New apartment construction process

16 Replies

Hi,

I have a basic question on how to go about evaluating responses form architects. I never dealt with architects before. 

I have a 7000 sq.ft. lot with R-3 zoning. So I found an architect from a similar project development that I want to undertake (10x 1BR townhome units).  I just asked the architect to let me know if they can create plans for small apartment complex with 10x units +parking. They responded that the architectural fee for the 10 unit townhome project is $45,000. This is for architectural work only, and does not include the work of the other consultants (structural, mechanical, plumbing, electrical, etc.).

So without having any other information but these several sentences from this architect, what is the best way to evaluate the offer from an architect? I know that the architect is not interested in providing any more details of what they have in mind without knowing that they will be selected for the job. On the other hand, I have no idea if $45k  is a reasonable amount for this work. So this  is like a chicken-egg problem. I would appreciate if anyone can share their experience on dealing with architects on new apartment development. 

Thanks!

@Ross Sib

Best way to check, go get other architect bids, at least two others. Make sure the arch scope of work is the same between the three. You should also bid you struct, MEP, civil also. Get three bids for those also. You can find S/MEP/C by asking the architects who bid who they recommend.

~ Scott

Fees are typically based on project type, complexity, sq ft, construction costs & how easy the client is to work with...  A percentage of estimated construction cost is fairly standard. This could range from   4% - 10%. The lower percentage is for lager projects $10M +. A higher fee is for smaller projects (less than $500k).  There are too many variations that could make this increase or decrease based on project complexity. 

As for comparing bids, you should start by providing the architects an RFP (Request for proposal). This is where you describe your project in great detail and what your expectations are of the architect. They will all bid off of the same information at this point. The should include a scope or work, what is included and not included. What the hourly rate for extras / changes would be. 

It's often best for the architect to include MEP & Structural engineering in their bid since they are required to work directly with them. This will save you some headaches later if you select engineers the architects don't like. Alternatively, Design/build could be a good option for this type of project. Find a good GC and have their subs do the MEP engineering and work directly with the architect. This is where you will find the most cost savings.  

Originally posted by @Seth Holmen :

Fees are typically based on project type, complexity, sq ft, construction costs & how easy the client is to work with...  A percentage of estimated construction cost is fairly standard. This could range from   4% - 10%. The lower percentage is for lager projects $10M +. A higher fee is for smaller projects (less than $500k).  There are too many variations that could make this increase or decrease based on project complexity. 

As for comparing bids, you should start by providing the architects an RFP (Request for proposal). This is where you describe your project in great detail and what your expectations are of the architect. They will all bid off of the same information at this point. The should include a scope or work, what is included and not included. What the hourly rate for extras / changes would be. 

It's often best for the architect to include MEP & Structural engineering in their bid since they are required to work directly with them. This will save you some headaches later if you select engineers the architects don't like. Alternatively, Design/build could be a good option for this type of project. Find a good GC and have their subs do the MEP engineering and work directly with the architect. This is where you will find the most cost savings.  

I agree totally with Seth. I will add to this by saying you must also be comfortable with the architect you select. They must communicate well and understand your goals and project program. 

Unless you are familiar with working with engineers then have your architect work with sub-consultants they are familiar with and include in proposal. The proposal should detail everything that will be completed for "$45k". From your description, it sounds as if your first architect doesn't believe you are serious about the project. Ask them their process because it's no walk in the park.    

@Jared W Smith  

@Seth Holmen

Thanks for the valuable advice! I started drafting a RFP based on the examples that I found online.

Another question that encountered during RFP drafting is the specification of the number of units and their size, eg. 1bd vs 2bd. How are apartment developers are usually deciding on the ratios of 1br and 2br units in the upcoming complex? For example, if I can build 10x 1br apartments or 8x 1br with 1x 2br apartment, which would be a more optimal combo? The project in question will be located in Koreatown area of Los Angeles. It is an area with high population density.

I’ve worked through that exact question on some apartment buildings I’m designing right now. To get an accurate answer to your specific region call up some property managers and ask for proposals for their services and as a apart of that have them supply a recommended unit mix based on your market. 

Option 2 is to study Apartments.com and see what’s in your area for unit sizes and mixes. 

The other factor is simply what is allowed based on parking requirements. Sometimes this is a very strong driver. 

I am now drafting the Scope portion of the RFP and I have the following content so far. What other information if critical to include in RFP to help Architect to provide a good bid/response? 

V. SCOPE OF WORK

Scope of Services and Responsibilities to be defined as per Standard AIA Owner/Architect Agreement B-141 are as follows:

  Structural Engineering (inspections, reports and recommendations).

  Schematic Design (new layout, demolition plan).

  Design Development

  Construction Documents

The design requirements will include but not limited to:

  Installation of new plumbing and electrical systems with separate electric metering for each unit

  New gas top –vent gravity natural gas wall furnace and air conditioning system. Air conditioning shall utilize mini-split based   systems with at least 18,000 BTU for 700sq. ft. apartment.

  The architectural design to meet sound insulation requirements as the following:

   - 50 STC (Sound Transmission Class)

   - 50 IIC (Impact Isolation Class)

 The apartment complex to have flat roof area of 500 -700sq. ft. that is ready for photovoltaic panel installation.

@Ross Sib

On unit mix, are you proposing to hold long term or sell it when complete? This make a difference in how you approach best unit programming. 

If you are going to sell it, then call a couple of local brokers who sell new completed apartment projects, ask them what the preferred unit mix for BUYERS. I will say most developers today in the LA urban markets are building for millennials, which suggests more studios and one bedroom units. While the demand is high in that demographic, competition from other project in development is also high. You don't want to be the last guy into the market leasing when the market downturn comes. As well, our internal assessment of the millennial demographic is two main things: 1. they are very mobile, and can move whenever they want, no kids, low job attachment etc, , 2. They are early in careers and not making high salary, so price sensitivity generally is an issue, rents go up too much they can and do leave for other buildings or other markets.

Our projects are now entirely out of the millennial markets, serving a totally different population.

If you are seeking to hold long term, or are attempting to build to a different demographic, then that should inform your unit mix. 

Overarching all this, is what you can fit on the site in regards to zoning. So you must balance zoning/parking/build cost requirements with your assessment of what unit type the market demands. This is a key component of being a seasoned developer, and many times missed by less seasoned folks.

~ Scott

@Ross Sib Indicate payment terms, 5% sign, % first draft, % second draft, % final draft, % 1st correction, 15% approved plans. Also include number of revisions you are allowed. ie Owner will be allowed 3 revisions per design phase, unless it is minor ie move a wall 1’, etc.

How would one go about estimating the cost for the new multi-family  construction? I hear of rule of thumb type of numbers of $150k-180k. Do I have to have a complete construction document from architect to get a reasonable estimate of the materials+ construction cost (minus appliances, cabinets)? 

Thanks!

@Ross Sib The architect should know how to make the construction drawings fit your budget. Of course, an architect’s imaginary or assumed cost per sf does not mean that once you shop, it will come in at the same range. Always put expectation low on construction drawings, they will blow up in price when you shop. This is where experience is worth.

@Ross Sib Construction costs vary wildly depending on many factors like which part of the country you are, the type of materials used, etc. You won't be able to get a true bid until you completed plans, but you could reach our to GCs in there area and get a ballpark. You'll need to hire one anyway to build your project. Be aware that construction costs are ballooning right now because of tariffs and other factors. Lumber has skyrocketed in the past year, steel just got hit with a 25% tariff, and quartz countertops from China are getting hit with duties as well. If you get a ballpark number today, but don't have plans for a few months, you could easily get some sticker shock when you actually bid out your project.

On the unit mix, what's the max density allowed on the site? Make sure you're not trying to build more units than allowed. Scott was right on in his comments on the unit mix. Who will you be marketing your units to? Put yourself in their shoes. What would you be looking for if it was you? Are there a lot of families in the area and renting makes more sense than buying a house? Maybe increase the mix of twos. Singles? Increase the ones. It's not an exact science but something you get better at over time. 

For instance, my company builds age-restricted apartments for seniors. We started with a 60/40 mix of 1s and 2s. Turns out, the majority of our residents are widowed and want 1s. Now on our fifth project like this, we're closer to 70/30. Our lease ups are much better now than with the first project.

Good luck!

@ross rib
I would recommend you contract an architect to do a feasibility study first so you can have an idea of a general site plan, how many units you can fit and at what square footage, etc. This can usually be done at a very reasonable price before you contract someone to do the full construction documents and building design.

Based on the info you provided, to bid a project accurately here are a few elements you need to provide or clarify:
- you indicate 1 bedroom units- but what’s the square footage? A 500 sf 1 bedroom vs 1000 sf is a huge difference.
- You say 10 townhomes, then you mention you asked the architect to bid on an apartment building. There can be huge differences in these two types. An apartment building will need to be designed under the IBC whereas townhomes depending on your jurisdiction, can be under the IRC. I typically charge more for apartment buildings because they are more complex and require more coordination for fire sprinkler, ada, and code requirements etc.