Get Our Email Newsletter

Navigating the multifamily market

The multifamily market remains steady. Here’s what savvy dealers know about serving these projects.

Multi-Family HousingThroughout the housing recovery, the multifamily sector has been booming, in part due to the number of millennials delaying their first home purchase as well as increased interest in in-town, walkable living.

Though the multifamily market has leveled off from its 2015 peak of 395,000 starts, it’s still strong. Following a 1% decline in 2016, the industry will likely see another 3% decline this year, predicts Robert Dietz, Chief Economist for the NAHB, with the industry eventually settling in at a comfortable level slightly above 330,000 starts.

“Momentum in the building market is continuing to transition to single-family, but multifamily should remain strong,” Dietz says about the market, “particularly since there are still a lot of millennials.”

LBM Resources

White Paper: Building Supply Industry Insights Report 2022

With most businesses now running hybrid ERP, our report reveals what hard-working building suppliers really require from their ERP partners and solutions.

As such, Dietz expects a shift in housing type as homeownership trends continue to stabilize. “Our expectation is that as unit count levels off, there will be a change in mix in for-rent and for-sale with growth in for-sale,” the economist notes. “The condo market is the lagging market even more than single-family.”

The industry also may see multifamily expand in smaller metro areas after years of growth in larger cities.

For dealers, multifamily builders offer an opportunity to diversify their customer base. And for those building low and mid-rise structures, as opposed to soaring high rises, many of the products are the same as or similar to what traditional LBM dealers already carry.

- Advertisement -

“For us, a customer building an apartment building has the same process as someone building a single-family home, just on a grander scale and with a lot more detail,” says Frank Cicero, COO at 84 Lumber.

Indeed, best practices for serving multifamily builders are often similar—think on-time deliveries, reliable service, etc.—but ratcheted up to a degree where it requires careful planning and a strong, knowledgeable team. Here are a few things to keep in mind when serving multifamily builders:

Identify key contacts

One big difference between single- and multifamily projects is that your point of contact for making a sale may change often—and may be hard to pinpoint. This can make it more difficult to land new customers or recommend new products. Sometimes it’s the general contractor, sometimes the framer, sometimes the architect making the decisions, notes Aaron Mathews, Director of Commercial Sales at Huber Engineered Woods. [Determining] who is going to help us defend that spec or ultimately allow us to try out our product takes a lot of legwork—and it can change from job to job.”

- Advertisement -

Huber and its dealers typically start with the framers, who often can provide insights into the general contractor’s and developer’s key objectives, be they water issues, quality, etc. That can help guide the direction to the right person and the right sales message. “The framer also will know how hard of a spec it is,” Mathews notes. “Most framers will try to provide other solutions, which have to go through the architect, and the framer will know if the architect is flexible.”

For Phoenix-based Alliance Residential, which develops and builds garden-style and podium-style multifamily buildings around the country, the decision-maker depends on the product category. For example, appliances, plumbing fixtures, flooring, and other high-profile finishes, as well as TPO roofing, are typically chosen by the developer. They rely on subs for commodities like lumber, drywall, and hardware, knowing that the installers have connections with suppliers that can help ensure the best rates.

Ask the right questions

Along those lines, ask a lot of open questions to determine the motivation for the products being used; this can also help establish relationships and trust.

“They’re not [just] looking for the cheapest; they’re looking for someone who can provide value on that project, whether it’s speed of installation, ease of installation, or something else,” Mathews says. “It’s about understanding what our contractors are dealing with and how we can provide solutions for that.”

Though budgets are tightly controlled, a product quality and performance message may resonate, considering the sheer size, and height, of some multifamily projects.

Specs for multifamily often call for “or equal,” unlike single-family builders that tend to be faithful to one or two brands, notes Ed Belair, President of Copley, Ohio-based Graves Lumber. “Our multifamily team engages in discussions with the GC, owners, and developers to determine what best fits their needs. Having the product knowledge of several brands within the category that fit the building and the project’s goals is a real benefit to us.”

Build a knowledgeable team

Because multifamily has a lot of nuances, ensure your team is stocked with members experienced on that side of the business or who have been well-trained. 84 Lumber’s multifamily hub in the Pittsburgh region, for example, has a lead, a construction manager, an estimator, two field staff/project managers, and an admin. “There are six people to make sure we don’t miss an order,” Cicero says. “The key is having people with experience who have worked around this business and understand that this particular building is four stories tall and how all those pieces fit together correctly,” he says. “There’s a lot more detailed estimating up front—you can’t make a mistake.”

Serving general contractors on multifamily projects is more formal, notes Justin Fahey, Construction Services Manager at Graves, calling out processes like contracts, AIA billings, and immovable deadlines. “You have to be very adept at working through that with the general contractors,” he says. “We have the personnel in place who speak that language. It helps us bridge the gap from residential wood framing to a more commercial framing environment.”

“The biggest thing we’ve learned is it’s the management of it,” adds Cicero. “This type of business is more than selling. This is truly a high skill-level management team that does this. Selling is easy; pulling it off is the trick of the trade in this business.”

That advice goes for your installation team, as well. Shoddy workmanship is amplified on projects this large, so ensure your crews are experienced in multifamily construction and are committed to quality.

Get our free newsletter

Join thousands of other lumber and building material industry leaders and keep up with the companies, people, products and issues shaping the industry.

What's New

Digital Partners

Become a digital partner ...

Sales Comp Study

Download this 55-page, in-depth study by LBM Journal of industry trends in sales force compensation and benefits. See how your organization stacks up.

Webinars

- Advertisement -

White Papers

View all ...

- Advertisement -

Partner Content

View all ...

- Advertisement -

Registration is now open for the LBM Strategies 2024 Conference