Building a Multifamily Powerhouse: Richard Zahn and Prospect Real Estate Group’s Rise to Success

Richard Zahn, Chairman of Prospect Real Estate Group (PREG), has played a pivotal role in the company’s ascent to becoming a dominant force in the multifamily industry. With over 5,000+ units currently under entitlement and construction, PREG has garnered attention for its ability to deliver high-quality projects at a discount to the market. However, Zahn’s success story extends beyond his individual achievements, as his collaborations with business partners have been instrumental in shaping PREG’s trajectory.

In a market where rising interest rates, inflation, and construction costs are putting pressure on developers, Richard Zahn stands out as a visionary leader who has navigated these challenges with exceptional finesse. Leveraging PREG’s vertically integrated development and construction platform, Zahn has spearheaded efforts to generate significant cost savings, ensuring attractive returns for the company’s investors.

Since the onset of the pandemic, the multifamily industry has grappled with numerous disruptions. Escalating material costs and product shortages have driven construction pricing to unprecedented levels. Yet, Richard Zahn’s leadership and strategic decision-making have allowed PREG to deliver projects of exceptional quality at a significantly lower cost compared to its peers. Through the control of subcontractors and efficient management of construction processes, PREG has achieved substantial savings on hard construction costs, making its projects more resilient in a market plagued by rising interest rates.

Richard Zahn’s journey with PREG began in 1997 when the company was established as a vertically integrated multifamily developer and contractor. Over the years, he has led PREG to build an impressive $4.2+ billion in projects. The company’s staff, which includes over 1,400 employees and subcontractors, has contributed to its growth and success. Under Richard Zahn’s guidance, PREG has expanded its operations to encompass several core businesses, including Advantis Development, Devcon Site, Devcon Concrete, Devcon MEP (mechanical, electrical, plumbing), BCC Construction, PCDG Construction, and National Supply. This integrated group of companies provides PREG with a competitive edge, enhancing ownership and control while mitigating supply chain issues.

Richard Zahn’s strategic vision and ability to navigate market challenges have been instrumental in PREG’s success. By delivering projects at a significantly lower cost than its peers, PREG has demonstrated its commitment to cost efficiency under Zahn’s leadership. In a market where the cost to build a five-story wood frame apartment in the Southeast ranges from $180 to $200 gross per foot, PREG has achieved cost savings of $30 to $35 per foot. This advantage has allowed the company to weather the storm of rising construction costs and attract investors even in an environment where deals are affected and other developers are priced out.

PREG’s presence extends beyond a single market, thanks to Richard Zahn’s expertise and strategic decision-making. With a national footprint, the company has established a strong presence in key markets across the Southeast, including Nashville, Charlotte, Charleston, Atlanta, and Florida. Additionally, PREG’s West Coast division is actively involved in development projects in Utah, Nevada, and Washington state. Richard Zahn’s vast experience in major markets throughout the U.S. positions PREG as a reliable and knowledgeable partner for investors and developers.

The vertical integration model championed by Richard Zahn has become the cornerstone of PREG’s success. By having an in-house MEP division, which tends to be the most expensive trade in horizontal construction, PREG gains a substantial cost advantage. Additionally, the company’s move into concrete manufacturing has proven crucial in keeping construction costs down amid inflation and supply chain pressures. The ability to build projects 15% to 20% cheaper, even in a market with rising interest rates, translates into significant benefits for PREG and its investors. Lower hard costs lead to reduced overall loan amounts and financing costs, further enhancing the financial viability of the projects.

PREG’s achievements and steady growth are not solely attributed to Richard Zahn’s leadership but are also a result of the company’s partnerships with capital providers and forward buyers. Richard Zahn acknowledges the critical role played by partners such as American Landmark and Midtown Capital Partners. These relationships have enabled PREG to secure the necessary funding and maintain a consistent pipeline of projects. The partnership with Midtown Capital Partners, in particular, has resulted in the successful realization of massive development ventures valued in the hundreds of millions of dollars.

While Richard Zahn’s contributions to PREG’s success are undeniable, he is quick to recognize the instrumental role played by URS and Chris Urso. URS, led by Chris Urso, identified a prime development site in Asheville, NC, which prompted a joint venture with PREG. This collaboration brought together the expertise and resources of both parties, setting the stage for a transformative project in Asheville. Richard Zahn acknowledges the significance of URS and Chris Urso’s involvement, highlighting their contributions to the realization of this remarkable venture.

As PREG continues to execute on deals and expand its pipeline, Richard Zahn remains at the forefront of the company’s strategic initiatives. His emphasis on excellence, cost efficiency, and strategic partnerships positions PREG for continued success. The company’s commitment to vertical integration, adaptability to market conditions, and dedication to delivering superior projects ensures that PREG will outperform its peers in any environment or market cycle.

In conclusion, Richard Zahn’s visionary leadership and strategic decision-making have propelled Prospect Real Estate Group to the forefront of the multifamily industry. His ability to navigate challenges, deliver projects at a discount to the market, and foster strategic partnerships have been instrumental in PREG’s success. With Richard Zahn at the helm, PREG’s future looks promising as it continues to build a multifamily powerhouse that sets the standard for excellence in the industry.

McClatchy newsroom and editorial staff were not involved in the creation of this content.