Saturday, November 1, 2014

NY Developer Embraces Modular for Three Big Projects

Less than four years after starting his residential development company, David Mann is taking on projects in threes this year in White Plains. And in Westchester County, he’s only just begun.

On a recent weekday afternoon, the 36-year-old apartment-building developer could be found at 10 DeKalb Ave., moving between unfurnished glass-walled rooms off the lobby and quick talks with a project manager, a rental agent for Better Homes and Gardens Rand Realty, contractors putting the final touches on a building project that broke ground in early 2013, and the developer’s design team at Papp Architects in White Plains.

Mann, who founded Lighthouse Enterprises LLC in early 2011, had other construction sites to check on within a few blocks of La Gianna, the five-story, 56-unit, $19 million luxury development that his four-employee company and its joint-venture partner in New York City, The Daten Group, will open for occupancy this month. La Gianna and the partners’ two nearby projects in the White Plains central business district are being marketed and managed under The Daten Group’s Vibe Living brand. Together they will add 103 high-end apartments to the city’s rentals inventory.

“This is going to be somewhat of a flagship for my company,” Mann said of La Gianna, a luxury rental complex whose amenities include a 1,200-square-foot gym, a game room, children’s play room, media room, barbecue and picnic area, putting green and covered parking. Rents at La Gianna, the most expensive of the Vibe Living developments, will range from $2,000 for a studio up to $3,800 for a two-bedroom apartment, Mann said.

The partners’ three multifamily projects represent “three different products for three different types of residents,” Mann said. While La Gianna is expected to draw “an older crowd,” The Dylan, at 42 Waller Ave., should appeal to younger residents in their 20s and 30s drawn to the city’s thriving night life on Mamaroneck Avenue one block away and proximity to the Metro-North train station, Mann said. The Reed with its more spacious apartments at 115 N. Broadway could appeal to young families, he said.

The Dylan and The Reed developments will cost about $8 million each, he said. At 42 Waller Ave., a foreclosed property for which the partners paid $1.4 million in late 2012, The Dylan will include 23 units with rents ranging from $2,300 for a one-bedroom unit up to $3,000 for a two-bedroom apartment. Tenants will have access to the gym and other amenities at La Gianna. At 115 N. Broadway, The Reed, a wood-fa├žade development of 23 townhouse-style one-bedroom and duplex units, is rising on the former site of a demolished Elks Lodge. Both buildings should be ready for occupancy this December, Mann said.

All three buildings are modular constructions, which makes for faster, less expensive and more energy-efficient development, Mann said. The developer’s locked-in contractual cost for modules eliminates potentially costly contingency expenses that can inflate a project budget. “The main goal of a developer is to eliminate uncertainty,” he said.

Mann said he had long been certain he “wanted to get into this industry.” But he first spent nine years in Manhattan’s garment center, working at women’s clothing manufacturing companies in which his father was a partner. Seeing “the writing was on the wall” in the garment industry, he pursued his interest in residential real estate and earned a master’s degree in real estate development from New York University’s Schack Institute of Real Estate. He started his company in early 2011.

Looking to move out of New York City that year with his wife, Mann was certain he did not want to return to Long Island. Though his Lighthouse company was named after the street on which he was raised in Great Neck, he was drawn instead to the less onerous traffic and suburban ambience of Westchester County, where several of his childhood friends had settled.

Shopping for a downtown residence, the Manns visited developer Louis Cappelli’s high-rise condominiums at the Ritz-Carlton Westchester on Renaissance Square. “It kind of blew us away,” Mann said. The $1 million sale price was much less than a similar condo in New York City would cost. “It was a nice baby step out of the city for us,” he said.

The starting developer wondered about the lack of residential development in his new city. “I ended up walking around White Plains for about two weeks straight, looking at any rental apartments that were available.” From those walks, “I understood what the competition was and what the supply was and the level of finishes and the amenities.” Mann thought he could build apartments that were more like New York City products with high-end finishes and amenities at the price of the existing supply in White Plains.
Mann made his first Westchester deal on the same DeKalb Avenue block on which La Gianna this month is opening with 15 apartments initially leased. In 2011 he paid $700,000 for vacant land at 17-19 DeKalb Ave. Its previous owner had paid $1,025,000 for the parcel in 2005 with plans to develop condominiums there.

With the condo market moribund since the financial crisis and the Great Recession, Mann instead made his development debut on the site with Bramare Town Homes, a 10-unit apartment building completed two years ago.

Mann saw another opportunity on Lake Street in White Plains, where the owners of the former Mazur Brothers Furniture Store were embroiled in a legal dispute with the state over payments for the state’s taking of Mazur Brothers properties during the Interstate 287 construction project nearby. The state had demolished the furniture store. Mann in 2012 acquired the disputed property at 68 Lake St. for $700,000.

The Lighthouse Enterprises developer erected Apuovia – the Greek term for “harmony” – a 30-unit rental building that opened in August 2013. “It was fully leased two months after it was finished,” he said.

Mann last year approached a childhood friend from Long Island and fellow Schack Institute graduate, Craig Rosenman, about his company’s interest in joining Mann’s small company in his next three White Plains projects. Rosenman is director of acquisitions at The Daten Group.

The partners last year paid $4.1 million for 8-14 DeKalb Ave., an undeveloped property whose previous owner several years ago received city approval for The Metropolitan at White Plains, an 89-unit condominium development.

“It was the real estate crisis. Still to this day you can’t sell condos in White Plains,” said Mann, whose own condo at the Ritz Carlton has gone unsold since his family’s move to Armonk this year. Some 60 Ritz condos remain unsold, he said.

Mann said his joint venture’s “direct competition” is Avalon White Plains, the Barker Avenue apartment complex of AvalonBay Communities Inc., and One City Place, Cappelli’s 35-story apartment building that towers above City Center within view of La Gianna. Both of those luxury developments are about 98 percent leased, Mann said.
At La Gianna, “We’re right now stealing from the competition” for tenants, he said. “We have a lot of people from Rockland County. What I’ve heard is that a lot of people would like to move to White Plains but they don’t like what they get for their money.”

Moving beyond White Plains, Mann hopes to break ground in January on a five-story, 50-unit apartment building at 120 N. Pearl St. in downtown Port Chester. “I think White Plains, Port Chester, Mamaroneck and Harrison are the best locations to build in Westchester,” he said.

“I have some irons in the fire. I have bids out on properties all over Westchester.”
But other developers apparently have seen in the county’s rental market what Mann saw on his walks through White Plains – prime opportunity.

Land and deals “are hard to find,” he said. “From February 2011 to May 2014, I don’t think anyone else ever bid on a property that I bid on. I never lost a bid. Now I am losing to higher bidders.”

“I knew that would eventually happen. I didn’t think it would happen this fast.”

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