Brothers Matthew and Michael Pestronk discuss founding Post Brothers Apartments to exclusively focus on creating and operating infill, class-A, best-in-class apartment buildings at a superior cost basis.
Post Brothers is one of the most active multifamily property developers in Philadelphia, with eight properties and more than 2,000 rental apartment units. In this Q&A, brothers Matthew and Michael Pestronk discuss founding the company in 2007 to exclusively focus on creating and operating infill, class-A, best-inclass apartment buildings at a superior cost basis.
What was the drive behind the company’s founding?
We were driven to found Post Brothers when we saw an opportunity to satisfy unmet market demands in the greater Philadelphia area, particularly in areas where we saw potential for redevelopment to fulfill the needs of new residents looking for high-quality housing available at competitive rates.
What challenges did you have to overcome?
Raising capital and convincing investors wasn't always easy as two guys in their late 20s and early 30s, but we changed minds over time through sound strategy and savvy decisions.
How is Post Brothers’ building model different from traditional development channels?
We call it buying smart, and developing smarter. We first seek out and exploit undervalued market niches, looking at the future rather than the present. We then redevelop properties in those areas into best-in-class assets, achieving higher rent levels than ever before in those submarkets.
How does your process differ from your competitors?
Quite simply, our strategy is effort. We don’t spend more than other comparable firms, because it’s not a matter of spending more money. It’s a matter of putting more effort into the selection and design process.
Where do you build and can you build outside your model areas?
We are currently focused on the greater Philadelphiaregion, but we are interested in any area where there is the potential to find unmet rental demand.
How do you choose the locations for your apartments and what is your customer demographic?
We have chosen our locations based on our expert assessments of market supply and demand, selecting those areas that are underutilized. In our region, our properties have attracted a range or residents, including young families and up-and-coming young professionals.
How do you ensure a superior cost basis?
Our superior cost basis is based on first finding the right properties for redevelopment, then adding unique and higher-grade finishes and amenity packages to completely transform what they once were. This is aided by our expertise as both a very hands-on construction manager and general contractor.
What factors have contributed to your success?
Post’s greatest competitive advantage is our consumer product-focused business model, and our success can be attributed to three important factors: correctly identifying demand in the consumer rental market, building the right product for the market with high quality and value, and excelling at selling the product to consumers.
How are your projects sustainable?
We don’t issue a press release every time we put in new high-efficiency windows, because we make sustainability standard practice. We start by considering the proper land use of our sites, then assess how to minimize resources during the building process, and then strictly install the most energy efficient appliances, energy saving building materials and resource conserving utilities.
Why is it important for you to be sustainable?
We like to talk about sustainability because we want to help change the world in a small way, as well as do the right thing for the communities we build in, but we also realize that energy efficiencies save us and our residents more money in the long run.
How do you promote good relationships with your vendors and subcontractors?
We choose the people we want to work with based on their abilities to do the job right, and we're honest and transparent with them every step of the way. That inevitably leads to trust, which is ultimately what's most important.