Williams, 44, is an architect by training with both an undergraduate and graduate degree in architecture from the University of North Carolina at Charlotte, in 1991 and ’92.
He hooked up with Michael Gallis, the legendary Charlotte architect (now a “strategic planner,” according to his company’s website), forming a real-estate partnership with him in the mid-90s.
That’s when Williams began assembling land around Elizabeth Avenue for his signature project: a planned behemoth mixed-use, apartment-centric development costing an estimated $220 million that will be along Gold Line streetcar lines.
That plan led to Williams joining Grubb.
The plan is still in place, but it’s now somewhere among the brussels sprouts on Williams’ plate, not where the meat is, as Grubb awaits more capital investment in the area.
The whole megillah has been stressful. We wanted to find out about that. And about Williams’ capacious pate.
We have two basic strategies, both involving multi-family apartments. One is what we call value-added acquisitions: buying older or vintage apartment buildings in desirable locations and turning them around. The other is building new apartments in what we call high-barrier-to-entry locations — meaning they involve different parcels to acquire or rezonings — the best example in Charlotte being our Elizabeth Avenue project, but we also have a number of other sites in Charlotte and Raleigh.
The Elizabeth Avenue project is a behemoth.
Our goal with Elizabeth Avenue is to make very desirable infill apartment communities in proximity of jobs and amenities to a combination of both uptown and SouthPark. There will also be commercial development, some office but mostly retail.
We’re buying up institutional-grade apartments of 100 units or up, with leasing offices and pools — anything smaller and the economies of scale don’t really work out. We’re acquiring 1990s and older apartments, and a few newer busted condo deals, like the Quarterside Apartments uptown. They were built as condominiums in the mid-2000s and they sold about two units. The company had begun the conversion, and we basically bought the note from the bank — we bought the mortgage and the property. They were distressed, a newer vintage property that had been written down by the bank. And we’ve bought some newer units that were built as apartments but were not performing. These are not about luxury so much as value-added.
At the Quarterside, for example, the units were not individually metered for water because it was condos, so we went in and sub-metered them, so each unit’s tenants could control their own water usage. And the washer-dryers were rented to the tenants, so we bought washer-dryers that now come with the apartments, which means we are not in the business of operating washer-dryers. And there was no leasing office. So we renovated the sale center into a clubhouse and leasing center. In all we spent about $500,000 in upgrades. That’s the main focus, apartments built in the ’70s, ’80s and 2000’s in Charlotte, Chattanooga, Atlanta, Raleigh that were mismanaged or had deferred maintenance issues. We improve the energy efficiency, install low-energy fixtures or how they are plumbed and repurpose some properties. These are work-force apartments aimed at teachers, cops. . .
Ha. And real estate developers, these days. Tenants who are rent-sensitive that want convenient, clean, safe housing that’s amenitized so that they are a compelling value and are larger on-average units than most you find on the market today.
So that’s strategy No. 1. Tell us about No. 2, building new luxury apartments.
We’re in a situation where there is mid-90 percent occupancy of rental properties, an amazing time fueled by a number of things. The Echo Boomers. . .
The Echo Boomers, the Millennials, Generation Y. They’re larger than the Boomers now, and the first group of them has graduated college, and homeownership is not in the picture. They have the money for the monthly payments, but not the down payment at today’s 20 percent. And it’s a generation that wants to be more mobile. After they’re here, they might move to Florida or New York City or San Francisco, or vice-versa, from there to here. These young people, when they went to college they had state-of-the art accommodations, nothing like what we had in the old dorm rooms. We’re talking age 35 and under. Their first jobs are in the inner-city, and they’re looking for something similar to what they had in college, a luxury rental product. They want to be in communities like SouthPark, Elizabeth, Dilworth, South End. And they tend to want something in 100- to 200-, 250-unit range because they want to know their neighbors. They don’t want to live in 500-unit apartments. We’re doing this kind of thing not only in Charlotte, like the Elizabeth Avenue project and a 100-unit project in SouthPark, but also in Raleigh, between downtown and the Glenwood South, in downtown Winston-Salem. They are highly-amenitized, with hardwood floors, grant countertops. But they are also rent-sensitive, so the unit sizes are smaller, some are as small as 700-750 feet for the studios — and all we are doing are studios, one-bedroom and two-bedroom. The rents will go from $800 to $1,800, and they are premium product.
Almost affordable. What do you mean by high-barrier-to-entry locations?
One, there is not much land left in desirable locations in Charlotte, developable land. Two, the rezoning and site-plan approval process can be difficult and affect what you can develop. The adjoining neighbors want to have something next door that betters the community. That is difficult and time-consuming, but it is also a process that takes up capital, both real and human resources. But we welcome that process because we want to better the community, too. Three, it costs much more to develop and build in infill situations. In the suburbs, you have nothing but land and can build lower and have surface parking. In closer-in situations, you have to go higher to get enough units to be economically feasible, and usually have to have structured parking. And four: The rules pertaining to storm water are more difficult to deal with. Farther out, you can just build ponds. But in-town you have to do storm water vaults, rain gardens. You have to go down into the ground. The bottom line is there is more risk, more risk to capitalize. But there are also rewards. You can also get high rents because the demand is greater. And Grubb is a great team because we’re so vertically integrated. We have everything here, acquisition, development, building, leasing, management. All the food groups of real estate.
We’re employee-owned, so we don’t operate in the usual silos, which is horizontal. We’re more team-oriented. Because we all have an interest in the ownership, all the departments and divisions are working together for common goals, not against each other. Each requires its own skillsets, but all meet and work together.
Great organization. How did you get hooked up with Grubb?
I met Clay in 1998 on the Elizabeth Avenue property, as I was assembling the land there, which I began doing around 1996. His family began working with me and my partnership, and he just said, “Why don’t you join our shop?” I’ve been housed at Grubb since 2002, and actually joined the firm in 2005.
One more thing: Nice haircut.
Ha. You’ll appreciate this. We own about 85 percent of six blocks, or plus-or-minus 16 acres for the Elizabeth Avenue project. It involved 78 parcels and 45 different deals, all assembled since about 1996. I’ve led that assembly of land since the beginning. That play is why I don’t have hair left.