Mission: Success—Marc Lifshin
- Jun 12, 2017
Ever since he can remember, Marc Lifshin has loved to build. His father, a high school football coach turned real estate broker, brought him up around Chicago’s single-family residential real estate, igniting a desire in Lifshin that grew into a dream of starting his own development company.
As co-founder & managing partner of Core Spaces, Lifshin is living his dream every day, developing high-end student housing properties in prime collegiate markets. He recalls being a structural engineering student at the University of Illinois at Urbana-Champaign, admiring cool off-campus houses with unique features. He even converted his own college apartment with 20-foot ceilings into a two-floor space.
“I never wanted to be a desk jockey, so I thought of ways I could be outside and not have to do the same thing every day,” Lifshin explained. He met a kindred spirit in college friend Brian Goldberg, and the two often discussed starting their own company building “really cool, unique homes” once they graduated.
While he credits his engineering studies with “teaching me how to think,” a summer internship with Bill Keeley’s Keeley Construction in Chicago really showed him the ins and outs of the business and solidified his interest in real estate.
“Marc rode shotgun with me, and it was so refreshing having someone so inquisitive, willing to ask questions and learn rather than just being, ‘Yes sir, no sir’,” Keeley recalled.
Even as a young college student, Lifshin made an impression. “I regularly regret not hiring him,” Keeley quipped.
But like most recent graduates, Lifshin took some time to find himself after graduating in 2001 with a business administration minor, learning things don’t always go quite as planned. Growing up as a snowboarder, Marc headed out West to work at Vail Resorts in Colorado for six months and “chased that dream for a little bit,” before returning to his home state to take a gig selling copiers for IKON.
“I had this brilliant idea that I would take a sales job, make all this money and be able to start my own business,” Lifshin remembered. “I quickly realized that was not the case.”
Building a foundation
Lifshin left the job in 2002, hitting the pavement to find investors in order to start his own development business. He reconnected with another college buddy and Sigma Chi fraternity brother, Brian Neiswender, who had been working for a property management company and was able to match Lifshin with some capital sources for his first few residential projects. Lifshin also reunited with Goldberg, who had graduated a few years earlier and had developed some of his own residential projects, and the two went on to form LG Development Group in late 2002, focusing on building the one-of-a-kind homes they had dreamed about.
LG started out building high-end, single-family homes on spec, but while other spec builders at the time “were building very vanilla,” LG focused on bringing in a “true design factor,” Lifshin noted.
Utilizing Goldberg’s experience and a business model of “giving more for the same price,” LG quickly achieved success. While delivering on their model required taking a lower profit margin, the unique flavor of their homes allowed them often to lock in buyers before hitting drywall and sell before everybody else, Lifshin explained.
While Lifshin recalled hard days of not being able to afford to hire carpenters and having to work days and nights, he noted how fulfilling an accomplishment it was. “Looking back, we thought it was stressful doing our own work, but it was nice to complete your own project.”
During his time at LG, Lifshin developed more than 150 custom single-family homes, ranging in price from $1 million up to $25 million or $30 million, and eventually expanded its portfolio beyond single-family into multifamily, condos and restaurants.
It takes two
Neiswender kept his eye on LG while he went on to co-found student housing firm Campus Acquisitions in 2004. (The firm has since become CA Ventures.) When the partners wanted to shift from solely acquiring to developing properties, he knew just the man to partner with on a student housing project at their alma mater.
Lacking a robust development team and knowing Lifshin’s experience, Neiswender signed LG as Campus Acquisitions’ development partner in 2006, and the firms delivered their first project together, 309 Green, in 2008. The 24-story, amenity-rich student housing property (now owned by American Campus Communities) holds the title of the tallest building in Champaign, Ill.
After going on to develop several large-scale projects as partners, Neiswender and Lifshin realized the former’s background in property management and student housing and the latter’s expertise in high-end residential development made them a natural fit to form their own student housing venture.
“We were working closely together and we always saw eye to eye at Campus Acquisitions, so it was obvious we were a fit,” Neiswender recalled. “Friends in business can be a challenge, but we worked together for several years. And we also had our unique roles: I was in management and he was in development.”
While Goldberg remains at LG, Lifshin gave up his active membership in the company in 2010 and went on to launch Core Campus with Neiswender. Core focuses on the ground-up development of high-end student housing in prime locations.
“You get to dream about where you want to live in college and then you get to build it. For me, it was a massive amount of fun building our dream,” Lifshin said.
To get the firm off the ground, the two then had to find an equity partner. After meeting with several family office and investor groups, Core was able to secure a long-term equity partnership with DRW, a proprietary trading firm, after meeting with David Nelson, the firm’s head of global investments and real estate.
“In order to grow a business, especially student housing, you need the right partners and they have to be supportive,” Lifshin explained. “DRW has been there since the beginning of Core, and we were fortunate to find the right partner that was our first and only partner to this day.”
While Nelson was initially hesitant when he met Lifshin in 2009—this was during the economic downturn, after all—Lifshin’s perseverance convinced him to be Core’s equity partner.
“Marc is extremely passionate, really focused on the details and has a veracious appetite for deals,” Nelson noted. “He’s a great partner and extremely aggressive in his desire to succeed, but he’s also a very understanding person.”
With DRW’s support, in 2011, Core began developing Hub on Campus Tempe, a 19-story, 637-bed student housing property located next to the football stadium at Arizona State University. Hub was the company’s first brand created to represent all of its high-end, ground-up developments.
“That was definitely the first milestone for us,” Lifshin recalled. Following completion in 2013 and a successful lease-up during construction, strong buyer interest convinced Core to sell the property later that year for $103 million—then one of the highest-priced transactions for a single, purpose-built student housing project in the U.S.
Since the beginning, Core has solely focused on developing Main on Main real estate at tier-1 state universities, believing that if there ever was a pullback in enrollment—which Lifshin doesn’t see as likely anytime soon—these universities would be the least impacted. The strategy has proven successful, with Core going on to complete two Hub projects each year from 2013 to 2015. Today, Core has the ability to handle as many as eight new developments per year. Hub projects span the country, located at state universities like Wisconsin, Oregon, Arizona, Arizona State, South Carolina, Illinois, Colorado State, West Virginia and Ole Miss. More are in the works at state universities in Seattle, Orlando, Ann Arbor, Minneapolis, Flagstaff, Tuscaloosa, Portland and Madison, Wisc.
But Lifshin has never let success go to his head. The firm started out developing only two projects per year as it stabilized the development and management sides of its business. “I’ve seen companies come out of the gate so hot but they don’t have the right people or systems in place and they implode. We wanted to do things properly before taking the next step,” Lifshin said.
And while a lot of vertically integrated companies struggle because their development and management arms are not in sync, Neiswender said he and Lifshin “work tirelessly to make sure the two arms are constantly communicating and working together.”
Core’s development arm is headquartered in Chicago, while the management side is in Austin. But the firm takes a decentralized approach by hiring people locally to run operations. This allows Core to grow “in a way that we’re putting a product in the market first and not necessarily where our management team may be located,” Lifshin explained.
Realizing the additional avenues for making money in the education sector, Core Campus rebranded as Core Spaces about three years ago as the firm began expanding from solely student housing into high-end mixed-use projects.
Core is planning such a project on Library Lane in Ann Arbor, near the University of Michigan campus. It will be dubbed The Collective on 5th, part of the new Collective brand for developments in collegiate markets but also in urban settings. The project will include residential, hotel, office and retail components.
Also in Ann Arbor, Core is planning a Hub project due for completion in 2018 next to Graduate Ann Arbor, a boutique hotel that is part of AJ Capital Partners’ Graduate Hotels collection.
AJ Capital Partners Founder Ben Weprin sold the parking lot next to the hotel to Core because of Lifshin’s character. “I really had my pick of who we could sell the land to, but Marc was fast and aggressive, and I knew he’d close,” Weprin recalled. “He’s a handshake guy, very honorable. … I put a tremendous amount of value on that.”
This quality of living up to his word is what several of Lifshin’s colleagues say has contributed to his success.
“I’m 10 years older than Marc and we only invest our own money, so I’m pretty hard on guys when it comes to making sure the alignment of interest is there,” Nelson said. “Marc has always been extremely collaborative. He’s definitely a man of his word, but he will also hold you to your word. It’s evolved into a really nice partnership.”
Core has also expanded beyond ground-up development, as its principals have realized it could purchase existing properties for a price “way below replacement cost … that just need a value opportunity,” Lifshin explained, adding that this is especially beneficial as land and construction prices continue to climb.
The firm launched its acquisitions platform in 2015, landing two existing properties in its first year, in Morgantown, W.Va., and Fort Collins, Colo. Core completed extensive capital improvement programs at the properties and gave them a new brand: State on Campus.
“We believe in branding. We think it’s like someone’s reputation,” Lifshin affirmed. While its Hub properties are typically at the high end of the market, they tend to fall somewhere between the middle and upper-middle market, providing a high-quality product but at a price point accessible to more renters.
Finishes with flair
Attention to detail is another attribute colleagues attribute to Lifshin. When developing a project, which usually takes 36 to 48 months from when it goes under contract to completion, Core conducts extensive market research, arranges focus groups and polls college and high school students to capture the local flavor and gauge what amenities students want.
Location is the top request, with Internet and technology close behind. Fitness centers, study rooms and pools are also top amenities. But Lifshin is always searching for the next best thing.
“Marc’s very quick-witted,” noted Evans Spileous, the founder of Evans Construction Services, who has served as owner’s representative on the construction side of Core’s developments since the firm’s start.
He recollected a time when they were on a plane back from visiting a project and Lifshin saw a Bluetooth-enabled Moxie showerhead in the airline magazine. “It was like he found a piece of gold, and all of a sudden it became part of his product,” Spileous recalled.
Core also tailors its amenities to the local market. “It’s not cookie cutter from one market to the next,” Lifshin said. For instance, at the 963-bed Hub on Campus Madison, located one block from The University of Wisconsin and completed in 2015, the firm installed a hockey rink with a jumbotron to fit the often frigid climate. For its inaugural Tempe project, Core provided a 25,000-square-foot rooftop pool deck to combat Arizona’s year-round heat.
For a second project in Madison, Core created a separate brand entirely: The 850-bed property is dubbed The James for its location in former president James Madison’s namesake city.
“We already had a Hub on Madison, so we came up with something more unique that fit that local community,” Lifshin explained.
No matter the project, Core’s goal is to be the “Google of student housing,” Lifshin said. That means constantly innovating and staying progressive. The firm is continually thinking of ways to deliver an “A-plus product in an A-plus location” while still appealing to the masses.
After realizing students care less about having “X amount of square footage and more about how the space feels,” Core has developed efficiently designed micro units at some of its properties. Projects often offer a mix of unit sizes at different price points, too, so they can attract a broader renter population.
Living the dream
Over the past five years, Core has delivered 7,669 beds in 12 markets, with 4,031 under construction for delivery next year. Another 10,000-plus beds are under development and scheduled for delivery by 2020. Brand-wise, Core is under contract for two more State properties and has six Hub projects planned for 2018. Its newest brand, Collective, will debut with a 569-bed Collective on 4th development at Portland State University next year.
While Core’s goal of delivering a top-quality product and “continuing to improve on the mousetrap we build every year” remains the same, Lifshin is also focused on creating a fun work environment for the company’s 150 to 160 employees.
“Your product is aligned to the culture you build, so we’ve tailored our work environment to be one where people want to be,” Lifshin said.
Staying “young at heart” is also very important. “You have to live through the current college kids. You need to be able to relate to them, and I think that’s the biggest challenge we continually talk about: How do you timelessly build a project that’s meant not just for today’s college kids, but tomorrow’s?”
Lifshin also stays young through the charity he founded in 2008 called Camp Out For Kids, which has raised more than $800,000 to send more than 2,000 kids to summer camp to date.
Looking toward the future, Lifshin is optimistic about Core’s prospects as the student housing sector continues to gain recognition as an institutional asset class. He sees increased interest from groups trying to partner on projects or acquire assets.
Major student housing player EdR, for instance, partnered on Hub on Campus properties in Madison and Tucson in 2016, and is partnering with Core on the construction of a Hub in Minneapolis, of which EdR will be the majority owner upon completion in 2018.
And more investors are likely to eye student housing as talk of the next recession percolates, Lifshin believes, given its strong performance in the last downturn.
Lifshin expects Core to continue to grow along with the industry. He attributes the firm’s success to learning from mistakes, maintaining long-term relationships and utilizing the effective model built at LG of delivering innovative, top-quality product at competitive prices, while remaining grounded and avoiding unnecessary risk.
“Marc has a unique ability to be macro and micro,” Neiswender explained. “He has the ability to think big picture and plan and work toward a goal and future, but he also keeps involved in the micro details. He’s like two people in one. His energy level in business is about as high as it gets.”
Originally appearing in the June 2017 issue of MHN.