Late last year and earlier this year, it looked as if many of the private developers around the country were getting back into the development game. Judging by a slew of news releases in the past week, that pace seems to be intensifying. Phoenix-based Alliance Residential, for instance, recently updated its development pipeline. It currently projects 5,000 starts this year and is developing eight communities in six states.
“We are currently looking at a variety of triple-A rated distressed sites and urban development opportunities,” Alliance president Bruce Ward said in a press release. “We’ve been in D.C. for a number of years, and we’ve expanded resources in San Diego, Seattle, Orlando, and Tampa during the past 12 months. Overall, our strong relationship with large institutional financial partners combined with low leverage allows us increased liquidity in our balance sheet moving forward.”
Meanwhile, Atlanta-based Gables has two deals in development in the D.C. area, two in Texas, and one in Florida. One D.C.-area deal, the 120-unit Gables Centerpointe in Fair Oaks, Va., will deliver this fall. The 275-unit Gables Upper Rock, in Rockville, Md., broke ground this past spring and should begin lease-up next spring.
Jorgen Punda, regional vice president of investments for Gables says the speed with which the company is opening these deals is partially a result of the fact that no one else has really gotten anything open in the past two years, creating a sweet spot for lease-ups.
“The goal was to get these projects started and deliver while there’s very little new lease-up competition,” he says. “We’re hopeful that the lack of new product combined with modest rent growth in these submarkets will be a great time to be delivering.”
Texas is the Reason
Washington, D.C., was obviously the first market many private builders came back to, but Texas has become the new hot spot. Ron Witten, president of Dallas-based Witten Advisors, produces a chart of multifamily construction starts relative to the overall number of apartments in various markets.
Witten’s data indicates that Texas has four of the top 10 most active apartment construction markets in the country. San Antonio is third with new starts totaling 1.2 percent of its stock. Fort Worth and Houston are fifth and sixth with new starts in both markets totaling 1.1 percent of their stock. Dallas is in the seventh-place spot with new starts totaling 1 percent of its stock.
“It [development activity in Texas] is not surprising because the Texas market is among the best in the county,” Witten says. “We didn’t have the housing overhang that other parts of the country had and it’s easy to get started here.”
Private developers are helping Texas along. Alliance is building the 363-unit Class A garden-style Broadstone Valley Parkway in Lewisville, Texas. It's expected to be completed in December 2012. The company also has a 344-unit property in Fort Worth, Texas, that it plans to finish by the end of 2012.
Denver-based Archstone announced that it has begun construction on a 474-unit apartment community close to the Texas Medical Center in Houston. And Gables also has two deals on the way in the state. It recently announced plans for Gables Post Oak, a 316-unit community located in the Uptown area of Houston and is also working on the 329-unit Fairmont property in Dallas.
“There definitely is a pick-up in Texas,” Witten says. “It seems like there’s a little bit more in Dallas and Houston than the others, but there’s more activity pretty much everywhere.”