LOS ANGELES—Getting the maximum return on your multifamily development may seem easy in Los Angeles. After all, there is ample demand a supply shortage that makes renters cringe and landlords rejoice, but maximizing ROI on ground-up development requires deep knowledge of micro market dynamics. Michael McCormick, president and CEO of McCormick Construction, says that “understanding and knowledge” of the development and entitlement process is one of the keys to delivering a successful project. But there are others, too, including amenity packages, designing for longevity and differentiating a project. We sat down with McCormick for an exclusive interview to find out his strategy for maximizing ROI in multifamily.
GlobeSt.com: What are the biggest contributors in maximizing ROI in ground-up multifamily developments during the development phase?
Michael McCormick: Having a good understanding and knowledge of the area's planning and entitlement process, including how “developer-friendly” the municipality is where the multifamily development is being built, can significantly affect ROI, since these things directly impact the overall cost of a project. Selecting the best project delivery method and project team helps facilitate a successful ROI as well. The right team can better evaluate potential costs, identify challenges and create opportunities to improve project profitability.
GlobeSt.com: What amenities contribute most to ROI? How do developers balance which amenities are the most profitable with what's the most desirable to their target demographic?
McCormick: Since amenities can be found both off-site and on-site, owners/investors need to first look beyond their development. At McCormick, we look for urban infill sites next to transit options in downtown areas and community centers that have a 90+ “walkability” score. In addition, close proximity to retail shops, restaurants, entertainment centers, employment districts, parks and good schools help promote ideal living conditions. On-site amenities are typically focused on technology, comfort and convenience. Residents demand exceptional Internet and cellular access, while quality unit finishes and materials, upgraded appliances, outdoor amenities such as pools, spas, BBQ nooks, rooftop decks, outdoor kitchens/dining areas and well-equipped gyms all create a better living space and aid in enhanced project profitability.
One of McCormick's current multifamily projects, Talaria at Burbank, is a $200 million, 471,000-square-foot project in the heart of Burbank, California's media district. Developed by Cusumano Real Estate and designed by VTBS Architects, the mixed-use community will include 241 luxury apartments and 760 parking spaces, with a range of on-site and off-site amenities. Talaria's ground floor will also include a new 43,000-square-foot Whole Foods market with a full-service restaurant – creating an ultra-convenient grocery and dining option for residents. Additionally, the community is in close proximity to a number of major employers, located directly across the street from Clear Channel, Warner Bros. and The Burbank Studios and within walking distance from Walt Disney Company and Providence St. Joseph Medical Center, bringing a desirable, high-end living option to the area.
GlobeSt.com: How can you best develop a multifamily property that will endure the test of time/future trends?
McCormick: Unquestionably, the best asset is one that is flexible. Having the ability to modify unit configurations, floor plans, etc. in the future will provide the greatest opportunity for a higher profit upon sale or long-term investment. Making sure the property is wired to not only meet, but exceed, current technology needs is important as well. In addition, the development should have a timeless architectural design that is not too trendy, so it does not become outdated.
GlobeSt.com: How are multifamily developers differentiating their projects in terms of live/work units?
McCormick: Developers are introducing live-work units in many new multifamily developments, typically in urban cores. McCormick is currently constructing Variel, a 426,000-square-foot, ground-up multifamily development in Canoga Park, California, developed by Evolution Strategic Ventures and designed by Urban Architecture Lab, which includes four live-work units. Ideal for entrepreneurs, artists, and others who work from home, these units typically offer a ground-floor office space and an adjacent living area. Once completed, Variel will meet the demand of those who desire flexible live-work units in the San Fernando Valley, outside of Los Angeles' dense urban core, differentiating itself from other multifamily communities in the area.
Several economic factors have resulted in net positives for the multifamily sector and prices in core markets are at an all-time high. But just how long can the market continue on this trajectory? Join us at RealShare Apartments East on Feb. 28 and March 1, 2017 for insights on succeeding in the right markets as well as navigating and finding opportunities in the more challenging ones. Learn more.
LOS ANGELES—Getting the maximum return on your multifamily development may seem easy in Los Angeles. After all, there is ample demand a supply shortage that makes renters cringe and landlords rejoice, but maximizing ROI on ground-up development requires deep knowledge of micro market dynamics. Michael McCormick, president and CEO of McCormick Construction, says that “understanding and knowledge” of the development and entitlement process is one of the keys to delivering a successful project. But there are others, too, including amenity packages, designing for longevity and differentiating a project. We sat down with McCormick for an exclusive interview to find out his strategy for maximizing ROI in multifamily.
GlobeSt.com: What are the biggest contributors in maximizing ROI in ground-up multifamily developments during the development phase?
Michael McCormick: Having a good understanding and knowledge of the area's planning and entitlement process, including how “developer-friendly” the municipality is where the multifamily development is being built, can significantly affect ROI, since these things directly impact the overall cost of a project. Selecting the best project delivery method and project team helps facilitate a successful ROI as well. The right team can better evaluate potential costs, identify challenges and create opportunities to improve project profitability.
GlobeSt.com: What amenities contribute most to ROI? How do developers balance which amenities are the most profitable with what's the most desirable to their target demographic?
McCormick: Since amenities can be found both off-site and on-site, owners/investors need to first look beyond their development. At McCormick, we look for urban infill sites next to transit options in downtown areas and community centers that have a 90+ “walkability” score. In addition, close proximity to retail shops, restaurants, entertainment centers, employment districts, parks and good schools help promote ideal living conditions. On-site amenities are typically focused on technology, comfort and convenience. Residents demand exceptional Internet and cellular access, while quality unit finishes and materials, upgraded appliances, outdoor amenities such as pools, spas, BBQ nooks, rooftop decks, outdoor kitchens/dining areas and well-equipped gyms all create a better living space and aid in enhanced project profitability.
One of McCormick's current multifamily projects, Talaria at Burbank, is a $200 million, 471,000-square-foot project in the heart of Burbank, California's media district. Developed by Cusumano Real Estate and designed by VTBS Architects, the mixed-use community will include 241 luxury apartments and 760 parking spaces, with a range of on-site and off-site amenities. Talaria's ground floor will also include a new 43,000-square-foot Whole Foods market with a full-service restaurant – creating an ultra-convenient grocery and dining option for residents. Additionally, the community is in close proximity to a number of major employers, located directly across the street from Clear Channel, Warner Bros. and The Burbank Studios and within walking distance from
GlobeSt.com: How can you best develop a multifamily property that will endure the test of time/future trends?
McCormick: Unquestionably, the best asset is one that is flexible. Having the ability to modify unit configurations, floor plans, etc. in the future will provide the greatest opportunity for a higher profit upon sale or long-term investment. Making sure the property is wired to not only meet, but exceed, current technology needs is important as well. In addition, the development should have a timeless architectural design that is not too trendy, so it does not become outdated.
GlobeSt.com: How are multifamily developers differentiating their projects in terms of live/work units?
McCormick: Developers are introducing live-work units in many new multifamily developments, typically in urban cores. McCormick is currently constructing Variel, a 426,000-square-foot, ground-up multifamily development in Canoga Park, California, developed by Evolution Strategic Ventures and designed by Urban Architecture Lab, which includes four live-work units. Ideal for entrepreneurs, artists, and others who work from home, these units typically offer a ground-floor office space and an adjacent living area. Once completed, Variel will meet the demand of those who desire flexible live-work units in the San Fernando Valley, outside of Los Angeles' dense urban core, differentiating itself from other multifamily communities in the area.
Several economic factors have resulted in net positives for the multifamily sector and prices in core markets are at an all-time high. But just how long can the market continue on this trajectory? Join us at RealShare Apartments East on Feb. 28 and March 1, 2017 for insights on succeeding in the right markets as well as navigating and finding opportunities in the more challenging ones. Learn more.
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