Developers in Texas and Florida Struggling with Insurance Increases up to 337%

Developing apartment properties in the current landscape is challenging, especially with a shrinking pool of lenders and persistently high materials, labor, and land costs. However, developers in Texas and Florida are encountering an additional obstacle that sets them apart from other regions: soaring insurance costs.

One such developer experiencing the impact of rising insurance expenses is Doug Faron, the managing partner at Shoreham Capital, a West Palm Beach-based developer. Over the past few months, Faron has witnessed his insurance costs surge from $600 to $800 per unit at the beginning of the year to a significant range of $1,200 to $3,500 per unit, an increase of 100-337%.

These sharp price increases cause delays in project timelines, influence site selection, and sometimes lead to deals falling through entirely. Shoreham Capital, currently working on a development pipeline comprising 800 units divided equally between traditional apartments and build-to-rent townhomes, faces challenges due to these escalating insurance costs.

The mounting expenses have made it increasingly harder for developers like Shoreham Capital to find projects that balance capital costs, construction expenses, and insurance expenditures. This confluence of factors has significantly hindered the development process, resulting in a reduced supply of housing units and exacerbating the existing shortage of available housing.

The situation calls for attention to the regions where insurance costs pose the most significant obstacles and an exploration of the underlying causes behind these cost escalations. Identifying potential solutions and fostering collaboration among stakeholders is crucial to overcoming these challenges and revitalizing housing development in Texas and Florida.

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