This week's guest: Christopher Capece, President of Heatherwood Luxury Rentals

0:00 Speaker 1 Good morning. This is Mike Stolar for the Stolar Real Estate Report. What’s happening in Long Island with regard to residential development. I have the King of Long Island Residential Development, the president of Heatherwood Luxury Rentals, my friend Chris Capiz.

0:18 Thanks for being.

0:18 Speaker 2 Here, Michael, as always, thanks for having me on the show.

0:21 Speaker 1 It’s interesting that you were celebrating your seventy fifth anniversary. I mean, not yours, but the company, and the company was started in a way similar to Levittown.

0:33 Speaker 2 Yeah, we were. So. My partner is Doug Partrick. His father Don started the company back in nineteen fifty with his partner Stanley Nislaus, and they were peer of the levitt Company. They might like to say that Don had a career before his career because they built around seven thousand single family homes on Long Island before they built

0:56 their first apartment community in the early sixties, which is saying something.

1:01 Speaker 1 So let’s talk about the apartment communities in the early sixties. The evolution.

1:06 Speaker 2 Yeah, so you know back then, I mean, look, they were building with two by threes back in the day, right, and so I think the evolution of the you know, the apartment community. It’s certainly come a long way. When you know, we were building back in the in the sixties, there were no amenities. It was a very no frill

1:24 sorted development program where you’d have you know, studios and one bedrooms primarily very little twos and almost no threes. And you know, you were really building for that price point. And you know when you think.

1:38 Speaker 1 And these were rentals as opposed to sales.

1:40 Speaker 2 Correct, correct, Well, we built our first apartment community in nineteen sixty two in Port Jefferson.

1:46 Speaker 1 Now, the interesting thing on my show over the years, development in Long Island is next to impossible because of local administration. Let’s talk about it. Used to be the bugs or the fish or certain other environmental that you had to meet qualifications. Let’s talk about that today.

2:06 Speaker 2 Yeah, sure, So you know on Long Island is always a little bit of the good, the bed and the ugly. And I think that you know, the entitlement process on Long Island has not gotten materially better. There is you know, precedent and some great work being done by some of our peers out there, whether it’s the Tritechs or the

2:25 Englebermans or the Beechwoods of the world that are also producing some multi family out there, but we run into resistance, unfortunately, and there’s still this inherent biased against departments, whether it’s the queensification of Long Island, or traffic or school children generation.

2:46 Those are some of the things that continue to I think be forefront in the conversation as opposed to, Hey, we’re in a high tax, high cost area and we need to do something from a supply side to handle this.

3:00 Speaker 1 Let’s talk about transit oriented developments in Low Island. That’s an important topic and it’s been really a number of buildings have taken place over the last five to ten years.

3:09 Speaker 2 Yeah. So well, I’ll start with one of the largest TODs in the history of Long Island, which is the one we’re building right now in West Hampstead. It’s our heritage Westminster Community and it’s four hundred and twenty eight units on nine acres at the West Hampstead train station, really at the border of kind of Garden City and

3:31 West Hampstead.

3:32 Speaker 1 This was a former retail site that goes back to EJ. Corvette’s S. Klein and a variety of other and I think the last one to be there was National Wholesale Distributors or something like that.

3:44 Speaker 2 That’s correct, and you know it had multiple force false starts over the years. It was three hundred thousand square foot existing building that you know, the community had been trying to reposition and redevelop for years, you know, big some other uses that had kind of come and gone, and you know, in in around two thousand, we had

4:07 partnered with the you know, local community and they had done an unbelievable job of you know, of putting wind in our sales and trying to get that over the hurdle and getting titlements in place. And now we’re about a year into construction.

4:23 Speaker 1 Okay, let’s let’s talk about the other Hampstead project, the one that you’ve been involved with and you’re dealing with the municipalities and frustration as they would say.

4:34 Speaker 2 Yeah, so what you’re referring to is our Lawrence transit oriented development, which is a little over three hundred units. And so this is getting a lot of attention within the industry, both regionally and nationally because it has further reaching implications. So for those of your audience who haven’t heard this, there was an article in the Real Deal

4:59 last month, but the town of Hempstead went through an approval process to study the environmental impacts and change the zone in and around the Lawrence and Inwood train stations on the Long Island Railroad for a mixed use in multi family. There were a couple of developers, including Heatherwood, that had moved moved forward with investment and subsequent to

5:27 putting the zoning in place on their own motion, there were multiple moratoriums, extensions, and just last month the town had peeled back the zoning, which I don’t think I’ve ever heard of throughout this country. And we’re in a lawsuit right now, so I can’t speak in too much detail, but those are essentially the facts.

5:51 Speaker 1 Okay, what about Heatherwood is involved with golf communities. You know, people love playing golf and it’s affordable and certain parts of the country, but not too much in Low Island. So let’s talk about that.

6:04 Speaker 2 Yeah, Yeah, I’ll talk about our latest and greatest, which is our Heritage Spiring Golf Club, which is in Setaukat on Long Island. And you know, we really think it’s our one of our flagships in the portfolio. We’re at a moment in time, we know it. We’re creating generational you know, suburban developments and the course itself. It was

6:27 originally an old executive course eighteen hole executive course that went through from entitlements to lease was a ten year process, so certainly a labor of love. But we repositioned the eighteen hold executive for two hundred units and a nine hole best in class golf course. And you know, the investment thesis was relatively simple, which was, Okay, we live

6:54 in a place and we own communities in a place where you know, large considered throughout the United States as a bastion of golf. Right you have the Shinnecocks, the Maidstones, the Sabonics, the Nationals, And we thought to ourselves, well, we have this generational opportunity here, how do we create the nine hole version of that? And so as we

7:18 were going through the process, we were able to identify a young superstar, Tyler Ray, who is a you know, Donald Ross estoration expert, and he was looking for opportunities for new builds and and he’s created an unbelievable course aspiring and you know, since he started on our job, he actually won a Golf Digests twenty twenty three Renovation

7:44 of the Year for his work over at Lookout Mountain in Georgia. And you know, frankly, Michael, we’ve been rewarded for it. We just were nominated for an NHB Award for Best Garden Community in the United States, along with you know, the likes of Related and Gray Stars. So for a small regional developer, we’re playing with some big boys.

8:07 Speaker 1 Okay, with regard to development, what about people finding affordable apartments? How do you provide affordable apartments.

8:15 Speaker 2 In Yeah, so we have a diversity problem on Long Island right in so far as housing, eighty three percent of the housing stock is single family homes. And so for us, even when we introduce studios single family homes, studios one bedrooms, even smaller twos, that’s meeting a housing need that is no longer being built for back in

8:40 you know, we mentioned Levittown at the beginning of the discussion. You know, the average size of the units in Levittown, we’re nine hundred square feet per unit. You know what that sounds like today, sounds like my apartment home sizes correct.

8:51 So we feel like, you know, we’re meeting the need in multiple ways, and communities like even spir Ring have a twenty percent affordable compon it that meaning income restrictions, so we’re hitting it on that side as well.

9:03 Speaker 1 So you are providing the affordability function correct. So last, but not least, how do people find out about apartments in law affordable apartments in Lowland from Heatherwood and other companies?

9:15 Speaker 2 Yeah, you know, for us, you can call around to any one of our communities. The Long Island Housing Partnership is a great resource for housing in Nassau and Suffolk County. And Peter Elkwitz, who is the CEO over there, is a fantastic steward of you know, not only some of our communities but for others in the Long Island spectrum.

9:38 So I think between what Heatherwood provides and Long Island Housing Ship provides, you can have a bit.

9:44 Speaker 1 I’d like to thank Chris Krippiece for being here today and I see my guests next week.

9:50 Speaker 2 Thank you. I appreciate that Ally buye