Calculator:
Penciling out
a project
Planning a new apartment building is kind of like a math problem. Developers calculate an array of costs to help determine a rent that will generate enough revenue to make a project feasible to build. And they have some choices to make along the way that can alter that rent by hundreds of dollars a month. The Globe designed a calculator to show the trade-offs.
The question: How do construction costs factor into the rent at a hypothetical 170-unit apartment building in Greater Boston? And how do some key decisions bring those rents up or down?
The methodology: The Globe spoke to numerous developers to understand the math behind housing construction, including the “hard costs” such as labor and materials, and “soft costs” like architectural and legal fees and financing. To make this as realistic as possible, the budget includes a 6 percent profit margin that is typically needed these days to attract investors, and a 2 to 3 percent fee that developers take to cover their expenses.
The answers: Check out the calculator below.
A DEVELOPER'S PERSPECTIVE
PENCILING OUT A HYPOTHETICAL 170-UNIT RENTAL BUILDING NEAR BOSTON *
Total project cost
$90.8 million
Land
$6.8 million
Soft costs
$15 million
Hard costs
$69 million
Return for investors:
$5.45 million
Average rent per unit
Market rate
153 units
$3,468 per month
Affordable housing
17 units
$1,625 per month
First: Where would you like to build?
The closer you get to the core of the region, the more land tends to cost.
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Calculator: Penciling out a project
Credits
- Reporters: Mark Arsenault, Andrew Brinker, Catherine Carlock, Stephanie Ebbert, Diti Kohli and Rebecca Ostriker
- Editors: Patricia Wen, Tim Logan, Mark Morrow
- Photographers: Lane Turner, Jessica Rinaldi, Erin Clark, Craig F. Walker, Pat Greenhouse, David L. Ryan, Jonathan Wiggs
- Photo editors: Leanne Burden Seidel and Bill Greene
- Video producers: Olivia Yarvis, Randy Vazquez, and Dominic Smith
- Video director: Anush Elbakyan
- Design: Ryan Huddle
- Development, graphics, and data analysis: Daigo Fujiwara
- Development: John Hancock, Andrew Nguyen
- Digital editor: Christina Prignano
- Copy editor: Michael J. Bailey
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- Audience: Cecilia Mazanac and Jenna Reyes
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