Executive Q&A: Blazing a Trail in Sun Belt Multifamily

Pollack Real Estate Group CEO Steven Shores on developing and value-add investing in Southeast and Southwest markets that have economic promise but no new product.
Steven Shores, CEO, Pollack Shores Real Estate Group

Steven Shores and Marc Pollack joined together in 2006 to create Pollack Shores Real Estate Group, an Atlanta-based firm investing in multifamily communities across the Southeast. Over the past 13 years, the company has amassed a portfolio of more than $1.6 billion in assets throughout the Sun Belt.

Last year, Pollack Shores acquired several value-add assets, including Discovery at River Bend in North Atlanta, Factory at Garco in Charleston, S.C., and Avery at Northwinds in Alpharetta, Ga. In January, Pollack Shores sold 5 West Apartments, a 318-unit, Class A community in Tampa, for $61.9 million to TH Real Estate. Additionally, Pollack Shores owns and operates Matrix Residential, a property management firm with a portfolio of approximately 31,000 multifamily units across eight Southeast states.

MHN recently interviewed  Shores, who was named CEO of Pollack Shores in January 2018 (Pollack continues as chairman), about the company’s current projects and plans for the future. Prior to co-founding the company with Pollack, Shores served as manager of the Denver development office of Hines Interests, was manager of acquisitions for Hines’ Southwest region and was also responsible for purchasing existing office and land assets in the states of Texas, Colorado, Arizona and New Mexico for several Hines investment funds―about Pollack Shores’ current projects and plans for the future.

What led you to start the company?

Shores: Back in 2006, we saw an opportunity and thought it was a good time to create a multifamily focused business. My partner Marc Pollack and I both came from other organizations. Marc had been in the multifamily business for a number of years while I came from the commercial side—I had been with Hines. We saw an opportunity to bring together a more institutional approach to the business by combining my experience from the commercial side with Marc’s background in multifamily.

I’ve always been entrepreneurial at heart, and I wanted to try to create something from scratch within real estate. To me, the residential side was much more interesting because it allows us to design spaces that enhance and enrich someone’s living experience and overall quality of life. The resident-focused approach has played an integral role in our growth and success as a firm. Making the leap with Marc was one of the best business decisions I’ve ever made.

Back then, what was your strategy based on?

Shores: Both Marc and I recognized that the apartment business was moving from what had traditionally been a very small-firm, mom-and-pop-focused and locally financed business into a larger asset class that was becoming more institutionally accepted. We saw an opportunity to create a best-in-class firm that would take advantage of that trend by structuring ourselves as an institutionally focused firm that could develop and execute a strategy geared toward the new class of investors who were gravitating into the multifamily arena.

How did your past experiences prepare you for this role?

Shores: My experience as both a real estate developer and institutional investor has helped to sharpen and refine Pollack Shores’ multifaceted approach. We understand the complexities of the zoning process and how to develop the new class of mixed-use environment that municipalities are seeking. We also know how to pair that knowledge with institutional investors who want a return on the capital they invest. Even though I was on the commercial side with Hines, I also had the opportunity to work in the master planning arena on several condominium projects. That background coupled with a generalist approach to my business life has prepared me well and provided a breadth of experience in finance, development and management of people.

What is the company’s strategy for 2019 as far as development and investment?

Shores: Our strategy on the development side will continue to focus on value development in high-growth suburban areas that have favorable demographics and proximity to walkable, mixed-use environments. We are going into areas that haven’t had new multifamily product in a while and trying to be the first movers into those locations. The other strategy entails building more cost-effective units in emerging neighborhoods and cities. For example, in Atlanta, we are making a big bet on the new Southeast section of the Beltline that is currently under construction. We are developing multiple properties in underutilized neighborhoods that are on the frontier of new job and population growth, yet haven’t seen new product in at least a decade. These types of projects have all the ingredients needed to generate healthy returns over the long haul and reflect where Pollack Shores will focus its time and energy for 2019 and beyond.

Besides the Atlanta area, where else is the strategy coming into play?

We’re doing this in other cities such as Charleston, S.C., Charlotte, N.C., Denver and Dallas.

What makes a location a strong one? What do you look for and when do you know it’s time to spread out?

Shores: It’s the age-old adage of wanting to be in the middle of the adjacencies of where people work and spend their time. Jobs and retail, specifically entertainment retail, are good geographic guideposts for where we scout and set up shop. We go where people want to go and spend time, and we identify those opportunities ahead of the pack. Right now, we believe the majority of good opportunities exist in suburbs that are seeing an influx of new jobs and residents. We’re building and redeveloping communities that are adjacent to vibrant areas that offer a wide array of unique dining, retail and entertainment experiences and appeal to today’s Class A renter.

What defines a Pollack Shores Real Estate Group property? Are there any common denominators?

Shores: We focus on the living experience of our residents. Everything we do is designed to enhance that experience and provide a higher level of service. To support that core focus, we train and coach our people in a manner that is very similar to what you find in the hotel industry. We want our residents to consistently feel that level of service when they live in our community. From a design perspective, we’ve also incorporated aspects of hospitality by creating vibrancy in our lobbies and common spaces. In several repositionings, we’ve been able to transform dated, “pass-through” spaces into a new destination and gathering area that attracts residents and energizes the community.  

Describe the make-up of your portfolio.

Shores: From a historical perspective, we’ve done around 60 percent new development and 40 percent acquisition/repositioning of existing properties. All of the new communities we develop are Class A, while properties that we acquire are usually A- or B+. Our value-add assets ultimately return to Class A status upon the completion of capital improvements and addition of new amenities.

What growth initiatives are planned for 2019?

Shores: Pollack Shores will continue to expand in the Southwest. We will break ground on new projects in Colorado and Texas this year, with hopes in being in Phoenix by the end of 2019. We’re also getting into the age-targeted/active adult side of the business, which is separate and distinct from the traditional senior living category. Today’s Baby Boomers are more active than preceding generations and seek a turnkey, vibrant living experience that delivers freedom, convenience and special events and programming unique to their neighborhood. Pollack Shores’ new Olea brand aims to capitalize on a spike in market demand for this type of product, with two age-targeted projects in Florida currently under development. We will continue to grow this segment of our business in the months and years ahead.

Last year, the firm had a notable milestone at The Battery Atlanta, developing three different Class A communities in conjunction with the Atlanta Braves and selling those assets in some of the most highly priced transactions. Is that something we can expect more of?

Shores: We are very proud of our partnership with the Braves in developing Home at the Battery, which has created a new blueprint for similar sports-anchored projects now underway in markets across the U.S. The transaction represents one of the most expensive multifamily sales in metro Atlanta over the last several years and reflects strong demand for high-performing Class A assets located near shopping, dining and retail. We will continue to pursue more large mixed-use projects on that scale, with a few already moving through the pipeline.