NorCal Development project

14 Replies

BP wise ones...

I am in between a rock and a hard place right now. I know many of you are in California and know how (block my eyes from the gouging) high the costs are with construction in NorCal. We have a beautiful flat parcel in NorCal and are about 2 years into the process of developing the site. We own the land outright. We are surrounded by multifamily and SFH. We've gone the direction of modular to try and save time/money but the numbers just are not penciling out like we'd like them to. Would love some feedback from anyone with experience in this market and/or with this size of project from a start to finish job. Since many of you will ask the details, they are below. What we are trying to figure out is if we can get costs down if we do this on our own and piece out to local subs - We've only done rehabs so this is a bit new for us. If we did this on our own in smaller bites vs. financing through lender with strict guidelines...also if stick built is significant savings vs modular at these rates. We are in no rush but these numbers are a bit crazy...but so is this area in costs right now. Hard to imagine anyone penciling profit off of these numbers even with skyhigh rents.

Location: North of San Francisco 

Project: 145 units. Comprised of a few 3-story apartment complexes and a couple dozen attached SFH. <5acre parcel. City is DYING for us to build asap. 12-378SF studios (Total: 4550sf), 63 510sf 1/1s (TOTAL: 32100sf), 36 875sf 2/2s (Total: 32000sf), 12 senior 2/2 rooms (TOTAL: 5500sf), 22 sfh (3/1 1100sf) (TOTAL: 23000sf). RENTABLE AREA: ~96,000sf. Average rent rate currently: $2.30/sf. Potential of $218,000 gross rent at 100% capacity.

Costs: Quote are for Modules alone delivered to site $16-17M; GC end to end (site prep, finish work) work quotes $18-25M.  These numbers are pushing above $355/sf cost to build. This is not including any finish work on our CDs. Or at least another $500k that that I anticipate costs for.  

Any and all feedback (constructive or not) would be greatly appreciated.  Tear these numbers apart, tell us how horrible the deal is...just would love some feedback. We are not quite asking our local friends who do this type of work so literally any feedback would be golden. 

wow  portland its 400 a foot for concrete glass elevator multi story   for 3 story wood walk ups we would be at 100 to 120 a foot.  what county..???.. 

@Dean B. Do you have complete plans and specs to get actual hard numbers? $18-$25 million is a big difference and sounds like ball parking due to a lack of detailed CD's.

Without knowing the location, (NoCal is a big area) what type of construction and level of finish, site conditions, utility requirements, parking and stormwater details it will be very difficult to give you an idea of how you compare but as @Jay Hinrichs mentioned those are Calss A glass tower numbers.  

Modular is not the way to go for a project like this. It will be a nightmare and cost way more than stick built. I definitely feel you can get those numbers more inline with what I am seeing right now ($200 ft all in) if you are doing stick built moderate to high end level finishes. 

@Greg Dickerson nice. I only used $18-25 so we don't call out to who could be reading this. I know the dev world is quite small.  It was a hard $19M.  Some stringent storm requirements but nothing to dictate this level of cost.  Site conditions are pristine (almost completely flat with minimal grade and soil work needed). Parking and utility work middle of road for the area.   We aren't complete CD done but we are close.  Glass tower is 100% not what we are doing...quite the opposite. Traditionally low-middle income area with quite a few large affordable projects mixed with market rate SFh in the 1-mile radius. 

Your 200 is what we were budgeting for originally FYI. $205 was part of our initial modeling +-10%.  And that was with mid-to-low finishes given our particular "fire damaged" area.   Sincere thanks for @Jay Hinrichs and your comments though...for a second we thought we missed the "construction prices up 80% memo" somewhere.  Its continuing to look like back to architects drawing board...

Originally posted by @Greg Dickerson :

@Dean B. Do you have complete plans and specs to get actual hard numbers? $18-$25 million is a big difference and sounds like ball parking due to a lack of detailed CD's.

Without knowing the location, (NoCal is a big area) what type of construction and level of finish, site conditions, utility requirements, parking and stormwater details it will be very difficult to give you an idea of how you compare but as @Jay Hinrichs mentioned those are Calss A glass tower numbers.  

Modular is not the way to go for a project like this. It will be a nightmare and cost way more than stick built. I definitely feel you can get those numbers more inline with what I am seeing right now ($200 ft all in) if you are doing stick built moderate to high end level finishes. 

Sonoma is a tough place  I own 4 acres across from the Graton casinso and Rohnert park decided we need 10 acres to develop mine is zone MF mixed use but cant do anything until neighbors join in.. value is about 

 

@Dean B. part of the problem here is that with all of the fire rebuilding the GCs are incredibly busy, and the trades are even busier. A lot of their jobs are insurance work which drives up prices as well.

From 2005 to 2014 you could count all the houses built on your fingers, so a lot of the trade labor moved away or switched to other occupations. When building started up again there were few resources locally to do the construction. Then the fire hit and the crisis was on...

I wonder if five years from now it gets better?  Once the fire homes are rebuilt perhaps we’ve accumulated a trade labor base looking for work.

Does your architect have it in their scope to do bidding services? I would get the CD's finished, bid the project, have the architect review/manage the bids and have them grill the contractors on their pricing. It sounds like you are getting the, "we're busy prices," which means they are bidding high because they don't really have time for your job. If they get it, then great, they've made a boat load. If it doesn't come in at what you want, reach out farther north. We have GC's up here that would love work like that and would probably give you better pricing to get their foot in the door.

There are also national contractors that have teams of people that move to the area to complete a job. North Dakota comes to mind. A few guys there can do projects this large and they charge less. Just some thoughts.

@Dean B. If you haven't start penciling out the numbers you'd need to sell off individual lots? Best scenario may be to  start selling off portions to earn your money back. Outside of other great responses here, i'd say the more hands on and the more bids you can continue to get the lower you can drive the cost. 

My guy @Scott Choppin may have some more insight for you. 

@Josh Cuthbertson  It can be in their scope. The issue is now we are at a fork in the road re: Architecture. We've done most work to plan for modular specs - which are quite a bit different than stick. I agree with you, we are reaching outside of the immediate area (hopefully within CA) for other bids.  Our local teams are just that "busy prices" across the board.  Fire home still being finished in most subdivisions still so work is still busy. I think we are going to spec this out stick built and get some initial estimates from a variety of teams.  If not in our budget, we will do it ourselves.   @Greg Dickerson will ping you a bit later.  Would love to pick your brain if you've done or evaluated bigger modular projects.

@Dean B. There is an apartment complex recently built (1-2 years ago) using modular construction in San Leandro along BART. Might be worth while connecting with the developer and/or GC on that project.

https://bridgehousing.com/properties/marea-alta-family-apartments/