In 1993, The Habitat Co. abolished apartment rent concessions. During a time when Chicago communities were offering prospective residents up to four months of free rent, Habitat, a Chicago-based owner, manager and developer of multifamily housing, ran full-page ads in local newspapers announcing the company's new stand against offering concessions. As far as Habitat executives were concerned, the strength or softness of the Chicago market had nothing to do with their decision. It was about principle.
The move may have seemed like a leasing agent's worst nightmare, but Habitat's new plan worked. Instead of offering drastic discounts, the company adjusted its rents to a fair market value and offered a solid, no-games policy to renters, says Douglas R. (Rick) Woodworth, president of Habitat. The approach is similar to that of automobile dealers who tout no-haggle pricing or stores that never post sales, instead promoting everyday low prices, he says. And, the company's leasing efforts remained productive despite the soft market.
The strategy is just one part of a corporate branding plan that Habitat, a privately owned company, holds for its portfolio of market-rate properties, which is made up of both owned and fee-managed properties.
At the same time that the company put an end to its concessions, it formalized its service standards, says Woodworth. "Our slogan is that 'Habitat management makes the difference.' [Our service standards] are part of a branding [program] that gives us corporate identity, but still allows us to create an individual character or personality for each property," he says.
Today, those standards are made evident through Habitat's new resident packet, which includes a maintenance coupon offering free move-in help. Other portfolio-wide benefits include a 24-hour maintenance guarantee, a security deposit refund program, a "fun and fitness" program, and what the company calls "the Habitat difference": the company's commitment to service (see "Resident Satisfaction" on page 46).
That commitment grew naturally into Habitat's corporate culture, says Daniel Levin, chairman and co-founder of Habitat. "Our focus on management grew out of the development arm and our focus on service stems from management," he says. The key to successful multifamily real estate rests in service instead of building design or materials, and individualized service is both what residents want and what makes employees proud of their work, says Levin.
And, the company applies the same standards of excellence to each property it manages, "whether it's public housing or a luxury property," says Woodworth. "And we bring our 30 years of experience to [maintain] those standards in a personalized way to every property."
Managing Extremes While the company manages a comprehensive range of property types, it's best known for two extremes: luxury high-rise communities and affordable housing. "We've managed every type of residential property in Chicago, from ... condominium conversions to new development of townhouses; mid-rises, high-rises, luxury and moderate-income properties; senior housing and scattered site rehab properties ... so we manage a little bit of everything," says Woodworth.
But the company, and many of its long-term employees, cut its teeth on high-rises. Levin founded the company in 1971 with an interest in urban planning opportunities. Habitat began with high-rise and mid-rise buildings in downtown Detroit and Chicago, and remains active in Chicago's downtown market, where most of the company's units are located. "Everyone at Habitat has been trained on high-rises and now we're high-rise specialists," says Woodworth.
That includes Woodworth's own background with the company. Woodworth, 49, started working for Habitat in 1973. "I was ready to go to law school when James McHugh, [the other] founding partner, suggested that I might find working with his real estate company interesting," he explains.
So, Woodworth abandoned law school to become one of Habitat's first janitors. "I wasn't mopping floors, but learning about the mechanical systems and how to repair them, how to hire contractors, and then [how to] manage a building," he says.
Through the years, he learned nearly every part of the business, including accounting, budgeting, forecasting, administration and, eventually, operating responsibilities. "Habitat had 2,500 units when I started, and five people in the main office. Now, we have more than 20,000 [units] and 85 people in the central office," he says.
As the company has grown, so has the number of high-rises Habitat manages, to nearly 40 high-rise towers in downtown Chicago, Detroit and St. Louis.
"I think we know more about residential high-rises than almost anyone," says Woodworth.
"It's true what people say about location, location, location. Our downtown high-rises are in prime locations for in-city living," he says.
Also, the large number of condensed units allows owners and managers to offer a more comprehensive amenities package, often including doormen, large health club facilities and secure parking garages. But that doesn't make management much different than mid-rise, garden-style or condo property types, because the basics of the business are all the same, says Woodworth. While high-rise managers certainly must manage more complicated mechanical systems – such as heating and cooling systems, and elevators – and concentrate on a larger number of units in a denser area, good management is the same regardless of property type, he says.
Habitat also has learned that developing high-rises can be much more difficult than developing other product types. "There is more risk in [high-rise] development, because it can take a long time to get permits, often because downtown lots are harder to permit or because people are concerned with obstructed views," says Levin. "[They're] harder to build, since you have strict fireproofing requirements and other mechanical systems to work with, [and they're] harder to [lease] up, because you have more units. But, we have always enjoyed the challenges."
That's because Habitat understands that the best tools a high-rise developer can have are patience and persistence, says Woodworth.
Presidential Towers, a 2,346-unit mixed-use development with four 49-story towers, opened in Chicago's West Side neighborhood in 1985. "It was a tough residential market. [And, it was] a difficult economic environment in a new urban neighborhood that was just evolving," says Woodworth.
While Presidential Towers initially struggled through lease-up, Habitat maintained its focus on its long-term prospects. "It wasn't that the property was ill-managed or ill-conceived, it just needed time to mature, and the neighborhood needed time to mature, and the economy needed to improve," says Woodworth. "[Now, it's] a very successful housing development that contributed to the rebirth of the West Side and ... it's really a showcase [development] for downtown Chicago."
Through that project, Woodworth learned first-hand that hard work and perseverance pay off. "The ability to stay in there for the long haul has been important," says Woodworth. "Time, in this business, cures a lot of problems." And, it doesn't just apply to high-rise development.
Affordable Change In some ways, management on the opposite end of Habitat's business spectrum is more challenging, says Woodworth. "[In] our public housing management, we have taken over some of the toughest buildings from the Chicago Housing Authority [CHA] and cleaned them up, upgrading the mechanical systems and training the staff, and really turned the buildings around," he says.
In public housing redevelopment, the process is not as cut and dry as simply making improvements. There's more public process involved, and it's a much longer and more complicated process, says Woodworth. "You're involved with the city, with the Chicago Housing Authority, with the existing residents, and with the neighborhood and community groups." But, whether the process is quick or lengthy, the company is as proud of its work with affordable and public housing as it is of its luxury properties.
"Nobody at Habitat treats [affordable housing] like affordable housing – they treat it like every other development they have. Some of their buildings have 20 percent [dedicated to] Section 8 [units] ... I walk [those] units and they're indistinguishable from the rest of the units on that property," says Linda Thurmond, director of asset management at the Illinois Housing Development Authority.
In addition to quality products and service, Habitat displays a long-term commitment to creating and maintaining affordable solutions. A prime example is a scattered site rehab property, comprised of 10 buildings, which Habitat acquired in the early 1980s and redeveloped.
The neighborhood surrounding that property has solidified and become gentrified, says Thurmond. While Habitat could change the buildings to a market-rate development and increase its profits, the company has instead lengthened its commitment to maintaining the area's quality affordable housing. "That's the type of developer they are. They're committed to the property, to keeping it affordable," says Thurmond.
In addition to managing low- and mixed-income housing, Levin and Habitat, as receiver, oversaw the CHA's Scattered Sites program, which developed infill housing in non-minority neighborhoods. The receivership, granted in 1989, led into the company's participation in the city's Hope VI redevelopment program to replace older public housing apartments with new housing. Habitat also manages a significant portion of the St. Louis Housing Authority's public housing portfolio, says Woodworth.
Affordable development can be a complicated process, but Habitat hasn't encountered much opposition. In the case of the Scattered Sites development program, the new buildings have been carefully integrated into the fabric of each individual neighborhood and have provided housing for neighborhood residents.
"There's not an overconcentration [of affordable development] in any one area, and it's all been privately managed," says Woodworth. New, private management has contributed to increased acceptance into neighborhoods by removing the stigma of poor public management, he explains.
Habitat's broad range of management experience allows the company to continually improve its involvement with both market-rate and affordable housing. "[Habitat] sees a project from all sides," says Thurmond. "[Woodworth] has come up through the ranks, so he has a unique perspective that most developers don't have. He knows what it takes to run a property, to clean it, keep it in working order, make sure the systems run, etc. He knows it from the inside out and that affects his approach to development," she says.
And, whether it's developing luxury condos or public housing, Habitat loves developing homes. "We enjoy the development process, the creation of housing, the creation of value. You can enhance or create value through acquisition, but it's more fulfilling [for us] to develop from the ground up," says Woodworth.
Opportunities All Around The company currently has three new developments on the drawing board, including two high-rise apartment buildings in downtown Chicago, as well as a possible condominium community. And, the company is always interested in other development opportunities, even though it's becoming increasingly difficult to do private development without institutional or real estate investment trust partners, says Woodworth. That's an area where the firm benefits from long-term relationships it has established with lenders and institutional partners. "We've worked with [the company] for 20 years, and we're always happy to hear of a new project [Habitat is] undertaking," says Bruce Duncan, group senior vice president in the real estate division of LaSalle Bank.
"[Habitat] creates opportunities for us," continues Duncan. "They've developed a concentration of multifamily [buildings], have good partners, quality staff and they're politically [savvy] – they have good relationships with, and know how to work with, planning departments and other officials."
But, the reason Habitat continually strives to be a good investment partner and maintain solid relationships reaches beyond securing finances, says Levin. "Money is nice, but having integrity in relationships is what makes us proud of our work, and proud of our company. It's the same as how service, not prettiness, makes us proud."
In addition to market-rate development, Habitat also is interested in growing its new condo management division, and maintaining its affordable housing management and development business. The company also has a growing brokerage business in Chicago's downtown residential market, and a corporate suites division that's looking to expand beyond its current 500 furnished apartments, says Woodworth.
The company's focus is to expand all of its business areas, and Woodworth sees Habitat potentially managing 30,000 to 40,000 units in the next five to 10 years. Most importantly, Habitat plans to continue to be selective about business opportunities and not get overextended in any one product type.
"[Maintaining balance] is an important part of our history. I don't think we ever want to be the largest player on the block," says Woodworth. "That's why we chose our slogan. Our goal really is excellence in management."
Resident Satisfaction An integral part of corporate branding for the Chicago-based owner/management firm The Habitat Co. revolves around its amenities and services. Each component reflects the company's mission of providing excellence in management.
One of those services, the company's 30-day guarantee, backs up its commitment to resident satisfaction. Upon move-in, residents are provided with a certificate that allows them to break their lease without penalty within the first 30 days of occupancy if they are dissatisfied for any reason.
In the same move-in packet, residents receive a coupon for 30 minutes of free maintenance help, which residents can use to help hang pictures, arrange and assemble furniture, or simply put up curtain rods. And, the company's 24-hour maintenance guarantee ensures residents that their non- emergency calls will be responded to within 24 hours.
Habitat also has established programs that offer financial benefits, such as the security deposit, referral and transfer programs. The security deposit program refunds 50 percent of a resident's security deposit after one year of residency. After two years, residents can get back an additional 25 percent, and after five years, the remainder of the deposit is returned with interest.
The resident referral program, which offers renters $250 to $350 rent credit after a referral signs a one-year lease, is advertised as having multiple benefits with the tag line, "It pays to have friends as neighbors." And, should a resident wish to move to another Habitat property, the building transfer program requests 60 days notice to transfer a lease without breakage fees.
Another outreach service is the company's dedication to resident suggestions.
In addition to providing move-in surveys and suggestion boxes in each building, Habitat management makes a point of reviewing suggestions at each weekly meeting.
Amenities One of the best-developed Habitat amenities revolves around each community's fitness center. Fitness is a company focus that had its start in the firm's background of developing health clubs. And, Habitat views fitness as a growing part of residents' lives, whether they are children, adults or seniors.
Habitat sponsors a lengthy list of classes, group activities and outings for its residents, most at no cost to residents. The events are tailored to specific groups, such as children's educational trips or seniors' fitness classes, or to an interest, such as Tai Chi or yoga. The list of "Fun & Fitness" events – detailed in quarterly newsletters – has included free "hot soup day" during some winter months, restaurant clubs that function similarly to book clubs, ski lessons, dance lessons, aerobics, and combined wine tastings and blood pressure screenings for a "heart-healthy" event.
The Spring 2001 newsletter lists opportunities for residents to participate in a "Race Against Breast Cancer," take healthy-cooking classes, join a softball or volleyball team, visit gardens or casinos, attend plays, take an introduction to acupuncture, and more.
While Habitat amenities vary among communities, the master list includes:
- 24-hour doormen
- Concierges and valets
- 24-hour service staff
- Enclosed or covered parking
- Indoor bicycle storage
- On-site dry cleaning, ATM, hair salon and tanning salon
- Indoor and outdoor pools, and outdoor sun decks
- Exercise rooms or fitness centers
- Grilling and picnic areas
- An outdoor running track, basketball courts and tennis courts
- On-site grocery stores, markets and retail malls
- On-site restaurants