179: Tim Alexander and Bill Endicott, Mill Creek Residential

When Mill Creek Residential launched in 2011, it didn't look like the typical startup. Roughly 75 people came together to form the company with capital relationships already in place, construction expertise in hand, and a clear thesis on multifamily development. Fifteen years later, their vision has scaled into a national platform serving 29 markets across the country with $11.3 billion in assets under management.

Tim Alexander, Managing Director of Development, and Bill Endicott, Vice President of Construction join us on Design Development to share their journey and highlight the great things happening at Mill Creek. The two have worked alongside each other for nearly nine years in an office where development, construction, and property management sit under one roof. Today, they have five projects under construction across Greater Boston, ranging from garden-style townhomes nearing delivery to podium projects years in the making.

Before Mill Creek, Tim was a Development Manager at WS Development, where he led retail and mixed-use projects across the East Coast. He spent the previous seven years as a Development Executive at Clark Realty Capital, managing development activities for multifamily and mixed-use projects across Washington, D.C., and Northern Virginia. Tim holds a Bachelor of Arts from Colgate University and a Master of Business Administration from the Darden School of Business at the University of Virginia.

Bill spent a decade at Skanska USA Building before joining Mill Creek, working on public and private projects across education, aviation, life science, and transportation. He holds a Bachelor of Science in Civil Engineering from the University of New Hampshire and a Master of Science in Engineering and Project Management (Construction) from the University of California, Berkeley.

Inside this week's episode:

• How Mill Creek capitalizes deals across SMAs and third-party equity, and the discipline behind keeping investor relationships in balance
• Why having development, construction, and property management under one roof shapes what Mill Creek pursues, not just how they execute them
• The career journeys bringing Tim and Bill to Mill Creek, and what each of them learned along the way
• The construction realities of building in Boston, from post-tension concrete versus composite steel to subcontractor alignment
• The internal culture around mistakes, and why hiding one is more dangerous than making it

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Transcript

Rens Hayes IV 0:08

Hi, everyone, and welcome to Design Development, your hub, the learn direct from top performers in real estate design and construction. I'm your host, Rens Hayes, co-founder of H+O Structural Engineering, a lifelong learner, and I'm personally obsessed with high-powered organizations and the leaders that got them. Let's go. Thanks for joining us today on design development. We have two great guests for you today. We got Bill Endicott and Tim Alexander from Mill Creek Residential. Thanks so much for joining us, guys. Yeah, thanks for having us. Thanks for having us, friends. As I prepared for this podcast, and I know you guys from local Greater Boston and the work that you're doing here, I had no clue that you guys were founded in 2011. And to see the scale at which you operate today is mind-blowing growth. So I'm excited to dig in. Tim, I'm gonna start with you. What's going well at Mill Creek right now?

Tim Alexander 0:56

That's a great question. I appreciate you phrasing it that way. It feels like every day a challenge in our world, as I'm sure you can relate. But we're fortunate actually to have five projects under construction right now, which is the watermark for Mill Creek in Boston. And I'll let Bill get into specifics, but you cross a couple different product types, some lower density projects with flats, buildings, and townhomes. We have two of those under construction and about to deliver. And then we have three podium projects that are under construction, many of which she worked on the pre-development for upwards of five, six years. So see them come to fruition is a really gratifying spot for us to be in. But as I mentioned earlier, every day brings a new challenge, whether it's in pre-development or in construction or in leaf up, or sure some other things we'll talk about as the conversation keep that. We're proud of where we are today in terms of having five under construction and a few more on the way.

Rens Hayes IV 1:47

Yeah. Five under construction in one region of your national company is unbelievable to think of. And you mentioned five to six years in pre-development. If I think back five, six COVID was 2020, right? Interest heights are 22. You've gone through so much in that timeframe. The deal that you thought you had in 2020 looks totally different today, doesn't it?

Tim Alexander 2:08

It does. Uh oftentimes, yes. And so we have to have patient capital on our side, folks who believe in the story of the projects and believe in our teen, and obviously good partnership with land sellers as well, who are willing to hold on, be good partners and see that see the end of the tunnel. So yeah, you're right. A couple of those projects were put under contract pre-COVID, very different interest rate environment, very different, in some cases, permitting environment as well. So yeah, the testament to the team and the patience and the perseverance.

Rens Hayes IV 2:38

Bill, for those that don't know Mill Creek, could you give us a snapshot of the company today? Geographic reach, offices, team size, that sort of thing.

Bill Endicott 2:46

Yeah, sure. So we are a multifamily development company spread from Boston to Seattle and everywhere in between the smile of the country, if you will, down through Florida, up and down the East Coast, Texas, Denver, Southwest, California, Phoenix, all the way up to again up to Seattle. We are in 2022 locations uh across the country. We are roughly 11, yeah, about 1,100 employees across the board right now. That includes construction, development, acquisitions, property management, investment management, a number of other support groups across the company, headquartered down in Boca Rotan, but running from coast to coast with all of those groups. Here in our office, we are represented, we're lucky, we're represented by construction development and property management or operations team, which is pretty consistent across all of our offices. We also have some folks from the acquisitions team as well as investment management sitting in our office here. So you have a gamut of all of our teams and some presence of that sitting here in Boston. Gives us an advantage of kind of what's going on locally, but also the policy of what's happening across the country in different markets and different groups within the company.

Rens Hayes IV 3:57

As I think about that growth, so founded in 2011, here we are 15 years later, but there's 22 offices. That's more than an office a year. And when you what do you have any sense of the strategy of so many offices to deploy capital and re- are you trying to have an office in every state that you work in? Is it regional? How do you think about that?

Bill Endicott 4:15

Yeah, I think we have an office in pretty much every market that we're working in. Tim, I think you probably agree. We've developed offices as we've targeted markets, generally speaking. And some of those have grown organically. A number of those were created as the company evolved in 2010 and 2011 and then expanded over the last 10 plus years to expand our reach across markets. Like Salt Lake City, I'm thinking, is one is a newer one. And Charlotte as well. And in recent years, maybe going back five, six, seven, eight years, something like that. But the cores of the presence here in Boston and the Mid-Atlantic and down in Florida and Texas all stem back to where our footprint was originally when we grew out of the Tramil Crow residential and came from that with the construction and development leadership to create the Milk Creek platform back in officially branded, I think, in 2011.

Rens Hayes IV 5:06

Development, construction, and property management in most offices because you're trying to self-perform. And you mentioned, Bill, that acquisitions and investment sit here in Boston. So, Tim, I know that's on your side of the company. Is that mean the team here sitting in Boston is looking out beyond Boston for acquisitions and investment to support all of these offices? How does that work internally?

Tim Alexander 5:28

Yeah, that that's right. So we actually we have an acquisitions team in a couple different offices around the country, including here. And you're right, they're covering multiple markets and ultimately the entire country. You've got a brand, and I think you will allude to it, it's called Alistair, which is a brand for when we acquire existing communities. It's not the biggest part of our portfolio or our platform, but it's a great addition, uh, allows us to find value add opportunities really across the country. So anytime you see Alistair and Mill Creek together, that's a community that we didn't develop and build ourselves, but we acquired. So yeah, those folks are a couple of them are in our office, but obviously on the road all the time looking at different products and opportunities.

Rens Hayes IV 6:09

If if we look off a given investment horizon, how often are you trying to develop your own product versus acquire existing? Is it 50-50, 70-30 type of thing, or is it not that rigid?

Tim Alexander 6:22

It's probably not that rigid, but really the vast majority of it is still something that we develop and build and construct ourselves. That's probably the core of the company. There are certainly a lot of different opportunities for us to acquire, but at our core, as you can tell by the fact that we develop and manage construction in-house, that's really the that's really our knitting as a company, is is the ground up development piece.

Rens Hayes IV 6:44

What's the financial model, Tim? Are you capitalizing deal by deal? Are you raising funds?

Tim Alexander 6:49

It's both. Yeah, fortunately for us, we have a couple different avenues there. We certainly always historically and continue to capitalize individual projects with third-party equity sources. And fortunate to have really strong, deep, long-lasting relationships with a lot of equity groups. We have and continue to raise separately managed accounts that allow us to deploy capital as well. But we know we never want to make we don't want our third party investors to feel like they're second fiddle. And so we're very careful about sort of rotation through our process to make sure that our trusted and valued partners on the equity side can get really good opportunities from us to ad.

Rens Hayes IV 7:28

As I think about that, is a delicate line you have to walk, right? Because you don't want your third party think you're just cherry picking for your fund and then they're getting the scraps. You have to integrate those. But I can also see the importance of having multiple funding strategies at the scale at which Mill Creek is operating, right? If we gave the audience a sense, like how what are your assets under management or number of properties, those types of numbers?

Tim Alexander 7:51

Yeah, that's a great point, right? We do obviously want to have multiple funding sources. It's the fuel for our engine. Uh, we've got just over, I think, 11 million or 11 billion, pardon me, assets under management at any one time, dozens of projects that are in pre-development and looking for capital. And yes, we're very careful about that rotation to make sure that all of our investors are seeing the best opportunities that we have to offer. But ultimately, yes, it's a our pipeline is two things, right? It's folks like us bringing in new projects and new opportunities, and then it's finding a way to get them capitalized so we can go vertical.

Rens Hayes IV 8:25

I think I read Mill Creek as of the end of last year in 2025 had over 43,000 units either under management or in construction. And when I think about a 15-year time horizon, that's almost 3,000 a year on average as a company. So that's like a tremendous investment vehicle to help support that. Bill, could you talk to me about some of the projects you're proud of that you've been a part of at Milk Creek?

Bill Endicott 8:48

Yeah, I've been fortunate to be involved in a number of projects, number of unique projects here in my time with Milk Creek. I think early on, it was coming into a company which was much more newer, I would say, even though we've been around for four or five years, really maturing in our processes and how we execute. And then we kind of got some momentum there, made some mistakes early on, learned from those. Then we got it to COVID. And I think probably some of the most memorable projects is executing two projects through COVID on the back end, and then delivering at the end of COVID, doing all kinds of crazy things to keep construction working, moving from thinking about where we're putting workers up in local housing because they couldn't be they couldn't be transporting over state lines and certain things and doing all kinds of things to keep folks safe and all the testing. And I don't know, that's probably some of the things, maybe the scars that we have in some of my most memorable time executing through those difficult times and all the creative things that and strategies we had to think about to deliver these projects and keep things moving while the rest of the world was shutting down. And fortunate to have a great team to work through that and still ultimately deliver two successful projects, really, that were finishing towards the end of COVID in 20 and into 21. What's still landing those successful, probably the things that come to mind? And then today, now we're we've grown from there. Our team has been expanding tremendously. And as Tim alluded to earlier, we have five deals going on right now, from some that are near the finish line to one or two that have just recently gotten started with nearly we have about just shy of 1400 units under construction right now, just in the Boston market. So we're probably, if not the busiest, one of the busiest markets across the company.

Rens Hayes IV 10:31

Yeah, 1400 units under construction. It makes a lot of sense. Your in-house construction capacity, are you doing all of those assets? So both townhomes and the larger scale commercial properties where we're doing larger podium projects right now.

Bill Endicott 10:45

Yeah, yeah. We have two garden deals, Tim alluded to earlier, that has a mix of townhomes and flat style apartments. We have three podiums under construction as well. So we manage all that in-house with our own team, superintendents, project managers, pre-construction, and everything in beans. So that's all managed by our military construction staff. Each team is based on site in our field office at that particular site once we get started.

Rens Hayes IV 11:10

Do you guys target primarily suburban, like outside of an urban core, or do you also invest in urban cores?

Bill Endicott 11:16

It's been both. Tim, you can speak to the kind of the investment strategy. The execution is different as well on the construction side of things, but it's been a it's been a mixture of both more heavily weighted towards the suburban market since we've been here.

Rens Hayes IV 11:30

Yeah, it when I think of that from a construction side, you're building a construction team to be able to deliver on these assets, building townhomes or flats to large-scale podiums to high-rise urban cores, those are all different skill sets and different experience profiles that I'm sure is difficult to manage on the construction side.

Bill Endicott 11:46

Yeah, on the construction side of things, it is building a high-rise downtown is a totally different animal. And while we do that in other markets, places like Atlanta and Miami, the construction dynamics, the type of construction, the labor, it's a very different animal. We'll do that, we'll self-perform that. Here in this market, we're focused on the wood frame product and the podium product, especially. And that labor force does differentiate between a podium deal near nearer to the urban core versus a uh garden style product for sure. There is some overlap. There are some folks that will be more inclined or more well suited for one product over the other, but in large part in this market, it's a lot of the same sub base and the multifamily platform.

Rens Hayes IV 12:30

Yeah, Tim, could you speak to the investment side?

Tim Alexander 12:32

Yeah, I was just gonna add, you're right, and Bill's right. Historically, and when the Milk Creek office started here 10, 15 years ago, the majority, or if not all, of those initial projects, four or five projects were suburban lower density. We in the late teens uh made a really concerted effort to not pivot, but really supplement the suburban uh type deals with some more urban higher density, still mid-rise, but higher density projects. So that's when we started looking in Boston proper, specifically where we now have a project under construction in Alston. And uh we have a project in Medford, which is a mid-rise a little closer in, uh, and a project in Revere on the beach as well that I think is exemplifies that move a little bit closer in, but never turning our back on the opportunities that are a little bit more suburban, provide those like Bill mentioned, garden style projects that there's fortunately for us for in Boston, there's demand just about everywhere. That's the byproduct of under scarcity, scarcity and not really under supply of housing for decades now. And yeah, we're still on the hunt, urban, suburban, anywhere. There are good opportunities everywhere.

Rens Hayes IV 13:39

Development, investing, construction, and property management. You're capitalizing these deals both on a per deal basis and through fund models. Is the intent to develop and hold forever? Is there a certain part of your portfolio you're developing and then selling? How are you guys kind of looking at that total investment strategy?

Tim Alexander 13:57

Yeah, both. And a lot of times it's dependent on our invested partner, right? So sometimes with our SMAs, it's a little clearer that it might be a long-term hold, so build and hold for a period of years. And then depending on the investment vehicle of our capital partner, it could be a quicker construction, lease up stabilization, and then look to to sell the asset. So it really does depend. And we can give examples across the board on projects just in Boston, but it's really all of the above. So we try to be we try to be thoughtful about that. And I think the good thing about it for Bill's team and our team is we're managing design and thinking about the product we want to deliver. We're always thinking about long term. We're always thinking about maximum and maximizing, call it leaks up pace, resident experience when they first visit the community, but also thinking long term in terms of quality, whether it's acoustics, whether it's any windows, whether it's finishes in the units. One of the one of the ways we developed a Milk Creek brand among our joint venture partners, and this dates back just the early years of Milk Creek, was like, look, we're we want to meet the market. We certainly won don't want to overdesign, but we also want to make sure we're providing that top-tier experience for our residents, which then translates to a top-tier value for our parkers.

Rens Hayes IV 15:12

I I can get in with that strategy. I like being at the top of market wherever I am, right? With construction and property management in-house and this national reach, like how advantageous is that for you as an investor and in a developer to him? What competitive advantages does that provide you having those services in-house?

Tim Alexander 15:29

Yeah, it's a it's a we feel it's a great advantage. And really it starts at the beginning of any pursuit. So as soon as we start, our development team is a team of three or four in Boston. And we're the first time we get a new opportunity and we're sitting around a table talking about it. The step immediately after that is to bring Bill and his team in, help us understand costs. We'll do a quick conceptual estimate, we'll understand where we are there. And then almost as immediately is speaking with our operations and property management team, they can corroborate or correct or confirm our rents that we've underwritten, help us with an operating expense budget, any kind of other details that's their world. So we have a complete, as complete a picture as we can have right out of the gates. And we're not unique in that. There are other folks who have those either third party partnerships with groups, but we've and part of the benefit of Bill and I working together now for eight and a half, coming up on nine years, is the ability to just quickly stand in a door in our the our office doorway and say, hey, here's a new one. Let's talk let's underwrite it. Let's and then within could be as quick as 48, 72 hours, we've got an initial feeling that helps us helps us be efficient with our time, helps us be responsive to land sellers, brokers, whoever we're talking to.

Rens Hayes IV 16:47

A a big part of the ethos of design development stems from my journey as a professional. Like I I became curious and started studying all of these areas outside of my area of expertise. And that was through through books, through podcasts, through conversations with people like yourself. And gaining knowledge about all these adjacent fields that impact what I do has improved my judgment and my communication like tenfold, and even that of our company. And so when I think of all of that sitting in-house, and Bill, I'll ask you, as you've built a construction team, I'm sure people are joining Mill Creek coming just from the construction world and having no exposure to development or design process or underwriting or any of those things. And I say that because I grew up in construction, I started a career in engineering, and I had no idea how commercial redevelopment worked or funded. Has that been a huge shift as you've started to build and bring people onto your construction team to have that development investment knowledge one door down in the hallway?

Bill Endicott 17:43

Yeah, it is. And a lot of folks that join us are are similar, have a similar experience or understanding as you just described, and they may not be familiar with it or understand it. Oftentimes it's very appealing to folks. They see that on the all that under one umbrella, under that one platform. And it's appealed, and it's an appealing to be part of that and think about being part of that full development team. And I think, and then the folks that have been here for a while, they get to the end and they're part of the conversations with our operations team on why it's important that we need access to this, or why it's important that we need a hose bib on the roof to clean the condensers. So we're going to make sure that the plumbing engineer includes a hose bib on the roof on the next five podiums that we do. Like that learning cycle and that experience and that feedback as to why we need certain things is accelerated when you have that all under one roof. And I think it makes us better executing on the construction side because we do so with a mindset of the end user. And this is not a building that we're gonna flip and walk away from, even if we divest from it in a year or two, we're likely doing so with partners that if there's an issue a couple of years down the road, they're probably gonna pick up the phone and they're gonna call. And I'm gonna get that phone call, or Tim's gonna get that phone call. And our guys in the field who are involved in that project might get that phone call. And so thinking about the quality and the execution and that mindset that you're tied to this product long term is important. And then again, the feedback from how development looks at things and Tim and his team early on, the conceptual phase, and rolling that into pre-construction and getting a better sense as to unit mixes and where we want to maximize. We're having a lot of those conversations right now where we're doing a lot of iterations on a lot of deals. And so we all get a little bit smarter each iteration when we understand what's important to the stakeholders. And when that stakeholder is sitting next door to you, and that stakeholder is somebody that you're gonna talk to every single day, you're at work, it's that much more critical that you're that you're thinking about that and you're trying to get the right information to the right folks across your team. And it's a different dynamic when all of those folks are in house. Creates a different level of accountability in a lot of ways, I think.

Rens Hayes IV 19:52

I like that you mentioned that, Bill. I noticed one of the core values or part of the ethos at Mill Creek was that continuous learning. And so if you do you guys actually formalize that process, like kind of almost a debrief, what went well, what went wrong, how can we improve on the next one? That's like an internal component to what you do.

Bill Endicott 20:08

Yeah, yeah, we do. So we have a lesson learned process uh in the construction side of things, as far as how we execute. That's often nuts and bolts, and we'll peel back the onion on mistakes we made, things we could have done better, things we could have done differently. That happens not just at the end, but also during construction. And then there's another element to that happens that includes the larger, the broader development, construction, operations teams during lease up, and that incorporates a lot of feedback from residents now and from the outside world. And that could be a lot of that stuff is design and kind of execution or your components to that particular project, what's working well, what's not working well, and that immediately is put back into the feedback for the next deal. So, yeah, it's inherent in what we do. And I think one of the advantages, and I think one of the appeals is construction is a difficult field, and I've been doing it for a little while now. I enjoy when we develop and build apartments, right? But they're all custom, they have different demographics, different stakeholders, focused on different people in different stages of their lives in different neighborhoods, and they're also very different. Yes, they all have a bathroom and a kitchen and a place for somebody to sleep in some bedrooms and a balcony, right? But the components of how that's laid out and the different iterations you can do that, and then the amenity space and the parking, there's so many components that we're a label, we're doing a lot of the same thing in the core at the core of it, but they're so different each one. So it's a it's an opportunity to accelerate that lessons learned because you're building apartments and the nuts and bolts are similar. So you can faster that as you go, as opposed to all right, we built the school, we built healthcare facility. There's a lot of lessons learned there, but I feel like it's really unique and interesting to apply that to a similar product, yet a custom version of that project over and over again to ultimately. Try and perfect it. While that is impossible to do, seeking that and applying that across the teams and how we look at things and the continuous improvement is a really interesting part of our business.

Rens Hayes IV 22:10

When I think the scale of Mill Creek, say on average, 3,000 units, but probably that's a growing number, right? So maybe you're three, 5,000 a year and growing, the rate at which you learn those lessons and then deploy that lesson to the entire company becomes paramount because every decision, if you made that, let's say it's a mistake I love labeling as uh a lesson learned or an opportunity, right? Something discovered today with thousands of units in the pipeline already. It's like, how do we try to integrate that so that we can benefit from this lesson? And for the leaders out there, I think most leaders will sit there and be like, yeah, like we're we don't condemn mistakes. We don't like people can make mistakes and learn from them. But it's like you really need to create a culture of learning for the entire company to benefit from a mistake. To expect an individual to have the confidence without creating the environment to be like, hey, I made a mistake. Here's what I learned. If one, if they try to avoid mistakes because no one wants to admit that they happened, they just rob themselves of a learning opportunity. But if they did learn the mistake, but they were afraid to share it with the company. Now the company lost the opportunity from for everybody to benefit from that mistake. And that to me is a far bigger mistake than the individual's mistake because it's amplified across the company.

Bill Endicott 23:22

And if not shared and learned from that mistake can lead to bigger problems down the road. If something gets covered up or there's it's not addressed at the time, right? It can not only lose the opportunity to learn from it, but also it can become a bigger problem down the road. So yeah, it's important that we create and foster a culture of sharing that information and learning from that information across the board for all of our benefit.

Tim Alexander 23:43

Yeah, I think I was just jumping. I and I give kudos to our senior leadership and our founding partners to who created that environment from the outset, right? Obviously, anybody who's worked in our industry for any amount of time understands that mistakes are going to be made or you're making an informed decision and then you look back and say, okay, that maybe wasn't the right decision. But it's okay to it's okay to own that. It's okay to a course to learn from it. And people we we know we're not perfect. It that one of the challenges as Bill mentioned is our projects are all fairly unique, right? We're not stamping out the same plans on projects across different geographies. And so when you are building these bespoke unique project products in every project, there it some cases limits the ability to apply those lessons learned. But any project we're gonna do our best. There's a lot of lessons learned we have are right when we're phasing delivery. What's the best way to do that on any given project? And that can be hard to apply because the phasing of a project in Marshfield is gonna be much different from a podium project in Medford, for instance. But at the same time, it's really like we said, the culture to be able to own a lesson learned, mistake, however you want to describe it, and then hopefully build from it. It's been that's been an I think a hallmark of the Milk Creek leadership. And it that does fortunately trickle down to each office.

Rens Hayes IV 25:00

Tim, I have one more thought on being an integrated development and construction firm and how that changes your mindset as an investor. If I'm sitting here as an investor and there's always a reason not to invest, right? There's always a risk, there's always an unknown, and different markets create different challenges. But when I sit there and I'm carrying an entire construction team, there's also this cost of inaction. You can't, we can't just sit here and be idle because we have a lot of overhead to carry a construction team and we have to build a pipeline to keep the engine busy. Does that change your conversation and your strategy as an investor? Are you able to underwrite these deals where you really know the strip-down cost and then the general conditions or construction overhead as a part of that investment return? How do you look at that?

Tim Alexander 25:42

I'll be honest, friends. Um, I can see why that could be the case. But when we're looking at opportunities, we're really not trying to think about, we're trying to look at and bring in the best opportunities. We think we have the highest potential, obviously, to get capitalized, get built as quickly as possible. And so we I personally try not to look at it and say, oh, I gotta feed the machine. Let's bring this one in, even if we don't think it's our best next option. It it certainly is tempting, and we want to make sure that Bill and his guys have the next job and the next job and the next job after that. But at the same time, we have to be thoughtful about the investment choices we're making. So if we get a little too fast and loose, then you quickly wake up and you realize, oh, maybe that's not an investable asset, or maybe there's something else that we didn't consider going in that could actually be a footfall that we that could do in a project, for instance. Yes, it's a the it's a captive general contractor, right? The bill's not building for anybody other than Mill Creek. And so we certainly have to be mindful of that. It's one of the big call it bill, it's one of the big challenges of your job, right? Is managing that team and making sure we have you have your one year, three-year, five-year plan. But uh, but at the same time, I don't think we can let that drive our strategy because we need to still make sure that each project that we're getting involved and invested in is one that, you know, A, we can get done and B, we could be really proud of.

Rens Hayes IV 27:02

I love that answer, Tim. Uh when I think about this in business terms, you have to have balance across your company. So what can happen if you're imbalanced? You can have a great team, you can be in a bull market, so abundance of opportunity. So you grow as a business, but you didn't grow because you had great marketing, great offers, and great sales mechanisms. It's not because you had a great operational advantage over here. It's a byproduct of the macro. So when that macro falls off, you don't know how to continue to grow or maintain revenue. So the team you built to supply that, you now have to cut. So when I hear you talk about that investment strategy, it's also almost like we have the confidence to build this in-house captive general contractor and carry that overhead because we're so confident in our site acquisition, site selection and acquisition process that we can confidently fuel that demand. And that's then it's opportunity, it's not risk. But to me, that tells that speaks volumes about the balance of the operations behind the under the hood, so to speak.

Tim Alexander 27:59

Yeah, that's a great summary. I would say, yeah, we we certainly have that confidence and that belief. We certainly have to deal with existential forces and threats, one of which we're dealing with now with this rent control proposal. But yeah, we gotta with the things that are in control are in our control, we feel really confident that we've built the team, we've built the trust within our teams, as Bill mentioned earlier, and that is invaluable to us.

Rens Hayes IV 28:23

I do we're let's go right to to rent control. And I got some stuff for Bill here too. But how has rent control being on the ballot in mass? And so if I guess for everybody outside of mass, rent control is potentially looming in Massachusetts with a vote coming later this year. What I'm seeing from my side is that it's already choking supply and making capitalizing a deal in Massachusetts more difficult than it otherwise would be because it poses risk. But Tim, this is your area of expertise. I'm a bystander in learning from people like you. So what are you seeing from your side?

Tim Alexander 28:56

Yeah, uh great question. Not an area we want to be experts on, but yes, we found ourselves in this position and we're still right in the middle of it, right? So I would say the ballot questions really became real in late 2029, and immediately, to your point, was a cloud on our market that led a lot of people to push the cost button. We everybody knows that Massachusetts is in dire need of more housing supply. And fortunately, the governor, lieutenant governor, a lot of officials have been beating that drum as well and understanding the sort of longer term implications of the undersupply of housing that we've got. But at the same time, that creates uh really for any sort of resident or the general population, that means that housing is expensive and costly. And this idea of a rent control proposal that gets voted on by the general population at the ballot question, most likely in November, has caused a lot of our investors to say, hey, let's push pause, let's wait and see what happens. If rent increases are capped at the lesser of 5% or CPI, that could be significantly impactful to the long-term investment that we would be making in a multifamily asset. And so it's a convers we've been talking, we have a I certainly talk about rent control every day, whether it's with an investor or a broker or someone in-house. And I think we're at the point now, late April, early May, waiting to see for sure if the ballot measure or if the question reaches the ballot, which we should know by June. And then obviously the vote would be in November. We're already starting to see some folks say, hey, we understand this is a major cloud in the market, but we also understand that long-term, right? Not one or three years, but out looking out again, five, ten plus years, Massachusetts is going to still be in great need of housing. We're already way behind the eight ball, right? Hundreds of thousands of units behind the eight ball. And so even if this were to get voted in as draconian as it is in in in draft, that that won't change the long-term prospects for Massachusetts. So while there are folks who are on the sidelines waiting till November, we also know there are folks, meaning investors and meaning and developers like us who are saying we need to, we don't want to be, we don't want to be um too careless and just look past it, but we need to understand, okay, what might be the impact on it in 2026, if it passes what the impact beyond that in the next 18 or so months. But then also understanding that quite frankly, and this is my opinion, long term, there's no way that a rent control measure as drafted currently could stay in place. It's not just a threat to the real estate economy in Massachusetts, it's a threat to the entire economy of Massachusetts. And so yeah, I try to I try to think of it that way as we're having conversations about new projects and new pursuits.

Rens Hayes IV 31:38

Yeah. I look at these conversations when I think of the root cause to a lot of misunderstanding in society. It's like, I think our education system needs to do a better job of teaching financial literacy. And this isn't just tracking your checking account and your savings account and paying your bills at home, the world of how capital and debt works and how all these things impact real estate. It's like you said, real estate investment in construction is a massive economic driver here. And rent control, although it sounds great, and I'm sure there's a lot of people that are affordability is a challenge, right? That is a problem, but it's almost like we're managing the symptom instead of the cause. And like the cause of printing money, low interest rates, which really produce more produces more liquidity in the market, raises all costs, right? That's inflation. And we had hyperinflation that created this, but hyperinflation is more or less tamed. And now we're going to propose these, but that's going to choke supply. So even if it helps somebody for, like you said, one, three, five years, it's not going to last and it's going to make things more expensive in the future, in my opinion, when I look at just it from an economic perspective.

Tim Alexander 32:38

Couldn't agree more. And quite frankly, for better or worse, we have examples across the country now where in our in some of our Sunbelt markets, Charlotte, Nashville, Phoenix, where housing growth and housing supply has grown significantly, they've already seen that correction. They've seen how the market produces that correction in terms of, okay, increased supply, now rents are going down, concessions are going up. And that's in the real time what's happening in those markets. And that should be the lesson we hopefully can apply in Massachusetts.

Rens Hayes IV 33:08

Quick break from the show. Thanks for tuning in to design development. We're trying to help as many people as possible. So if you could subscribe and leave a review on today's episode on whatever platform you're listening, it would be a great help. It's the only way we're going to reach more people. Let's get back to the show. Bill, can you give us a sense of the founding story here in 2011? I think you you mentioned Trammel Crow. So Milk Creek launched in 2011. What's the founding kind of story here?

Bill Endicott 33:36

Yeah, it was before my time, certainly, but uh it was a group of roughly 75 or so individuals, Tim, if a few if I had rec correct, that that came from the Tramil Crow platform, kind of coming out of the Great Recession to start Milk Creek as it is today. And so there was a lot of institutional knowledge, relationships with capital partners, a lot of construction experience that came from that. And so really hit the ground running, not as a startup per se. It was a lot of momentum there. And in talking to the folks that were here at the time, the nameplate changed on the door, the hard hat logo changed, and there was certainly some evolution of how they executed, but there was so much momentum coming from the approach and the expansion from all those folks had from the TCR days and rebranded to Milk Creek Residential to grow to what it is today. And so that started. I know at the time there was uh an office down in Jersey, I believe in Connecticut. And then we started doing some work up here in Boston. Actually, one of our early projects in this market was one of the first developed under the Milk Creek umbrella back and coming right out of 2000 and when we were officially branded as Milk Creek Residential in 2011. And a lot of that stuff ended up being very successful coming out of the Great Recession, and then there was a lot of appetite for supply because things had been so quiet for some time. So grown to now, I think I may have mentioned earlier, I think we're right around 1,100 employees across all the platforms today. That's unbelievable.

Rens Hayes IV 35:08

I had no idea that it started with such momentum and such a big team size there. If we go back to your start, Bill, like how did you end up in construction? Was that a part of your childhood? Did you always have your eye on buildings?

Bill Endicott 35:21

Yeah. Good question. It was, I didn't know that I, at least explicitly, although my parents might tell me differently that I wanted to be in construction, but I always enjoyed building things as a kid, as often any of us often do, and putting things together and breaking a lot of things, which I always tell my kids now that's the best way to learn how to fix something. You break it for they give me a hard time about breaking something. So you gotta learn that. And so I always enjoyed the math and science. Went to the University of New Hampshire, studied civil engineering, which was a tremendous baseline for the construction, even the real estate field in general. I figured out after a couple of years while I enjoyed the engineering, I didn't want to be an engineer per se. No offense, Rentz. No offense taken my career. I was always drawn towards construction and building things. Didn't have a construction program where I was at the University of New Hampshire. So I went to get my master's degree and continued studying more of construction engineering and project management program at Cal Berkeley. And then I came into the field right out of school into construction. And so I always enjoyed again putting things together, the math, the sciences, having a concrete answer to the question, specifically in the math field, was always fascinating and energizing to me. And so the technical piece of it was always really a motivation for me. And then it was a natural transition coming in and getting that experience in the field on a bunch of great teams early in my career. And I started with Skanska right out of school.

Rens Hayes IV 36:44

Yeah. What type of projects did you get exposed to at Skanska?

Bill Endicott 36:48

Uh, I was fortunate enough to work on a couple of different, a number of different types of projects. A transportation facility, um, a bus transportation facility was one later on. Started working on a lab at Harvard University, did some aviation work. Actually, spent some time down in Nantucket doing some work at that airport. That was interesting. Talk about learning how to manage summer and not the winter. It was both. It was both. So it was summer. It's not quite as exciting in February, but managing the logistics of building a small airport on an island, very difficult. But it's also unique in your workers would get off the plane and uh be commuted over from the Cape and then walk onto the job site. That was pretty interesting. And then I did a few schools. Uh at the time, two of the most expensive, at least per square foot elementary schools on the state in places like Belmont and Andover. And so I was giving I was given some great opportunities. I worked with a lot of great people, and Scanska created really in in my early on in my career, a great baseline of the fundamentals of executing large-scale commercial construction, which still applies today. And part of the appeal of coming to Mill Creek and switching to the multifamily space 10 now, 11 years ago was taking what I learned there and applying it to the multifamily world, which in some ways, at least certainly going back a number of years, wasn't always as sophisticated or as developed as far as process. So applying that to what we do today has been a tremendous experience for me years.

Rens Hayes IV 38:09

Yeah, that's a good takeaway. It's cool to have such diversification of experience early in your career to be able to learn from all those different entities and market sectors to apply to where you ended up planting your flag here at Milk. I know for me in business, I became a much better engineer in business because of my exposure to the structural steel industry and running a steel company and then studying other businesses. It's not just because I did what I do every day the same over and over. It's because I'm endlessly curious and trying to expose myself to all these different I had no idea how people justified technology companies or venture-backed software companies. I was like, how in the world does anybody make sense of this? And it took forever for me to actually read something. It was like escape velocity, it's the exponential lever on the outside. You have high capex, but you're out, you have outsized returns when you hit right. Right. But I couldn't understand that because I've always been like a professional service, but it's like exposure to these other markets makes you better at what you do. Tim studied history, yet landed at Fidelity for a career in finance for about eight years. How did you how did those two go together?

Tim Alexander 39:13

Yeah, so yeah, very liberal arts undergrad. I was just thinking about it. I, as Bill was talking, I I didn't even take an econ class or anything undergrad. Very liberal arts kid. And really, you mentioned fidelity, it was less finance and more sales and marketing. So I started in a sales role, which was great. I learned a ton about how to tell a story, how to be succinct, how to show energy and enthusiasm.

Rens Hayes IV 39:37

Who were you selling to there?

Tim Alexander 39:38

We were I would we were selling mutual funds to investment professionals. So here's why your fidelity fund is better than XYZ competitor. Here's why you should have it in your sort of stable. Yeah, yeah, yeah. And that was on the phone, sometimes in person, but as a young guy, mostly on the phone and learned a lot there. Kind of quickly realized they probably didn't want to be in sales long term, although everybody can sales. Yeah.

Rens Hayes IV 40:03

I was gonna say you're still selling a lot today in investment in development.

Tim Alexander 40:07

Which you learn later in life. So I you know the great one of the great things about Fidelity was just the opportunities that there, right? I was able to probably in eight years, I think I had five jobs, five different roles and a bunch of different groups. And so I moved into product management and product development. So bringing new mutual funds to market and helping to manage them and make sure they were properly positioned so our sales folks could sell them. And it was a again, good opportunity to learn just business in general. One of the most well-run organizations talk about continuous improvement at Mill Creek. That's one of the cadres of fidelity and has been for decades. But probably that probably led me to stay there longer than I otherwise would have because I don't think it took me too long to realize that that teacher funds and investments wasn't going to get me out of bed every day for the next 40 plus years. A good opportunity, but I quickly went back and said, What am I interested in? Yeah, I wasn't taking econ undergrad, but I took a few architecture courses, always been interested in construction, design, architecture. And uh I wasn't sure I wanted to do that, but I went back for my MBA with some thought towards that and was able to use that career switcher. Coming out of school though in 2008, right at right as the Great Recession was taking hold, uh, I was still fortunate to get a uh an opportunity in the real estate development world down in the mid-Atlantic and started my career down there. It was the Fidelity was a great training route. I recommend it to anybody to go to a big firm where there's lots of opportunity and lots of smart people.

Rens Hayes IV 41:30

So did you choose to go back for an MBA not knowing you were gonna end up in real estate, or was that kind of one decision and the same?

Tim Alexander 41:37

Yeah, I wasn't sure. I was certainly on my mind as one of the goals, but I I I wasn't sure. And then I doubly wasn't sure, right, when we were when I was in the recruiting process coming out of school, and this is I distinctly remember, right? It was the fall of 2007, spring of 2008. Some of my classmates had full-time offers to join Bear Stearns on a Tuesday, and then on a Wednesday, Bear Stearns didn't exist anymore, right? That was it, it was a very interesting environment. So I kind of had to continue to keep my options open, but yeah, like I said, was able to find a uh position with the Clark companies down in the DC, which was again another great place to start my second career, if you will.

Rens Hayes IV 42:15

Bill, what are our must-haves in multifamily construction?

Bill Endicott 42:19

We have a lot of conversations about balconies and and amenities too. Those are the things that probably some of the things that vary the most from deal to deal. Is this a is this deal more of a basis play with a lot less balconies? And do people actually like Juliet's in some instances? Or are those more of a barrier because of the way they take away from the living room as opposed to a balcony they can walk out to and position of couches and stuff like that? So we have a lot of those conversations in our early ergonomics come discussions with development, with operations, and then the amenities varies wildly. Talk about a project in Revere, which we're finishing up now, which has some of the bigger, larger amenity spaces compared to a lot of our other deals, to a deal that we're looking at right now and the pipeline that is very much uh simplified suburban product. It has almost no amenity to speak of or very limited uh amenity, and that's just it's a different product in a different location. I think as far as must-haves, I think that's defined differently with every deal and every location in the target audience for that particular let's talk about on the construction side of like what pet peeves, what are the things that you're focused on that are like most critical to your success? Yeah, probably the most important thing is our alignment with our trade partners right out of the gate. And so making sure that early on we're getting pricing and we're partnering with folks that know how we built and can execute successfully in our world and we have a trust and we have a relationship with, and then ensuring they have the manpower and the capacity to do. And so right now we have been very busy, and the market has been fairly engaged and fairly hungry to do. Business and secure work and backlog. There are some exceptions where that's not the case with certain certain trades, but generally you've had some decent tailwinds as far as the engagement from the subcontractor market. So aligning with but still aligning with the right trade partners right out of the gate and then managing such that they can be successful is probably one of the biggest things to dictate our success on any given project. And so we focus a lot on that, not only setting things up from the pre-con phase, but making sure we're trying to do the right thing during the execution phase as well. Yeah.

Rens Hayes IV 44:36

Trust aligned partners is really important. And I'm sure you have to go through training on your team on how to communicate. Because if I go back to my subcontractor days and somebody's, hey, can I get a budget on this DD set? I'm like, I have a million projects I'm trying to price. I'm trying to put keep this manufacturing facility busy. I'm trying to keep the crew busy. I don't know if I have this job or when it's going to go. I'm going to give you a rough number versus what your team's doing is building a cost structure to underwrite and capitalize a deal. So, like you get bad information in, bad decisions out, right? You need good information. So I imagine it's so important to create those relationships to have.

Bill Endicott 45:14

Yeah, and we have to fold in that information that we get with our historical data. And we can't just take that because sometimes we do get budget numbers or conservative estimates or sometimes overly aggressive. So we have to check down against what were we expecting to see, given the dynamics of this deal and all of the components and the timing, and how does that correlate? And if there's a if there's a major disconnect, we can't just look at that and run with it. We need to understand why. And does that make sense and examine that further? So that's where we rely on external feedback from the market to constantly make sure that we're using the most current information, but also historically making sure that we're not making bad decisions because we got bad information externally from somewhere else. And we should have caught that. We should have known better. So that's constant calibration for our team throughout the pre-con process. And even once we get into construction during buyout.

Rens Hayes IV 46:05

A lot of suburban multifamily product, both garden style and podium. When we look at the podium, do you have any preference to post-tension concrete versus composite steel? How does that impact your internal process, your team, that sort of thing?

Bill Endicott 46:18

Yeah, so good question. We've only we've done primarily post-tention concrete podiums. Usually the driver is building height. We've done a deal recently in Revere where the grading around the building gave us some flexibility with a higher grade in the front and our average mean grade gave us some flexibility to have a little bit more floor to floor. We chose to go with steel at the time. It was a schedule benefit and it was a budget benefit. But as you that equation does kind of change over time as the cost of steel and concrete goes up and down with market forces, as well as labor availability. So it's not a hard and fast preference. I would say we we probably lean towards post-cension concrete. There are uh a few folks, although it's not a deep pool, but there are a number of folks that execute that product very well in the multifamily space here in Massachusetts. But there are certain times when steel makes sense and can be faster, it can be cheaper. It depends. I would say the answer, the decision we made two, three years ago to go steel. If we would do that project all over again, the answer might be different today because the price of some of those commodities have changed and we might do it differently two or three years later. But usually, if we're trying to get to maximize to a seven-story building, it's a five over two scenario. Post-tention concrete usually gives us more flexibility floor to floor.

Rens Hayes IV 47:38

We see different decisions in different markets, right? They don't not all markets have the steel supply that New England has. So it's like auto default, sometimes cast in place concrete without post-tension, sometimes post-tentioning, sometimes it's both. Any lessons or learned or observations you have from having a national construction arm?

Bill Endicott 47:56

There are, and we sh I just spent a better part of last week with a lot of my counterparts in our Atlanta office, and we share a lot of lessons learned. I would say, but the interesting thing is the dynamic from market to market is so different, right? Like we're constrained oftentimes by our site size. That's the other big component of where we're trying to maximize density in floor to floor. So that steers us toward P towards PT more often than not, especially with a really tight urban site. But in other parts of the country, that we don't see a lot of steel. Our high rises are full concrete. You go to a place like Atlanta or down in in Florida, humilform concrete is very popular. They have a different labor pool, their material inputs are different. And then in Texas, we're doing different stuff there. It's a lot of garden steel. They have tons of land, tons of space, right? We apply some lessons across those platforms because a lot of the sticks and bricks, once you get into the buildings, are similar. But at the same time, the product they're building and their constraints are so very different. And I would say, I would argue, we probably have one of the more challenging markets to build in compared to all the others we are across the country, given limitations with land, labor challenges, especially as you get into the city and the union environments with that we're managing as well. That that's very unique to the Boston market compared to almost any other market across the country.

Rens Hayes IV 49:11

Yeah, it certainly is. And you definitely see some of the national players or semi-national players move into New England and then move right back out because they can't deal with the time value of the investment timeline, right? It's something that you almost have to prep people that aren't from New England on how long it takes to get her.

Bill Endicott 49:26

And we have a lot of those conversations internally. Tim does almost die.

Rens Hayes IV 49:30

Why would I do that if I could have a shovel in the ground in three months?

Bill Endicott 49:32

Like, why would I Yeah, exactly? And I took you how long to do what? And you have to deal with that. And this, yeah, we have a lot of those conversations with our carnival.

Rens Hayes IV 49:42

But historically, Greater Boston is one of the most the best real estate market in the world over time. Tim, uh, we mentioned a few brands in conversation, but I wanted to make sure the audience had an understanding. What are the three primary brands under the Milk Creek umbrella?

Tim Alexander 49:56

Yeah, sure. So the name, the brand we you probably see most often is Modera. So Modera, a brand is all of our ground up development across the country. And that signifies to our residents and to our investors that's new class A brand new communities. And then we have, uh I think I mentioned earlier, a brand called Alistair, which is generally used for our uh acquired communities. So it's depending on age, could be a couple of years, could be a little bit older than that, something that we are able to acquire and the opportunity to add some value through minor upgrades, modifications. And so that's what we when we acquire a property, it's generally branded Alistair. And then the third is uh Amavi, which is our brand for our single family rental communities. And not something Bill and I do up here, and he mentioned just a minute ago, right? The scarcity of lands and and entitlement challenges up here don't allow for large-scale subdivision type rental communities, but that's what we do in in the south and Texas and even out in the Sun Belt as well in Southwest United States.

Rens Hayes IV 50:59

How large is that that investment strategy for Mill Creek? Do you have a sense?

Tim Alexander 51:03

It's grown and evolved a little bit with the market. It was developed a ball in terms of investment opportunities. I want to say three, four, five years ago. A lot of capital was flowing there, a lot of tea, and some of our competitors were really very high on the space. We continue to be high on the space, but it's been challenged a little bit by the recent changes in the sort of macroeconomic environment. But we've got a great team in place. We've got a dedicated construction team in place, right? So differences between building multifamily and single family rental, and we've tried to feel really smart about recognizing that and making sure we can build at the right cost basis for that our product. And so I I could couldn't tell you right now, uh, Renz, what the sort of percentage is. We're still majority multifamily, but we're really trying to grow that single family realm. And it's a great product and a great really meets the market in terms of the resident market in a lot of those Sun Belt states.

Rens Hayes IV 51:56

Yeah, I I everyone knows I'm a big golfer around here. And we go down to South Carolina to golf uh a couple times a year, and we drive by this place called Sun City. And I don't want to miss misspeak, but I'm pretty sure it's over 10,000 homes. And we end up meeting the person that's doing the siding on eight to 10,000 of them, and I it might be 10,000 homes there. And talking about construction schedule, they're able to turn a house over in 16 weeks because of like how fast these go. So then when I think of an investment strategy, you're almost these things are almost cash flowing as you go. It's not this big long-term wait to have this end day. So it's a totally different kind of profile on the investment strategy, which I think is super unique.

Tim Alexander 52:36

Yeah, there's a lot to certainly, as you mentioned, about speed to first turns and cat and getting to cash flow. There are other real advantages when it comes to operating efficiencies and and just operating expenses in general. Yeah, it's a great space. It's again can be challenged at a little bit of the mercy of the broader market, but I certainly think it's got a lot of potential.

Rens Hayes IV 52:56

There is this narrative about avoid having like institutional capital buying single family homes. One, I don't think that's that big of a problem. And two, I want to make sure the audience under this is a totally different strategy. We're creating these homes, it's creating affordable living situations, it's solving an actual problem. So I think it's I I love the strategy. I want to wrap up today, like with everyone every other episode, a favorite book or podcast you'd share with the audience. Bill, I'll start with you.

Tim Alexander 53:23

Going back to my liberal arts days, I really love a podcast called Broken Record, which is uh in-depth interviews with musicians. And it's Drake Rubin, who's the one of the preeminent producers and creative types. Malcolm Gladwell is also one of the interviewers. There are a few others, but I find the these in-depth hour plus long interviews with musicians. I love music. I love talking about music, I love hearing about the creative process. And so some of these interviews are in-depth about that creativity, in-depth about the evolution of an artist or a band, and then the relationships and the sort of evolution sort of growth that happens within a band, or sometimes vice versa. And so I just I eat those things up, especially when it's an artist that I'm interested in or I really like their music. It doesn't have to be that. Stories are what regardless of the music, the stories about the human aspect and the creative aspect really that's keeps me coming back.

Rens Hayes IV 54:15

Yeah, bro broken records, to your point, outside of business, but anytime you get to hear somebody's journey or thought process when they're amazing at what they do, that's interesting to me. I'm forever curious to learn about that.

Tim Alexander 54:28

And sometimes you get a sense of what they've sacrificed in order to keep that going, right? And not something that we always do day to day in the business world, right? We're trying to spin as many plates as possible, but there are folks who are so focused and so single-minded and don't worry about the rest of that stuff. And in some cases, that's a little bit freeing to listen to that.

Rens Hayes IV 54:46

Bill, Tim, thank you so much for joining us on design development. Uh, I love what Mill Creek is building, the internal culture, the products you're putting out there, and the scale at which you're operating. So I wish you, the team, nothing but the best. And thanks again for joining us.

Bill Endicott 55:00

Thanks for having us, Red. Appreciate it. Enjoyed it. Thank you, Red.

Rens Hayes IV 55:06

Hey everyone, thanks for tuning in to Design Development. Real quick before you leave, our goal is to help as many people as possible. We're a growing community and you're a big part of it. So just click that send button, send this episode to a friend to let them get the same insights that you got today. We appreciate you. See you next time.