Exclusive Q&A: CityView CEO Talks Millennials And Multifamily
CityView CEO Sean Burton says his firm benefits from capitalizing on properties other companies disregard. Sean will be one of our amazing speakers at Bisnow's BMAC West event July 20 at the Omni Downtown LA.
Bisnow caught up with Sean to find out more about CityView and its latest developments.
Bisnow: What has been the strategy for your company?
Sean Burton: CityView’s strategy is to target complex multifamily housing opportunities in urban markets, which are often overlooked by other investors due to transaction and development challenges. This could include entitlement or environmental issues, political hurdles or community challenges.
The majority of our projects are transit-oriented, meaning that they are within walking distance of transportation hubs, job centers, schools, retail services, healthcare facilities and cultural amenities. Our goal is to generate top-quartile returns for our limited partners while striving to measurably improve the surrounding community. CityView also targets urban areas we believe will continue to grow and thrive due to demographic and cultural changes, which are attracting people to the nation’s city centers. Demand for housing in dense, high-cost markets such as the San Francisco Bay Area and coastal Southern California means housing supply is constrained and barriers to entry are significant. These market conditions are ideal for our style of investing.
Bisnow: Do you see that strategy changing in the next year?
Sean Burton: No, we do not expect the strategy to change in the next year. We will continue to focus on building well-designed, urban projects that are near jobs, transportation, entertainment, retail centers and other amenities.
Bisnow: What do you think the future of the multifamily industry looks like?
Sean Burton: In one word: Millennials. The Millennial generation is nearly 90 million people strong. It is the largest in the history of the United States, and it is completely changing the future of multifamily housing. Millennials are nearly 2.5 times more likely to rent than Baby Boomers, Generation X or any other group. They want buildings with good design, great common spaces, free WiFi, car-charging stations, gyms, yoga rooms, and pet-friendly spaces like dog runs and pet washing stations. The multifamily housing industry needs to keep working to understand the demands of this new generation.
Bisnow: What do you think makes your company stand apart from its competition?
Sean Burton: If there is one thing CityView is known for, it’s our ability to get even the most difficult projects done. We focus on sites that are in excellent locations but have environmental challenges, structural issues, affordability restrictions or entitlement issues. Our team has the ability to come in and work through those challenges so we can obtain the site and put the property to better use as a multifamily housing community. In addition, we have strong operational expertise in the local markets where we build. That includes government processes, property management, development, entitlement, design, construction, finance, law, accounting and market research. We implement a real hands-on approach that is different from many of our competitors.
Bisnow: Can you update us about some of your company's latest projects?
Sean Burton: CityView currently has several multifamily projects under construction. This includes The Pearl on Wilshire (above), a 346-unit building in the heart of LA’s Koreatown neighborhood. In keeping with our focus on transit-oriented development, the complex is walking distance to two major metro stations along Wilshire Boulevard, giving residents access to jobs and entertainment located in Hollywood and downtown LA.
In nearby Costa Mesa, we are redeveloping a 4.17-acre site that was previously occupied by an office building. We are seeing Orange County become an increasingly important market for us as it is now entering the redevelopment phase where obsolete structures are being converted into housing.
In San Diego’s Little Italy neighborhood, we are under construction on AV8, which is ideally located in one of the city’s most desirable and vibrant neighborhoods. The project will feature a six-story building containing 129 residential units, 7,600 SF of retail space and an amazing rooftop deck with harbor views. In northern California, another one of our transit-oriented developments is under construction in Union City. It’s 243 units and is walking distance to the Union City BART station as well as a major shopping center. We also have buildings under development in Menlo Park and Mountain View—both will provide residents with fantastic access to job centers in their respective areas.
Bisnow: How tightly do you watch the stock market, oil prices and the struggling Chinese economy? How does that change your perspective?
Sean Burton: While we certainly do keep an eye on macroeconomic situations, we focus on how such trends affect job growth, wage growth and population growth in the specific geographies where we are active. These and other microeconomic trends are different city-to-city and offer key insights into the current and future health of the multifamily housing market.
Bisnow: Some are saying we're less than a year from a downturn. What are your thoughts?
Sean Burton: I have been thinking about this a lot lately. In almost every meeting I attend, people ask me what “inning” I think we are in regarding the multifamily housing cycle, meaning, how close are we to a downturn? My answer is always the same: It absolutely depends on what market you are talking about. If you are talking about a number of highly desirable urban cities—San Francisco, Los Angeles, San Jose, Denver, San Diego, Portland—then we believe we are still in the early innings and have lots of running room ahead of us. There are a number of trends that support this, such as population, job and personal income growth that exceed national averages, as well as significant barriers to entry that restrict new supply.
This supply/demand imbalance leads to higher occupancy rates and higher rents and, importantly, it is cheaper to rent than own in those cities. This leads to higher returns and lower risk for multifamily investors in these markets. Add in to this mix the fact that Millennials are the largest age group in the US population, and they are significantly more likely to rent. They also want to live in the middle of cities—in the middle of the action—to be near jobs, entertainment and amenities.
Bisnow: What do you enjoy doing outside of work?
Sean Burton: Outside of CityView, I serve as the president on the Board of Airport Commissioners for Los Angeles World Airports. The other commissioners and I are working to bring major improvements to LAX—not just to the airport itself but also to the infrastructure connecting the city to this important transportation hub. It’s an enormous project and one that I’m excited and thankful to be a part of.
Family time also is extremely important to me. You will often find me on baseball diamonds and soccer fields with my children, and we frequently attend Dodgers games together. We also do a lot of hiking and fly fishing in the mountains.