In 2022, LMC, a subsidiary of Lennar, rebranded as Quarterra Multifamily as a first step to separating from the home builder into its own public company. It also had an active development year, debuting on the NMHC Top 25 Builders list at No. 13 with 4,340 starts and moving up 17 spots to No. 7 on the Top 25 Developers list with 5,224 starts. Will Chapman, president of investments, shares more about the rebranding and the work it has been doing to increase attainable housing.
MFE: The rebranding was a big move in 2022. Tell us more about the impetus of the rebrand and how the name Quarterra was selected. How does it represent your work?
Chapman: We officially rebranded as Quarterra in May 2022. The name Quarterra focuses on the two main components of what we do—living quarters and land (terra)—and we feel it complements our mission to deliver extraordinary communities for people to live remarkably.
Rebranding was an extremely fun, yet equally stressful, process. Our marketing team, led by senior vice president of marketing Beth Tuttle, understood that our new name needed to capture who we are as a people-first company, as well as where we want to go as a top-performing company.
The process of renaming was multifaceted and very strategic. It was important to us to be able to trademark this name in multiple classes, as we plan to grow our company. The name needed to fit this growth trajectory. We wanted a clean URL for our website and email addresses. It may seem minor, but these seemingly small details were impacting our previous brand.
This process was not something we took lightly, and we invested the time and effort to get it right.
MFE: The spinoff from Lennar was put on hold at the end of 2022, are there any plans for it to happen in 2023?
Chapman: The Quarterra spinoff was put on hold due to financial market complications, and we’re waiting for more favorable conditions before bringing Quarterra to the market.
MFE: Quarterra almost doubled the units started in 2022 year over year. What do you attribute this to?
Chapman: There are natural ebbs and flows to the development cycle, and some of our ventures were strategically positioned to close in 2022. That, coupled with the continued correction of pandemic-era supply chain issues, enabled us to push some of our development projects forward last year.
MFE: Can you provide some highlights of your work in 2022?
Chapman: 2022 was a big year, with several signature developments and new markets (Reno, Nevada, and Charleston, South Carolina), but the landmark event of the year was the delivery of our first Emblem communities.
The Emblem concept was created in 2019 to help address the national shortage in supply of Class A housing that is attainable for middle-income renters. Emblem is a programmatic approach to housing development that focuses on design simplification and standardization to increase efficiencies with regard to cost and schedule. These developments reach the market much quicker than individualized communities, expediting the time frame in which the nation’s essential workers, first responders, and other middle-class professionals will have access to quality housing that doesn’t price them out of the neighborhoods they serve. Since the inception of the strategic platform, Quarterra has assembled a nationwide pipeline of more than 20 new communities, with the first Emblem communities welcoming residents in early 2022.
This year, Quarterra’s commitment to providing attainable housing was further highlighted with three new communities in Seattle. Ovation was the first tower to participate in the city’s Multifamily Tax Exemption (MFTE) program—designed to support mixed-income residential development in urban centers and ensure affordability as the community grows. Our work with the city is a prime example of private and public organizations coming together for the greater good of the communities we serve. Quarterra prides itself on being a strong and valued corporate neighbor, and the delivery of Ovation earlier in 2022, followed by fellow communities and Seattle MFTE participants Spectra and The Piper are prime examples of our commitment to this value.
MFE: What’s in your pipeline for 2023? How will it compare with 2022?
Chapman: We had a great 2022, and our 2023 pipeline should be comparable, if not slightly larger. In spite of current market conditions, we’re still extremely bullish on U.S. housing fundamentals and believe there is an opportunity to deliver into a void, when many of our competitors are pulling back this year. We intend to forge forward with new starts in 2023.
MFE: Can you talk about a project that recently opened or will open in the coming year that you’re most excited about?
Chapman: We are really excited about our first Charleston development, Cormac, a mixed-use community on the city’s upper peninsula, in the rapidly growing North Morrison “NoMo” neighborhood. Cormac, which started leasing in late 2022, features 303 apartment homes and 13,068 square feet of retail space, as well as a pair of public ground-level courtyards. The mid-rise community’s unique and enviable location puts residents within easy reach of employment centers, dining options, as well as entertainment and sporting venues, and provides prime access to downtown Charleston, Mt. Pleasant, Park Circle in North Charleston, and West Ashley.
Cormac residents will have access to a full amenity lineup, including an eighth-floor rooftop terrace complete with a butler kitchen and spectacular views of downtown Charleston and the Ravenel Bridge. The fourth floor features three elevated courtyards—one of which is highlighted by a resort-style pool and clubhouse. The clubhouse will be home to multiple coworking spaces. A state-of-the-art fitness center with a flex fitness/yoga studio, a bike storage room, package lockers, rentable storage spaces, and a podcast studio will also be at residents’ disposal.
MFE: What concerns you the most for the multifamily industry in the short and long term?
Chapman: Uncontrollable expenses like materials, due to lingering supply chain issues and inflation, as well as insurance costs, still remain issues for the industry. But, in the short term, the greatest concern is the lending environment with interest rates. Over the long term, it’s the potential overregulation of rent control.
Multifamily needs to continue to educate municipalities and government leaders about the impact of punitive permit fees that restrict new development and prevent developers from providing much-needed housing. Public/private partnerships, like Seattle’s MFTE program, provide an ideal vehicle to simultaneously promote housing development as well as attainable housing options.
MFE: With rising costs all around, what are some key things you’re doing with design and construction to make these deals pencil out? Are you doing anything different to help navigate the rising costs on the operations side?
Chapman: Through our Emblem communities we are creating uniform, repeatable, and efficient designs. By utilizing scale and repetition, we experience a significant reduction in costs associated with architectural and interior design, as well as branding. Quarterra also reduces labor costs through increased contractor efficiency and materials expenses by procuring in bulk to drive down front-end expenses.
Emblem communities have consistent interior finishes from one community to the next, featuring high-end materials like quartz countertops in kitchens and baths, stainless steel appliances, and luxury vinyl plank flooring. Amenity designs and property features such as social rooms and fitness centers will also follow the prototype.
One interesting occurrence in the last couple of years happened with Jayne, a boutique community in Denver that opened in 2022. Unfortunately, our interior designer on the project went out of business as result of the pandemic, and our development team had to quickly adjust the scope of work on the FFE—furniture, art, signage, fitness equipment, and entertainment. The Denver team got creative with the procurement and installs, and successfully navigated the reselection process, supply chain challenges, and other pandemic concerns, and managed our relationships with third-party procurement partners. Through their efforts the project stayed on schedule and under budget, all while putting together a very comfortable, warm, and eclectic design.
Operationally, Quarterra continually explores new innovations to empower our teams to be more efficient and optimize property performance. We also seek out technologies to streamline energy and water consumption, reducing our carbon footprint as well as utility costs.
MFE: Despite the headwinds, what excites you most about being part of the multifamily industry today?
Chapman: At the end of the day, multifamily is meeting an essential need for people—shelter and housing. And we have strategically positioned Quarterra to provide housing at multiple levels, which is truly important work.
|RANK + COMPANY||HEADQUARTERS||CORPORATE OFFICER||UNITS STARTED 2022/2021||RANK 2022|
|1. Summit Contracting Group, Inc.||Jacksonville, FL||Marc Padgett||14,184/10,569||3|
|2. Alliance Residential||Scottsdale, AZ||V. Jay Hiemenz||13,480/11,266||2|
|3. Mill Creek Residential||Boca Raton, FL||William C. MacDonald||10,877/6,960||6|
|4. Wood Partners||Atlanta, GA||Joe Keough and Patrick Trask||10,650/6,954||7|
|5. Greystar Real Estate Partners LLC||Charleston, SC||Robert A. Faith||10,467/10,386||1|
|6. OHT Partners||Austin, TX||Steve Oden and Craig Hughes||9,900/10,532||4|
|7. Trammell Crow Residential||Dallas, TX||Ken Valach and Kevin Dinnie||8,433/4,887||10|
|8. The NRP Group||Cleveland, OH||J. David Heller||6,990/5,410||9|
|9. CBG Building Company||Arlington, VA||Keith Anderson||5,665/5,422||8|
|10. The McShane Companies||Rosemont, IL||Molly McShane||5,298/9,044||5|
|11. JPI||Irving, TX||Payton Mayes and Mollie Fadule||5,051/1,225||new|
|12. LandSouth Construction||Jacksonville, FL||James Pyle||4,888/1,574||24|
|13. Quarterra Multifamily (fka LMC)||Charlotte, NC||Todd Farrell||4,340/1,254||New|
|14. Hillpointe||Winter Park, FL||Steven Campisi||3,814/2,444||New|
|15. VCC, LLC||Little Rock, AR||Derek Alley||3,576/3,943||12|
|16. Evolve Companies||Greensboro, NC||Mike Winstead Jr.||3,530/2,444/td>||25|
|17. Dominium||Plymouth, MN||Paul Sween and Mark Moorhouse||3,482/3,021||17|
|18. The Bainbridge Companies||Wellington, FL||Richard Schechter||3,355/3,363||14|
|19. Provident General Contractors||Dallas, TX||Chuck Wright and Blake Pearce||3,312/2,939||19|
|20. Trinsic Residential Group||Dallas, TX||Brian J. Tusa||3,192/2,059||New|
|21. Harkins Builders, Inc.||Columbia, MD||Gary Garofalo and Ben Nichols||3,093/2,554||23|
|22. Kaufman Lynn Construction||Delray Beach, FL||Michael Kaufman and Chris Long||3,013/1,354||new|
|23. Northwood Ravin||Charlotte, NC||David Ravin||2,990/3,047||16|
|24. Holland Partner Group||Vancouver, WA||Clyde Holland||2,968/1,045||new|
|25. Galaxy Builders, Ltd.||San Antonio, TX||Neilesh Verma||2,947/1,774||new|