When something’s never been done before, it can be difficult to visualize the end result. At least, an end result that’s a success. For some, the thought of the unknown is a nonstarter. They’ll just stick to what’s conventional and keep moving forward.
But there are others who approach each opportunity with an open mind, and possess the ability to envision what’s ahead, like a chess player mapping out his next three moves.
John Zeledon, who’s responsible for all development activities within the Jacksonville, Orlando, and Tampa, Fla., markets as managing director at Alliance Residential, fits the latter description.
When you work for one of the nation’s biggest apartment development companies—ranked second, after Greystar, on the 2017 NMHC Top 25 Developers list—staking millions of dollars and years of company time, energy, and resources on something “new” is daunting. You must envision the possibilities while also persuading a few associates and equity partners that the vision will become a reality.
Most of all, though, you’ll have to believe wholeheartedly that the “new” thing you’re sold on will be a success.
For Zeledon, that last requirement didn’t take long after meeting the team from Finfrock in 2015. The Apopka, Fla.–based modular builder prides itself on being a “one-stop shop” for companies like Alliance. On a given project, it serves as the architect, engineer, contractor, and supplier. Powered by its proprietary technology, Finfrock does nearly all of its work inside its 93-acre manufacturing facility.
“It’s not only about the modular aspect of our construction, but it’s really also a lower-risk play [for the developer] in that we [assume the] risk for the design and build of the building,” says Bill Finfrock, the company’s president. “So if there’s any problem with the building, we designed it, we built it, we’ve got no one to point at but us.”
So far, there hasn’t been any finger-pointing in Alliance’s partnership with Finfrock as the latter constructs a seven-story, 268-unit, market-rate building for Alliance in Winter Park, Fla.; Broadstone Winter Park is slated to open in early 2018.
To get to this point, though, took a lot of convincing.
The Deal
Finfrock has had a relationship with master developer Dan Bellows for roughly 20 years. A parcel of land in Bellows’ mixed-use Ravaudage development was marketed to multifamily developers a few years ago and secured by a small firm from South Florida. That firm hired Finfrock to work on the schematic design and help get site-plan approval from the city, but the company couldn’t get its equity lined up and had to back away from the deal.
Once Alliance came in and put the site under contract, its executives met with Finfrock “as a courtesy,” according to Bill, since his firm had already done months of conceptual work on the original project.
When initially meeting with the Finfrock team, Zeledon recalls there being some hesitation from the Alliance side since it usually builds internally, although, in Florida, “if we go concrete, we entertain the idea of going third-party.”
But this wasn’t the typical third party.
Although Finfrock has been around since 1945, it had never built a market-rate apartment building before, though in recent years it had begun building student housing developments and opened its own hotel in Naples, Fla., last year.
The 183-room hotel, Hyatt House Naples, was built in part with the intention of showcasing Finfrock’s product to multifamily developers. “We knew it would be tough to get the first person to sign off on this, so I found a site in Naples,” Bill says. “Precast has always had the reputation that you can’t build a beautiful building, but we set out on this project to prove that’s not true. This turned a lot of people’s heads.”
Zeledon toured the hotel shortly before it opened and was impressed, but there was still apprehension. “Do we want to be the first ones to try this and to be committed to it?” he recalls pondering. “In talking with my senior partners, the first response was no.”
—John Zeledon
After seeing the hotel and Finfrock’s manufacturing facility firsthand, however, Zeledon was sold. “At this point, I was already mentally committed to it,” he says. “I thought it was something I wanted to do.”
But to get his colleagues at Alliance to sign off, Zeledon asked them to make a trip to the Orlando area and take the same tours he had. “After that, my senior partners were likeminded,” Zeledon says. “We were in agreement to move forward with the Finfrock product.”
Since Finfrock was new to apartment building, though, Alliance ran what Zeledon calls a “dual process” where it hired “a traditional architect and a traditional group of consultants” while Finfrock “worked in parallel” until everyone at Alliance was comfortable.
Also during this time, Zeledon had to get the company’s partners and lenders comfortable with Finfrock, a task that involved many more tours of the hotel and manufacturing facility.
“Just working with them for the first six weeks, I was so incredibly impressed that they invented this product, they were committed, they built a hotel to prove it can be done, and because everything is in-house, the speed at which we can make changes and evaluate those changes architecturally, structurally, and economically got me to the point where I became very comfortable with their commitment to see this become a successful project,” says Zeledon.
Permits were submitted in October 2016, financing was closed in January 2017, and a week later, Finfrock began building.
The Build
Finfrock had only to do some minor changes to the design it had originally conceptualized to better suit Alliance’s needs. Once the green light was given, Finfrock put to use its DualDeck technology, a product Bill says took more than a decade to produce.
The DualDeck is two slabs of precast, prestressed concrete joined together by a steel truss. Finfrock models the entire building and all the precast components using its proprietary 3-D modeling software. The software transmits information to lasers for precise placement of all building penetrations and subsystems.
“Once it’s right in the computer, it’s right in the manufacturing facilities because the lasers automatically tell you what to do,” says Bill.
The precision in-house cuts down on the possibility of change orders, which slow down projects and cost money. “As an owner, I would want someone like us to take the entire risk, build my building, design my building, and make sure it’s operational, because a lot of modular guys will say, ‘Here you go,’ and set it down, and it’s up to someone else [to realize it didn’t work],” Bill says.
On the Alliance project, Finfrock has used trucks to transport the concrete slabs to the construction site, where cranes then put them in place. Since most of the building is constructed in the facility, there’s less work for subcontractors to do on-site.
“When you get to the field, you just paint the concrete ceiling and you roll carpet on the floor,” Bill adds. “There’s no floor prep, there’s no toppings, there’s no drywall ceiling.”
It’s a process Zeledon has come to enjoy. “I’ve been doing this over 25 years and they offer what I consider one-stop shopping,” he says. “You’re not coordinating a number of consultants; you’re calling one guy to get the building built.”
At the start, Finfrock told Alliance it could have all the units delivered in 13 to 14 months, but Alliance asked to slow the construction schedule down in order to better meet its leasing pace. “They actually moved faster than we needed them to, and part of what I had to convince my partners and our financial sources of is that we could build it at this speed,” Zeledon says.
The first 40 units will be delivered in January, and then 40 more will be delivered every three weeks or so thereafter, according to Bill.
When Zeledon went to get builder’s risk insurance for the project, the underwriters couldn’t believe the expected time frame. “The underwriters were saying that there’s not a project that they underwrite across the country that can be built that quickly; in fact, they’re getting extension requests from all over the place because of the delays at other projects,” says Zeledon, adding that Alliance essentially paid half what it normally would for the insurance.
Finfrock built its hotel in 12 months, as opposed to the usual 20 to 22 months for a hotel of comparable size, Bill says. That was worth nearly $2 million in both the income Finfrock made from having an operational hotel and not paying construction costs for another 10 or so months.
Moving Forward
According to Zeledon, any company that puts a sign listing its phone number on the fence protecting the Winter Park construction site gets flooded with calls from interested renters. Alliance began marketing the building in October, with rents ranging from $1,300 to $3,000 and floor plans from 527 to 1,635 square feet in studio to three-bedroom configurations.
Alliance and Finfrock have already teamed up on another project in Orlando, on Lake Ivanhoe. The project calls for up to 260 units and will break ground in 2018’s fourth quarter.
The two firms are looking for more projects on which to team up as well.
Zeledon, who took a chance on Finfrock, refers to the company as his “secret sauce,” but he doesn’t think it’ll be a secret much longer, due to the high-profile project they’re about to open.
“My only concern is that everyone [will discover] it, and [he’ll] no longer [be] my go-to guy,” Zeledon says. “I’m my own worst enemy, because I tell people to visit. I don’t want to keep an opportunity from Finfrock. There may be deals that I either can’t do or won’t do but other groups will, and I’d like to see this product more accepted.”
In a world of shrinking land supply, tighter budgets, and labor struggles, that product may be more widely accepted sooner rather than later.
