July 21, 2021
Bruce A. Percelay is chairman and founder of Mount Vernon Company, a real estate investment and development firm known for improving communities and investing in sustainable, award-winning design.
PCA and Mount Vernon Company have worked together on mixed use, residential and hospitality projects totaling more than 750,000 square feet over the past decade.
The latest collaboration is Arthaus, a five-story residence with 74 apartments and a separate four-story building with nine condominiums. Arthaus will provide active ground floor programming including a local art gallery to enliven the pedestrian experience and create a vibrant public realm.
You use design as business strategy to differentiate your properties – the Allston Green District, the Revolution Hotel, and recently, Radius and Arthaus. What are you learning from these outside-the-box projects?
Our fundamental belief is we want to be the best in any neighborhood where we compete. And we express that through architecture. Virtually every building we have built is best in class. It does cost more, and it does take a lot more thought, and more time. We also believe that the highest risk in this business is to produce commodities. When the market is weak, the consumer is going to gravitate toward the highest quality environment they can get, especially if the price is relatively the same.
Our approach is to set a high watermark for design quality, and quite frankly, only a few other developers think that way. We are not bean counters. We don’t obsess over nickels and dimes. We are long-term thinkers. Therefore, we feel putting out unique and iconic buildings differentiates us from the competition and improves our performance. We know from years of experience that a great design attracts tenants and outperforms competing properties. The ultimate testimony to this way of thinking about design is measurable. Every single new building we have built, we were able to fully rent before it was completed, including our most recent project, Arthaus.
Your Arthaus example is a good segue into my next question. How is Mount Vernon Company’s design approach experienced at ground level by tenants?
When tenants who pre-leased early at Arthaus based on the renderings now finally get to see the actual thing, one of the most enjoyable things we experience is when they walk in after it is completed and we see their jaws drop. We like to exceed expectations, something not usually the rule in the world of real estate.
Part of the reason for satisfaction is the story connected to Arthaus, a story that resonated. When a landlord is interested in art and promoting artists, and in promoting young people who want to pursue their passion, the tenant feels the landlord has a soul. That exactly summarizes their feelings. It was similar to what we saw in the Green District. They knew the sustainability and community story was authentic, and we knew this because we did tenant surveys. The tenant view was that any landlord who was so concerned about the environment must be a good landlord. The same principle is true with the Arthaus. So, we have found that the extra effort and the extra dollars, both of which are relatively significant at Arthaus, resonate in a big way with our tenants.
What are the most important considerations for you in the early stages of planning a project that contribute to its success in the market?
I have a personal philosophy that if we can’t do something to change the neighborhood and to improve the neighborhood, then we are in the wrong neighborhood. So, we typically do not go into fully baked areas where we are seen just as another new project. We come in as the change maker. And so, we add value beyond the building by taking a neighborhood that was previously ignored and turn it into something distinctive. Our goal is not to just build something but build something spectacular.
The Green District was our first big development using this approach. It was a neighborhood with industrial uses and was known for low-quality student housing, and we completely transformed it. We built significant buildings while paying a lot of attention to the surroundings. We put art on the streets, created outdoor spaces, and changed the neighborhood. We were the first in Allston to do something like this, and we will happily take credit for igniting the Allston housing renaissance.
In the case of the Radius building, that design is a highly visible one at the intersection of Western Avenue and Leo Birmingham Parkway. We replaced a vacant power tool repair facility that was sitting there for 15 years. There was nothing going on at this intersection, in fact not anything down Western Avenue nor anything up Leo Birmingham Parkway. People said, “Are you sure you want to do this?” And we said, ‘yep.’ And we built an iconic building. Today from that site, if you look up and down Leo Birmingham and up and down Western Avenue, you will see the same thing we saw happen with the Green District. We are proud of our role as pioneers in areas where we have become agents of change.
Mount Vernon Company has teamed for close to a decade now with PCA. How do you work together to produce these community-changing ideas?
We have an unusual relationship with each other, in a good way. It is an unusual dynamic because I tend to be a little pie in the sky sometimes. And David will say, ‘we’d love to do that, but let’s do it this way, not that way, so we can afford to build it.’ So, we go to PCA with dreamy ideas, and we work together and come up with something that is both unique and practical.
The speed with which PCA can process ideas is what makes this work for us. They can corral our thoughts and translate it quickly to design. It just works.
Any closing thoughts about development, design, and what works for tenants today?
I wrote a book a long time ago called ‘Packaging Your Home for Profit.’ My background is in consumer marketing. And what I learned early is there are many ways that consumers are influenced that are sometimes very subtle, but they are quite persuasive.
Intangibles such as design play a big role in whether a person is intrigued about leasing in a particular building. It’s not just about the location. It’s not just the price. It’s the feeling that the person gets when they walk in the door. And we are very cognizant of the fact that the way a person reacts to the space that they are in has a big impact on their leasing decision. And we pay a lot of attention to that feeling.
This is what separates us because we look at real estate from a consumer experience perspective. It is no accident that our buildings lease quicker, get higher rents and have lower turnover than our competition.
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