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Amenity-Driven Multifamily, Senior Living and Student Housing Construction Is in Full Swing

Today’s most desirable condos, apartment complexes and assisted living communities—and to some extent university residence halls—have one thing in common. They must offer the best amenities to attract the burgeoning number of people occupying these properties post-recession. For the contracting community, that often means building smarter and strategically collaborating with project partners so owners can direct less of the budget to construction processes and more of it to high-end finishes and services.

Multifamily in the Southeast
To date, apartments have been the all-star of the residential rebound. But as prices escalate, momentum should shift to condos—at least in markets such as South Florida.

“Apartment projects just getting under way will continue to move forward, but work should slow down once those jobs are done,” says Peter Tuffo, southeast chief operating officer for Suffolk Construction, West Palm Beach, Fla. “Condos remain strong, particularly in Miami, and we expect that to continue through 2015 and 2016.”

This is good news for Suffolk, as multi-unit projects account for about 50 percent of its contracted work in the Southeast. (By dollar volume, it’s closer to 70 percent of the firm’s work.) Pent-up demand from the downturn is driving activity, along with increased interest from South American and Latin American investors and buyers.

“We’re seeing more people allocating their resources and money toward the condo market than in the past,” Tuffo says. “And the closer the development is to the water, the higher chance of success.”

In June, Suffolk broke ground on one of its first post-recession vertical projects. Aria of Longboat Key, a five-story condo complex on the Gulf of Mexico, features 16 luxury oceanfront units. Suffolk is working with Ascentia Development Group to deliver a high-end project with details such as floor-to-ceiling stacking doors, glass terraces and rooftop gardens.

“In talking with deveNew River Yacht Clublopers, they believe people with a higher net worth are more confident in the economy and more eager to jump in and buy a new product,” Tuffo says.

On the rental side of the market, one of Suffolk’s first high-rise jobs to come out of the ground after the downturn was New River Yacht Club in Fort Lauderdale’s downtown riverwalk area. The 26-story residential tower features six levels of parking, 249 upscale units, pool and fitness amenities, and close proximity to the beach, shopping, dining and the Las Olas business center. The developer, Related Group, awarded Suffolk the 420,000-square-foot project in 2012, and work wrapped three months ago.

2012 also marked the start of the Met 3 project in downtown Miami—a mixed-use development with underground parking and 462 residential units atop 13 stories of commercial space. With three different owners and multiple phases scheduled to wrap up in February 2016, it definitely qualifies as a complex project.

“It also includes a basement 24 feet below grade, which is unusual for Florida,” Tuffo says. “We had to pump out an extensive amount of water to make space for the underground parking.”

To that end, finding subcontractors that have enough resources to meet schedule and project needs is a top priority for Suffolk. Tuffo says Suffolk seeks out stable firms that can maintain their bonding limit and can confidently explain their work in place on other projects and how they allocate their resources. It’s a tall order for a tightening labor market.

“The amount of subcontractors that can complete this size of work is smaller, and the labor force to actually complete the work is very competitive,” Tuffo says. “Labor rates and materials costs are showing signs of escalating.”

As a result, Suffolk is noticing an increase in the amount of trade partners that are prefabricating assemblies. “It improves the predictability of the schedule, enhances the quality control and reduces the possibility of lost-time incidents by decreasing the total amount of manhours worked on the project,” Tuffo says.

As always, construction teams are looking for any kind of competitive edge to help get projects off the ground. For Crescent Terminus, a three-building luxury apartment complex within an urban mixed-use development in the Buckhead neighborhood of Atlanta, that meant turning to wood frame construction.

“On a cost basis, this land is among the highest in our portfolio,” says Crescent Communities Senior Vice President Jared Ford. “It’s prime real estate, but that’s where the market is. Our strategy is to build on these ‘Main-and-Main’ sites using wood frame construction. It just makes sense.”

While wood frame construction has always been common in low-density multifamily construction, it’s a big departure for higher density projects like Crescent Terminus, which has about 140 units per acre.

Crescent Terminus“The shift to higher density wood frame construction has been occurring rapidly thanks to advancements in wood frame structural and architectural technology, and the codes that enable it,” says Eric Brock, principal and director of the housing and mixed-use practice area at Atlanta-based Lord Aeck Sargent (the architect for Crescent Terminus). “The factors that go into a site analysis can be very complex, but if you can achieve the necessary density in wood frame, the savings are significant. Many of the projects we have helped our clients pursue coming out of the recession could only be justified in wood frame—and only then because the necessary project density decreased in step with land values.”

Led by Atlanta-based DPR Hardin Construction, Crescent Terminus broke ground in January 2013 and will be completed in November. The price tag for the 355-unit project is $67 million.

Of the 20 investments Crescent Communities has under construction or in the planning phase, all but one is wood framed. “We’re either building or hunting in 13 of the top 20 metropolitan markets, and we’re almost entirely focused on wood frame multifamily apartments,” Ford says. “Obviously we build for a return on our investment, and wood frame construction is just more cost efficient per square foot than steel or concrete.”

Most jobs fit in the urban infill category as well, which means coping with a tight site surrounded by public roads and existing buildings. In the case of Crescent Terminus, the design team decided to build two buildings over existing roads rather than staying within the confines of the land.

“The site was incredibly tight, and many of the decisions made in terms of construction were based on logistics,” says Dave Conlon, project executive for DPR Hardin Construction. “Trusses, plywood, wall studs and other materials would arrive and be flown immediately by crane onto the appropriate floor. Nothing was ever left staged at the jobsite.”

DPR Hardin considered having the walls pre-panelized to save on labor costs, but the trade-off would have been higher transportation costs and more traffic congestion. “Instead, we had the studs and other materials cut to length offsite, which helped speed construction on the jobsite,” Conlon says. 

Framing was completed in about 11 months. Overall, the affordability and efficiency of wood frame construction allowed Crescent Communities to put less money into the bones of the building and more into the high-quality finishes, landscaping and amenities that tenants value.

Senior Housing in the Northeast
The demand for high-quality finishes and amenities transfers over to the senior living market, which Congress Building Corp., Peabody, Mass., has specialized in exclusively for the past 50 years. Like all owners, assisted living and skilled nursing facilities are listening to the dynamic needs of their clients—such as multimedia components and security systems—to maintain a competitive edge in their marketplace.

“Buildings are smarter now, which means electrical and HVAC systems are more complicated to build and operate,” says Congress CEO Bill Nicholson. “Data systems were not even an element of projects in the early 1970s, and now they’re almost universally required. Resident and nurse call systems also have become far more powerful and complex.”

Additionally, the senior care industry has become more diverse. Certain projects include significantly more square footage per unit for an independent style of living, while others are price driven, as with many studio or double occupancy “companion” units.

“We have recently constructed, and are currently planning, nursing facilities with very high percentages of private rooms,” Nicholson says. “This is a departure from the typical model of virtually all double-bedded rooms and only a limited number of single-bedded rooms, often only as required by code.”

Overall, Nicholson reports the assisted living market is extremely active at this time due to a dearth of construction in this sector during the past 14 years, and he expects the momentum to continue at least through 2015. After years of capital constraints, lenders and equity sources finally started to open up construction financing in 2013, mostly targeted toward assisted living and memory care projects with experienced operators and developers with successful track records. Currently, Congress is performing additions, renovations and improvements to two assisted living and memory care projects in Massachusetts and Vermont, as well as providing ground-up construction management services on four projects in Massachusetts and Connecticut.

Demand is still high for nursing home construction as well, given the antiquated condition of many facilities throughout New England, New York and New Jersey. Meanwhile, skilled nursing is moving rapidly toward post-acute care, which places different demands on the physical plants (e.g., rehab gyms, therapy space and more single-bed rooms) and will generate future work for firms like Congress that have a good track record in the skilled nursing sector.

“The rehab population tends to be younger than the long-term care population, often in their 50s and 60s. We’re seeing more and more patients in skilled nursing for rehabilitation on knees, hips and shoulders after leaving the hospital,” Nicholson says.

Regardless of the nature of the project, Congress emphasizes collaboration among its project partners. While the preconstruction period remains crucial, Nicholson has found the post-occupancy phase to be of real value to clients.

“We have made it a strict company policy to keep one member of our team onsite through the break-in period of the project,” he says. “In addition to a structured systems training program, we guide our customers through the orientation of HVAC, electrical, telephone, multimedia and all other building systems. If done properly, this orientation and commissioning period is very important to our customers’ satisfaction.”

While no health care provider buys construction services in the exact same manner—some have tremendous development expertise versus others who prefer to purchase that expertise—Nicholson says they all value honesty, transparency and certainty of final cost. “All our projects partners, from customers to engineers and lenders, are entitled to prompt and candid information  about what is happening and how we plan to address issues as they arise. That’s what we do our best to deliver.”

The New Normal: Student Housing, Labor Requirements and Prefabrication
Student housing looks a lot different today than even a decade ago, especially as urban universities try to blend new buildings into existing neighborhoods. For example, Howard University is transforming Washington, D.C.’s Fourth Street corridor with two new residence halls that look more like high-end apartments than traditional dormitories. The university’s goal is to create a strong sense of community and promote collaborative opportunities for students.

In construction terms, this means two-person semi-suites for students, independent apartments for faculty and staff, common lounges on each floor and kitchen areas on the ground level, plus game rooms and laundry facilities. The building exteriors—one measuring seven stories and the other six stories—feature a brick and metal façade accentuated by punched windows. Clark Construction kicked off work in February 2013 and finished up earlier this fall.

Clark tapped Manganaro Mid-Atlantic, Belstville, Md., to do the masonry, drywall and air/vapor barriers. “We won the Howard job because we do drywall, metal framing and masonry veneers. Combining those trades together gives us a competitive advantage,” says John Livingston, business development manager for Managanaro Mid-Atlantic, which attributes about 60 percent of its volume to multi-unit projects (high-rise multifamily and student housing).

Aside from dealing with a dense urban site, Livingston says one of the biggest challenges on a job like Howard University is complying with Washington, D.C.’s First Source law, which requires certain projects receiving government assistance or city funds to fill 51 percent of new jobs with district residents, as well as validate 35 percent of apprenticeship hours logged on the project are performed by district residents. There also are targets for local journey worker, skilled laborer and common laborer participation.

“There’s no workforce to fulfill what the law requires,” Livingston says. “It’s hard enough to hire skilled labor right now anyway, and the extra First Source requirements make it even harder.”

Though it sounds strange, another potential impediment to efficient work in the multi-unit and health care markets is prefabrication.

“It is easy to see how prefabrication can bring advantages to mechanical and electrical trades, but in the complex ecosystem that is a large construction project, there can be unintended consequences that mitigate or even cancel those advantages,” Livingston says. “The correction or repairs made necessary by the gains of one subcontractor can
cost another subcontractor.”

A common example is a rack of bathroom fixtures that are prefabricated and shipped to the jobsite. If the framing contractor is unaware of the extent of the assembly, studs may conflict and the structural integrity of the wall may be compromised. In an effort to minimize these conflicts, Manganaro Mid-Atlantic has begun to engage mechanical subcontractors earlier in the planning process to map out a joint strategy for installation and sequencing.

“We need to work hand in hand toward a more collaborative and cooperative approach if we are going to prosper in the industry’s new normal,” Livingston says.

Joanna Masterson is editor of Construction Executive. For more information, email masterson@abc.org, visit www.constructionexec.com or follow @ConstructionMag.

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