WHY ONE OF THE TOP MULTIFAMILY DEVELOPERS IS GOING MODULAR IN FLORIDA
When you work for one of nation’s largest development companies, staking millions of dollars and years of company time, energy, and resources on something “new” is daunting. You must envision the possibilities while also persuading a few associates and equity partners that the vision will become a reality.
Most of all, though, you need to believe wholeheartedly that the new thing you’re sold on will be a success.
This was the dilemma facing Alliance Residential managing director John Zeledon two years ago when deciding whether modular building could be right for his company, which builds and manages multifamily developments in 35 U.S. markets and is the country’s second-largest apartment developer, according to BUILDER sister publication Multifamily Executive. While factory-based multifamily construction is not new, it was something the Phoenix-based firm had not tried before. Zeledon saw it as a way to save money and time, but he knew there were risks involved. When the opportunity came up to work with Florida modular builder Finfrock on a 268-unit apartment community that Alliance was planning in Winter Park, Fla., Zeledon carefully considered the options.
The deal required a leap of faith. Finfrock, which has been around since 1945, had never built a market-rate apartment building before, but in recent years it has built student housing developments and its first hotel project opened in Naples, Fla., last year.
The 183-room hotel, Hyatt House Naples, was built in part to showcase Finfrock’s product to multifamily developers. Zeledon toured the hotel shortly before it opened and was “mentally committed” to Finfrock, but there was still apprehension from others at Alliance. He recalls the others pondering whether they wanted to be the first ones to try this and to be committed to it. “In talking with my senior partners, the first response was ‘no,’” he says.
After touring the hotel, however, they were sold, too.
Permits were submitted in October 2016, financing was closed in January 2017, and a week later, Finfrock began building Broadstone Winter Park.
Under One Roof
Finfrock prides itself on being a “one-stop shop” for companies like Alliance, serving as architect, engineer, contractor, and supplier, says Bill Finfrock, president. A large part of its projects are constructed inside its 93-acre manufacturing facility in Apopka, Fla..
Using its DualDeck technology, two slabs of precast/prestressed concrete are joined together by a steel truss. Finfrock models the entire building and all the precast components using its proprietary 3D modeling software. The software transmits information to lasers for precise placement of all building penetrations and subsystems.
“Once it’s right in the computer, it’s right in the manufacturing facilities because the lasers automatically tell you what to do,” Finfrock says.
This precision cuts down on the possibility of change orders, which slow down projects and cost money.
When Zeledon went to get builder’s risk insurance for the project, the underwriters couldn’t believe the expected time frame. “The underwriters were saying that there’s not a project that they underwrite across the country that can be built that quickly; in fact, they’re getting extension requests from all over the place because of the delays at other projects,” says Zeledon, adding that Alliance essentially paid half what it normally would for the insurance.
Finfrock built the Hyatt House Naples in 12 months, as opposed the usual 20 to 22 months for a hotel of comparable size, Finfrock says. That was worth nearly $2 million in both the income Finfrock made from having an operational hotel and not paying construction costs for another 10 or so months.
The process is one that Zeledon has come to appreciate. “You’re not coordinating a number of consultants, you’re calling one guy to get the building built,” he says.
Finfrock says there are many reasons why developers like Alliance look to his company’s hands-on approach.
“It’s not only about the modular aspect of our construction, but it’s really also a lower risk play in that we take risk for the design and build of the building,” he says. “So if there’s any problem with the building, we designed it, we built it, we’ve got no one to point at but us.”
At the start, Finfrock told Alliance it could have all the units at Broadstone Winter Park delivered in 14 months, but Alliance asked to slow the construction schedule down in order to better meet its pace of leasing. The first 40 units will be delivered in January, and then 40 more will be delivered every three weeks or so, according to Finfrock. Broadstone Winter Park is slated to open in early 2018, with monthly rents ranging from $1,300 to $3,000.
The developer has already teamed up with Finfrock on another project in Orlando on Lake Ivanhoe. The project calls for up to 260 units and will break ground in fourth quarter 2018. The two companies are looking for more projects on which to collaborate.
Zeledon, who took a chance on Finfrock, refers to the company as his “secret sauce,” but he doesn’t think it’ll be a secret much longer due to the high-profile project they’re about to open in Winter Park.
“My only concern is that everyone discovers it, and he’s no longer my go-to guy,” Zeledon says. In a world of shrinking land supply, tight budgets, and labor struggles, it may be just a matter of time.
To view the article, visit Builder.