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22A — April 24 - May 14, 2015 — Spring Preview — M id A tlantic
Real Estate Journal
M ulti -F amily D evelopment
By Russell Tepper, Mill Creek Residential “Perfect storm” growth scenario created for Multi-Family development
A
we’re also seeing significant numbers of millennials prefer- ring to delay household forma- tion while seeking the flexibil- ity that renting provides. They are prioritizing the use of their resources in order to access the best quality, most highly ame- nitized and convenient living experiences possible. These demographic trends – namely the increased ranks of “renters by choice” – are oc- curring after what had been a long period of limited multi- family construction. Simply, supply of quality multifamily housing stock has a long way
number of factors have converged in recent years to cre-
to go before it catches up to de- mand for well located, transit- oriented property. In theory, this is all great news for multi-family devel- opers, but barriers to entry in New Jersey and New York re- main high. Towns that offer the mass transit access demanded by today’s renters are willing to work with developers on their proposals, but the entitlement process is lengthy and often unpredictable. While we have a historically favorable set of market fundamentals, there is fierce competition. About four months ago, Mill
Creek opened a new commu- nity, Modera 44 inMorristown, New Jersey, and two more Mill Creek communities are set to open later this year – Modera Mineola, on Long Island, and a repurposed, 110-year-old, eight- story warehouse in Jer- sey City, called Modera Lofts. Key drivers of success for devel- opment of these communities and in this marketplace are: 1. Local ties. The develop- ment team working with mu- nicipal officials must know the local market, and the individu- als on the project must have strong relationships in the
towns where they wish to build new communities – relation- ships that develop over years of partnership and through multiple economic cycles. 2. Versatility, stability and flexibility. Developers that succeed in this landscape are vertically integrated and well capitalized. This enables them to approach the process without strict design specifica- tions and inflexible construc- tion methods. Developers are distinguishing themselves by building communities that re- flect the municipalities’ visions for blending into the fabric of their neighborhoods while also satisfying the desires of future residents. 3. Superior product . A developer must understand the renter profile and attract residents who are looking for a certain type of living experi- ence. A track record for deliver- ing a superior product is criti- cal. Quality craftsmanship and innovative apartment features must appeal to very discerning renters, and amenity pack- ages should reflect their unique needs and interests. Lessons are learned over the long-term and experience is the common thread run- ning through the profiles of developers who are succeeding right now. All three of our new communities result from col- laborative processes in which we’ve listened carefully to our municipal partners and ensured that our communities reflect their visions for smart growth. Mill Creek’s goal is always the same: create value by building a high-quality community that exemplifies the best in live-work-play for our residents and also serves as a source of pride for the municipality. With historically strong fun- damentals, this market can be very rewarding for develop- ers and municipalities that want to see reinvestment and growth in their downtowns. To succeed, developers must understand the ways in which municipalities and renters de- fine value creation and appre- ciation. Those that deliver on their promises will find them- selves very busy and highly sought-after in our region. Russell Tepper serves as senior managing director with overall responsibility for all development activi- ties in Mill Creek’s North- east Region. n
ate a “per- fect storm” growth sce- n a r i o f o r multi-family development in our region. Baby boom- ers have re- alized that
Russell Tepper
their empty nests represent opportunities to simplify their lives and upgrade their life- styles through renting luxury apartments. At the same time,
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