On the Waterfront Dranoff has stuck with the philosophy of his former company of finding sites near a river. According to Dranoff, in older cities you’ll find the vacant, dilapidated historic buildings and distribution centers along the river. These buildings are now obsolete and ripe for conversion. “Vacant building are typically not at Times Square,” he says. “They are not in the heart of the city. These building are slightly off the beaten track. And, that’s why the buildings became vacant and are available. The art is to look ahead and determine if the buildings can become places people will want to live.”
In addition, Dranoff looks for projects that have or can have parking. “Parking gives us a tremendous marketing advantage, and it allows us to have a premium product,” he says. People who are moving back into the city still have cars. And even if they walk or use public transportation to get to work, they still want to have their car for the weekend, he says. Dranoff won’t do a project without parking facilities.
Before purchasing a building, the company does its homework to make sure the demographic is there to support it. “In my view the demand is there to support the Camden project,” says Thomas Maher, CEO of Wachovia Maher Partners. “There are 600 engineers that work across the street at L3 Communications, Cooper Hospital/University Medical Center is not too far away, Rutgers University has a campus downtown – including its law school – plus many of the county and city offices are in Camden, but there is no place for any one to live.”
Dranoff’s homework also revealed that The Victor was located in a highly protected area–it is directly adjacent to virtually all the waterfront attractions. And because of these attractions, the police frequently patrol the area, says Maher. The company also made sure it knew what Camden had in the transportation pipeline. A new light rail system will open in the spring with a stop right in front of The Victor.
It’s not enough to have the right site. You ave to get the customer and offer amenities that they can’t find anywhere else. In the Philadelphia market, the major attraction for residents at a Dranoff property is the actual units. “Lofts are a fairly new product type in the market,” says Louise J. Walton, regional manager for Allstate Insurance Co., a commercial mortgage lender. “They did a great job marketing [The Left Bank] and attracting a high quality tenancy.”
In addition, at all of Dranoff’s properties the units feature 14-foot- to 20-foot-high ceilings, 12-foot- to 14-foot-tall windows, and exposed mushroom cap columns. The columns become conversation pieces, says Dranoff. These are character defining architectural features that are impossible to replicate.
Dranoff’s philosophy is to stay close to the consumer and make sure that the company isn’t creating an obsolescent product. In doing so, he has realized that his residents are getting busier and busier and they are looking for a destination place to live, one that will provide 24-hour service and practical retail, such as a gourmet grocery stores and restaurants. “All we are starting out with in our buildings are columns, beams, floor slabs and in some cases walls,” says Dranoff. “Everything that is going into the buildings is brand new and luxurious.”
“When someone thinks of a Dranoff property they will know what to expect,” he says. “It’s like going into Tiffany’s – you know that you will be treated well and the goods will be priced appropriately. There will never be a discount at Tiffany’s, but you know you are getting a high quality product and impeccable service – the same holds true at a Dranoff property.”
On the Fast Track While there are additional costs and regulations in doing historic gut rehabs, there also are some benefits during the construction phase. For one thing, the structure is already there. Because Dranoff Properties doesn’t have to wait for the right weather conditions to get the foundation poured, it can implement fast track construction – which it has done at all of its properties.
“What we have to do is gut the building very quickly, clean it out, and put on a watertight skin on the outside of the building with windows and brickpointing,” says Carl Dranoff, president. For example, The Victor, in Camden, N.J., had new windows on the fifth and sixth floors by the middle of January, and a new roof was installed at the end of January. At the same time, the layout and building systems were being installed inside the building.
“We always attack the building from the top down,” explains Dranoff. “We’ll have multiple trades in the building at any one time so that we can condense what would be normally an 18 to 24 month construction period into 12 months. The key is to get the building enclosed. Once the building is enclosed you can work all year round.”
By Labor Day, Dranoff plans to have the lobby, elevator, amenities, and sixth floor of The Victor completed. That is when the first residents of the building will move in. Each month after that, a new floor will be opened and leased. “The people who are in first are delighted,” says Dranoff. “They have the best selection of units. And usually, we are raising the rents as we are going along, so the initial renters get the best deals and are on the highest floor.”
And even though there is construction taking place on the other floors, the company strictly enforces a separate entrance for the construction crew and the trades people know not to make their presence known to the residents.
The benefit of this type of construction is that people have moved into the building and are paying rent. The end result is that when the building is complete it’s also leased. “At Locust on the Park, [in Center City, Philadelphia] the lease up went quicker and the project achieved higher rents than expected,” says Louise J. Walton, regional manager for Allstate Insurance Co., which holds a loan for the project.