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Costs, Opportunities and Supply: Q&A with GroundFloor Development’s Mark Drumm

Though the demand remains high for apartment rentals throughout Texas, the industry is changing. Connect Media got in touch with Mark Drumm, managing director with GroundFloor Development and a panelist at the upcoming Connect Texas Multifamily Conference, to determine some of those changes.

Q. Are we in danger of multifamily oversupply in Texas?
A. I believe we are in danger of overbuilding in the higher-end product categories in infill locations. We need more quality affordable product to continue to meet the growth needs statewide. Yes, it is regional, but similar factors are playing into all the Texas markets with regards to new supply coming online.

Q. What are the next development opportunities in multifamily, and why?
A. We will have to be taking a look at apartment product over the next decade to address both affordability, economic and demographic changes. That could mean a variety of things, from unit size to delivery options. Multifamily in mixed-use has always been in high demand. It has just been harder to justify costs and rents in secondary markets until now. The demand for this product just now is in line with delivery costs and associated rent levels. We will see demand remain high, as renters seek mixed-use environments for access to social opportunities, services and entertainment.

Q. How are increasing construction costs impacting multifamily development?
A. There are a number of items affecting overall costs. Tariffs obviously have an economic impact and could increase costs significantly, depending upon where the supply for construction materials originates, or where there might be more cost-effective alternatives. However, the biggest factor affecting apartment development and home building in general has been the limited access to affordable skilled labor. This will continue to be an issue for the foreseeable future, until we relax or reform immigration, or alter building techniques.


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About Mark El-Rayes

Mark El-Rayes is an award winning designer and photographer from Beirut, Lebanon. El-Rayes has over 15 years in the design industry, 5 years of which he served as a Mass Communication Specialist in the United States Navy at Naval Air Station North Island, Navy Public Affairs Support Element - West (NPASE). El-Rayes is a full-stack developer, seo specialist, photographer, and artist.