Why Flexible Firms May Finish First in 2017

As an avid runner, I know firsthand the benefits of being flexible, and how important it is to stretch your muscles to reach your maximum potential. So, it stands to reason that as we continue to see a surge in luxury apartment deliveries—the result of a nationwide building boom now into its seventh year—a handful of leading multifamily firms are reevaluating their strategies to become more flexible in order to successfully diversify their business and continue their dramatic growth.

For example, Chicago-based The Habitat Company, one of the largest multifamily developers in the country, with more than $3 billion in assets and more than 22,000 units under management across five states, continues to find ways to grow. In addition to market-rate apartments, the firm’s portfolio includes public, affordable and senior housing communities, as well as mid- and high-rise condominium buildings.

As the supply of apartments increased, rather than focusing solely on the development of new communities, the firm opted to broaden its geographic focus while simultaneously expanding its third-party management business. In 2016, Habitat entered into a programmatic partnership with CA Ventures in which Habitat assumed management of a five-building, 1,215-unit apartment portfolio comprising properties in multiple cities. Habitat also was awarded the management of five properties totaling nearly 1,400 rental units in Tampa, Fla., owned by Crescent Capital Partners LP.

“There’s a reason The Habitat Company is in its 46th year,” said Matt Fiascone, president of The Habitat Company. “We’ve strategically identified opportunities through acquisition, development and property management to create a real estate company as diverse as our customers’ needs.”

The Buckler is a former office building transformed into an amenity-rich, 207-unit, luxury rental community in downtown Milwaukee – one example of how The Habitat Company is strategically expanding its geographic reach through a partnership with CA Ventures.

And the firm is just as active in 2017. In the first quarter alone, Habitat announced it would be growing its condo management business with 689 units across three buildings in the Chicagoland area, and would assume management of 440 market-rate apartments across two buildings in Chicago and Evanston, Ill., one of which will tap into Habitat’s experience in repositioning assets.

Another leading example of successfully diversifying a business is Waterton, a Chicago owner-operator whose $4 billion portfolio includes 20,000 apartments and 13 hotels across the United States. Leveraging its familiarity with both property types and realizing the growing demand for hospitality-inspired experiences in residential communities, Waterton merged its apartment and hotel management divisions in 2015 to form a single, integrated platform.

“Establishing a key differentiator in the market, Waterton made a significant investment in the creation of a hybrid service training program blending best practices from our hospitality side with those of our residential side,” said David Schwartz, CEO, chairman and co-founder at Waterton. “The program, trademarked Resitality™, consists of eight modules that provide our associates with an in-depth understanding of Waterton’s elevated customer service standards. With Resitality™, we have been able provide a hotel-like experience to our multifamily residents and a more home-like experience to our hotel guests.”

Embracing the union of residential and hospitality benefits not only apartment dwellers and hotel guests, but also investors. Staffing crossover between the firm’s multifamily and hospitality properties allows the best practices of one sector to inform those of the other, improving service and financial performance. Additional operational savings are realized through a centralized design and construction group and shared supply chains through which everything from furniture to office supplies can be purchased in bulk.

For the past 10 years, Luxury Living Chicago Realty (LLCR) has served as Chicago’s go-to brokerage for leasing luxury apartments, renting more than 4,500 Class A apartments and condos with revenue exceeding $125 million. And while Chicago’s heated rental market has been a main driver of LLCR’s growth, the firm realized it was in the perfect position to capitalize on the city’s resurgent condo market—after all, LLCR had rented thousands of homes to Chicagoans who were now ready to become homeowners.

With a coveted database of luxury renters and landlords, LLCR has expanded its five-star service beyond luxury rentals into condo sales and recently launched LuxuryCondosChicago.com, which stands alone from LLCR’s rental website and provides a convenient way for clients to search for home listings in the downtown Chicago neighborhoods where LLCR’s brokers are experts.

To further broaden the firm’s business, Aaron Galvin, owner and managing broker of LLCR, created the Luxury Living Development Marketing division within LLCR, which partners directly with developers to plan and execute an efficient and revenue-maximizing lease-up for new multifamily developments.

The development marketing arm of LLCR currently works alongside some of Chicago’s most prominent apartment developers, such as Fifield Cos. and CA Ventures., in strategically reviewing floor plans, mining market data, accumulating comprehensive “real-time” renter stats and determining optimal pricing and lease-up strategies.

“In today’s highly competitive and rapidly evolving market, it’s imperative to be nimble and truly understand not only where the market is at, but more importantly, where it’s heading,” said Galvin. “Our development marketing platform is just one of the ways we’ve expanded our core business, drawing on our unparalleled research capabilities; dynamic team of marketers and real estate professionals; and extensive experience working with luxury Chicago renters.”

Emily Johnson is president of Taylor Johnson, a public relations firm specializing in real estate. Established in 1977, Taylor Johnson has worked with public and private companies in the areas of residential development and brokerage; commercial development and brokerage; mixed-use development; property management; real estate finance and investment; real estate auctions; real estate law; and architecture and design.