Recap: The Evolution of Multi-Family Development | Hosted by Greybrook Realty Partners

This webinar, hosted by Greybrook Realty Partners, featured Greybrook Realty Partners CEO, Peter Politis, and Property Markets Group Managing Partner, Ryan Shear.

Prompt: What is the value of multi-family living? What problem have you solved with the Society Living Platform?

Ryan: Affordability has become a huge problem in the US. The cost of buying land, construction, and the cost of living. A lot of people have been pushed out of places they want to live. About a decade ago, we [at PMG] discussed the idea with Greybook Realty. We asked, how can we find a way to make living affordable, without sacrificing location and quality? Can we look at the asset a little differently? Despite being unconventional, Society has been a success story. It allows people with median-level income in a city to rent a fully furnished bedroom in a Class A building.

Peter: You have a bedroom, bathroom, privacy, locks, a clean common area. The location is hard to beat. And these are highly amenitized buildings — the gyms are 2–3x the size of regular gyms; we host events like whiskey tastings and movie nights; we create a community. It’s not just a dorm room. It’s actually the opposite. There is lots of space to do lots of exciting things.

Ryan: Yes, there’s the affordability component — that is the core. Then there is the second component — as Peter said, these buildings are true Class A. Our gyms are modeled off some of the best gyms in country, as well as our co-working and social space. And the price point is way better.

Peter: And we can keep our residents. We hope if people move around a lot they move with us, for example from Society Olas to Society Denver.

Prompt: How are you different?

Ryan: A lot of people who have entered into the co-living space are not in development. Traditionally, they are management companies. There are very few, if any, true development companies currently in this space. Also, we are flexible firms. That attribute is more important than it has ever been. Sometimes we have to figure things out in 4 weeks. That doesn’t happen in a lot of real estate shops, at least not at the level we talk about. Both of our firms are quick and flexible, and have a ton of capacity. It allows for a lot of growth.

Prompt: If I am an investor, why would I choose this opportunity?

Peter: Every organization, generally, is interested in alternative investments. In the universe of real estate investing — multi-family assets (in core major US cities) are one of the most in demand. It’s the top of the real estate food chain. Globally, what things trade for on a cap rate basis and the amount of money that goes in makes this the lowest risk and most in demand asset you can buy.

We only sell if we get our price; we have a yield producing asset. These are private equity type returns without cash flow. You are generating the lions share of your cash and profit on the building. That is the tradeoff and why you get paid on liquidity from a return standpoint. Our job, every day is to create the value. Unlike commercial leases with long term timelines, these allow you to adjust every year.

Prompt: What does the future look like?

Ryan: We are targeting cities that are growing quickly — Atlanta and Denver are number 1 and 2 for us, and South Florida. There are other cities we are targeting — some can be hard to make sense of. For example, the cost of construction in Seattle, NY, DC, Boston. Those are hard to get into. In my opinion, we want to plant as many Society’s where it makes sense around the country. We are targeting cities with proper rent growth, non-inflationary hard costs, and a political climate that allows us to develop.

Peter: There is certain land that doesn’t make sense. The nitty gritty of development needs to make sense. The way we look at it is— if one day, Denver becomes Seattle, we’ll take off list and revisit later. That’s what makes this a special opportunity. We get to assess this stuff in real time. We aren’t stuck with decisions that we made 1, 2, 5 years ago.

Ryan: Exactly, it moves quickly in real time. That’s favorite aspect about the firm. We can move quick and make decisions on the fly. If intricacies of the Atlanta market prove they don’t work, we will move on.