Environmental, social and governance factors hold greater sway in the multifamily housing industry.

The rise of environmental, social and governance (ESG) factors has accelerated in the worlds of finance, politics and the multifamily housing industry. It has accumulated new designations and labels along the way including green finance, social impact investing and mission-driven finance.

The roots of the concept stretch back to the 1980s as academia became interested in “social capital,” the notion that added value could be attached to a company that was doing good deeds. The concept appealed to investors looking for places where they could earn a decent return while also helping humanity.

The U.S. Government Sponsored Enterprises officially invested in ESG in 2016 when Freddie Mac Multifamily launched its Green Advantage Program. The program has proved successful and now touts its advantage over non-green programs by claiming almost $28 million in reported annual savings, which equates to roughly $48,900 per loan, and $191 per unit on projects that qualify for the program.

The Multifamily Radar Screen
In addition to the availability of green financing, owners and operators are seeing ESG creep into their world in a variety of other ways, including resident interest. “It is very much top of mind for our residents,” said Kelly Vickers, VP, ESG for Boca Raton, Fla.-based Mill Creek Residential. “We see it showing up as demand for a sense of community, walkability, active design, wellness- inspired amenities, energy and water efficiency and EV charging stations.”

The insurance industry also has a vested interest, especially from a sustainability perspective.

“Our insurers are definitely interested in ESG and want to know how committed we are as an organization,” said John Filipowicz, VP, Compliance and Risk Management, Mill Creek Residential. “Our commitment shows and has enabled our risk team to be transparent with our brokers and carriers, which promotes teamwork, open communication and positive outcomes.”

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New Rochelle, 13 December 2023 – Artist Case Maclaim, internationally renowned for his colorful hands in Wynwood, is bringing his signature work to New Rochelle, with “1STep”, a new mural part of the NRNY murals curated and produced by the New York based non-profit Street Art for Mankind (SAM). This 7,500 square feet mural, made possible thanks to the support and vision of the Modera by Mill Creek team, features colorful and impeccably executed overlapping hands walking forward. This new mural is a burst of positive energy that celebrates in a conceptual way this diversity of people coming together as one to create a bright and colorful future for all. New Rochelleans walking the talk!

Between 2019 and 2022, Street Art for Mankind (SAM) curated 22 massive murals in New Rochelle with prominent international artists to reflect on the creativity, diversity and resiliency of the New Rochelle community. The murals, linked by SAM’s free audio-guide app “Behind the wall”, form an unprecedented outdoor museum that New Rochelleans and New Yorkers can walk to enjoy fine-art pieces and also reflect on contemporary issues such as climate change, diversity, gender equality, quality education, ocean protection, and the pandemic. This initiate was supported by the city of New Rochelle, the New Rochelle Council on the Arts (NRCA) and passionate developers like Mill Creek.

At the Modera New Rochelle, located at 111 Centre Avenue, SAM curated the existing alley as a fine-art gallery experience on the theme “People, Places and Relationships”. The first phase, painted in 2022 by Spanish artist Cristian Blanxer, saw the creation of five large paintings using a double-exposure effect and featuring recognized New Rochelleans with their rich backgrounds.

The new gigantic mural, on the Hallen School side of the Modera alley, completes the second phase of this gallery experience. Thanks to this signature Case Maclaim hand piece, New Rochelle yet again sheds a light on the vibrancy of its community, and the importance of public art as a universal language to inspire all generations. New Rochelle is now showcasing some of the most talented street artists of our time, and proving to have one of the most vibrant outdoor museums in our country.

Mural Address: 111 Centre Avenue, New Rochelle, New York, 10801

QUOTES:
“We are thrilled to bring this new mural to New Rochelle, as it symbolizes the unstoppable movement towards a more diverse and inclusive future. And we all need this hope and drive to build a better future for all! said Audrey and Thibault Decker, co-founders of Street Art for Mankind. “We would also like to thank the public and the residents of the Modera for their kind words and Mill Creek for supporting this meaningful artistic initiative. This mural is another vivid proof that together we can elevate people’s experience, one mural at a time.”

Mill Creek Residential’s partnership with Street Art for Mankind at Modera New Rochelle has been terrific. Not only have the murals offered yet another amenity for our residents and the public to enjoy, but they also serve to reinforce the importance and positive impacts of art in a community, said Russell Tepper, Senior Managing Director, Mill Creek Residential.

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The launch of Beckett by Mill Creek is in conjunction with the opening of its first attainable housing community, Beckett Cottingham, in Houston.

“The motivation behind the launch is a simple one: There is a tremendous need and demand for attainable rental housing in the U.S. The Beckett by Mill Creek brand will help meet this demand with communities that offer both a reasonable rent and a high-quality living experience,” says Darren Schackman, chief investment officer, Mill Creek Residential. “Residents at Beckett by Mill Creek communities will be middle-income earners, including many individuals who keep our cities running. We’ll be giving these renters the option to relocate to new product in great locations near their work.”

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One of the big stories in the real estate industry in recent years has been the emergence of the single-family rental market as an appealing destination for investors’ dollars.

According to Berkadia, the construction of build-to-rent homes – single-family houses built for the purpose of renting out – jumped by 30% from 2019 to 2020. A 2022 report by the company also notes that “developers expect build-to-rent homes will reach a double-digit share of new construction by 2024, compared to its 6% share of new homes being built in the U.S. today. SFR is the fastest-growing sector of the housing market.”

For years, the SFR market has been dominated by mom-and-pop operators, but institutional players and large multifamily companies have observed the vast demand that exists for this product and have entered the sector in recent years. Mill Creek and others are developing entire BTR communities, which can feature hundreds of single-family homes while also providing residents with a multifamily-like array of amenities, such as swimming pools, fitness centers, playgrounds, dog parks and maintenance services.

Looking ahead, those interested in this growing market might wonder what makes a submarket a good one for a BTR community, and which regions of the country might see these developments arise and flourish in the years to come.

Growth, Jobs and Schools

Many of the factors that make an area a good fit for a BTR community are largely intuitive. Residents in these developments want access to good school districts, quality retail and thriving job centers. For developers and investors, they want to see population and job growth in the surrounding area.

At Mill Creek, we want our BTR communities to be within 30 minutes of a major employment hub and minutes away from major grocery stores. Walkability and Walk Scores, which have become such important factors for apartment residents, are not important to SFR renters. For the most part, they are going to drive.

Unfortunately, there are jurisdictions that aren’t especially enthusiastic about SFR properties and BTR developments. These local governments may restrict the number or percentage of single-family homes that can be for rent, or they may prohibit single-family rentals altogether. Or they might try to make BTR development almost prohibitively expensive through architectural restrictions. Obviously, these are areas that investors and developers are likely to pass upon.

Considering the above factors, Mill Creek is targeting the Atlanta, Phoenix and Nashville metros for BTR projects, as well as markets throughout the Carolinas, Texas and north Florida. Berkadia has identified Utah, Nevada and Idaho as other states that are likely to be attractive to SFR/BTR developers.

Words of Wisdom

When building a single-family team to evaluate opportunities and develop BTR communities, it’s important that longtime multifamily players make sure they bring in people with ample SFR experience. Although there are some surface similarities, the multifamily and BTR landscapes are profoundly different overall.

It’s not easy to find suitable development sites, and developers need team members who know the major land sellers in the space, as well as the capital needs and providers. You also need team members who understand the BTR community construction process and how to maximize efficiencies in that process. If you asked a longtime SFR player to build a high-rise apartment building in a downtown area, they would be lost. The same is often true for apartment companies entering the BTR space without the right in-house experience and expertise.

Looking ahead, it’s clear that BTR communities will play a major role in the rental housing world in the coming years and decades. Renters want them and in those areas with the right market and economic factors in place, developers can build a product that will experience high occupancy rates and deliver the targeted returns to investors.

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Development Programs and Mental Health Breaks

Mill Creek Residential, one of the nation’s most established developers and operators, has various yearly on-site programs designed to foster associate growth. These include development and leadership training programs for service technicians, assistant community managers, community managers, and regional managers. In addition to the extensive onboarding training program, associates have access to self-paced learning opportunities to spur further workforce development.

“We really give them the tools they need to support their own curiosity and growth in the way they prefer,” says Taryn Silva, vice president of learning and development of property operations for Mill Creek. “One of the things I love about what we do today is that we have cultivated and curated so many on-demand, self-service learning opportunities. The courses and job resources are not solely focused on day-to-day tasks, which of course are important, but they also focus on wellness and skill set development. For instance, if you’re not an Excel pro, not a problem, you can quickly hop in and take a course.”

In the last two years when everyone’s mental health has been tested by the pandemic and its impacts, adding wellness courses have been especially beneficial, according to Silva. The courses provide the opportunity for associates to take a few minutes to reset, which Silva notes is unique in the industry. It’s part of Mill Creek’s mission to focus on associates as a whole and what they need to be supported and successful.

It’s universally known that many industries struggle to find ways to support the personal development of associates, including mentoring, coaching, and mapping a path to personal growth. Silva believes that in a people-centric industry such as multifamily, it should be a primary focus. Mill Creek’s L&D initiatives factor into one of the company’s core values, she says, which is to create a culture of continuous improvement.

“The truth is that associates want to stay with an organization when they believe it really cares about their personal and professional development, and we want to provide them with that opportunity,” Silva says.

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It’s clearer now more than ever: happy and high-performing associates are essential to a rental-housing company’s success.

When onsite teams and other associates throughout a property management company feel supported and are committed to their jobs, the ripple effects are immense. Happy associates begat happy residents. They also make their coworkers more energetic and more productive, and can build an atmosphere of creativity and innovation that benefits both the company and its residents. They reduce the expense and headaches of high employee turnover rates.

So, how can a rental-housing company build an organization in which team members thrive and are fulfilled? Below are five general recommendations.

1) Supervisors have to operate in the sweet spot. Over my years in multifamily, I’ve determined there are two major causes of associate unhappiness. One occurs when team members feel their supervisor is disengaged, unsupportive and hard to reach. The other cause is the opposite situation: an associate is micromanaged by an untrusting boss.

There’s no one golden rule about how often a supervisor should interact with team members, but associates should always know that they can reach their boss when they need to and that their supervisor will have their backs when the situation calls for it. Some team members may need a conversation with their supervisor every day, while some people may require one chat per week. Great supervisors are responsive to the needs of their associates and their communities.

2) Sharply define performance expectations and your company’s areas of focus. Associates do best when they know the metrics and benchmarks that matter most to an organization’s leaders. This gives them a way to know what they should be working towards and how they will be evaluated.

At Mill Creek, our team members know that we emphasize customer satisfaction, financial performance, online reputation, associate engagement and lead management. We’ve got custom-made scorecards around those areas that we’ve had for years. We also regularly publish community and regional portfolio performance metrics for all associates to see. Our team members appreciate the transparency and the chance to engage in some friendly competition. We use this as an opportunity to celebrate top-performing communities but also as a chance to lean in and help those communities that may be lagging. Associates at lower-ranking communities know that we’re not going to shame them and understand we will work diligently with them to improve.

3) Create a culture in which hard-working associates aren’t afraid to fail. Associates want to be part of a company where they can work hard, try new ideas and not be afraid to fail. When engaged and caring team members know they won’t be reprimanded if a particular initiative doesn’t go entirely as planned, that creates an atmosphere in which associates can develop and thrive.

4) Provide enhanced educational opportunities for excellent performers. Hard-working and caring associates want to grow. They want to move up. Rental-housing operators do themselves a big favor when they clearly spell out what team members need to achieve to be successful and prepared for further responsibility. Mill Creek has implemented formal training programs that allow assistant community managers and assistant maintenance managers to get the coaching and guidance they need to be successful at the next level. These programs have been a big cultural win for us and have prepared excellent associates for additional responsibility.

5) Show your appreciation. Department-wide contests and associate appreciation weeks are simple but powerful ways to build team member satisfaction. So are fewer formal acknowledgments of success and achievement, such as simple marks of praise during a company meeting. Who doesn’t enjoy being recognized and rewarded for their good and hard work? When associates feel their efforts are insufficiently acknowledged and appreciated, that’s a surefire recipe for discontent.

In the final analysis, rental-housing companies simply must prioritize the satisfaction, engagement and performance of their associates. The benefits of happy and high-performing team members are too great. And the consequences of unmotivated, disengaged team members – such as unhappy residents and under-performing portfolios – are too severe.

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MFE-PaulWillis11.13.22 — Charlotte is notable for its distinct-yet-charming neighborhoods, pleasant subtropical climate, and a healthy contingent of high-level employment opportunities within the financial sector.

Oh, and a thriving apartment market.

The Queen City, located in the Piedmont Region of North Carolina, seldom is regarded as one of the nation’s largest cities, but ranked No. 15 in 2022, boasting a population greater than that of San Francisco, Denver, and Washington, D.C. While multifamily markets in those cities are often regarded as more prominent, Charlotte has certainly joined the fray.

“Charlotte has the primary characteristics of what you like to see in a market in that it’s large with a diverse economy,” says Brian Schneider, principal and co-founder of Addison Partners, a New York-based apartment owner. “It’s a prominent regional hub with a heavy finance component, with Wells Fargo having a sizable presence. It’s experiencing great population growth with many younger generations relocating there. It’s just a fun and vibrant city that draws renters.”

According to a market insights report from NorthMarq, Charlotte has experienced increased demand, accelerating rent growth and a steady vacancy rate of only 4.8% in the second quarter of 2022. The city had 20,657 units under construction as of the second quarter. “The local investment market remained competitive during the second quarter with activity gaining momentum, per-unit prices rising, and cap rates remaining low,” according to the report.

Home to the corporate headquarters of Bank America and Truist Financial—and the East Coast headquarters of Wells Fargo—Charlotte ranks as the second-largest banking city in the U.S., trailing only New York City. The city also boasts a collection of eclectic neighborhoods, from Uptown (the city’s downtown area), Fourth Ward, SouthPark, South End, the arts district of NoDa, and several more.

Three operators recently imparted their thoughts on the market, sharing some of their immediate and upcoming plans in the city.

Developments Underway in a Thriving City
Mill Creek Residential Trust expanded into Charlotte in 2019 and is rapidly building a presence within the city. The prominent developer, builder, and operator, based in Boca Raton, Florida, also added a regional office in the city, which underscores its fondness.

“Charlotte is consistently ranked as one of the best places in the U.S. to live,” says Alex Eyssen, senior managing director in the Carolinas for Mill Creek. “Charlotte’s population has been steadily growing, and demand continues to outpace supply. This became even more evident during the pandemic, when remote workers and families relocated from other cities to Charlotte.”

Mill Creek is developing Modera SouthPark, a 239-unit community in the popular SouthPark neighborhood, which is projected to open in early 2024. The company recently broke ground on Modera LoSo, located in the rapidly growing Lower South End submarket, which will feature a sky lounge overlooking Uptown. In addition, Mill Creek acquired the Alister Uptown community in Uptown.

Eyssen says the highest rent per square foot is typically attributed to the Uptown and SouthPark communities, but that several SouthEnd communities have recently risen to the top. Other light rail-adjacent neighborhoods are poised to experience increased demand, as well. Likewise, pockets west of Uptown—such as FreeMoreWest, the Wilkinson Boulevard corridor, and areas northeast of Uptown—are also experiencing growing interest, he says, along with every county adjacent to Mecklenburg County.

Investment activity in the city’s multifamily market remains strong, Eyssen says, as several institutional investors and REITs that have historically favored major gateway markets have recently targeted the Queen City.

“Almost everyone has a neighbor or colleague that relocated to Charlotte in the last two years,” Eyssen says. “I don’t see that trend stopping. Charlotte also is part of a regional, prosperous economy that attracts a talented and educated employment base, many of whom are relocating from markets where renting is commonplace. Thus, we view Charlotte and the surrounding areas as having great fundamentals.”

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FALLS CHURCH, Va., Nov. 8, 2022 /PRNewswire/ — Mill Creek Residential, a leading developer, owner-operator and investment manager specializing in premier rental housing across the U.S., today announced the addition of Paragon Theaters to Founders Row, a mixed-use lifestyle center in the heart of Falls Church.

Paragon Theaters will add 600-plus seats and seven screens, including its innovative Lux Box concept featuring heated “Zero Gravity” reclining seats, complete with privacy walls. Guests can enjoy an array of food and beverage conveniently delivered to their seats with the convenience of QR code ordering. In addition, Paragon will bring its Axis 15 Extreme, a ground-breaking large format Auditorium with a 65-foot screen tilted 15 degrees for optimal viewing. Axis 15 Extreme will feature Laser projection, Dolby Atmos sound and 3D capability.

The area’s most advanced moviegoing experience is coming to Founders Row, which sits at the intersection of West Broad and North West Streets about 10 miles west of Washington, D.C. The theater, which will also include a full-service restaurant and bar along with bar and arcade entertainment options on the ground floor, will join the retail landscape at Founders Row that also includes restaurants Ellie Bird, Chasin’ Tails, Nue, Roll Play Vietnamese Grill, Kyu Ramen and Kyo Matcha, along with other retailers such as Club Pilates and 4Ever Young Med Spa.

“We are thrilled to welcome Paragon Theaters to Founders Row,” said Joe Muffler, senior managing director of development for Mill Creek Residential. “While previous efforts to bring a theater to the City of Falls Church were thwarted by the pandemic, we have nevertheless worked tirelessly to realize the vision that we set to create when this project was first approved in 2016. We firmly believe in the future of movies and the exhibition industry, so this is the best possible outcome to partner with such a high-level theater operator. We believe the addition of Paragon Theaters will further transform Founders Row into a true destination community.”

Paragon Theaters was formed in 2009 by former Muvico Entertainment executives Mike Whalen, Jr. and Mike Wilson. The company has a proven track record of building, retrofitting and operating successful movie theaters throughout the southeast U.S. Paragon’s portfolio currently consists of seven operating theaters in Florida, North Carolina and Virginia, with the most recent theater addition the brand-new Paragon Fenton location in Cary, N.C., which opened in summer 2022.

“Founders Row is a genuinely unique development that attracts a wide array of residents and visitors, and we’re eager to make it the next home of Paragon Theaters,” said Mike Wilson, Co-CEO of Paragon. “We believe the theater will become an immediate attraction and offer an unmatched entertainment experience in the area.”

Founders Row boasts a centralized location within Falls Church, a charming inside-the-Beltway suburb of Washington, D.C. that features a thriving school system, an active arts and cultural presence, and direct access to the Washington & Old Dominion (W&OD) trail, a paved 45-mile rail trail that extends through northern Virginia.

“With new development, the City consistently seeks to bring in popular amenities like great retail, restaurants and entertainment that residents and visitors can all enjoy,” said Falls Church Mayor P. David Tarter. “We congratulate Mill Creek on this milestone at Founders Row and look forward to welcoming Paragon Theaters to the City.”

Located at 110 Founders Avenue, Founders Row includes 80,000 square feet of overall luxury retail space and offers two distinct apartment communities. Modera Founders Row is a contemporary market-rate community featuring 322 homes, and Verso Founders Row is a 72-home age-restricted community dedicated to individuals 55 years and older.

“Adding our anchor back into the mix at Founders Row is extremely exciting,” Muffler said. “We have spent nearly a decade curating a vision with our partners, CrossHarbor Capital Partners, and the City of Falls Church to create an exciting, boutique lifestyle entertainment environment within the Beltway. Combining Paragon with Michelin-award winning chefs at Ellie Bird, and best-in-class operators such as the HEH Group, IVEA Restaurant Group and our other retailers, fulfills that goal, and we are thrilled to be opening retail at Founders Row before the end of 2022.”

There is limited available space for restaurants and other boutique shops remaining at Founders Row. To inquire about available retail space, please contact Chris Wilkinson, principal at Willard Retail. He can be reached at 301-657-7330 or [email protected].

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