In this article, Marc and Nicole Padgett (Summit’s leadership) share their insights into the current shifts in multifamily construction markets.
Edited: September 15, 2022
Smaller cities (secondary and tertiary markets) surrounding the major metros are gaining new developments as populations grow and market conditions become more favorable for garden style construction. There are several factors at play that determine where developers choose to build. We will look at a few of them here.
Summit Contracting Group has specialized in multifamily construction in the Southeast U.S. since 2007. We’ve seen construction “hot spots” shift over the years, but there are far more projects under construction outside the primary market cities since 2020. For example, where a lot of our Georgia construction was previously concentrated in the City of Atlanta, now we are building in the surrounding communities of Stockbridge, Gainesville and Cartersville. These cities are more friendly to development and builders, with less “red tape” compared to the stricter regulations in larger urban areas.
The construction of building types has shifted into more garden style buildings in the suburbs, due to the demand for housing with population increases, more land availability, and better cost efficiency. High density podium construction is still happening but are not as popular right now due to increases in the costs of materials, regulations and other development fees.
Summit’s President, Marc Padgett, expects garden style product demand to hold steady in this economy. He says, “the market is saturated with the 5 over 2 podium and similar type downtown urban products which are significantly higher in cost to build. That cost combined with higher interest rates is pushing more development of 3- and 4-story garden product.”
Nicole Padgett, Summit’s CAO, sits on the Jacksonville Planning commission and from there she sees a lot of different types of development projects. She tells us that “mixed-use developments, townhouses and single family for rent communities have gained in popularity with developers as a way to diversify their assets, and to meet the needs of the City and its residents.”
Overall, the multifamily sector remains strong as migration towards secondary and tertiary areas continue.
Regulations account for 40.6% of apartment development costs, according to a recent report from NMHC and NAHB: https://www.nmhc.org/news/press-release/2022/new-research-shows-regulations-account-for-40.6-percent-of-apartment-development-costs/