Starts for multifamily residential units fell from 381,000 in 2016 to 343,000 in 2017, or 9.5% on an unadjusted annual basis, according to the Census Bureau’s newest residential construction data. Accordingly, the nation’s most active developers posted more modest starts numbers in 2017 than in 2016, amid mounting oversupply concerns and slight occupancy-rate declines in top markets.
To keep its pipeline full despite the late market cycle and mounting pressures on land, construction, and interest rates, Irving, Texas–based JPI uses careful analysis to find the best deal opportunities in each market. The developer leapt into the Top 25 this year at No. 9, going from 1,643 new units started in 2016 to 2,832 in 2017. The company invested $700 million in new multifamily projects last year, split between Dallas–Fort Worth and Southern California.
JPI has been among the most active multifamily developers in the Dallas–Fort Worth market by annual starts over the past three years, with 4,600 new apartment units currently under construction there. The firm’s Southern California efforts are also on the rise, and the company expects to be an even more dominant presence in the market over the next few years.
“It’s no surprise the market is highly competitive, and maintaining a strong deal flow and pipeline is becoming even more challenging,” says Brad Taylor, chief development officer and national managing partner at JPI. “… We’re focused on the development opportunities with the best risk-adjusted returns for our capital partners. We’ve allocated a larger amount of our team’s time to underwriting development opportunities and [we make] fact-based decisions on each. We evaluate market data and remain disciplined in our underwriting, including making reasonable inflation assumptions for both rent and construction hard costs.”
Alongside its successes in multifamily acquisition, management, and ownership, Charleston, S.C.–based Greystar Real Estate Partners has maintained its position as the top apartment developer in the U.S. for the second year running. The company started 5,651 new units in 2017 and has over $8 billion in new multifamily properties under development across most of the nation’s major markets.
“Year over year, projects get denser and more complex as it becomes harder to find developable sites and challenges such as labor shortages impact schedule, costs, and returns,” says Scott Wise, executive managing director of development for Greystar. “We’re constantly evaluating our pipeline of projects across markets and product types to leverage the institutional knowledge we’ve gained to help us face these challenges.”
The developer’s international development pipeline has also been robust, with new developments underway in Mexico City and Santiago, Chile; a new joint venture with Macquarie Capital to build new, purpose-built rental housing in major Asia-Pacific cities; and a new pipeline of rental housing in London.
“We expect the company to continue to grow domestically and internationally,” says Bob Faith, Greystar’s founder and CEO. “Rental housing remains one of the strongest sectors in institutional real estate globally. We plan to continue to grow our business in the U.S., and, increasingly, in many of the great cities around the globe, by doing what we’ve always done, focusing on providing world-class service to our residents, clients, and investors.”
