Rockefeller Group Expands Multifamily Development Focus Across the Southeast

Rockefeller Group, a real estate developer active in multifamily, industrial, office, and data center projects, is expanding into small- and mid-sized apartment construction in the Southeast to address growing housing demand, according to the firm.

In July, the New York City-headquartered company appointed Mitzi Jones as senior managing director of the Southeast to strengthen its multifamily presence in the region. While Rockefeller already builds wood-frame apartments, particularly in the Southwest, its Atlanta office has historically focused on industrial projects, with roughly 90% of its portfolio in that sector, Jones told Multifamily Dive.

“In the past, we just haven't had the expertise to focus on multifamily,” Jones said. “With my background, we're able to make that shift and focus more on the multifamily because we have a great reputation on the industrial side.” Previously, Jones worked at Atlanta-based Atlantic Residential and brings nearly 30 years of experience guiding large-scale residential and mixed-use developments through all phases of the project lifecycle.

Rockefeller is currently developing Brooklyn & Church, a 460-unit, $250 million multifamily conversion project in Charlotte, North Carolina, as well as Alina, a 357-unit, 60-story mixed-use tower in Midtown Atlanta, according to a press release shared with Multifamily Dive. However, “that type of trophy-style project doesn’t come around often,” Jones noted.

“For us to get a larger presence in the Southeast, we need to shift our product type to more of the wood-frame, either garden-style or wrap-type product,” Jones said. “We just want to get our name out there that that's a product that we are also very interested in doing, and we kind of see that as being our future for now.”

Currently, multifamily projects account for approximately half of Rockefeller’s development portfolio, with the remainder split between industrial and office projects, per the press release. Over the past 24 months, the company has completed and owns roughly 3,000 multifamily units across eight states, with another 2,731 units under active construction nationwide, according to a Rockefeller spokesperson.

Regional challenges

In her new role, Jones said she is eager to see what Rockefeller can achieve in multifamily in the Southeast, “given all the market constraints we're dealing with today.”

“We've got a lot of great developers here in the Southeast, and everybody's chasing the same land, chasing the same deals,” Jones said. One of Rockefeller’s advantages, she noted, is that “we don't always have to source third-party equity.” The firm can provide its own equity for a “good portion” of its projects, which helps expedite development and “shave some time off because you're not out there looking for an investor.”

Rockefeller is eyeing multifamily builds in new markets, including the Carolinas and Florida, as well as Atlanta and Nashville, Tennessee. When identifying potential sites, Jones said the firm looks for “deals out there that maybe have been overlooked.”

“We're seeing where we can find opportunities that already are part of either a mixed-use or a higher-residential-density land so we don’t have to go through a full entitlement process,” Jones explained.

However, plans are complicated by high levels of supply and widespread concessions throughout the Southeast, Jones said. “It's just going to take time” for that supply to be absorbed, she added. “That’s the nature of the beast — you just gotta wait and be patient and let the absorption run its course, basically, and then try to be one of the front-runners coming out to those markets.”

Materials and labor

Although lumber prices and other material cost escalations have subsided from recent peaks, construction remains challenging, according to Jones.

“What we're seeing now, in probably the past year or so, is the subcontractors — while they're needing and thirsty for the work — they are still hesitant to give you their best and final pricing until you're ready to sit down with them and write a contract,” Jones said.

Even with a Guaranteed Maximum Price contract, general contractor pricing can remain elevated, Jones noted. Once at the buyout stage, significant savings may emerge, but “the challenge is trying to capture those savings when you're putting the deal together, because it makes the deal unattractive if you're going in with such a higher price on your overall construction cost.”

“Once you can get the deal to go through, then you're having all these savings, which doesn't help as much because you haven't had it on the front side, so you're basically paying interest on a higher cost, or your cost of money is higher because your overall project costs are elevated,” she added.

Tariffs are still having an impact, Jones said. Many subcontractors importing products from overseas are reluctant to commit to lower prices due to market uncertainty. “So you're not getting your best numbers until when you're sitting down at the table writing a contract, and they're like, ‘Okay, if I can buy this in the next 30 days,’ then their risk is minimized, versus [when] it's an open ended, like, ‘Okay, I've got to hold this price for how many months?’”

The cost of construction labor also jumped in recent years, and although prices have plateaued, “it’s not going to go backwards,” Jones said. “I think it's the new norm, where we are on the labor costs. And from what I've seen and heard, I don't think we have, really, a labor issue. Things have slowed down because of the oversupply we have,” she said. “I think folks are out there wanting the work, but they're not going to drop their prices.”

Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.