Alliance Residential had a strong 2021, exceeding 11,000 units starts and placing the firm at No. 2 on both NMHC lists for top developers and builders. Jay Hiemenz, president and chief operating officer, shares what’s in the development pipeline as well as the concerns he has for the remainder of the year.
MFE: What's been the biggest move Alliance Residential has made in the past year to become a better company?
Hiemenz: We’ve been focused on two primary objectives moving into 2022:
1) Continuing to diversify our product offerings with attainable workforce housing being a larger component of our overall pipeline, and addressing the large unmet demand of this segment by expanding into smaller tertiary markets (seven in 2021 and more planned for 2022); and
2) Using technology to address supply chain opportunities given the hyper-inflationary construction cost environment, volatility of commodities pricing, lack of available trade labor (and related cost pressures), and sourcing timing challenges of project commodities and components.
MFE: What are the firm’s primary goals for 2022?
Hiemenz: We’re focused on executing a business plan for growth to meet housing demand as well as investor demand in the capital markets for well-executed, well-positioned residential rental in conventional multifamily, workforce, senior, and build-to-rent housing sectors. Our 2021 plan was 11,000 unit starts, which we exceeded, and we are looking to grow to 15,000-plus unit starts in 2022. Construction cost inflation, labor availability, entitlement delays, supply chain issues, and interest-rate increases all are our biggest challenges to executing the plan.
MFE: How many units are you expecting to start this year?
Hiemenz: Our business plan is to start 15,000-plus units in 2022. We’re constantly adding infrastructure and labor to be able to achieve and expanding our core of investors to provide the project investment capital.
MFE: What is in the development pipeline?
Hiemenz: We have approximately 40,000 units in the development pipeline—16,000 under construction and 24,000 under development.
MFE: Can you share a development that is under construction or recently completed that highlights Alliance Residential’s work?
Hiemenz: We are completing Broadstone Heritage Village—a large residential and retail mixed-use development in Orange County, California. The project commenced in 2015 with predevelopment design and land acquisition shortly thereafter. The project has three residential phases, Broadstone Arden, Broadstone Archive, and Broadstone Atlas, totaling 1,221 residential units and over 40,000 square feet of retail and retail amenity space. The project successfully leased up the first two phases—overcoming significant COVID challenges during that timeframe—and is delivering the third phase units with a completion date of late summer.
MFE: As a developer and builder, what are your biggest concerns for the remainder of the year?
Hiemenz: The current environment presents unique geopolitical challenges that translate in our business to cost inflation and product availability. We are constantly monitoring supply chain issues and working to overcome these obstacles. Construction costs continue accelerating at above the overall rate of inflation, and volatility of pricing makes forward price projections very difficult. So far, rent inflation has in most markets kept pace with the overall pricing increases, but we’re watching closely to see if rent velocity abates. Lastly, we’re watching the interest-rate environment to determine what impact it may have on the cap rates and valuation of real assets, which to date in multifamily residential have continued to increase despite some modest rate increases.
|RANK + COMPANY||HEADQUARTERS||CORPORATE OFFICER||UNITS STARTED 2021/2020||RANK 2021|
|1. Greystar Real Estate Partners||Charleston, SC||Robert A. Faith||11,301/5,298||6|
|2. Alliance Residential||Scottsdale, AZ||V. Jay Hiemenz||11,266/7,728||2|
|3. Summit Contracting Group, Inc.||Jacksonville, FL||Marc Padgett||10,569/9,159||1|
|4. OHT Partners (f/k/a Oden Hughes)||Austin, TX||Steve Oden, Craig Hughes, and Eric Taylor||10,532/5,809||4|
|5. The McShane Companies||Rosemont, IL||Molly McShane||9,044/5,250||7|
|6. Mill Creek Residential||Boca Raton, FL||Bill MacDonald||6,960/5,661||5|
|7. Wood Partners||Atlanta, GA||Joe Keough||6,954/4,950||8|
|8. CBG Building Company LLC||Arlington, VA||Keith Anderson||5,422/4,353||10|
|9. The NRP Group||Cleveland, OH||J. David Heller||5,410/6,726||3|
|10. Trammell Crow Residential||Dallas, TX||Kenneth J. Valach||4,887/2,155||25|
|11. DHI Communities, a D.R. Horton Company||Arlington, TX||Chris Frandsen and Silas Graham||4,723/2,150||new|
|12. VCC, LLC||Little Rock, AR||Derek Alley||3,943/2,755||18|
|13. Bozzuto||Greenbelt, MD||Toby Bozzuto||3,585/2,412||21|
|14. The Bainbridge Companies||Wellington, FL||Richard Schechter||3,363/3,572||14|
|15. LDG Development||Louisville, KY||Mark Lechner and Chris Dischinger||3,338/3,220||16|
|16. Northwood Ravin||Charlotte, NC||David Ravin||3,047/2,439||20|
|17. Dominium||Plymouth, MN||Paul Sween and Mark Moorhouse||3,046/2,270||11|
|18. AvalonBay Communities, Inc.||Arlington, VA||Timothy J. Naughton and Benjamin W. Schall||3,010/591||new|
|19. Provident General Contractors||Dallas, TX||Chuck Wright and Blake Pearce||2,939/2,540||new|
|20. Hanover Company||Houston, TX||Brandt Bowden||2,849/2,344||23|
|21. AHS Residential, LLC||Miami, FL||Ernesto Lopes and Carlos E. Gonzalez||2,649/492||new|
|22. Fortune-Johnson LLC||Peachtree Corners, GA||Brett Fortune and Jason McIlvain||2,641/1,366||new|
|23. Harkins Builders, Inc.||Columbia, MD||Gary Garofalo and Ben Nichols||2,554/1,793||new|
|24. LandSouth Construction||Jacksonville, FL||James Pyle||2,548/2,146||new|
|25. Evolve Companies||Greensboro, NC||Mike Winstead, Jr.||2,444/2,453||new|