High demand, high costs add pressure to multi-family projects
From squeezing apartment buildings onto tight urban sites to meeting budget on affordable housing projects to scheduling construction at low tide in order to create waterfront residences, today’s multi-family market presents an array of novel and profound challenges.
Ranked as one of the country’s biggest multi-family builders, Harkins Builders is currently constructing 42 multi-family projects. Photo courtesy of Harkins Builders.
High interest rates and high construction costs have reduced multi-family starts nationwide in the past year. However, the housing shortage plus new initiatives to facilitate the construction of affordable housing have kept the sector busy.
In the fourth quarter of 2023, a total of 504 new multi-family developments were approved for construction in the Baltimore region, according to the Maryland Department of Planning. That’s down from 793 multi-family developments approved in the fourth quarter of 2022, but up from the 316 approved in Q4 2021.
The combination of high costs, high demand and a shortage of available land push project teams to meet accelerated schedules, keep costs within budget, deliver highly attractive homes and often complete those tasks on difficult sites. It’s a market sector that can require creative solutions.
Troubleshooting on a deadline
Before beginning work on the River House Apartments project in Wilmington, Delaware, Plano-Coudon Construction knew it would have to contend with some extraordinary conditions. (Plano-Coudon formed a joint venture with Bancroft Construction to construct River House.) The project was constructed on a brownfield site with contaminated soil, so crews would have to cap the site and install strong sediment and erosion controls.
The project was also located on the banks of the Christiana River which is tidal and could flood the undeveloped land.
The River House project produced beautiful, waterfront apartments but required crews to contend with tidal flooding and a brownfield site. Photo courtesy of Plano-Coudon Construction.
“The trickiest part was getting work done at high tide while we were constructing retaining walls and getting the building pad elevated above the flood plain,” said Michael Cox, Senior Project Manager. “We had to work around the tides and pour concrete at low tide. Once the building pad was elevated, the majority of the work was able to be done off of articulating boom lifts.”
To keep the project on schedule, Plano-Coudon had to oversee a major design change when an electrical manufacturer, which had promised equipment delivery months ahead of schedule, said it could not guarantee any ship date.
“We took action by working with in-house specialists, the electrical subcontractor, other suppliers and the design team to develop an alternate plan to provide several enclosed switches in lieu of a main switchboard,” Cox said.
The new plan involved reworking the already constructed electrical room and tearing up concrete. The change, however, kept the project on schedule and enabling the owner to begin leasing during the summer peak.
Schedule has also been a driving factor at Merion Village Apartments — a four-story, wood-frame, affordable housing project in Edgewood, Maryland targeted at residents who are 62 and older. The project requires Plano-Coudon to meet an accelerated, 13-month construction schedule.
“We knew we would have challenges with the schedule so, constantly throughout the entire process, we have been looking for ways to save time,” said Brett Roberts, Senior Project Manager.
Plano-Coudon Construction’s recent multi-family projects include Merion Village Apartments – an affordable housing project for seniors located in Elkridge, MD. Photos courtesy of Plano-Coudon Construction.
One key time-saver was a plan developed with the site contractor to complete a major retaining wall and site-elevation work within the first six weeks of the project.
Other multi-family projects have presented Plano-Coudon with different challenges.
Cypress on Vine in Takoma Park is a highly amenitized, LEED certified, 56,000-square-foot co-living facility with 28 units that accommodate 155 residents.
“It is a beautiful building with beautiful finishes and a green roof,” said Lisa Tenley, Vice President of People and Communication. “Its target market is people who want to live in an urban setting but need a slightly more affordable option.”
The development, however, was happening on “a very tight urban site,” Tenley said. “Literally, the shorings were right on the property line so we had to coordinate our work with the contractor who was building on the adjacent site.”
Affordable and sustainable
Ranked as the 21st largest multi-family builder in the United States in 2023 by the National Multi-family Housing Council, Harkins Builders is immersed in the work of delivering market rate and affordable housing.
In 2022, Harkins started construction of 3,093 units, according to NMHC. Currently, the company has over 40 multi-family projects under construction (totaling over 4,400 units) and another 120 projects in preconstruction, scheduled to start in the next few years.
Affordable housing developments add to a project’s requirements, said Dave Griffin, Director of Preconstruction. Projects must meet stated timeframes, as well as high sustainability standards, to receive tax credits that are essential to the projects’ pro formas.
Floors Etc completes about $35 million of work in the multi-family sector annually. Photo courtesy of Floors Etc.
“A challenge on affordable housing projects is understanding and meeting their project threshold requirements for sustainability, energy efficiency, materials, mechanical systems,” Griffin said. Harkins just completed Legacy at Twin Rivers — a two-building, 153-unit affordable development in Columbia. “There is a scoring system to receive the tax credits and you have to go above and beyond with sustainability to score well.”
Sustainability requirements change periodically. The types of products and systems that meet those requirements and pencil out for projects also change. For example, more projects are now using heat-pump hot-water heaters.
“A lot of times, the client brings on a consultant to help with design options,” Griffin said. They’ll create multiple options to plug into their models and see how well the building will perform. Then, they present the options to us and we have to determine the different price parameters for them.”
The demands involving sustainability, schedule, budget and regulations mean that “we usually work together with the owner and the design team early on and at a pretty high level on conceptual design, layouts, site plans and big picture parameters about what the job is going to need to meet all of these requirements,” Griffin said.
New efforts to make budget
On many affordable and market-rate projects, contractors are being brought into the design and planning process earlier to help identify best options to contain costs and address conditions on increasingly challenging project sites.
In Harford County, Harkins is currently constructing the James Run Apartments – a seven-building, 300-unit, luxury development. The site contains a significant amount of rock – a condition that required added coordination among the developer, the property’s previous owner and the project team to create an optimal plan for site work and construction, Griffin said.
“At this point, every site presents challenges,” Roberts said. “That’s a big reason why the owner-developer should bring in the general contractor as early as possible to help with the planning process rather than only having the design team involved. The general contractor is going to look at true constructability and identify issues that other people don’t necessarily think about.”
Early involvement is also key to another increasingly important part of multifamily projects – value engineering.
“We are spending a lot more time working on value engineering in the preconstruction process to get the numbers to work for our multifamily clients,” Cox said.
In Harford County, Harkins Builders is currently working on the seven-building, 300-unit James Run Apartments project. Photo courtesy of Harkins Builders.
Within project teams and individual companies, lean building practices, refined procurement processes, improved inventory management and added attention to warranties have also become essential parts of meeting budget on multi-family projects.
Floors Etc, which completes about $35 million of work in the multi-family sector annually, has worked to build strong partnerships with manufacturers to secure competitive prices on large purchases, said Dennis Walsh, Vice President.
On each project, “we also partner with an adhesive company that understands the makeup of the actual product we are installing and they put together a job-specific warranty,” Walsh said.
Through those partnership with manufacturers and adhesive companies, “we know that we are providing the general contractor and the developer with the best possible product and a warranty that will be honored if something were to happen down the road.”
Floors Etc is also constantly working to address a common challenge on large, multi-family projects, namely material management.
“We work to make sure our take-offs match what is actually being built, and our mechanics and field managers are organized and keeping track of material usage,” he said. “If you lose track of a quarter box here and a quarter box there in a 300-unit building, that is going to add up to a lot of waste and a cost that could be avoided.”