The financial model governs the design
The model that underwrites a deal is also the brief for its design. Design decisions are priced in the model before they are committed, construction costs are held to it as they are drawn, and actuals refine the projections as the project advances.
Priced before committed
A deeper floor plate, a different unit mix, an added amenity, a podium in place of parking on grade: each is priced in the model for its effect on rents, cost and the yield on cost before the drawings change. A change that lowers the return is made only with that cost known.
Held as drawn
Cost per SF is tracked at each design milestone, so the drawings stay inside the envelope that justified the project, and the estimate at permit is the one the lender and the equity were shown.
Actuals refine the projections
Bids, draws and change orders feed back into the model, so the owner sees the projected return move with the facts, through delivery.
Questions
- How do developers control cost during multifamily design?
- By pricing each design decision in the underwriting model before it is committed, and tracking cost per SF at every milestone.
Sources
These guides summarize the code text for general information and are not legal advice. Every site is read under the code, the overlays and the ordinances that apply to it on the day of preparation.
TECTO GROUP takes multifamily sites through these pathways for owners, from the first study through entitlement and design to a permit ready to issue. Send the address of the site under consideration.
Email lucas@tecto.group