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— Multifamily Properties Quarterly — October 2015
Developer Spotlight
T
he challenges facing the con-
struction industry may seem
daunting in a climate of growth
and exciting innovation. As
we continue to have conversa-
tions around these challenges, we
see a few constant themes such as
meeting quality
challenges, seeking
skilled personnel,
lacking afford-
able for-sale units,
and being able
to expand across
regional and global
markets.
In the follow-
ing interview,
David Thorpe,
vice president of
Shaw Construc-
tion, addresses the
current challenges
in multifamily
construction and offers solutions to
those challenges for general contrac-
tors, subcontractors, vendors and
the real estate community.
Q:
What is the greatest challenge of
multifamily construction right now?
A:
It’s a supply and demand chal-
lenge. There’s a lack of available,
trained construction personnel; high
and unpredictable pricing due to
the reduction in competition; and
schedules are delayed and quality
is scrutinized. The growth in the
demand side is outstripping the
growth in the supply side.
Q:
When do you see the gap clos-
ing between rental and for-sale
units?
A:
That will depend on when the
legal environment will allow our
clients to feel comfortable building
for-sale condominiums. There are
people who would love to develop
for-sale product, but the legal envi-
ronment is creating an array of
barriers to make that a realistic pos-
sibility for developers who are ready
to create high-quality products.
Q:
How is Shaw responding to the
civic agenda for more affordable
housing?
A:
We have been an active partici-
pant and leader in affordable hous-
ing for many years. We continue to
work with developers, architects
and engineers who know the mar-
ket, products and the best delivery
methods that work for the afford-
able housing industry.
We prefer to work with clients who
are on the leading edge of adapta-
tion and innovation. Thus, we aspire
to and are eager to engage more
work in the affordable arena. Some
of our best projects are those that
push us to adapt with the changing
needs of the market.
Our latest project with the Denver
Housing Authority is a multifam-
ily affordable housing community
called Mariposa in Denver’s La Alma/
Lincoln Park neighborhood, part of
the DHA’s plan to reinvent the area.
The community received LEED Plati-
num certification, which is hard to
achieve for a residential building.
We are proud of the work we did to
make sure the building fit within the
guidelines of LEED certification, and
that we could work on a project that
will make such a positive impact in
Denver’s affordable housing market.
Q:
What key learnings can the
industry garner from this current
construction climate?
A:
First, adapt as quickly as pos-
sible. We understand the dynamics
of the market demand change. We
best serve our project teams when
we quickly come to terms with
changing environments and work
collaboratively to adapt with our
developer clients and our design
team partners.
Second, give our best assessment
of true cost changes – as everyone
knows they have been escalating
and, at times, rapidly – even if it is
not what our developer clients or
our design team partners want to
hear. Projects that seek to deliver on
last year’s costs are the projects that
find their way to a troubled budget
and pro forma.
Third, maintain strong subcontrac-
tor and vendor relationships. Bring
in additional expertise to assist
subcontractors and vendors on how
to deal with the challenges of the
shortage of skilled labor.
Q:
What do subcontractors need to
bring to the table to compete in this
market?
A:
Our best subcontractors under-
stand everything mentioned above,
and they work hard to train skilled
labor, retain their best skilled labor,
plan their work carefully, and keep a
good balance between their available
resources and the amount of work
they want to take on. They are good
planners and strategic project task
masters.
Q:
What do vendors need to offer
to compete in this market?
A:
Strong customer service skills.
Our best vendors understand they
are vital to the success of our
subcontrac-
tors and, by
extension, the
project. They
carefully plan,
focus on qual-
ity control,
provide good
product infor-
mation and
proactively
provide insight
to the project team relative to the
best means and methods of delivery,
storage, installation and mainte-
nance through the life cycle of the
project.
Both subcontractors and vendors
must garner expertise at global pro-
curement and have access to proj-
ects produced globally to be com-
petitive.
Q:
Is Shaw Construction seeing
similar trends across the Rocky
Mountain region and, if so, what are
they?
A:
We are seeing similar trends
across the country. Denver, and
Colorado as a whole, is one of the
fastest-growing markets, but these
dynamics largely are true to varying
degrees across the nation. Region-
ally the challenges may be bigger
or smaller relative to supply and
demand balance.
In conclusion, it is important for us
to listen, learn, adapt, communicate
and masterfully execute as a collec-
tive community from inception to
completion for the multifamily resi-
dential construction environment to
flourish in both for-sale and for-rent
affordable product types.
s
A
s the housing market revital-
izes in Denver and around
the country, green initiatives
are more readily recognized
and celebrated. The U.S. Green
Building Council suggests that in the
next three years, residential green
construction spending will nearly
double.
Although some would assume this
growth is isolated to single-family
residential projects because of the
increased initial investment and lon-
ger return schedule for multifamily
properties, a SmartMarket Report by
McGraw Hill Construction projects
79 percent of multifamily properties
will be built using green initiatives
by the year 2018. That’s a 25 percent
increase from the 54 percent reported
in 2014.
We’ve seen this significant growth
in green-building initiatives for mul-
tifamily properties firsthand. We
were honored with the opportunity
to work with some of Denver’s most
forward-thinking developers to bring
sustainable design to multifamily
properties across the Denver metro-
politan area.
For example, AMLI Residential has
built a brand on using sustainable
design practices in its multifamily
properties and consistently pursuing
LEED certification.
“Pursuing LEED certification at all
new AMLI projects is a central tenet
of our company culture and devel-
opment thesis,” said Andrew Mutz,
senior vice president of development.
“We believe it provides for a healthier
living environment for our employees
and residents and, quite simply, is
the right thing to
do.”
AMLI’s most
recent LEED cer-
tification came in
partnership with
Norris Design
at AMLI River-
front Park, which
achieved LEED Gold.
This continued dis-
tinguished effort is
a great success and
“has helped the
communities we
develop outperform
expectations while
reducing the carbon
footprint of both
AMLI and all the
residents living at
our properties,” said
Mutz.
The largest bar-
rier to more green
initiatives in mul-
tifamily communi-
ties is the initial,
higher develop-
ment cost due to specialized mate-
rials. This hasn’t stopped all local
developers, however.
“Even though the first costs are
significantly higher, the benefits
obtained in tenant retention and
overall occupancy affordability help
to offset those costs,” said David Pret-
zler, president at C&A Cos.
“Building sustainable communities
helps us maintain a healthy bot-
tom line through higher occupancy
and rent levels in declining markets
because a large part of our affordabil-
ity in comparison to our competitors
is obtained through lower heating,
cooling and water bills for our resi-
dents,” said Pretzler.
The trade-off Pretzler suggests
between higher initial costs and
increased tenant retention due to
competitive utility costs is a major
motivator for conscientious devel-
opers to uphold sustainable design
practices in their builds.
C&A Cos. and Norris Design com-
pleted the Solaire development in
Brighton, which is the largest geo-
thermal installation at a multifamily
community in the nation. After the
development’s success in reducing
its carbon footprint and the utility
obligation of its residents, C&A Cos.
is continuing this effort in more of its
upcoming properties.
Aside from the potential, long-term
financial benefit, many developers,
architects, engineers and construc-
tion professionals are recognizing
and finding the use of sustainable
design practices offers a sincere ful-
fillment of innate moral obligations
to protect precious resources.
The Grove-Stapleton is one of those
realizations. This property, developed
by Zocalo Community Development,
features a rain garden that filters
water from building runoff before
it’s deposited into the storm water
system. Small steps such as this can
Keo Frazier
Director of
marketing, Shaw
Construction,
Denver
Jared Carlon,
PLA
Principal, Norris
Design, Denver
Brad Haigh, PLA
Principal, Norris
Design, Denver
David Thorpe
Photo courtesy Norris Design
The Grove-Stapleton features a rain garden that filters water from building runoff before
it’s deposited into the storm water system.
