CrowdStreet’s Darren Powderly is joined by Todd Bennett, President of BDR Capital Partners, LLC, to discuss how the Seattle market has been impacted by COVID-19, what his firm is seeing with their occupancy and collections rates, and their latest deal on the CrowdStreet Marketplace.
Darren Powderly, Co-Founder & VP Capital Markets
CrowdStreet
CrowdStreet
Darren founded CrowdStreet in 2012 after identifying the need to radically improve people's access to commercial real estate investments via technology. Over his 20+ year career, Darren has transacted billions of dollars’ worth of commercial real estate investments and enterprise software contracts. Darren is a driven leader who loves building relationships based on mutual success. In addition to building businesses, leading teams and advising a prestigious list of national clients, Darren has personally owned commercial real estate, syndicated investment groups and developed properties from the ground up.
00:00:10 Hello everybody. Welcome to our next edition of StreetBeats. This is Darren Powderly, co-founder of CrowdStreet. It's my absolute pleasure to have Todd Bennett, uh, the founder and president of B D R companies with us today. Uh, Todd and I have known each other for a number of years. He's based in Seattle, and, uh, we're very fortunate to call Todd and his firm, a client here at CrowdStreet. Uh, again, StreetBeats is just a quick hitting overview of what we're seeing in the market from different areas of the country and different sponsors that we get a chance to work with. So, uh, enjoy today's show. And without further ado, Todd, welcome to StreetBeats. Uh, please introduce yourself, give a bio and maybe touch on your experience with CrowdStreet, please.
00:00:52 My name is Todd Bennett. I'm the chairman and founder of BDR Companies. We're a 30 plus year real estate development company in the Seattle market, specializing on the residential side. Over the past 30 years, we've developed over 3,300 multi-family housing units. We do condos and apartments. We have quite a involved for sale housing side of our business. We've built thousands of homes. Right now we have 23 projects across the Seattle area. We, we were building housing from as low price as $400,000 to, we have a very active high-end business selling homes from three to 6 million.
00:01:33 Todd, uh, Seattle, let's just touch on Seattle at first. I mean, you've been in the Seattle market for decades. Uh, as I said to you when we were getting ready for this, you know, the Seattle residential market as well as anyone that I know. So, uh, with Seattle being one of the first, if not the first city in the United States, that was impacted by Covid, uh, one of the first to actually close up shop and, and go into shelter in place. Uh, tell us what's going on on the ground right now in Seattle. What are some of your observations as the city begins to open back up?
00:02:04 I think Nationwide is probably pretty well known that we were, we're f F O is what I think of we were first in, but I think we're first coming out. Mm-hmm. <affirmative>. We had the first, we had the first cases. Um, and so I think we were first to react to it. Uh, companies like Amazon and Microsoft were first in early March. They sent their people home. You know, coming into Covid was really strong. Now you ask a question about our, our real estate market. But, but going into Covid in the early part of this year, our apartment occupancies were above 96%. Most projections had us with rent increases this year of four to 6%. Our housing market was less than one month supply in almost every price point. Um, really strong. We had a really strong residential market going into Covid. Mm-hmm. <affirmative>. So we're, we're thinking that's helping pull us through the covid situation.
00:02:57 Yeah, definitely. And that Washington in general, and Seattle in particular, is a great model, uh, for the rest of the country and the other governors to follow. The numbers are impressively low, uh, given that that's where the first outbreak was. So, uh, it is, is a good example. And for those of us who believe in science, uh, you know, to follow the numbers and take the appropriate actions, uh, is intelligent. So I'm glad to hear that, uh, things are, are looking up and, and brighter in Seattle. Uh, let's, uh, let's continue along the path of talking about residential real estate in general. Uh, I know you build a lot of homes. Uh, you've got a, what, 30 plus year track record building homes in the Seattle area. I believe you started your, your career out as a, as an accountant, right? You were, um, in the accounting
00:03:43 Industry
00:03:45 Going way back, uh, prior to getting into the, uh, the residential construction, home building industry. But, uh, tell us, uh, tell us what you're seeing. How, how is your portfolio and what are your observations about the housing market in the Puget Sound area?
00:04:00 The, the occupancies haven't dropped a lot, you know, 96 down to maybe 92, 90 3% regionwide in Seattle. Um, so not, not a big drop, but there's kind of a reason for that. A reason for that is that part of the governor's stay-at-home order was that we're apartment owners are not allowed to do evictions. So we we're not allowed to do evictions for probably another month. Collections dropped, further dropped collections have dropped into the mid eighties in a lot of projects, and that's, uh, that's what we're experiencing as well. But we, but we saw, like we're seeing this month, we're starting to see net increase in rentals. We're starting to see things picking up this month as the first phase of the stay at work order gets implemented. We are starting to see some positive traction on, on, on raising our occupancy. So, um, we're, we're feeling we're, that's what's happening today in the apartment world. We see occupancy dropped a little collections drop more, um, not really big numbers, and actually, frankly, numbers that we had anticipated. We, we, we were explore about where we expected to be, and hopefully this is kind of where we're gonna move out of now and move forward from here.
00:05:10 But it sounds like there's enough demand out there in the market, uh, especially if things continue to open up and people get back to work, uh, that, you know, you'll, you'll be able to backfill that given the low vacancy numbers that persist in the Seattle market. Right.
00:05:24 I mean, we have, we have Amazon here that's, that's targeting the groups of people that are out of work because they, they need workers. They're just, they're, they're trying to hire, you know, tens and tens of thousands of workers. So they're, they're targeting the restaurant workers and the airline workers and the travel industry, and just to pull people out of those industries, into their, into their fulfillment centers.
00:05:48 Uh, let's talk a little bit about, um, you, you have a, an offering right now in the CrowdStreet marketplace. Uh, it is called Sonata at Columbia Station. Uh, can you just tell us a little bit about that particular project and, um, you know, why you're recapitalizing it today? And, uh, I know it came to Market LA late last year, late 2019 after Comple Construction was completed, and it very rapidly went up to 95% leased. Speak a little bit about that project, please.
00:06:19 We're really proud of this project. It's a, it's a project we worked on for quite a while. It's, uh, 91 units, but it's really right next to a train station, a light new light rail station in Seattle, uh, about halfway between the airport and downtown Seattle. So it's really convenient. Um, we're, we're, uh, you know, it's a class A property. It's high quality, and we think it's, in building this project, we put some of our home building DNA into it. Um, we do some fun things in our home building side. We, we build pure, elaborate outdoor living environments with heaters. And, uh,
00:06:53 And how has the project been holding up, uh, to, you know, I know it was 95% lease, like right out of the gates, and so, you know, very competitive market, uh, for apartments in Seattle. So you guys, uh, you know, probably beat out most of the other, uh, competing projects, but tell us how is it weathering the Covid storm?
00:07:11 Um, we feel like we had an immediate burst of people that left because they lost their jobs. And it was, it was our, it was healthcare. It wasn't healthcare, I'm sorry, but it was, uh, it was the travel industry, the restaurant workers, hotel industry. Those were the, those were the jobs that got hit first. Mm-hmm. <affirmative>, and those were the, our tenants that got hit first. And so once we sustained that for the first month, we, most of the people that we have left have really good high paying jobs that are unaffected. So we feel like we have a pretty, pretty clean tenant profile at this point.
00:07:45 Uh, any other, uh, tips for our viewers today, or any other topics that you'd like to touch on before we wrap up?
00:07:52 My summary for our market here is, Seattle's really unique place. I'm, I'm totally unobjective for sure, but it's, it's, it, it has a high tech vibe going on that's hard to underestimate. And, and we happen to have the two, I think now the two biggest companies in the world who are totally thriving during this covid time. There's nothing more in demand than cloud computing and remote workplace, Microsoft and home delivery with Amazon. There's nothing more in demand right now. And so those companies are, are thriving and benefiting our marketplace here.
00:08:31 Good things happening in Seattle. Well, Todd, thanks so much for joining us. Uh, continue the good work up there in Seattle in your residential home building and apartment, uh, development. Also, if you're interested in receiving StreetBeats, uh, on a regular basis, you can sign up for, uh, to receive these on a weekly basis. So thank you, Todd. Uh, it was great having you. Great to see you.
00:08:54 Thank you.
00:08:55 Stay healthy and stay well.
00:00:52 My name is Todd Bennett. I'm the chairman and founder of BDR Companies. We're a 30 plus year real estate development company in the Seattle market, specializing on the residential side. Over the past 30 years, we've developed over 3,300 multi-family housing units. We do condos and apartments. We have quite a involved for sale housing side of our business. We've built thousands of homes. Right now we have 23 projects across the Seattle area. We, we were building housing from as low price as $400,000 to, we have a very active high-end business selling homes from three to 6 million.
00:01:33 Todd, uh, Seattle, let's just touch on Seattle at first. I mean, you've been in the Seattle market for decades. Uh, as I said to you when we were getting ready for this, you know, the Seattle residential market as well as anyone that I know. So, uh, with Seattle being one of the first, if not the first city in the United States, that was impacted by Covid, uh, one of the first to actually close up shop and, and go into shelter in place. Uh, tell us what's going on on the ground right now in Seattle. What are some of your observations as the city begins to open back up?
00:02:04 I think Nationwide is probably pretty well known that we were, we're f F O is what I think of we were first in, but I think we're first coming out. Mm-hmm. <affirmative>. We had the first, we had the first cases. Um, and so I think we were first to react to it. Uh, companies like Amazon and Microsoft were first in early March. They sent their people home. You know, coming into Covid was really strong. Now you ask a question about our, our real estate market. But, but going into Covid in the early part of this year, our apartment occupancies were above 96%. Most projections had us with rent increases this year of four to 6%. Our housing market was less than one month supply in almost every price point. Um, really strong. We had a really strong residential market going into Covid. Mm-hmm. <affirmative>. So we're, we're thinking that's helping pull us through the covid situation.
00:02:57 Yeah, definitely. And that Washington in general, and Seattle in particular, is a great model, uh, for the rest of the country and the other governors to follow. The numbers are impressively low, uh, given that that's where the first outbreak was. So, uh, it is, is a good example. And for those of us who believe in science, uh, you know, to follow the numbers and take the appropriate actions, uh, is intelligent. So I'm glad to hear that, uh, things are, are looking up and, and brighter in Seattle. Uh, let's, uh, let's continue along the path of talking about residential real estate in general. Uh, I know you build a lot of homes. Uh, you've got a, what, 30 plus year track record building homes in the Seattle area. I believe you started your, your career out as a, as an accountant, right? You were, um, in the accounting
00:03:43 Industry
00:03:45 Going way back, uh, prior to getting into the, uh, the residential construction, home building industry. But, uh, tell us, uh, tell us what you're seeing. How, how is your portfolio and what are your observations about the housing market in the Puget Sound area?
00:04:00 The, the occupancies haven't dropped a lot, you know, 96 down to maybe 92, 90 3% regionwide in Seattle. Um, so not, not a big drop, but there's kind of a reason for that. A reason for that is that part of the governor's stay-at-home order was that we're apartment owners are not allowed to do evictions. So we we're not allowed to do evictions for probably another month. Collections dropped, further dropped collections have dropped into the mid eighties in a lot of projects, and that's, uh, that's what we're experiencing as well. But we, but we saw, like we're seeing this month, we're starting to see net increase in rentals. We're starting to see things picking up this month as the first phase of the stay at work order gets implemented. We are starting to see some positive traction on, on, on raising our occupancy. So, um, we're, we're feeling we're, that's what's happening today in the apartment world. We see occupancy dropped a little collections drop more, um, not really big numbers, and actually, frankly, numbers that we had anticipated. We, we, we were explore about where we expected to be, and hopefully this is kind of where we're gonna move out of now and move forward from here.
00:05:10 But it sounds like there's enough demand out there in the market, uh, especially if things continue to open up and people get back to work, uh, that, you know, you'll, you'll be able to backfill that given the low vacancy numbers that persist in the Seattle market. Right.
00:05:24 I mean, we have, we have Amazon here that's, that's targeting the groups of people that are out of work because they, they need workers. They're just, they're, they're trying to hire, you know, tens and tens of thousands of workers. So they're, they're targeting the restaurant workers and the airline workers and the travel industry, and just to pull people out of those industries, into their, into their fulfillment centers.
00:05:48 Uh, let's talk a little bit about, um, you, you have a, an offering right now in the CrowdStreet marketplace. Uh, it is called Sonata at Columbia Station. Uh, can you just tell us a little bit about that particular project and, um, you know, why you're recapitalizing it today? And, uh, I know it came to Market LA late last year, late 2019 after Comple Construction was completed, and it very rapidly went up to 95% leased. Speak a little bit about that project, please.
00:06:19 We're really proud of this project. It's a, it's a project we worked on for quite a while. It's, uh, 91 units, but it's really right next to a train station, a light new light rail station in Seattle, uh, about halfway between the airport and downtown Seattle. So it's really convenient. Um, we're, we're, uh, you know, it's a class A property. It's high quality, and we think it's, in building this project, we put some of our home building DNA into it. Um, we do some fun things in our home building side. We, we build pure, elaborate outdoor living environments with heaters. And, uh,
00:06:53 And how has the project been holding up, uh, to, you know, I know it was 95% lease, like right out of the gates, and so, you know, very competitive market, uh, for apartments in Seattle. So you guys, uh, you know, probably beat out most of the other, uh, competing projects, but tell us how is it weathering the Covid storm?
00:07:11 Um, we feel like we had an immediate burst of people that left because they lost their jobs. And it was, it was our, it was healthcare. It wasn't healthcare, I'm sorry, but it was, uh, it was the travel industry, the restaurant workers, hotel industry. Those were the, those were the jobs that got hit first. Mm-hmm. <affirmative>, and those were the, our tenants that got hit first. And so once we sustained that for the first month, we, most of the people that we have left have really good high paying jobs that are unaffected. So we feel like we have a pretty, pretty clean tenant profile at this point.
00:07:45 Uh, any other, uh, tips for our viewers today, or any other topics that you'd like to touch on before we wrap up?
00:07:52 My summary for our market here is, Seattle's really unique place. I'm, I'm totally unobjective for sure, but it's, it's, it, it has a high tech vibe going on that's hard to underestimate. And, and we happen to have the two, I think now the two biggest companies in the world who are totally thriving during this covid time. There's nothing more in demand than cloud computing and remote workplace, Microsoft and home delivery with Amazon. There's nothing more in demand right now. And so those companies are, are thriving and benefiting our marketplace here.
00:08:31 Good things happening in Seattle. Well, Todd, thanks so much for joining us. Uh, continue the good work up there in Seattle in your residential home building and apartment, uh, development. Also, if you're interested in receiving StreetBeats, uh, on a regular basis, you can sign up for, uh, to receive these on a weekly basis. So thank you, Todd. Uh, it was great having you. Great to see you.
00:08:54 Thank you.
00:08:55 Stay healthy and stay well.