Paul Bertozzi, President & CEO, Live Oak Contracting
In an interview with Invest:, Paul Bertozzi, president and CEO of Live Oak Contracting, discussed the company’s achievements, the current landscape of the multifamily and commercial construction industry, and the unique characteristics of Jacksonville.
What achievements has Live Oak Contracting accomplished over the last 12 to 18 months?
I started Live Oak Contracting in February 2014, and we just celebrated our 10-year anniversary. Over the past decade, we’ve contracted more than $1 billion in multifamily projects, delivering roughly 8,500 units across seven states. We’ve expanded our licensing to 12 states and continued to grow despite economic shifts. Over the past year, we’ve broken ground on a new student housing project, The Verve in Orlando, FL, and successfully delivered and sold Canfield at Fairfield Metro in Connecticut. Our ability to adapt and form lasting partnerships has been key to our success, and we look forward to continued expansion.
How would you describe the landscape of the multifamily and commercial construction industry in the region, and what are the challenges and opportunities?
The biggest issue right now is capital expenses. With increased bank regulations and the Federal Reserve raising interest rates, the market has tightened, reducing the number of projects. Traditionally, our development partners relied on a lending structure of around 25% equity and 75% debt, but in the last 24 months, we’ve seen debt ratios drop to as low as 55%, requiring 45% equity. This has increased capital demands for development groups.
We’ve also experienced significant construction inflation over the past 36 months, along with rising land values and pre-development land asset valuations. This has squeezed market opportunities. While the Fed’s efforts to combat inflation with interest rate hikes have led to a market valuation correction, projects that used to stabilize within six months now take 12 to 18 months, with rents not growing as expected. Over the last 12 months, rents have been flat, and we anticipate nominal to zero rent growth moving forward.
Developers typically sell properties at the end of the development cycle to long-term holders and move on to new projects. However, the valuation squeeze has allowed long-term holders to buy at lower rates than development costs, creating challenges for developers. Insurance costs have also risen significantly — anywhere from 70% to 120% across our markets. This increase stems from the rapid rise in property values, which insurance companies didn’t keep pace with, leading to a stabilization at high rates. While these costs may eventually decrease with market corrections, construction inflation, land inflation, interest rates, and insurance costs have created strong headwinds, resulting in a sluggish market over the past 12 months.
Despite these market challenges, Live Oak has remained agile by leveraging strategic relationships with trade partners and implementing cost-effective solutions. While we’ve seen financing constraints impact project starts, our proactive approach in working closely with banks and developers allows us to maintain steady momentum.
What trends have you observed in the development of build-to-rent communities and urban mixed-use projects in recent years?
Over the past four years, we’ve seen a push towards build-to-rent (BTR) or single-family-for-rent communities. Developers are attracted to this lower-density product because it offers higher rents. We’ve also observed an increase in townhome-style products within these communities. On a standard development, we might see 12 to 30 townhomes added, which diversifies the offerings for renters and creates higher demand in the market.
What are some of the unique characteristics or strengths that Jacksonville offers to the construction and real estate industry?
Live Oak has played a key role in Jacksonville’s growth, having delivered 2,786 multifamily units and invested heavily in the area. Jacksonville’s continued expansion presents incredible opportunities for smart, sustainable development, and we’re committed to building projects that contribute to the city’s long-term success.
How is the construction industry balancing sustainability practices with the risk of over-regulation, particularly in states like Florida?
Many of the projects we work on in Florida are wood-frame multifamily communities, which offer sustainability benefits due to the renewable nature of wood. Florida’s building codes are some of the most rigorous in the country, integrating sustainability measures that shape how developments are planned. Across the state, different municipalities and counties have their own regulations, such as EV mandates in Miami, stormwater retention in Tampa, and impact fee structures in Jacksonville, which developers must navigate. While balancing sustainability and regulation is important, ensuring policies are aligned with real-world demand remains a key challenge.
How do you view the regulatory environment?
The banking sector is facing significant over-regulation from the Fed. While responsible development is essential, there’s also a strong push for affordable housing in many markets. The shortage in affordable housing stems partly from the lack of development between 2010 and 2014 following the Great Recession, especially in the multifamily and affordable housing sectors.
What are your top near-term priorities and goals for Live Oak Contracting?
As we look ahead, our goal is to continue expanding into high-growth markets while maintaining the service-minded approach that sets us apart. While we remain a trusted partner for developers and investors, we’re also actively exploring development opportunities ourselves. We see strategic value in directly investing in projects that align with our long-term vision, whether through joint ventures, land acquisitions, or select development initiatives. Additionally, we’re focused on innovative construction solutions that improve efficiency, cost savings, and long-term sustainability in multifamily development.
