But, while Pollack Partners has been charging full-steam ahead with projects since the company was formed last summer, Chair-man and CEO Marc Pollack didn’t jump into his own multifamily development, acquisition and investment business without some serious planning.
“I spent six months in sort of a sabbatical, thinking about it and designing the company in my head,” said Pollack, who stepped down from his position as president of Lane Investment and Development LLC in January 2006 to focus on independent endeavors, while still maintaining his role as partner in a fairly large portfolio of Lane Co. properties and consultant to the company he joined 13 years ago.
Lane Co.’s transition from a mostly Southeastern to a national focus was the catalyst for Pollack’s decision to move on. “We’d grown the company to a certain level and it was best for Lane to continue to grow and become a national company. I was at a point in my life where I wanted to be a boutique operation and do a couple of deals and not have to travel all over the country,” he explained recently.
Once he had a clear concept in mind, Pollack began looking for partners. “I had very specific objectives about the folks I wanted as part of my team and I was able to find three great, great partners that all serve different roles and complement one another,” Pollack said.
Those partners include David Golden, who has been Pollack’s friend and business associate for a number of years. Pollack met his other two partners, Michael Blair and Steven Shores, more recently. “I only met Steven and Michael over the past year or so and we all came together through relationships in the business, so it was kind of a natural evolution,” Pollack said.
The team plans to focus on development and acquisition activities in Atlanta and Florida for the first couple of years, perhaps adding North Carolina, if the right opportunity comes along. But, development will be the company’s mainstay for the first year or so, with financial support coming from partners and investors with whom Pollack has done business for the past 10 or 15 years and who have expressed a desire to be part of his new ventures. Those equity investors will include both domestic and foreign institutional money and entrepreneurial, high-net-worth individuals. Shores, the company’s managing director, expects the development pipeline will continue to grow rapidly, promising announcement of several other new deals in the near future.
The 400-unit, $59 million Dunwoody Park Apartments will be first out of the ground, with plans to go vertical as soon as the existing 30- year-old apartment community on the site has been demolished. The tear-down began a couple of months ago on 10 acres in Atlanta’s Central Perimeter area that Pollack Partners acquired just 24 days after the company’s office opened its doors on New Year’s Day this year. The new-born company also filed for rezoning of a 13-acre parcel in the city’s rapidly growing Westside area on Jan. 9 and expects to receive approval next fall and start a $98 million mixed- use project there sometime between the end of 2007 and the end of Q1 2008.
Pollack Partners also reached an agreement in February to buy a small infill site in Broward County, Fla., right off of U.S. Route 1, with plans to build a 230-unit mid-rise apartment community there for something north of $50 million, but that deal has yet to close.
Pollack believes the key to dealing with the current high cost of construction materials and labor is to work with great architects and contractors. “The second key is to pick the right locations, where you can get rents that will justify the cost,” he said. And the Dunwoody deal meets both those criteria.
The site in DeKalb county, where Pollack Partners plans to build the four-story luxury Dunwoody Park Apartments, is located just outside Interstate 285 near Chamblee-Dunwoody Road, on the edge of the Central Perimeter area that boasts the largest concentration of offices in Atlanta. Pollack believes the employment trends in the area and the demand for new, quality rental housing make the location an excellent opportunity for his firm and his investors.
“It’s got the greatest job generators and it hasn’t had any new apartments built in five years, so it’s a terrific spot for people who don’t want to drive too far and can work where they live,” Pollack said.
Marcus & Millichap’s 2007 report for the Atlanta market agree with Pollack’s. According to the Marcus & Millichap forecast, the increase in demand for multifamily housing has been most pronounced inside the I-285 beltway, particularly along the Peachtree Street Corridor between Midtown and Buckhead, just a few miles west of Pollack Partners’ site. The report also predicts asking rents in the city will increase 2.8 percent to $855 per month, while effective rent gains are expected in the 3.7 percent range, as concessions burn off in the market. The strongest rent hikes are expected in northern portions of the metro, where expensive home prices drive steady demand for luxury apartments, promising success for Pollack’s first development.
The community will be built in partnership with BHC Property Group, the Atlanta-based land developer that sold the 10-acre site to Pollack Partners in January. BHC brought the parcel that is part of a larger development plan to the table when the company learned Pollack was looking for an experienced multifamily development partner. “And, as fate would have it, we sort of bumped into each other at right about that time. I actually worked on a project in the past with BHC Property Group, so I knew them well and they knew me well,” Pollack said.
“They’re almost exclusively land developers and not vertical developers. Their background for the past 20 years is developing large-scale subdivisions. This is a bit more out of their box, although they’re moving in this direction,” he said, adding that the demolition permit was granted Feb. 7 for the community that broke ground at the beginning of March.
BHC bought the 26-acre site in August, right around the time Pollack Partners’ was formed, and is partnering with single-family home builder Ryland Homes on the other 16 acres with plans to build town homes there, rounding out the small mixed-use community.
MK Management, a 57-year-old Atlanta-based industrial developer that disposed of a very large portion if its industrial portfolio over the past year or so, is Pollack Partners’ JV partner on the Westside deal. “This particular property is where their offices are and they’ve decided that they’d like to redevelop it. I’ve known them for about 30 years, so we talked about doing it together and ultimately we formed a partnership with us being the land development partners, because we’ve got all the multifamily development expertise, and they’re going to be both our partner and most likely the investor in the deal,” Pollack said.
“Our family has owned the land for decades,” said Doug Kuniansky, acting president in charge of MK Management’s marketing, leasing and property management. “The community around our property has changed dramatically over the years and the new development will be much more compatible with the surrounding neighborhoods than the current industrial park.”
Atlanta’s West Side, Pollack said, is an area of town that has the most upscale single-family housing and has seen a tremendous resurgence over the past couple of years, driven more than anything by the huge Atlantic Station project where he headed up development of almost 2,000 units of multifamily housing while with Lane.
“That really drove the West Side, which historically has been a more industrial area, but it’s just absolutely booming now. They just opened a giant Wal-Mart there, the first Wal-Mart in the city. And there’s a lot of mixed-use going on and this is just a terrific location that is literally a quarter of a mile away from multi- million-dollar homes. It’s right on the expressway. It’s got 200,000 cars a day driving by and it’s just a great location,” said Pollack.
Pollack and MK Management plan to build 55,000 s.f. of live/work space that could become stores, restaurants and offices and 650 residential units both for rent and for sale on the 13-acre site. The team expects the project will deliver first units about 18 months after breaking ground late this year or early next year, followed by another 18 months of lease-up. Luxury amenities will include swimming pools, fitness and business centers in a walk able community designed to create the sense of an urban village.
Pollack believes the definition of a luxury apartment has changed over recent years. “Nowadays, you have to put granite counter tops, some hardwood floors and wood tiles and vinyl,” he said. And, another design change–a response to the increased cost of labor and building materials–is the creation of smaller spaces that feel bigger thanks to slightly taller ceilings and transoms above the windows or floating walls that don’t reach the ceiling, allowing more light to enter the space, he said.
Atlanta-based Lord, Aeck & Sargent Architecture, which will provide design expertise for the Collier Road project, likely will include many of those luxury finishes in the units that probably will consist of ones and twos that average around 950 s.f. The apartments are expected to rent for between $985 and $1,500. Prices for the for-sale units have yet to be determined.