Beverly Hills-based developer Markwood Enterprises has been growing with a new focus on L.A. and multifamily development.
 
The company was founded in 2010 as a family office by two brothers in New York, but James Mehdizadeh and Robert Mehdizadeh had entered the Los Angeles market in 2005.

Markwood has put its stamp on Los Angeles with roughly 315,000 square feet across five projects. The company’s portfolio includes one income-producing asset that will be redeveloped over the next few years, a parking garage, and a project that’s in the lease-up stage.

Markwood began to sell some of its New York assets as it homes in on multifamily properties in L.A.
 
“It’s the sweet spot of real estate,” said Markwood Chief Executive David Wright, who joined the company in 2012 and was named CEO in 2016. “It’s more isolated from market swings. Retail is very challenging. The pandemic was the perfect example. People always need a place to live, but they don’t necessarily need to go shopping at their local store or restaurant. Retail is a little bit too volatile.”

Wright said the company is interested in developing multifamily assets rather than acquiring existing properties.

“In L.A., it’s really hard to find acquisition opportunities that make a lot of sense,” Wright said. “Prices are high, seller expectations are high, so for the buyer, there’s not a lot of meat left on the bone.”

Markwood is starting to lease up a 13-unit apartment building in Larchmont. In the next few weeks, the company plans to start work on a 19-unit project in Mid-Wilshire as well as a 51-unit project with one retail space in West L.A. The latter project will come with a fully automated parking garage, a feature that allowed the company to pack more residential units onto the site.

“It’s a fairly tight site, and in order to have a regular parking garage, the ramp down would have cut out about 10 units and changed the whole configuration of the building, and we would have lost 10 apartments,” Wright said. “We would have only been able to park about 20 cars on a level. We would have had to excavate about 50 feet or 60 feet down, and that’s prohibitively expensive. We had to look at parking solutions.”

The Mid-Wilshire project with 19 units will have a semi-automated parking system.
“With the stackers, we were able to get the maximum density on the site. It’s an extra cost, but it returns itself,” Wright said. “It pays itself back fairly quickly.”

Next year, Markwood plans to start on a project with 66 apartments in the Mid-City West/Melrose District.
 
Wright said that unlike some other development companies, Markwood is interested in both small- and large-scale apartment buildings and evaluates “each site and each opportunity as it comes up.”

He added that the company analyzes overall returns on a property rather than the size, but smaller builds can be tricky at times.

“The smaller projects are more challenging. I really like the concept of these smaller infill projects but … it’s more challenging to find general contractors that are willing to build small and lenders who are willing to lend small,” he said.

The company is building Class A properties. Wright said Markwood was also looking at projects that would have workforce housing.

“For workforce housing we are looking more in the fringes of downtown, South L.A., West Adams, places like that where you can get development sites at a better cost per unit. West L.A. is prohibitively expensive. We haven’t found anything in that area in the last few years that actually makes sense,” he said.

Going forward, Markwood is looking to do more with modular construction.
 
“It’s not a huge cost savings per se, but it gets you to market way faster,” Wright said. “That’s the main benefit. And the standardization of design makes materials more efficient and labor is more efficient.”