Some developers and investors are unsure about committing to new senior living developments amid rising construction costs and interest rates, while others remain bullish on building new communities figuring that demand will be outpacing supply for the foreseeable future. I have even heard from some clients that they really push to get new developments going in this environment when other potential new projects may be holding off which gives them a leg up in a given market.
One segment that continues to gain steam is active adult according to a recent article in Seniors Housing Business’ April Edition. Active adult communities target those 55 years old and older that are ready to rid themselves of all things associated with home ownership, but are young and healthy enough that they don’t require assistance with daily living activities. These communities are not as labor- or service-based as an assisted living community because they... Read More >
As we move into the rainy season, it’s important to revisit best practices of protecting wood from the elements during construction. Previously, we used to rely on just-in-time deliveries which would limit the amount of time our framing materials were subject to the weather prior to being covered up. With today’s market environment, we find ourselves ordering materials early and storing them on site so that we can be productive as we start building and not run out of material along the way. This has led to lumber being stored for longer periods than we are used to. It’s important that this is taken into consideration as we construct our projects and that we don’t allow deterioration of our building products to occur.
First, develop a plan early to deal with these issues in order to reduce the risk of mold and product deterioration. Ensure that your storage area is well... Read More >
Everywhere I go people are asking what’s going to happen with construction prices, and they are right to ask. I visited with a prospective client this month and he told me that construction prices on his prototype increased 46% in two years, which was shocking to him and a little surprising to me. We are tracking prices in our Florida office and our records indicate costs are up 30% in 14 months, 2% per month, so I guess I shouldn’t have been surprised. Everywhere we look subcontractors are backing out of quotes and/or raising prices, and even once under contract don’t always honor prices. Materials and labor availability is a whole other issue. It’s hard to believe these increases can continue, but I don’t see any signs of relief.
The above doesn’t make our jobs any easier or more enjoyable. We hate giving bad news to our clients on costs, but... Read More >
The multi-family market has certainly evolved over the last several years. From the types of amenities renters demand, to an influx of new single family build to rent communities. Not to mention the changing renter demographic. While millennials make up one of the largest rental cohorts, the age 55+ Baby Boomers are selling their homes and opting for a more convenient lifestyle.
According to Forbes, in the last decade, the multifamily market has experienced hyper growth. Even during the pandemic, 2020 saw a 50% increase in multifamily units, compared to that of 2019. Rents in multifamily housing markets have continued to climb. Yardi Matrix reported in February that year over year rent growth increased 15.4% and occupancy rates of 96.9%, surpassing the previous record of 96.5% in 2000.
Today’s renters are demanding more and different amenities. This includes everything from storage areas or lockers for packages, trash valet services, community dog parks... Read More >
We have been a developer’s contractor since we opened over 40 years ago. As everyone knows, our economy goes through cycles, positive and negative. And the development economy has significantly greater swings than the general business economy. 2008-2010 had dramatic negative swings, but we have been on an upswing now for almost 10 years. When the economy trends down, construction costs decrease, as do interest rates. But more importantly, the rank of developers thins. Those with limited experience and capital can’t get deals done so exit the market, while the strong take advantage of lower prices and interest rates, but also a distressed inventory, and get stronger.
The uptick in the economy creates the opportunity to be active for these people, but also the perception of opportunity for new entrants to the market. Some are well capitalized, but with limited experience and expertise, and they can get deals done with the... Read More >