CAPRE’s Northern New Jersey & Gold Coast Investment Outlook Preview: Mill Creek’s Russell Tepper Says Gold Coast Insulated from Potential Slow-Down

JERSEY CITY, NJ — Russell Tepper serves as Senior Managing Director for Mill Creek Residential Trust, with overall responsibility for all development activities in Mill Creek’s Northeast Region, including New York, New Jersey, Connecticut and Pennsylvania. From 1993 – 2013, Russell’s management responsibilities had grown extensively, culminating in the development of Matrix Development Group’s urban redevelopment portfolio and mixed-use investments throughout New Jersey and suburban Philadelphia. In this role, he managed the development of over 5 million SF of commercial property and over 2,000 residential units. He is an executive board member of the New Jersey chapter of NAIOP and is licensed in New Jersey. In anticipation of CAPRE’s Northern New Jersey & Gold Coast Investment Outlook, CAPRE asked Russell to share some insight into the Gold Coast commercial real estate arena.

Russell Tepper, Senior Managing Director – Northeast, Mill Creek Residential Trust

CAPRE:  What are you looking forward to about CAPRE’s upcoming New Jersey & Gold Coast Investment Outlook?

Tepper: I look forward to the great networking opportunity CAPRE’s New Jersey CRE Summit provides me to connect with fellow executive-level real estate professionals that are experiencing and tackling similar development challenges, as well as benefit from the exchange of problem-solving ideas.

CAPRE: What kind of demand drivers are setting the pace in the New Jersey multifamily arena?

Tepper: Northern New Jersey has long been a perpetual beneficiary of growth in the overall New York Metro market where many sectors of the population do not wish to own a home, but rather are seeking Class-A multifamily rental living options.  Despite the ever-growing supply of rental housing options in Northern New Jersey, this market will remain insulated from significant shifts in the economy and hopefully supply and demand drivers for multifamily housing will continue grow, albeit at a slower rate than has been the case over the past 5-10 years.

CAPRE: Which New Jersey sub-markets are you most focused on, and why?

Tepper: Although Mill Creek Residential is a private, national developer of multifamily rental communities throughout several markets along the East Coast, West Coast and the South part of the country which are experiencing terrific growth, in the New York and New Jersey Metro market, we focus most of our time pursuing new development opportunities in the Hudson, Essex, Bergen, Morris and Union Counties of Northern New Jersey, as well as sub-markets within Westchester County and Long Island, New York.

CAPRE:  What kinds of product are you most focused on, and why?

Tepper: In this region, it is so difficult to aggregate or assemble large tracts of land, especially in the core markets I just mentioned, so our primary focus is to develop new communities on podiums above parking garages or wrapping around parking garages, such as Modera Lofts in Jersey City, Modera 44 and 55 in Morristown and Modera Parsippany  We are giving more consideration to developing high-rise buildings in certain urban markets that can support the higher cost of construction.

CAPRE: How does your product differ from other multi-family assets?

Tepper: Mill Creek Residential has succeeded in developing new communities that are not based on a standard prototype mimicked from market to market, but rather by developing unique communities that are designed to meet the specific characteristics of that particular market and, of course, to meet the demanding wants and needs of our residents; after all it’s their home.  We take enormous pride in creating living environments that also foster lasting relationships with our residents and the larger community as a whole.

CAPRE: What kind of demographic, economic, or technological trends are you tracking right now?

Tepper: We primarily track population growth, supply/demand, rent growth, interest rates, and construction material indices as these provide the strongest indications of growth and trends in the multifamily industry. Technology is integral to everything we do; from resident experience to trends in design and construction to tracking revenue, expenses and operational efficiencies. Our IT division is never at rest.

CAPRE: What is the most exciting thing happening in the Gold Coast?

Tepper: To me, the most exciting thing happening on the Gold Coast is the resurgence of office and retail demand, not seen in many years.  If this continues, the multifamily industry will continue to thrive, despite all the new supply.

CAPRE: What the most challenging?

Tepper: Growth in land prices and construction costs has not slowed in any significant way, yet rent growth is stagnant.  This condition, when coupled with NO rent growth in New York City, portends for tough times ahead in markets with significant supply.

CAPRE: What could the New Jersey industry (whether that’s buyers, sellers, operators, even brokers and/or lawmakers) do better?

Tepper: The industry needs greater predictability for developers, especially in obtaining entitlements from governmental agencies.  Developers are the root cause of job creation, fiscal growth and overall economic health, so let’s educate those that are unable (hopefully not unwilling) to see the wide-spread benefits of our industry.

CAPRE: Got it. Thanks again for your time Russell. We’ll see you in Jersey City!