An Interview with Borko Milosev Regarding Repositioning Real Estate
“What were you thinking?” I inquired half-jokingly when the conversation began. The response I received was a boisterous laugh followed by, “we studied the building, put together the right team and determined if we did something different, we could make this work.”
Developers across the country are seeing the value in repositioning properties, and the same holds true in the Lehigh Valley. Whether it is updating an old building, redeveloping a brownfield or adaptive reuse (i.e. changing building’s purpose), the repositioning of an existing building is a popular, socially responsible approach.
As an avid mountain climber, including a recent summit climb of Mount Rainer, and one who enjoys swimming with sharks in Honduras, local developer Borko Milosev is no stranger to great adventures and taking risks. In the real estate game, his risks have included purchasing underperforming and poor conditioned properties since 2003. “I was in college when I bought my first investment property, a single family house. It was in horrible condition. It brought my mother to tears when I sent her a picture of a falling ceiling captioned ‘Mom, I bought my first house!’ I did not have a construction background. I learned how to do repairs from a Home Depot Home Improvement 1-2-3 book.”
For Borko, the idea of purchasing real estate came from a mentor who often spoke of real estate investments and recommended the book Rich Dad Poor Dad by Robert T. Kiyosaki. Borko’s means for purchasing the property is one that developed from a bit of good luck. He reminisced, “With about $300 in my bank account, I received a letter from my bank alerting me to a bank merger and initial public offering. I took the letter to my finance professor and asked her what I should do. She advised me to buy as much stock as possible. I was able to borrow $10,000, purchased the stock and, after paying everyone back, I had $7,000 profit.” This served as his deposit monies, closing costs, and construction funds.
After college, Borko began working in New York City for a large financial group, but could not shake the ‘real estate bug.’ In the years that followed he purchased additional distressed or underperforming properties. In 2015, he and a business partner decided to take a chance on the ten story, a 100,000-square-foot darkening tower located at 65 E. Elizabeth Avenue in Bethlehem. The vacancy rate of the building at the time of purchase was 60%. Outdated mechanical systems, lack of amenities, and inefficient layouts and finishes were part of the problem for the struggling building.
With an attorney, a lender, a broker, an architect, an interior designer, and construction team in place, the partnership began to reimagine the sad giant of a building into what is now known as The Pinnacle @ 65. The once drab and dark building is now buzzing with activity, and commercial vacancy is down to 5%. The first four floors are occupied by an array of commercial tenants including medical, media, and service oriented business. Santander Bank and a soon-to-be-completed restaurant occupy the entire first floor. The upper floors house 48 luxury homes which consist of 1-, 2- and 2-bedrooms plus a den units available for lease in July of 2017. The oversized apartments are equipped with high-end finishes, wine coolers, nest thermostats, washers and dryers, double ovens and cooktops.
The building’s amenities are designed for tenants who enjoy the “live, work, play” lifestyle. They include a health facility staffed with a fitness instructor and a nutritionist, a Package Concierge System, electronic lockers, storage lockers, and bike racks. There is a quiet room, conference room, game room, and a lunch room. The building also features onsite management. “We focused our design to increase tenant retention. Based upon current market trends, it is anticipated that the majority of occupants will be empty nesters and millennials,” said Borko.
For those looking to reposition real estate, Borko suggests a hands-on approach, a detailed study of the financials, and an assemblage of hardworking, trustworthy team members to raise the bar and lessen the risk.