Multifamily Development Amid Coronavirus: Case Study
- Aug 05, 2020
The first of three Arizona projects that The Related Group has planned, Manor Scottsdale, will comprise 286 apartments—from studios to three-bedrooms—in buildings that range from two to five stories.
The multifamily community will target professionals working in the nearby Scottsdale Airpark, an 8.6-square-mile area—anchored by the Scottsdale Airport—with over 2,900 businesses employing more than 51,000 people. It’s also geared toward downsizing empty nesters looking for walkability and easy access to Kierland Commons—a popular area for shopping and dining.
Related plans to break ground on Manor Scottsdale in August 2020, after briefly putting the project on hold due to the coronavirus pandemic.
“We took a 30-day pause due to COVID-19,” said Michael D’Andrea, Related’s vice president of development in Scottsdale. “We were able to start earlier—we just chose not to.”
D’Andrea said the delay was to allow the company to assess the pandemic’s impact on the project. “We were finishing up our construction documents, so our pause was simply to better understand what the equity positions were going to be, what our construction costs were going to do, and what the incomes and rent roll were going to do,” he said.
Ultimately, Related decided to proceed with the project for three reasons: the company already had an equity partner in place, it had secured a construction loan and it was bullish on the Scottsdale multifamily market. Related is confident that apartment rents, which had experienced what D’Andrea referred to as “a six- to 10-cent per square foot temporary hit,” will recover, or even increase, by the time the project delivers in 2022. Currently, rents are projected to range from $1,400 for a studio to $3,200-plus for a three-bedroom unit.
Although Related is moving ahead, it plans to tweak the project’s design, in response to COVID-19, and is working with its architects and designers to improve the health and safety of future residents. The company is exploring features such as keyless and touchless entry—with full access from a smartphone—as well as ways to segment tenants in the business center by incorporating a conference room and separate cubicles.
“We’re exploring a lot of options that will let people live in a high-density product, but have the comfort level that they’re a little more protected against issues that might come up now, or in the future,” said D’Andrea.