Capstone Development Group LLC - CityParc at Pine

When the construction and development markets see new trends, Capstone Development Group LLC does not stand still. Instead, the company stays on the edge of innovation by changing with the industry, owner and President Bill Luchini says. 

For example, when interest surged in green initiatives, Capstone immediately sought to move with the market. Since then, many of its projects have achieved LEED Gold or Platinum status. “That level of quality stands out,” Luchini says.

Based in Clayton, Mo., Capstone specializes in developing affordable communities for families and seniors. Luchini explains that the firm started operations in 1976, building rural housing for farmers.

“We did a number of those deals up until 1986,” he says, adding that the company’s focus changed with the implementation of the Tax Reform Act. This enacted the Low Income Housing Tax Credit, which provides tax credits for affordable housing investments. 

Today, Capstone has a portfolio of approximately 325 neighborhoods in 17 states, as well as a reputation for quality with the state agencies it works with. “That’s been very helpful,” Luchini asserts.

“The other thing that makes us strong is the partnerships that we have with our lenders and investors,” he continues. “Right now, in a real estate downturn, we’re able to get deals done. That’s made us stand out over the last five years.”

Resurrecting CityParc

Capstone’s current projects include CityParc at Pine, a 13-story senior housing development under construction in downtown St. Louis. When finished, the building will span 169,000 square feet and feature 149 living units. It will feature many amenities that make it a standout, including on-site laundry, electronically controlled garage parking, a fitness center, fully equipped kitchens, a telephone entry system and a community/meeting room.

Luchini notes that the development is not entirely a new structure, but the renovation of an apartment building that originally opened in 1954. “Some of the young individuals that may have lived there back then may come back and spend their retirement there,” he says.

Each unit, he notes, will be gutted and entirely rehabbed, costing $82,000 each. “It’s being restored to its original look, down to the color of the building,” he says, adding that the project should earn state and federal tax credits. “There’s a good amount of equity in the deal to make the thing work.”

Capstone’s sister company, Crestwood Building Associates, serves as the general contractor on the project. Construction started in April 2013, and should be completed before next summer, Luchini says. 

Capstone has learned lessons during the construction of the CityParc project, Luchini says. One challenge, he notes, is restoring a building nearly 60 years old to its original state while also meeting the needs and demands of present-day tenants. 

This includes the addition of amenities and the creation of common space for the residents of the property on the first floor. This will include the community room, which will feature a full kitchen, as well as an activities room, a fitness area and a management office.

The kitchens in the apartments also will be converted from the 1950s galley style with small stoves and refrigerators to large, open floor plans with all modern appliances. Additionally, the project will see the installation of wiring for cable and Internet, a telephone-entry system, walk-in closets, and energy-efficient HVAC equipment and lighting.

The company also has strived for consistency in CityParc. “We’ve spent a lot of time with selections for the interiors,” he says. “The same color family and same style flows throughout the entire building.”

A Team Approach

Luchini joined Capstone in 2001 and became its owner in 2009. “My background has always been in real estate,” he says, adding that he became interested in the company through its work in Illinois. “That’s where I am originally from.”

Although Capstone has a modestly sized staff, its employees have extensive experience and are highly motivated, he asserts. “They’re committed to our mission of quality and green,” he says. “They’re the ones that do all the heavy lifting.

“Our product stands out as a result of the dedication of the employees,” he says. “We take a team approach to getting these deals done.”

A challenge Capstone constantly copes with, he notes, is the rising costs of materials. “Just because there’s a down market, it doesn’t mean we’re getting low prices,” he admits. 

“The prices of sheetrock and plywood fluctuate like the price of soybeans,” he says. “Those are some things we have to forecast as much as a year ahead of time. We have to be attentive to where we think the market is going to be.”

Despite the cost challenges, he sees a strong future for Capstone. “Over the last five years, we’ve experienced a steady growth and we see that for next year,” he says. 

“It looks like we see possibly doing about $70 million worth of development,” Luchini says. “Right now, we’re looking at projects next year in Illinois, Missouri, Georgia and Louisiana.”

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