Central Avenue Lofts in Newark, NJ, was MPV’s first project, and it was anything but smooth. Almost everything that could go wrong—did. I chose this location because it met my criteria for economic growth and transportation fundamentals, but I couldn’t have imagined the many ups and downs we’d face to get it up and running.
Addressing environmental and planning hurdles
I owned this building and worked on the environmental and pre-development aspects of this project for several years. It was a slow, methodical process because I wanted to be sure there were no major issues before investing too much money.
- Environmental: The property had underground storage tanks, which we removed one at a time. Then, my environmental team found old hydraulic car lifts under the concrete, which contained hydraulic oil that needed to be properly remediated. This cleanup process included removing four lifts and addressing other environmental concerns.
- Planning: Initially, I received estimates saying that the property could only fit four residential units on each floor. That was too low to be able to create a strong return on the project. I brought in a local Newark architect and engineer. Together, we worked through various designs until we had a plan for 21 residential units across the building—10 on the first floor and 11 on the second.
- Approvals: Once we finalized the designs, we submitted everything to the City of Newark for approval, including a variance for having residential units on the first floor. Everything went smoothly in that regard, and I was ready to hire a contractor.
I asked my network and found a general contractor with great references, including from well-known developers in the area. But not long after I secured financing and we began construction, the problems started.
Overcoming contractor setbacks to keep on track
Soon after the project kicked off in January, Covid hit, and that’s when the problems started. First slowly but then growing day by day. The general contractor stopped showing up. Then, I heard that employees weren’t getting paid. Then, the subcontractors started complaining about not being paid. I found out later that the contractor was taking funds from our project to cover expenses on other jobs. I tried reaching out through emails, letters, and phone calls, but there was no response.
By Thanksgiving of that year, I had no choice but to terminate the contractor. It was a disaster—the project was only halfway done, and their tools were still on-site. People started hopping the fences and stealing equipment, creating a security nightmare.
After terminating the first contractor, I found a new one through a mutual connection. His name was Vick, and by mid-December, we had agreed on a price and contract. Within a week, Vick had 50 guys on-site cleaning up and getting the project back on track.
How a strategic partnership led to MPV
Shortly after hiring Vick, I started receiving liens on the property from the previous contractor —about eight in total. This contractor hadn’t paid multiple subcontractors, including those for scaffolding, lumber, and electrical work.
I now had to manage the financial burden of these liens while keeping the project on track. On top of that, I discovered the general contractor hadn’t paid their bank loan for daily operating costs, even though I paid them monthly with construction draws. These payments, which were meant for the bank (Factor Company), never made it. The contractor forged lien waivers, and the project began to unravel.
At that point, I knew I needed additional financial support. I went to John and told him I had a shortfall. He brought in Marc. They stepped in immediately, wiring the funds without hesitation, saving the project from further delays.
We finally finished the project one year after I fired the original contractor, and we fully leased the building at rents well above my initial pro forma expectations. The experience with the first contractor was incredibly tough, but it ultimately led to the formation of MPV, and now we’re off and running.
