PROFILEnyc had the exclusive opportunity to sit down with Joe McMillan, Chairman and Chief Executive Officer of DDG, to discuss bringing green building and sustainable practices to New York City real estate. Joe and DDG have been behind major projects such as 12 Warren, 180 East 88th, and 41 Bond, amongst others, where they use innovative design solutions to improve the built environment, creating value for both stakeholders and the community at large. DDG is fully integrated to optimize value via both designing and building their developments. Learn what it takes to design and build sustainably in the fast paced streets of Manhattan:
PROFILEnyc Magazine: So few real estate developers are as fully-integrated as DDG when it comes to designing and developing your own projects, why do you think this is so rare? Why did DDG take it upon itself to be involved in both the architectural design and development?
Joe McMillan: It is really a multi-faceted answer. If you look at design, development, construction and the other business we are in, asset management and property management, and overall investment, they are all very separate and distinct skill sets. What most typical firms do is they focus on one of the aspects of development and one of the skill sets. We felt that it would be an incredible competitive advantage to be able to integrate various of those under one corporate umbrella. That is why we chose to do the development, the design, the construction and the asset management all in-house. Having those capabilities and the integration enables us to be more nimble. We can move faster. We can control more of the process and we can control more of the quality. In the end that falls out to the bottom line, so as investors we obtain a better margin and better quality product as a result.
PM: What is your background and how has it enabled you to build a fully-integrated real estate company?
JM: My background is private equity and I am an institutional investor. I spent a number of years as an investor who had a tremendous passion for real estate and the arts. When DDG was started, we built out a team that has very extensive depth along the investment side, from Wall Street firms like Morgan Stanley, Barclays, etc. We have institutional capabilities from development firms and have hired from Hines for one, and on the design side we have a very robust team of designers who are incredibly talented and design a lot of our projects. On the construction side we have hired out of Tishman, Turner, and others; on the hospitality side some members of our concierge team have been trained by the Four Seasons and other five star hotels, so we have the best in class in all the businesses that we operate in. This gives us a very deep set of capabilities in each aspect of our business. We go out, try to find the best and the brightest, bring them together as one team and try to push that as a platform.
PM: Let’s jump to 12 Warren where you chose to use a unique bluestone for the facade. Why did you make this choice? How has the reception been?
JM: The bluestone has been incredibly well-received. We first worked with bluestone as a company at 41 Bond, which was the inaugural project that we completed in 2012. It was the first project that we did as a company. There we used a much more rationalized contemplation of the stone. If you look at the brickwork it was very linear, it was in very regular patterns. The articulation is incredibly beautiful, but it was done differently than 12 Warren. If you look at Warren Street, we wanted to do something that was rough-hewn. The reason we went back to the bluestone is it was a very traditional material used in New York City construction in the late 1800s early 1900s. It was used less over time as concrete, steel and glass became much more prevalent. We wanted something that went back to the roots of New York City. If you look at the Tribeca neighborhood, it is one of the oldest neighborhoods in the city. We thought the rough, organic texture was completely different. If you look just a couple of blocks away you have the World Trade Center towers and various other developments that have a lot of glass. We wanted to do something that was really an opposite reflection of what was going up. We wanted to show something that was much more traditional, although the final contemplation brought it into a slightly different light as well.
PM: What differentiates the design and style both from an architectural perspective and development perspective between the different neighborhoods of Manhattan? Where is DDG’s favorite neighborhood to build in?
JM: Every project is different and every neighborhood is different. I would say that every neighborhood has its opportunities and every neighborhood has its challenges. I think that you really need to respect the individual neighborhoods and look at them in their context. Every building needs to be contextual. There are certain neighborhoods that lend themselves towards high-rise, and certain neighborhoods that lend themselves to low-rise and mid-rise; some are more traditional and some are more contemporary. We send our design and development team into a neighborhood and they will walk block by block and take a myriad of photos so we have samples. We will come back to the office and we will sit and go through a reflective line: “What is the context of this neighborhood today?” We will do as much historical research as possible, going back as far as we can in city records and city tax records and get as many pictures as we can find, and figure out what was there 50, 100, 120 years ago. This really helps us understand the history of the location and history of the neighborhood, to bring that into today’s context and from there we decide what is appropriate for the site and the neighborhood.
I cannot say that we have a favorite neighborhood per se. I can say that we enjoy building in many of the various neighborhoods throughout the city and we have a lot of projects in Manhattan, and more recently we have worked in Brooklyn. We think that there is a lot of opportunity
PM: Both 12 Warren and 180 East 88th are designed to be LEED Certified. Why is DDG so committed to sustainability? How does this affect design and development?
JM: It is not just 12 Warren and 180 East 88th that are going for LEED Certification, we have buildings across our portfolio that are. Every project that we have done in New York since 41 Bond has gone for LEED Certification. We don’t only believe in LEED, we believe in green, we believe in sustainability. We believe that as investors and developers, we have a responsibility to do what we think is right. Part of that is what we think is right for the environment, what is right for the city, and what is right for the planet. LEED is a portion of that, WELL Building is a portion, and green building is a portion.
LEED is one of the many standards that we try to adhere to and try to achieve. There are various levels of certification, whether it is silver, gold or platinum, and we think of that as important from a corporate responsibility perspective. We also think that as the world has changed over time, we as individuals have become much more cognizant of what is happening. We look at global warming, rising sea levels, temperature changes; we try to do anything we can do to help some of that and to slow down and pivot. Whether it is using sustainably harvested wood where everything that is not used is recycled, or using local stone like bluestone, or going for LEED Certification, we try to implement sustainability across everything that we do, and not just in New York, but also we are very aggressive in pursuing green building in the other markets we are in, which currently include California and Florida.
PM: You guys hit several snags with 180 East 88th before getting the final go-ahead to finish construction. Can you comment on how the project is progressing and what its completion will mean to the Upper East Side?
JM: 180 East 88th is currently under construction. We are presently pouring the 16th floor of concrete and the building is nearing halfway towards its pinnacle. We are actively in the sales process. We feel very good about that building; it has a tremendous location. If you look at the amenities of the surrounding area for many buyers, there is no better location than the Upper East Side. The building has been very well responded to by the market.
PM: What is the hardest part about building in Manhattan?
JM: The hardest part about building in Manhattan is maintaining patience. It is a very lengthy process. Whether we are talking about the acquisition of a site, which can take many years to assemble and acquire, or the planning and construction processes, both of which take multiple years. After that, you either hold the property or you exit. The entire process is very lengthy and there are many twists and turns. I would say maintaining patience through that is the greatest challenge, but it is also incredibly fulfilling. I can think of nothing else that I would rather do, and nothing as fulfilling, than being able to bring beautiful architecture and beautiful buildings and really make a change for the better and contribute to the environment. The legacy that we participate in is exceptional. Bringing housing to the city and doing it in a beautiful way is something that I take personal satisfaction in.
PM: Where is the future of development and architecture in Manhattan heading? Where do you expect to see the borough change over the next 5 years? 10 years?
JM: I think we are seeing somewhat of a classical shift to more traditional materials and more traditional architecture. I think there was a period of time where there was a tremendous amount of glass used, and I think that there is a true desire for warmth. You are seeing that reflected in a growing number of projects where developers and architects are taking a step back and saying, “let’s blend some of the modern with some of the more traditional and do something that is slightly different.” You don’t want to look at a building and say, “this was a 2000s-era building.” I think we are getting to a place where we want the architecture to be a little more timeless.