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
Sustainability | May 11, 2023
Let's build toward a circular economy
Eric Corey Freed, Director of Sustainability, CannonDesign, discusses the values of well-designed, regenerative buildings.
Hotel Facilities | May 9, 2023
A new camping destination near Utah’s Zion National Park offers a variety of all-season lodgings and amenities
Outdoor lodging brand AutoCamp has opened a new camping destination near Utah’s Zion National Park. A 16-acre property, AutoCamp Zion is located between the Virgin River and the desert of Southern Utah.
Headquarters | May 9, 2023
New Wells Fargo development in Texas will be bank’s first net-positive campus
A new Wells Fargo development in the Dallas metroplex will be the national bank’s first net-positive campus, expected to generate more energy than it uses. The 850,000-sf project on 22 acres will generate power from solar panels and provide electric vehicle charging stations.
Regulations | May 8, 2023
Supreme Court case likely to have huge impact on Clean Water Act
A case before the Supreme Court will likely determine how the Clean Water Act is interpreted and the ruling could open up new areas for development within or adjacent to wetlands.
Senior Living Design | May 8, 2023
Seattle senior living community aims to be world’s first to achieve Living Building Challenge designation
Aegis Living Lake Union in Seattle is the world’s first assisted living community designed to meet the rigorous Living Building Challenge certification. Completed in 2022, the Ankrom Moisan-designed, 70,000 sf-building is fully electrified. All commercial dryers, domestic hot water, and kitchen equipment are powered by electricity in lieu of gas, which reduces the facility’s carbon footprint.
Multifamily Housing | May 8, 2023
The average multifamily rent was $1,709 in April 2023, up for the second straight month
Despite economic headwinds, the multifamily housing market continues to demonstrate resilience, according to a new Yardi Matrix report.
University Buildings | May 5, 2023
New health sciences center at St. John’s University will feature geothermal heating, cooling
The recently topped off St. Vincent Health Sciences Center at St. John’s University in New York City will feature impressive green features including geothermal heating and cooling along with an array of rooftop solar panels. The geothermal field consists of 66 wells drilled 499 feet below ground which will help to heat and cool the 70,000 sf structure.
Office Buildings | May 4, 2023
In Southern California, a former industrial zone continues to revitalize with an award-winning office property
In Culver City, Calif., Del Amo Construction, a construction company based in Southern California, has completed the adaptive reuse of 3516 Schaefer St, a new office property. 3516 Schaefer is located in Culver City’s redeveloped Hayden Tract neighborhood, a former industrial zone that has become a technology and corporate hub.
Mass Timber | May 3, 2023
Gensler-designed mid-rise will be Houston’s first mass timber commercial office building
A Houston project plans to achieve two firsts: the city’s first mass timber commercial office project, and the state of Texas’s first commercial office building targeting net zero energy operational carbon upon completion next year. Framework @ Block 10 is owned and managed by Hicks Ventures, a Houston-based development company.
Market Data | May 2, 2023
Nonresidential construction spending up 0.7% in March 2023 versus previous month
National nonresidential construction spending increased by 0.7% in March, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $997.1 billion for the month.