Just received updated pricing from one of our projects (4 over 2 construction) - up 15% in a matter of months. Unfortunately we are in a market where rents haven't risen fast enough to keep up with the pace of construction. We are trying every angle we can on the financing/funding side, but are also going to need to VE this pretty hard. Any creative workarounds/solutions that you've seen recently? I'm not looking for a silver bullet but anything that gets us working the other way helps.
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Hope that helps.
Construction prices are pretty tough right now and are killing a lot of my deals, so it seems to be the norm. First I’d ask your GC for VE options. Second I tend to address engineers first since I have an engineering background and know these guys over design a lot.
I try to keep architectural stuff last when it’s typically the first thing to go. I also target redundant items like rebar, panels, doors, windows, etc. Lastly, I try not to sacrifice tenant experience nor community’s (architectural design). There’s so much in the S/MEP side that developers are scared to challenge cause they know little to nothing about it. Good luck!
Great answer.
This. Was. Awesome. Exactly what I was looking for.
Big one to flirt with: assuming you have 9' ceilings, reduce to 8'9" - this will reduce building height by 1' resulting in less required framing and, more importantly, façade surface area. 9' ceilings has become standard for new developments, however, I do not believe most renters will notice the difference between 9' and 8'9".
Reduce elevator speed - no one can tell the difference from what was probably recommended by your engineer and 150FPM, especially in a non-high-rise.
This is programmatic but do you have the ability to reduce parking ratio?
What about 8'6" - is that much more noticeable?
We recently purchased a value-add with 8'6" ceilings in a micro market that has a plethora of new inventory. Virtually all of the new inventory has 9' ceilings. My opinion is that 9' to 8'6" has a miniscule impact on the way a unit feels. We haven't lost leases due to this either.
Once you get to 8' or below, your rooms feel tight but I think 8'6" + is safe.
We are pretty tight on the parking ratio as is and would prefer not to reduce anymore. I think that'll make the development look better on paper but will lead to issues once it's open.
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