Value-Add Projects Like Kitchen and Baths Yield Big ROI

When a local multifamily community was feeling the pressure of Denver's highly competitive rental market, they turned to Stonebridge Builders for help. They needed to consider upgrades not only to address deferred maintenance issues and outdated amenities, but also to justify rent increases to be consistent with local demand.   In densely populated urban areas with many options for apartment living, property owners need to set themselves apart from the competition. For many, this means rehabilitation projects to bring value where others don't. By industry standards, a successful renovation project should generate rent increases between 10-30%from interior improvements, and renovations to kitchens and baths tend to generate the greatest ROI.     

A great example of this strategy is Home Properties, headquartered in Rochester, NY. The company owns over 43,000 units in 121 properties primarily located in the Mid-Atlantic and Northeast. The company strategy is to acquire assets that most other developers would not be interested in. They're not looking for the newest, most attractive or luxury communities. The assets they acquire are in need of rehabilitation. The company knows that by rehabbing and renovating properties that are "a little beaten up and a little run-down" they can achieve substantial rent increases, which ultimately drives revenue. This strategy has yielded an 11.4 percent average annual total return over the past 10 years, and a 5- year compounded return of 11.7 percent.

Deferred maintenance is certainly an area of focus in multifamily renovation, however the most significant investments are made in upgrading kitchens and baths.   In Denver, Stonebridge Builders helped the local company to exercise this strategy and achieve the same results. Kitchens were upgraded with updated cabinetry and counter tops, state of the art appliances and both pendant and recessed  lighting to create a brighter look and feel. Baths were also remodeled with upgraded materials and lighting, which justified rent increases, encouraged retention and decreased vacancies.  

If your multifamily property could use a little TLC, and you're considering a value-add project, look to Stonebridge Builders for a consultation and ultimately for a seamless and successful process.  

Why choose Integrated Project Delivery on your next project?

A quick Google search for construction industry trends for 2017 yields a dozen articles about what we can expect in the coming year. From labor shortages to rising costs to increased use in technology, and uncertainty with the new administration, the number one trend could shape how we do business indefinitely.

Construction projects are notorious for getting derailed at numerous different stages in the process whether it’s new construction, a remodel, rehab or renovation. Construction companies are always looking for ways to streamline processes for smoother, better outcomes. Collaborative project delivery methods are taking hold as companies are recognizing the potential for lowering costs, increasing the flow of information between all stakeholders at every stage of the process and decreasing the stress and resources wasted as a result of miscommunication and lack of alignment.

Design-Build and Integrated Project Delivery are replacing the more traditional Design-Bid-Build method as it has become clear that a more collaborative effort from start to finish saves time and money and increases accountability and engagement between everyone involved.

Design-Build and IPD create collaborative, highly functioning teams from the start of a project and encourage alignment of all stakeholders, owners, architects, contractors and subs. These methods provide smarter use of resources and tend to reduce re-work that results from miscommunication and misinterpretation of plans and strategy that can result from the standard Design-Bid-Build process. For example, considering the Contractor a collaborative partner in the design phase can ensure the appropriate materials are chosen, timelines are accurate and budgets are met.

Stonebridge Builders is your collaborative partner from day one on your multi-family construction project, apartment remodel or apartment renovation. To learn more about how we bring value to each and every project we undertake, call us at 303-425-9999.