Season 2:

Episode 38

February 8, 2022

#38: The Elm with Nick Falker of Cambridge Realty Partners

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In this week’s episode, I speak with Nick Falker, the Managing Partner at Cambridge Realty Partners based in New Haven, Connecticut. His firm has been investing and developing in real estate opportunistically since 1978. Beginning in 2015, the company pivoted to focus on the New Haven multifamily residential market. In today’s episode, we will discuss The Elm, a new construction multi-family building in Downtown New Haven. More broadly, we will also speak about the rise of the second city during COVID and what other cities may learn from it. As we will learn, New York’s loss is perhaps New Haven’s gain.

Located in the heart of Downtown New Haven, The Elm caters to young professionals and Yale affiliates. It is a mix of studios and four bedroom units with a rooftop deck and an industrial feel. There are some shared workspace areas where people can break off into study groups or work from home in a more comfortable place overlooking the city.

Join us on today’s episode as we discuss strategies for multifamily development and real estate development, how COVID is changing the game for developers, and popular neighborhoods that have been growing in New Haven. We will be exploring these topics in-depth, including Nick’s previous experience working for Cigna Realty Investors in Connecticut and the Bristol Group Inc in California.

Learn more about Nick Falker

Nick Falker is the Managing Partner at Cambridge Realty Partners based in New Haven, Connecticut. The firm has been investing and developing in real estate opportunistically since 1978. Since then, they have focused on office assets in the Northeast US, Texas, and Mexico — and most recently in multi-family developments in Connecticut. Previously, Nick worked for Cigna Realty Investors in Connecticut and the Bristol Group Inc in California.

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Now let’s build something today.

Our guest is Nick falter. Nick is the managing partner at Cambridge Realty partners based in surprise, new Haven, Connecticut, not Cambridge, Massachusetts. The firm has been investing and developing and real estate opportunistically since 1950. Over that time. They have focused on office assets in the Northeast, us, Texas, and Mexico, and most recently in multi-family and Connecticut, Nick previously worked at Cigna Realty investors in Connecticut and the bristle group.

And at Caltech. We will be talking about the Elm, his new construction multi-family building in downtown new Haven. It is catering to young professionals and Yale affiliates. More broadly. We will talk about the rise of the second city during the. And what other cities might learn from it. New York’s loss is perhaps new Haven’s game.

So thank you so much for being here with us, Nick.

[00:02:22] Nick Falker: Thanks. Great to be here and, uh, appreciate the opportunity. Absolutely.

[00:02:27] Atif Qadir: So, Nick, you started out your career at Eastdil secured, the investment sales brokerage. Why did you start there and what did you learn from that?

[00:02:37] Nick Falker: Well, I started there cause it was the best opportunity I had at the time out of college.

I didn’t really know anything yet and was trying to crack into the industry. Obviously, real estate is a, is a tough industry to crack into. And once you’re in, you typically stay in Eastdil secured. If, if people don’t know about the companies that fund. Real estate brokerage company. They really set the bar for a hundred million dollar and up real estate transactions in the early nineties.

So as real estate became a more institutional asset class, Eastdil secured. Raised the bar in terms of institutional quality asset brokerage. So it was an excellent opportunity for me. This was in 2006 when I, when I first started there and particularly what they did really, really well was real estate analytics.

So I joined as a first year analyst, I joined with several other new hires at the same time, and they had a formal, real estate analytics training program for their first year analysts that we went. And the blocking and tackling and hard skills that we learned there were excellent and served me very, very well.

I still use Excel without a mouse and the skills I got from those few years where I use daily. So it was excellent place to start. Do you know,

[00:03:55] Atif Qadir: honestly, I would say that. Real estate development is a second career. After being an architect, I absolutely need to use a mouse, an Excel, no matter, even if I am very incredibly proficient, I still have to use the mouse.

So that is definitely a measure of success, I think. Okay. So after that you spent almost four years in San Francisco. What prompted the move out there and how would you compare. Uh, the real estate industry in the bay area versus that in

[00:04:26] Nick Falker: Metro New York. So yeah. Well, the move out there was, was after college for me, I went to college on the east coast.

I’m from the east coast and I had some friends from college that were heading out there for various jobs as well. So we all got an apartment together. It sounded like a great place to live. This is San Francisco, 2006, and it was all of that in California is wonderful. San Francisco is amazing and, uh, it was a great place to go after college.

In terms of a real estate investment market. San Francisco has many similarities to New York city, many major differences as well though, I’d say on the similar side, severely supply constraint, being both being physical peninsulas and water surrounding them, both being very densely populated and both being tier one cities in terms of liquid.

And all global, uh, investment attributes, major differences, obviously San Francisco, less zone. Now it’s more diversified now, but it’s still heavily, um, centered around the technology industry and all of the offshoots of that, which has served it well through the great financial global financial crisis and through COVID.

But, um, obviously tech has been a huge part of the last 20 years. It is a less diverse economy. The New York city, New York city is a much, much bigger economy and much more diversified global economy than San Fran.

[00:05:49] Atif Qadir: I think also in terms of population. So New York city’s is 8.8 million. I think San Francisco is not 8.8 million.

[00:05:58] Nick Falker: I believe at least 10 years ago. It was less than a million in, in the city proper. But when you bring in. Greater San Francisco area, including the east bay, Oakland. Um, you get to several million people quickly, but the city proper is, is actually sparsely populated relative to New York city. They don’t have high rise buildings.

They don’t have high rise residential really at all. So yeah, far fewer people.

[00:06:21] Atif Qadir: So you’ve had experience and investment sales brokers. And real estate development. And then you returned to Connecticut and worked with your father, Michael Faulker, who started Cambridge Realty partners. What aspects of the firm did you retain when you took over and

[00:06:39] Nick Falker: what did you change?

So the first thing that I changed was a full pivot into multi-family, which during my dad’s era, through the seventies, eighties, nineties, and early two thousands, they had never done multi-family. My dad said my dad and his partners. The firm. So we, when I came in to Cambridge in 2015, we pivoted exclusively into multifamily.

So that was a pretty strong pivot. Also, my dad had built up and his partners had built up an industrial portfolio in Mexico, in the early in the nineties and early two thousands. And they sold the majority of that portfolio in 2006, retained one asset. And that final asset was sold in 2013. So from 2013 to 20.

Cambridge had really been dark. Got my dad had unofficially retired at that point, along with his partners. We really restarted the company. I re restarted the company in 2015. So in many ways, this version of Cambridge, my version is a, is a startup it’s kind of two point, oh, we, we certainly have all the benefit of the longer track record and the credibility and the brand.

In many other ways, it looks and feels like a, like a startup, like a newer company.

[00:07:52] Atif Qadir: So as you were starting up the second iteration of Cambridge Realty partners, what were some of the, the challenges and some of the learnings that you had as you were setting down that course?

[00:08:06] Nick Falker: Biggest challenges to starting a real estate company.

The biggest challenge in my opinion, is the capital. It’s a capital intensive business. You are buying hard assets and there’s all of the good that comes with that. People always talk about the tangible nature of it relative to other asset classes and the challenges of that, which is it’s it’s by definition, capital intensive, because you’re buying a real asset.

So, or you’re building real asset either way. You know, there there’s an inherent conflict there when you’re going for a startup, but you need heavy capital that obviously doesn’t exist with internet startups. So you kind of, you need to have either an angel investor or a family member, someone that’s willing to back.

Or you need to be old enough and have been in the game long enough to show a track record men have in your back pocket, a stable of more institutional investors that are ready to back you for professional reasons. So that’s an inherent friction to starting up a real estate company. That’s always been there and it hasn’t really changed with.

All of the evolution that’s gone on in, in the business world of the last 20 years, that hasn’t really changed. And that was certainly my biggest challenge. And in many ways it remains one of our biggest challenge we’ve grown and our access to capital has grown, but as we grow with each iteration, the next round of deals that we do grow and in step with that.

So we’re always pressing the next bigger loan. The next bigger equity check. I suppose that that challenge will never stop and that’s exciting, but the zero to one stage is certainly the most challenging because once you have the track record, proven it’s much easier to say, well, we’re just stepping up in terms of size and scale, but this is something that we’ve done for a long time.

That’s a much easier conversation for a capital source. Then we’re starting out on our own, and this is why we think it’s good.

[00:09:57] Atif Qadir: So, uh, this month we had Sam Dickinson. Who’s the founder of Keeler Mark Wood group earlier on this year. So he had worked in the hedge fund industry as a trader, uh, for 20 years.

And for him, the, the presentation or the, the talking points that you have are focused on his skillset and risk management and, uh, the hedge fund industry and how that would parlay well to, uh, first development. That’s the way that he presented himself for raising capital for his first deal. What were the things that you mentioned when you were raising capital for your first deal?

[00:10:30] Nick Falker: So I really all, I had to point out, which I, I suppose, any startup real estate person has to point out is their previous experience, which had been extremely relevant. It had been multi-phase. Development. It had been industrial and office building value, add projects with Bristol group. You know, when I was at Cigna, we deployed several hundred million dollars of equity into class, a institutional multi-family development around the country and tier one and tier two cities.

So, and I’d been in the business from 2006 until 2015 at that point. So it’s almost a 10 year stretch of very, very relevant experience. The question that most people had was, but you haven’t done it yourself. And it’s, it was an extremely valid question and it proved to be a OnPoint question as well, because when I did start doing it myself, there were things I didn’t know, the intuitive things that when you, I imagine that you only gained by doing it yourself.

Intuition for how much it costs to renovate the 600 square foot apartment versus a 1300 square foot apartment. And if you’re going to class a standards or you’re taking a class C building and bringing it to class B minus, um, those, the dollars involved in those renovation differences that becomes intuitive quickly, especially if you have the financial background in the, in the business, but you don’t.

The close intuition until you do it yourself. And that can lead to mistakes. And it led to mistakes on my end as well. You know, there were several projects we did in the beginning that were ultimately financially successful, but we made underwriting errors because we didn’t have an extremely close eye for renovation costs.

It was more broad brush estimation that we are building our pro forma with, which was got us 90% of the way there. So, um, you know, that’s not to say. Fatal flaws far from it, but what could have been a 20% IRR, maybe wasn’t 18 because of those mistakes. So, and those are mistakes that we fixed and that’s how we’ve gotten

[00:12:31] Atif Qadir: better.

And if you’re asking me for the construction underwriting, where there certain things that you did have to turn the screws and tighten up a bit, was it I’m guessing it likely was the rough carpentry. Numbers, those can swing a lot because of material prices or some of the specialty trades or specialty equipments.

Was it both of those or were there specific instances for you

[00:12:55] Nick Falker: absolutely. In, in COVID or prior, uh, for those first projects for the first projects? Yeah, I would say labor and materials. Absolutely. Um, all of the above the cost of labor varied wildly, depending on the quality of the contractor, you know, in the amount of insurance that they had, et cetera.

You know, it’s very easy to renovate five units with kind of guys in a truck, or you can renovate those five units with the same G general contractor with all of the insurance qualifications and everything else that you would use for a ground up $40 million project. And that would cost something.

[00:13:31] Atif Qadir: And he, or she would likely have a bigger truck, right?


[00:13:34] Nick Falker: right. In a much bigger truck, multiple trucks. Yes. You know, and there are pluses and minuses for all of these decisions and there’s risks and benefits. But yeah, we certainly could have done things better. Of course, because we were started, we didn’t know everything and we don’t know everything now.

And that’s an endless process of, uh, learning.

[00:13:54] Atif Qadir: One thing in particular, when I was taking the experience from textile and development and then starting my own development business to do value, add opportunistic small-scale multifamily in Jersey was that the norm for construction contingency is 10%.

That’s all right. If you’re doing a hundred million dollar. But if you’re doing a $5 million deal, especially if it’s value add, I learned to change the number from 10 to 25% to account for all of those things that you’re just talking about.

[00:14:23] Nick Falker: Yes, absolutely. Right. When the budget’s extremely small, 10% is not going to give you a lot of wiggle room to make a mistake.

But, but of course, if the budget’s quite big, you know, now you’re talking now you do have a few bucks to work with and we’ve employed that exact same strategy. We have a $40 million development in Bloomfield, Connecticut, and starting right. And we have a 5% owner’s contingency on it. Whereas with the Elm or our downtown.

Building that we just finished. I think we had a 10% owner’s contingency in it, and that was a, a 13 million. So a $13 million builds in downtown new Haven versus a $40 million bill, significantly different, different underwriting there.

[00:15:03] Atif Qadir: So let’s pivot then to the. The element is located in downtown new Haven.

And some of our listeners may not have heard of this city and those that have may automatically associate it with Yale. And what is special about the city for you and what drew you to this particular site?

[00:15:21] Nick Falker: New Haven is a wonderful city. The location is great. It’s on, it’s on the water. It’s on the, on the sound and it’s basically halfway between New York and Boston.

It’s on the train lines to New York, but it’s got. The benefits and niceness of Connecticut. It’s not so dense that it’s hard to get around traffic. It’s not really a problem. It’s also just got a ton of character. It’s got grit, it’s got Yale university. So it’s got the college town fun aspects to it. It’s got a local longstanding kind of grittiness with great food, great restaurants and a not too fussy.

Fancy. Five to it. So for all those reasons, uh, my family and I’ve loved living here for 10 plus years, the site itself was brought to our attention on an off-market basis in 2019. So in a local investor that I, that I know and knew at the time. Had a relationship with the seller who had owned the property for about 30 or 35 years.

So the site itself, the development site for the album was a parking lot when we purchased it. And right next to the parking lot was a a hundred unit building that we also purchased with it from the same seller, the parking lot. That’s now. Was it. So was the parking lot for the a hundred unit building that we purchased.

Um, there’s been a movement in new Haven, along with most American cities for the past 10 years to, if not a formerly changed their zoning laws than to unofficially require less parking downtown urban areas, obviously to allow for more density, more building in an effort to bring down housing costs. So anyways, we purchased that the local investor that I.

Brought it to our attention that he had a relationship with the seller and they may be interested in doing an off market transaction and he needed help financing the project and getting it done. So he called me and we got it done. And then as soon as we closed on that acquisition, which. Uh, $15 million acquisition of the a hundred units.

Plus the parking lot, we immediately started talking to the city of new Haven about entitling, the parking lot for development. So that conversation with the city started it right as we close, which was February of 2019. With a lot of back and forth, formal and informal with the city. About a year later, we received building permits and broke ground for the album, which was March of 2020 when we broke ground.

Right. As COVID was unfolding. Perfect

[00:17:50] Atif Qadir: timing. So I think probably one of the, the best piece of advice that I got as I was starting a development company, uh, was sure, sure. Yeah. You, you have all the experience that all. Just buckle up, just

[00:18:07] Nick Falker: building the mental health and development is hard and it is hard and there’s no matter what you’re building, you’re going to have unforeseen issues back to the contingency conversation.

The best advice I got. Budgeting for the development of the Elm was put in more contingency than, than you think you need. And certainly don’t use any rule of thumb from a 50 million or a hundred million dollar development that you may have learned at a previous employer and apply it to a much smaller project exactly.

As you set out to do so, but there were many unforeseen issues. Most notably was global pandemic.

[00:18:39] Atif Qadir: So let’s take a, like a step back a little bit. So, uh, more about new Haven. So there has been a boom of rental building construction in new Haven over the past seven to 10 years. And we’ve had the opportunity to tour buildings like the novella and the Corsair who else is developing in the area.

And what did you take away from their projects as you started planning for the L.

[00:19:05] Nick Falker: Good question. So it’s still mostly local developers until maybe the last two years. It was really local developers, meaning Connecticut, Fairfield, county developers, and hard for developers, but mostly Connecticut based folks.

I would say in the last two to three years, that started to broaden out. So certainly institutional capital from New York and Boston has come into town. And even on the GP sides that Heinz just purchased a development site in Worcester square in new Haven, and they are developing a two or 300 unit project there.

So that is very new for new Haven. There’s I think the first signs of the city broadening were kind of institutional capital. Capital sources from further outside of, of Connecticut coming into town. And now they’re coming into town on a GP basis where they’re actually buying sites, controlling sites, developing sites.

So you’re certainly seeing that. I don’t know whether that says something about new Haven or whether it says something about where we are in the capital markets. I’m not sure, probably a little of both, but that’s all. Right now. Yeah.

[00:20:14] Atif Qadir: So tell us about the development strategy in more detail and who else is working on this project

[00:20:22] Nick Falker: with you?

So we worked with a local design and build firm urbane new Haven. They were the architects on record and also the general contractor. They have both of those skill sets in. There are local company. I’m friends with the owner of the company and the partners there. And I had known them well before we started the project.

So we did interview other architects and general contractors for the job, but going into the project, I spoke with the owner of verbate new Haven. He said he was very excited about the concept, the location, and. Basically it was, uh, I’m going to do the project with, with this group, unless we can’t make it work for some reason.

So that was kind of the mindset going in. And that was a relationship based. I mean, that was a good, a good story of a small town project coming together. It was, it was two local companies that knew each other that, that had every intent to do the project together and they were excellent. They designed a very unique, cool building, and then they executed the built through.

Uh, what I would imagine was probably the most challenging 18 months to build a building that you could imagine, all the supply chain issues, all the pricing pressures, all the labor issues as the pandemic rolled out all of the political uncertainty. And if you recall, in the beginning of 2020, when COVID was unfolding, New York city actually shut down construction for a period of time.

I think Boston did as well.

[00:21:51] Atif Qadir: The state of New Jersey did as well. And my project shut down for two months.

[00:21:55] Nick Falker: Oh yeah. The Tufts. So we were looking, we had, uh, we’re right on the cusp of closing the construction loan in March of 2020 for the. And, uh, we were staring down this pandemic environment and looking at what was happening in New York first.

And then later Boston, as you just said, New Jersey where the governors were shutting down construction. Obviously if we close the loan and hadn’t drawn on the loan, we’d be. Interest on that. And, and similarly, if the GC was buying out all of their goods and then sitting on them and labor and sitting on them without able to begin building the cost implications of that are huge.

So that was a very difficult decision to make governor Lamont. The governor of Connecticut issued a formal statement that that’s available on YouTube sometime in the middle of March, where he actually cited New York and Boston having shut down their construction industries. And then he specifically. We are circling construction is one of the few core industries that we will do everything within our power to re, to remain open as it’s, uh, a bright spot for the local Connecticut economy.

And it has the ability to maintain operations, mostly outdoors, and for a variety of other reasons, given the fact that everything else was shutting down, he specifically cited construction as something he was going to try to keep open. So. That was really the trigger point for me. Um, once he made that statement, I spoke to our lenders.

I said, look, guys, we need to close on this and move forward now or never. And they were an excellent partner. They closed and we started building and we were never sure.

[00:23:32] Atif Qadir: So similar discussion we had earlier this season with Maryanne Gilmartin, uh, founder, and the head of Mac partners, the former CEO of forest city Ratner.

And she actually closed on the financing for her major multi-family project in west Chelsea, in Manhattan around the same time that you did for your project and new Haven. And she had similar conversations with her investors and she said, Is always going to be New York. Let’s go, let’s do this. So I’m guessing there’s probably similar aspects because in the case of new Haven, it’s not.

Any other second city, literally Yale is right there.

[00:24:12] Nick Falker: Yes. That w w would have been a different, different conversation with our capital sources. Had that, not been the case where we’re basically right on the edge of the L’s campus and, and had that not been the case, if this was a more suburban multi-family project, I imagine the friction we would have encountered with the capital sources would have been, would have been more significant, but that was huge for.

And then of course, Yale did shut down as soon as we started construction. So construction industry did not, but within weeks of us starting construction, yells, shut down, send all their students home. And then it was very unclear whether they’d be coming back for the fall. And as you recall, 2020. They came back in a very hybrid way.

So there’s far fewer students on campus then than there are now. But, uh, anyways, um,

[00:24:58] Atif Qadir: do you know, what I would imagine then is it’s probably then a different story of being next to a major research university that is in a. Versus a major university research university, for example, university of Connecticut, which does not have the benefit of a multi-industry city, like new Haven, because then you can balance those ups and downs that you might have within one

[00:25:20] Nick Falker: particular area.

Yeah, I think that’s right. Yeah. You have a more diversified tenant base, potential tenant base. If you’re in a city, you know, you can con there’s so many options at your disposal to, if you have a. Uh, well located multi quality multifamily building in a city. There’s so many options available for you to generate income in a, in a challenging environment.

If there’s a recession or a pandemic, you can switch to Airbnb, you can do all sorts of things to generate income. And the reason for that is people need places to live always. So if you’re flexible with the ways in which you lease your building, you can stay lease. If you’re in a more suburban area. If you.

Purpose, uh, student housing at Yukon to use your example in Storrs, Connecticut, which is very woodsy, very suburban and Yukon shuts down due to a pandemic. You’re you’ve got an empty building. You don’t have any other options.

[00:26:16] Atif Qadir: So speaking of buildings, so walk us through the building. That’s that’s your new construction project.

So our listeners could imagine what they would experience when they walk through it. When it’s.

[00:26:26] Nick Falker: So you, you entered the building, it’s got a, uh, industrial vibe to it. There is a concrete podium that the parking is underneath and the building really sits on top of that. And as you enter the lobby, you can see kind of the exterior wall of the concrete podium on that podium.

We had a local artist do a kind of a mural wall painting of, um, kind of a new Haven, Lance. It’s got kind of a mix of like bright, cool colors with, uh, like an urban industrial vibe to it. So, um, that’s, that’s the vibe of the building. Um, there’s kind of, there’s a gym on immediately to your right and to your left of the lobby.

There are some conference rooms. Some shared workspace areas with some TVs where people can break off into study groups or, or, or work from home in a more comfortable place outside of your apartment. And there’s, there’s an elevator bank, six story building. Each floor has a, I think, six to eight units.

It’s a mix of studios to four bedroom units. And the roof deck is, uh, there is a roof deck, which is, you can take the elevator all the way up or you can take the stairs and we’ve got some cocktail tables, some lounge chairs, cornhole, you know, it’s just, it’s a yeah. Right. Check all the boxes for your roof deck.

Yeah. And it’s got a cool view of downtown. And when the weather is. Absolutely stairs. It looks right at downtown and the Yale campus. Yeah. So, uh, people, uh, w when we opened the building in the fall, people were using it.

[00:27:55] Atif Qadir: As you are going through the design process with urbane and new Haven, what are some of the choices that you made in terms of finishes?

Given this as a multifamily building, there’s a student populations. You want it to look good, but also stand up. Uh, what were some of those decision?

[00:28:12] Nick Falker: So, yeah, so we developed it to luxury standards, but we made unique strategic decision. So I would say that a lot of our competitors didn’t make, you’ll see a lot of kind of cookie cutter, new multifamily tendencies when you tour a lot of these, these buildings.

And, um, we found a lot of those amenities were not being utilized by many of the tenants in the competing buildings. A theater room for example, was a good example of that. We found that there was very little usage of post. Concepts. And that was prior to the pandemic and with COVID people are using those types of things significantly less.

So we emphasized a good fitness center. We emphasized, um, bright, modern, warm colors. We emphasize modern fit and efficiency, usage, and flow of space, but we probably downplayed some of the tricks. You know, things like the theater room we opted for multiple conference rooms. TV’s that you can project on and whiteboards that you can brainstorm on.

And we have some small ones for groups of two or four, and we have some bigger ones for groups of six or eight. And I think as the work from home aspect of life has really grown with the pandemic. Those spaces are just very, very valued. So that, that worked out to our benefit. For sure.

[00:29:29] Atif Qadir: I think that’s an excellent point that you made.

Having toured a number of the large multi-family properties in new Haven. I always noticed the fact how empty all of their amenities are, especially with the student population, which doesn’t necessarily have a nine to five schedule. There should be people in the gym all the time, people in the county all the time.

And when I asked a broker about why that is and what the situation is, she said, People like the idea of having amenities, not necessarily using those amenities. And it seems like such a foolish game to play. Just make your apartments nice

[00:30:06] Nick Falker: to them. Right. I think that’s spot on, but you can’t pour all that money into your, into your apartments and not spend on the many.

So you have to figure out where you want to allocate the money. But I think that. I think the usage of the amenities generally speaking is much lower than the cost associated with constructing them would, would suggest. But on the flip side, you kind of have to choose where you want to build out your amenities if you want to compete.

So you do need to check certain boxes and we’re building more suburban to new. Project multifamily developments now that are more suburban than the Elm once outside of Hartford in a suburb of Harford, one’s in New Jersey. And it’s exactly that we have to choose which amenities we want to spend big on for the tour, through the project, knowing that we need to capture eyes and attention and check certain boxes through the tour.

But the utilization of it. Lower than it should be.

[00:31:02] Atif Qadir: So speaking of the utilization of people, you utilizing those spaces and talk to us more about who you thought your renters were going to be, as you were underwriting, this deal, how that changed over the course of the project and who actually is renting at the property.

[00:31:17] Nick Falker: Yeah, we expected the tendency to be 80 to 90% Yale, and that would be mostly graduate students, but it was our expectation, maybe 90% graduate students to. Undergrad of the 80 90% that we thought would be yellow. And if the 80 to 90% had been yelled at that, the other 10 to 20%, we expected to be the young professional cohort that ratio of Yale to young professional is more, uh, more in line with 50 50.

Now that’s a result of COVID. There are a lot of folks, relatively, a lot of folks moving from New York into new Haven right now. And I say relatively, because there’s a lot of folks moving from. Everywhere Florida, Connecticut, New Jersey. So Colorado, Georgia, right? Yes. So new, Haven’s getting up a chair of that, which is great for new Haven.

And we’ve got an excellent location and we’ve got some big units that are more accommodating for young professionals, or maybe even young families that have the ability to rent a relatively more expensive apartment in new Haven. So, um, we’re capturing a segment of that.

[00:32:25] Atif Qadir: And, uh, out of curiosity, do you find folks signing multi-year leases?

Because if they’re for a PhD program that could be 5, 6, 7, 8, 9, 10, 11, 12 years.

[00:32:36] Nick Falker: Yes. The requests are there no question about it. People are definitely asking for two or three year leases. Accommodate cause the least has been so well-received and so strong. We’re signing one-year leases. And so we’d love to keep you in at the end of your year renew, but the requests are certainly there for two or three year leases.

That’s a

[00:32:54] Atif Qadir: great word of confidence in the product that you’ve created.

I’m going to pause here to let our listeners know that we will be having chalk lie. The C O O of New York based real estate investment firm. Clear mountain. Um, the podcast next month, uh, you can check out past episodes and subscribe. So you don’t miss any of the future episodes by heading to American building

So a retest is a new technology company that is innovating around an age, old problem financing. Real estate deals. The machine learning driven platform is a end to end solution for real estate professionals. Looking to unlock the a hundred billion dollars of tax credits and other real sentences. That are given out every year in the U S learn finally, for any person going from the home office to the office, to the construction site, finding clothes that look good and stand up to the crazy days is a big deal.

That’s why I’m a huge fan of Banabos I’m in fact, wearing other pants right now, and Nick may or may not be, and you can check them out for

So March 20, 20 COVID and that spring into summer, the New York times estimated that 5% of New York city’s residents left and never came back to put that into context. That is the entire population of Minneapolis or Cleveland. Or Tampa. So let’s see a lot of people, if all you did was look at the Instagram feeds of celebrities, it would seem that they all went to east Hampton.

And in reality, many of those actually came to Connecticut to buy homes or to rent properties. Uh, could you give us a, a window and on the ground, look at what the residential market was like in new Haven before. During COVID. And then after COVID maybe some more anecdotes of some of your

[00:34:54] Nick Falker: vendors. Yeah, absolutely.

And for the record, I am also wearing Bonobos pants. There you go. Yeah. So absolutely no. Connecticut has certainly been a beneficiary of, of population growth from people leaving New York during. And I do think a portion of that is permanent. And how much of that is permanent? I don’t know. But, uh, a portion is I, I believe, and that the residential market in Connecticut it’s, it’s fragmented.

You really have the Fairfield county residential market, that new Haven residential market out of the Hartford, greater Hartford, residential market, all of those markets have risen, um, in terms of property values and time on the. And basically by any other metric, they’ve all risen across the board.

Fairfield county on questions. The most. So I think following the financial crisis until COVID Fairfield county, a single family market was, was soft. And employers were basically, there was a kind of a net loss of, of employers from Southern Connecticut, into New York and other urban areas. And that obviously has been reversed a bit.

And, um, the residential market has come back strongly in Connecticut, in new Haven. I don’t really know the percentages, but single family homes, I would assume. And it’s also a very neighborhood-y city, but, uh, so I bet it varies quite a bit from neighborhood to neighborhood, but in, in the neighborhood I live in, for example, in east rock, I would imagine single-family home values on average are up 20 to 30.

I think those that’s pretty representative of the country though. So I think over the past 18 months or so, so 24 months, so yeah, I think new Haven has done well. Connecticut’s done well. It’s the quality of life here as has always been an issue. And the natural beauty of it has always been an attribute relative to Jersey or New York, no offense, New Jersey.

And those are things that just kind of came back to the forefront for people, making decisions, leaving, leaving New York.

[00:36:59] Atif Qadir: So the reasons why someone comes to a new Haven and why they choose to stay. Let’s talk about that in more detail, because I think the new Haven story is actually one. Is repeated across the Metro New York city area and then across other MSLs in the U S so one of the important things that we’ve talked about is this sense of place and these unique aspects that are our only new havens in terms of everything from Yale to the pizza.

So tell us more about the popular neighborhoods that are in new Haven and what you think makes them great places to live, perhaps beginning with.

[00:37:34] Nick Falker: Yeah. So east rock is a great place to live. It’s it’s less than a mile north of downtown new Haven and Yale business school is basically an east rock, a little separated from the core undergrad campus, Worcester square.

As you mentioned before, as a perfect analogy, it is kind of the Brooklyn vibe neighborhood of new Haven. And that’s where the Heinz development site is that I mentioned earlier. It’s 200 or 300 unit project that’s under construction. Now that Heinz is. And then you have downtown, which has become more viable, have a place to live as more residential development has gone up there in the last few years, but still.

In my opinion is a less desirable place to live than east rock or Wister square. For example, you know, east rock in Wister square, still very walkable to downtown, and you can have more space and it has really nice neighborhood amenities, coffee shops, bars, restaurants, and you don’t have to be in an elevator building with parking challenges, for example, that you would have downtown.

So there are obvious reasons to leave. Uh, downtown New York or downtown Boston, but I don’t think that really applies to new Haven because the neighborhoods are so accessible even by foot, uh, certainly on, on a bike. So, yeah, I mean, so it’s, it’s, it’s a great place to live. Yeah.

[00:38:51] Atif Qadir: Talk about the neighborhoods that are north of downtown.

I believe. Around prospect street and science hill are those areas that are desirable for people moving from New York city, for example.

[00:39:02] Nick Falker: Yeah. So, um, well science hill really borders kind of the Yale sphere and the east rock sphere. And. Eh, you know, a slightly, I hate to say rougher neighborhood on the other side of it.

So it kind of blends those, those two areas. There’s been obviously a lot of investment from Yale and into science par, and there’s several new residential projects that are slated for development in that neighborhood. A mix of affordable housing and market rate housing that has affordable requirement.

That were instated in order to get the zoning variances that were needed to develop that density. So that’s an interesting place to live. It’s pretty gritty there. You know, it’s got that commercial and office feel to it from science park and then it’s next to some pretty gritty neighborhoods. So it’s definitely got a.

You know, a mixed bag feel to it, but, and the Yale hockey stadium that the whale, the yellow whale is right there too. So that’s a cool attribute of it as well.

[00:40:07] Atif Qadir: I believe the Yale hockey stadium was designed by Arizona. Yes. As a really iconic architect of the early 19 hundreds. So let’s talk about food. So.

What are your favorite restaurants? What’s the foodie scene like in new Haven?

[00:40:23] Nick Falker: Yeah. New Haven’s food is awesome. So new Haven has a longstanding Italian heritage to it. Going back to the 18 hundreds, hence the history of pizza in the city, but there are so many other. Italian restaurants from markets and a little kind of on the wall favorites to no more white tablecloth restaurants in my neighborhood in east rock Nikos and P and M or local Italian markets where you can get prepared foods prepared salads.

They’ve got seafood, fresh vegetables, and then the sandwich options are incredible. Italian sandwiches. The Binny’s the pastas. Pretty amazing. So that’s pretty awesome comfort food on foot to get. And then coffee shops, the Italian coffee shops are fantastic on foot in east rock. And then the pizza is, is what it is.

It’s the best. It’s the best in the world.

[00:41:18] Atif Qadir: I would say. Have you spent time in Philadelphia? A little bit? Yeah. I feel like new Haven has a vibe of south Philly. Bellavista that Italian market

[00:41:28] Nick Falker: area. Yeah, I think that’s fair. Yeah. Kind of the grittiness old east coast Italian-American cities. Absolutely. Yeah.

[00:41:37] Atif Qadir: And then, uh, transportation’s a really important thing, especially people relocating to new Haven. So what does new Haven have going for it in terms of getting there and getting around?

[00:41:49] Nick Falker: Yeah, so, I mean, I would say the biggest thing is the Metro north stops in new Haven. The end of the Metro north line out of grand central stops in new Haven.

So it’s the last stop, which directly. New Haven to near city, which is fantastic by rail, you know, any from anywhere in new Haven, you can take an Uber to the train station, you know, within five, 10 minutes. So that’s pretty outstanding. You can also take the Amtrak to Boston, go straight into south, uh, south station.

So. I don’t need a car in new Haven. If you have a bike you’re pretty good. And you can get to Boston in New York and you can get to the airports there by public transportation relatively easily. There is a bus system in the city, and then there’s a Yale shuttle, which is outstanding actually. But you have to be, you know, a affiliate to use a student or employee, but that’s a really well, highly used system as well.

But aside from that, I would not say it’s the best public transport unit. Oh, within the city itself, you mean within the city? The bus system? Yeah, to be fair.

[00:42:49] Atif Qadir: I think as someone who’s visited the city, a number of times it’s, as you said, it’s eminently walkable. You could literally park your car right around the green.

And if you have a couple meetings, a couple of things to do, you can pretty much like walk everywhere. It’s not even that big of a deal. I think at least for.

[00:43:07] Nick Falker: Definitely. Yeah, no, a mile in any direction. We’ll pretty much get you anywhere.

[00:43:12] Atif Qadir: And then also let’s think of fairies. Are there any, or those are actually neighboring cities that have

[00:43:19] Nick Falker: neighboring state.

So there’s a ferry from Bridgeport to long island, which is great. You can avoid New York city if you’re going to long island, but not from new Haven that. That would be cool though. Maybe we should look into that.

[00:43:31] Atif Qadir: That’ll be the next part of Cambridge is future infrastructure

[00:43:34] Nick Falker: development. That’s right.

[00:43:35] Atif Qadir: Absolutely. So then access to the outdoors. I know a lot of my friends that have kids, that’s a huge, huge thing. So talk to us about the parks, the beaches, and other recreation spaces that.

[00:43:48] Nick Falker: So east rock park is a huge one. There’s there’s hiking trails, walking trails, baseball fields, all around it. East rock itself is actually a pretty good hike.

It’s a few hundred feet up and there they’re running trails up the mountain and you can get your, get as much of a trail run as you want on them. Walk your dog, take your kids. It’s it’s really a great park. The beaches are fantastic. There’s beaches, um, in all the neighboring towns and, you know, including new Haven itself.

So, you know, you’ve got a half dozen great beaches, both north and south of new Haven immediately, north and south. And then, you know, little further away, you’ve got quick access into the, into the rest of new England. So now you can drive into Vermont and New Hampshire. Relatively quickly.

[00:44:34] Atif Qadir: And I think particularly what goes under appreciated is the coastal communities that are north and north or east of new Haven.

So for example, mystic and Niantic and Groton, all of them are beautiful on their own. They’re just off of 95 and there’s a nice kind of. Uh, local road that you can take from, from town to town. I actually did that this past fall for the first time, even though I’ve been to, I’ve done the New York Austin thing, a zillion times average, I take that loop that way back to new Haven versus on 95 or, or the

[00:45:07] Nick Falker: that’s great.

I don’t think I’ve ever driven that Raj I’ve been in Niantic and new London and all those towns, but I don’t think I’ve ever taken that road. I always take 95 to get there, so that’s great.

[00:45:17] Atif Qadir: Wonderful. So I think with all of this, these great details that you’ve given about a new Haven, I don’t know why anyone would not want to move to the city.

So, yeah.

[00:45:26] Nick Falker: Yeah. Circling back on a question you asked a little bit ago about what, what portion of people coming in and out. Are staying here and why? I think a significant portion of the people that have come to new Haven will stay here and choose to stay here. The work from home aspect obviously has kind of released that flexibility into the workforce.

That’s affected the entire country in urban centers across the country. Certainly it’s, that’s an aspect here. And then, you know, you’re in a little. Without being in New York. So I think you have a lot of the claustrophobia, pandemic related claustrophobia and traffic issues relieved by coming to new Haven from New York.

But you don’t give up all of the walkability and other amenities that you would want from a city. So you kind of, you get a little, a little of both when you come to new Haven. The relief of the congestion, but you still have all of those nice amenities.

[00:46:19] Atif Qadir: I think it’s, they’re all wins. And I think particularly, uh, drawing people away from perhaps the urban areas that are familiar with, to go to others.

Uh, other parts of the country is I think a. Big benefit overall this past year, having spent time in 12 different places across the country one each month. Uh, I can tell you there’s many amazing place to live beyond Brooklyn. Uh, so for example, Morgantown, West Virginia, I absolutely love, uh, Durham, North Carolina, Charlottesville, Virginia, Austin, Texas.

There’s so many, so many great books and new Haven is absolutely in my top 10 favorite cities.

[00:46:54] Nick Falker: That’s awesome. Well, that’s an impressive list to put it up with, so that’s great.

[00:46:59] Atif Qadir: So we’ve had a chance to talk to the honorary mayor of new Haven. Nick Volker. Thank you so much for joining us today on the

[00:47:06] Nick Falker: podcast show.

Our thanks is nice to be here.

[00:47:10] Atif Qadir: Absolutely. So listeners, if you want to hear the behind the scenes stories of how iconic buildings in our country were designed and built subscribe to this podcast on Spotify, iTunes, Google, anchor, Stitcher, or wherever you like to listen, rate and review us on iTunes to help us reach a wider audience and follow us on Instagram at American building podcast, we all know real estate is a tough industry to make it.

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