ADAM MERMELSTEIN OF TREETOP DEVELOPMENT
By Adam Mermelstein, Principal of TreeTop Development
By tapping into niche markets, real estate investors and developers can receive incredible values by purchasing well-performing assets that generate immediate capital. While from an investment standpoint these acquisition make perfect sense, the infusion of new property owners to specific areas is also having an unforeseen, but welcomed effect; the rebirth of once-forgotten neighborhoods.
Instability in the real estate market combined with economic concerns and challenges have pushed multi-family property owners into untapped residential addresses where they can purchase mismanaged rental properties at competitive prices, upgrade them to meet market standards, reintroduce them as middle class housing and attain higher rents. These renovated and modernized building set the footprint for the gentrification of a neighborhood.
Case in point: South Harrison Street in East Orange, New Jersey. A revitalization underway by a group of developers is transforming this long forgotten neighborhood into one of Essex County’s hidden residential treasures. Located on the western side of East Orange, South Harrison Street was once a premier destination with a historic hotel and architecturally-distinct residential buildings, many dating back to the early-to-mid 20th century. Unfortunately, over time, the neighborhood fell into a state of disarray with many buildings burnt out, vacant or dilapidated. The result was an unpleasing streetscape with well maintained buildings standing side-by-side with empty lots and structures in disarray. That all changed approximately two years ago when several pioneering real estate investors and apartment managers realized the potential of this neighborhood and set forth to re-energize the Street, an effort that is close to fruition.
Until 2010, many property owners on South Harrison Street were simply putting “band aids” on the existing buildings, performing minor repairs to maintain the viability of the asset, but not improving the standard of living. The initial wave of activity came when the first companies identified the Street as a prime area to create affordable housing that would appeal to the working class of East Orange, Newark and beyond. They began purchasing existing assets, and rather than complete minor repairs, instituted aggressive capital improvement projects to renovate and rehabilitate the properties.
For example, two years ago we purchased six existing rental buildings – located at Nos. 106, 111, 120, 158, 179 and 243 South Harrison – consisting 443 homes. We immediately set forth a capital improvement program to not only restore and upgrade the buildings, but also keep them affordable by utilizing materials such as Formica, not granite, and ceramic tile, instead of marble. We refinished or replaced hardwood floors, renovated kitchens and baths and retained full time superintendents and on-site managers. We also made several important exterior and common area improvements. At 111 South Harrison Street, an approximately 70-year-old building with 86 apartments, we installed a new roof, chair rail moldings in its hallways, and new elevator cabs. A pair of tall glass entry doors with custom wrought-iron detail replaced metal doors with tiny barred windows. The goal was to exceed the idea of middle-class standards and create homes where residents would stay long-term and become part of a community.
However, we weren’t the only investor who took notice of the neighborhood’s potential. Concurrently, Laferrara Properties, LLC, a locally-based real estate company, renovated two buildings on South Harrison Street to add even more market rate housing, including 174 South Harrison. Today, yet another gut renovation project is underway at 121 South Harrison.
As the neighborhood transformed, the apartment owners and managers were joined by new home developers who saw a revitalized South Harrison Street and entered the market with new construction and gut renovation apartment buildings that would raise the housing inventory to another level. These developers are introducing luxury rentals, complete with amenities and services found in hi-rise apartments in popular Cities such as Hoboken and Jersey City. The natural progression of the neighborhood has seen Gaia Real Estate reintroduced Gaia Park View, which consists of 266 upscale units at 320 South Harrison Street. Homes feature the latest in interior appointments and on-site amenities not commonly found in East Orange rental buildings. What’s more, Blackstone 360 is now offering Indigo at 141 South Harrison Street. Once a famous hotel, the property now feature striking one and two bedroom rental homes, two level penthouse residences and a long list of amenities.
The bustling development activity has left just one vacant building remaining along South Harrison Street which Blackstone 360 is rumored to have purchased. The influx of new development projects and investors with a vested interest in creating a neighborhood that offers a high level of living has made South Harrison Street a sustainable redevelopment effort that will continue to strengthen in years to come.
About TreeTop Development, LLC:
Led by General Partners Azi Mandel and Adam Mermelstein, TreeTop Development, LLC is a multi-faceted real estate concern with a focus on renovating and developing buildings in key urban centers throughout the New York Metropolitan area. In addition, the company has initiated an aggressive plan to acquire existing HUD apartment complexes and institute capital improvement programs to upgrade and modernize the assets, including living spaces, common areas and building systems before returning them to market.
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