This quarter felt different. It isn't a rush, and nobody's calling it a recovery yet, but a few projects that had been sitting on the shelf for a year or more are moving into production. Here's what's getting unstuck, what's still hard, and what we're seeing work on the sites that do move forward.

In Q2 we said Active Adult was making another push, costs were starting to ease, and podium was mostly stuck. Two of those held up clearly. Active Adult is moving forward in a few markets, especially the Carolinas and Colorado, and it's a big share of what's actually starting.

Urban mid-rise is still hard to justify, because construction costs haven't come down enough and rent growth isn't large enough yet to carry that product at this point in the cycle.

On costs, it's hard to say for certain, but GCs seem to still be sharpening their pricing, which makes sense with so few construction starts out there.

For reference, we're seeing three-story garden deals at around $130 to $135 per net rentable square foot, and four-story surface-parked deals about 10 to 15 percent higher at around $150. Wraps push you over $200, and podiums land in the high 200s.

A few slow or shelved projects are moving forward, and we think the slight rent growth we've seen is what released them.

It isn't aggressive, but deals are getting past schematic design and into production, and some of the projects we drew over a year ago are coming back with DD kicking off in several states.

We have a lot of projects that go through concept design and then pause. When a client calls to release us into design development, we know it's a real deal and that they're likely in it for the long haul.

What those deals have in common is telling. Most are either Active Adult, or they have a compelling development story behind them, such as being part of a town center or having an equity partner who just finished a similar deal that is doing better than expected.

This is a copycat industry in a good way, and when one deal performs, capital tends to look for the next one like it.

The product types moving are the ones where the math is simplest. Affordable garden apartments and four-story, surface-parked, Type VA wood construction are carrying most of the activity we see, and affordable garden deals in flourishing suburbs seem to be picking up a bit.

That lines up with where people are moving and where jobs are being added.

Houston is a good example, since the job growth there is concentrated in specific suburban pockets rather than spread across the metro, and those pockets are where garden and surface-parked product makes the most sense.

Structured parking and concrete podiums are still a harder conversation, and most developers we talk to aren't having it just yet.

Developers rarely change the target audience on a site, but they do change the product type to unlock the economics. We often land plan a site and then suggest a different product that gets a better yield on the investment, and that alone can start a project. A lower overall development cost can bring a whole new set of eyes onto a deal that had stalled.

We saw this play out recently. A client came in wanting a four-story, surface-parked scheme, and we also showed them a garden site plan that reached comparable density. We knew they needed to be more aggressive on the purchase price to win the land, and the garden option gave them room to do that. They raised their offer and won the deal.

That's why we run a second study even when nobody asks for one. It's a small amount of extra work on our side, and if the project doesn't succeed for the developer, it doesn't succeed for us either.

Active work this quarter is spread across Houston, Pearland, Dallas, Austin, Raleigh, Charleston, Denver, Sacramento and Los Angeles. Texas is still the largest share of our work, with the Houston and Dallas suburbs especially strong, and the energy economy continues to support demand in Houston.

Austin is worth watching. It was overbuilt for a while, but rent growth is showing up in Austin again, and rent growth is usually the signal that gives equity the green light. The Carolinas and Colorado are carrying most of the Active Adult activity, and California is steady for us in both Sacramento and Los Angeles.

One thing we recommend on almost every project is meeting with the city early. A pre-development meeting at the start can often qualify a project for expedited review, and that cuts considerable time off the back end. For a developer carrying land and financing, those months matter as much as anything we draw, so we'd rather have that conversation in the first weeks than after the first set of city comments.

It's the question we hear most when a deal isn't penciling, and our answer is usually to test more than one.

The site, the purchase price and the market decide which product works, and sometimes the product the developer walked in with isn't the one that wins the deal.

A garden layout, a four-story surface-parked scheme and a wrap can all look reasonable on paper, but only one of them usually gets the yield where it needs to be, and it helps to know which before you commit to land.

If you're weighing a site right now and aren't sure which product fits, the framework we use to test it is the same one in our playbook, and we're happy to take a first look.

We're gearing up for growth, because we can see the market turning.

We're actively hiring, and we're moving some of our key staff into project management roles as more work heads into DD.

We're also moving more of our projects into Revit, since it has become the dominant program in our profession right now.

On build-for-rent, we've kept developing our products for that market and have fine-tuned them to be affordable and quick to produce. We don't have a lot of BFR projects on the boards yet, but recent conversations with several development teams have us bracing for a big wave of that work.

That's what we're seeing this quarter. If something here matches what you're seeing on your own deals, or doesn't, reply and tell us. We read every one, and we'll check these calls again next quarter.

Reply to this email if you want to talk through a site. It can be a quick call.

If this was forwarded to you, you can get the next issue here: Meeks Quarterly » And if you know a developer weighing these same calls, send it their way.

— Trevor