(Updated to correct errors related to Grubb’s New York properties.)
Charlotte’s Grubb Properties named Todd Williams as president, succeeding Scott Brown, who has moved to a senior adviser role after working with CEO Clay Grubb for more than 30 years.
Williams joined Grubb in 2005 and has been chief investment officer since 2016. His new job puts him in charge of construction, development and operations teams. The chief investment post is now held by Skip Schwartz, who was hired earlier this year after working for about 30 years at the Chicago-based Heitman real investment firm.
Grubb has built or has plans for 8,700 apartment units nationally, and wants to expand to at least 20,000 by 2030. That is likely to involve both construction of new projects and some acquisitions, Williams says.
Those aggressive growth plans are focused on Grubb’s “essential housing model” that targets renters earning from 60% to 140% of an area’s average median income. The apartments are slightly smaller than many competitors’ units, while typically leasing for a few hundred dollars less per month, he says. Prime tenants include law enforcement officers, construction trades workers and teachers.
It’s a big growth opportunity because much U.S. apartment development has focused on luxury units leased by higher-income tenants. “Our apartments are designed to meet that really challenging need in that housing segment,” Williams says.
From its N.C. roots, Grubb has expanded over the past decade to 250 employees. Its Link apartment brand, which launched in Charlotte in 2018, now has properties in 13 U.S. markets, including Los Angeles and New York. In New York, Grubb bought a Lower Manhattan property in 2020 for $88 million, which Williams says was about 50% lower than its peak value a few years earlier. A 462-unit apartment tower is now being built at the site.
Separately, its completed 417-unit Link Apartments QPN in Long Island City is now experiencing the fastest lease-up in company history.
“We try to be greedy when others are fearful,” he says. Fears for the Big Apple’s future are overblown, he adds. “New York is back in a big way. Its streets are crowded, the hotel room rates are way up and they are out of housing.”
Over the past year, Grubb has been consolidating its legacy funds into a real estate investment trust (REIT) that will own the majority of Link properties. That has involved convincing its limited partners to shift their holdings into the new investment vehicle. He expects to complete the process by the end of the year. “It should provide a strong base of assets and income to really support our mission to grow that portfolio,” he says.
While apartment construction activity has long been restricted in the high-cost LA and New York markets, development swelled over the past decade in the Southeast, leading to an oversupply in many cities, Williams says. While occupancy rates generally remain strong by historical comparisons, rents “have gone sideways or down” in many cities.
Meanwhile, apartment valuations have crashed in some areas because of rising inflation and oversupply, Williams says. Cost of construction remains a challenge, with the average unit in the Southeast now costing more than $350,000 per unit, versus about $240,000 before the pandemic. Grubb acts as a construction manager for its projects, hoping to control costs and complete projects in time for the key fall and spring leasing periods.
“We think our product is a little more resilient versus the luxury market,” he says. “It’s not as subject to the ups and downs, though we won’t see the big rent growth during periods of tight supply.”
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.