How Mixed-Use Design Is Stealing the Show
Mixed-use properties are becoming the go-to opportunity for developers and investors across the industry. Matthew Schwartz, principal of The Domain Cos., offers his views on the sector’s future direction and the company’s next projects.
As more renters seek communities with that live-work-play feel, mixed-use is offering investors and developers a chance to showcase their new apartments while adding to the economic growth of the neighborhood. Founded in 2004, The Domain Cos. has been a major player in the mixed-use sector, amassing more than $1 billion in development and providing sustainable units for mixed-income residents across markets from New York City to Louisiana. Multi-Housing News spoke with principal Matthew Schwartz about the firm’s expanding geographic portfolio, the appeal of mixed-use and what the future holds for the company.
What is your approach to development?
Schwartz: The first step is identifying communities where we see opportunity to invest and grow over time. We are looking to identify indicators of growth potential that may have been overlooked by the market. With each individual project, we look to develop a best-in-class asset, whether that’s in special-needs housing or high-end hospitality. Further, we want to know that we can operate that asset to maintain that position. As a result, we are constantly looking to innovate and identify opportunities to create a meaningful leap in value with our products and operations. Our projects typically include elements like brownfields, historic structures, complex entitlements or other opportunities to add or unlock additional value. Finally, we are looking to create communities that are sustainable and grow in value over time. This means finding the right mix of housing, retail and services to make a community thrive. These elements often require complex financing strategies or multi-layered public-private partnerships that create opportunities for added value.
What is the appeal of developing mixed-use projects?
Schwartz: Creating dynamic and interesting neighborhoods requires combining a variety of uses that attract a diverse mix of residents, workers and visitors. Again, this wide-ranged approach to community development enables us to maximize our impact. The ability to successfully execute a variety of quality products helps us to identify a community’s greatest needs or opportunities. Truly sustainable communities are truly diverse communities, and that is ultimately what we seek to create.
Tell me more about the company’s multi-tiered approach and how it targets community development.
Schwartz: Impacting communities means more than creating and operating exceptional properties. In the years following Katrina, we learned firsthand how the impact of our work went beyond our property lines. We learned that our ability to positively impact neighborhoods extended beyond the work of our team to our residents, commercial tenants, suppliers, vendors and neighbors. Ultimately, we learned how to grow our footprint in a way that maximizes our impact and enables it to grow over time.
The foundation of this effort is our MyDomain and MyCommunity programs. Together, the programs help us support local businesses and non-profit organizations (respectively) and directly engage our residents in those efforts. We’ve built a community engagement team that is dedicated to growing these programs and expanding them into new communities as we expand our portfolio.
What are some sustainable elements incorporated into each of the projects?
Schwartz: We are always looking for opportunities to increase value through high-quality architecture and design. With each development, our team focuses on maximizing green and sustainable design, materials and building practices. Several of our properties have LEED Silver certification or higher, including Eleven33, our property in Greenpoint, Brooklyn, which has received LEED Gold certification and the Big Apple Brownfield Award. Most of our developments are located alongside or directly adjacent to public transit, and often include additional amenities such as bike or car sharing.
What are some design elements that set apart a Domain Cos. property?
Schwartz: We focus on every detail—both big and small—when it comes to design. We believe in creating modern properties that speak to the culture, community and history of the areas in which they’re built. This means working with local, award-winning architects, interiors designers and artists to incorporate unique, intentional design elements throughout. Whether large-scale works of art, designer finishes and fixtures, luxurious functional living and amenity areas, or beautiful public spaces, design is always at the forefront of our projects.
What innovative solutions have you developed for taking on challenging projects?
Schwartz: As we are always taking on new challenges, each new project requires innovation in planning, design, financing and how we engage with communities. As we are often investing early in emerging areas, our challenges often lie in how best to stimulate additional investment or otherwise overcome issues outside of our direct control. Our MyDomain and MyCommunity programs were born from this idea, and right now we are focused on measuring the success those programs have had over the 10 years we’re been working to develop them. Our community engagement team is constantly looking for new ways to engage with stakeholders throughout the community and help to create success at all levels.
How does the Domain Cos. choose geographic locations?
Schwartz: Domain’s primary objective is to strengthen communities through strategic planning and exceptional development, so that plays a major part in determining location. We choose neighborhoods where we can be partners in growth. This long-term approach is at the core of our mission to create true community value and ensure that our projects lay the foundation for future progress.
We look for markets where we can make a series of investments over time that will ultimately build off of each other and add additional value. We tend to concentrate on individual neighborhoods, looking to identify the problems or challenges they face and how we can turn those into opportunities. Engaging with a community’s residents, business owners and local officials helps us determine where best to invest.
What attracted you to New York and Louisiana as development targets?
Schwartz: New York and Louisiana are two states that have been incredibly important to Domain’s development and growth. Chris Papamichael, my fellow principal & co-founder, and I are both from New York, and became close friends while attending Tulane University in New Orleans. After graduation, we both returned home to New York to pursue respective careers in development.
After several years working in the industry, we launched Domain in 2004 with a focus on creating high-quality affordable and mixed-income housing in core urban locations throughout New York City. Over time, our comprehensive approach to community development grew to include a wide variety of housing products: retail, hospitality and creative office space. We’ve remained focused on New York, and will continue to grow our platform in that market.
After Hurricane Katrina, we returned to New Orleans and saw the urgent need for affordable and mixed-income housing. Since that time, New Orleans’ economy has undergone a dramatic transformation, diversifying to include rapidly growing industries like technology and healthcare. As a result, we’ve continued to diversify our products in that market, and see a tremendous amount of potential for the city going forward.
What are some projects in the works now?
Schwartz: It’s an exciting period of growth for Domain. In the coming months, we’ll begin construction on The Odeon at South Market, a 29-story luxury apartment building that will be the sixth building in our $500 million South Market District mixed-use development in Downtown New Orleans. A few blocks away, we’ve commenced the adaptive reuse of a beautiful historic structure into a new hotel, directly adjacent to our mixed-use Ace Hotel New Orleans.
We are currently advancing planning for The Exchange, our first project in Salt Lake City. Located in the heart of downtown’s Civic Campus, the project will combine over 400 affordable, moderate-income and market-rate apartments with a new location for our co-working and creative office platform known as The Shop. A food hall and a variety of retail and commercial spaces will be included. We’re expecting to break ground in late 2018.
We recently acquired two large development sites in Gowanus, Brooklyn, an area that is currently undergoing a neighborhood-wide rezoning. Gowanus is an area with a rich history and culture, well situated to support the growth taking place in the Brooklyn market. Ultimately, we’ll be advancing plans for mixed-use, mixed-income developments on these sites and plan to continue to invest in this submarket.
The Exchange in Salt Lake City is your first development in a new market. What led to your choosing that location?
Schwartz: For several years, we’ve watched the Salt Lake City region’s growth, supported by a business-friendly environment, diversifying economy, concentration of strong universities, well-trained and educated workforce, and high quality of life. We think companies and households will continue to be attracted to this region, and we see significant potential for future growth. That said, these changes have resulted in many of the challenges we’ve seen in other rapidly growing markets, namely housing affordability. In Salt Lake, we see an opportunity to do what we do best: creating a series of impactful mixed-use and mixed-income developments designed to create value over the long term.
Will that development lead to future projects in the west?
Schwartz: Absolutely. We were attracted to Salt Lake largely because we see the opportunity to make a wide range of investments that will build off of each other over time.
What is The Domain Cos.’ long-term plan for growing its geographic portfolio and the company as a whole?
Schwartz: We will continue to invest in New York City, New Orleans and Salt Lake City, and will continue working to identify markets for future expansion. We’ll continue growing a team of talented, entrepreneurial and innovative people who care about their communities and take great pride in the impact of their work. To support our wide-reaching approach to community development, we’ll continue to expand our operating platform, grow new projects such as our Shop co-working platform, and look for opportunities to support entrepreneurial activities within and around our developments.
How has the company grown from its first development to its latest one?
Schwartz: We’ve learned to focus on what matters most and to prioritize how we affect the lives and livelihoods of the people that live and work in our communities. We started with a focus on affordable housing, and learned to take a comprehensive look at the challenges facing a community and where we might find opportunity. We’ve learned that the best way to engage is directly. Our team has established deep roots in our communities, through their own families and relationships and by becoming more engaged citizens, as volunteers, board members or simply good neighbors.
What are some things that have changed along the way in terms of strategy, design and project features?
Schwartz: We’ve seen continued interest in core mixed-use assets and greater acceptance among financial partners for combining multiple uses in a single project and for elements that add complexity but create value (like brownfield redevelopment or investing in sustainability initiatives). In these core urban sites, we continue to see a preference for location in terms of accessibility to transportation, employment and entertainment versus apartment size. As such, our focus on unique sites, efficient design and investing in first-class community amenities has contributed significantly to the success of our projects. That said, as the appeal of living in these neighborhoods increases, our projects are appealing to a continually diversifying group of households. We are always looking to find the right balance for our products to appeal to a wide consumer base.
Technology continues to create opportunities to improve the customer experience, from our initial marketing outreach to the day-to-day interactions we have with our residents. We’ve continued to invest in digital marketing resources, our technology platform, and the training and support necessary to enable our team and residents to benefit from these amenities and services.
You’ll find more on this topic in the June 2018 issue of MHN.