Infill Development vs. Larger Projects: What's Your Winning Strategy?

Question

In our experience, infill development—especially single-family detached and attached homes—has proven to be the fastest and most profitable strategy in markets like Columbus, Ohio. These projects minimize entitlement delays, leverage underutilized lots, and provide faster cash flow than large-scale subdivisions or lengthy custom home builds.

But is infill new construction (non existing structure) the best strategy in your market? Are you seeing stronger returns in condos, townhomes, apartments, industrial spaces, retail, or hotel developments?

We believe infill homes strike the perfect balance of speed, cost control, and strong IRR. Have you found a strategy that performs better? Let’s discuss!

Stuart Udis · Answer

In Philadelphia in-fill development remains popular but the numbers don't pencil too well unless you are in well established neighbohroods. For new construction to pencil (and even heavy renovations, particulalry for multi-family/commercial projects that trigger more costly construction types) the following has to be true:

For-Sale: SF Houses: $350/SF  Condos: $400/SF

Rental: 1 Bed 1 Bath (550 SF unit)-$2.75/sf rent; 2 Bed 2 Bath (800 SF unit) $2.50 sf rent; Units over 1,500 SF at least $2.00/sf rent....and these numbers are tight. Add an additional $0.25 to each for some better performance. I see investors building 1 Beds at $1350/$1400 and don't see how they are staying afloat. Of course these are also just general rules, construction costs will vary greatly dependent on site conditions and design.

Most material costs, insurance costs, permitting, licenisng etc. don't deviate greatly depending on where exactly in the city you build and unfourtnately, most of the in-fill opportunties are in the neighborhoods that can't achieve the required pricing to make the cost of new construction pencil. Those who make it work in the neighborhoods that can't achieve the outsale or rents are usually construction companies merely using the builds to collect fees