Filling in: while most aspects of an urban infill project are small, your profit margins don't have to be among them

Prosales, July, 2003 by Rich Binsacca

Imagine a half-acre jobsite set between a 1920s apartment building and a corner grocery store on a busy city street, fenced in and accessed only by a 15-foot-wide gate. By ordinance, your truck can't deliver materials before 8 a.m., block traffic, or leave any mud or debris on the road. Hoisted and placed by an on-site crane, a single delivery can take an hour or more to unload, and your yard is an additional 90-minute drive away.

Sound like a nightmare? Wake up, because urban infill is a growing trend in most major and secondary cities. The 2000 Census revealed a demographic shift to city living, especially among young single professionals, and big builders such as Beazer, Toll Brothers, and K. Hovnanian recently have joined the ranks of other city-slick builders in developing metro projects.

And while urban infill jobs likely won't ever rival the volume of production housing in the suburbs, builders are increasingly looking for dealers that can handle the realities of supplying in-town projects. In addition, builders that are new to urban infill will need--and value--a higher level of service and consultative selling from dealers that understand the nuances of such projects. "We get those jobs because contractors and framers know we're willing to do whatever they need," says Jim Devos, a salesman at Piedmont Lumber in Pittsburg, Calif.

Less Is More

For most dealers that serve contractors with urban infill projects, the biggest difference is size: size of loads, size of the jobsite, size of delivery trucks, and the size of on-site material storage areas, which usually can hold only a day or so worth of inventory. "You can't go in there with a 52-foot trailer," says Devos, who recently supplied an 82-unit condo project in west San Francisco and just began a multifamily rehab project in another area of the city. "You have to bring materials in as needed and in smaller loads."

A jobsite's conditions dictate the logistics for supplying it, as well as bidding it, for both the contractor and the dealer. "A typical infill site is really tight, and there's no good access to the building," says Scott Peterson, vice president of Maleady Builders in Charlotte, N.C. "There's increased labor costs involved to carry materials around by hand, especially among masons and framers."

In turn, dealers often are asked to load, deliver, and stage materials to accommodate conditions and help minimize extra labor costs for materials handling on the jobsite. "You can't just dump material like on a tract job," says Peterson. "You need a crane or a forklift to place materials in strategic locations."

Often, such requests require an investment in equipment by the dealer. "We have a crane truck we'll use from time to time to provide that equipment to the builder if needed," says Jim Price, a commercial sales representative for the Lake Elmo, Minn., location of Lampert Yards, a St. Paul, Minn.-based dealer with 2002 sales of $171 million. "It's a problem if you or the builder don't have it."

Unloading materials by crane also necessitates additional labor for the dealer. "You have to block everything [on the truck] to allow the straps to get around the material," says Price. "It requires more control on our end."

And time. While a forklift can unload place a semi or smaller truck of material quickly, even on an infill job, with a crane, a trailerful of framing materials may take an hour or more to clear off the deck. "Everything about an infill project adds to the cost of the job," says Price, who supplies urban projects in St. Patti's revitalized downtown core.

Plan Ahead

Price and other dealers who supply urban infill jobs say they're willing to wait out city traffic and lengthy deliveries as long as they are aware of those conditions when bidding the job. "I usually rely on the builder regarding the site conditions, but if I know the location I might drive by and see it," says Price. "The key is to bid an in-town project properly and reliably."

In addition to his occasional drive-bys, Price makes sure to cover his costs in delivery time when there's a crane required to unload materials. Simply, he multiplies the estimated number of loads by one hour, then adds the time the truck will be unavailable, either on the road or on site, to recoup his costs. "We want the business, but we don't want to take it in the shorts, either," he says. "Competition and margins are tight enough on urban and commercial jobs."

While some dealers find it necessary to add a premium or extra charge to deliver to an urban jobsite, others can accommodate the request as they would any other contract. "Delivering to an in-town site doesn't impact the price [of our delivery]," says Ron Green, multifamily sales representative for Northlake Lumber in Troutman, N.C., an $18 million, single-location dealer outside of Charlotte. "We deliver it however and whenever they like it."

Comparatively, Devos figures that a delivery to an urban project takes the truck out of service to other jobs for a full day; if it returns and can be loaded again, it's a bonus. "That's the cost of doing business on an urban infill job," he says.