View the 2012 MFE Top 50 Builders List
As the saying goes, the numbers don’t lie. And in the multifamily construction industry, the figures are telling a story of robust and opportunistic growth in 2011. A look at new starts reveals that developers were eager to add new supply to meet the existing demand for rental properties last year. It seems confidence has returned and developers are realizing this rental trend is going to be around for a while. The increased volume in new units for 2011 proves it.
In last year’s Top 50 list, only the top 24 builders had 1,000 new starts or more. On this year’s list, however, each of the top 40 builders had broken ground on at least 1,000 new units. That’s the first time since 2007 that that many companies broke the 1,000 mark.
While 2010 leader Marlton, N.J.–based Michaels Organization didn’t make the cut, and several other high-rankers have dropped in the ranks, some familiar names were happy to step up and take their places. Marietta, Ga.–based Wood Partners and Phoenix-based Alliance Residential hurdled last year’s top builders to claim the No. 1 and 2 spots, respectively. Previously, they were ranked Nos. 9 and 10. Alliance, whose main focus in 2011 was Texas metros and coastal markets, expects another strong year in 2012 and will expand its efforts to new regions. “We see more markets having recovered to a point that select new development is feasible, including markets like Tampa, Phoenix, and Denver,” says Alliance’s chief financial officer Jay Hiemenz.
But Alliance isn’t the only builder breaking ground in new markets. Cleveland-based NRP Group (No. 8) will be making its presence felt in the Florida multifamily space, with attention placed on market-rate properties rather than affordable housing. “In 2011, we thought we’d see more new starts from affordable housing and less from market-rate. It turns out there was more opportunity on the market-rate side. And 2012 is shaping up to be the same story,” says David Heller, principal at The NRP Group. The company expects more than 3,000 new starts this year, making it among the more active builders in 2012.
San Antonio–based Galaxy Builders (No. 38) has consistently remained in the Top 50 thanks to its ability to maintain strong client relationships and its firm Texas roots, where growth was abundant this past year. This is the company’s fifth consecutive year on the top builders list, and in 2011 it increased its new starts by 74 percent. Other notable moves on this year’s list include Chicago-based AMLI Residential (No. 7), which went from 32nd two years ago to seventh in 2011 starts. And Houston-based REIT Camden Property Trust jumped from No. 38 last year to take the final spot in the top 10 on this year’s list, increasing its new starts more than 250 percent.
The projected new starts in 2012 for some of the industry’s most prolific builders prove that this resurgence in construction is not going away any time soon. The numbers appear to be working their way back toward pre-recession levels, and the outlook appears bright for at least the next few years. Dallas-based Mill Creek Residential Trust (No. 9), the new development spin-off of Trammell Crow Residential, leads the pack in projected starts for 2012 with 6,900—more than double the number of new units it built in 2011. According to the company’s chief executive officer, Charlie Brindell, Mill Creek is very bullish that the market growth trend that’s occurring will continue for the foreseeable future.
“I do believe most markets will continue to be undersupplied for the next few years. Our core markets exhibit very strong demand fundamentals,” says Brindell.
Mill Creek expects to break ground on new units in regions like Denver; Washington, D.C.; Southern California; New England; and several Texas metro areas, where Brindell believes demand will remain strong thanks to a combination of high-barrier and high-growth markets.
High demand for rental property has been tied very closely to regions that are experiencing job growth this year. No. 4 Arlington, Va.–based AvalonBay’s director of investor relations, John Christie, is keeping a close eye on job growth in 2012 as a critical factor in keeping apartment demand high in the coming year.
“Job growth had been sluggish until about [two months ago],” Christie says. “There’s been a lot of help from job growth in our core markets. There’s no supply, so our occupancy rate is steady and we can generate pricing power.”
The more than 4,300 new units projected this year for AvalonBay also make the REIT one of the multifamily developers to watch in the coming months.