Brian O'Neill doesn't have a college degree. He never even got a high school diploma. But who needs either of those when you have enough land to provide about $4 billion worth of apartments and condos?
The story of how O'Neill went from a high school dropout working three jobs to a real estate mogul is as unique as the man himself. Instead of relying on an Ivy League MBA, the fast-moving, plain-talking founder and chairman of O'Neill Properties Group in King of Prussia, Pa., amassed his real estate fortune by blending a potent mix of street smarts, doggedness, and salesmanship.
O'Neill carved out his niche by buying, remediating, and building office buildings on environmentally contaminated brownfields that used to house old mills and factories—sites that no one else would touch. He eventually amassed roughly 3 million square feet of office space.
Then multifamily caught his eye.
So now, O'Neill is selling some of his office assets and buying and building multifamily sites, where he sees the opportunity to increase both his creativity and profits. “I literally took my entire organization and did a 180-degree turn [into multifamily],” he says.
Many of O'Neill's longtime associates think he made the right decision. “Brian is a visionary,” says Charlie Fitzgerald, senior vice president and commercial real estate banking regional market manager for Bank of America, which has worked with O'Neill since 1997. “He is an expert on market dynamics, which gives him the ability to recognize trends, take action, and adjust course if necessary.”
Manufacturing Land As you walk through the scenic surroundings of Riverview Landing apartments in Valley Forge, it's hard to imagine there was once a paper plant there. The factory, which had been on the property since the 1950s, left quite a footprint. “It had abandoned, dilapidated buildings and environmental contamination that had to be cleaned up,” says Leonard Poncia, senior vice president and development principal for O'Neill Properties.
That included volatile organic compounds, or VOCs, in the soil and water. To fix this, the company needed to excavate the site and move the soil to an approved off-site landfill. “When you used to come here, all you would see were a bunch of beat-up, old, rundown environmentally contaminated paper plants and Lubin Studios [a silent movie studio that O'Neill restored and turned into artists' lofts],” O'Neill says. “It took 12 months, 1,000 people, and millions and millions of dollars to get it to look like it does now.”
O'Neill takes tremendous pride in his ability to turn around blighted sites like Riverview Landing. “A typical apartment guy says, ‘Give me a zoned piece of ground and I'll go build on it,'” O'Neill says. “But we're the manufacturers of ground, in addition to being the manufacturers of buildings.”
But the ability to manufacture developable land did not draw O'Neill to brownfields. He went to this difficult ground because they were the only sites he could find. “When I started my business, I had no money,” he says. “The only people willing to sell to someone with no money were people who had brownfield sites.”
Doing brownfields requires interaction with local and federal government officials. So, O'Neill got to know the regulators. One of these people, Jerry Nugent, now director of the Montgomery County (Pa.) Redevelopment Authority, first met O'Neill in the early 1980s. The would-be brown-field developer, who was then in his early 20s and looking for a business niche, made an immediate impression. “He is one of those unique people” who absorb information “like a sponge,” Nugent says. “He's an expert on these regulations, how they apply, and how to adhere to them.”
So is his staff. O'Neill and his employees describe their brownfield process in one simple phrase: “by the book.” They follow the EPA and DEP regulations closely, often planning to remediate the site before the company even buys the land. They will search records to see what factories were on a site and walk the site. To do this, they draw on their in-house expertise: Half of O'Neill's 100 employees focus on site assessment work, including master planning, zoning, environmental concerns, scrap, machinery resale, legal issues, and acquisitions. And they move fast. “It takes two weeks to know everything we need to know about it,” O'Neill says.
Then the O'Neill team crafts its plan. Since there is no such thing as a typical brownfield site, the company must develop a strategy to fit each location. In some cases, there may be land pollution, and in others there may be water or air pollution. Sometimes, all three types of contamination exist. “The longer the history [of the site], the more the operators did whatever they wanted to do,” says Richard F. Heany, senior vice president, project principal, and director of acquisitions for O'Neill Properties Group.
Costs can vary too, with the company's cleanup tab running from essentially nothing to $20 million, depending on the land.
Regardless of the site, O'Neill's track record and attention to detail helps him secure government assistance on many projects. “The team he has put together has become sophisticated at dotting all of the ‘i's and crossing all of the ‘t's and, as a consequence, getting significant public investment to help underwrite the costs of brownfield remediation,” Nugent says. “There are lots of developers around the country who are trying to access the same money.”
King of Prussia The appeal of the Riverview site (Riverview Landing is the first phase of the mixed-use project) was obvious. In addition to its scenic location next to Valley Forge National Park and the Schuylkill River, it was close to Rt. 422, which was completed within the past 10 years. When the highway opened, the King of Prussia Mall and a number of businesses became accessible to new communities. “All of those communities further out started clogging up traffic along 422 because there were too many people from farther away driving into King of Prussia,” Poncia says. “This 70-acre site is the first exit from King of Prussia off 422,” so the new residents will be closer to Philadelphia and spend less time on the road.
When O'Neill sees a site in a top-notch location, he goes all out to get it. Exhibit A: the Millennium, also built along the Schuylkill. This site, located in Conshohocken, Pa., will feature five towers totaling 1,086 luxury apartments and condominiums, an extended-stay executive suite hotel, 200,000 square feet of Class A office space, new retail stores and restaurants, a one-mile parkland, a central plaza, walking and biking trails, and a new Villanova University boathouse. “I chased that property for 20 years and through four different owners, but I finally got it,” O'Neill says. “Everyone else would have given up 18 years ago. I just kept plugging every single month until I got it.”
Now that O'Neill has developed a reputation as a brownfield developer, sellers and localities will come to him with sites. “I became known as the guy that corporations could sell to and count on when they wanted to do a restructuring,” he says. “I started getting calls from these big companies that had environmentally impaired sites. And, I've always done the right thing in townships, so then they call me when they have problems.”
O'Neill Properties Group usually buys about 95 percent of the sites it pursues, which are generally on the water, near major interstates, near major malls or shopping areas, and, most importantly, near Philadelphia's Main Line. “The Main Line is like the Gold Coast,” says Pam Bennett, executive director for the Greater Philadelphia Apartment Association. “Every city has its area and, in Philadelphia, the Main Line is money.”
And, the Main Line doesn't have much apartment competition, which makes the area even more enticing. “A lot of product in the suburban area is very old,” says Jerry Kline, a partner in the Philadelphia law firm of Obermayer Rebmann Maxwell & Hippel, which represents multifamily companies in the market. “It gets transferred from Class A to B to C to D. There's not an awful lot of new growth.”
That's because a difficult entitlement process and high land costs makes it hard for developers to find greenfield sites in the close-in Philadelphia suburbs. But that's not the type of ground that O'Neill wants anyway. Instead, he pursues blighted land, persuading development-wary neighborhoods that a multifamily project is far better than an abandoned factory site. “We develop a vision, go into the municipality, have some neighborhood meetings, try to get them to understand our vision, then we start writing the zoning ordinances from scratch,” says Michael T. Trio, senior vice president and director of land planning for O'Neill Properties Group. “We cover the bases and the NIMBY issue is mitigated.”
Down By the River Riverview Landing is O'Neill's first shot at the multifamily market. Sixty-eight of the 310 units in the first phase are now open. The pools, Jacuzzi, gym, and clubhouse (complete with a fireplace) all look out over the river. The amenities are designed with two demographics in mind: young professionals and empty-nesters. “We're taking this brownfield site and establishing it as a place where the BMW chicks and active adults want to live,” O'Neill says.
The units at Riverview Landing have nice carpet, washers and dryers, and high ceilings but aren't necessrily spectacular inside. “We don't need to do granite countertops to compete,” the developer says. “Our sites are so compelling.”
In 2005, O'Neill expects to open 1,399 units. As his quantity of apartments improves, he wants the target market to go up as well. He's already started to dabble in high-end condos in the Philadelphia suburbs, and he's recruited some famous firms to help out. In the Carnegie Abbey and Corinthian, Joseph Newkirk, a Ralph Lauren design consultant, is designing the sales models and the lobbies. O'Neill says he wants his condos to be known for “first-class everything.”
The price tag for his condos, which is almost $2 million for a penthouse in the Corinthian, also is first class, especially considering they aren't even in Philadelphia's popular Center City. “He has picked great areas to build,” says Loraine Rahm, senior advisor for Sperry Van Ness, who has been involved in the Philadelphia multifamily market for more than 20 years. “But they're not bringing the same for-sale prices or rental rates as Center City.”
It will be a challenge for O'Neill, who must persuade people, especially active adults, to pay downtown prices for suburban luxury. “There has been significant movement from the suburbs into the Center City area,” Kline says. “There's no question that people in their 40s, 50s, and 60s are coming back into the city in droves.”
But O'Neill is betting that quality product can keep these buyers and renters in the suburbs. Ridge MacLaren, senior investment director for multifamily in the Philadelphia office of Marcus & Millichap, thinks this bet will pay off. “The empty-nesters are moving back into the city because new product isn't being developed in the suburbs,” he says. “Maybe some people will now see that they don't have to go to Center City to get those kinds of amenities.”
While building and managing a new product is risky, those who've been watching O'Neill in business for almost the past 25 years wouldn't bet against him.
“He approaches everything with zeal,” says Jonathan Spergel, an attorney at the environmental law firm of Manko, Gold, Katcher & Fox who has worked with O'Neill on brownfield cleanups. “If he's not the best at it when he starts, by golly, he will be the best at when he's done. I have no doubt he's going to succeed in redevelopment for residential use.”
O'Neill Properties Group at a Glance
- What: A developer of brownfields and infill sites in the Northeast that is focused on luxury condos, apartments, luxury resort sporting clubs, Class A office space, and lifestyle retail centers
- Founded: 1984
- Headquarters: King of Prussia, Pa
- Geographic Coverage: Northeast, including Boston and Philadelphia suburbs, New Jersey, and Newport, R.I.
- Revenue: Initiated more than $500 million in new projects and added $2 billion of backlogs in 2004
- Units: 793 projected to be completed in 2005; more than 10,000 in the pipeline
- Value of Land in Development Pipeline: More than $4 billion
- Employees: 100
Management Initiation Conventional wisdom would say that if you're getting into the apartment business (after years in office ownership and management) and your core business is remediating brown-fields and developing those sites, you may want to look outside for a third-party manager in the customer service-intensive apartment market. But Brian O'Neill, founder and chairman of O'Neill Properties in King of Prussia, Pa., doesn't subscribe to this theory.
Instead, he believes in another adage: If you want something done right, do it yourself. “Our organization is so intense that we've never found an outside company that pays as much attention to the outside details as we do,” he says.
Still, O'Neill knew he needed experienced multifamily operators on his staff. So he lured talent away from companies such as Trammell Crow and HOME Properties to start O'Neill Management Services, a management and leasing operation. “I'm not going with our existing [office management] team,” he says. “I'm bringing in people who know what they're doing and letting them build their own team.”
Jim Quinn, regional development manager for O'Neill, arrived from HOME Properties to lead the management team. He has no doubts that his team will be up to speed when the O'Neill development machine starts rolling out units. “We will deliver a quality product to our residents, and we will offer exceptional customer service,” he says.