How Much Does It Cost to Build an Apartment Complex
Calculating Apartment Building Construction Costs
What's the cost to build an apartment complex? It can seem like a simple question, but apartment building construction costs can be based on a wide range of factors. Part of this is due to size. Apartment complexes can range in size from two-story four-apartment quad to huge multi-story complexes with multiple apartment buildings within them. With 2020 behind us, the many construction projects that were slowed down due to stay-at-home orders and similar issues are now nearing completion, along with a wide range of other projects that are finally kicking off, leading to expected apartment deliveries of 400,000 units by the end of 2021.
Part of what is driving this trend is the strong growth in the rental unit market. From 2010 to 2017, apartment revenue doubled, going from $20.8 billion to $42.9 billion. Generally speaking, construction of these lucrative projects will range from several hundred thousand dollars for very small units to tens of millions for large developments. But how do you determine the cost to build an apartment complex for a specific project? This article will get into serious detail about how apartment buildings are estimated, including areas where you can save time and money due to the repetitive nature of the floor plans in many apartments.
Estimating the Cost to Build an Apartment Complex
When you're trying to estimate the cost to build an apartment complex, you need to keep in mind the type of finishes you'll be using. Is it a utilitarian apartment complex intended for budget-minded individuals, or is it an ultra-luxurious high-end apartment building in the middle of downtown? Though most apartment buildings will never cost over $100 million to build, ultra-luxurious apartments themselves have been known to run as high as $237 million for an individual penthouse. However, for high-end apartment complexes, much of the money will go into the purchase of the property, marketing, advertising, and sales to ensure these pricier apartments do not remain vacant for very long.
Outside of extreme examples such as these, most apartment complex construction projects will require low- to mid-grade materials, depending on how much turnover and damage the rental company expects from their tenants. You may also see a mix of materials, with hardier commercial materials being used in public areas and residential-grade materials in the apartments themselves. Paying close attention to the overall specifications of the project is very important when you're estimating apartment building construction costs, as missing details like this may cut into your profitability if you land the job, or may make your bid too high to be accepted.
Are you bidding as a general contractor or subcontractor? If you're the GC, you'll need to consider how materials deliveries from multiple contractors may impact the elevators and access to the higher floors while deliveries are being unloaded. This can cause some of your project costs to increase, making delivery management and scheduling important to keeping your crews moving and ensuring that your project is completed on time.
Another area that many residential contractors fail to take into account is travel time. In larger multi-story apartment buildings, it will take longer to get materials, crew, and tools to the higher floors. This is an aspect of your labor estimate that you'll need to consider when you're bidding tall multi-story apartment structures, because your crew will often expect to be paid from the point that they reach the building, including the time it takes to travel to the floor you're working on that specific day.
Areas to Save Time and Money When Estimating Apartment Building Construction Costs
Saving Time on the Apartment Building Takeoff
Apartment building takeoffs can be streamlined to a certain extent, due to the fact that they often use identical floor plans, materials, and layouts for many of the individual apartments. If you know that you have a specific number of a particular type of apartment within the building, you can do your takeoff on a single unit, then multiply those quantities by the number of apartments with that same floor plan in the apartment complex. If you do this a few times until you have all of your apartment floor plans accounted for, you can quickly work up your estimates for all of the apartments.
However, if part of your estimate includes the areas outside of the apartments, make sure that you're accounting for these materials and the involved labor. Though all of the apartments for a floor plan may take the same amount of electrical wire of a particular gauge, as an example, running power to each individual apartment on different floors may require different amounts of heavy cable to move the power to the floor and then distribute it to each of the apartments on that specific floor. Failing to take this infrastructure into account when making your estimate can quickly turn a profitable project into a money trap.
Don't forget that you'll be able to make up some labor costs when working on multiples of the same floor plan. As your crew learns how each unit goes together, their efficiency will improve over time, allowing later units to be completed more quickly than the first few units of that floor plan. Additionally, during days that you can't access the worksite, you can keep your crews busy creating assemblies to make the time spent on site more efficient, such as prewiring an electrical assembly to speed installation. This allows you to keep your crew working while making the most of your time once you can be on the job site.
Saving Money When Estimating Materials Costs
Because apartment buildings often use larger quantities of the same materials, such as 100 of the same kitchen sink, 5,000 outlets, or 200 gallons of paint, you'll be able to take advantage of quantity purchases and larger cases to ensure you're getting the best possible prices from your suppliers. This can also help build your relationship with suppliers who see the increased revenue they are receiving from you as well as the additional cost breaks they can provide you with to help ensure that they keep your business long into the future.
You have two options when trying to estimate your materials costs for larger projects such as apartment buildings. You can continue to depend on your existing suppliers, who you have a solid relationship with, or you can branch out to try to work with new suppliers who may be able to provide you with better overall costs on the higher quantities you'll need for a multi-unit housing project. There are benefits and drawbacks to either approach that you can use, issues that you'll need to consider before you decide which possible costs to use for your estimate.
If you work with your existing suppliers, you may not be getting the best possible prices, because they may not have the volume to be able to offer the deeper discounts you'd receive working with larger suppliers. However, if there's an issue with the materials you've ordered, you're more likely to get good customer service, expedited shipping, or similar considerations because you've already developed a solid relationship with that supplier and they'll want to keep your business as your company expands into multi-unit housing and provides them with a higher volume of sales.
Working with new suppliers may provide you with deeper discounts at the beginning, but unless you've vetted their company, you may find that you receive less-than-stellar customer service in the long run. The supplier may be able to provide phenomenal pricing, but will have to order the materials from overseas, creating a shipping lag when you need the materials more quickly. They may have a poor reputation for delivering on their promises, something that you may not discover until it's too late, causing you to end up with lower profitability–or even a loss–on the project.
If you are changing suppliers, do so in a smart fashion by taking the time to check out online reviews, look at their rating with the Better Business Bureau, or similar options that allow you to check the quality of their service. If all else fails, ask around with other contractors at your local contractors or builders association to see if anyone has worked with that supplier in the past. This may save you a lot of hassles later on when the project is already underway and you're under contract to deliver your part of the project within a specific timetable.
Developing a Strategy for Estimating Apartment Building Construction Costs
However, it's important to note that larger construction projects can often hinge on more than simply having the lowest prices on your bid for the project. Especially when there is specific performance required for the project as part of the contract, the company hiring you will want to know that you can get the job done with good quality workmanship within a set timeframe. If you can't prove that you're able to deliver that level of performance, you may be passed up for the project, even if you can deliver results for less.
To be able to complete an estimate that is more likely to be accepted by an owner or general contractor, you'll need to convey your company's ability to manage a large project that may extend beyond your current experience. That may be handled by hiring a project manager who has dealt with multi-family and apartment complex construction in the past, providing documentation that you've handled large projects of similar scope in your company's history, delivering additional details on how much work your company can handle at a time and similar aspects that are not typically included in traditional single-family home construction projects.
You'll also need to be able to show that you can manage the crossovers that occur in apartment buildings between residential and commercial construction. Apartment complex buildings combine aspects of both types of construction, with residential-style construction processes in the individual apartments being paired to commercial infrastructures such as higher-power junctions, elevators, commercial finishes, heavier-duty hardware, and similar aspects of commercial construction that can commonly appear in public locations in an apartment complex.
Being able to demonstrate the difference between residential and commercial codes, as well as the quasi-commercial requirements for multi-family housing units, can also go a long way to showcase your expertise for the project. For example, you could be required to have a specific fire rating on doors leading out of an apartment, in order to keep any fires contained to a single or small number of units. If you're not able to demonstrate your company's ability to get the job done properly, you may have a hard time winning the project you have in mind. This is one of the reasons why you may want to work with professional estimators to help you win the project. By having a solid grasp of how to determine how much it will cost to build an apartment complex, you can ensure that the figures you've determined when estimating apartment building construction costs are accurate and will provide you with a fair profit on the overall project. But what if you're still new to the process and aren't sure whether your figures are correct? The experienced professional estimators at 1build combine smart AI technology with good old-fashioned construction know-how and can help you determine an intelligent strategy and reasonable numbers for your next project. If you'd like some help making sure your numbers are online with the rest of the project or if you don't have the spare time to estimate more complex projects such as these, all you need to do is request a demo of our services, sign up for a no-risk account or reach out today with any questions or concerns.
How Much Does It Cost to Build an Apartment Complex
Source: https://1build.com/blog/cost-to-build-an-apartment-complex/