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
Smart Buildings | Apr 7, 2023
Carnegie Mellon University's research on advanced building sensors provokes heated controversy
A research project to test next-generation building sensors at Carnegie Mellon University provoked intense debate over the privacy implications of widespread deployment of the devices in a new 90,000-sf building. The light-switch-size devices, capable of measuring 12 types of data including motion and sound, were mounted in more than 300 locations throughout the building.
Affordable Housing | Apr 7, 2023
Florida’s affordable housing law expected to fuel multifamily residential projects
Florida Gov. Ron DeSantis recently signed into law affordable housing legislation that includes $711 million for housing programs and tax breaks for developers. The new law will supersede local governments’ zoning, density, and height requirements.
Energy Efficiency | Apr 7, 2023
Department of Energy makes $1 billion available for states, local governments to upgrade building codes
The U.S. Department of Energy is offering funding to help state and local governments upgrade their building codes to boost energy efficiency. The funding will support improved building codes that reduce carbon emissions and improve energy efficiency, according to DOE.
Steel Buildings | Apr 6, 2023
2023 AISC Forge Prize winner envisions the gas station of the future
Forge Prize winner LVL (Level) Studio envisions a place where motorists can relax, work, play, shop, or perhaps even get healthcare while their vehicles charge.
Architects | Apr 6, 2023
New tool from Perkins&Will will make public health data more accessible to designers and architects
Called PRECEDE, the dashboard is an open-source tool developed by Perkins&Will that draws on federal data to identify and assess community health priorities within the U.S. by location. The firm was recently awarded a $30,000 ASID Foundation Grant to enhance the tool.
Architects | Apr 6, 2023
Design for belonging: An introduction to inclusive design
The foundation of modern, formalized inclusive design can be traced back to the Americans with Disabilities Act (ADA) in 1990. The movement has developed beyond the simple rules outlined by ADA regulations resulting in features like mothers’ rooms, prayer rooms, and inclusive restrooms.
Market Data | Apr 6, 2023
JLL’s 2023 Construction Outlook foresees growth tempered by cost increases
The easing of supply chain snags for some product categories, and the dispensing with global COVID measures, have returned the North American construction sector to a sense of normal. However, that return is proving to be complicated, with the construction industry remaining exceptionally busy at a time when labor and materials cost inflation continues to put pricing pressure on projects, leading to caution in anticipation of a possible downturn. That’s the prognosis of JLL’s just-released 2023 U.S. and Canada Construction Outlook.
Cladding and Facade Systems | Apr 5, 2023
Façade innovation: University of Stuttgart tests a ‘saturated building skin’ for lessening heat islands
HydroSKIN is a façade made with textiles that stores rainwater and uses it later to cool hot building exteriors. The façade innovation consists of an external, multilayered 3D textile that acts as a water collector and evaporator.
Market Data | Apr 4, 2023
Nonresidential construction spending up 0.4% in February 2023
National nonresidential construction spending increased 0.4% in February, according to an Associated Builders and Contractors analysis of data published by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $982.2 billion for the month, up 16.8% from the previous year.
Sustainability | Apr 4, 2023
ASHRAE releases Building Performance Standards Guide
Building Performance Standards (BPS): A Technical Resource Guide was created to provide a technical basis for policymakers, building owners, practitioners and other stakeholders interested in developing and implementing a BPS policy. The publication is the first in a series of seven guidebooks by ASHRAE on building decarbonization.