Local expert Clark Espinosa shares his thoughts on the state of the market:
TREND: Affordable housing is gaining momentum, but the promise of new funding options is lagging.
The continued cost of housing across market segments has added immense pressure to the development pipeline. Cities and states are seeking ways to bring more affordable housing options online while NIMBYs continue their fight against it all. Intense collaboration between developers, investors, planners, architects and jurisdictions is the only way to make things pencil.
CHALLENGE: Finding equity partners willing to fill in the capital stack still proves difficult.
Telling the development story has become more crucial than ever, and differentiating your new project will require a creative approach. Hit the five key elements in your pitch deck, for sure, but supplement your story with great graphics. If you can’t afford original conceptual design, consider having your architectural team leverage AI to create images you can use to sell investors.
DESIGN VALUE: Cost-containment strategies require efficient architecture that can actually save money.
Waiting to value engineer your project until after the initial design phase could be the kiss of death. Today’s tighter pro formas require a cost-conscious approach from the outset, and if your design team doesn’t understand your financial goals, they’ll never help you hit the mark. Marketability, creativity and high design are still the goal, but not to the detriment of profitability.
BEYOND THE NUMBERS: Design resiliency will ensure new projects remain competitive even if they need to be shelved for a bit.
Many of your competitors are hesitant to start the design process for potential projects, worried that capital will dry up or other conditions will alter the course. But hedging your bets in favor of an earlier start can potentially pay huge dividends. Initial design fees are a small percentage of your overall budget, and taking the first step in project design greatly increases your odds of seeing it through.
Clark Espinosa spent 18 years in real estate development and construction where he specialized in leading projects in REO residential and commercial investments and guided asset management teams through due diligence, property condition assessments and environmental site reporting. He is a member of the American Society of Civil Engineers and earned his degree in Civil and Environmental Engineering from Rutgers University. He lives in New Jersey and works with developers across the east coast.
