Ground-up development is new multifamily construction from entitlement through lease-up stabilization. Highest-risk, highest-reward multifamily strategy — 3–6 year cycle, capital-intensive, lease-up execution dependent.
Development phases: land acquisition and entitlement (1–3 years), construction (12–24 months), lease-up and stabilization (12–24 months). Total cycle 3–6 years. Returns come from creating value through construction (cost vs. stabilized market value) rather than operational improvement of existing assets.
LA multifamily development in 2026: construction costs elevated, entitlement timelines extended, specific regulatory obligations (Measure JJJ, affordable housing requirements) add cost. Fewer developers are starting new projects given the rate environment. Construction starts down 53% from 2023 peak.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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