The Real Estate Roundtable with IPRG
IPRG Partners and guests discuss various topics on New York City Real Estate and the broader Real Estate Market.
The Real Estate Roundtable with IPRG
The Art of Real Estate Development with Anthony Morena of Mortar Group
Anthony Morena of Mortar Group shares his journey from architecture to development, explaining how his technical background allows him to see value in real estate deals that others miss while navigating Brooklyn's dynamic market. He offers timely insights on condo demand, resilient pricing, and the surprising trend of larger units outselling smaller ones as interest rates decline. Tune in to hear how his flexible approach to development can help investors and builders navigate today’s shifting market with confidence.
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All right, we're here at the Real Estate Roundtable with IPRG and we have a great guest today, Anthony Morena from Mortar Group. Welcome, Anthony, Thank you. Great to see. You Appreciate it 100%. Yeah, Luke Sproviero is here and Donald Flaherty is here. This is Derek Bestrick. So what's happening, Anthony? How's everything going Doing well, you know.
Speaker 2:Market's keeping us busy. Yeah and no, and it's good to be here. I appreciate you guys having me?
Speaker 1:Absolutely. We were talking briefly before we just started recording that you're a developer but your background is in architecture, yep, so we think that's great, probably a very good knowledge base having the architecture to go along with development. And you were saying that architecture just wasn't really where you wanted to be and wanted to pivot into development.
Speaker 2:Yeah, yeah, you know it's. You know it was one of those things like I graduated from architecture school and you start to see kind of the climate of you know where architects were in the totem pole of development. It's like, okay, that's not really where I want to be. I want more control. I wanted to see what was going on, I wanted to have a voice in the overall system. So I was like, okay, we're going to start to shift into development. But the architecture kind of gave me a good background from the technical side. Yeah. So where I was able to kind of see deals a little bit differently than your traditional kind of finance guy would and that's kind of what created Mortar and what we do where we kind of combine the architecture and development, where, um, you know, I could look at a deal from a technical perspective or just having knowledge about zoning, it's like, okay, you know what, I could squeeze 10 to 15% more sellable floor area out of a deal just because I knew how the code works.
Speaker 2:Yeah, so that early on in my career you know cause I've been doing this, you know almost 25 years at this point. So on in my career, you know cause I've been doing this, you know, almost 25 years at this point, so early on it was really helpful, I'm sure. Um, and then I went to go work for, uh, uh, an architect down here, uh, joseph Pell Lombardi, who kind of did architecture and development. So that was kind of my first foray into the development world. And then after that I went to work with a Mourn and that was, you know, early 2000s, 04, 05. Okay, when Joe Moynihan was kind of, you know, starting really to take off and be really busy and really active, so we were doing, you know, 40-story ground-up construction projects, so I got to learn development from kind of the best of the best and then after that kind of pivoted into mortar and doing what we do.
Speaker 1:What were you doing for Moinion?
Speaker 2:Project manager. Okay, and it was, you know, at the time it was a really small group. There were, you know, 10 or 12 people in that office and everyone was just really busy with a lot of work going on. So you got to see every part of a deal, you know, and I was more on the construction side. But you got to see everything and how, like a really good developer does a deal, how do they look at it, how do they analyze it, where do they find the value? That were me as an architect, you know I brought kind of a technical expertise and I could see value that way. But how did guys like that really look at deals? So it's kind of like for me it was like the combination of those different things was kind of the precipice for it.
Speaker 3:Out of curiosity, like a lot of the developers we speak to, especially in Brooklyn, they're more of like a boutique kind of developer. I'd probably put you in that category, right, but like a Moinion, right, yeah, and you were in the office doing a 40-story building. Why one or the other? What's like the benefit of doing the bigger projects versus like the boutique kind of developments?
Speaker 2:It depends, you know, and early on I kind of I had to decide kind of what, where I wanted to go. Yeah, but ultimately there's no difference in doing 500 units at a $500 million or doing 20 units in a 10 or $20 million deal. There's more zeros, but the process is the same. You know, development it's, it's kind of a template. You refine it as you go and you get better, you know, with each deal, but they're all kind of the same. And then for me, early on, I kind of like I was like, you know, I like multifamily, I like residential, I want to focus on that. And then I kind of grew up in Brooklyn, knew it like the back of my hand, so it was kind of like the perfect combination. And then I liked doing the smaller deals because for me as an architect I could extract the most value out of those. Got it, and it just happened to be in Williamsburg, you know.
Speaker 2:And my first project we started it was 2001. So it was a long time ago, oh wow. And you know we did a ground-up construction project which should have taken three years. It took five years because I didn't know what the hell I was doing, you know. And at the time there was only. We did a six-family ground-up construction project but there was only one other building in that area that had. That was for comps for condos, like there was just no condos in Williamsburg at that time. Yeah, I believe it. You know, I think there was a deal, a building on it. It was like on Richardson. That was the only comp that we had. It was like $3,000, $3.50 a foot for condo sales.
Speaker 3:Get out of here. That was in 2001. Yeah, I believe it. Yeah, I believe it's great.
Speaker 2:And you're trying to figure out what is the value project and you've got a hundred people lined up for open houses and that's where you start to see the snowball of that whole area.
Speaker 3:So on $300 sellouts what was the dirt?
Speaker 2:It was, it was not much. Yeah, you know the construction cost $90, $100 a foot. That's a difference. Yeah, you know it was a different world, different world. But that's kind of where I kind of cut my teeth with and kind of you know you get started and I just liked the neighborhood and kind of watch it grow and then you kind of see it through the evolution. You know the high points in the market, the downsides 08, stuff like that, and just kind of, yeah, grew into it a bit.
Speaker 3:So it's all pretty much the same right. So I guess also on, the bigger sites are hard to get right. Like Williamsburg is full of these 25s, 50s, but to get like a big site where you could build a 40-story building and that's if I was a developer looking to do that stuff, I mean it's hard to get the right site. So how long are you sitting around like waiting for the site versus like how many times can you buy stuff?
Speaker 2:You know, and plus at the time I was 25, 30. Yeah, so I didn't have the capital to do those. So you literally have to start one small project and then next, then maybe try to do two more. It's this slow evolution and slow burn into building it out. Yeah, it took a while to build a truck. For sure that's good.
Speaker 1:Real quick before we start talking more about Mortar. Could you just elaborate when you're talking about Joe Moynihan and when you say he's building these big developments and where he kind of sees the value, or like when you say, like just dealing with like a very professional developer, like some of the takeaways or kind of what, yeah, what caught your attention from dealing with him?
Speaker 2:He just has an eye and he had an eye and a knack for it. He knew what he was looking for. He knew and he still does like the branding on how to bring a product to market that people will like as a resident but also create value for investors and just as a good product. You know, when I worked with him before that I was at Joseph Pell Lombardi who was in Tribeca. He was an older guy that had been one of the first guys to do warehouse conversions to residential in Tribeca.
Speaker 2:So it was just like you start to see these different developers and what they did and how they do it and it's all kind of the same language. You're you're trying to create value for your investors but you're trying to do something that is interesting, you know, stylish and that people will like the end product. So it was that and it's just you know, and then just having kind of the guts to do it, you know that was the big thing. You just you got to go for it. That's kind of one of the biggest things I like that.
Speaker 2:It's so true, yeah, it's you got. You can play with the pro forma until you're blue in the face, but at a certain point you got to go and you're going to learn some stuff, you're going to screw up some stuff and then you just learn deal by deal. Yeah, um, but just seeing you know guys do it at that level where he was doing those size projects and just the growth of his company at that time, and then continued you know well, past it, obviously, uh, it was just great to see in my twenties. Um, yeah, yeah. And then I kind of refined the ideas, like, okay, what do I want to do? What do I want to do in the field and still keeping a little bit of the architecture, uh, background that I went to school for? So I, you know, you don't waste my college degree, yeah. So it was like, yeah, let's get licensed as an architect, use those skills and then try to bring, you know, my version of Velp into the market.
Speaker 1:Cool, yeah, all right. So at Mortar you're building condos to sell and you also have rental products that in many cases you're building or renovating, rehabbing, and then you're holding and cash flowing. Let's start with talking about the condos and the condo market and stuff that you're selling. And we're at the end of September, middle of September, right now. The Fed just cut rates again for the fourth time in the past year. I think rates are down 100 basis points in the past year, something like that, maybe a little more actually, but I don't know. What are you seeing in the condo market right now?
Speaker 2:It's been interesting. It's been an interesting few years for me and, I think, every other developer. Yeah, you know you're constantly tracking rates seeing where things are going. The condo market was slow. You know you're constantly tracking rates seeing where things are going. The condo market was slow. You know you had a lot of deals going on, but not significantly less than you would in a good market. But now it's starting to pick up. You know sales are picking up.
Speaker 2:You know we had spurts of it kind of happening last year, a little bit Like the more interest rates would get close to 6%, the more they would tease 6%. You would see more activity in buyers. So now we're finally going to start to get back to that range. When I think there's so much pent-up demand, there's low inventory on the condo side, ultimately you're going to bring all those people back to the table on the sales side and you're probably going to have a bump in prices. Yeah, that'll come with it. You know cause on the flip side and the rental side, you know rental prices went out of control in the last three, four years and people that were buying apartments decided to rent an apartment and then now I think that you know they're going to start to shift back into the sales which they were originally looking to.
Speaker 1:to pick up, what size units are you building or targeting, or like what price points like? Where's the sweet spot, in your opinion, in the market?
Speaker 2:So for us we're kind of a small to mid-cap kind of company. We look at deals that are, I would say, you know, five, 10 units to 40 units. That's kind of our sweet spot and you're looking at. You know, for us we've done work. Manhattan, brooklyn, queens is is our, is our, our space, but mostly Brooklyn, and I think you know you're getting a lot of uh sale velocity in larger units. You know two, three beds, um, that have been moving well at a at a good price point. One beds are also doing well, but not at the same velocity.
Speaker 2:But I think as rates start to come down and kind of then enter into the fives, I think you're going to start to see that pick up as well. Because you know, coming out of COVID you had, you know the rental market was, let's say, williamsburg, greenpoint was $2,000 to $3,000 for kind of one bed and then now it's at $4,500, pretty steady, you know. So I think you know You're going to start to see that whole market shift again. But on the sales side we're excited for it. I think the Fed yesterday, or the Fed in the fall, started to lower rates and you see where things are going over the next 12 months. The velocity of the drop rates we don't know, but it's all trending in the right direction. Finally, after a few years of waiting around, I think it's going to start to build up. Projects that we're taking on now are selling faster. You know earlier, and I think we, you know there's a good buildup of work that we have for, like end of 25, 26, and then going into 27. That will do pretty well.
Speaker 1:So yeah, it's good, you know it's a nice turnaround, nice change in the market to see over the last you know few months. For sure, yeah, people have said that real estate has been in a recession for like the past three years, ever since rates started to go up. But it's interesting because I think sale prices, as far as I could tell, are at all-time highs in terms of price per foot.
Speaker 3:I mean, I'm not.
Speaker 1:No, I would say that for residential units throughout Brooklyn Like rent no sale prices. That for residential units throughout Brooklyn Like rents no sale prices, sale prices, that's what I meant. Yeah, price per foot on sales For condos, condos, townhouses just the residential market, not apartment buildings, but yeah. Well, it depends, yeah. So yeah, it's interesting to think that rates went from basically zero on the Fed to over five Yep. No-transcript.
Speaker 3:I don't track the Manhattan market, but is that the case in Manhattan though for condos in Manhattan? Because Brooklyn obviously we're very close to it, right, williamsburg's been insane Like you're seeing 2,000 a foot now in a. But Brooklyn, like I live in Tribeca, like I don't track that market but I'd like to it'd be interesting to see. I think the prices were bigger on these condos in 19 and 18.
Speaker 2:I think it's all kind of correlated, you know, together and I think they're all kind of following a similar trajectory. Yeah, you know we had, you know you had such low rates for a long time and you had a stable buyer pool, yeah, and then the rates shot up unexpectedly in 22 at such a high clip. No one was really ready for it and depending on what kind of deal you were doing, you could have got wiped out, you got killed, but it just the prices on the sales side did not really go down much. But the velocity dropped significantly in 22, 23. And then now you're starting to see it kind of trend back up in the right direction.
Speaker 2:And I think once we hit certain milestones with rates and you know it always takes a little bit of time between rate drops and buyers to kind of come back to the market and feel comfortable, you know, is that three months, six months? But I think that's kind of it's all building up to put us in a good position, I think for New York in general, for sure For the next couple of years. You know rental is trickier because it depends on what kind of rental asset you have and all the politics and all the other stuff associated with it.
Speaker 1:But for good markets, I think you're in a good position coming in and do you think the velocity was down because there was less demand to buy, or is it like there was a lack of supply because people just weren't selling A little bit of both?
Speaker 2:Yeah, I think it was the market kind of froze up. You weren't seeing too many new deals coming to market that you could develop no-transcript X amount and buy a condo or a townhouse at 7% or 7.5% where your mortgagery would have been double what it would have been three years before, and I think that was also kind of a shock thing where people weren't ready to make that jump. But now, because things are starting to come back down, you're going to see that kind of movement again and instead I think those people went the people that were on the sidelines in buying they switched to rentals for a short term. It was like, okay, I'm going to rent a place, great spot, williamsburg, greenpoint, manhattan, tribeca, where it might be and those rates went up as a result. And now I think you're going to see the sales stuff kind of follow, got it? I've been wrong before but that's kind of.
Speaker 1:I was listening to something earlier that said that we're like at the start, like the very beginning of a new cycle, like we're about to enter, like this, the start of a new cycle, a new boom in real estate. Do you think so?
Speaker 2:I think so, yeah, yeah, I think, I think it's. I think it's there's a lot of different things that are going to come together. I think New York is kind of. You know, everyone was kind of concerned about New York for a bit and it's like where's it going? But I think, you know, new York is doing well, everything's kind of taken off, everything's kind of the timing is kind of moving in the right direction. And now for us it's just it's finding deals, deals that make sense, that you can kind of really jump into.
Speaker 2:We had a lot of, you know, for us in general, we have a rental portfolio that we manage, that we hold on to, and you know deals that we'll develop as rentals. But then we also do kind of a mix of either ground-up construction or kind of renovation or value-add type stuff. So we were earlier, a few years ago, we were more shifted towards the ground-up construction stuff and then we shift a little bit more towards renovation stuff, just because we could pick up more of them and just fit in with the rain market. And I I think now you're starting to see, you're going to start to see more ground up stuff kind of come to market and kind of you'll see all that kind of move. But yeah, I'm excited about it. I think it'll be pretty good yeah.
Speaker 1:And are the condos all ground up, or do you do those like in existing buildings as well?
Speaker 2:We'll do them in existing buildings. Where we'll take a smaller building, add on to it, double the number of units, change up the unit mix, just update, modernize it for what the market's looking for. So we'll do a little bit of everything. It kind of depends. You follow the flow of the market to a certain extent. Where things are where they're going, you try to push out a couple of years and kind of get a sense.
Speaker 2:The problem with ground up sometimes is it'll take three to four years to build and then bring to market. So the problem we had was with any developer that started in 20 to 22, and you had a construction loan at 4%, 4.5%. By the time you're halfway through construction in 23, 24, you're at nine because it's just floating debt. It's just they killed those projects, so for sure. So it really depends on what you were doing and how much equity people had in deals, how levered they were on debt, you know, and stuff like that. But for us we tried to maintain a good balance where we can kind of balance and pivot with things as they went along.
Speaker 1:Yeah.
Speaker 3:Makes sense.
Speaker 1:Yeah.
Speaker 2:Makes sense. Like you know, it depends. It depends on the product and where it is. You know we have condo developments in Astoria, which is a very different kind of market than Greenpoint, Williamsburg. Or you know we just finished up a project in Prospect Heights. So very different, all three very different marketplaces. You know, Astoria is kind of like you've got buyers from Long Island City that are looking for something that's a little less expensive, a little more space, a little more bang for the buck.
Speaker 2:You've got Williamsburg Greenpoint, which are, you know, could be people from Manhattan that are kind of shifting in, or the people that have been living in Williamsburg Greenpoint forever. And then, like you know, you get married, you have a kid. Now you're concerned about a school and a larger space. So you start to see that. And then Prospect Heights Park Slope, it's your school bigger apartment, three, four bedroom, higher valuations, just because there's less inventory there, because it's more landmarked, so it's harder to find a new deal or a new building that you can kind of live in. So it really depends, but they're all kind of trending in an interesting way, which is nice to see. Yeah, For sure, yeah.
Speaker 4:I feel like, in terms of school, a big gripe on Williamsburg Greenpoint is the schools. That is the big issue that a lot of people, I think, that are looking for condos for three bed, three bath, like wanting to put their family and buy a condo for a lot of money.
Speaker 2:That's the Achilles heel of the area and you know it used to be worse because, as the neighborhoods were kind of coming up, there wasn't very few options. Now they're getting better. Now you have private options. You know people commute a little bit more. Covid kind of changed things a little bit where how people you know work and you know spend their time during the day. So but overall it's gotten better and the market for those larger units has grown substantially, like even like with deals that we're bringing to market now on the condo side. The velocity that we're selling a 1,500 square foot condo is a little bit faster than your one bed or your studio. Usually it was always the other way around. Like the one beds you'd sell them faster, you know. Just lower price point But's spending $2 million, $3 million on an apartment that's larger, that fits their needs A lot of cash buyers you're seeing. I think that'll start to shift, obviously with rates. But yeah, it's an interesting mix that you see coming.
Speaker 3:So you think the cash buyers are because of the rates. Yeah, I mean, I obviously agree. I mean, so you think the cash buyers are because of the rates? Yeah, now I would say I mean I obviously agree. I mean I think the rates have something to do with it. But I think it's a lot of inheritance too, like we saw that a lot in carroll gardens. It sold, like we sold like two townhouses to users and these people cut checks. They also I don't think they could get mortgages because they're inheriting the money. They don't have good jobs, so like they can't get a mortgage just because you have a bunch of cash. They have no income, so like they had to do that anyway.
Speaker 2:Yeah, you definitely see an interesting kind of blend of that.
Speaker 3:So I think it's a lot of that too.
Speaker 2:You know you had a lot of cash buyers the last couple years were looking for deals. Yeah, like, okay, I'm coming in cash. Yeah, you know, sell it in a year when rates come back down or then I'll finance it then and pull my money out, um, but you definitely see a lot of like the inheritance stuff, gifts, you know, couples getting married, family money kind of buys the apartment for them. You see a lot of that kind of stuff. Yeah, um, but that's kind of the beauty of it. Yeah, you know, for years it was kind of like the. It was like foreign capital, foreign equity, was coming in. That slowed down, I think, just because of COVID and everything else. But I think that's going to start to pick up as well. So, yeah, it's a good mix that you see kind of popping up now.
Speaker 3:Yeah, the bigger units are interesting. I mean, I have a need for that. I obviously have kids, but I see it everywhere.
Speaker 3:I mean, I have a need for that I obviously have kids, but I see it everywhere. If you look on like Street Easy today, like big units, if you need like a three bedroom, let's say three bedroom or four bedroom, like you are not looking good. You have very, very, very little options. Maybe in the buying there's more options, but it's crazy. People are still building these small units. I think even people that are even with a girlfriend or boyfriend, whatever it is. They want more space.
Speaker 2:Yeah, and then you see buyers that'll take two, one beds and they'll combine them into a three. You know to see that kind of thing, you know. So yeah, it's, it's definitely kind of flipped a little bit. So you know the nice thing about doing the renovation or rehab deals is you can be in and out of a deal in 18 months, like so, some stuff that we bought with you guys, you know we're coming to market already. You know it's just kind of fast turnover. The ground up construction takes a little bit longer. So if you've got a pivot in your unit mix it's kind of hard. But with a deal that you're coming to market 12 months after you bought it, it's just you can catch the market faster. Got it, bought it, it's just you can catch the market faster, got it. So that's kind of what we try to focus on at this point just velocity, doing a lot of smaller deals but just getting in and out of them faster. It makes the underwriting easier, makes investors happy because they're getting their capital back, they're seeing gains. Everyone kind of gets excited about stuff and you can catch the market at the right time, which has been good for us. Those are for condos yeah. Renovate, okay, yeah, even rentals though too.
Speaker 2:The other thing is on the rental side is it took a couple of years to kind of digest the fact that, okay, rates suck and they are what they are. You got to accept it. And then you start to change. Rates go up, but the pricing dynamic for an asset or deal you're trying to buy doesn't really change that much. Like you know, they're still expensive, not to rate adjusted. Then prices start to come down a little bit and now you start to see more velocity. So I think now that combination you know, helps and I think it, you know it works well.
Speaker 2:Yeah, and the rental values have been strong. That's the other thing. Rental prices have not dropped. They're going in one direction. The politics and everything else in New York which makes it sticky at times has also driven that market even higher. So I'm curious to see what happens on the rental side. But if I take past history, it's going to continue in one direction. It might slow down a little bit, but when we bring rental deals to market now, you're leasing them in a couple weeks You're getting five offers on a two-bedroom, on a three-bedroom, five offers in one day, and then you're just moving on to the next. You recapitalize and you kind of just keep going. So it's nice.
Speaker 1:So what's the business plan on the rental side? It's to buy buildings that are vacant and renovate and then just put them back on the market and kind of cash flow and hold it.
Speaker 2:It's a combination. It depends on the deal. We'll have some that we just kind of put into our portfolio we're keeping this for 20 years and some that will will buy reposition and then kind of just have a sale in two to three years. Um, you know, and that's kind of it's always kind of been this blended model, really kind of depending on what's going on. Yeah, um, and what works well from, you know, the cap rate side.
Speaker 2:The cap rates got crushed a little bit with some stuff. So it's like, okay, you know, we can be a little bit more patient, we can wait until 26 to 27 to start to sell, but the rental numbers have all kind of been working in your favor. You just need rates to kind of cooperate a little bit For sure. So now you're starting to see that. So I think you start to see more velocity and for a while you didn't see a lot of new deals coming online. You know, because for us, if we're doing smaller stuff, you have to be a little more picky in kind of what deal you're buying, where it is. You know, if you're looking at sub-rehab stuff, you've got to be pretty meticulous on how you're looking at that stuff and if you're evaluating correctly with. You know just city-state guidelines and all that kind of stuff. So you have to do your homework a little bit more. But if you can get a good deal, that works out well. I think it works out for everybody.
Speaker 1:Yeah, yeah. And then are you guys into like so you buy, you renovate, and then you refinance, you pull out your cash and basically just sit and hold. And then what about like 1031s? Are you guys doing that?
Speaker 2:Okay, yeah, we'll do that. You know, early in my career the way I would do it is it was kind of 1031s to build up the rental portfolio. You finish the development deal, you 1031 into a rental and it's always kind of recirculating capital because you're starting. For me, you're starting from zero. I don't come from like a real estate family or background, so it was kind of like always kind of you got to hustle a little bit and try to figure out how to just build that base and you get lucky sometimes and you just kind of keep growing it. So, yeah, 1031s have been a big part of it and that was also quiet for a little bit. Now you're starting to see that happen again. You know, bonus depreciation was a big thing, you know, and then that kind of died down but then that's back.
Speaker 4:So it's like all right, let's go.
Speaker 2:We're ready to go and that just helps. Yeah, so that helps you just evaluate deals where, if the acquisition price was a little tricky, now you can, you can navigate those prices a little bit better. And you know, for us on the construction side we do a lot. We don't do the construction in-house, but we have contractors that I worked with for 20 years. You know contractors are always a little finicky. Everyone's got their issues. But if you have good teams and you can turn around deals fast, it makes you more efficient. You can be more aggressive on the buying side.
Speaker 3:That's what we hear. You see us here on the phone. We're talking to a developer and his dad's a big developer and he has friends that obviously are doing this a lot. And if you have those pieces together and you get what you're doing the a lot and if you have those pieces together and you get what you're doing, the price per foot doesn't really matter as much. Right like you don't know what you're doing, you have to really buy cheaper.
Speaker 2:But a hundred dollars a foot, if you have the pieces in place, doesn't really move the needle that much no, that's the thing like, if you like, for us, if we look at a deal now, yeah, um, uh, you can identify in five minutes if it's going to work or not. You know, know, you don't need to get into all the nitty gritty, you don't need a full pro forma. You know what the comps are, you know what it's going to cost to build it, you know your soft costs, your debt. Does it work or not? And it's like all right, let's go. That's why I like working with you guys. It's just kind of of you know, you know what you know, but it took a while to kind of figure that out. You know again, like after doing it for a while, it gets a little bit easier. You know, for us we still do the architecture and the design in-house. So once a deal comes in, we'll do like the initial underwriting, see if it makes sense, you know. And then it goes to the architecture team and then they bring in the construction admin side and it just kind of. And then the development team is kind of and that's also the races uh, pretty fast.
Speaker 2:Um, that was always one of the nice parts about bringing architecture and development together. It's like sometimes you know you are a developer and you've got to make a change. You've got to value, engineer something you got to call the architect, he's got to call the architect, he's got to call the engineer, you got to call the contractor. It's two weeks of back and forth and no one knows. You know, it's just you have to figure it out. For us we could sit down, we make a decision in a half hour and we're we go. So that's just. We've been built for kind of velocity and just kind of move fast in that way. Um, just because we've done so many of them, you know, yeah, I think you know this year we're kind of working on our 40th you know development project. So we've, you know, now we've got a pretty good base of like historical data that we kind of just go back to and kind of see what works, what doesn't.
Speaker 4:And people like you. It's like so easy to deal with because, like you're a developer and architect, but also we have developers and general contractors, which are also very easy to deal with because they know everything, and I feel like if you're not one of those two things, you can't. It's like it takes so long for us to even get an offer from you as a developer, so it's like much easier.
Speaker 3:The GC stuff. I mean that can kill you. I mean it's all about the foundation, that's it. That's what I was told.
Speaker 4:The foundation is the hardest part. Right Like the rest of the building, is easy. After that it's getting it off the ground.
Speaker 2:That's the hard part. Like the architecture developer model is good, the GC developer model is even better. Yeah, at some point in my career a few times they were like maybe we should do construction in-house. But I was like I've had enough headaches, my hair is gone already, I don't need any more problems.
Speaker 2:But that way it's like like you're saying, it's like when you've got a ground of construction project and you get out of the foundation phase, it's just like, oh, this is, this is lovely. It's like, all right, let's do superstructure, let's get this thing in close, and then, and then you're, then you're going. It's that early phase where you've got neighbors, you've got, you know, city agencies, you've got all this stuff, you've got to navigate and make sure you do things the right way, you've got insurance, all these kinds of costs, and you know the general contractor that's managing that project is extremely crucial. Like if those guys are doing it in-house and they can manage their schedule and they know I can be in and out of this foundation in three months, four months, versus getting lost in it in six to eight. That's huge and especially when rates go up, that that money is just getting. You're just getting killed. It's all coming out of the back end. Um, so it's, it's, it's a huge piece to have uh, it's a big x factor.
Speaker 3:I still to this day. Obviously we sell a ton of them, are very happy to sell them, but the ground up stuff, so many x factors, like just the access agreements, like that's not even a guarantee. I eventually they have to give it to you, but everyone closes like without them. I mean they try not to. Obviously I think that's the point of the long closing, besides the architectural driven and all that, but just that alone it's just because you have to get it from sometimes both sides. It's just crazy.
Speaker 4:I know developers that give their GC equity in their deals, just so they're in it with them. I mean it's smart.
Speaker 2:It's a smart move.
Speaker 4:It's like because that's how important they are.
Speaker 2:Yeah, I know We've done structures like that in the past where it's like an incentivized bonuses and stuff like that, just to try to get everyone on the same page, because when a deal goes well, everyone is happy. There's always going to be bumps. When you close on the deal, everyone's excited, but at some point in the process all hell is going to break loose. If you're all kind of unified on that path and you get to the end and everyone does well, it's a great way to do it, and the older I get, I try to avoid as many headaches as possible. But access agreements are still one of them.
Speaker 2:It went from like you didn't need an access agreement to you needed a little bit more. You needed something, you needed a letter, you needed some sort of uh communication. Now it's formal access agreements and then it gets tighter and tighter and then you know some neighbors try to take advantage of that, you know, and so you've got to navigate all those issues. But you've got to do it right at the beginning. Now it's like you've got to plan for it.
Speaker 4:You've got to plan for it.
Speaker 2:It's baked into your cost, it's part of your budget because you know you might have some more work to do the first three months, but if you don't do it it's going to make your life miserable for the next two years. So it's huge, you know, but it's one of those things. It's tied into that foundation. Once you get that foundation done, if you've got to underpin, you get all your concrete work you're still work done. You get superstructure up. Then all of a sudden it's the game flips and then you kind of really you can finish interiors pretty quickly If you've got a good team. You know and you just, you know just hammer out a project fast and then, if it's a rental condo, you just bring it to market. You know, depending on you know what you're doing, you know and then the sales team is also is important from on both. You know, like on your side kind of, where you're selling the deals, but also on the exit side. You know who's that team. Sometimes it's the same right. You know we work together in that respect. Those are huge parts and it's like having that network to work with makes your life so much easier.
Speaker 2:There's always pros and cons to every group you work with. You know me as a developer. Someone could say there's pros and cons. You know some contractors. They're not perfect but I know they can get a deal done in the time they say and you can trust that they're going to do a good job. You know the kind of work that they do. It's like okay, you know I got to keep an eye on them when they do tile work, but I know they do kitchens really well. I know they do steel really well. So you start to kind of pick and choose your teams, that depending on the deal, and then that's how it kind of all comes together, you know, and hopefully it goes well. Ultimately it's up to the real estate gods to determine what's going to happen.
Speaker 3:For sure, do you think the foundation for these ground up, that's the, that's the hardest part.
Speaker 2:yeah, you got to get through demo, you got to get through the foundation part, yeah. And then it's because you know when you're, when you're modeling your performer, your contingency, your contingency is going to get eaten in that phase. If it doesn't unless you're making changes as the owner or the architect screwed up, there's not much variation in that contingency. After the fact, it's all kind of gets eaten up in that phase. You know there's projects that we've done where you design one foundation and it's like, okay, we're going to do a traditional concrete structure. Then you start to dig and you hit water in six feet. It's like, okay, this is a problem, that structure doesn't work anymore, so you've got to redesign it and it comes a lot more expensive. Or if you've got to switch to piles and piles are a nightmare, it's one of those things kind of like access agreements.
Speaker 2:It used to be a lot easier to navigate doing piles in New York City. Now it's a lot more complicated, a lot more expensive. So you got to try to figure out all your variables in house where that being the architect or having that team in house has kind of helped us. Um, but yeah, you're always. You know you're surprised sometimes when you you dig a hole and it's like, oh, I wasn't planning for that, wow, you know, we did years ago, early on, we did a project in vinegar Hill and we're doing demo and excavation for foundations and there's a buried car underneath there, it's like, okay, we didn't plan for that, so we got to get this car out of here. You know it's, it's a contingency item, you know.
Speaker 4:but, um, yeah, you just you never know and then when you hit water, it's basically you're making, you're building a pool right, because you're inlaying this whole structure and you're lying it, lining it like a pool.
Speaker 2:Yeah yeah, and it just it gets messy. And then, depending on what time of year you're you're building that foundation, water tables high, low. You know Greenpoint, you know Williamsburg, astoria, there's a lot of fill, you know. So you've got to. You got to understand where you're, where you're building. What's the history in that location? Um, you know, so it's. You know I've been burned on that side and we, you know, we've been fortunate in others.
Speaker 4:But yeah, you, you kind of learn to look for the pitfalls.
Speaker 3:You know and you try to. You try to hedge against them as much as you can, but you know it's never foolproof. Wow, so what's one of the more? Successful endeavors Like what you have, like the name of the project, but what's one of the better ones that you've done recently, in the last couple?
Speaker 2:of years. So we've had a few. We've had some that have taken a little bit longer to sell Okay, but we've had some that have done really well and sold really quickly. Prospect Heights great location, beautiful building, turned out really well, contractor was great and sold most of it really quickly. Greenpoint, williamsburg same thing. If you get that unit mix right and you time it right, they worked out really well.
Speaker 2:It's a little bit hard sometimes because you'll have like five deals that are going at the same time. You're bringing them all to market. Three or four are hitting really well and then you got one that's lagging what's going on there. Three or four hitting really well and you got one that's lagging what's going on there. It's, it's just a mix of timing, location, transportation, how far is it, you know? Um, but yeah, we've had, we've had some really good ones in williamsburg, greenpoint um, you know, long island city, we're kind of we're working in now, which is, I think, I'm excited for. I know I'm excited for just because it's a great location that we haven't really gotten access to very much, because it's even like with Park Slope and Prospect Heights, it's hard to find good deals there. There's a lot of competition, you know, but it's also limited inventory. You've got to navigate landmarks so it's like where can you find that good deal? That makes sense, you know.
Speaker 3:Got it.
Speaker 2:It's also it also depends on the timing in the market. It's like for me, being the small to mid-cap guy, there's always and you guys know this there's 10 of us that all do similar stuff in North Brooklyn, 20 of us, and it's like if I missed out on the deal, it's like who got it? We all kind of follow each other. We all know what the other one is doing For for sure. It's always kind of like yeah, what did that person do with that? It's like, how did that work out? It's like, oh, that guy did something interesting that I wouldn't have thought of.
Speaker 3:It's always kind of you go a little bit of that and you kind of learn from that as well yeah, I mean, I think I think certain buyer side advantages right, like being easy to work with, I think, from a broker standpoint, I mean we, we obviously gravitate towards you. There's people that we gravitate towards depending on how it goes right, like the drawn out closings, all that knowing some people do that yeah, it is what it is as you get better and better right, just like you with developing buildings as a broker.
Speaker 4:You get better and better at like vetting out, like who's the syndicator, who's the guy who actually has cash.
Speaker 3:You have to have a big advantage, a big advantage though, in this Italian section of Williamsburg right, I mean growing up there you've got to have it work out well for you. People know who you are. Yes and no, okay.
Speaker 2:Sometimes they don't want to sell to the guy that's the local guy, really, because they feel like they can get more from someone that's coming from. They're looking at an address or, you know, feel there's more capital. So it really depends. But yeah, it's. You know it's tricky, you never know. Sometimes you know a deal will die and it pops up six months later and you're like, oh, that you know, or a deal will die and it's like you know you'll see someone else pick up like, oh, thank goodness we didn't work, um, but I, you know, and I didn't.
Speaker 2:I never, when I was starting, like the first 10 years, I didn't appreciate the, the sales team developer relationship as much as I do now. Um, and because you're just fighting for deals, you're trying to build a track record and it's like that first deal you're doing and the first few deals you're doing for me, like 04, 05, I had no money, I didn't have the equity raised. So it's like, okay, I got to try to sell a deal, I got to secure a deal somehow, and then, yeah, you might want to try to delay the closing a little bit and that just pisses everybody off. Yeah, but you don't really have a choice. But now it's like you get into this groove and you kind of just mature in the business itself. Now it's like okay, if there's a deal that makes sense, we can move fast, and that's you know. I didn't realize that early on, you know, because you're just trying to scramble and hustle for anything you can do. Yeah.
Speaker 3:I won't forget Frogan Frost. I think we did that in 17 with you that one, you and the other guy that lost the deal. You guys moved very, very quickly on that deal. I remember how fast that went, yeah, and I think it was probably a rare deal being a 50-footer. And that block obviously was not what it is today. It's obviously good on the map, but it's crazy now.
Speaker 2:No, even looking back, that was one of my favorite projects to do. The way it turned out. Yeah, we were really happy with how it got a great response to the market because then, ultimately, that went to market in 2020, which is not the best time to bring condos to market, but it got a great response because it looked good, it was a great location and we were really happy with it.
Speaker 3:You know, yeah, you know, um yeah, really that was a project that really worked out.
Speaker 2:Yeah, it was, it was great. You know you drive by and now you walk by it's like it's it holds up for sure. You know it's always nice to kind of you know, look past, you know for us, you know, and for me in particular, cause it's like, okay, that held up, this one kind of taught. You know the aesthetically kind of held up well, finishes helped up well, residents are happy. So you're always trying to adjust and kind of see what works, what doesn't.
Speaker 3:Um, because it just helps you on the next one you know, we hear from a lot of developers like, oh, we can't do that, it's mta this. Like we sold deals on, obviously a ton of manhattan avenue, metropolitan grand street, what, what are like the no-nos as a developer, like, yeah, I'm not doing that. Like you hear, like the MTA stuff, water level tables, like, in your opinion, what's something that you won't touch?
Speaker 2:It depends. I used to be scared of MTA early on, but then you start to do a few MTA deals. Okay, this is not that bad. You just need to know what to do. Who do? You got to reach out from the MTA. You got to get them their drawings. You got to get them drawings early to get approved. You got to get your insurance requirements in place. You've got to budget a certain amount for MTA oversight. But once you have that, it's not bad. You just got to know how to do it. You know the environmental aspect. You know you've got dirty soil and you've got to clean that out. Doesn't bother me, I you know, cause you have the teams for it. You just got to budget and you got to plan for it. It's like, okay, if I'm, if I'm, going to turn around this deal in three years, the first three months we've got to be pretty busy and just make sure we get it done right and you budget for it Right. Um, but what scares him the most now? I don't know, piles are always tricky.
Speaker 3:So explain to me the piles, because obviously we're not. We don't do this, yeah, so when do you do piles? What are piles? How does that work?
Speaker 2:So, specifically, or more times than not, the closer you are to the water, you're going to hit water pretty quickly. When you start to excavate and you can't pour a traditional concrete foundation, okay, you know you're going to have uplift of just from water pressure. You're going to have uplift of just from water pressure. You're going to have to have a dewatering plan to get water off of the site and then that's got to go through municipal approvals. So the alternate is you're digging, instead of doing a full concrete foundation, you're doing, let's say, 40 or 50 piles strategically, you know, in the site, and you're digging down 50 feet, 80 feet depending on where it is, and you're just, it's just a concrete base, it's a concrete tube that gets filled and then you pour a concrete slab over it and then you build a building right on top. Okay, so it's almost kind of you're digging through the water to support the building and that's just gotten more expensive over time. But again, it's one of those things if you know how to navigate it.
Speaker 3:It's not, it's not and this is when you push that closer to the water, like in Greenpoint. Yeah, that's like you're definitely going to have to do that.
Speaker 2:It depends. Sometimes you luck out, but a lot of times now like with uh, let's go, it's a half a block from the war, so it's okay, this is going to be piles, you know, just because there's no chance we're hitting anything secure for quite a while. So you just have to budget for it, you have to plan for it, and then it comes to the access agreements and you just need more of the legal side buttoned up. You know, and that also comes kind of with experience, even even dealing with attorneys and good, good teams in that respect. Um, you know, when you're younger, you're you're trying to find, you know, someone that you know or someone that's less expensive, but that's going to get, that's going to hurt you. So now you got to pay for a good team that's really going to help you get you through that process. Um, yeah, I think now it's more just about being efficient and it's like what works, what doesn't? Can we meet our objectives to get out of here of a project in the time that we want it? Because you'll raise capital, we'll have either syndication or fund type structure for appeal, depending on what we're doing when, and it's like we want to deliver returns to investors that are at what we said we would, or you want to beat it in that same timeframe. So it's like you know, we want to deliver returns to investors that are at you know what we said we would, or you want to beat it in that same timeframe. So it all kind of ties into your deal selection. So it's kind of it's never kind of just one thing. You're always looking kind of at all that stuff and how it works out well. So, yeah, it really kind of just depends, but there's nothing too much. Now it's lately.
Speaker 2:It's just been dealing with rates and kind of the shock that came with it because it had to be absorbed into the market and sellers had to acknowledge it at some point. We had to acknowledge it and then on the sales side, on the cap rate side, you've got to acknowledge this is what the market is. You know for that building, regardless of what your performer thinks it should be, this is the market and it works or it doesn't, you know, and that takes a little bit of while. You know, some time to just adjust. Yeah, it's like this is, this is what it is. Um, you know, especially cause rates went up so fast, but then you know you go into 23, 23 and 24. It's like, okay, we know what the rates are. The deal works at these rates, great. If it doesn't, you can't plan for the rates to come down, and that will do well. It's got to work well at that. At that price point, um, so yeah what about like the retail quarters?
Speaker 3:are you like metropolitan or manhattan? Would you build on these streets or is it something you stay away from?
Speaker 2:no, we've done. We've done a few of them on metro. I think we've done three or four deals on metropolitan yep um manhattan, we've done one um it's okay, you know it just depends, like you know.
Speaker 2:Sometimes, you know, especially in greenpoint, the streets are, the side streets are even narrow or super narrow. Like you know, we have one on new or we've had a, we've done a few, I think three on newell. It's a tight street, so sometimes it's even worse than like manhattan avenue, just because it's so tight and there's not a lot of room. So you just have to plan for it and it's like what can I build here and how am I going to get material in and out? Um, so yeah, it's just really the planning phase and just being realistic. You know, I try to avoid hoping that something's going to work out, instead of hope it's like, okay, this is what we need to do, and does it work or does it not?
Speaker 3:This is a separate comment, but when you're building up like an all-in-one job right, like your Dion Richardson, where you're turning a three into a seven, for example, do you need access agreements for that stuff from the neighbors when you're building up, or access agreements for that stuff from the neighbors when you're building up, or is it only when you're messing with the foundation.
Speaker 2:No, you need it for when you're building up as well, because you've got to provide overhead protection for those neighbors and it's always, you know, it always depends on how you approach the neighbors.
Speaker 2:You can go straight legal, which in some cases you need to, but sometimes it's a conversation with the neighbor. It's like, hey, you know, we're going to be doing this for a couple months. You, you know, you try to pay them for the time or the space that you're going to be using, and a lot of times people will work with you, you know. So it's just sometimes just having that conversation, you know, bring them, you know, muffins or whatever it might be.
Speaker 2:But just try to be honest and be nice and I think the biggest thing that we've noticed with access agreements is just telling people what's going on. We've noticed with access agreements is just telling people what's going on, cause they're like, you know, if, if you know, especially like in in these parts of Brooklyn, where you've got kind of people that have been there for 50 years and you know they're kind of, they're not happy that any developer is there, but it's like, hey, this is what we're going to be doing, here's my phone number, what time it is, and it's like, hey, we're going to have. You know, we're doing demo today, this week, we're making a little bit of noise, but we'll be out of here by Monday and so just so they know what's coming. Sometimes it's a huge, a huge piece, because otherwise, if you don't tell them, they're calling the building department.
Speaker 2:And they have the right to do it and that kind of things, because it's just delays. But it takes a little bit of time to figure out that.
Speaker 3:If some of these developers act the way they act with us, with their neighbors, I can only imagine, because they don't tell you everything.
Speaker 4:And so it's like oh, communication is everything, calms everyone down.
Speaker 3:I can only imagine some of these developers. They don't tell these people anything, probably, and all of a sudden, things are falling on their roofs.
Speaker 2:They call in DO anything, probably, and then all of a sudden, like things are falling on their roofs, they're calling dov, yeah, yeah, it must be nuts yeah, you know, and then, and then you know, if you have a good, if that they have a good experience, a lot of times then they'll be like hey, do you want to buy our place? Yeah, I'm thinking about selling what do you think you, you have a more friendly rapport.
Speaker 3:We we met with two people in the last month that were like my neighbor. I hate them, what they did, what they did to us, and they're going to sell like a development site and their neighbors were developers. They have no shot of getting that deal because they pissed them off so much which is insane to me because they just were nice. Even that deal was full metropolitan, they were never going to sell their neighbor. Just crazy.
Speaker 2:You know, developers get a bad rap and sometimes we deserve it. A lot of developers are a-holes and yeah, but if, if you try to do decent by everyone, yeah, you can avoid a lot of the the headaches, for sure. You know, especially like, even when you have people that move into rentals or people that move into condos, it's like, just you gotta. You know you tell them, hey, this is what's going on, this is what we can do, and, and you know you navigate it For sure. But a lot of, yeah, a lot of times it's the simple, even with lenders, you know it's like, hey, this is what's going on, this is what we're planning to do. You know, for us it's a lot easier now just because we've done so many deals and they're like, hey, see what we've done, and then it just gets makes it easier, you know. You know, just over time it gets, it gets easier.
Speaker 3:Where are you? They probably don't want to say, but where are you seeing condo prices these days Like where? Where do you like proforming? Do you think in these, like Italian neighborhoods of Williamsburg?
Speaker 2:It depends, you know. So for a long time it was like Williamsburg always had the upper hand over Greenpoint and Long Island City and then Long Island City kind of shot past it, like if you're in prime Long Island City, that's a great spot to be in. And then Greenpoint has taken off. You know, greenpoint some stuff that we're doing now is 1,500, 1,600 a foot. You're maybe 1,400 to 1,500 a foot on a walk-up. You know which. That was kind of. You know 1200 was usually pushing it for a few years and then now you're starting to enter into that range in greenpoint yeah, um, block by block kind of really depends on the location.
Speaker 2:But even the rental side, where rentals shot up in greenpoint significantly faster than some parts of williamsburg, um, and it worked out. It works out really well, you know, if you're you know the rental shot up in Greenpoint significantly faster than some parts of Williamsburg and it worked out, it works out really well, you know, if you're. You know, the best part of any development project is when you have, you know, your sales team. You're about to go to market and it's like, hey, we're about to bump prices up 10%. It's like, oh, this is great For sure Wasn't planning on that.
Speaker 2:My platform has no mention of it but this is great, you know, even if you end up somewhere in between. It's always a nice thing to have. For a while, when the market was tougher, you didn't see that, but you're seeing that more now. Like I was saying earlier, I think it's just going to start to continue.
Speaker 1:Luke and I renovated a building in Williamsburg a couple years ago and our original pro forma numbers for the bank versus what we started to think that we were going to get and what we actually got, it was just like up and up and up yeah, it was crazy, so much, I mean the realm market exploded yeah but, it was a great feeling.
Speaker 2:Yeah, no, it's great that you have, or you have like an open house. Yeah uh, you launch a building, you have that first open house. You've got 50 people there.
Speaker 2:You know it's like this is great yeah, you know people like the product, they like the location and there's a market market for it. It just makes everyone feel a little bit better about what you're doing. It makes investors happier because they know, okay, we're getting our money back soon, we're going to do okay, and it just kind of builds that kind of faith in the overall team.
Speaker 1:Yeah.
Speaker 3:Are we hitting 2,000 a foot in these locations yet, or close to it?
Speaker 2:You know it's tricky. I've thought about that, yeah, because it's like when the market was really slow after, after lehman and lehman was kind of its own thing. But you know, I was like 2012 to 15. The that part of williamsburg which is kind of like on the other side of the bq, and these bqe started to kind of hit 1200 a foot 1100. It kind of broke a the other side of the BQ and these BQE started to kind of hit 1,200 a foot 1,100. It kind of broke 1,000. That was the big thing. Now it's kind of 15, 14, 15. The next logical step is it's going to go there.
Speaker 3:I love that neighborhood. I mean you're pretty much. You're not in Northside, you're on the other side. There's amazing restaurants, you could park your car I mean, you used to be able to park your car and there's construction on every block, which is probably the worst part about it. But you're right there like like a frost location, like we just discussed, like that's.
Speaker 2:You're essentially in north side yeah, well, that location, yeah, you're gonna hit 2000 pretty fast. Okay, you know if, if not, now, depending on what you're selling, um, yeah, it's just been this slow build-up and you know, like you guys were saying before, the prices have stayed consistent throughout the rate hikes. Now rates are coming down. Your mortgage is going to go down half, but you're still at the same price point and you've got all this pent up demand for people that have been renting instead of buying. It's only going to go one way. There's not that much inventory. You know it's gonna go one way. Yeah, yeah, we were. Yeah, we're seeing from a sales point I mean the four, the 421a aspect of like how long that took to get resolved, or even 45x.
Speaker 2:Yeah, yeah you know, it's just, it's not really resolved. You know, to me um it's just it's not really resolved it's jammed up the pot, the pipeline, there's not much product and you know that's where some of the smaller buildings you, if you can, if you can get them, they do well, but you have to be able to navigate and move quickly.
Speaker 1:You think the 421A and the 485X and the jam up of that and what that's done to the rental market has boosted sale prices on condos.
Speaker 2:Yeah, yeah, yeah, because I think there's less inventory, less inventory yeah. You know it's weird kind of with with rent stabilization, all these sorts of things. You know you've got I have all my theories which probably don't sound so good on a product, on a podcast, but you know it's. It's kind of like the more kind of that. That that work kind of gets jammed up in politics. It's just everything else is going to go up the supply.
Speaker 4:Yeah.
Speaker 2:Yeah, you know, and stabilization and protecting housing is good, but it only protects a certain amount of people and the rest of the market is free market.
Speaker 1:Oh, yeah, so it's just Good cause. Eviction is jamming things up too. Yeah, I'm seeing tenants that are not leaving and they're saying we got good cause, like we're staying. Yeah, and it's just like creating less supply in the market and ultimately that doesn't help that many people in the market.
Speaker 2:It's like, you know, I was looking at this, I was reading this article where it's like, okay, there's 4,000 apartments in New York City, roughly right, and then you've got 900 or 900,000 are stabilized. Okay, that's a free market. Population is a lot of people, oh, yeah, so you, you know, and then rent stabilized apartments. How many of them are actually for people that need that assistance? You know a lot of our people that can make make a ton of money and they're just, they found that apartment. Yeah, good, cause I'm not moving. Yeah, and in the meantime you've got 3 million apartments. You know 5 million people that their rents are going out of control. You know it's it's a political thing that, but it kind of is what it is there needs to be a happy medium.
Speaker 2:I mean obviously we're.
Speaker 3:We're on one spectrum in New York, but then you look at like places like Austin, texas, where they are like build whatever the hell you want and like build these skyscrapers, and I think they have an oversupply, yeah. And here we are in New York where it's way too regulated and we're pushing pricing yeah, but they need to come back a little bit more to the middle, where that's where I think a market needs to be.
Speaker 2:I think eventually it'll get there. It's just a question of when. You know. I think you know you want to do well for everyone for New York to thrive New York is built that way you need different levels of income in the city but the policies need to help everyone, you know, and kind of find that midpoint where it's not just a political buzzword, that you know it's got to work well. But New York has always kind of gone through these cycles. You know where things squeeze, then people realize they've squeezed too much and then it kind of gets looser but it just kind of ebbs and flows. It kind of gets looser but it just kind of ebbs and flows. But what it does for what we do it helps because it pushes everything up. So you know it works out well, absolutely.
Speaker 1:Yeah, that's the way things have gone. All right. Well, we've been talking for a little while, maybe just towards like wrapping up. Just two quick questions. One I want to ask you, like I've heard from like GCs that building for rentals is different than building for condos. Like say that you rehab a building, sure, but what is that difference between building for rentals and condos? Like I get it if it's like flooring or cabinets, like material.
Speaker 3:Appliances and fixtures, but is that?
Speaker 2:it or is there like material appliances and fixtures?
Speaker 1:Yeah, but but is that it, or is there like more to it?
Speaker 2:Well, you've got more. You've got more legal costs with going for a condo. You've got to go through your offering plan. You've got to go through that whole process. There's a time element that's tied to that, but again you can get through that pretty quickly but it's an extra cost. Then you've got your finishes. You know, are you putting in a, a Wolf Sub-Zero or a Bertazzoni oven, or are you putting something a little lower end for a rental Construction materials, how fast you're doing your superstructure, because a rental you're going to want to get to market faster.
Speaker 2:So it's going to be usually stuff that's easier to execute, especially with a rehab. You can adjust, you know, between steel, concrete, joist, all these kind of things to adjust your speed. But it also affects your price point. And then contractors always kind of price things differently. You know they've got their magic numbers that they work with, but they always kind of value them differently. Are they building the same thing? In a lot of ways, yes, but they kind of they look at them differently. Yeah, and then you also need a contractor.
Speaker 2:When you're doing condos there's more diligence on the back end with buyers. You know you've got punch lists. You've got to make sure things are done properly, the building is tight, the uh, everything works well, and that the contractor has to factor that into the budget where, okay, I'm gonna, I have to give a warranty for this building and I need to be on the ball to do it, because there's legal ramifications for the sponsor if he doesn't. So that factors in a little bit more, less so in rentals. So it's like a little bit of all these little things that kind of have to build up.
Speaker 3:Yeah, the end punch.
Speaker 2:Think about that Like people will rent apartments, but like to spend inspector oh my god, you're bringing an inspector, you're bringing your aunt, your uncle, you're bringing five different people to the, you're bringing everyone to that, especially if you're a first time buyer. Yeah, and everyone is going to have like the stickies and kind of put it everywhere and it's, you know, it is, it's the nature of the business. But the contractor needs to work with you to kind really make sure you address those things and that buyer is happy. Because if the buyer moves in and they're not happy, it just it causes more problems for you, for the developer, and you get a bad rap, you know, as a as a result.
Speaker 1:Um, do you guys have any other questions? I just got one last one. I'm good. Yeah, I'm good. All right, so what's your favorite part of a project, from like acquisition to like selling at the end, like where's, like what, what?
Speaker 2:what do you like the best? That's easy, it's the chase. I love that it's finding the, finding the deals that make sense. It's like, all right. Or if it doesn't make sense at first, it's like how can I get this to work? Well, that someone else might've not looked at it this way, but I can maybe try to find a different way to make it work.
Speaker 3:That's the architect. Yeah, that's a little bit of that part to figure it in.
Speaker 2:But it's like, yeah, it's like the numbers make no sense.
Speaker 1:What am I not?
Speaker 2:missing yeah it's the chase. It's like when a new deal comes in, it's like, oh, this place is great, it's a great location. How do I get that to work?
Speaker 1:It's great, the end is nice, but it A couple of weeks ago, just like the chase, like right before you get the deal, the in-between, how are you going to get it?
Speaker 2:Yeah, and then sometimes it's like you chase too much and now it's like, okay, I've got 10 deals that I got to get built. Yeah, because I enjoy that part. First Now I got to go through the messy phase, I got to actually build it. But yeah, it's the nature of the business, but the chase is fun Cool.
Speaker 3:Awesome, I love that answer. It's true, this is good stuff.
Speaker 1:Looks like the market's about to go up and there's going to be, I'm sure, more deals because of it. Yeah, Hope so. Yeah. But, Anthony, great seeing you.
Speaker 2:Thanks so much. Appreciate it guys. All right, thanks.
Speaker 1:Anthony.
Speaker 4:Thank you All right.
