MULTIFAMILY AEC GIANTS: Slowdown prompts developers to ask: Will the luxury rentals boom hold?

For the last three years, rental apartments have occupied the hot corner in residential construction, as younger people gravitated toward renting to be closer to urban centers and jobs. But at around 360,000 annual starts, multifamily might be peaking, according to BD+C's 2015 Giants 300 report.

August 07, 2015 |
MULTIFAMILY AEC GIANTS: Slowdown prompts developers to ask: Will the luxury rentals boom hold?

ZINC Apartments, West Cambridge, Mass., just outside Boston. The owner, Wood Partners, will start accepting tenants in September. The Building Team: Symmes Maini & McKee Associates (architect), J Derenzo (site work), EM Duggan (MEP), McPhee (electrical contractor), JK Glass (curtain wall/glass), Canatal (steel), Sanford (wall panels), and Lend Lease (GC). Rendering: Wood Partners and Monogram Residential Trust

ZINC Apartments, in West Cambridge, Mass., which opens in September, could be the poster child for the latest trends in multifamily, notably:

Smaller living spaces: Its 392 residential units average 793 sf.

Transit-friendliness: The 15-story, 531,900-sf building borders the future elevated Green Line and is across from a planned train station.

TOP MULTIFAMILY ARCHITECTURE FIRMS

2014 Multifamily Revenue ($)
1. Solomon Cordwell Buenz $31,096,704
2. Callison RTKL $29,778,051
3. Niles Bolton Associates $26,150,000
4. NORR $22,285,475
5. Perkins Eastman $20,119,000

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TOP MULTIFAMILY ENGINEERING FIRMS

2014 Multifamily Revenue ($)
1. AECOM $533,433,000
2. WSP | Parsons Brinckerhoff $37,363,109
3. DeSimone Consulting Engineers $23,981,385
4. STV $21,465,000
5. Wiss, Janney, Elstner Associates $19,110,000

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TOP MULTIFAMILY CONSTRUCTION FIRMS

2014 Multifamily Revenue ($)
1. Lend Lease $1,715,790,000
2. Balfour Beatty US $936,680,339
3. Suffolk Construction $889,079,228
4. Clark Group $877,396,257
5. Turner Construction $593,146,836

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Rich amenities: Rental units will have full-size washers and dryers and condominium-quality finishes. The common area will have an upscale fitness center, cyber café, pet spa, and 15,000-sf landscaped outdoor living room with a fireplace, water feature, and grilling stations. A hiking/biking trail runs adjacent to the property. ZINC will offer a bike workshop and 206 covered bike racks.

Smart technology: DAS (distributed antenna systems), key fob security, Nest thermostats, destination dispatch elevators, and electric car hookups are part of the package, says Jeff Arfsten, Managing Director/COO of Project Management and Construction for Lend Lease, the project’s GC.

For the last three years, rental apartments have occupied the hot corner in residential construction, as younger people gravitated toward renting to be closer to urban centers and jobs. Market watchers believe young renters will take longer than previous generations to transition to homeownership.

Multifamily construction starts jumped by 38.3% in 2012, 25.1% in 2013, and 14.9% in 2014, according to National Association of Home Builder estimates. Market researcher CMD Group estimates spending on multifamily construction will jump another 13.6% (to $45.1 billion) this year and by 13% (to $50.9 billion) in 2016.

But at around 360,000 annual starts, multifamily might be peaking. NAHB expects multifamily starts to increase by less than 2% in 2015, due partly to rising land and labor costs. Developers are trying to determine just how large the customer niche is for luxury apartments and condos.

SMALLER UNITS, but with many MORE FEATURES and amenities

The shift toward smaller units stems, in part, from the growing number of one-person households, says Devon Patterson, AIA, LEED AP BD+C, Design Principal at Chicago-based Solomon Cordwell Buenz. At the same time, communal amenity spaces in high-rises are getting more robust, says Patterson, by offering socialization and nightlife opportunities that “elevate the living experience.”

Terry McKellips, Vice President/Division Manager for Swinerton Builders, says another key element in multifamily design has to do with “incorporating a contemporary feel to complement the vibrant growth of the city.” He singles out NEMA, a 754-unit luxury apartment complex near San Francisco’s City Hall that he claims helped transform this area into a cool place to be for tech companies and workers.

The complex consists of four residential towers unified at the base with a podium that houses two residential lobbies, common areas, and retail spaces. Amenities include an energy solarium, a 7,000-sf Wright Fit fitness center, club solarium, a spa, a business center, three outdoor terraces, a 60-foot heated saline pool, and 24/7 spa treatments and concierge and porter services.

But luxury living doesn’t come cheap. A 463-sf studio in NEMA rents for $3,130 per month; one- and two-bedroom apartments ranging from 1,376 sf to 1,442 sf are renting for as much as $6,685 per month, according to NEMA’s website.

developers ACCOMMODATING changes in TENANTS’ LIFESTYLES

The amenities “arms race” being fought in the rental sector is likely to continue, as resort-grade packages become standard, says Cannon Reynolds, AIA, Managing Director of Architecture at Niles Bolton Associates, Atlanta. Even smaller apartments are coming with designer kitchens, higher ceilings, and larger windows.

Reynolds believes apartment projects will continue to lean toward complicated urban sites, walkable streetscapes, structured parking, and street-level retail. He says busy tenants are demanding timesaving conveniences like dry-cleaning services and trash valets. Apartment buildings are quadrupling the space devoted to receiving and storing packages due to the proliferation of online shopping.

The question remains: How much gas is left in the luxury rental tank?

Trammell Crow Residential and Thompson Dorfman Partners are sanguine about the market niche, at least in the San Francisco Bay Area. The developers formed a joint venture in May with an initial capitalization of $500 million to search out multifamily development and acquisition opportunities with a luxury sheen.

On the opposite coast, Boston has been dubbed the “Luxury Glutpocalypse” by Curbed, the real estate website, because so many luxury apartments are under construction. NAHB also points out that the tide may be turning back toward single-family home ownership: 40% of U.S. states are expected to be back to pre-recession housing production levels by 2016.

 

TOP MULTIFAMILY ARCHITECTURE FIRMS




  Company 2014 Multifamily Revenue ($)
1 Solomon Cordwell Buenz $31,096,704
2 Callison RTKL $29,778,051
3 Niles Bolton Associates $26,150,000
4 NORR $22,285,475
5 Perkins Eastman $20,119,000
6 HOK $17,104,000
7 Skidmore, Owings & Merrill $15,255,131
8 Goodwyn Mills and Cawood $14,580,422
9 Cambridge Seven Associates $14,119,000
10 WDG Architecture $13,322,000
11 Hord Coplan Macht $12,789,500
12 Harley Ellis Devereaux $11,943,000
13 Architects Hawaii Ltd. $11,720,000
14 Stantec $10,773,546
15 Perkins+Will $10,750,000
16 FXFOWLE Architects $10,464,325
17 Mithun $9,803,000
18 Good Fulton & Farrell $9,600,640
19 Smallwood, Reynolds, Stewart, Stewart & Associates, Inc. $9,118,233
20 Gensler $8,970,000
21 Dattner Architects $8,919,373
22 Ziegler Cooper $8,815,451
23 Beyer Blinder Belle $7,326,002
24 Rule Joy Trammell + Rubio $7,000,000
25 ZGF Architects $6,400,862
26 EDI International $6,290,000
27 Cooper Carry $6,208,410
28 Kohn Pedersen Fox Associates $5,292,000
29 HKS $4,956,571
30 Lord Aeck Sargent $4,921,340
31 FitzGerald Associates Architects $4,888,000
32 OZ Architecture $4,496,350
33 GBBN Architects $4,275,000
34 Page $3,930,000
35 WATG | Wimberly Interiors $3,873,000
36 STG Design $3,770,000
37 Nadel $3,660,000
38 Glumac $3,518,182
39 Moseley Architects $3,439,488
40 Carrier Johnson + Culture $3,400,000
41 Eppstein Uhen Architects $3,240,191
42 VOA Associates $3,192,141
43 Cuningham Group Architecture $3,123,991
44 Adrian Smith + Gordon Gill Architecture $2,980,442
45 Shepley Bulfinch $2,976,023
46 Clark Nexsen $2,900,000
47 Morris Architects $2,625,000
48 Vocon $2,586,615
49 Montroy Andersen DeMarco $2,535,000
50 Jerde Partnership, The $2,447,580
51 MBH Architects $2,214,000
52 Large Architecture $2,001,210
53 SB Architects $1,940,494
54 Symmes Maini & McKee Associates $1,919,343
55 MG2 $1,904,753
56 FreemanWhite $1,823,590
57 Corgan $1,800,000
58 Luckett & Farley $1,750,000
59 Moody Nolan $1,721,434
60 Leo A Daly $1,670,418
61 NAC|Architecture $1,654,028
62 PBDW Architects $1,641,193
63 Rottet Studio $1,608,484
64 GreenbergFarrow $1,560,000
65 Goettsch Partners $1,415,500
66 LS3P $1,412,040
67 Hnedak Bobo Group $1,367,253
68 Heery International $1,296,185
69 CTA Architects Engineers $1,294,330
70 Kirksey Architecture $1,253,285
71 P+R Architects $1,159,649
72 Environetics $1,074,602
73 CO Architects $983,600
74 Zyscovich Architects $902,197
75 Cooper Robertson $852,000
76 RNL Design $735,230
77 Sherlock, Smith & Adams $603,000
78 BDG Architects $600,000
79 Gresham, Smith and Partners $588,000
80 Westlake Reed Leskosky $550,000
81 JLG Architects $500,395
82 Albert Kahn Associates $500,000
83 Davis Brody Bond $464,326
84 HMFH Architects $427,787
85 Emersion Design $426,487
86 TEG Architects $412,813
87 Baskervill $392,609
88 ATA Beilharz Architects $361,829
89 KSQ Architects $281,921
90 LK Architecture $250,000
91 Nelson $185,240
92 Wight & Company $182,600
93 GSB $144,325
94 Bergmann Associates $131,811
95  Becker Morgan Group $99,814

 

 

TOP MULTIFAMILY ENGINEERING FIRMS




  Company 2014 Multifamily Revenue ($)
1 AECOM $533,433,000
2 WSP | Parsons Brinckerhoff $37,363,109
3 DeSimone Consulting Engineers $23,981,385
4 STV $21,465,000
5 Wiss, Janney, Elstner Associates $19,110,000
6 Thornton Tomasetti $18,228,765
7 Jacobs $16,170,000
8 Simpson Gumpertz & Heger $11,305,000
9 Magnusson Klemencic Associates $10,140,568
10 KPFF Consulting Engineers $9,524,000
11 Arup $9,507,340
12 Dewberry $6,048,997
13 Jensen Hughes $3,395,066
14 ME Engineers $2,580,000
15 Davis, Bowen & Friedel $2,310,499
16 Aon Fire Protection Engineering $2,000,000
17 Martin/Martin $1,952,909
18 CTLGroup $1,600,000
19 Coffman Engineers $1,577,000
20 Cardno Haynes Whaley $1,342,033
21 TLC Engineering for Architecture $1,325,706
22 KCI Technologies $1,300,000
23 Bala Consulting Engineers $1,239,000
24 M/E Engineering $1,082,121
25 Walter P Moore $1,059,391
26 Vanderweil Engineers $917,700
27 CJL Engineering $726,128
28 GHT Ltd. $700,000
29 Newcomb & Boyd $593,409
30 Henderson Engineers $583,073
31 KJWW Engineering Consultants $570,568
32 RDK Engineers $468,000
33 Smith Seckman Reid $462,383
34 I. C. Thomasson Associates $450,000
35 Spectrum Engineers $431,960
36 GRAEF $420,000
37 OLA Consulting Engineers $416,000
38 SSOE Group $340,696
39 Guernsey $326,248
40 RMF Engineering $300,000
41 Karpinski Engineering $275,000
42 Epstein $242,100
43 TTG $164,220
44 Barge, Waggoner, Sumner and Cannon $150,000
45 Wallace Engineering $125,000
46 Peter Basso Associates $117,000
47 P2S Engineering $113,473
48 Dunham Associates $100,000
49 Highland Associates $100,000
50 Zak Companies $94,874
51 G&W Engineering $91,300
52 Stanley Consultants $86,649
53 Mazzetti $35,931
54 Environmental Systems Design $27,432
55  William Tao & Associates $22,140

 

 

TOP MULTIFAMILY CONSTRUCTION FIRMS




  Company 2014 Multifamily Revenue ($)
1 Lend Lease $1,715,790,000
2 Balfour Beatty US $936,680,339
3 Suffolk Construction $889,079,228
4 Clark Group $877,396,257
5 Turner Construction $593,146,836
6 PCL Construction $414,562,954
7 Whiting-Turner Contracting, The $364,031,287
8 Batson-Cook $329,151,093
9 Adolfson & Peterson Construction $314,207,145
10 Power Construction $303,000,000
11 Walsh Group, The $300,576,205
12 JE Dunn Construction $298,862,364
13 Swinerton Builders $297,178,000
14 Weis Builders $243,739,297
15 Harkins Builders $239,000,000
16 McShane Companies, The $223,911,076
17 Andersen Construction $221,000,000
18 James McHugh Construction $192,428,739
19 Donohoe Construction $188,255,031
20 Brasfield & Gorrie $181,927,554
21 C.W. Driver $181,610,000
22 James G Davis Construction $180,196,119
23 Bernards $179,600,000
24 Structure Tone $171,616,000
25 Skanska USA $164,573,972
26 Summit Contracting Group $123,291,282
27 DPR Construction $120,064,000
28 Bette Companies, The $112,545,650
29 Hoar Construction $102,991,000
30 W. M. Jordan $97,637,459
31 Kitchell Corporation $91,123,879
32 Austin Industries $86,894,237
33 Choate Construction $81,147,393
34 Doster Construction $78,781,958
35 O'Neil Industries $75,854,488
36 Flintco $73,000,000
37 Haselden Construction $61,917,773
38 Weitz Company, The $59,794,000
39 Juneau Construction $59,736,090
40 Kraus-Anderson Construction $59,000,000
41 Hensel Phelps $57,280,000
42 CORE Construction $56,582,657
43 Ryan Companies $54,505,343
44 Gilbane Building Co. $53,162,833
45 Walbridge $50,720,000
46 IMC Construction $49,000,000
47 HITT Contracting $48,900,000
48 LeChase Construction Services $45,000,000
49 KBE Building Corp. $44,046,132
50 Messer Construction $39,526,784
51 Hill & Wilkinson $34,650,884
52 S. M. Wilson & Co. $31,548,956
53 Paric $30,000,000
54 Consigli Building Group $29,909,389
55 Hill International $29,000,000
56 Layton Construction $25,000,000
57 Manhattan Construction $14,249,000
58 Yates Companies, The $11,600,000
59 Robins & Morton $10,800,000
60 Beck Group, The $9,384,248
61 Pepper Construction Group $8,705,000
62 Level 10 Construction $8,452,831
63 Hoffman Construction $6,362,878
64 Fortis Construction $1,500,000
65  Leopardo Companies $915,135

 

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