DALLAS LUXURY MULTIFAMILY FIRM NAMES NEW CEO WITH VISION FOR WORKFORCE HOUSING
By Claire BallorStaff Writer, Dallas Business Journal
Brad Taylor started his career with Dallas apartment developer JPI as a property manager at one of the company’s first apartment buildings in Las Colinas. Now, more than 25 years later, he will take the reins of the national multifamily firm.
JPI announced Thursday that Taylor will replace Bobby Page as CEO of the company. Page, along with co-founder Ron Ingram, President Mark Bryant and Chief Financial Officer Kirk Motsenbocker, will sit on the board of directors.
Taylor spoke with the Dallas Business Journal about his new role and the workforce housing plans he has for the company known for luxury living.
What is first on your agenda as CEO?
This is our 30th anniversary, so it’s an exciting time for us. And that doesn’t change our business plan, but it is a milestone for our company. Our business plan today is that we’ve started about $800 million a year in new multifamily annual production starts. We’re really focused on two major markets – southern California and DFW, although we’ve developed in this cycle in Austin, Houston and Phoenix also.
My goal for the company is to identify a strategic platform capital partner that could provide opportunities for growth for JPI at large and our team members. So that will be a focus here in the next 12 to 24 months.
What do you think are some of the biggest challenges you’ll face in this job?
The challenge for all of us in our industry is the unknown, and that’s the economy. There’s always a risk of an unknown event triggering some economic reaction across the world, which with a global economy could impact our economy significantly.
We’re bullish on the economy, but we also expect property performance to look more like the long-term average with respect to rent growth and occupancy versus the way it’s looked the last several years. We expect more of a return to the historical averages versus the above-market performance we’ve had. And we’ve seen that already. We’ve already kind of moved that direction in the last 12 to 18 months. We’re watching supplies in the markets that we’re focused on and we’re tracking demand and watching the employment numbers. It’s those things that we can’t control that are always risk factors for our business.
Technology is kind of leading the way, and so I think the way we construct and the cost to construct our apartment homes will change. I think there’s a big opportunity in our industry that we’re exploring and spending some time and effort to understand a little bit better.
How do you see JPI changing in the future?
Our niche in the market would be higher-end product or renter by choice. It’s a higher-end product, more amenitized with a higher level of finish than maybe our competitors and such. We are looking at another business line, if you will, of workforce housing that we are spending some time and energy on. But today we would be recognized in the market as providing a higher level of amenities and design to our residents. I could see JPI having two different product lines going forward, and so that’s one opportunity for us to grow.
What are your plans for workforce housing? How do you plan to build it considering the financial barriers developers face in doing so?
It’s a DFW concern or issue, the affordability of housing. And it’s a national issue. I think technology will begin to change the way we construct the products. Technology has changed the way we lease up and operate our assets, but we still put the box together the same way did essentially 50 years ago. We’ve updated amenities and finish materials, but there’s been no change in the construction industry.
I think we are entering a disruptive era for change in the construction industry and I think it’s likely that modular housing will become a bonafide product here over the next few years.
Everything above the foundation is fabricated in a controlled environment, and you have a higher quality than field construction, and it would be brought to the site, unloaded and put together. This really hasn’t been done in the multifamily world to this level. We hope to be on the front end of that. We haven’t delivered a full modular project yet, and I think that will happen in the next 12 months.
I think it will be a definite option for the workforce housing, and I think there’s an opportunity where it could work on certain sites for a luxury product.
When do you think you could deliver your first workforce housing apartment building? Is it a matter of waiting on the right technology to be able to do it?
There is a modular technology piece that we’re watching closely. But separate form that, JPI is working on another workforce housing line that is non-modular; it’s a site-built product. So we’re working on both of those avenues. The expectation is that we might be able to introduce this in DFW by the fall of 2020. Our goal is to start a project in 2020 that would try to meet some of the demand for workforce housing.
Where in North Texas might you launch your workforce housing projects?
It’s a big metro. I think there are some opportunities with some cities that are trying to solve workforce housing needs and might be more aggressive than other cities. We’re talking to a number of cities to see what their needs are and how JPI can help cities solve their needs. I think right now there could be lots of opportunity in the DFW area.
The trick with this or the dilemma in the past is how can you build effectively at a cost that makes sense to hit a rent level to meet this target audience. Land costs continue to inflate, city processes are longer and harder than they were yesterday, so those things combined drive up the cost of a project. So absent of some significant changes in the way we build the product, I don’t know how we can deliver the workforce housing.
The second side to this is there are incentives that governmental agencies may provide. We’re trying to attack it more on the construction cost side and how do we put this building together more efficiently.
This Q&A has been edited for brevity and clarity.