Bigger isn’t always better, especially when it comes to development companies. The competition among Chicagoland boutique development firms is increasing, forcing developers to think even further outside the box to maintain the level of production – and industry status – they desire.
By K.K. Snyder
What is the thinking behind boutique developing? Why not build house after condo after three-flat, and rake in the bucks?
For some, the art of erecting a home taps a deeper source than their bank accounts. These builders build deliberately and purposefully, citing quality and supreme craftsmanship as reasons to keep the project volume down.
As a former lawyer representing builders for more than 15 years, Robert Ralis, president/owner of Foster Condominium Corp., not only develops his boutique properties, he also lists, shows and sells the properties. Though he develops an average of 15 condo units each year, he’s particular about the individual projects he takes on and demands they be head-and-shoulders above the competition.
“First of all, I only buy in areas I feel are high quality,” says Ralis, who became a full-time developer and part-time lawyer a couple years ago. “For example, we’re on the best street in Albany Park. We’ll have the nicest units on that block of close to 100 new units. I like to do something different.”
Ralis, who currently has projects in Albany Park and Lincoln Square in Chicago, as well as in Indiana, Colorado and Arizona, doesn’t care for most products of general developers. He says the units, with black countertops, burgundy cabinets and oak floors, become generic.
“Even in small boutique buildings, a lot of stuff I see them do is the same in all units,” he says. “I try to do every single unit different – different woodwork, flooring, cabinetry – and even change the floor plan around some.”
Ralis says when a client comes into one of his boutique buildings, he really has a choice of three or four different units that all offer something different in terms of price, layout, lighting and flooring. And, he doesn’t spare any expense when it comes to making his units desirable to potential buyers.
“I never build in red brick, because everything here is red brick,” continues Ralis. “There are so many interesting brick colors out there, but no one wants to spend $2 a brick to get something different. They’d rather spend $1.20 a brick for red.”
Despite his penchant for creating unique spaces, Ralis says the boutique market remains quite competitive. “I’m developing out lots, not buying a whole block, so it’s very competitive to find the bigger lots or to find someone with two or four or five lots,” he says. “It’s very limited what you can find; it’s a small world.”
One of the benefits of maintaining a small development company is the affordability of carrying projects. “You can carry a four-unit building if you’ve built up good reserves or have a good bank relationship,” Ralis says. “Or, you can take your time doing a project or sit on it. If you have hundreds of units, you’re up against the clock. When you have to do it fast, you may not get to do everything you wanted to do. I have more options, and I can afford to do all the units different because I don’t have a big project.”
A downside comes in dealing with suppliers. If Ralis needs four kitchens for a project and another developer wants 40, Ralis knows the other developer will get his quicker and cheaper. Smaller can also be a problem when trying to get city inspectors out to the job site, a task that tends to be easier for large developers, he adds.
“There’s a big difference between doing what you can get away with and doing it right,” Ralis says.
AN AGENT DEVELOPER
Karen Ranquist of RCR Realty came to boutique development from the other side of the table, where she served as a real estate agent. Today, she and her husband own Ranquist Development, specializing in small, stylish living spaces with extreme attention to detail.
“We’re unique in the products we’re selling and for our own properties,” says Ranquist, who does all sales and marketing for the company. “We’re a team, and we have a really specific marketing plan. And, our base of customers is a very big resource for us.”
Over the last eight to 10 years, the company has developed a niche of boutique, high-end, minimalist but modern, high style properties.
Ranquist – a one-woman show – separates herself from the competition by distinguishing her product and selling only her own. She works directly with clients to ensure they receive the final product they had in mind. It’s all about the architecture, the design and working within the restraints of the city, she says.
“From a boutique standpoint, I think the big difference from a large company is that we have our own way of doing things, which, as far as I can see, is the best way,” says Ranquist. She adds that the company has a long list of previous buyers, some of whom have purchased more than once, and their friends, whom they frequently refer.
“As small as we are – it’s just me – we really are able to let people have as much personal input as possible, even before we break ground,” she says. “We’ve got our product out there even though we don’t have a big name. We don’t have a national presence and hundreds of agents working for us, but it doesn’t hurt us. Size seems to matter now in the industry. You’re either huge or tiny; anything in the middle just doesn’t seem to work as well.”
Building 30 to 60 infill projects a year is more than average for a boutique developer, but the Dearborn-Buckingham Group specializes in finding properties with uses no longer consistent with what’s going on in the area and redeveloping them to be more compatible with the surroundings, says Christopher Coleman, owner and president.
Location is of supreme importance, he says, and he’s willing to invest the time needed to get smaller infill developments improved.
“I try to focus the architectural design so that [the development] both looks great and lives great,” says Coleman, who has 19 years of experience in the industry. “You get some sizzle, but you also get some steak.”
Coleman says the industry has gotten more competitive, as more builders and developers recognize the value of the small development and the appeal they have to buyers. Like most boutique developers, Coleman works closely with Realtors.
“We focus on the referral business, because if a Realtor sees that referral is important to us, they know satisfied clients are also important to us,” he says. “The builder is a reflection on the Realtor who brings the client to them.”
While he’d like to see his company grow in the future, Coleman says the ability to do so is limited by the sites his company can find to develop. “I don’t want to grow for the sake of growth, but grow naturally,” he says.
More true to the definition of boutique development, partners Steven Glick and David Chencinski of CG Realty Group only build four or five homes per year. Glick and Chencinski started as brokers and made the switch to developers in 1998. In addition to high-end, single-family homes in the $1 million to $2.5 million range, they also specialize in condo conversions and renovations, says Glick.
“Our properties are unique, and we have the concept, after being in the brokerage world, of being in tune with what buyers want and demand,” he continues. “It makes it easier for us doing construction. We have a grasp of what the marketplace demands for high-end homes, and we’re able to bring some of that upper level professionalism to the products that we build.”
Glick says working with agents and brokers is important to the company’s success. “If you have a decent track record as a builder or developer, certain brokers will consistently show your homes and tell their clients that ‘these are the people you want to build your home.’ That kind of public relations is priceless.”
Glick knows that while competition is fierce, not all competitors are created equally, especially when it comes to quality. “It gives buyers a bigger selection, but it’s more difficult for developers because you’re clearly never going to be the only game in town.”
Boutique development allows focus toward the client’s needs. “There price points are in the upper bracket to say the least, but buyers are spending a lot of money and want things done perfectly,” he says. “Having a smaller focus allows you to stay on top of the needs of your customers.”
When you build such a small number of homes each year, name recognition is tougher to establish. You also have a smaller pool of clients to tell others about your work. And, while they always have an interest in some level of growth, Glick and his partner are aware that growing the company too big can cause quality to suffer and dampen a great reputation – two risks that neither partner is willing to take. C.A.
CG Realty Group
Foster Condominium Corp.
Owner and Managing Broker, RCR Realty