Twin brothers Scott Shalek (left) and Eric Shalek are principals of Ridgecut Road, a two-year-old firm focused on low-coverage and outdoor industrial storage sites and ground-up warehouse development. — Photo by Aaron Houston for Real Estate NJ
By Joshua Burd
The experience was eye-opening for Eric Shalek, then a member of Brookfield Asset Management’s debt investments team, when the fund manager in 2021 was weighing a loan for a large industrial project in Hudson County. It was notable, he recalled, that the borrower had underwritten what it described as parking rents at the development site, seeking to capture value from space that was outside the four walls of the building.
“This was land adjacent to a warehouse facility,” said Shalek, now a principal of the real estate investment firm Ridgecut Road alongside his brother, Scott Shalek. “I think that was an early indicator or sign in the market that there was demand for that type of space.”
The identical twins, who hail from Tenafly, have largely focused on low-coverage and outdoor industrial storage sites since launching Ridgecut Road in early 2022, having started their careers with several well-known real estate firms. The company and its partners own five such properties in Middlesex and Monmouth counties after a series of acquisitions starting in spring 2023, with two more pending and others expected by year-end.
And with a two-pronged strategy, the Shaleks are also planning a groundbreaking this year in Montgomery, New York, about 30 miles from the New Jersey border, where they’re developing a 146,075-square-foot distribution center just north of Interstate 84.
“We liked the dynamic up in Montgomery when we were entitling that,” Eric said. “It’s a great distribution node. We’ve watched rents grow very strongly over there, really trending off the back of what’s going on in New Jersey and its growth.”
The brothers, age 30, are former standout hockey players at Tenafly High School who were both integral to a deep, dramatic playoff run in 2012, one that included four overtime wins before the team lost in the state championship game to Summit High School. Both attended Northwestern University, graduating in 2016 before launching their respective careers.
For Scott, that meant jobs with the former General Growth Properties, followed by more than two years as a broker with Meridian Capital Group and then positions with Tishman and Valyrian Capital. He also obtained a master’s from New York University’s Schack Institute of Real Estate. Eric, for his part, began his career in consulting before pivoting to real estate, first with the capital markets advisory firm Hodges Ward Elliott, giving way to jobs with JDS Development Group and Brookfield over the next two years.
That experience paved the way for the brothers to scratch their entrepreneurial itch in 2022, with the industrial market soaring from pandemic-fueled demand.
“Growing up in Jersey, we understand the landscape and we saw what was going on in the industrial space,” Scott said. “It really was a combination of those two factors. That was the impetus for us launching Ridgecut and deciding to go off on our own.
“And it was the right time in our life to live lean and bootstrap it, if you will, so we walked the plank and went for it.”
Eric, who is nine minutes older, added that “being in the operator seat and being the boots on the ground is more suited for our personalities,” but that’s not to say that their roles are duplicative. Scott is focused on sourcing new opportunities and overseeing its acquisition pipeline and development, he said, while Eric is largely responsible for maintaining the firm’s relationships with investors, capital partners and lenders as well as deal structuring and execution.
“We’re identical twins, but we think very differently at the end of the day, which is a good thing for our business,” Scott said.
Ridgecut Road closed its first deal in spring 2023, in tandem with Marcus Partners, acquiring a 3.92-acre, low-coverage industrial property at 456 Hollywood Ave. in South Plainfield. The site, which housed a crane rental and equipment business for some 50 years, is just off Interstate 287 and includes an 11,500-square-foot service facility that was key in helping attract a tenant.
The firm has since acquired properties in Sayreville, Aberdeen and Middlesex Borough, as well as a second in South Plainfield, and expects to close on two others before the fourth quarter. It’s also managed to generate strong interest in its newest acquisitions, thanks in part to a deliberate approach to the asset class.
“I think what we’ve realized as we’ve grown and scaled our business is that it’s extremely nuanced and about understanding, on a site-by-site basis, what can work and what can’t,” Eric said. Zoning is an obvious consideration, he said, but the firm has also searched for versatile sites where “there’s a depth of tenancy that a given property can work for.”
“I think that’s part of what we view as the key to successful execution. And ultimately being able to execute on your underwriting is really understanding some of those dynamics.”
Ridgecut’s ground-up project in Montgomery, New York, is more than two years in the making. Eric noted that the firm was “tracking that municipality very closely” as Bluewater Property Group was developing a 1 million-square-foot, build-to-suit fulfillment center for Amazon — a project that required some 20 meetings to secure approvals — in a time when the municipality was revisiting its zoning due to pushback from residents.
Ultimately, the zoning for Ridgecut Road’s parcel remained intact despite major changes that effectively constrained new development in much of the town.
“All we were looking for was clarity,” Eric said “We came in at a good time, when the town had finally chosen to make a decision … When you don’t have jurisdictional clarity as far as what can and can’t be done, it’s really tough.”
The low-coverage space “will continue to be the lion’s share of our focus,” Eric said, citing the compelling risk-adjusted returns. That’s despite a diminishing supply and with institutional buyers now turned on to the asset class, but the Shalek brothers are betting that their roots in the region and their ability to be nimble will be differentiators.
“That’s probably been a distinguishing factor from our perspective,” Eric said. “There’s a bunch of larger fund operators that are investing in the space. But we view our secret sauce or our competitive advantages as the fact of how local we are and the fact that we can touch and feel everything.”
BRC: Construction tech firm enters New Jersey with 12,000 sq. ft. lease in South Plainfield
