“We’ve been doing mixed-use infill development in the Bay Area since 1984, and we’ve had lots of partners that we have done transactions with. In comparison, the cadre of folks at MacFarlane is pretty high quality,” says TMG chairman and CEO Michael A. Covarrubias. “Clearly, their commitment to urban infill is greater than other funds. They are committed to projects with social income as well as a profit motivation. They can handle complex real estate, but at the same time, [if] you show them a good, old-fashioned, middle-of-the-road urban infill project, they’ll be [just ] as smart about it.”
MAKING A DIFFERENCE Indeed, MacFarlane Partners has been raking in both the returns and the accolades for the company’s urban investments. Case in point: Just across the San Francisco Bay Bridge in Emeryville, Calif., MacFarlane and JV partner Madison Marquette Realty Services just completed construction of Bay Street at Emeryville, a mixed-use project covering three city blocks with 365,000 square feet of high-end retail, 284 rental apartments (20 percent of which are affordable), and 95 for-sale condominiums. Despite a $20 million environmental remediation that MacFarlane describes as clean-up crews “working the site in space suits” as well as the death of the original developer mid-construction, the project has been recognized as a smart growth milestone in an already sustainable-centric Bay Area, winning the San Francisco Business Times‘ 2006 Real Estate Deal of the Year Award.
MacFarlane also has his sights set on the nation’s capital. As the new owner of the D.C. United pro soccer team, he is lobbying for a new arena to replace an aging RFK Stadium, with plenty of mixed-use retail and multi-family to go with it. The firm has already stepped up its investment activity in the Ballpark District, helping to revitalize Ward 8, which until recently was one of Southeast D.C.’s most downtrodden neighborhoods. On May 7, 2007, the company announced a Ballpark District JV with Monument Realty to develop Half Street—a multiphase, mixed-use development, phase one of which will include 300 multifamily residential units. What’s more, MacFarlane has already invested in Forest City Washington’s adjacent 41-acre redevelopment of a former federal center. As envisioned, the 60-acre Ballpark District ultimately will encompass a new stadium for the Washington Nationals baseball team, 785,000 square feet of retail, 1.6 million square feet of office space, and 3,000 residential units.
So if real estate follows people, where are all the people moving to next? Sure, “to the cities” is a logical answer, and MacFarlane, Berman, and Vilkin can point to a U.S. map with pushpins lining both coasts like the best of them. But where’s MacFarlane Partners’ next South Central L.A., the next Ward 8? Vilkin demurs at the question, but MacFarlane has no objection to revealing a bit of competitive strategy. “Harlem,” he says. “Everyone said we were crazy when we pushed inner-city L.A. Everyone said we were crazy when we tried to clean up Emeryville. Everyone said we were crazy when we opted for residential before retail in Oakland. And now everyone is saying we are crazy for wanting to go into Harlem.”
Insanity or genius, get the neighborhood ready. In November, MacFarlane Partners will break ground on Harlem Park, a 21-story, 640,000-square-foot mixed-use office and retail complex, a joint venture with New York City-based Vornado Realty Trust at Park Avenue between East 124th and 125th streets. If the make-up of Mac Farlane’s Manhattan portfolio is any indication, multifamily residences won’t be far behind. “We’re trying to buy more there,” MacFarlane promises with a smile. “We’ll make a difference.”
LEADERSHIP LESSONS: VICTOR MACFARLANE
- Age: 56
- Favorite Quote: “It’s not you, it’s the money.”
- Favorite Book: The Call of the Wild, because it led me to the library, which is really where I got my education.
- Best Business Decision: Restarting my business after I sold my last one to GE Capital. I considered a lot of things, including retirement, and just came to the conclusion that “Once an entrepreneur, always an entrepreneur.”
- Greatest Business Challenge: Balancing the economic needs of our organization, its people, and growth with the moral requisites that make us unique and life- fulfilling.
- Ideal Leader: Someone who can focus intensely on a goal—through a wide-angle lens.
- Best Advice Someone Ever Gave You: “If Mama ain’t happy, ain’t nobody happy!”
- Philosophy of Leadership: Leaders must demonstrate an uncompromising commitment to excellence, integrity, the people of the organization, the broader community, and hard work.
MACFARLANE PARTNERSFounded: 1987
Headquarters: San Francisco
Employees: 125
2006 Revenue: Undisclosed
Geographic Coverage: California, New York, Boston, Washington, D.C.
Multifamily Development Pipeline: 13,300 units
Assets Under Management: $15 billion
Institutional Equity Under Management: $4 billion
