The Multifamily Guy
Jotham Sederstrom Oct. 25, 2011, 9:59 a.m.
To look at the buildings neighboring it, 567 Vanderbilt Avenue is a typical four-story, mixed-use apartment building in Brooklyn. From the bricks it was built with to the upwardly mobile professionals and strollers it presumably houses, the structure is nearly identical to the other assets in that corner of Prospect Heights.
With a recent shift on the ground—characterized by relatively new restaurants like James, Cornelius and, inevitably, the Vanderbilt—sales prices in the neighborhood are rising.
But over on Vanderbilt Avenue in particular, where trendy bars and cafés pop up each week, prices are absolutely surging, in part because of Nostradamus-like predictions of basketball fans flooding the zone once the Nets start playing inside the proposed Atlantic Yards arena and, ultimately, exiting en masse from doors leading directly to the street.
It was with those paradigm shifts in mind that, two weeks ago, 567 Vanderbilt Avenue changed hands for $1.3 million, a notable $50,000 above the initial asking price. Working behind the scenes was Shaun Riney, a 25-year-old Marcus & Millichap commercial real estate broker who has emerged out of nowhere as the face of multifamily housing deals in one of New York City’s most rapidly changing neighborhoods.
“It’s kind of, in a sense, ‘A rising tide will lift all boats,’” Mr. Riney said last week of the cruise ship-size arena that’s expected to be completed and ready for the 2013 National Basketball Association season.
The old-fashioned way for greenhorns to break into New York’s commercial real estate scene is a simple yet competitive process: reach out to the big firms—CB Richard Ellis, Cushman & Wakefield, Jones Lang LaSalle, for example—and pray for a break, get in, and spend the first year watching veterans ink deals.
Or they can go to the Brooklyn office of Marcus & Millichap, which for the past four years has offered brokers the chance to cut teeth in a borough brimming with profitable commercial real estate possibilities.
Launched in 2007 by J.D. Parker, now the Northeast regional director of Marcus & Millichap, the firm brought more than 25 young brokers into its offices in downtown Brooklyn to negotiate a combination of multifamily, retail and office deals. In four years, the firm has seen its sales numbers explode, rising from $28 million in 2007 to nearly $40 million in 2010.
“We’re on track to have our best year ever in Brooklyn,” said Mr. Parker. “And a lot of that is due to Shaun.”
Mr. Riney, a Detroit native with a physical resemblance to Boiler Room and Hawaii Five-0 actor Scott Caan and the track record of a much older and experienced broker, has closed 330,685 square feet in property deals and has handled $85.2 million worth of listings. During his first year at Marcus & Millichap’s Boston office in 2008—while working alongside then-colleague Zach Felson—he closed more than $35 million in sales, a feat that earned him the firm’s in-house “Rookie of the Year” honors.
Mr. Riney was given his own team in 2010, closing $18.1 million in property sales that same year. He received his second accolade, the “Marcus & Millichap Rising Star Award,” in January 2011.
Sitting in his bare Brooklyn office—adorned with little more than detailed maps of Brooklyn—Mr. Riney said he spends his weekends not at sports bars watching football with friends but scouring Property Shark listings, looking for his next big running pattern.
“This is the environment I love to be in,” said Mr. Riney, now an associate at the firm’s national multihousing group. “[It’s] fast-paced, intense, competitive, where every day can be a $50,000 day or a dud, depending on how much you want to work at it.”
Mr. Riney sells a variety of multifamily housing and mixed-use properties in Clinton Hill, Bedford-Stuyvesant and Fort Greene. And with the unveiling of Atlantic Yards just a year away, he thinks now is the perfect time for prospective buyers to invest near the massive—and controversial—new development in Prospect Heights.
He believes that the arrival of new tenants—the Atlantic Yards project is looking to add more than 6,300 units—and a growing local workforce—such as in the new office building on 470 Vanderbilt Avenue that recently signed the New York City Human Resources Administration to a new lease deal—will bring more new renters, prospective home owners and a new cadre of consumers to local retail.
More important, the development will encourage investors to snatch up mixed-use properties in the surrounding territories for future retail locations. He thinks that is especially the case for Vanderbilt and Washington avenues, mere blocks away from Atlantic Yards.
“I’d say 75-to-85 percent of Washington Avenue is mom-and-pop retail,” said Mr. Riney. “That’s the fringe, where an investor can still get in relatively cheaply in terms of the basis with nothing but, in my opinion, upside on a five- to 20-year time rise, which is what most real estate investors are looking at.”
At 567 Vanderbilt Avenue, for example, the building features a 600-square-foot commercial storefront, where the estimated rent tops out at $50 per square foot. “That rent will only increase as the project comes to fruition,” Mr. Riney said of a space that some day could house yet another trendy new restaurant.
A lot of his listings are multifamily buildings that feature retail—like 437-439 Tompkins Avenue that sold for $1.35 million, and a mixed-use building on 690 Prospect Place now on the market for $1.025 million.
“The bread and butter of Brooklyn in general is multifamily mixed-use buildings,” said Mr. Riney. “That’s what is selling right now, that’s what banks are willing to finance, and that is the majority of the housing stock in northern Brooklyn, and I think it’s the asset class which I think has the most potential.”
Brooklyn buyers, for the most part, agree. Thirty-nine multifamily buildings in the borough sold for a total of more than $116 million in the third quarter of this year—a dramatic improvement from the 14 buildings bought at $44 million at the same time last year, according to an Ariel Property Advisors quarterly report.
Mr. Riney got his taste for real estate when, as a senior at Boston University, he leased out his four-bedroom apartment to a group of sophomores at a $3,000 profit. He continued selling and leasing apartments in Boston during 2005, before making the move to New York City three years later.
Mr. Riney interviewed with CB Richard Ellis and Jones Lang LaSalle before sitting down with Mr. Parker and Mr. Felson for an interview at Marcus & Millichap’s Court Street office in downtown Brooklyn.
Another young broker was hired at the same time as Mr. Riney. Mr. Felson initially had his doubts about the young man from Detroit while holding a torch for the other hire. A year later, however, Mr. Riney and Mr. Felson had their profitable partnership, while the other hire had dropped out of the business entirely.
“[Riney is] not afraid of rejection in a business where you’re on purely a commission base,” said Mr. Felson, 28, who is now a senior vice president at Prado, a San Francisco-based real estate company. “I’d seen many guys come in and fall out of the business in six months because they couldn’t deal with hearing the word ‘no.’ He was really undeterred.”
And he’s made himself at home with Marcus & Millichap. Mr. Riney, a lifelong Newcastle United fan, plays on the Brooklyn Football Club with Mr. Parker and other colleagues at the firm.
He also has no plans to leave Brooklyn.
“My game plan is to continue to expand in northern Brooklyn,” said Mr. Riney. “There is a ton of untapped value in the Brooklyn marketplace, in these Brooklyn buildings, and I want to be a part of that.”