Many developers press pause as lumber prices skyrocket — but not Unicorp. Here’s why.
Many Central Florida developers have pressed pause on new apartment construction as lumber prices continue to soar. However, Orlando-based Unicorp National Developments Inc. is stomaching the short-term pain for what may be a future windfall.
Unicorp has more than 2,000 apartments either under construction or in the works in Central Florida, making it one of the most active apartment developers locally.
Meanwhile, lumber futures reached a record $1,326.70 per 1,000 board feet on April 19, according to Bloomberg. Wood costs have spiked during the Covid-19 pandemic due to more demand from residential builders and a reduction in supply.
As a result, the price of lumber has increased construction costs by an average of $3 million per project, President Chuck Whittall told Orlando Business Journal.
“It’s going to be a little bit of a ding to the bottom line,” Whittall said. “But there’s going to be a supply shortage of apartments in two years, and we feel we’ll be in a good spot.”
Indeed, Unicorp and other active apartment developers hope to be among the few companies debuting new projects during the next few years, which may capture higher rents. In addition, demand to buy these projects may be higher as there are fewer options available, which may drive up the price for these properties.
Apartment experts say that’s a good strategy for developers who can absorb the high lumber costs. “He’s going to have pretty good timing out of the ground because building has slowed and supply in general has slowed since Covid,” said apartment expert Luke Wickham, senior managing director in the Orlando office of Institutional Property Advisors, who is not involved with Unicorp’s projects.
Meanwhile, Unicorp expects to build more apartments locally in the coming months. Whittall told OBJ on April 19 he is under contract to buy 16.8 acres northeast of Avalon and Seidel roads for a new luxury project that may break ground in January 2022.
Apartment stats
Apartment construction is important, as it provides new homes, as well as temporary construction jobs and permanent full-time jobs to Orlando’s growing population.
The Orlando-area apartment market has fully recovered from the pandemic, and rents now exceed pre-Covid levels. The region’s average monthly apartment rent is $1,335 while its average apartment complex vacancy rate is 8.8%, CoStar Group reported.