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Why this Irving developer plans to invest big ($300M a year) in DFW 

Dallas Business Journal

It’s been nearly 30 years since Irving-based JPI began developing apartment communities in North Texas, venturing into up-and-coming neighborhoods over the decades — from Deep Ellum in the 1990s, to north Oak Cliff in the early 2000s, to the Cedars in 2016.

Now, JPI plans on betting big on its hometown market in the next two to three years, with plans to spend upwards of $300 million per year on new projects in North Texas.

“We want to stay stabilized at $300 million a year in starts — which is about three to five projects — and we want to maintain our presence in the market,” said Brad Taylor, regional managing director at JPI’s Irving office.

“For the next few years, we want to stay focused on Dallas-Fort Worth,” Taylor told the Dallas Business Journal.“We have seen a lot of names come and go, but this is our backyard and we know the market, which is tougher than a lot of folks realize.”

JPI Multifamily Partners LLC, which is one of the busiest apartment developers in North Texas, has nine luxury apartment projects under construction in Dallas-Fort Worth. JPI recently completed Jefferson Riverside in Las Colinas.

And Taylor said the development firm isn’t done yet.

“We expect to start three more projects between now and the end of the year,” he said. “We already started two projects earlier this year — so in all we will have five projects starting this year.”

JPI also develops apartments in southern California, including a recently started $103.5 million community, called Jefferson Pacific Beach, that broke ground earlier this month in San Diego.

Taylor and Matt Brendel, who oversees the firm’s acquisitions and project development, recently sat down to chat with the Dallas Business Journal about JPI’s strategy for being a big player in North Texas:

Where does JPI tend to build in North Texas? Taylor: About 80 percent of our product is in Las Colinas, in Richardson near 190 and North Central Expressway, the Legacy-Frisco market and along the Dallas North Tollway near Addison Airport. Other areas — such as in-town projects — have been strategic plays for us. Matt and his team underwrite about 300 land opportunities a year to peg the best four or five best projects on a risk-adjusted returns basis. On the in-town projects, we have joint ventured with a land owner or developer. On the South Side project, we were able to joint venture with Jack Matthews. We sold that project earlier this year.

Brendel: We also J/V’d with the land owner on the West Love master-planned development on Mockingbird west of Love Field. We knew the land owner on both of these deals. They aren’t markets we focus on, but they were good deals for us.

Taylor: We are not unaccustomed to being pioneering if it makes economic sense.

Where would JPI like to develop, if the right opportunity came along? Brendel: In West Dallas, Trinity Groves or in Fort Worth. They are similar to the four submarkets we are focused on in North Texas, which are four of the highest submarkets with office absorption and good job centers and they are all high-rent areas.

Why did JPI decide not to develop in Uptown? Taylor: Years ago, we put offers on multiple sites in Uptown, but we weren’t the high bidders. Two years ago, the costs went up and we got uncomfortable with the amount of supply in the pipeline. We saw higher returns on other land opportunities in the region.

How do you compete in the luxury market? Taylor: Our rents typically are in the $1.95 to $2.00 per square foot, which is typically 11 percent higher than other Class A competitors in the market, but we deliver on amenities. On one of our Las Colinas properties, we took 10 percent of the property and created concierge-level units with additional amenities and services, such as free newspapers, a fridge with drinks, breakfast on the go in the morning or snacks in the afternoon. Those residents also got reserved parking spaces and upgraded units with furniture and fixtures in the corridor. There was a $200 premium on these apartments, but they leased up like the rest of the community.

What is your typical holding pattern? We are more of the merchant build model and we do whatever our investors desire. Most of our investors are short-term investors in natures. By the time we begin construction, build, lease it up and sell it — it takes us about three to three-and-a-half years.

Are there still investors wanting to back apartment projects in North Texas? We still see investor interest on new construction, but the debt is more difficult today than a few years ago. Bankers, especially large banks, are getting more attention from regulators. We have good banking relationships. We’ve also had a lot of good interest on our products. We haven’t seen a drop off on offers for our projects. There’s still a lot of interest.

        

By
 –  Senior Reporter, Dallas Business Journal