Although relatively new to the multifamily sector, Secaucus, N.J.-based Hartz Mountain Industries sure knows how to double down: On May 11, the company announced that it has purchased the 52-story One Superior Place high-rise in downtown Chicago, a market that often sees friendly one-upmanship on both the acquisition front by apartment stalwarts including Fifield Cos., The Lynd Co., and Waterton Residential.
With 809 studio, one-, and two-bedroom apartment units, One Superior Place—which features in-unit washers and dryers, private balconies, a sundeck with fire pits, fitness center, and 24-hour doorman—increased Hartz’s multifamily residential ownership portfolio to 1,618 units, including 524 units in The Monaco, the newly opened Jersey City high-rise comprised of two 50-story towers on the Hudson River.
With a mission to triple their portfolio size over the next year or two—both by acquisition and development—Hartz Mountain Industries president and COO Emmanuel Stern sat down with Multifamily Executive senior editor Chris Wood this week to talk about moving into the apartment sector.
MFE: What can you tell us about Hartz Mountain Industries and your multifamily residential footprint?
STERN: Well, the residential footprint is sort of the newest chapter in Hartz Mountain Industries. We are a privately-owned, family business, and a couple of years ago, we decided that it made sense for the foreseeable future to layer in a multifamily division, both through ground-up development and acquisition.
MFE: And how have those opportunities arisen?
STERN: Well, obviously One Superior Place exactly doubled our unit count. We began construction a month ago on 122 units and have entitled another 570 units, and I’m continuing to look for new acquisitions. We have 38 million square feet of commercial space, and I expect in a few years to have a few more thousand units of multifamily apartments under ownership.
MFE: The Monaco was ground-up construction, while One Superior Place is a straight acquisition. What’s your philosophy on build versus buy?
STERN: What we are looking for is core properties with high barriers to entry. At the end of the day, our DNA is that of a developer, and we certainly have developed the vast majority of our portfolio. But I see us acquiring just as much of our residential portfolio as we develop ourselves, acquiring more as a percentage than we have historically with other commercial properties.
MFE: From the tallest residential towers in New Jersey to 52-stories in Chicago’s Gold Coast, it seems like you like high-rises?
STERN: No, up until the Monaco, we had four assets comprising 270 units all in northern Bergen County, N.J., and plans for the 122-unit development called Morris Crossing in Morristown, N.J. Right now, we are in construction of a five-story, podium, stick-built job. So we’re not concentrated on a specific product type.
MFE: Chicago is a pretty competitive market. What did you make of the competitive pressure for assets?
STERN: Fortunately, this was an off-market transaction and not an auction process, so we were not subjected to that competition.
MFE: Outside of the New York metro and Chicago, what other markets have your attention?
STERN: There is nothing that is targeted in terms of market. Geography is not the priority. The priority is a high-quality asset that has a compelling story. We feel comfortable that we can identify and understand those stories as we underwrite and go through due diligence on properties.