Closing 2023 with the acquisition of over 450 acres of land to build more than 4,000 units, Hillpointe is slated for another year of expansion through developing market-rate attainable housing across the Sun Belt. As many developers battled rising construction costs and tightening capital markets, the firm had an upper hand because of its innovative and differentiated model, says Steven Campisi, CFA, who is co-founder and managing partner.
“We are fully integrated in the truest sense of the term, directly performing design, materials sourcing, construction, property management, asset management, and capital markets under one umbrella,” he says. “Our fully integrated approach gives us the ability to deliver new assets at what we believe to be a significantly lower cost basis than our competitors, and our recent development budgets have largely ranged from $160,000 to $200,000 per unit on an all-in basis. As a result of our cost advantage, we have been able to successfully continue to produce attainable multifamily housing.”
Admittedly more excited about the potential landscape of opportunities than the firm has been in several years, Campisi looks to this year’s investment pipeline, which includes 22 prospective opportunities in various stages of the pre-development process.
“Throughout much of 2023 we proceeded cautiously when evaluating new land opportunities. This posture was driven by our belief that the land market had not yet adjusted to the reality of higher interest rates, lower rent growth, higher construction costs, and the corresponding drop in multifamily starts. From our vantage point, the expectations of land sellers are beginning to adjust, a process that we believe will continue to play out over 2024,” he adds.
Considering the significant supply that is set to deliver in 2024, Hillpointe expects fundamentals to further deteriorate in the near term amid a competitive operating environment.
“Over the next 18 months, we expect that tenants will have increased pricing power and that correspondingly rent growth will continue to decelerate as operators compete to put heads on beds,” he says. “After the 2024-2025 supply wave delivers, we believe that a dearth of apartment starts is likely to exacerbate the overall housing shortage, and we would correspondingly expect a strong rebound in apartment fundamentals in 2026 and 2027.”
Hillpointe, which ranks No. 5 on the National Multifamily Housing Council’s Top 25 Developers list and No. 6 on the Top 25 Builders list, controls a pipeline of over 6,500 multifamily units throughout the Sun Belt. Campisi is confident the firm is well positioned to continue addressing the housing affordability crisis while setting eyes on additional markets like North Carolina and Tennessee.
Campisi notes the firm was founded to serve the neglected “missing middle” of the housing market and is highly focused on delivering attainable housing. “Our target residents are the backbone of communities—nurses, teachers, policemen, distribution facility workers, etc. These residents, who are critical to the functioning of American cities, constitute the ‘missing middle’ that has been left behind by today’s housing market,” he shares. “We develop a critically needed streamlined living experience, complete with luxury finishes, technology, community amenities, and pride of place, at an attainable rent.”
