Sandy Albert
no renter cares looks at or thinks about or even knows what the rent per square foot they just don't developers say
December 17, 2024 · 52 min
The Future of LA Real Estate with Sandy Albert
With Sandy Albert — Commercial Real Estate Developer
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What this conversation gets into
Discover the incredible journey of Sandy Albert, a filmmaker-turned-commercial real estate developer, as he joins Taylor Avakian in this insightful podcast episode.
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Episode show notes
Discover the incredible journey of Sandy Albert, a filmmaker-turned-commercial real estate developer, as he joins Taylor Avakian in this insightful podcast episode. Sandy shares how his upbringing in Los Angeles, love for urban environments, and parallels between filmmaking and real estate inspired his pivot into development. Learn about CityPads’ innovative projects in Los Angeles and Chicago, their unique approach to creating affordable, walkable communities, and strategies for navigating the complexities of commercial real estate in Southern California and beyond. 📍 Key Topics Covered: Sandy’s path from filmmaking to real estate The impact of Los Angeles architecture and urban fabric CityPads’ projects: 700+ units across LA and Chicago Smart density and affordable housing strategies Challenges and opportunities in commercial real estate 👉 Don’t miss this deep dive into real estate development, creative problem-solving, and city-building! If you're interested in real estate investing or simply enjoy hearing how successful investors manage their day-to-day schedules, this episode is packed with both inspiration and knowledge. [00:07:50] Sandy's Journey: From Filmmaking to Real Estate [00:11:46] Introduction to CityPads Projects [00:12:14] Overview of Active Projects [00:14:21] LA and Chicago Real Estate Focus [00:16:59] Real Estate Development – Construction and Cost Strategies [00:18:23] Developing Real Estate Projects for Affordability and Lifestyle [00:20:19] Keeping Costs Low and Smart Design [00:28:51] The Future of LA Real Estate: Walkability and Public Transit [00:23:03] Parking and Urban Development [00:26:32] LA Housing Market and Rent Pricing [00:27:42] Personal Branding and Real Estate Marketing [00:33:14] Regulatory Challenges and Competitive Advantage in California [00:35:25] Construction Costs and Yield on Development Projects [00:37:14] Challenges of Developing in High-Cost Markets [00:38:14] Capital Markets and Investor Demands [00:39:14] Technology Integration in Real Estate Development [00:43:11] Fundraising Challenges for Real Estate Development [00:46:09] The Process of Raising Capital [00:48:57] The Role of Social Media in Fundraising [00:52:37] Prospecting vs. Content Creation [00:53:32] The Future of Brokerage Never miss an episode! Subscribe on your preferred platform and rate our show ⭐⭐⭐⭐⭐: 🍏 Apple Podcast: https://podcasts.apple.com/us/podcast…🎧 Spotify: https://open.spotify.com/show/0mqgyJK…📺 YouTube: / tayloravakian Visit us at 🌐 thegroupcre.com Connect with me: Website: https://www.thegroupcre.com/ Email: taylor@thegroupcre.com X: https://x.com/TAYVAY_ LinkedIn: / tayloravakian #LosAngelesRealEstate #MultifamilyBroker #LandlordTips #RealEstateInvesting #PropertyManagement #TenantScreening #RentalMarket #LosAngelesApartments #RealEstateStrategy #TaylorAvakian #ApartmentOwner #TaylorAvakian #RealEstate #CommercialRealEstate #LosAngeles #SouthernCalifornia #RealEstateDevelopment #SandyAlbert #CityPads #Architecture #UrbanDevelopment
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Episode transcript
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0:00–10:00
Taylor Avakian
it's just becoming more and more expensive to build and projects don't make Financial sense and so they're pulling back
Sandy Albert
and doing fewer um of them in La we're building to close to a 7 and 1 12% holy crap that's crazy 7 and 1/2 yeah the future of Los Angeles believe or not is not about cars and parking so much of your time and risk and construction is going in the ground and we're delivering a product that hopefully hits on hopes and dreams of people who would die to live on the west side of
Taylor Avakian
[Music] La welcome to no vacy where I share conversations with LA's top multi family owners investors and Visionaries I'm your host Taylor Vin the founder of the group SI and I specializ in the sale of apartment buildings in Los Angeles on this show we cut straight to what matters Market insights and real world strategies straight from LA's multif family icons to help you navigate one of the most complex real estate markets in the world Southern California enjoy I'm excited to welcome a guest who's shaping the landscape of two of the country's most complex and highly regulated markets Los Angeles and Chicago Sandy Albert isn't just any developer he's someone who grew up right here on the West Side in Los Angeles learned the ropes of institutional real estate in New York City and then came back to build groundup projects that blend thoughtful design and
Taylor Avakian
smart strategy he's raised over 20 million in equity has 700 units currently in the pipeline and has actively entitling two projects in West Los Angeles while Others May hesitate to tackle the challenges of LA and Chicago Sandy leans in brings a vision centered on walkability density and affordability let's find out what makes tick and how he plans to keep pushing boundaries in these Dynamic markets Sandy welcome to pod Taylor thank you of course man I'm stoked this is great I love um talking to people who are making waves in Los Angeles and kind of thinking about things differently and I think that's what I've admired about how you're um approaching the business right now and we've talked about it too and originally we connected on Twitter I believe right and you were on there sharing some development you know thoughts you're
Taylor Avakian
an active developer and I go I got to follow this guy like he's sharing stuff that I need to know you have skills and and knowledge that I've always wanted to in Vibe so that I could again just be a better broker so I'm excited to to fuel my Curiosities today and just ask you a million questions appreciate it so I want to start a little bit regarding the background and kind of some Market selection for you because you you developing in some very interesting markets so you grew up on the west side of LA and you cut your teeth and institutional real estate in New York how did those early experiences shape the way that you approach development today sure yeah I appreciate it
Sandy Albert
and thanks it's really great to be here and I'm impressed with everything that you've been up to and doing so it's uh it's a pleasure um yeah I mean I think look I'm a big city guy I grew up in Los Angeles I moved to New York City for college started my career here in La M back to New York for grad school so I mean Los Angeles and New York doesn't get bigger and batter than that and obviously you know now we're we're we're also active in Chicago um um so I'm you know I'm really an urbanist I'm you know I I grew up you know um I love you know dense Urban environments cultural environments Arts music food obviously being a Californian and and Angelino I also love nature and the outdoors and stuff and I think
Sandy Albert
that's arguably one of the most underrated parts of LA actually and one of the best parts but I'm I'm really a big city person and so I think that really affected me you know my father's an architect of almost 50 years here in Los Angeles so I sort of grew up not sort of I did grow up in and around the business and the built environment and um cities and architecture and planning and construction so that that that always affected me you know growing up here in La I actually wanted to be a filmmaker that's you know like the cliche thing but it's true I wanted to be a filmmaker either an executive producer or a director or like a you know a studio executive and I wanted to make make movies and and for me it was always about telling stories and people I've always been really really social
Sandy Albert
and good at organizing things and so um and also interested in business and and politics and stuff like that so I thought I want to be a filmmaker and um you know that's what I did early on my internships and everything in in film um didn't have the best experience on the ground and so then in college I decided I wanted to be a real estate developer and I really Drew parallels between you know the skills that it takes to be you know filmmaker producer executive producer Studio executive in terms of being the real estate developer in
Taylor Avakian
terms you was that um did you have friends whose families were in development or like what Drew you from creative obviously your dad was an architect but like it's kind of a 180 in terms of what you want to go and do was there
Sandy Albert
an influence on you that made you choose that yeah definitely I think my father being an architect was a huge influence and I think just drawing the parallels in terms of what skill sets are necessary to be successful in both Fields you know creativity storytelling communication work ethic Financial Acumen political Acumen you know there's it's you know you're wearing so many hats and both I think are really entrepreneurial totally at any level um um and so I I think I drew a real parallel there um and then I've just always been passionate to your original question I've always been passionate about cities and the built environment and places I love going to places I love going to restaurants and museums and you know walking the the streets um and
Sandy Albert
so it you know that kind of clicked in my mind mind very early on and I was like ah I want to be a real estate developer got it and that that was in college and this is like you know 20 years ago
Taylor Avakian
yeah gez that's crazy was do you remember an experience either in a big city or um in a you know some some Grand architecture or something where you were just fascinated or or that moment where you saw a piece of something that was built and you're like I want to
Sandy Albert
build that yeah I think growing up in La actually people don't you know
Taylor Avakian
people don't give La it does have its like uh prowess for being known as a great architectural city yeah well right
Sandy Albert
I mean it doesn't not necessarily not like places like you know Chicago and New York with the history there skyscrapers and all that but you know uh towards the end of high school I really started I really started exploring Los Angeles and going out and getting sort of developing an appreciation for the built environment and the urban fabric of Los Angeles which is really interesting obviously historically chronically low density you know um but there really is a a unique Urban Fabric in La you know the difference between the west side and West Hollywood and Hollywood and all the N neighborhoods on the east side and the topography and you know the buildings are obviously not as old as they are other places our old buildings here are like 100 years
Sandy Albert
old and the old stuff is like going back to the 40s and the 50s and 60s but still there's really cool there's really cool Urban Fabric and architecture so I think that's what um first sort of sparked
Taylor Avakian
my curiosity and then why um let's I want to dive into the projects that you're working on right now so could you tell us a little bit about the LA projects and then the Chicago real estate that you are working on and own as
Sandy Albert
well definitely appreciate it so yeah we have City pads first of all is myself and my business partner Andy ATO um who's based in Chicago I'm based here in La I'm biased but I think Andy is one of the if not the best department developers in Chicago so I'm lucky you know we're lucky we've got a great team um and um we have 700 units across LA and Chicago across five projects and assets in various stages in operations Construction development um we have investing out of our own GP fund right now that we've raised um so we delivered we we delivered 125 units in Evanston Illinois in March of this year which is fully stabilized wow great project
Sandy Albert
fully stabilized 96% occupied gez um we're under construction on 132 units above 9,000 ft of retail in Lincoln Park Prime Lincoln Park Chicago you know half a block from uh Whole Foods and you know a block and a half away from an Apple store we broke round on that this this summer in August um so we're really excited there this 132 units above 9,000 ft of retail and then we have two projects here in West LA right adjacent to Culver City you know less than a 10-minute walk to Helm's Bakery and Ivy station and Apple's new campus that they're currently under construction for and platform
10:00–20:00
Sandy Albert
and downtown Clover City so we're doing two projects um for a total of 218 units the first project is a 92 unit project which will be fully entitled on hopefully by the end of this year by the end of this month and ready to break ground on in May of next year wow uh for 92 units um and then the second one in West LA will be ready to go vertical in the beginning of uh 2026 and that's another 126 units uh and then we are um pretty much entitled and almost done with predevelopment on another 230 units in Evon Illinois uh right near the one that's operational currently uh that'll be ready to breakr in in June or July of this year got
Taylor Avakian
it wow geez that's incredible and it's all kind of seems to be happening in a very short time span but I know it's been many years um and The Works can so I noticed that there very close to each other can you talk to me a little bit about like why why those locations specifically and what is your thesis regarding those those properties those locations those areas neighborhoods sure I really appreciate it yeah I mean
Sandy Albert
look that's the that's the like this gets into the DNA of City pads and who we are as an investor developer we are extremely focused you know we were talking we're chatting and we're like you know we're extremely focused we are Los Angeles and Chicago it's all about creating relative affordability and attainability in locations and sites that are really sort of walkable and well Lo located with proximity to really great neighborhood retail you know coffee shops and restaurants and bars um um and hopefully jobs you know we've seen in our experience I mean you know I've been in the business 20 years I worked for family offices in New York large developers in New York I worked for a very large Venture Capital
Sandy Albert
back Technology based operator my partner Andy's been the business over 25 years used to um run and own the largest apartment marketing and leasing company in Chicago so we have a real deep background in multifamily operations and ownership and you know I think what we've noticed what I've noticed is that the the national renter by and large cares about two things price and location interesting and so our thesis is really to deliver you know a low chunk price product for the renter in great locations that are otherwise just unaffordable and unattainable where people want want to be how do you uh make the numbers work for something like that yeah exactly and that that's another thing like so we're building to you know higher yields on costs
Taylor Avakian
than most other developers okay so I want to I like to get nerdy about it so like what's the what was the land acquisition cost what are you guys underwriting for in terms of the cost of construction and so like what's the basis going to
Sandy Albert
be when you're out of the door sure so the you know the land acquisition cost is all across the board it obviously differs LA versus Chicago but I'll give you an example I mean on our West LA stuff we're in on the dirt for $67,000 a door wow jez man you know and this is Prime West that's crazy city of Jason so we're really excited about that it's not easy to do that you know we you know it this is comes together over over years um but this is what we've been doing putting together over the past two three years in environment when you know yeah you know not many people are really excited in about or had been excited about investing in LA and Chicago not many people we were talking not many people were excited about ground up multif family but meanwhile you know
Sandy Albert
as Wayne Gretzky used to say you're you're you're skating to where the puck is going not to where it's been you know what I mean yeah for sure you got to
Taylor Avakian
be out ahead so 67 per uh land unit what are you guys estimating in terms of construction cost sure and that so
Sandy Albert
but it it's I think it just before you know I'm I dive into that it's all it's also about the product and our thesis okay so our thesis is about great locations that have a real argument for walkability and Transit that are viable in terms of walkable and neighborhood retail and also jobs and Transit you know renters now something that I debate too after post pandemic you know I think renters City dwellers care about the the vibe and the environment on where they live you want to enjoy the place that you live because you can you know some people go to an office but you can still do a lot of working from home so you got to have those neighborhood amenities great coffee shops great restaurant gym yoga stud you know I mean totally that
Sandy Albert
so that's the idea and then we're stick frame developer so type three type five five to seven stories and we come from a density background you know we sort of experts at density MH but what we're using is relative density smart density smart design it's it's all about it's all around the edges all of the alpha or the value is created the devil's in the details okay so so okay so I'll a specific examp you know smaller Studios and one bedrooms okay so you know instead of doing six or 700 foot one bedrooms where a lot of the Legacy product or Legacy developers are doing or have done or doing 500t one bed bedrooms got it you know yep or you know maximizing space exactly well
Sandy Albert
well designed well laid out and on the studios we're doing you know 400 foot studios Okay so denser smaller shoos what does that do it drives down chunk price to the renter know a well-laid out well-designed new construction unit that drives down in a great location that drives down chunk price to the render but what does it do with the squ on the real estate increases bar for squ on the real estate but no renter we talk about this all the time all the time and we argue this till the cows come home with any Institutional Investor as well and the the smart investors totally understand this no renter cares looks at or thinks about or even knows what the rent per square foot they just don't yeah you know they just don't and you can you can tell like okay a renter can probably tell the difference between
Sandy Albert
you know 650 or 700 foot unit versus a 500 foot unit but nobody knows the difference between a 550 foot unit and a 500 unit 25 or 50 or even 75 sare feet it's very hard to tell so it's all about the architecture light and air quality so what is that so drives down chunk price to the renter increased dollars per square foot in the real estate now we're creating value and yield there um really smart wood frame construction that we're we're experts at low cost it it in LA for for example we're even we're even going type five as opposed to type three we get like nerdy and detailed about it so we're staying at we could go on our West LA stuff we could go six or seven stories at least six stories but we're staying to five stories it's uh a four over
Sandy Albert
one construction so four stories of wood over one story of concrete that allows us to stay type five as opposed to going type three which is an extra fire rating you know um increases cost a little bit so we're really trying to keep costs as low as possible um and then you know we're talking a little bit you know on our Los Angeles stuff and certainly in Chicago so we're not building you know we're an urban infill Transit oriented developer so we're not building a ton of parking you know we're not going Subterranean we're not we're certainly not going Subterranean in Chicago obviously as a urban fully transit or in city so we're staying on grade okay that saves a tremendous amount of cost and here La the future of LA and I'll you know we'll I'll let you you know I'll stop in it
Sandy Albert
in a second the future of La in my opinion I think this is like you know if there's if there's one thing that also maybe SE separates us is we and I firmly believe the future of Los Angeles believe it or not is not about cars and parking it's not I love my car I will always drive a car I love driving a car in California but actually the future of a of an equitable attainable exciting vibrant healthy fun Los Angeles is about density public transportation walkability biking you know all that stuff and so you know by really focusing on locations and sites that are truly viable from a neighborhood retail and jobs and Transit standpoint where you can walk we're not building going Subterranean what does that do saves a tremendous amount of construction
Sandy Albert
costs by not going Subterranean and time and risk and money so much of your time and risk and construction is going in the ground and cost we eliminate all of that so how many parking spaces for the 96 92 unit yeah so there'll be SE so we're saying it's on grade okay the first level is as much parking as we can get typically we're still doing really great amenity spaces on the bottom floor we typically do like a co-working lounge is one of the most well-used sort of smartest amenity spaces in multif family you could do right now we we along with roof deck
20:00–30:00
Sandy Albert
so we're doing 17 parking spots for 92 units okay
Taylor Avakian
wow yeah what okay so because I get this question a lot when I talk to developers especially because of ed1 as you're familiar which is the emergency directive one basically it allowed developers to build um a a huge amount of density with very minimal parking yeah and so I always get the question especially even on existing stuff is like I want buildings with parking like tenants want parking tenants the rents that I'm going to get on a building with parking versus non-p parking is significant Andor the lease up time is going to take a long time sure how are you guys looking at the risk reward of obviously in the future right with wh Mo and public transit getting better and things like that if you're looking 10 10 15 years down the road I think that makes a ton of sense sometimes though the market timing can be tough
Taylor Avakian
because the tenant and the renters in the next immediate future when you guys got to rent this up maybe the we're not there as a society yet as a culture yeah how are you guys underwriting the the risk and I'd be curious to know the rents comparative to the market sure I would push back a little
Sandy Albert
bit there I think the future is in many cases already here I mean we literally have Whos on the streets of M already yeah we already have new Transit expo line that didn't exist 10 15 year years ago if you look at what the transit map looks like you know for the o here in LA in 2028 it's even more robust if you look at the transit map which is by the way all the funding is there it's happening it's being built this is not like a you know this is this is for sure um going out five 10 years it's a legit transit system and Whos and Driver car is already you know the future is like basically here um now that being the case to your question also we're using new state law AB 2097 which says which
Sandy Albert
allows developers to build as little as much or as little parking up down to zero parking as they want if you're within a half mile from a major TR Transit stop this is legislation that got passed La last year a lot of people think this is a great thing for housing production because more housing for people less H housing for cars the truth of the matter is I'm getting to your question I'm going to answer your question sly because I know you the truth of the matter there's tons of parking in La yeah tons of parking tons of lots tons of garages tons of street parking most people in La don't want to like they want to find like street parking right outside of where they're going they don't want to go to like a lot or a garage even to block away but so there's tons of parking so
Sandy Albert
the answer your question not only is the location the locations that we're building on viable from a walkability standpoint neighborhood retail in transit but there's actually tons of Street parking tons of street parking and there are ancillary Lots like within you know a 5minute walk of the site that if people have a car they can park at we anticipate a lot of our tenants will not have cars um but for the tenants that do have cars we have at least three options one option so you pay for unbundled parking in the building which is going to be expensive you can do street parking which a tons of rent rent in Los Angeles yeah I do street parking do street parking yeah or there are lots available that offer um parking for a monthly rate um very close to the
Sandy Albert
site um and we were probably going to try and make deals with those now to answer a question on price also so our studios in West LA will hopefully go for around 2600 okay brand new and one bedrooms at like 3 Grand 3100 in a in a West La Mar Market where you have Studios easily going for three grand and above and one bedrooms you know 4,000 $4500 is not not uncommon yeah yeah so we're a discount we're a chunk price discount to a lot of the other new product in West LA and that's that's what we're excited
Taylor Avakian
about and so given that you kind of have this very unique renter ICP like this profile of the renter what does that look like and how does that shape the marketing around the asset because especially in today's world and I'm seeing it I just saw a video of Steven schwarzman of of uh Blackstone literally doing like uh J he he they just bought Jersey mics and he was eating the Jersey mics and he was doing social media for Blackstone ST schwarzman which was just blowing my mind I saw that right it was crazy and so clearly like marketing and the way that you're um showing the asset and wanting to pitch and tell the story so like give me the story specifically or this one that's going to be newer like what is the the vision for that building in particular and how do you think
Taylor Avakian
about that and how do you craft that and does that go in from the beginning when you find the land to like okay this is
Sandy Albert
our story I appreciate that and that comes back to like storytelling yeah I think that's the most fun thing about being a developers you get to tell a story I love that I'm the director exactly I'm obsessed with with film and and art and music and storytelling and I think that's what people it's a little bit cheap easy in real estate but that's what people care about and gravitate towards the these are people's homes these are not cheap rents yeah you know what I mean so we gota you got to bring it you got to come with it you got to tell the story you know bring the the design uh make it fun um and so we think about that all the time and that starts with the architecture light and air um a huge on branding we work with some fantastic branding companies and interior designers interior
Sandy Albert
design companies um and really I'll say this La is a Cosmopolitan Global City New York and LA are the two Cosmopolitan Global cities of the United States so we're thinking about a a a huge renter pool an international renter pool a domestic runer pool from all over the country and surely local people from LA and we're delivering a product that hopefully hits on hopes and dreams of people from all over the world who's who would die to live on the west side of La adjacent to Culver City next to Apple and Amazon and Sony Studios and Father's Office you know like C blocks away and so we I think we think about that what's it going to look like what's it going to feel like and is it going to live up to the to the idea that
Sandy Albert
people have when they think about being able to live on the west side of La it's sexy
Taylor Avakian
it is sexy for sure 100% And that area is so so nice I I mean we've I've been over there a couple times and it's very easily walkable which is nice and I think that's um the the way that La was designed and has been designed um there's little neighborhoods and Pockets that are very easily like neighborhood oriented walkable that kind of stuff right which it seems like you guys have found a pocket but I say the majority of La is not that it's this grid aligned um or these little even not grid where it's weirdly shaped streets and you know there's no grocery store within a f Mile Drive given a walk even to right and it's a very spread out City so how is that in itself the way that La is is like the different pockets of it the
Taylor Avakian
way that they're shaped right how does that affect the way that you guys look um for future growth as well cuz I assume after these projects you're going to want
Sandy Albert
to definitely continue to grow yeah look I think there you know there's only so many parts of LA that are that that are truly and where there's a true argument for walkability and
Taylor Avakian
Transit Silver Lake maybe some parts of Echo Park Santa Monica Santa Monica West
Sandy Albert
Side Echo Park Pulver City Beverly Hills but you know we're not that's not really ouro um you know and so you you have to be a sharpshooter you have to be local you really have to know these neighborhoods and we live it I live it these are the place that that we hang out that I go out to dinner that I go to coffee with friends that my wife and I go to dinner you know and I like to hang out we shop in and all that you know yeah um and you really have to understand the demand drivers of these specific neighborhoods and locations because you're right I mean it's still La it's a big sprawling City but you do have exactly what you said you know pockets of density and pockets of walkability and I those are the places that we like I mean I think any on
Sandy Albert
the West Side anything adjacent to Culver City obviously the growth of West Adams yeah has been C exactly what cim has been doing and funrise and a few other groups but yeah um you know that's interesting anything along the Expo line there you know we stick with the city of La we actually like uh working in the city of La why it's well I'll tell you it's very technical it's technical but um you know we're using very very powerful laws along with the technical process with the city of La so if you know what you're doing you can just get the entitlements it is whereas like you know city of Santa Monica West Hollywood Beverly Hills totally different political landscape and process that's why um we like Echo Park Silver Lake I think East Hollywood will continue to
Sandy Albert
um to grow and expand and a lot of cool and exciting things happening around you know the Melrose Hill area all that
Taylor Avakian
um do
30:00–40:00
Taylor Avakian
regulations I mean you're in some of the most highly regulated cities in the the country so I'm curious to know why why you want to subject yourself to the the rigors and the the brain damage of Highly regulated cities and in
Sandy Albert
States yeah it's you know we're a hybrid entry developer but I mean you know that's you know a lot of people aren't I appreciate you said in the beginning a lot of people just aren't willing to roll up their sleeves and do it or have the confidence I mean we've been here for a long time I'm blessed we're lucky my father's an architect of 50 years here we we work with him so I'm you know I'm the luckiest person in the world and we use the resources that we have and we you know really work with you know the best consultants and everything um but you know the while it's highly RI regulated there's also you know the most acute supply and demand imbalance and affordability crisis here so if you can get the housing built I think you're going be we're going to be we're
Sandy Albert
going to do extremely well extremely well on these hybrid entry markets um it's not easy it's not for so it's like
Taylor Avakian
your competitive Advantage is you know the details you're able to go around and move around some of these highly regulated markets because you know them so well and you know how to get things through you know the entitlement process and everything exactly but it's still kind of crazy that you know 12 months 16 months 18 months to get a a property started off the ground like that's
Sandy Albert
seems like it's crazy yeah um yes so our tile timelines are like 12 to 14 months yeah they should be like 6 to 9 months yeah in in any other Market or I think we'll get there you know but it's but you know that going in you're not surprised we know we know how long we know how long it's going to be and so we we H you have the experience you have the technical knowledge to underwrite that from the beginning and so you know you're not so us and our investors there are no surprises there everybody knows
Taylor Avakian
what they're signing up for got it um I'm going to nerd out and go really deep into and if if you don't know the an that's fine I'm just curious um from an actual uh construction cost perspective of the building right so what is the yield on cost that you guys are underwriting towards once the project is complete I'm curious to know
Sandy Albert
definitely so you know this it's been a really hard as a lot of people know um even the biggest best sponsors globally yeah really hard Capital markets environment especially from an equity stand from an lb Equity standpoint try raising LP equity for groundup development in Chicago and Los Angeles where you know a lot of equity investors are going towards the sunb and Texas and Florida yeah yeah um in La we're building to close to a s and a half percent what stabiliz no [bleep] way yeah seven and a half yeah trended yeah sure with 3% rent growth but I make if you look at all the institutional studies and based on the fact that new construction in La is essentially falling off a cliff going in the next years no starts the past
Sandy Albert
two years because it's been impossible to get financing and want you know what I mean so I would argue that 3% rent growth is a base case scenario here yeah thankfully talk about the regulation prop 33 and prop three failed which was huge we can go into that um but yeah so in so in Chicago we're building to like an eight stabiliz oh my gosh yeah but that but it's it's it's simple math and you know not to get into it so the combination is smaller units lower trunk price rer higher dollars per square foot smart low construction cost stick frame type three type five construction we spend a tremendous amount of time in architecture and value engineering with our Architects or engineers and our gc's you know and that predevelopment timeline I mean you need that six-month period to dial in
Sandy Albert
these projects so they're so efficient um you know and here and here we're building for we're going to be building for below 300 bucks a foot $290 a foot I want to be build for for less but you know holy crap that's crazy and I won't I won't accept anything more for comparison
Taylor Avakian
just so people know like the the average Developers probably underwriting to like a 5 a half% yeld on cost and then no not today and then their construction costs are the lands maybe 75 to 100 bucks a square foot and then the cost of construction is probably another 350 to 400 for most most developments that's 500 bucks a foot and you're going
Sandy Albert
for three under 300 it doesn't pencil you have to there's development 101 in the United States multif family is that you must be any in any smart investor whether it's institutional or otherwise is you must be at least 150 basis point spread on in caps to your yield on cost yeah that's just with the risk associated with it that's the risk so that's that's what it is so we want to be but in this past crazy Capital markets environment I mean investors will say no no no I need to be at so if if caps here maybe you know at five caps you know institutional la West Side historically for caps some for for cap okay we all know caps rates have expanded because of interest rates but so let's say you know and I would
Sandy Albert
say they're going to come down hopefully soon but let's say Max La is at a five cap well that means you have to be at least at a six and a half cap but investors be like no no I want to see a seven a seven and a half cap they'll always try and push you up so we knew that the writing has been on the wall for the past couple years so as we're buying and designing and underwriting and programming these projects we're like we need to be as at high of a yield as possible now it gels with our business plan around affordability and density and low cost construction location yeah for sure you know but yeah yeah we're we're we're getting we're building to at least at least a seven a seven and a half cap here here in La that's the only way we're going to
Sandy Albert
track C Capital yeah for sure successful th s thus far and building to an eight cap in Chicago in Chicago we build for below like $230 a foot wow it's much
Taylor Avakian
cheaper than here really labor is kind California makes it tough what um so then some of the efficiencies like technology wise and now it feels like everything with AI and you know it seems like everything's changing towards and it's been and it clearly is a very technology focused um society that we live in yeah what are some of the technology tools or things that even you're implementing in the building or that you're using to make stuff like this feasible is there any technology that you guys have used or thought about for future proofing the B the
Sandy Albert
business the buildings things like that it's a great question I mean all the stuff on the operations I'm very I'm so optimistic and bullish about just operating platforms operating technology building software and stuff I think that's like the least of my concerns there's so many great Technologies and platforms and we're going to implement all that yeah you know you know um um um so that's you know that's kind of table sticks got it you have to be doing all that stuff whether it's you know your management software your operating software your electronic door latches your um OnDemand maintenance re requests obviously automatic payments there's great software tenant Insurance type stuff taken advantage of I mean absolutely yeah you know that's this T table stakes and and we you know we pay attention
Sandy Albert
to that very closely but that's why we work with the third party property management company companies and marketing leasing were incredibly Hands-On on the asset management side there handpick our staff and our staffing plan and make sure all of those things are implemented there's a lot of cool Technologies um uh on the construction management and and development cost management we just insed this we just uh bought this software that allows us to do predevelopment um cost and construction cost tracking budget actual draw requests sounds nerdy and wonky but when you're managing you know five projects 7 units and there's basically you know three two or three or four of us you know using these softwares and Technologies so you're not you know in spread we also use spreadsheets obviously but that really is helpful
Sandy Albert
so there's cool software there cost tracking software and then this is going to sound uh dorky too but because you asked um from an AI standpoint Development and Construction like making movie is Project based there's tons of meetings and conversations with consultants and engineers and Architects and lawyers and contractors and you know and weekly AOC meetings and so many things get communicated and promised and agreed upon verbally over the phone over Zoom or you know in meetings and these are real important decisions that you need to be able to track a friend of mine um is a found ER of an AI notetaking software company backed by Andre for the construction industry yes and so you can you attach this AI software to your weekly
Sandy Albert
AOC meetings on Zoom or Google hangouts or whatever and it it it it gives you you know it tracks everything and it it can be used in a positive way to hold everybody accountable and so it can disseminate notes and you go back and check it it also is good
40:00–50:00
Sandy Albert
these projects you know $20 million $50 million $100 million projects major construction stuff stuff comes up and often times as we all know you need to be able to hold contractors accountable so from a legal accountability standpoint it's
Taylor Avakian
really cool have you um what's like the been the biggest um challenge or risk or do you have any stories on stuff that you guys had overcome in this whole process that was like memorable
Sandy Albert
for you trying to raise money from you tell me the past three years what does that look like what is what is going out and trying to raise money for products like this look like you know a friend of mine said it really well a friend of mine runs a VC fund out of V Venice actually he's a venture capitalist um and he has his own fund uh he actually started he actually I met him in the real estate development program at Columbia but now he's wow in VC um um and he said and he's ra raising money and fund raising and I was we were in the middle of raising our fund and I was like it's so much work you know and he's like Sandy he's like think about it like this you get to go and have lunch in Beverly Hills and try and
Sandy Albert
convince somebody to invest in your fund or your business and it's it's it it it could be worse is that is you know it's not that bad it's it's a privilege to be able to do this to be able to go out and talk to people um and I love that and that's that's what it's about but make no mistake fun raising is a huge part of the business huge part of the business and I think like over the past um especially last year in the year before from 2021 to 2023 almost all we were doing aside from putting these deals and projects together yeah was fundraising raising M money and it's um and you really lean on a lot of people on social media and I you know LinkedIn or Twitter talk about this um but you really lean on who you are as
Sandy Albert
a person and the people that you know from various stages of your life um and you go out there and you tell your story and tell people what you're doing and you got to make the ask and see it and see if it resonates with people so fundraising in and of itself is a skill and an art form um um you get a ton of nose yeah and you got to you got to be determined and dogged every single day and just keep going and keep going and keep iterating you know if things aren't working you maybe switch it up a little bit but um it's very easy to you know lose
Taylor Avakian
the forest within the trees yeah for sure um I'm curious just because I'm I'm just curious to know so like what is the actual process how do you find the people who you're going to go to and try to pitch them to to raise the money like are you going through your Rolodex and saying okay who do we know that that is investing in real estate and has or who do we know that's high net worth or like what's the actual tactical process look like Yeah from you saying okay now we need to raise money like what are you doing
Sandy Albert
yeah legitimately yeah totally I think I'll answer it concretely and singly think first we were talking about this other day it it's also time you know I've been in the business 20 years yeah I've literally been in the industry 20 years across La New York and Chicago part of the reason you need a a big Rolodex you need to know a lot of people you need to have a reputation and a track record you need to have confidence in yourself and need to know that other people have confidence in you and if that's if you don't have those things you're probably not ready got it so that like I think that's the biggest thing and um and yeah and then I think the strategy for me for us this is my first fund that I've raised um that we that that yeah that I've raised um is
Sandy Albert
you start with the people that you know small medium large who you think like you and believe in you that's what it's all about this is a people business it's about people it's about trust and relationships yeah Absolut so start with the people that like you and believable it I literally will start with my texts who are my friends who do I text on a regular basis start there then I'll then I I keep lists so then I'll go to my or I'll go to my Rolodex my address book and I have you know I have classification too yeah like take notes on everybody uh you're doing the CRM you're a broker for Equity basically right you're brok for your life it is more important as a developer I can't tell you how how many different categories of relationships I have yeah big time yeah and I've been doing
Sandy Albert
that for almost 20 years keeping track of who I know and what they do and what they're interested in and how they could potentially help me or us mhm yeah
Taylor Avakian
and how you could help them and like exactly planning the seeds to okay this guy I'm going to help him you know it's like you have to be organized really
Sandy Albert
organized and keep these records um and so then when when you're going out and fundraising you have the tools to create massive lists go out talk to a lot of people send the right emails make the right phone calls um you know technology has made it a lot easier to do that there's still no perfect one you know Silver Bullet
Taylor Avakian
but yeah that's has social media impacted at all have you done any Social Media stuff yeah definitely has that helped with the process I mean you're the king at
Sandy Albert
that you're I don't know you're getting into it which I'm impressed by I appreciate that I'm excited you know to be you know I think it's awesome what you're doing thank you and um you know I think that um you know it's a balance between first of all nothing replaces picking up the phone just that is so powerful like that's where deals get done 100% that's where you raise money that's where deals get done that's where you find a period is either picking either over the phone or in person now social media and like LinkedIn and Twitter is incredible for I've noticed I'm sure you've noticed this too I'm curious to get your thoughts um you know it raises awareness so it's like you need to have it it's like advertising it's like people are always you know you can not you
Sandy Albert
can share what you're doing and then people are thinking about you it's like the old thing like out of sight out of mind if you want to keep if you want to make sure that you're in people's mind one great way to do that is to post and create content that's hopefully relevant to people then like so and I've noticed like people will reach out for stuff and I'm like I bet that person probably like saw a post and then somehow thought
Taylor Avakian
yeah you can kind of tell yeah yeah it is it's super interesting to to see it too in action because the reason I asked too is there's I had Moses in this chair yeah and he The Godfather yeah social media for Real Estate like I think he's raised over $100 million do just from his connections on social media and Twitter and I was that to me was that's wow insane right insane or maybe done $100 million a deal or something like that um but it was it was just like wow that's that is a lot of money and that's really powerful and that trust that you build what what I've seen it do because my whole job as a broker is really to create awareness for myself and stay top of Mind of people so that when they want to transact or they have questions
Taylor Avakian
about buildings whatever it is about apartment buildings in Los Angeles they feel confident and can trust that the conversations they have with me and the knowledge that I have is going to help them in whatever facet that they they need it to be and so for me again it is just keeping that top of Mind awareness giving away almost information that I've spent hours in the on the phones talking to people about that I've researched like valuable time that I'm trying to distill and give to people um because that's that's part of the value of what I'm I'm able to do is because I'm constantly talking to owners developers I'm understanding where cost of construction is I'm understanding where Market rents are and those things affect people like yourself other people that I interact with my clients because it's it's again their livelihoods like
Taylor Avakian
this this is important stuff for them and um and so I think social media has been super interesting to be a part of and kind of stumble upon for me in terms of building that brand awareness yeah but it is still [bleep] hard man it is like a full-time feels like a full-time job in itself you know what I mean h how
Sandy Albert
do you balance doing creating content social media and stuff versus like actual prospecting yeah not to say that this is not the work because is the work but picking up the phone like writing targeted emails or like Strate you
Taylor Avakian
know what I mean like I'm a I'm a menace I'm a menace I uh I still try to make like three to 500 calls a week um and so I have to time block like 9 to 11 is my call time and I'm just calling from 9:00 to 11: most days that's just so so I have to be very structured and organized the way that you're reaching out to these people I have to be relentless because if that stops the business stops everything else dries up and so I'm really and for 2025 too um i' I've been thinking about it of like how do I optimize my time yeah optimize my time to make the most of it um and figure out how to be the best broker that I can be just like you want to be the best developer that you can be not only
Taylor Avakian
for your LPS but for just creating something special creating something magical that you've been able to mold
50:00–1:00:00
Taylor Avakian
and to shape and to build from nothing um and make that something very unique and special I think that's it it it's passionate right it's passionate I can tell you have
Sandy Albert
the passion for the business what do you think is the future of multif family brokerage like how how are you you know what I mean like where do you
Taylor Avakian
think Consolidated teams yeah they'll be very they'll be a very few set of very top Brokers with support staff that are either W2 or employees or people like that I think it's going to weed out a lot of the bottom Brokers because of where technology is going and it's such a relationship driven business that those who rise to the top are going to have 80% of the actual market share in my opinion yeah um but it's still it's a it's a relationship fractured business so I'm curious to know how AI is going to affect that really oh yeah like tremendously tremendously because AI is going to get to the point where it's going to be able to do 95% of what we do yeah and the the iners meeting to meeting is the only thing that's
Sandy Albert
going to affect that so you think the more time that you have to be freed up to be out there developing personal relationships with the right buyers investors sellers that's where the magic is at exactly yeah yeah it's the
Taylor Avakian
same stuff we just get to offload the other stuff to technology and Ai and all that stuff so I know you got to get to a call you got a big investor meeting Sandy I appreciate you very much for coming on here man this was awesome I'm looking forward to seeing these sites I got to come check them out when they're they're finished and uh continue success moving forward keep it up this was a lot of fun thanks appreciate it good thank you for listening to this episode if you enjoyed the podcast it would mean the world to me if you could rate US five stars on YouTube Spotify and apple podcast it really helps us get our name out there and helps us get fantastic people like our guests to share their insights and knowledge with you again my name
Taylor Avakian
is Taylor ven I specialize in the s of apartment buildings in Los Angeles in Southern California and I look forward to sharing more of these conversations with you see you in the next one