What Challenges Are Facing Developers Today?

RealShare Apartments development panel

LOS ANGELES—Demand from both individual renters and investors for apartment homes and buildings has intensified. To meet this growing need, developers have expanded the volume of new construction. This, of course, leads to a quandary. On one hand, multifamily builders want to create the best product to lure both renters and potential investors. On the other hand, the costs of construction materials, land and labor remain high and loans are becoming more expensive due to Dodd-Frank regulations.

In a RealShare Apartments panel titled: Clearing the Hurdles: Development Update, expert panelist addressed the question of how today’s apartment developers are managing to pencil deals out in this climate, among other things.

Panelist Jim Andersen, SVP of Trammell Crow Co., said that in Los Angeles specifically, there has been a tremendous amount of development over the past five to seven years. “Some of the more desirable Westside neighborhoods have been inundated with developments,” he said. However, Andersen pointed out that thanks to a few major initiatives on the ballot, the price of development could go up and take longer and we could see a significant slowdown on L.A.’s development momentum.