Focus on Location, Instead of Asset Classes, Says Investor

Ari Rastegar, Founder & CEO of Rastegar Property Co., has carved out a reputation as an entrepreneur who blends traditional investment strategies with innovative technologies. That has helped him create a diverse portfolio that spans residential, commercial and mixed-use properties, across 12 states.

We first talked to Rastegar in 2021, when the economic landscape was quite different compared to what it is today. Now, we asked the investor to share updates about his company, and provide fresh insights into his current investment strategies, particularly in Austin, Texas, his hometown.

When we last spoke, you told us about your plans so expand beyond Austin into tech-centric Sun Belt cities. Where is Rastegar Property present these days?

Rastegar: Our investment approach is truly sector-agnostic, prioritizing investment in locations with the right characteristics for growth rather than in any one asset class. Key characteristics we look for are strong job and wage growth, a diversified and business-friendly local economy, and generally favorable weather, leading to increased quality of life.

With these attributes in mind, Rastegar’s portfolio currently includes nine projects in Texas and Arizona totaling over 5.6 million square feet and $1.5 billion including in key Sun Belt cities Austin, Dallas and Phoenix. We’re most active in Austin since it is one of the fastest-growing U.S. cities and is also my hometown, so I’m passionate about building more homes that cater to the needs of the community.

Outside of Texas, we also see Phoenix as a booming market with tremendous population growth as job opportunities expand in the area. We have an Opportunity Zone there where we have plans to build the tallest building in Arizona in downtown Phoenix, at 326 N. 4^th Ave. Totaling 260,700 square feet, this development will ultimately add 261 multifamily rental units to the area, including a mix of studio, one-bedroom and two-bedroom apartments. The development will capitalize on the area’s growing demand for apartments while also complementing the diverse range of urban land uses and small businesses found in the surrounding area. We’ll continue to invest in major markets in the Sun Belt where we see the most potential for growth.

Tell us a few more details about the projects you have in the pipeline in Texas.

Rastegar: We have a massive multifamily project at 5402 S. Congress Ave. that just won its zoning approval this past May, which is really exciting. It’s an aggregate of three different lots that the light rail in Austin will sit on. Our 300 multifamily units will be built on the most famous street in Austin, with retail space below, generating a massive wave of community enhancement that this area really needs.

We also have over 1,400 apartments that are under horizontal construction right now that will soon go vertical as part of our Inf1nity Square development, a 318-acre master-planned community in Kyle, Texas, currently in the first of seven phases of construction.

In Dallas, we have a residential tower that we’re working on that’s zoned for condos and multifamily as well, resulting in a mix of for rent and for sale.

In the next year or so we’ll also be undertaking the rezoning of 10 different projects in order to build more Class A to meet high growth demand in these areas. Zoning is really what Rastegar does best, and through rezoning what we already wholly own as part of our portfolio, we plan to develop almost 6,000 multifamily units over the next three to five years.

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Can you go more in-depth about the plans you have for Austin?

Rastegar: Austin is a very special and diverse place where you can see all the best aspects of Texas come together in one city. The state of Texas is strong economically, and politically you can see the positive impacts of a bipartisan balance in a city like Austin, which leans liberal but within a more conservative state. There’s a reason that great tech companies like Tesla, Space X and The Boring Co. are moving to Austin and expanding here.

And so, we’re continuing to expand here, too. Our mixed-use development, Inf1nity Square in Kyle will create a new, master-planned community that includes 1,000 single-family homes and 1,400 multifamily units, office space, retail and even an elementary school to support the growth that Austin is experiencing. Construction on these 318 acres has already begun.

With the rise of smart homes and IoT, how do you plan to incorporate technology and sustainability features into your multifamily projects?

Rastegar: We take a tech approach in everything, from property management to resident-centric technologies within our apartment units, such as new safety mechanisms that utilize geofencing technology. We feel that tech is so critical to our growth strategy that we are building an in-house team that will custom-design our proprietary prop tech solutions going forward.

More so, we’re always looking to make the best use of our capital to do what’s best for the community, as well. Inf1nity Square and other projects will involve solar and are always looking to be good custodians of the land, while also being prudent about cost when it comes to the materials we use, and the sustainability features we include.

The pandemic is behind us, but are we over the impacts it inflicted upon the multifamily industry? What permanent changes do you notice in multifamily living preferences in a postpandemic world?

Rastegar: We are absolutely not over the impacts. They kept rates too low for too long and then raised rates too fast, dropping the value of multifamily across the board, although the impacts have been felt across many asset classes.

But a lot of the more enduring impacts of the pandemic come down to multifamily interior design. The shift to remote and hybrid work means that people require different interior setups to do their jobs from home. Value-adds like small built-in desks are just one postpandemic consideration we’re making when we think about designing our multifamily interiors.

What are your thoughts on the current financial landscape? How has it altered your investment and development strategy?

Rastegar: Our business is very much governed by interest rates, so when there’s fear in the global marketplace, it can prevent a lot of good deals from happening. Right now, there’s definitely money sitting on the sidelines waiting to be deployed because of the emotional response to interest rates.

That said, Rastegar remains bullish on real estate and is working to make these deals happen, even in a challenging market. We have 1 million square feet of development under construction and are committed to delivering on our construction program to create developments that will produce long-term value for communities and investors.

We take on the highest level of risk as the first investor in our projects. We see opportunities following trends in population and asset use, and are able to see the long-term picture which has meant we have a strong track record of delivering for our investors.