This NYC developer was already shifting his portfolio away from the city before the coronavirus

Jeff Simpson was already looking away from New York City for investment opportunities before the coronavirus pandemic hit.

Now, he says he’s even more sure of his strategy.

Simpson is the founder of Arch Cos., a real estate development, investment, construction and management firm headquartered in New York. Arch focuses on value-add opportunities with existing properties and ground-up projects. The company has properties in New York, California, Florida, Alabama, North Carolina and South Carolina.

In New York City, Arch is building loft-like apartments in SoHo and boutique condominiums in Williamsburg.

Simpson spoke with me recently about what projects his company has in the works right now, what he sees happening in the market, and what his outlook is for his projects.

This conversation has been edited and condensed for clarity and length.

What projects do you have going on right now?

In New York, we only have a limited portfolio and it’s all construction right now. We shifted away from assets in New York probably four years ago.

Both projects, like any projects in New York, they’ve gone through the process of, what’s essential work? What’s not essential work? Are construction workers comfortable coming to work?

What do you see happening in the market?

As far as condo sales in New York, those were a problem pre-corona, so I don’t think that goes away. The large projects with lots of condo inventory are going to become even more problematic.

Has this changed your outlook on the NYC market at all?

We really have been struggling with the political environment in New York in the last couple of years, [as well as] the mismatch of construction pricing and land pricing.

We really have shied away from New York other than unique projects that are special situations. This isn’t going to make us hungrier, other than, again, more unique situations.

Our outlook on buying garden apartments in the Southeast and buying office selectively where there’s major tenants, that’s where we’re comfortable. Our portfolio is performing nicely through this.

How is your portfolio being affected geographically speaking?

The southern states feel much different than the northeastern states.

We’ve already positioned ourselves to be in those markets. We’re in Alabama, we’re in northern Florida, [as well as] North Carolina, South Carolina.

I think those markets are still strong — really happy that we’re there.

The states that are subject to a lot of regulation are going to be problematic and continue to be problematic.

I think our thought process is really very much the same. It’s just going to be a matter of price, where we feel comfortable transacting.

By: Liz Young, New York Business Journal


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