The National Association of Home Builders (NAHB) projects multifamily starts will decline by 20% this year. That comes on the heels of a 14% falloff in 2023 multifamily starts.

Ryan Bedford understands why so many fellow developers opt for the sidelines. Take builder’s risk and commercial property insurance, for example.

“Builder’s risk insurance has gone bonkers. You might be looking at $1,500 a door for stick-built units. It’s been increasing like that for the last four or five years,” explains the president of Wisconsin-based Bedford Development and managing principal of K.B. Walker, a specialty contractor. A recent study concludes the cost differential of combustible versus noncombustible can exceed 60% for commercial property insurance.

Hard Market Reality

“We own wood properties. We own concrete properties. Insurance costs on noncombustible buildings are four to five times less than standard wood-frame construction. We’re looking at just $230 to $250 per door. That’s significant,” Bedford says.

He says shrinking coverage limits for combustible projects forces some developers to bundle multiple carriers together on a single project. He contrasts that with noncombustible. “You might have 50 insurance companies to consider instead of 10 or 15 with combustible, and those 50 will have competitive rates and higher limits, generally speaking,” Bedford says.

‘Yes, There is a Way’

No one can predict the course of a hard insurance market or interest rates. A hold strategy is understandable. “But you can only hold so long,” Bedford cautions.

That’s why Bedford advocates an alternative construction strategy that avoids sky-high insurance costs and the kind of material pricing uncertainty that can severely impact net operating income. “Owners and developers are looking for reliable options,” Bedford observes. “I have conversations with people about what we pay on our properties. And they’re like, ‘What? There’s no way.’ I answer, ‘Yes, there is a way.’”

That “way” is ICF, short for insulated concrete form. ICF is a highly evolved building system that uses Lego-like steel-reinforced foam blocks to form cast-in-place concrete walls. It’s a fast assembly process that yields a building envelope of exceptional resilience, energy conservation, and interior quiet.

And one other thing: surprising affordability.

Same Low-Cost Wavelength

“I live in the development world. I have a good grasp of development costs for apartments, hotels, and student housing,” explains Bedford. “With my interests in K.B. Walker, I know the bottom-line costs on ICF. ICF is 100% comparable to wood-frame. If I was solely a developer or a contractor, I might think ICF was too expensive. ICF absolutely pencils out for private market development.

“I’m on the same wavelength as any developer. I require low costs. Does ICF work for every project? No. But it makes a ton of sense for most projects.”

He cites other owner-friendly advantages:

  • Low Energy Costs. Bedford separately meters units so residents see the super-low utility bills. “Instead of a 30% to 35% rent roll turnover, we’re down to 15%. Residents know it’s a good deal.”
  • Fewer Noise Complaints. ICF wall systems help silence sound intrusion. Quieter units mean happier, longer-term tenants.

As you weigh your development options, keep ICF in mind. “There are lots of people in the industry who are happy to share their experience and advice,” Bedford suggests. “What’s your showstopper? There’s a high probability ICF can help.”

Learn more about how ICF offers a proven, affordable way to dramatically reduce multifamily housing insurance costs.