It's often said you learn your most valuable lessons from the most difficult times. That would be the case for Marshall Tycher, principal of Roseland Property Co. in Short Hills, N.J. As a regional partner for the Northeast Lincoln Property Co. in the early 1990s, he experienced the real estate recession firsthand. "That recession taught me about urban infill," Tycher says. "I saw that the closer-in locations did better than the more suburban locations" when the economy is suffering.
Since then, Tycher and his fellow principals at Roseland, Brad Klatt and Carl Goldberg, have put that lesson to good use at the New Jersey-based multifamily firm. During the past decade, the trio has assembled a pipeline of more than 13,000 units, many of them in now-popular (and profitable) infill locations. As impressive as that is,though, obtaining well-positioned land is just one piece of the three-part program that has made Roseland a worthy competitor to the public companies and family empires that dominate real estate in New York and Boston. To move to the head of the class in Boston, New Jersey, and Virginia, Roseland also has had to master two other key multifamily disciplines: property management and construction.
"These guys are first-class in everything they do, from the first time you drive up to the project right down to the finishes in the units, the amenity packages, and the employee base," says James Fontana, senior vice president of Wachovia Bank's commercial real estate division in Union, N.J.
Lender Fontana raves about Roseland's overall operation. If you ask him what's most impressive about the company, it doesn't take him long to answer. "They've built a group of employees who are enthusiastic and energetic about what they do," he says. "From lower-level employees to senior management, they focus on customer service."
Visit a Roseland property and you'll see much of the same. Whether it's Bill Martinez, a doorman at the Marbella in Jersey City, N.J., complimenting a woman in his Spanish accent, or an impeccably dressed Kent Bullis, director of leasing and sales at the New Jersey waterfront, leading a tour at Port Imperial along the Hudson River, you feel like customer service really is number one at Roseland. The numbers back this up. According to M/PF YieldStar, overall occupancy rates last summer were at 95.7 percent in Boston and 97.4 percent in the New Jersey markets where Roseland operates. At Roseland, those figures are higher. "We run at 96 [percent] to 98 percent," says Sharon Kurtz, a partner in the company. "If we drop below that, it's a market issue. If we're above, our rents are too cheap."
The company's high occupancies speak to its culture, which reveals itself in the three principals as well as the energetic, aggressive group of junior partners that are involved in key decisions. "When I come in [to work on transactions], they bring the junior folks in and take them through the whole transaction," Fontana says. "They take the time to teach them and bring them up to speed."
While the temptation for a company skilled in obtaining sites, development, and building may be to outsource property management, Roseland didn't even consider it. "In the apartment business, having your own management is critical," Tycher believes. "You don't want to rely on a third party for creating the satisfaction that gets you the rents you put on paper."
At Roseland, area directors, who run six to 10 properties, and three regional directors who handle the New Jersey, Boston, and Virginia portfolios make many of the key decisions. "Our expectations of area directors are equivalent to regional directors and up in other organizations," Kurtz says. "That's the level of intelligence we want driving the cars at our communities. These are billion-dollar assets. I'm not going to hand the keys to anyone and say, 'Drive it.'"
The reliance on senior and area directors doesn't exclude property managers from decision-making. Property managers are responsible for setting their yearly budgets, managing on-site staff and product designs, and making pricing recommendations, which must be supported by either a spreadsheet or the Roseland "cruise ship"–a color-coded printout that shows the occupancy status of each unit at a property at a glance.
But, like many apartment companies, the ultimate leasing success at Roseland is most dramatically affected by leasing agents, maintenance staff, and other on-site workers. As a result, the company spends time and money to train and grow these employees.
That training starts on a new employee's first day, when he or she arrives to find their new business cards waiting for them. But they won't be using them immediately. "We have them blind-shop everyone in the market so they know what they're up against and what they need to be better than," Kurtz says.
When new employees return to their home property, they don't start their jobs then either. Instead, they work with their colleagues in different departments; a leasing agent may do maintenance or an accountant may staff the leasing office. The purpose is to help property-level people understand the jobs of those around them. "Can you imagine getting a service request that just says, 'There's a leaky faucet'?" Kurtz asks. "Well, what faucet is it? Let that happen a couple of times, and you get better at responding."
To further its training program, Roseland also hired two trainers, Neil Fjellestad and Carol Levey of IT Partners in San Diego, to spend two weeks every month with Roseland property staff. The two trainers provide fair housing guidance and other lessons, mystery-shop other properties, and, perhaps most important, get to know the property-level employees so they can be a resource to staffers.
The company also welcomes employees' suggestions and extra efforts, rewarding them by granting bonuses, saying thank you, and considering their ideas for improvement. "When a partner comes out and talks to a maintenance technician or leasing specialist and asks what they think, they're actually being heard and it's taken back and implemented," says Brenda Cordova, Roseland's president of residential services.
The level of Roseland's management team is matched by the quality of the company's urban infill land buys and resulting apartment properties. "Marshall has been very successful in getting some very interesting sites," says Paul L. Bordogna, managing director for Prudential Real Estate Investors in Parsippany, N.J. Prudential has been both a partner in a significant number of Roseland deals and an investor in the company itself. "Without that, no matter how good his construction or management expertise is, he's going nowhere."
The company developed its land pipeline by scooping up underperforming bank loans in the early 1990s. "Both developers and Wall Street firms were buying under performing loan portfolios," Tycher says. "We distinguished ourselves by being prepared to buy large amounts of land. A lot of the non-performing loan dispositions were buildings, but we were prepared to buy land."
As Roseland worked through the entitlement and construction challenges on these parcels, the market began to turn, with profitable results. "They sold many of those sites and used the capital from that to initially capitalize Roseland Property Company," says Jeff Journey, a senior client manager in Bank of America's community real estate banking group in Dallas and a longtime lender to Tycher.
But the company didn't sell all of its early assets. It still owns Port Imperial, a two-mile slice of land on the Hudson River with breathtaking views of Manhattan. Eventually, Port Imperial will include 6,500 residential units in a mix of condominiums, townhouses, and apartments; 1 million square feet of office space; a ferry to Manhattan; 375,000 square feet of retail; and a 300-room hotel.
Not surprisingly, given the complexity and scope of Port Imperial, the project challenged Roseland. "There were environmental constraints with the Hudson," says Goldberg, the Roseland principal who specializes in land planning. "We were looking at view preservation, traffic maintenance, and orientation of the buildings to the river, construction of the waterfront walkway–basically all of the issues involved in getting waterfront communities in urban areas approved."
Now that Port Imperial is on its way, Roseland is finding it easier to sell cities and corporations alike on its development proposals. "Roseland is not just somebody with a rendering," Bordogna says. "They've already done it. It gives them a tremendous leg up when someone can see what they've done."
Roseland's work has also attracted the attention of its home-building counterparts. K. Hovnanian, one of the 10 largest home builders in the country, is developing housing at Port Imperial, and Roseland just entered into a joint venture partnership with Lennar Corp., also a top 10 builder, to develop condos at the waterfront site and in Boston. Roseland will handle the construction, while Lennar will handle the sales. "We have great skills on the rental side, but we never brought our skills to their level on the for-sale side," Klatt says. "We're both improving each other at this early stage."
With high-end sites to build on, Roseland must build a first-class product. And, by many accounts, they do. "Their design is very good and the quality of their construction is good," Bordogna says.
The company focuses on a resort-style living environment, with high-end amenities, such as basketball courts, saunas, concierge service, pools, tiki bars, theaters, and a calendar of events that can keep a resident's organizer booked throughout the month. Behind this strong package is the principals' desire to always improve its offerings. "The senior people are involved on a daily basis with new construction," Bordogna says. "They'll walk the property and make changes as they go through on a regular basis. They learn from what they've done and always try to improve it."
This sprit prompted Klatt to develop the firm's successful RoseLink technology system, which includes DirecTV, surround sound, multiple phone lines, an intrusion alarm, and high-speed Internet connections, for each unit. "People [Roseland residents] kept saying they couldn't get on their computers from home," he says. "As you went to leasing centers and rental centers, it was so easy to see that there was a huge advantage in allowing these young urban professionals to work and communicate at home."
The company charges residents a mandatory $100 for this service. Convincing residents to take the package was easier than managing the diverse group of tech companies that provided the service in the 1990s. But when the tech bubble burst, so did many of the smaller companies. "The big providers understand customer service and cutting-edge products," Klatt says. "We've been fortunate that we've not had any loss even though we had a number of providers change."
Property staff members are also encouraged to offer their own ideas and strategies for improving the Roseland living experience. In the late 1990s, employees noticed that many residents owned personal computers. So Roseland began including personal computer stations in the units. Now, with laptops more popular, the company has removed those stations in favor of extra space. It has also made its closets larger and, in some properties, developed "Crayon Corners" for parents because of property management observations or resident requests.
These are just a few examples of how Roseland people, combined with its buildings and locations, make for a first-class living experience. "Everyone feels like they have a part in the design of the buildings," Cordova says. "It's important for our people to feel like they're part of the process."
Roseland adds a link to its technology chain.
Now, that RoseLink is taking off, Roseland is implementing a new technology system, called BuildingLink, that will allow residents to submit maintenance requests in their timetable. "It's better than having residents to walk to the office or make a call," says Sharon Kurtz, a partner in the Short Hills, N.J.-based multifamily firm.
The technology will allow the company's residents to file work orders online. The orders go to property management, the work is completed, and the resident logs on and closes out the maintenance order. "At the end of the day, management can pull a summary off the system and find out how long it took for the average request to be completed," says Brenda Cordova, president of residential services for Roseland Property Co.
BuildingLink also gives a resident the details on his or her apartment's maintenance visit. "The residents can see what happened, who was in their unit and what time they were in there," Cordova says.
Roseland Property Co.
- What: Urban residential and mixed use development firm, management firm, and general contractor
- Founded: 1992
- Headquarters: Short Hills, N.J.
- Units Started in 2005: 1,000
- Units in the Pipeline: 16,000
- Geographic coverage: Virginia, New Jersey, New York, and Massachusetts
- Revenue Sources: Project development, construction and management services, and sales of land, town-homes, and condos
- Employees: 220