Meredith Marshall, co-founder and managing partner of mixed-income housing specialist BRP Companies, has spent the bulk of his career developing and preserving workforce housing properties in New York and other major metro areas. The New York-based firm’s projects have brought online more than 1,000 units at a time when there’s a severe supply-demand
imbalance of reasonably priced housing in infill areas. But in a recent interview with REFI, Marshall posed an important question: is the U.S. in the midst of a housing crisis – or it is suffering from depleted infrastructure?
“We can’t move people to and from cities like New York quickly because of our aging infrastructure. You could extrapolate, given the amount of time it takes to get from New York to Philadelphia, for example, that we’re having a false housing crisis – the real problem is infrastructure,” Marshall said.
By car or train, it takes about 90 minutes to two hours to get from New York to Philadelphia, which has a substantially lower cost of housing. Marshall, who traveled to Beijing several times over the past five years, pointed to the concentric circles of transportation that make commuting exponentially faster in that city. “Our financial services, entertainment, and clothing are cutting edge. But our infrastructure and political systems are a lot older,” he said.
The firm, which invests via a series of private equity funds and joint ventures with partners that include Goldman Sachs, seeks mixed-income deals in parts of Brooklyn and the Bronx and also looks farther afield, in parts of Baltimore and Philadelphia. “We’re at the forefront of the mixed-income model,” Marshall said.
BRP’s tack is a bit different from its peers, with the firm pushing for sustainability in all of its projects. In some deals, this means that BRP is the developer – and the utility company. “We provide heating, cooling, and electrical utilities for both business and residential in three or four of our deals, and have some LEED Gold standard [properties] because of that. Sustainable elements are always important,” Marshall said, noting that this focus can be hard to pull off. “The theoretical approach works but the practical is always harder. You find in many cases, however, that it’s better or less costly to implement sustainable strategies over the long-term.”
The firm got its start as BRP Development, renovating brownstones and underperforming multifamily assets in Fort Green and Downtown Brooklyn. With about six properties in its portfolio, BRP expanded into Harlem and Philadelphia. After several years of growth, the firm joined forces with Goldman Sachs Urban Investment Group and received a $20m commitment. To date, Goldman has invested more than $600m, including construction financing, mezzanine equity, and acquisition financing on roughly three-quarters of BRP’s projects.
BRP has grown steadily over the past 10 years, with projects under development rising from about $80m in 2007 to more than $1bn of planned projects in its pipeline. “When we first started, it was friends and family and we were building 20- to 30-unit buildings, competing against normal developments in the city,” Marshall said. “We built up credibility on the public side and learned how to navigate the system. Moving forward, we expect some private institutional investors as well as public pension funds.”
Projects in the works include Caton Flats, a 14-story, 277,000-squarefoot, mixed-use property in Brooklyn’s Flatbush submarket. The property, at the corner of Caton and Flatbush Avenues, is comprised of 212,000 square feet of residential space and 23,000 square feet of retail development in the heart of a neighborhood that’s historically been a hub for Caribbean immigrants.
The project includes an expanded Flatbush Caton Market on the ground floor level, additional retail, offices for the Caribbean-American Chamber of Commerce, and two business incubators. “This will remain a cultural center for new and existing Caribbean folks,” Marshall said.
The company is also working on another major development in Queens, Jamaica Crossing. “The city rezoned a large swath of downtown Jamaica in 2007, allowing for a 50% increase in the number of units – no one did anything until 2013,” said Marshall. “It’s the right zoning but it needs someone to take a big plunge to get it done. [The planned building] looks like a market-rate design in Battery Park.”