Presented By: Berdon LLP
Breakfast With Berdon: Category-Killer Multifamily Project Driven By Groundbreaking Construction Technology
Berdon Accountants and Advisors LLP just released the third installment of its Breakfast with Berdon video series, where, along with the Commercial Observer, the firm interviews commercial real estate’s top executives, getting the inside scoop on new projects and the latest thought leadership from those who propel the industry forward.
Hosted by Meyer Mintz, tax partner and co-chair of the real estate group at Berdon, the new episode features an interview with Michael and Matthew Pestronk, co-founder and CEO and co-founder and president, respectively, of Philadelphia-based developers Post Brothers.
Matthew Pestronk began the conversation with an overview of the company.
“We do large-scale, category-killer, mixed-use projects driven by rental apartments, with typically ground-floor retail,” said Matthew, who notes that the company currently has projects in Philadelphia, Washington, D.C., and Northern New Jersey. “The projects themselves are a destination, and we tend to build them in existing, highly desirable residential areas.”
This folds in, Matthew said, to the company’s overall philosophy and unique niche.
“When we started the business,” he said, “we were more focused on emerging locations. At this point in our trajectory, we’re much more focused on finding potential properties to develop in areas that are already highly desirable.”
The discussion then turned to the company’s Piazza Alta development in Philadelphia’s Northern Liberties neighborhood, the largest multifamily project to come online in the U.S. this year, and one which, Michael Pestronk mentions, came in on time and on budget thanks to company’s unique structure.
“We’ve become vertically integrated in the construction and delivery of apartments,” said Michael. “We act as our own construction manager and general contractor to eliminate as much overhead as possible from the typical construction model.”
Years ago, he explains, Post Brothers, who are also converting a 1 million square foot office building in Washington into somewhere between 550 and 700 apartments, started a building supply company “just to get closer to manufacturers.”
“The typical way building material is bought is very inefficient,” said Michael. “It goes through a lot of middlemen that aren’t necessary, slows down the process and causes problems.”
This successful cost-cutting is also due in part to the company’s use of construction technology, just one more aspect of their development process that sets Post Brothers apart.
“The Piazza Alta is the largest project in the U.S. ever to have been built with a technology called prefabricated, light-gauge, load-bearing walls,” said Michael. “It’s the sweet spot between fully modular construction and traditional field-built construction. Fully modular construction has, and we believe always will have, fundamental limitations about the desirability of the product that can be built. Multifamily housing construction, by its nature, will always be majority market-rate, new Class A products, and fully modular just isn’t suited to that. So to drive costs down, we focused on prefabricating as much as possible — taking really big pieces of the structure and printing them on the site as big as you can possibly fit them on a truck. That increases the productivity and lowers cost, but still allows for a really desirable residential product.”
For more Breakfast with Berdon, click here.