flexiblefullpage -
billboard - default
interstitial1 - interstitial
catfish1 - bottom
Currently Reading

Amid single-family housing’s comeback, rental market not skipping a beat [2013 Giants 300 Report]

Amid single-family housing’s comeback, rental market not skipping a beat [2013 Giants 300 Report]

As the economy recovers and homeownership becomes a realistic option for more consumers, will it spell the end of the multifamily sector’s hot streak? The experts say no.  


By BD+C Staff | July 16, 2013
The 33-story Three Harbour Green tower is the final piece of a three-building de
The 33-story Three Harbour Green tower is the final piece of a three-building development fronting seven acres of waterfront park space in Vancouver. IBI Group provided architectural and interior design services on the project, which incorporates residential units on the west side of the tower and office space on the east portion. The two functions are divided on the exterior by a series of stone-clad sky gardens hanging off the building. PHOTO: BOB MATHESON
This article first appeared in the BD+C July 2013 Issue issue of BD+C.

Seven years removed from the beginning of the most severe housing market crash since the Great Depression, the U.S. single-family residential sector is finally starting to snap out of its long period of malaise. Home prices, new-home sales, existing-home sales, and housing starts have all trended higher during the past 12-18 months, and while the market remains significantly depressed relative to 2005-06 output, it’s safe to say the single-family housing sector is in a much healthier state.

During the depths of the recession, multifamily construction remained one of the few relatively bright spots of the nation’s residential building sector, driven largely by pent-up demand for apartments and other rental units, such as student and senior housing. But as the economy recovers and homeownership becomes a realistic option for more consumers, the question becomes: Does this spell the end of the multifamily sector’s hot streak?  

Not anytime soon, according to FMI’s Construction Outlook Report for First Quarter 2013, which predicts a 31% YOY increase in multifamily construction spending in 2013 and another 27% in 2014 (following 47% growth in 2012). The sector is expected to reach its housing boom peak ($54 billion in annual construction spending) by 2017—although annual percent growth will taper off over the next four years.  

Real estate investment services firm Marcus & Millichap is forecasting long-term demand for rental housing to remain strong across most U.S. metro markets. According to its 2013 Apartment Outlook, the recent boom in apartment construction—85,000 units completed in 2012 and an estimated 150,000 units to come online this year, up from just 40,000 in 2011—isn’t enough to meet the pent-up demand for rentals in most markets.

TOP MULTIFAMILY ARCHITECTURE FIRMS

2012 Multifamily Revenue ($)
1 IBI Group $42,729,436
2 Niles Bolton Associates $22,446,821
3 Perkins Eastman $17,400,000
4 WDG Architecture $17,233,000
5 Solomon Cordwell Buenz $16,000,000
6 RTKL Associates $12,992,000
7 Perkins+Will $10,783,619
8 Skidmore, Owings & Merrill $10,179,000
9 HOK $7,730,000
10 VOA Associates $6,902,030

TOP MULTIFAMILY ENGINEERING FIRMS

2012 Multifamily Revenue ($)
1 STV $42,284,000
2 URS Corp. $42,072,070
3 AECOM Technology Corp. $39,580,000
4 Parsons Brinckerhoff $37,500,000
5 Michael Baker Jr. $21,020,000
6 Buro Happold Consulting Engineers $20,430,000
7 Wiss, Janney, Elstner Associates $18,070,000
8 Thornton Tomasetti $13,899,030
9 KPFF Consulting Engineers $13,000,000
10 Simpson Gumpertz & Heger $10,200,000

TOP MULTIFAMILY CONSTRUCTION FIRMS

2012 Multifamily Revenue ($)
1 Lend Lease $1,105,667,000
2 Clark Group $733,189,959
3 Balfour Beatty $416,669,856
4 Swinerton Builders $379,053,249
5 Walsh Group, The $277,912,525
6 James McHugh Construction $239,964,258
7 Whiting-Turner Contracting Co., The $212,734,120
8 Weis Builders $207,290,000
9 Suffolk Construction $203,442,894
10 Harkins Builders $201,000,000

Giants 300 coverage of Multifamily brought to you by Andersen www.andersenwindows.com

“Many metros are well short of new product coming online,” said Hessam Nadji, Managing Director, Research and Advisory Services with Marcus & Millichap, during the firm’s 2013 apartment market forecast. “And the new product that is coming online is ultra-high-end and not really affecting the workforce housing or the middle of the bell curve, where the demand is. Overall, we do not expect building to become an issue whatsoever.”

There are enough impediments to homeownership, experts argue, to keep the rental market strong for the immediate future, including a still-recovering jobs market, increasingly stringent mortgage requirements, and a sizable swath of the home-buyer base that is still reeling from the effects of the housing market downturn, with underwater or delinquent mortgages. Plus, the nation’s two largest generational groups—the baby boomers, who are at or near retirement age, and the Millennials, most of whom are in the very early stages of their career—are ripe for long-term rentals.  

This outlook is music to Jeffrey Raday’s ears. Raday is President of McShane Construction, one of the nation’s largest multifamily contractors. The sector will represent more than half of the company’s business in 2013.  

“Along with the positive outlook for market-rate and luxury rental developers, we are also encouraged by the growth expectations within the student housing, senior living, affordable housing, and supportive living sectors,” says Raday. “We enjoy a significant amount of both new and renovation construction activity in those markets.”

Despite the exuberance, multifamily experts are fearful of overbuilding, as developers race to catch the market upswing. With nearly a half-million rental units expected to come online between 2013 and 2015, chances are developers and owners in certain markets and submarkets will be caught with their pants down as demand eases.

Luxury tops multifamily trends

Multifamily housing trends vary market to market, but experts point out several overarching shifts that are driving change in the way projects are designed, built, and developed:

Luxury prevails. From urban condos to suburban apartments to rural student housing, developers are meeting the market’s demand for lavish amenities and features, including clubhouses, workout facilities, pools, spas, and upgraded appliances and finishes.  

Greater need for space. One-bedroom units currently make up about 80% of the multifamily rental stock in most metros, but Niles Bolton, AIA, CEO and Chairman of Niles Bolton Associates, expects that number to decrease in the coming years as more baby boomers hit the market.  

“We are seeing more product with larger units favoring two-bedroom luxury product being developed in affluent, stable neighborhoods,” he says. “I expect to see longer-term rentals in nice properties as empty nesters seek rental homes not located in senior communities.”

Micro units—rentals as small as 250 sf—are gaining acceptance among Millennials, who value location, affordability, and mobility over space.

In addition, developers working in tight, urban spaces have been successful in getting approval for tall, slender structures, allowing them to build where the demand is highest.

“Advances both in structural design and building materials have made constructing skinny multifamily towers much easier than a few years ago,” says Jeff Arfsten, Lend Lease’s Interim Managing Director and COO, Project Management and Construction. “Steel-reinforced concrete is more than twice as strong as it was a generation ago.”

Moving away from the box. Demand is up for complex designs that break up the typical multifamily box, such as sloping walls, high slab heights, and large ceiling-to-floor views, according to Arfsten. “Not many multifamily buildings just go straight up anymore,” he says. “The complexity of designs seems to be indicative of the developer being able to seek higher prices per unit.”

Ditching street-level retail. Bolton says municipalities are starting to ease on the requirements for street-level retail on multifamily projects. “Too many developments over the last 10 years have struggled with city-mandated retail space that has remained vacant because the density and activity were not there to support it,” he says.

Read BD+C's full Giants 300 Report

Related Stories

University Buildings | May 10, 2024

UNC Chapel Hill’s new medical education building offers seminar rooms and midsize classrooms—and notably, no lecture halls

The University of North Carolina at Chapel Hill has unveiled a new medical education building, Roper Hall. Designed by The S/L/A/M Collaborative (SLAM) and Flad Architects, the UNC School of Medicine’s new building intends to train new generations of physicians through dynamic and active modes of learning.

MFPRO+ News | May 10, 2024

HUD strengthens flood protection rules for new and rebuilt residential buildings

The U.S. Department of Housing and Urban Development (HUD) issued more stringent flood protection requirements for new and rebuilt homes that are developed with, or financed with, federal funds. The rule strengthens standards by increasing elevations and flood-proofing requirements of new properties in areas at risk of flooding. 

Government Buildings | May 10, 2024

New federal buildings must be all-electric by 2030

A new Biden Administration rule bans the use of fossil fuels in new federal buildings beginning in 2030. The announcement came despite longstanding opposition to the rule by the natural gas industry. 

Mass Timber | May 8, 2024

Portland's Timberview VIII mass timber multifamily development will offer more than 100 affordable units

An eight-story, 72,000-sf mass timber apartment building in Portland, Ore., topped out this winter and will soon offer over 100 affordable units. The structure is the tallest affordable housing mass timber building and the first Type IV-C affordable housing building in the city. 

K-12 Schools | May 7, 2024

World's first K-12 school to achieve both LEED for Schools Platinum and WELL Platinum

A new K-12 school in Washington, D.C., is the first school in the world to achieve both LEED for Schools Platinum and WELL Platinum, according to its architect, Perkins Eastman. The John Lewis Elementary School is also the first school in the District of Columbia designed to achieve net-zero energy (NZE). 

Healthcare Facilities | May 6, 2024

Hospital construction costs for 2024

Data from Gordian breaks down the average cost per square foot for a three-story hospital across 10 U.S. cities.

MFPRO+ Special Reports | May 6, 2024

Top 10 trends in affordable housing

Among affordable housing developers today, there’s one commonality tying projects together: uncertainty. AEC firms share their latest insights and philosophies on the future of affordable housing in BD+C's 2023 Multifamily Annual Report.

Retail Centers | May 3, 2024

Outside Las Vegas, two unused office buildings will be turned into an open-air retail development

In Henderson, Nev., a city roughly 15 miles southeast of Las Vegas, 100,000 sf of unused office space will be turned into an open-air retail development called The Cliff. The $30 million adaptive reuse development will convert the site’s two office buildings into a destination for retail stores, chef-driven restaurants, and community entertainment.

Codes and Standards | May 3, 2024

New York City considering bill to prevent building collapses

The New York City Council is considering a proposed law with the goal of preventing building collapses. The Billingsley Structural Integrity Act is a response to the collapse of 1915 Billingsley Terrace in the Bronx last December. 

K-12 Schools | Apr 30, 2024

Fully electric Oregon elementary school aims for resilience with microgrid design

The River Grove Elementary School in Oregon was designed for net-zero carbon and resiliency to seismic events, storms, and wildfire. The roughly 82,000-sf school in a Portland suburb will feature a microgrid—a small-scale power grid that operates independently from the area’s electric grid. 

boombox1 - default
boombox2 -
native1 -

More In Category




halfpage1 -

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021