As investors eye the 2023 market with some uncertainty, Mike Abuladze, founder of Argo Development, is feeling confident that his firm is well-positioned to capitalize on impending growth in a key sector—single-family homes.
A variety of demographic factors point to this opportunity, from a renewed interest in more space due to the increasing rate of virtual workers to the large influx of people in and around the Hudson Valley. Currently, many would-be homeowners are sitting on the sidelines, choosing to rent rather than buy. But the incentives that Argo is currently offering that facilitate a down payment, are creating a surge of interest in consumers who are seeing the incredible value in purchasing a home rather than spending money month after month on rent.
A Serendipitous Beginning
Argo began as a framing company in Sept 2002 when Abuladze took over an existing company where he’d been working as a project manager. When the owner disappeared, he saw no other way to save the jobs of his 60 fellow employees than to step in. They became known for their excellent work in general contracting and soon were offered opportunities to move into prominent luxury projects.
In 2016 they expanded their services to development and have been making their mark throughout New York and New Jersey and beyond ever since. This initial redevelopment project offered Argo its first experience in taking over a faltering project and achieving success, says Abuladze.
As he explains, 2016 was a tough year for general contracting as potential clients couldn’t afford their rates, yet he refrained from cutting prices because he knew the quality of workmanship would suffer. He was in a quandary over whether to close his doors or pivot when he decided to take on an investor to help support a new venture. Abuladze purchased five properties on a street, remodeled them and turned them into high-end rentals. They soon were commanding $2,500 a month, which represented a 15 to 20% return on the investment.
When others saw what I was capable of, everyone wanted to do business with us. We started small and grew gradually and today have hundreds of units.
A Reputation for Quality and Success
Argo’s reputation precedes them which means they gain projects via word of mouth through a wide network of connections that might include city officials, architects, engineers, attorneys and lenders. “An influential circle of people know about us and they come to us to help get a project moving,” he says.
Argo’s niche continues to be taking over projects from developers who have failed to make them viable, whether because of management missteps or other missed opportunities. “We have a knack for taking projects on life support and making them special,” Abuladze says. “We are known for taking over shovel-ready properties and getting involved as partners or developers to restructure and redesign them to bring them to life.”
For example, he mentions a project that was started in 2009 and failed several times until Argo got involved. Since last year, they have built 25 homes and have 30 homes under contract in that deal. In another example, a developer had struggled to sell homes at the $625,000 price point, but Argo was able to reconfigure the properties and bump them up to the $1.1 to 1.5 million price range.
Argo’s comprehensive process entails generating detailed reports that include renderings and market analysis, such as demographics and income, which provide support for the suggested price point. “We give our clients more than they expect,” Abuladze explains.
While residential projects are a prominent focus, Argo handles other high-profile developments. For example, a recently completed project at 680 Park Avenue, soon be highlighted in Architectural Digest, is a $60 million building which was donated to the Queen Sofia Spanish Institute. Argo was invited to develop and remodel the entire building from scratch into a luxury project that is a frequent site for filming as well as press conferences for dignitaries.
Optimistic about their Pipeline
While other developers are pausing in response to today’s adjusting market, Argo continues to have a number of projects in the works in the New York/New Jersey area, as well as Texas and Florida—and has the capacity for more. “We could grow ten-fold given the dedicated infrastructure we have in place and strong relationships with skilled attorneys, architects, engineers, designers and subcontractors, in addition to suppliers,” Abuladze says.
And he believes Argo will be well-positioned, with less competition than normal as other builders opt out of new projects. In particular, he has high hopes for a development of net-zero homes which he predicts will be appealing for their ability to help homeowners manage energy costs. “Buying one of these energy-efficient properties is similar to choosing an electric vehicle, where you might pay a bit more upfront, but you’ll recoup that investment in savings down the road through lower energy bills, not to mention a smaller environmental footprint, which is important to consumers,” he says.
With banks eager to lend for new construction, he is increasingly seeing that consumers are taking the long view as they realize it is far more financially advantageous to buy than rent. That’s opening up a whole new playing field and Argo is poised to capitalize on these opportunities.
While every entrepreneur views economic uncertainties from different angles, Abuladze is used to seeing the silver linings and creating his own profitable ending.