3 Reasons to Build Townhomes Now

Builders and developers in all markets should be looking for townhome opportunities this year. Market forecasts indicate strong growth in this product type across the country, and the potential is undeniable. Below, I’ve outlined a few of the positive benefits that I’ve been sharing with my clients in Florida and throughout the southeast, but the same tailwinds are occurring nationwide. It’s time for everyone in housing to make townhomes a priority.

1. Favorable Numbers

For single family builders, the transition to townhomes is easier than you might think. Although more complex than detached single family, townhomes are still relatively simple buildings to design and construct. Design teams leverage similar strategies in footprint and unit design, just on a larger scale. This means the design process is relatively fast, especially when compared to traditional multifamily development. The trades can easily understand this construction type, so there’s a very small learning curve (even for contractors who have never built townhomes). This means you carry land for shorter periods of time, get sticks in the air faster, and move on to your next opportunity.

Multifamily developers will find townhomes a breath of fresh air that offer quicker returns, less complexity and more predictability. A faster process and shorter construction time also means townhome developments typically offer more manageable financing arrangements than larger multifamily projects. The capital stack is less reliant on equity and debt since returns are realized much faster, especially in for-sale developments or rental communities that will be turned over at closing. Long term holds on rental townhomes are promising, too, as the build to rent sector maintains significant momentum this year.

2. Adaptable Density Targets

Regulatory burdens continue to derail housing developments, but townhomes offer some adaptability to help you navigate unexpected zoning, approvals and permitting obstacles. The overall flexibility of building configurations and unit designs allow planners to push and pull key elements on the parcel to meet municipal demands. Increasing or decreasing density, parking ratios, and open space is a much easier task with townhome units that can be combined, loaded and parked in multiple ways.

Townhome unit plans are also incredibly flexible, which can help sell the concept to regulatory officials and communities. Variety is indeed the spice of life, and townhomes provide developers with the ability to offer single-story end units, townhome/stacked flat combinations, and even carriage homes over garages. These modulations make it easier to dial in on the perfect density without causing monotony.

3. Growing Market Appeal

Attainability and affordability are top concerns for today’s buyers, and as interest rates continue to put pressure on consumers and builders alike, new developments must offer the most marketable options possible at realistic price points. Townhomes enable developers to span a range of square footages, lifestyle layouts and target demographics within a single community – and with a single approvals process. In most major markets, this means townhomes are more attainable than single family homes for many buyers

Additionally, townhome projects can provide buyers with the most current designs to meet today’s lifestyle desires. Flexibility within building modules and unit layouts allows developers to shift mid-stream if one unit type shows more promise among consumers, tweaking building layouts accordingly. Key features like multiple work from home stations and high-quality outdoor living can be offered at all footages, so buyers never feel like they have to settle.

For these reasons and more, I believe builders and developers should make new townhome projects a top priority this year. The time is right, and the potential is clear.