The Heat Seeker: Blesso Properties’ Albert Price on the Next Big Nabe (article source click here)
How does a small-town boy from Duxbury, Mass., predict what the next big neighborhood in New York will be? Albert Price, the newly named president and chief operating officer of Blesso Properties, has spent his 20-year career developing commercial, residential and multifamily properties in areas that he believes will be deemed the Big Apple’s next hot spot. The Commercial Observer spoke to Mr. Price, about the challenges of starting a new development and his excitement about a hotel project in Panama.
The Commercial Observer: How difficult is it to kick-start a development—not just any development, but the right one—in New York City today?
Mr. Price: I think with any development project, there are sort of two kinds of developers in terms of how Matt [Blesso, Blesso Properties founder and president] and I see it: You have your commodity developers that basically develop into a demand in the marketplace, and they are looking at bigger macroeconomic data and saying, ‘O.K., we think that over the next X number of years there’s going to be this much demand for this type of product, so let’s go out and figure out where the right places to build it are.’ Or they buy existing buildings and convert them into different uses, or even just buy existing buildings that they think because of the demand behind it that that product is going to experience more upside than others.
Matt and I have a somewhat different approach, and I think with most boutique real estate development companies they, to some degree, have the same approach. We really start with a concept, we start with a vision, of a niche in the marketplace where we see some sort of a demand. With respect to the [421 West] 22nd Street project, the niche that Matt saw there was really the niche of really not being able to purchase studio apartments that were improved to a level of finish and design that a typical high-end buyer would like. Most of the studios that are available in Manhattan are rentals. They’re not for sale. I think the 22nd Street project was really geared toward a reinvention of the studio into something that could be created as a condo and purchased by a buyer as a condo. We had a concept for design, sort of what are the things that studios in general—apartments in New York City—don’t have. Particularly with respect to studios, they don’t have a lot of storage and they also typically don’t have nice kitchens, and you’re typically challenged with space, because you have to fit furniture—a bed, a desk, workspace, an office, a dining room table—you have to fit that into one small room.
As a developer, do you prefer to build from the ground up or to do a gut renovation?
If we were buying a property that had some issues that needed to be worked through and needed to be redeveloped, we can create value at a number of levels along the way, not just through redevelopment, but also through good design. That’s a way that we and other boutique developers in the marketplace can gain advantage. If you have a strong point of view from a design perspective and you … get a good architect, you design it and you build it, more likely than not in a city as large as New York, as long as you have good taste, there’s going to be a subset of the population that is the perfect customer for you. And when you have a 7- or 8-unit building—or even up to a 20- or 30-unit building—it’s a lot easier to sell a building like that out quickly and to pre-sell it, so that the time you finish the redevelopment … or even if it is new construction, by the time you finish the building, it’s a lot easier to have those units pre-sold than it is if you’re building a building that has 100, 200, 300 units.
How many units are in the 22nd Street building?
Nine units.
Are you doing strictly residential now?
Matt has done primarily residential, it’s his background. I’ve done a combination of commercial and residential. The focus especially over the 2000s was pretty much on residential. That was where the market was, that’s where the financing was, and that’s what people really needed. That’s probably changing a little bit today, although people still need places to live. There tend to be more renters and fewer buyers, even at the luxury level.
Is it riskier to embark upon commercial developments in favor of trade?
There’s always risk. With risk comes reward. In our business model we really try to mitigate our risk through good design and thoughtful design and anticipation of a market that we would then build a product for. If you’re just developing based on where you see the macroeconomic force is, and you’re developing for larger users or you’re developing larger buildings, you may be more exposed to risk.
When you’re developing smaller buildings in niche markets, it’s really about how well you can assess your customer, and if you do a good job with that, then you’re really just renting or selling a small amount of space relative to the size of a market like New York City.
As a developer, do you want to remain in New York City? Or do you feel better opportunities lie elsewhere?
The Panama opportunity was interesting. Matt came across that on a trip down to Panama a few years back, came across an area in Panama called Casco Viejo, and Casco Viejo is a Unesco World Heritage site, and most of the buildings in Casco Viejo are between [300] to 400 years old.
It’s a building stock and if you look at it from a … context of developing in an urban location in the United States, and you’ve seen what’s happened in the United States with manufacturing neighborhoods and with other neighborhoods that have become rundown as a result of the suburbanization of America, that trend has reversed itself largely in the last 20 years. People have realized that it’s much more efficient to live closer together, with a lot of the amenities that can then be supported by a more densely-packed population, and people have headed back into the cities. What’s been happening in Panama is very similar. There was a somewhat of a suburbanization and then there was a pull-in back to the city. The modern part of the city has grown tremendously, and all that supports a very large customer base that again, back to the principle of being boutique and trying to do projects that are unique, if you can do something on a small scale that’s interesting in a populist area, you’re going to have a subsegment of the population that enjoys your product and becomes your customer. That was very much what was in mind with Casco Viejo, and we also see Casco Viejo as an area that probably has another 15-20 years of upside and growth as many of the more dilapidated older structures are actually restored. As that sort of movement gains traction, and there’s more and more critical mass of improved properties, you’re starting to see your first generation of professional people who normally would have lived in a modern part of the downtown, choosing to live in Casco Viejo. It has that same sort of bohemian appeal that places like Soho had and Tribeca had and the Meatpacking district had in the earlier years.
And how do you, as a developer, locate these neighborhoods you think will be the next Soho?
There are tell-tale signs. Anybody who’s spent their time being interested in those types of areas or those type of things kind of has an innate sense of where these things are happening. In many cases it’s more like the … I don’t want to necessarily say “artist,” but it’s more like the intelligentsia, in a sense, who sort of lead the way, who are a little bit more daring intellectually and choose to go into places that are considered by most other people a little more risky. Sometimes people who are happy to take that risk for the trade-off for more space or more creative type of lifestyle. So if you follow those types of groups and you see where they collect and you understand what is motivating them, to develop real estate for them is definitely a strategy and a preference that we enjoy.
