By Taylor Williams
It’s a tough time in the Austin multifamily market, and architects and general contractors (GCs) are being asked to do their part to minimize the financial distresses of their developer clients and to facilitate the work of the agencies that lease the buildings they design and build.
The state capital is on the back nine — it’s tough to say which hole precisely — of an apartment building frenzy that materialized in the immediate post-COVID era. Times were starkly different then in terms of costs of capital and trended rent projections, and developers and their capital partners made hay while there was light.
Project partners on developments that were delivered in the past 12 to 18 months as part of the building boom may not have felt as acutely pressured to design for efficiency. But those working on new projects today do not have that luxury and are being asked to think and design with cost savings in mind.
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One could argue that developing multifamily product with financial efficiency in mind is always good policy in any economic climate. But when rents and valuations are at all-time highs, developers can also build loyalty and retention with renters by spending a little more on fancy finishes and/or engaging amenities. It’s a trade-off that many developers were willing to make when times were good, but the party is over, and so the design emphases have shifted.
At the annual InterFace Austin Multifamily conference in early September, a panel of design-build professionals made no secret about this directive. Amber Autumn, director of the southwest region at Adolfson & Peterson Construction, moderated the panel.
“When we get into a glut of design and construction [activity] and rents are increasing, there’s less focus on efficiency and making buildings as simple and straightforward as possible,” said panelist Jason Shephard, CEO of Atlanta-based Dwell Design Studio.
Shepard said that his company has rolled out new prototypes and models that are meant to give multifamily developers more lower-costs options on certain design materials and practices. He noted that in some cases, Dwell has been able to achieve “15 to 20 percent reductions in construction costs without cheapening the product.” Shepard also said that he sees examples of multifamily designs in which key features of unit interiors — bedroom windows, private balconies and other finishes — have been downgraded or removed entirely from blueprints.
“That’s not what people ultimately want, nor does it create a product that is market-rate and that can be capitalized on the back end,” he said. “Upon selling those projects, owners are discovering they’re not getting the upside value by delivering the lower-end product.”
Shephard then touched on amenities, stating that the most effective amenity spaces today are those that “cross over.” The best amenity spaces allow different uses to overlap within a single room, he contended, because those spaces drive home the notion of the property having everything renters need under one roof. While his analysis was framed in the context of delivering experiences that renters want, his words also indirectly reinforced the importance of efficient design in today’s marketplace.
“The big leasing lobby can coincide with the mailroom; maybe the mailroom has a fireplace or library or something that connects people,” he postulated. “Using spaces in creative ways to create [senses of] community is something we’re seeing a lot of.”
Panelist Daniel Melfi, preconstruction manager at Kansas-based Cerris Builders, addressed construction costs from the GC perspective.
“Obviously construction costs have gone up over the past four or five years, and adjusting to that since COVID has been a roller coaster,” he said. “But in 2025, for the first time in several years, they’ve leveled out a bit and stabilized to the point where we can hold pricing, forecast more accurately and give owners better predictions on how [future] pricing will look.”
Melfi and Shepard both said that the market is seeing more construction buyouts — the process in which the GC selects the subcontractors, which occurs after design but before ground is actually broken. Melfi noted that generally speaking, subcontractors in Austin are hungry for work, leading to more favorable pricing structures. “We’re getting very competitive pricing when we go out to bid, which has helped get that buyout and achieve savings after the fact,” he said.
Other panelists then chimed in with strategies and practices to help save on costs.
Janna Paulson, founder and president of Peel Paulson Design Studio, touched on the importance of direct communication with manufacturers to eliminate any discrepancies in pricing that may arise in the bidding and quoting processes.
“As pricing goes up, when we write our specifications, we use prices that are quoted to us by our manufacturers’ representatives,” she said. “We find this really helpful when construction bids come back and we’re told that we ‘spec-ed’ [a product(s)] that’s three times the budget. We then find out that sub[contractors]s are upping their prices or may not have even gone to the manufacturer to get the actual quotes. So that gives us a benchmark to help developers monitor pricing that’s coming in.”
Paulson also identified certain apartment features that architects and contractors can “economize on,” such as flooring and select wall finishes. “It’s all about being strategic about high-dollar materials to make [the unit] have the look but not necessarily cost [too much].”
Nikki Morgenthaler Gonzales, residential practice area leader and design manager in the Austin office of global architecture firm Gensler, expanded on ways to effectively manage costs throughout the project life cycle.
“We’re finding that the best approach to pricing difficulties is pricing early and often,” she said. “We’re having GCs at the table as early as in the concept and SD (schematic design) phases so we can provide the best design while staying within our budget. It’s been challenging, but also a very positive thing given the pricing woes we’re facing.”
“Having more communication with contractors early in the process allows you to get through the CD (construction design) process with less VE (value engineering) at the end,” Gonzales continued. “Really, the VE process is happening the whole time, which sometimes can feel like death by 1,000 cuts. But in the end, it gets everybody to a product that they’re happy with and they feel like they can achieve.”
The panel also collectively pointed out that the efforts of architects and GCs to design in ways that save money on multifamily development are matched by similar initiatives to drive revenue on the leasing front.
One such way in which design professionals are helping with leasing, which is slower in an overbuilt market, is by creating unit “mockups,” or model units, for prospective renters. These displays can be built out within containers and offer previews of design elements in unit interiors, amenity spaces and common areas.
Melfi also said that certain design strategies are prevailing more frequently in response to shifting preferences of renters. He cited a higher concentration of one-bedroom residences within a unit mix, as well as the need for built-in work-from-home spaces, as key design features that can potentially help spur stronger leasing activity.
“Everyone wants everything [they need], including the ability to work from home, to be onsite,” Melfi said.
“Residents don’t want to leave the property,” Paulson concurred. “So it’s also important to have places where people can touch down — a conference room or little pods or areas where people can sit and work. Pool areas can become more resort-style for people to entertain, as can sky lounges for parties. Because the product that’s been delivered in the past five years has been elevated, we can’t under-deliver on those [features] anymore.”