Rising high

The Cappelli Organization reaches new heights with its Westchester Towers

When the 28-story tower, 3Thirty3 opened at 333 Huguenot Street in New Rochelle last June, developer Louis Cappelli expected the building’s 285 luxury units to rent out in perhaps eighteen months. Yet here it is less than a year later and the 435,000 square foot building—which features apartments with white quartz countertops, walk-in closets and panoramic views—is more than 92 percent leased.

“It’s the most successful rent-up on any job I’ve ever done,” Cappelli says. “The demand is out there—it costs so much for a mortgage right now that people are probably deciding that renting is the more cost-effective option, so they are flocking to rental apartments. The demand is strong.”

It’s not just this one building, either, says Cappelli, the managing member of The Cappelli Organization. “We have more work going on now than we have had in 46 years in the business,” he says, explaining that some of those projects are underway, some are just getting started and some are going through local approval processes. “There are millions of square feet to be developed and thousands of apartments that we’re working on in Westchester County, mostly in New Rochelle and White Plains.” His company is also finishing projects in Coney Island and the Bronx.

Among the projects are another 28-story tower across the street from 3Thirty3 at 325 Huguenot, with another 244 luxury units, which is expected to be completed by year’s end. Additionally, late last year, the Cappelli Organization and RXR broke ground on Hamilton Green, a $650 million project on the site of the former White Plains Mall. Located just two blocks from the recently renovated White Plains Metro North Train Station (and only a block from the White Plains Central Business District), the project features four mixed-income multifamily buildings totaling 860 rental units, more than an acre of publicly accessible open space, dining, retail and commercial spaces.

The other famous mall in White Plains, the Galleria, was still surviving but needs a re-thinking—so the owners, Pacific Retail Capital Partners and Aareal Bank, are partnering with SL Green Realty and the Cappelli Organization to redevelop the property. They plan to transform the site into a mixeduse development centered on residential development and amenity-based retail.

All this activity is not merely the result of pent-up demand after the world shut down in 2020 because of the pandemic. In fact, Cappelli points out, their company didn’t really miss a beat.

“We worked straight through the lockdown,” he says. The company was considered essential because of our contractors’ work on utilities and brownfield cleanups. “Everybody worked in the office, and it was a go full-on our job sites. We had nurses and protocols in place and testing on the job every morning. We spent a lot of money making sure people were as safe as they could be. We had very few people test positive.”

The full calendar is the result of a confluence of factors, starting with low interest rates and a booming economy pre-pandemic, followed by money from the federal government in the aftermath of the pandemic. Additionally, a lot of the jobs have been created on former brownfield sites or in Opportunity Zones. Cappelli says, “they are great projects in great locations and those sites are incentivized for building.”

Even the current economic situation with inflation and climbing interest rates doesn’t particularly strike fear into Cappelli’s heart. “We’re in it for the long term, so everybody’s looking past this,” he says. “In a lot of places we fixed our rates so we’re not floating on everything. We managed the finances well.”

Additionally, he notes that at 71 he has seen it all before.

Born in the Bronx and raised there and in Yonkers, Cappelli graduated from Notre Dame with an engineering degree and worked for his father in electrical contracting before moving into real estate development. His first property was in Valhalla and he made his name in the mid-1990s taking over development and construction of New Roc City, the first big step in revitalizing New Rochelle’s downtown. A decade later, he helped start the reshaping of White Plains with City Center. All his successes have made him one of the county’s premier builders. Beyond being the founder of the Cappelli Organization, Cappelli is the Chairman and CEO of two subsidiaries—LRC Construction and Cappelli Development Company.

“I’ve been through four or five recessions in my career, but you get through it and it has always been a happy ending,” he says, adding that concerns about transit-oriented development when Manhattan’s offices are sitting halfempty are also overblown. “How many times have we seen everybody write Manhattan off—in the ’70s, the ’80s, the ’90s—only to have it come back with a roar. So, I think transit-oriented development is a good place to be and will continue to be very successful.”

In a recession, he says, the key is to pick locations or deals where people didn’t finance properly and need to get out. “There’s valuations of land you can buy right now that are extremely attractive if you have a long-term view,” he says. “Now is the time to be buying that land and getting approvals done.”

Cappelli has long praised New Rochelle for their “brilliant” reimagining of the land use process that created an overall environmental impact statement that now enables building approvals within 90 days of submission and developers are adding 6,000 units to downtown, which “gives everybody confidence because you can see an actual city being built.” But in this particular moment, he notes that the more traditional approach of White Plains and Yonkers—where it can take a year to eighteen months for approval and “you need to be way more patient”—can also work in their favor.

“If it takes time that’s actually fine; why rush to get something approved tomorrow when the interest rates are at eight percent,” he says, adding that while some equity investors are pulling back, the smart ones know it makes sense to start a job now when you don’t need the construction loans. “It’s smart to spend your development money getting something approved during the recession and then start building later. In a year, certain rates will be going back down. It’s an election year next year and the smart money is saying that things will be fine by then.”

The company has an added advantage when it comes to dealing with the ebbs and flows of business from supply chain shortages to climbing interest rates.

“We have a different perspective because we are the developers or co-developers but we’re also the builders so we’re much more in control of our destiny,” Cappelli says. “We can’t control interest rates or the banks, but we can hedge that. We can’t control rising costs but we can redesign something if the original materials become too expensive. We have fewer moving pieces.”

Bruce Berg, the Cappelli Development Company CEO adds that other in-house disciplines like architecture and engineering help the company with redesigns or pushing projects through in a cost-effective way. “That’s a unique trait among developers,” Berg says.

That ability to adapt fits in with the “everything comes and goes; you have to work your way through it”—a sagacity that Cappelli has gained in his decades in the business. Still, he says, dryly, “I like wisdom, I just don’t like being 71. I would like to have the wisdom and be 51.”

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