built at the intersection of new and old Chinatown neighborhoods. The goal is for the building to unite the communities and serve as a catalyst for the developing area.
Building Team Awards | May 19, 2016
NYC subway station lights the way for 300,000 riders a day
Fulton Center, which handles 85% of the riders coming to Lower Manhattan, is like no other station in the city’s vast underground transit web—and that’s a good thing.
Market Data | May 17, 2016
Modest growth for AIA’s Architecture Billings Index in April
The American Institute of Architects reported the April ABI score was 50.6, down from the mark of 51.9 in the previous month. This score still reflects an increase in design services.
Architects | May 16, 2016
AIA and HOK partner to advance Design and Health Research Consortium
The groups' key priority is to identify and develop practice-focused opportunities for funded research, publications, and tools in the area of design and public health.
Senior Living Design | May 16, 2016
Perkins Eastman releases white paper on biophilic design in senior living
The paper highlights some of the firm's top projects that feature biophilic design, a sustainable architecture strategy that connects people with nature.
Architects | May 16, 2016
3 strategies to creating environments that promote workplace engagement
VOA's Pablo Quintana writes that the industry is looking for ways to increase engagement through a mix of spaces suited to employees' desire for both privacy and connection.
Architects | May 11, 2016
AIA to create a resilience curriculum for architects
The program will teach resilient design and decision-making on hazard mitigation, climate adaptation and community resilience.
Retail Centers | May 10, 2016
5 factors guiding restaurant design
Restaurants are more than just places to eat. They are comprising town centers and playing into the future of brick-and-mortar retail.
AEC Tech | May 9, 2016
Is the nation’s grand tech boom really an innovation funk?
Despite popular belief, the country is not in a great age of technological and digital innovation, at least when compared to the last great innovation era (1870-1970).