Dive Brief:
- Atlanta-based Wood Partners, the country's fourth-largest apartment developer, is no longer pursuing projects on the West Coast, according to a statement that Joe Keough, CEO of Wood Partners, provided to Multifamily Dive.
- Nevertheless, the firm “remains committed to the execution of the construction, lease-up and stabilization of our projects in these impacted markets while continuing to be good fiduciaries for our capital partners,” Keough said.
- In the statement, Keough didn’t provide a reason for the decision to exit. However, California is a notoriously difficult place to build and has a severe housing shortage.
Dive Insight:
Despite its plans to depart the West Coast, Wood Partners still has 15 offices across the country, and it expects to start 5,000 units this year, according to Keough, who said that the company is grateful for its West Coast employees and “will support them through this strategic transition.”
A Wednesday post on X, formerly known as Twitter, alluded to layoffs and the closure of the company’s California operations.
Over the past 10 years, housing production in California has averaged fewer than 80,000 new homes each year, according to the California Department of Housing and Community Development. Ongoing production is well below the 180,000 additional homes the state needs annually.
"It's really hard to operate here,” said Zain Jaffer, partner at Midvale, Utah-based multifamily investment firm Blue Field Capital and a California resident. “First, good luck trying to increase rents, and then your costs have just shot up like never before.”
Apartment owners and developers also deal with a number of issues that drive up pricing in the state.
“Insurance is very difficult, especially depending on where you're located in California,’ said Jaffer, who has no connection to Wood Partners. “And I think a large percentage of the cost just comes down to dealing with all the red tape for construction. It's just inspections after inspections."
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