Investing in apartment buildings and other multifamily properties offers some significant advantages. Investors can leverage economies of scale with on-site management, and having multiple units helps offset vacancy periods. As a result, new investors frequently ask about ways to join multifamily deals. We’ll use this article to discuss both the top multifamily development companies in the US and High Peaks Capital’s role in this process.
Specifically, we’ll cover the following topics:
- Multifamily Development Company Rankings
- Similarities Between Most Multifamily Development Companies
- Final Thoughts and High Peaks Capital’s Multifamily Development Role
Multifamily Development Company Rankings
Multifamily Developer Overview
Real estate development is the business process of improving either raw land or existing structures. Developers use these real property improvements to increase the value of that property. Depending on the particular deal, real estate developers can focus on anything from ground-up construction to historic renovation to value-add improvements.
Regardless of strategy, real estate developers focus primarily on the financials behind a deal. A successful developer will underwrite a potential deal to ensure that the total future revenues justify the total development costs. If the return on investment doesn’t make sense, the developer will either alter the deal’s plans or not pursue it at all.
Multifamily development companies, as expected, focus on multifamily properties. While not an all-inclusive list, some of the more common types of multifamily properties include:
- Garden-style apartments
- Mid-rise apartments
- High-rise apartments
- Student housing / dorms
- Senior and assisted-living
Every year, Multi-Housing News, an affiliate of real estate software conglomerate Yardi, releases a list of the nation’s top multifamily development firms. According to its most recent survey, here’s a list of the five largest firms by both 1) units completed in the past three years, and 2) units under construction:
- Greystar: 27,609 units completed / 20,747 under construction
- The Related Cos: 7,393 units completed / 15,400 under construction
- The NRP Group: 8,405 units completed / 11,753 under construction
- LMC: 8,603 units completed / 9,227 under construction
- Trammel Crow Co. / High Street: 4,535 units completed / 11,002 under construction
Similarities Between Most Multifamily Development Companies
With the exception of a handful of large-scale companies featured in the above rankings, a significant portion of multifamily development occurs among smaller, entrepreneurial shops. Yes, as Multi-Housing News illustrates, big developers have produced – and continue to produce – a ton of units. But, in general, multifamily development is a fairly fragmented industry.
A real estate cliche states the importance of “location, location, location.” This is particularly true when it comes to multifamily development. Successful developments heavily depend on in-depth knowledge of the local market. At a minimum, developers need to understand local multifamily supply and demand, associated pricing trends, zoning and land-use regulations, contractor availability, cost of materials, and property management support, among others.
Very few developers can both A) have a nation-wide presence, while B) still understanding these above local market characteristics. Instead, small-scale developers – teams with intimate understanding of their communities – drive most multifamily development. These firms have the relationships and local knowledge to make successful deals happen.
Final Thoughts and High Peaks Capital’s Multifamily Development Role
At High Peaks Capital, we embrace this “local-first” approach to multifamily development. We use our local knowledge and established relationships to find the best multifamily development deals. From deal sourcing, to underwriting, to execution, stabilization, and disposition, we have the skills, experience, and connections necessary to develop high-performing multifamily properties.
We are also a finance company. We help some of the top Multifamily developers in the country source equity capital for their projects. If you have a Multifamily apartment development coming up and need Joint Venture, CO-GP, LP or preferred equity capitalization, reach out and we can discuss.
If you’d like to discuss different multifamily investing options for your unique situation, we’d love to chat! Drop us a note, and we’ll set up a meeting to talk about available passive real estate investment opportunities.