ARE PEOPLE TOO POLITICIANS PROMISE MORE MONEY FOR HOUSING AGENTS PULL OUT TOP DRAWER MARKETING V O L U M E 1, I S S U E 3,

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1 V O L U M E 1, I S S U E 3, FO R THE WELL I N FO R M ED R E A L E S TAT E PROFESSIONAL Left to Right: Joel M. Carlins Ron Shipka,Sr. David W. Buzz Ruttenberg ARE PEOPLE TOO POLITICIANS PROMISE MORE MONEY FOR HOUSING AGENTS PULL OUT TOP DRAWER MARKETING

2 by Jason Fortune contrary to popular belief, developers are people, too. though they range in size from very small to colossal, their impact on our nation s communities is measureless. Their ideas and endeavors shape the world in which we live, work and play. From metros stuffed with high-rises to strip malls in the suburbs, if a developer didn t develop it, it would still be open land. Developers have the ability to breathe life back into neighborhoods that have fallen into ruin. They don t just develop properties, they help create community infrastructure, which can in turn boost a community s economy. Not everyone can become a developer. It takes a special kind of person to take on the risk and the responsibility. It requires skilled forecasting and eternal confidence, pride in reputation, commitment and leadership. But most importantly, it takes funding. >> 22 F E B R U A R Y 1 2, W W W. C H I C A G O A G E N T M A G A Z I N E. C O M

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4 David W. Buzz Ruttenberg President, Belgravia Group, Ltd. A developer is a chef he takes raw ingredients and puts them together to create the finished product, says Buzz Ruttenberg, President of Belgravia Group, Ltd. He grew up around rehabs, and remembers toddling around his father s first rehab in the 1940s, on the 2700 block of Hampton Court. Like the art he collects, Ruttenberg views his properties as works of art as well. We ll scale down and do a 15-unit rehab because it s fun, and we know it s going to turn out beautifully. SO WHAT DOES A DEVELOPER REALLY DO? We asked three of Chicago s leading developers for a peek into their world. Ron Shipka, Sr. Chairman, The Enterprise Companies The developer is like the hub of a wooden wheel on an old covered wagon, says Ron Shipka, Sr., Chairman of The Enterprise Companies. The spokes keep the wheel going, but they all lead back to you - from the acquisition to the entitlements to the design to the construction to the sales. Developing is in Shipka s blood. He has been developing houses in one way or another his entire life. His father, a superintendent in a construction firm, got him his first job as a carpenter s helper when he was 14. While attending the University of Illinois, where he received his degree in Industrial Management, he solicited door-to-door sales for home remodeling. After college, he charged into developing and never looked back. His sons are active leaders in the family business as well. Joel M. Carlins President, Magellan Development Group, Ltd. I compare the developer to a symphony conductor, says Joel M. Carlins, President of Magellan Group, Ltd. It s the conductor s job to pick the right musicians, pick the composition, and make sure it all works properly for the performance. The developer s job is to select a site, maintain a vision for the concept, arrange the financing, and pick the right people to market the project. Carlins lived many lives before coming to real estate development. After receiving his Journalism degree from the University of Illinois and his Law degree from DePaul, he traveled the globe practicing law in the United States and several foreign countries. He represented great blues musicians such as Willie Dixon and Muddy Waters, and even wrote the late Mr. Waters will. Carlins still holds his attorney s license in the state of Illinois and the Virgin Islands. Besides his passion for developing, Carlins is a master sailor and historian. He named his company after the famed explorer Magellan, who was known for his impressive navigational skills. 24 F E B R U A R Y 1 2, W W W. C H I C A G O A G E N T M A G A Z I N E. C O M

5 HOW DO DEVELOPMENTS DEVELOP? Most of the developer s time is spent in the board room rather than the construction site. But developers are not super-people; they assemble a qualified and competent team of professionals in the fields of architecture, construction, legal, marketing, design and property management to assist them. Pre-planning is vital so that risk is minimized, and years can be spent planning a project before ground is ever broken. Determining whether or not to build takes research and in-depth preparation; most times taking longer than the building process itself. SHOW ME THE MONEY Getting financed is often the trickiest part of the production. Most developers have a viable team, a financing plan and a marketing plan to bring to the bank. Many deals are so complicated that special finance experts and legal minds are brought in to consult. Some deals are restructured again and again in order to make them happen. Once everything is approved, however, the developer must simply execute his/her plan. When times are tough, things can get especially risky. Over the last few months, some of Chicago s big deals have gone - or are in the process of going - south. Financial problems led to The Radco Companies takeover of Bejco s River Bend and Prairie House projects. Also, CIB Bank recently hired Magellan Development Group to finish the stalled luxury condominium project at 6 North Michigan Avenue, after the previous developers defaulted on their loan. As banks grow more cautious, developers looking to finance new projects must have a successful history, reliable market data and talented teams planning the process from concept to close. KEEPING IT REAL We can do a wonderful job, but if we don t keep people informed, it impacts good will, says Carlins, whose company, Magellan Development Group, publishes a newsletter to keep his agents and buyers updated. Managing your clients expectations when selling a new home can be difficult, and even impossible, unless you have great communication with the developer. We keep everyone informed, says Carlins. Agents are our life line. It s a small world and you live by your reputation. The Enterprise Companies give their buyers many tasks to help ease the waiting period between purchase and close. The initial sales agent who makes the sale is responsible for selling the standard type of home with standard finishes, explains Shipka. The buyer will then work with our design team and visit the design center to start customizing their home with finishes to their tastes. So let s say this process takes a year. Buyers will see samples, speak with coordinators, select products, make changes, complete an electrical walk-through to verify outlets, switches and light fixtures... They are very busy throughout the process. Most agents agree that developers need to understand the experience that buyers go through when purchasing new construction. Shipka, one of the rare developers who actually worked in a sales center and sold his own properties, has a good sense of how to set buyer expectations and keep lines of communication open. All told, developers have a difficult job to do. Those with vision, integrity and a keen sense of the market build our skyline. As an agent, it is critical to know your developer when you bring your clients to a sales center. A thorough understanding of who developers are and how they do business will enable you to help your clients make more informed decisions. >> WHAT IF SOMETHING GOES WRONG? There are always unforeseen circumstances, such as an angry neighborhood association, a freak construction problem or an unexpected shift in the market. When problems arise, it s the finesse and creativity of the developer that often saves the day. If conditions have drifted too far from the plan, the project could go under. However, if the developer is able to push the development through the pre-sale stage, chances for success are greatly improved. Before the construction loan is open, you have to start a pre-sale process, says Shipka. What separates the professional developer from the amateur or fast gun is spending the money on pursuit costs to reach a GMP, or guaranteed maximum price. I don t want to say that s how much we built them [developments] for last year; this is how much we built them for the year before. But if you have a GMP you know what your product is going to cost, you know what your acquisition price is, and you know your bottom line. Therefore, your sales price is the last ingredient in the formula. MAKING THE SALE Good developers understand the role real estate agents play. Agents are our life blood, says Ruttenberg. Through direct mail and a significant number of personal presentations at agents offices, Belgravia Group ensures we are understood by agents who represent the buyer. We find that the agents who understand the Belgravia commitment to bring quality to their customers are the ones who come looking for our product and price point on a regular basis. When asked how agents could help in facilitating the buying process, vice president of Magellan Real Estate Robert Pontarelli says, Help pass on more information from developer to buyer, act as intermediary, and be more involved. Lots of agents just sign a deal and walk away. We can do a wonderful job, but if we don t keep people informed, it impacts good will -Joel Carlins F E B R U A R Y 1 2, W W W. C H I C A G O A G E N T M A G A Z I N E. C O M 25

6 cover story con t DEVELOPER S HISTORY ENTERPRISE COMPANIES Current Developments Museum Park 13th/14th s along Indiana Ave. Two River Place Superior and the River Lincoln Park Commons 600 W. Drummond River Village 1000 N. Kingsbury Residential Properties The Regal Condominiums 1735 W. Diversey Landmark Village 1800 W. Diversey Terra Cotta Village 1761 West Wrightwood Huron Pointe 420 West Huron Cornelia Village 100 West Cornelia Wellington Park 1800 W. Wellington Lakeview Commons 1725 West Diversey River North Commons 520 West Huron Ravenswood Park 1801 West Winnemac Lincoln/Ashland/Belmont Re-development Whole Foods building 3300 North Ashland 1500 West School Kinzie Park Kinzie and the river One River Place Chicago River Chicago Avenue MAGELLAN DEVELOPMENT GROUP, LTD. Current Development Lakeshore East Columbus/Wacker/Lake Shore Drive/Randolph The Lancaster - Columbus/Wacker/Lake Shore Drive/ Randolph Rental Developments Dearborn Place Apartments 875 North Dearborn One Superior Place One West Superior Park Millennium 220 North Columbus Near North Grand Plaza State/Grand/Dearborn/Ohio Condominium Developments Park Newberry at Delaware Place 55 West Delaware Place 21 West Chestnut Place 21 West Chestnut The Farallon 600 North Dearborn Admiral s Pointe 645 North Kingsbury The Carnavel Dearborn and Ontario s Park Alexandria Jefferson / Monroe BELGRAVIA GROUP Current Developments The Apex 859 W. Erie Hartland Park Chicago W. Wrightwood & N. Paulina Bella Como 544 N. Milwaukee Ave. 530 North Lake Shore Drive 195 condominiums Roslyn Place 444 West Roslyn place ` Roslyn Place Residential Properties Kensington Park -18th & Indiana Avenue Via Como Due North Peoria Summerdale Court of Budlong Woods W. Summerdale Ave. 950 W. Huron - Huron at Morgan Berwyn Court of Budlong Woods W. Berwyn Avenue Roslyn West Roslyn Via Como North Peoria Fulton Station 560 W. Fulton Greenview Park North Greenview Ave Emerald City 2230 N. Lincoln Lill On The Park W. Lill Avenue Schiller Place 1440 N. Wells & 1401 N. Wieland Tamerlane 2707 N. Greenview Belgravia Terrace Sedgwick-Wisconsin- Hudson 1132 Lill Ave Lill just east of Racine 2428 N. Southport Southport at Fullerton Fletcher Homes W. Fletcher Armitage Row W. Armitage Retail/Mixed-Use Properties 555 North Michigan - Developed in 1998 by Belgravia Group Webster Place Shopping Center West Webster Avenue Belden Centre North Clark 800 W. North Avenue - At the corner of Halsted, North and Clybourn Avenues Lincoln Park Garage N. Clark 26 F E B R U A R Y 1 2, W W W. C H I C A G O A G E N T M A G A Z I N E. C O M