Up Close with Peter Michelis and Larry Rose

Seven months into forming The Michelis Rose Group, Peter Michelis and Larry Rose have hit the ground running, working on more than $100M in redevelopment projects, including three Sears properties in New Jersey and New York on behalf of REIT Seritage Growth Properties, the retailer's spinoff company for its real estate holdings. We sat down with the duo to learn what they’re working on and how market trends will impact their business going forward.

Michelis and Rose first met while they both worked on the leasing and construction of a ground-up retail power strip center in Woodbridge for Forest City Ratner in 2000. Even though their careers took different paths over the next 15 years, they stayed in touch, teaming up to work on a $100M mixed-used development next to Vassar College in Poughkeepsie, NY.

While the project was ultimately shelved, they realized they worked well together and formed The Michelis Rose Group last year to develop and redevelop properties into their highest and best use — particularly infill locations near transit centers and within high barrier-to-entry markets. The Montvale-based firm mostly does work within the Tri-State area, but has its eyes on Philadelphia and Boston, as well.

Three of its current redevelopment projects are for the Warren Buffett-backed Seritage, which owns 224 properties leased to Sears and Kmart.

One of the properties is at Willowbrook Mall in Wayne, NJ, where Michelis and Rose are redeveloping the Sears box into a multi-level, mixed-use retail location that will include a Dave and Buster’s. Sears will continue to operate at the location, which means The Michelis Rose Group has the challenge of subdividing the space while working around an operating store.

Two other locations — in Central New Jersey and Long Island — are in the planning stages, but will likely be redeveloped into multi-tenant lifestyle centers, Michelis and Rose said.

As they tackle these projects, Michelis and Rose are drawing from their experiences working for some of the area’s biggest names in real estate.

Michelis (above with his family at the Acropolis of Athens) joined Forest City Ratner in the ‘90s to work on ground-up retail and redevelopment projects in New York and New Jersey. There, he oversaw one the largest outdoor lifestyle centers in the Northeast, Yonkers’ Ridge Hill, and one of the first new mixed-use developments in Harlem in more than 40 years, Harlem Center at 125th Street and Malcolm X Boulevard.

After a stint as senior vice president of Vornado’s U.S. retail construction and development group — where Michelis worked on projects like The Outlets at Bergen Town Center in Paramus — he was recruited to Hartz Mountain Industries to lead the development and construction group. Among his initiatives was helping launch Hartz’s multifamily rental program, which developed a 2,000-plus unit pipeline and installed over 20 megawatts of solar panels, including a solar farm; that sustainable power energized its real estate portfolio and provided power back to the electrical grid.  

After joining Forest City Ratner in the late ‘90s, Rose (with his family in Central Park) helped develop and lease Atlantic Terminal in Brooklyn, then was hired by Kimco to oversee redevelopment opportunities along the East Coast, including projects in Savannah, Charleston, Jacksonville, Harlem and outside of Philadelphia. In 2010, he launched his own firm to redevelop and reposition assets, including Sky View Center in Flushing, Queens, and a strip center in Palm Springs, FL.

As they grow The Michelis Rose Group, the duo is keenly aware of where real estate stands in the economic cycle.

“Everyone was saying we were in the ninth inning for a while, and we’re now in overtime,” Michelis said. “We try to be conscious of this, attempting to mitigate our risks and plan our strategy moving forward.”

The deals they’re pursuing — including retail big-box redevelopments and repositionings, student and faculty housing, multifamily and mixed-use projects — attempt to mitigate the specter of a looming recession. Michelis noted a perfect storm is approaching: a mature and extended growth period going beyond the ninth inning with new regulatory rules emanating from Dodd-Frank, which could choke credit markets for construction, development and refinancing.

“Throw in billions of dollars of corporate debt coming due in the next few years, and the forecast gets murky and potentially ugly,” he said. “We believe that this distress in the market will generate many redevelopment and repurposing opportunities.”

Working in the New York metro area is challenging, Rose said, because land prices are high and the appetite for real estate is strong. The competition for value-add assets has only increased in the past five years, and these projects are The Michelis Rose Group’s bread and butter — taking underused or obsolete buildings and repurposing them into new assets that add value.

Assets in the suburbs just outside of the major markets — including New Jersey, Westchester, Rockland and Long Island — seem to have a better upside as fewer investors are focused on those area, he said. “The perceived flight to safety has led to a widening spread between gateway cities and the rest of the country.”

Outside of work, Michelis has three active kids, so his world revolves around their sports: cross country and soccer. In addition to his family and real estate ventures, he loves dreaming and reading; one of his favorites is "The Power Broker" by Robert A. Caro, a biography of Robert Moses.

Rose also has two children, so much of his outside life revolves around family as well. In a former life, he used to perform stand-up comedy in New York City, performing routines at places like The Improv and StandUp NY.

“It’s been very helpful in real estate, as I have had to present projects to sometimes not-friendly audiences — a little humor usually helps,” he said. Another avid reader, he recently finished "Coming Apart" by Charles Murray and "The Art of Thinking Clearly" by Rolf Dobelli.