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The Habitat Company.

Q4 2012

St. Louis Press Release

The Habitat Company Acquires Two Multifamily Assets in St. Louis

CHICAGO (November 13, 2012) - The Habitat Company announced the acquisition of two assets in the Creve Coeur submarket of St. Louis, Missouri in a joint venture with Goff Capital Partners, L.P. for an aggregate purchase price of $30 million.  These acquisitions mark the third and fourth assets in which Habitat has partnered with Goff Capital Partners in the past year.  In addition, The Habitat Company is the managing agent for Goff Capital Partners at a 500+ unit asset in Tampa, FL.
The 254-unit Edgewater Court Apartments and 105-unit Tuscan Villas Apartments are prime assets located in one of the most sought after submarkets in St. Louis.   These assets offer a value-add opportunity through both management improvements and renovations.    "By combining the location of these assets in a premier submarket and having healthcare as its economic driver with Habitat's industry leading operations platform, we create value for our investors.  These properties offer Habitat a perfect opportunity to continue to methodically expand our geographic footprint," said Matt Fiascone, Senior VP of Finance and Investment at The Habitat Company.  The assets were built in the late sixties and seventies and were renovated from 2005 to 2008.   Sitting on 23.5 acres, the properties share extensive amenities including private entrances, three outdoor pools, sand volleyball courts and a fitness center.  Additionally, the properties have great visibility, directly off a major thoroughfare and are close to transportation arteries and downtown St. Louis.

"We are pleased to continue to expand our partnership with The Habitat Company," said Conrad Suszynski, Managing Principal of Goff Capital Partners, L.P.  Goff Capital Partners is a Fort Worth based private equity firm that concentrates on real estate related assets.

The Habitat Company currently manages for its own account and for third parties over $2 billion in assets comprised of more than 20,000 residential units of market rate, affordable, student, condominium and public housing units in six states.  Since December 1, 2011, The Habitat Company's total transaction value for acquisitions and development is approximately $260 million.  

Record downtown apartment rents reflect shortage

By: Alby Gallun, November 12, 2012

Rents at top-tier downtown apartment buildings inched up to a new high in the third quarter, but the increases are likely to moderate next year, when a development boom eases a shortage that has given landlords the upper hand.

Effective rents at Class A apartment buildings downtown rose to $2.58 a square foot, up 0.4 percent from the second quarter and 7.5 percent from a year earlier, according to a report by Appraisal Research Counselors, a Chicago-based consulting firm. Effective rents include concessions such as free rent. 

The downtown Class A occupancy rate was 95.6 percent, vs. 96.0 percent in the second quarter and 95.1 percent a year earlier.

With more downtown residents choosing apartments over condominiums, demand for rental housing is outpacing supply, giving landlords the power to hike rents without losing tenants. But supply will catch up with demand next year, when developers complete 2,686 units. Another 2,000 are on tap for 2014.

"Right now, we're seeing rents reflecting the shortage of units downtown," said Appraisal Research Vice-President Ron DeVries. "As we head into next year, as these buildings start to lease, the upward pressure on rents is going to subside."

The question is whether the construction boom will result in a glut of apartments, dragging rents and occupancies lower. Mr. DeVries doesn't expect that to happen, predicting instead that rents will continue to rise next year, but at a lower rate - 3 percent to 4 percent annually.

Class A rents have risen 24 percent since the market hit bottom at the end of 2009, meaning the average high-end apartment now costs $428 more a month than it did it three years ago - or $5,128 a year.

An increase that big should drive more renters into condos, especially considering how much mortgage rates and condo prices have fallen. While more stories are emerging to suggest that may be happening in places, the evidence is purely anecdotal at this point.

Some would-be buyers are waiting for more signs of a recovery in the condo market. Others are still trying to scrape together the money they need for the higher down payment required to get a loan in the post-bubble era.

"As rents continue to rise, it makes for more of a compelling reason for people to buy," Mr. DeVries said. "But they still have to get over the emotional and financial hurdles." 

Yet many landlords are counting on 20- and 30-somethings to stay in apartments much longer than they did in the past. After seeing home prices plunge during the bust, some renters view ownership as burden, limiting their flexibility, for instance, if they get a job in another city, the theory goes.

"People are looking at housing and thinking it's more of a lifestyle choice than an investment decision," said Mark Segal, president and CEO of the Habitat Co., a Chicago-based landlord that is building a 450-unit apartment tower in River North.

Landlords are also hoping to get some help from the job market. If downtown employers boost hiring, that will create more demand for apartments.

The much publicized trend of companies moving their headquarters to the city from the suburbs also could benefit landlords, if their employees follow them to the city and the companies continue to hire. Mr. Segal, for instance, is optimistic about Motorola Mobility's recent decision to move from north suburban Libertyville to the Merchandise Mart in River North. Habitat's new building, at 360 W. Hubbard St., is about a block away.

Effective rents at less expensive Class B downtown buildings were $2.20 a square foot in the third quarter, down 0.9 percent from the second quarter but up 4.8 percent from a year earlier, according to Appraisal Research. The Class B occupancy rate was 94.9 percent, vs. 94.7 percent in the second quarter and 95.1 percent a year earlier.

One key metric of demand, absorption - or the change in the number of occupied apartments in downtown Chicago - has fallen recently, dropping to 1,198 in the last four quarters from 1,365 in the prior 12 months and 2,194 in the year before that, according to Appraisal Research.

That might worry some, especially with developers adding nearly 4,700 high-end apartments over the next two years. But the drop primarily reflects the shortage of apartments in the market, not any decline in demand, Mr. DeVries said. Many renters today can't find what they're looking for, he said.

"As we add supply next year, I think it's going to induce some demand," he said.

21 E. Chestnut Annoucement

The Habitat Company Awarded Management of 21 E. Chestnut Condominium

CHICAGO (November 28, 2012) - The Habitat Company LLC is pleased to announce that it has been selected as the property management company for 21 E. Chestnut, a 24-story condominium building located in the Gold Coast, one of Chicago's most vibrant neighborhoods.  Nestled on this tree-lined street, 21 E. Chestnut offers a roof top pool, a fitness center and a party room.

"Heavy weights lifted off my shoulders just hearing Habitat's proposal to be our new management company.  I thought the Association could save money and the building would be better if they only delivered half of what I was hearing. Within two months Habitat has exceeded my expectations in every area.  Without being given a good paper trail on past budgets, they pulled together for 2013 one of the best budgets I have ever seen.  Habitat is a real partner with our Association.   Lastly, our onsite manager is providing a consistent welcoming and professional presence for our residents and staff that makes coming home a wonderful experience", said Susanne Smith, 21 E. Chestnut Association, Board President.

For almost 30 years, The Habitat Company's Condominium Management Group has employed the highest levels of integrity, customer service and expertise to protect and preserve the value of the overall property and each unit owner's home. The company is one of the Midwest's largest privately owned property management firms, with everyone from the corporate to on-site staff treating each property like it is their own home. Habitat's condominium management portfolio includes more than 3,300 condominium units managed in Chicago and Detroit.

"It is The Habitat Company's distinct pleasure to partner with 21 E. Chestnut Condominium Association and continue to build upon the community's positive reputation," added Diane White, Senior Vice President of Condominium Management.

 "The Habitat Company's leadership team continues to bring transformative service change to our condominium communities and we are pleased to include 21 E. Chestnut in our portfolio as we continue to grow our condominium business.  21 E. Chestnut joins The Bristol, The Buckingham and 400 E. Randolph among other premier condominium associations where we strive to deliver the highest level of service every day", said Mark Segal, President and CEO of The Habitat Company.


News page

The Habitat Company Starts Construction of 450-unit luxury high rise in Chicago

CHICAGO (January 12, 2012) - The Habitat Company announced the start of construction of a 43-story, 450-unit luxury high rise in Chicago in a joint venture with Multi-Employer Property Trust (MEPT) and a major institutional investor. This luxury multifamily community will be located at 360 W. Hubbard Street in Chicago's vibrant River North neighborhood, across the street from the iconic East Bank Club. This latest project adds to the more than 17,000 residential units developed by The Habitat Company in its 40 year history. Bentall Kennedy, one of the largest North American real estate advisors, represents its clients, an institutional investor and MEPT, a $5.4 billion real estate equity fund, in the transaction. "We are pleased to begin our latest project which builds on our forty years of experience and understanding of the market to create what we believe will be our finest apartment development," said Daniel Levin, Founder and Chairman of The Habitat Company. The rental residences will be smoke-free and will include top-of-the-market finishes, amenities, and services, including 29,000 square feet of indoor and outdoor amenity space to accommodate year round activities. The development will be seeking LEED Silver certification under the Leadership in Energy and Environmental Design (LEED) system of the U.S. Green Building Council. The project's architect is Solomon, Cordwell, Buenz & Associates which has designed many distinctive residential buildings around Chicago, including The Habitat Company's Kingsbury Plaza development located across the street. The general contractor for the development is James McHugh Construction Company which has built some of the most recognized properties in the Chicago skyline, including many of The Habitat Company's prior projects. "For The Habitat Company, there are many exciting aspects to this development, not the least of which is our partnership with Bentall Kennedy, one of the most respected North American institutional real estate advisors, a major institutional investor and MEPT," said Matt Fiascone, Senior VP of Finance and Investment for The Habitat Company. Upon its completion in late 2013, the development will be managed by The Habitat Company. The Habitat Company currently manages for its own account and for third parties over $2 billion of assets comprised of more than 20,000 residential units of market rate, affordable, condominium, student and public housing units in Illinois and four other states. When combined with its recent acquisition of 480-unit and 360-unit multifamily assets in Ann Arbor, Michigan, The Habitat Company concluded transactions in December having a total value of close to one-quarter of a billion dollars.

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