Leaner Operations for Lean Times

Submeters are just one tool for a market that is at once growing but at the same time proceeding cautiously. More than ever, today's multifamily developers and property managers are focused closely on operational costs, life-cycle performance and the durability and resilience of every building system and material.

Similar to the focus on micro-units, many developers are retooling to be leaner and more cost-effective. A recent study by MIT study, for example, shows that methods for reducing initial construction costs should be weighed against long-term costs and environmental impacts such as global-warming potential (GWP).

For example, for concrete structures in multifamily buildings, reducing core thickness from 6 inches to 4 inches is both cost effective and reduces emissions. Using increased percentage of supplementary cementitious materials, or SCMs, in ICF buildings can reduce GWP by as much as 14 percent. For some developers, this and other benefits, such as may reduced heating and cooling costs over the life of the building, may offset concerns about the higher initial cost of ICF as compared to light-frame wood construction.

In spite of the wariness and vigilance that multifamily investors and builders show in today's market, they are solidly bullish for certain markets. Multifamily rents increased by about 4.9 percent in 2011 while vacancy rates dropped to below 5.0 percent late last year from a high of 7.3 percent in 2009, according to CBRE Econometric Advisors. On top of that, based on U.S. Census data the supply of rentals is still relatively low, says Freddie Mac: Only 167,000 units started construction in 2011, as compared to the preceding decade's annual average of 260,000 units.

In 2012 and into early 2013, the pace of supply is accelerating yet still below the level of need, due in part to weak credit markets and a slow overall economic recovery (see “Multifamily Housing Trends” sidebar on page 2).

“Based on permit issuance to date and expected construction time, it is unlikely that the number of new units delivered nationwide will exceed long-run averages over the next two years,” according to a Freddie Mac report. Slowly but surely, however, new supply is coming on the market, with building conversions and renovations slightly outpacing new construction projects. A few local markets even have murmurs about potential overbuilding, especially in student housing.

In a few years, this new wave of multifamily will be easy to distinguish from apartment buildings and condominiums built in past years. It won't just be the re-emergence of old ideas, like the micro-units that resemble SROs, but also the new amenities drawing buyers and tenants—and the new technologies behind the walls. Whether it's prefabricated wood systems, moisture control and air barriers, or the new roof decks and fenestration systems, innovation is as rapid as the pace of development for today's multifamily structures.

Sunlight and Energy Efficiency Live in Perfect Harmony

A beautiful wall of windows allows sunlight inside while providing excellent energy efficiency. Photo courtesy of Simonton Windows® The multifamily housing market serves more than 15 million people—one in seven American households. Multifamily structures span workforce, senior, and student housing while providing market-rate and affordable rental properties. Planning for multifamily housing comes with unique challenges. Take Prestwick Chase, a sprawling senior living community in Saratoga Springs, New York. 1,500 Windows and Doors Were Used for This Project Abundant natural sunlight in both residential and common areas of the community was a primary objective. But energy efficiency was just as important, especially because most utilities are included in the price of the apartments. A total of 1,500 double-hung, single-hung, and picture windows and 167 patio doors were specified to deliver the desired sunlight along with impressive thermal performance. The windows specified for this project included: 12 half-rounds 12 quarter-rounds 526 single hungs 600 sliders 200 pictures 167 patio doors In addition to requiring virtually no maintenance, premium vinyl is an excellent insulator. Low-E glass combined with an Argon gas fill allows sunlight to stream through the expansive windows, yet it also helps reduce heating and cooling costs. Now the residents of Prestwick Chase enjoy sunlit atriums, bright common areas, and inviting residences while staying comfortable year round.

Chris Sullivan is principal of C.C. Sullivan, a communications consulting and marketing agency focused on architecture and building products.