An explosive year of new development set the stage for a few shake-ups on the Top 50 Builders list for 2012.
Greystar Real Estate Partners topped the list as the largest mover and shaker of the year. The Charleston, S.C.–based company climbed from No. 13 last year to the top spot with 5,360 new starts in 2012, a 164 percent rise over its 2011 volume.
The firm attributes the year-over-year surge to its careful sense of deliberation: Greystar waited to make deals until the time was right in the wake of the economic downturn, says executive director of development Scott Wise.
“It was really at the end of 2010 that the signals began pouring in,” Wise says. “Most of our 2012 starts originated from that turning point for us.”
That pacing laid the groundwork for an epic year. Wise says he was surprised the company rose to the very top, as he expected Wood Partners, No. 2, and Mill Creek Residential Trust, No. 3, to take the prime spots.
Dallas-based Mill Creek climbed this year’s list by putting 5,001 new units in motion in 2012, an 88 percent increase in starts compared with its 2011 production. However, it wasn’t enough to outshine last year’s alpha dog, Atlanta–based Wood Partners, which started 5,082 units in 2012, a 36 percent increase from the firm’s 2011 count.
None of the three companies believes this coming year will be earth-shattering compared with the numbers posted in 2012. Each predicts it will have similar numbers to those last year. In fact, despite the growing demand, the production numbers may shrink some in 2013 given the rising costs of labor and materials.
“The numbers may even be a little less,” Wise says. “Land and construction prices have risen, but as a nation, we’re still underfulfilled as far as supply.”
AvalonBay Communities hit the charts at No. 7 after doing 10 percent more development from one year to the next, keeping the company in the top tier of the builders list. The Arlington, Va.–based firm reported 3,391 new starts after announcing a huge deal to acquire a percentage of the Archstone portfolio in a multibillion-dollar transaction with Chicago-based Equity Residential.
For its part, Englewood, Colo.–based Archstone landed in the middle of the pack, with 2,049 new starts and 49 percent growth from 2011 to 2012.
Although Boston-based GID Investment Advisers is new to the list, the firm had the largest growth percentage of all the companies that made the cut. The 1,749 units GID started in 2012 put its growth at 212 percent, compared with the 561 starts it posted in 2011. GID ranked No. 28 and had strong growth despite the fact it pulled out of the Phoenix market and didn’t break into any new markets.
Coming in six spots below GID, The Bainbridge Cos. surged up the rankings as well, moving from the bottom of last year’s list to the middle of this year’s pack.
With 1,399 starts in 2012, the Wellington, Fla.–based company is hoping to start an additional 600 units in 2013 by expanding its reach into new markets. While its 2012 development plans focused on projects in the South Atlantic region, Bainbridge is hoping 2013 will take the firm into markets up the East Coast, including New York and Boston.
AMLI Residential (No. 10) fell just a few spots on the list but still had a positive year of growth with the development of 3,217 units. The Chicago-based company attributed much of 2012’s success to the firm’s disposition of older assets, eight in all, which helped fuel AMLI’s development pipeline.
AMLI pulled out of the Kansas market in 2012, but it plans to continue to focus on markets it’s currently working in, such as Chicago, Dallas, and Denver.
Timing Is Everything
While almost all of the builders on the list had higher starts numbers last year than the year before, some slowed down and fell below those that charged full steam ahead. But given the lead time of a typical development, a company’s placement in the rankings can have more to do with timing than anything.
Wermers Cos. (No. 32) had the most drastic decline, starting 1,500 units, or less than half of the starts it did the previous year.
Jeff Bunker, the San Diego–based company’s president, says he wasn’t alarmed when he found out the company had dropped from the No. 3 rank to below the halfway mark, saying 2011 was an uncharacteristically big year.
Although Wermers’ volume fell, the company touted the fact that all of 2012’s projects were completed on time and under budget. “A lot of times, projects will span over a year or two or three,” says Bunker. “[In 2011], a lot of them stacked up.”
Taken as a whole, the hefty amount of starts in 2012 proves construction is back in full swing as developers race to capture a growing wave of demand.
A total of 233,900 new multifamily units were built in 2012, according to the National Multi Housing Council (NMHC), an increase of 66,000 units over 2011 and up more than 129,000 units from 2010, according to NMHC data pulled from the Census Bureau.
Still, last year’s starts remained below the historical average of 300,000—though at the current pace of construction, it won’t be long before the industry hits that mark again.