Avner Krohn is the Founder, Chairman, and CEO of Jasko Development, a vertically integrated real estate development firm based in New Britain, Connecticut. Under his leadership, Jasko has delivered a wide range of projects across the multifamily, healthcare, and retail sectors—focused primarily on underserved urban cores in the Northeast.
Avner launched his entrepreneurial career at age 10 and has since spent more than two decades working across real estate development, historic preservation, and adaptive reuse. With deep expertise in finance, public-private partnerships, and ground-up construction, Avner has led the development of over 400 residential units and commercial properties, with another 500+ units currently in pre-development.
He is widely respected for his ability to navigate the complex intersection of development, government, and community needs. Avner is also an advocate for mission-aligned growth, integrating long-term public benefit with investor returns.
Insights from Avner Krohn on Public-Private Partnerships in Real Estate Development
With a background that bridges entrepreneurial grit and large-scale execution, Avner Krohn brings a rare blend of strategic insight and real-world experience to the commercial real estate space. His vertically integrated firm, Jasko Development, has carved out a niche working with municipalities to unlock challenging projects that others overlook.
In this episode of The Dealmakers' Edge, Aaron Strauss speaks with Avner about the real dynamics of public-private partnerships, from how to build trust with city officials to structuring deals that actually pencil in tough markets. Avner also shares how he's scaled a lean but powerful team, why mindset matters more than market timing, and what keeps him grounded through the ups and downs of development.
2:13 – Avner's early days: entrepreneurship at age 10 and launching his first business
5:45 – Lessons from Israel, building a foundation in real estate and finance outside the traditional path
8:58 – First deal in Brooklyn and the road to larger-scale development
13:35 – Structuring turnkey solutions for the healthcare and retail sectors
16:12 – The anatomy of public-private partnerships and why most developers miss the mark
20:43 – What municipalities actually need (and how to earn their trust)
24:01 – Managing a growing business while staying present with a young family
26:47 – How Avner balances optimism with realism in turbulent markets
Transcript
Aaron Strauss: You're listening to The Dealmakers' Edge with A.Y. Strauss diving deep into stories behind commercial real estate leaders.
Hello, everyone, and welcome to The Dealmaker's Edge. Today, we are really excited to be joined by Avner Krohn, who's the founder, chairman, and CEO of Jasko Development.
Based in New Britain, Connecticut, Jasko Development is a real estate firm focused on multi-family retail and healthcare projects. They work closely with communities to deliver housing and commercial spaces that align with local needs. With a vertically integrated approach and an emphasis on technology, Jasko manages development, construction, and asset management to create lasting, functional spaces.
Avner has led the successful delivery of dozens of commercial real estate projects across the Northeast, expanding retail, healthcare, mixed-use, and family. With a strong focus on community-first development, he works closely with cities and stakeholders to ensure every project is a win-win.
Avner is a good friend of mine. I've spent a lot of time with him over the years. He has high integrity, a wonderful personality, and super positive energy. In this conversation, he's going to talk about successful dynamics in public-private partnerships, which you don't hear people speak about too much, riding the highs and lows of development in the current markets we're facing, and also just how to navigate and juggle so many projects in real time with varying degrees of responsibility. Hope you enjoy the episode.
Hello, everyone. Welcome to The Dealmaker's Edge. Today, we are pumped to be joined by Avner Krohn. He is a dear friend of mine, somebody I really respect tremendously. He brings an incredible energy to the table, and we're going to get his story and learn from it today. So, Avner, I'm really excited to have you here. Thanks for being here today.
Avner Krohn: Hey, Aaron, my pleasure. When I got the invite, I was super excited. You and I have a great story about how we met—we can touch upon that a little bit later—but I'm really excited for the conversation today and happy to be here on this rainy Monday.
Aaron Strauss: Yes, cold rainy Monday, but good energy, good vibes, and I'm super pumped to take the time to hang out here a little bit.
What's always good to do is to sort of frame the conversation. Maybe you could talk about where you grew up. I know you started really young in the business, but kind of where you grew up, your upbringing, and maybe your first foray into business, and how you first got started, that would be wonderful.
Avner Krohn: Yeah, absolutely. I grew up in Monsey, New York, a little enclave of an ultra-Orthodox community, with great, fantastic parents who were super supportive. We're four brothers. I always joke around—my dad's a mohel, he does ritual circumcision, so he didn't know anything about daughters.
So, we're four rambunctious boys. My brothers and I all played, I'd say two of my brothers and I played music professionally growing up. It was a really wholesome upbringing and a very close family.
Growing up, I just didn't like boredom. I didn't particularly like some of my studies working in elementary school. So, when I was 10 years old, I said to my dad, “Hey, can I borrow your lawnmower?” And that's where my entrepreneurship essentially started, outside of selling my grandfather's presents to other friends and family.
I started cutting people's grass and made, I think, $600 or $700 when I was 10 years old, then I reinvested that into additional equipment. My parents gave me a loan, and by the time I was 15, we had a hundred accounts.
I wasn't dressed in a suit and tie but rather covered in grass from head to toe. I'd come back from school, blowing leaves late at night with big halogen lights lighting up the yard. My dad would come out and help us fix equipment. My mom is this 4'11", shy Jewish woman, an amazing mom, driving around a bunch of teenagers with trailers filled with equipment.
We had massive barrel garbage cans on top of the car. When I think about it today, it was wild. But I really learned what it meant to work hard, to be honest, and to manage a team of people.
Aaron Strauss: Amazing. I guess that was a really good foundation for construction. A lot of people you meet, they buy and sell real estate, they finance, they JV, they lease, but you don't meet very many really up-from-the-ground development, you've really rolled up their sleeves. And I think from a young age, you've shown that—you like to roll up your sleeves, literally and figuratively.
Let's talk about maybe your first project or two—your education and then how you got started on the first deal.
Avner Krohn: Just putting it all out there. I was in high school through 11th grade. It wasn't going that great, wasn't doing super well on the studying. I just wasn't stimulated back then, and I wasn't learning what I really wanted to learn. I wasn't learning anything about finance. I wasn't really learning about current events of the world.
But I was working. And I was working hard. I mean, I'd get myself thrown out of school so that I could catch up on my landscaping. Together with my employees, they had their parents who weren't all that happy. So it was quite interesting times, as you can imagine.
But I was always working—working nighttimes, weekends, and summers. I had decided, after 11th grade, to go off to Israel. I had a lot of family and friends there. Like I mentioned earlier, my brothers and I were playing music professionally, and I figured, “You know what? I'll go for a couple of months. I kind of missed my 12th grade, my senior year, but we were going to look for a new experience.”
My mom was running the landscaping business at the time. I ended up going to Israel, came back in the summer, took my GEDs, and made sure to get my high school diploma. I fell in love and said, "Hey, I've got my whole life to work, and I've practically worked my whole life. So I'm going to stay in Israel for a period of time."
I went, learned in a Yeshiva, Talmudic studies, and was playing music around the country professionally. What would happen is, I'd come back to the States twice a year, and at times, my mom would hire college professors. I'd start learning finance. They were on break, on vacation from teaching, and I was back from Israel. So I got my real estate degree, learned finance.
I'm dating myself to some extent—I'm not that old—but I mean, there was no Google. I didn't have a real estate translation. So I sat with this little dictionary, and I remember the first time I heard the word "amortization," I'm like, "How do you spell that? I have no idea what I'm talking about."
But the understanding for me was trying to get into the investment, creativity, and creation of real estate. It was a driver of mine since I was young, and I kind of was exposed to it when I was a little bit younger. I invested $10,000 through a friend of my mom. They had a large multifamily platform at the time. I didn't really understand what they were doing, but I made 10% on the money, and I said, "Hey, I come from a family—grandparents, uncles—all in the law field, attorneys at big firms. That's not for me. I got to sit in one place for too long." Little did I know that I'd spend the majority of my day with my lovely attorney friends.
So I go to Israel. I end up staying for four years in total. I come back, I'm 21 years old. My uncle, at the time, was an associate at Simpson Thacher. He and I partnered, and we bought our first house in Brooklyn.
At the time, it was Marine Park on 35th Street. Growing up in Rockland County, we grew up with a yard and large space. I couldn't understand—I'm like, "Hey, this is a little box. There's no yard. Three bedrooms. Who's going to live here?"
But we kept the property for 16 months, and we doubled our equity investment at the time. That gave me a taste. I remember attending my first closing, where the residential attorney at the time was representing both the lender and myself. It was a very interesting learning experience.
From there, I had opportunities to renovate some other homes for individuals or friends of our family on a fee basis. I really loved the creativity of doing something like that.
Aaron, as you mentioned, it wasn't just about the numbers. It was also about constructing or building something that I thought could add value. From there, I started buying property in New Jersey—smaller multi-families. Then I landed in a historic district, having no idea what that even meant.
Again, I'm in my young 20s at the time. It really taught me about tax credits, historic tax credits, restorations, and so on and so forth. We went from there to boutique office buildings, I'd say between 20,000 and 40,000 square feet. In 2006, I had purchased my first office building in Connecticut. That was a property where I said, "Hey, look at the underwriting—at 50% occupancy at $12 a square foot gross, I'm paying all my bills." I just sold that building a few weeks ago, almost 16 years later.
A lot of people asked me, "How did that make any economic sense?" It was a historic tax credit project that we converted at a later point in 2019. I'm all about opportunity, and opportunities rolled in on the build-to-suit side, where a lot of medical dentists and doctors would come, try to lease space from us, and then have to go through the architectural, engineering, and design permitting process. It's not what they do, they're busy practicing medicine.
So, I kind of fell into the build-to-suit platform, where they signed a long-term lease, hence building a lot of value prior. We performed all the construction and handed over a turnkey space. But it was not from the perspective of a large-scale Starbucks corporate model, we used the same model, though, for the mom-and-pop medical industry, which led us to do T-Mobile, gas stations, Hartford healthcare surgery centers, and AFC urgent care centers, which were 23 different states. We had focused on the New England market per se.
Over time, we also worked on multiple smaller 20,000 to 40,000-square-foot historic conversions. That gave me a taste of the public-private partnership, where these deals did not pencil out, yet they offered tremendous upside for the communities they were in, many times in more distressed municipalities with beautifully historic buildings that had been sitting underutilized for many, many years. I got the taste of the public-private partnership from there, and over the past five years, really rolled into larger-scale multifamily, which unleashes my creativity, brings a couple of white hairs, and so on and so forth.
We've built over the past couple of years about 400-plus units and a mixed-use component in multiple different projects, typically focusing on 100 units plus, and we're going in the ground, God willing, this year on 542 units, predominantly in the New England, Connecticut marketplace.
Aaron Strauss: You've also built a great team, many of whom I've had the pleasure of meeting and hanging out with at some dinners, et cetera. You really are vertically integrated. A lot of developers are outsourcing, but you really have a full team that's doing everything A to Z.
Maybe you could talk about how you scale your operational capability alongside projects because at certain times—and we feel it too—we're a business, maybe overstaffed, understaffed, finding the right people for the right project, the right opportunity. You're always growing. So how do you manage to juggle between managing at a high level almost politically?
You're interfacing with a lot of political figures, public-private partnerships. You're keeping relations with your investors. You've got to have a lot of broker relationships. I know you're on the phone with lawyers a lot, maybe more than you'd like, in a good way, making deals. You're also running a team. How do you maintain that juggling? I know you work extremely hard, but how do you set yourself up daily to succeed while you have all these different balls in the air?
Avner Krohn: Great question. I'll add to that—a four-year-old, a two-year-old, and a one-year-old.
Aaron Strauss: Oh, yeah. We didn't even get there. I didn't even go in there exactly, yeah.
Avner Krohn: Talking about balance, though, and being present as a dad, but we'll talk about that in a moment. It's a great question. What I don't want to do is only focus on the positivity. I also want to focus on the challenges because I feel that many times, people get up, we tend to eat breakfast, happy hours, and everyone's spouting how fantastic and amazing it is. It's just, "Look, we've grown, and it's just easy." From the outside, it looks like this tremendous success. It's challenging.
I think the big focus is good people. You cannot grow without delegating. So I'll talk about my organization and a couple of key individuals and how I've managed to grow and my focus on growth. Also, on myself and my family, because that's a big component that ties together. You can just work and work and work, but at some point, what's it all for? Another part of this conversation, hopefully.
Our chief operating officer, Uriel Schatz, I've known him since my Israel days. When he didn't speak a word of English, he had come in from Mexico, and we met in the old city of Jerusalem. He used to nod like he understood what I was talking about. Little did I know that he wasn't fluent in English at the time. He ends up going to Yeshiva University. He ends up graduating with a finance degree, and just fast forward, worked for very, very large multi-billion-dollar family offices.
He's our chief operating officer. He's a guy I could trust with my life. So he can run a part of my organization. I don't have to be on every email, on every conversation, on every follow-up, finance, and so on and so forth.
It's also hiring individuals and part of the team that may be way better at specific aspects than I am. You have to humble yourself and say, "Look, I'm good at X, but there are a lot of other people that are good at Y." Our head of construction has been with me for 19 years now, I'd say. I grew up with him since pre-18. He and I worked in landscaping together.
He's a licensed chief building inspector. Another individual works on property management for us and special projects—been with me for eight years. I can call him day or night. If there's an issue, he's going to make sure it happens. It keeps on going. We're a team of about 25 people, and getting it right sometimes is difficult.
We may have some hires a couple of times that don't fit the team. One of the difficulties is knowing when to let someone go. If they don't fit the culture or the work ethic, or you can't trust that individual, then they're not the right person for our team. That's really helped on the growth.
The challenge, Aaron, like you mentioned, is, "Hey, you're growing, there's payroll, there's infrastructure, and yet always on the development side, you need to make sure that you have a pipeline." The pipeline starts years before there's a shovel in the ground.
Now, in this particular environment, it's even more difficult because you may have thought you were going to finance from one specific direction. Well, the lenders were close to lending at a period of time. There was COVID. There's hyperinflation. Navigating that—there's no map. There's no particular way to say, "Hey, here's how you're going to navigate this."
Entrepreneurial spirit is huge. Like I mentioned before, having great people you can trust and delegate to is essential. Praying to God. That's all I can say. It's like, "Hey, praying every day and then hoping for the best."
I heard something really interesting the other day. It was about individuals going through difficult times at a point in time on a large-scale development side of things. When you look at the mountain, you say, "Wow, how am I going to get past this? It's insurmountable." But if you do something positive every day, the compounding effect of that is tremendous. I took that lesson internally.
Part of scaling and growing the business is, "Hey, all of a sudden, you need HR." Ten years ago, HR—for what? It was just me and three or four other people. That was it. They were good buddies, and we were working together. Growing in areas that I never imagined were also challenges, but I do love to learn.
If you combine an entrepreneurial spirit, creativity, and a thirst for learning, it goes back to my conversation prior about leaving high school after 11th grade where I always wanted to learn, but the mold didn't work for me at that particular time. At no point do I tell anybody to do what I did, it takes a very particular individual.
But scaling and growth in challenging times will also make you stronger when times are super fruitful and things get a little easier. The lending markets open up. Construction costs come down to some extent. So those would be the key takeaways.
Aaron Strauss: You're also one of the most positive people on planet Earth. I've been around a lot of people, and your energy is through the roof. So no matter what's going on, it could be raining fire and lightning, and hail, and you'll just find a way to have a positive outlook. I think that's also a huge driver of how you've attracted a lot of like-minded people to your orbit.
Speaking of attracting, maybe we could talk a little bit about the public-private partnerships. It's kind of a niche space. You hear a lot of people talk about it, but not many people do it exceptionally well. You've been doing it a long time. I know the relationships you have in certain municipalities in Connecticut go back at this point, many, many years. Through the fruitful relationships there, you can make deals pencil.
Perhaps today somebody's trying to do certain development deals, and they're trying to think about getting deal flow, and they've never really explored this path. Maybe you could talk on a macro level about how you've seen success with the public-private partnerships.
Avner Krohn: Well, absolutely. My grandma always used to tell me, she's like, "When you negotiate, make sure to leave something on the table." It's the opposite takeaway for some other individuals. Don't wipe the table clean.
I've taken that model with me where you don't have to milk every last dollar, squeeze every last penny where one side has to walk away feeling bad or taken advantage of. That's really the segue into the public-private partnership. It's a partnership. People don't understand what that means.
Essentially, there's a municipality that is going to benefit from your development. Now, not every municipality can foresee the benefit, and not every city council member or every mayor's office or every state will see the benefit. Then there's a benefit for us as a developer where essentially the municipality and/or the state are going to contribute towards your project.
So the challenge is making sure that it's a win-win and being able to portray to a municipality why they want you, specifically you, not just a development. An RFP goes out, and people could say, "We're going to build X amount of units or retail." But why do they want Jasko Development or Avner Krohn to be a part of their municipality?
And so what I try to do is think about it from their perspective and say, “What are we looking for?” We're typically, in a public-private partnership, looking for them to contribute. What can a town contribute? What can the state contribute? Well, they could contribute a long-term pilot program.
Connecticut doesn't really have pilot programs, so we call it a tax fix. Now, I made it up one day. I'm like, "I got to look at the state statutes. If it's allowed, something that a local municipality could contribute is long-term tax deals." You have to be able to show the municipality, "Hey, you're going to make two, three, maybe 500% more tax revenue with this tax deal, in addition to having very significant development in your core town."
So it's a win—not, "Oh, hey, you're going to give this developer a whole ton of millions of dollars of tax breaks. They're just the rich developer who's going to benefit." So that's the conversation we have on a regular basis.
Developer equals rich equals being taken advantage of the city. So the conversation is granular, and it's very long-term relationships. It's not like you can storm your way into a municipality one day and say, "Hey guys, we're here. You want us to work here? This is what you're going to have to give us." It's reputation.
Then it's technical know-how because there are a lot of regulations placed on local municipalities—federal government related to state funding, state funding related to grants, and the hair that may come along with public-private participation.
So, for example, a lot of people don't realize that a tax deal may not be transferable. Well, how does your lender look at it? Because if they ever took a property back, they've just lost the tax deal. It's a no-go.
So there are many different factors. We just turned down a $4 million grant awarded by the state of Connecticut because, unbeknownst to the state agency, the Department of Labor through the state put a ruling out that the entirety of the project could have to go prevailing wage—not just the $4 million grant.
That particular project was about a $27 million project. The cost, together with the affordability component, was about six and a half million. So if you take a $4 million grant, you just have a six and a half million dollar cost. But essentially, it's weighing into the public as well.
“Hey, we desperately need housing of all kinds. We need affordable, we need workforce, we need market rate to free up some of the affordable units for other individuals. How do we accomplish that?” And so I try to be a part of that conversation as much as possible and think out of the box.
In today's environment, if you give me a free piece of land in most towns in Connecticut—excluding super affluent towns—I cannot build a yield to cost that will actually make any sense for ourselves, our investors, or our lenders. So the only way to actually succeed in most municipalities today—look at some of the projects customers have been putting on in New Jersey—is the public participation.
Again, when you're taking someone home, you sit on the city council, they may be a doctor, maybe they're working in a completely different field, how do you explain debt service coverage ratios? How do you explain expectations for returns? How do you explain the benefit? And it gets very granular.
Part of that is really reputation. It goes into our design process. When we're building in a moderate-to-low-income town, we're building nicer than in an affluent town at times. That's because we want to attract people to live here. The local municipality is participating, so we want to give something back.
We may be able to get away with a three-story building, but instead, we're going to build something six-story. It's going to add density and foot traffic to the core downtown. So it's pulling yourself as the developer out of the equation and thinking about it from the municipality side, and then being able to insert yourself back in and say, "Okay. Here's how this all works." And it's many, many years of participation on the political side as well.
Aaron Strauss: Well said, Avner. You're really encapsulating that beautifully. Long and short of it is having that integrity too. When you come to a town, a lot of times there's this fear of "Who is this developer? What are their morals? How do they deal with people?"
Not just the granular X's and O's, but will they be a tried-and-true partner that we can trust? Can we sleep at night knowing we've given this person reign, frankly, to develop where we live, where we work, where we play, where we raise our kids? And you've really built that reputation over the years, which is fabulous.
So one more question I have for you while we're talking on this is that we call this podcast The Dealmakers' Edge, and there's a lot of mental aspects to the business. You've described how you're juggling projects, you're juggling a growing young family, juggling a lot of team members, a lot of political relationships. You have good days, you have bad days, you have in-between days. You're an extremely positive person—one of the most positive people I know, by the way.
How do you talk to yourself when you're having those rocky times? You know, a lender pulls a deal, an investor backs out, interest rates double what was forecasted. How do you sort of talk to yourself to power through some of those challenging times?
Avner Krohn: It's a great question. It's a deep question. I take a deep breath. I got a great wife, thank God, that I can talk through some of these challenges. I feel like it's been a storm over the past couple of years because, Aaron, like you mentioned, in any of our businesses—I mean, a pandemic, a 40% increase in construction costs, a doubling of interest rates. So you think you got through one thing, and then, what's coming next?
But I am internally optimistic, and I am a problem solver. I think if you own a business and if you're a developer, it's all about problem-solving. So it smacks me in the face. It hurts. I don't have an answer. How are we going to get through this challenge at this particular time?
But I don't give up. So I also look at our investors' funds as more important than mine, which is a huge factor because you need to make sure that, “Hey, when there's a challenge, you want to protect all people's livelihoods that are invested with us as well.”
So I try to exercise, which helps a lot, by the way. If I have a bad day, I'll just hit the gym a little bit harder that day. But it's really looking at it and saying, "Okay, here's the reality. Here's the challenge. But to every challenge, there's some sort of workaround."
It may not be how we thought. It may be a completely different aspect. We may not make as much as we want to make. There are going to be uncomfortable conversations with a lender or uncomfortable conversations with a third-party contractor and so on and so forth. But it's about trying to figure out the macro. Like I said a little bit earlier, it's looking at how I accomplish something positive every day towards solving the issue.
For example, when there was hyperinflation, did we see the writing on the wall immediately in Connecticut that there'd be this hyper rental increase? We didn't know that right away. Then, all of a sudden, a state that had stagnant rents—maybe a growth of two or three percent for decades—had a massive increase in rental income. So while it didn't solve all issues, it solved for construction overruns.
Now, back in early 2020, we didn't know about that early on. So it's about navigating the conversations that have to happen prior. For myself, there are down days, difficult days, difficult moments, difficult weeks—because there's not always an answer as to how we're going to get past any particular challenge.
But I like to underscore that it's a challenge. The goal is to think past it and get super creative. One of the things I remind myself all the time is that with challenging times, there will be an uptick in the marketplace.
If you look back and you say, “Hey, 17 years ago, did you think you're going to have interest rates at 2% and cap rates in tertiary markets at 4%,” people would have thought you're nuts. But that happened at a period of time.
So it's riding the waves that gets me past it. Again, it's also leaning on my team because what really is challenging, but really is the view of your organization is getting through the challenging times and being able to lean on mates and our staff, and it's not just all on my shoulders.
When you know that you have other people that are going to work tirelessly to overcome obstacles, that goes a long way. Then Aaron, you know this about me, I always want to have a good time. I have to have a good time. My friends, my team has to have a fantastic time. If there's a bad day that I want to make that night an even better night. Because you know, there's one life.
So that's the other part of it. Let's have a great cocktail. Let's go out and have a bunch of friends out. Let's have dinner. Whatever it's going to be. We're also blessed. I keep Shabbat. So for me, Friday night, I'm out, man. I'm checked out till an hour after sundown on Saturday night. That's time to rejuvenate as well with the family and just to rethink life and say, “Okay, it's going to be okay.”
The other major aspect, I don't want to forget to leave this out because it's the most important aspect. I believe in God. And as much as I like to think that I'm in control, we all like to think, “Hey, yeah, I'm going to do this mega project and I'm going to work through this challenge,” I'm a pawn. I do my best to take a step forward. But ultimately, I'm a big believer that God runs the world, which helps set me up to not worry as much and I'm telling that to myself over and over as we speak right now.
Aaron Strauss: Well said. And I do agree. You always want to have a good time. And people want to be around people who are positive. There are a lot of people who just have this sort of down-and-out mentality. They're hot when the market's hot and down when the market's down. But I've never spent time with you where you have not had a smile on your face and a positive energy and a good laugh. We've had great times together as well. Always fun to hang out.
One more question I have for you. Feel free to throw in anything else that I have not asked you. You've seen so many changes in the market last six, 12, 18, 24 months as described. No one has a crystal ball, but in real time, you're buying materials for construction. You're talking to municipalities. You're collecting rent.
You have a lot of fingers on the pulse that maybe other people who are not developing may have. And maybe you could describe where you're feeling the market is today versus even just six, 12 months ago.
There are a lot of moving pieces now. And maybe you can talk about whether you're more optimistic, less optimistic, what kind of trends you may be feeling projecting out a bunch of months.
Avner Krohn: I'm going to look at a little bit more hyper-focused on New England, Connecticut, and then how I view that particular market because there are many other high-growth markets that while I read what everybody else is reading, I don't have my finger on the pulse in those particular markets.
Those markets had like super high growth over the past number of years, tremendous amount of construction, the absorption rate's different. I'm in a state where there's a high barrier to entry for construction. Most of the projects are between 100 and 200 units. You're not really dealing with mega projects and high-rise outside of certain specific cities.
So yes, there have been many, many, many challenges. I think the interest rate coming down conversation clearly has been one out of a couple of years out for like, "Hey, you know, 2024 is going to be so much better and 2025 is going to get great. There's election and everything's going to be all rosy." Then we have the tower of conversations and the 10-year or the five-year's going up and down every single day.
I think that, particularly in New England, we are seeing construction costs stabilize. We are seeing subcontractors who are now not as busy for some particular trades. We're also seeing an influx of some trades from out of state. So for example, New York City or even in some of the high-growth marketplaces where construction has slowed down. So there are tradesmen who are either relocating or coming into work within the New England region. That's a benefit.
We have seen some of the local lenders open up additional lending for projects to experienced developers in particular markets. I'll give a case scenario, which got approved last week on a small loan. It's a $10-plus million loan on a second phase of a very successful project. We're borrowing at 80% loan-to-cost at a 7% interest rate fixed for five years. Super local lender, they've seen our success. So they're open to getting aggressive, so long as your debt service coverage ratio meets the requirements. And it's below 1.25, by the way.
So I think that moving to the future, there are a lot of projects that are falling off the grid that don't make some financial sense. I do believe that a lot of municipalities in New England are more open to a public-private partnership. We just passed legislation in the last legislative period in the state of Connecticut, which now allows every municipality to enter into up to a 30-year tax deal, where prior it was capped at 10 years for many municipalities.
So I think that we will hopefully see some—this is an unknown to me, I'm not an economist, and I wish I had a better outlook—but I don't think that the interest rate is plummeting. If it does, we end up with another set of concerns, which is unemployment potentially in particular markets. I'll give you an example, ESPN has been hiring in Bristol, Connecticut, random town, no one would ever imagine, but we're seeing dozens of tenants signing leases in our particular markets. If they have layoffs, it's a direct hit to the local economy.
So it's like, you better pray for what you wish for from some perspective. Rates come down, does help to some extent, but where is that economy? Another big question. There's some balance with all of the perfect balance, I don't know where that is.
Construction costs are where they are. You're not going to see a deflation. You may see some kind of balance, but I don't think your HVAC unit that used to cost $11,000 a unit in 2019, that went up to $22,000 a unit, it's not coming down to the $14,000 unit. Your balance might be $17,000 or $18,000 a unit. And so rent is going to have to stay at the levels they are right now and increase.
There is a lot less housing availability on the single-family home market in the New England market. There's not a lot of land. So I believe the delta between rental and purchasing a home is larger than it's ever been with the current interest rates.
Homebuilders have difficulty building something ground-up when you're not building a large-scale project, which is very, very difficult in the state of Connecticut. And so I do think the rental market in New England's going to stay very strong. I think that rents are going to increase as they have significantly.
I think that the lending market locally, if you are hyper-local and involved, is going to open up even more so than it has right now. That's my prediction moving forward in the next six months.
Aaron Strauss: Beautiful. Well, we'll play the tape in six months and see what happened. But all kidding aside, no matter what happens, I'm confident you'll be ready to face the challenge. You'll be in a good mood that day, no matter what's going on.
You'll be a great dad, great husband, great friend, all the other good things that are so critical. But Avner, I guess from here, we'll wrap. I just want to really thank you for taking the time. It's always a pleasure, whether it's over this Zoom recording or in person.
Keep doing everything you're doing at a very high level. It's so much fun to watch. I'm just excited to continue to see your continued growth as a professional and as a human being.
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