Rental market pushing service, ‘community’

The Top 25 Giants 300 AEC firms in the Multifamily Sector keep four-legged tenants in mind.

Oakwood 200 Squared, Chicago, a 43-story rental high-rise with 10,000 sf of reta
Oakwood 200 Squared, Chicago, a 43-story rental high-rise with 10,000 sf of retail space, a green roof, and a two-story residential lobby, designed by Solomon Cordwell Buenz for Midwest Propety Group, with ESD (MEP/FP), SpaceCo (CE), Sieben Energy Associates (LEED/Energy model), and Lend Lease (GC). The 600,000-sf planned unit development is pursuing LEED certification. Photo: Steinkamp Photography/Courtesy SCB
July 19, 2012

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
         
 

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