A rendering of The Rail @ Red Bank Station, a planned mixed-use development in Red Bank by Denholtz Associates
By Joshua Burd
For a firm that takes pride in projects that are often complex and unconventional, it’s no surprise to hear Steven Denholtz quip that “we never seem to do the same thing twice.”
But there has been at least one rather simple constant for Denholtz Associates.
“We try to go where the opportunities are,” said Denholtz, CEO of the Matawan-based firm.
Now in its 65th year in business, Denholtz Associates is staying on that course as it continues its longtime focus on value-add office and industrial projects. But it’s also marking a return to its roots, with a pipeline that includes new residential construction for the first time in decades.
Those developments include a mixed-use project in Red Bank, where Denholtz is planning 45 new luxury apartments alongside the borough’s train station. The firm has already started the project by renovating an existing boutique office building at the site, while it now hopes to complete the residential portion on an adjacent lot as soon as late 2018.
Elsewhere in Monmouth County, the developer is under contract to acquire a residential subdivision that could support 21 waterfront homes in Atlantic Highlands. And it’s in the early phases of purchasing a site in another nearby municipality, in which Denholtz envisions building townhomes, restaurants and commercial space around an existing marina.
“The Monmouth County waterfront is just magnificent in all those towns,” he said, noting that the sites are providing a vehicle for the firm’s decision to get back into residential development. “We’re out there every day talking to people and you see what people are doing and where they’re succeeding, what feels good in your gut,” Denholtz said. “I think the new home market has really not done as well as it could have in New Jersey these last few years … (but) the water is an incredible attraction, so it kind of evolved into that.”
It’s an exciting step for a firm that began on the residential side of the business. Founded in 1952 by Jack Denholtz, Steven’s late father, the company initially focused on building single-family homes, townhouses and apartments in the state.
It then pivoted in the 1960s and 1970s to the commercial sector, where it pioneered the flex industrial building concept. Denholtz said the firm developed a portfolio of multitenant warehouse properties in places such as Carteret, Rahway and Piscataway, building an expertise in the asset class that still serves it well today.
The business was transitioning to a full-fledged commercial owner by the time the younger Denholtz joined the firm in 1983, following a stint as a practicing attorney. It was a “natural and easy” decision, he said, given that he grew up watching his father’s entrepreneurial style and “listening to him talk about it at the table” every night.
“I just always wanted to try to create something,” Denholtz said, noting that he spent the first several months in the field learning the construction business. He added that “the time in the field was fabulous for me (because) just to be able to talk the talk with people is very helpful.”
“I loved it from day one and was totally enthused by every aspect,” he said. “It was a new challenge every day. I was in the mud in the mornings and dealing with contractors and vendors, and in the afternoon I was dealing with the financial side and the leasing and transactional side.
“I learned every single aspect of the business over a very short period of time.”
All of that was bolstered by the fact that he was able to learn and work alongside his father.
“He was such an easy guy to talk to and had such an encouraging, upbeat personality,” Denholtz said. “And he wanted everybody to do well, so he was an encouraging force.”
Today, the firm of about 75 employees is best known for its commercial portfolio in New Jersey, Florida and Illinois. Denholtz leads the company alongside Stephen Cassidy, its president, who joined the business in 2002 and largely oversees its day-to-day operations and accounting.
That allows Denholtz to focus on finding new opportunities for the firm’s investors or pushing projects forward, he said, quipping that he and Cassidy work rather independently, “but we have some kind of mental telepathy of knowing when you need each other.”
Cassidy agreed, noting that there is some overlap, “although I tend to look more at things that are square boxes we can fill and rent and sell to people, while Steven has the dirty shoes and likes to figure out the development process.”
“That’s a good combination because we’re seeing a much broader part of the market and at the end of the day, that’s very good for this company,” said Cassidy, a CPA who had Denholtz as a client before joining the firm.
The business also benefits from what its CEO said is a “skinny decision-making structure” and having all of the essential functions in-house, from construction and management to leasing and finance. That has allowed it to continue to succeed with projects such as 655 Howard Ave. in Franklin Township, where it remediated a formerly vacant, dilapidated manufacturing site and repositioned it as a 75,000-square-foot distribution center.
Denholtz sold the building for about $6.7 million earlier this year, only about 10 months after acquiring it, to an electronics distributor that occupies the space. The firm this year has also completed renovations or set out to upgrade office buildings in Somerset and Monmouth counties, among other locations in the state.
In Red Bank, the firm has renovated a 30,000-square-foot office building on Chestnut Street that will serve as the first piece of its mixed-use project. It’s now planning to begin construction of the 45-unit, high-end apartment complex on two neighboring lots, once borough and state officials have completed water supply upgrades around the site.
Denholtz appears to be especially bullish on the project, noting that “there are a couple of talented developers” in Red Bank that are poised to help improve what is already a “dynamic” west side of the borough.
All told, Denholtz currently has a portfolio of 5 million square feet after having acquired more than 1.7 million square feet in the last year. It’s also planning another 750,000 square feet of development.
“Being at the train station is a tremendous advantage, both for the commercial and the residential,” Denholtz said earlier this year when discussing the project. He added that local officials “(want) to encourage people to come back and live in the city. … The west side is really where the development opportunities are and we’re right in the thick of it.”
Home away from home
Denholtz Associates may in fact have deep roots in the Garden State — for 65 years and counting — but when it comes to areas of expertise, Florida is a close second.
As Steven Denholtz recalls, his father had long since established a second home in the state by the late 1980s, when they started to recognize the demographics, the migration patterns and the real estate opportunities. That’s when the firm began to buy property in Palm Beach County, before moving into the west coast of the state about a decade later.
Today, its holdings include a 240,000-square-foot office building in downtown St. Petersburg and a 180,000-square-foot property in Tampa known as The Times Building, among others.
“We don’t have the capabilities there that we have here,” Denholtz said, “although we’re doing some pretty big things for not being physically (headquartered) there.”
He also said that Florida served as his father’s home for the last 20 years of his life, noting that the firm’s office in West Palm Beach gave him an opportunity to stay engaged with the business after moving to the Sunshine State.
“We love Florida,” Denholtz said. “We’ve become very comfortable and we know what we’re doing down there, but it took a long time to really become experts.”
