It’s been about 16 months since we checked in with The Habitat Company to see what’s going on with the River North developer. The big news, obviously is that there’s a new name on the door of the big office. Matt Fiascone is now running the show, and was nice enough to answer some questions for us via e-mail.
Editor: How was 2014 for Habitat?
Matt Fiascone: 2014 saw us complete the lease up of Hubbard Place achieving stabilization (95% occupancy) six months ahead of projections. Needless to say we’re proud of the achievement by our team and our partners are very happy.
Editor: What do you see ahead for 2015?
Fiascone: We are actively pursuing acquisition and development opportunities in Chicago and other Midwestern markets, while at the same time strengthening our established partner relationships. We have several irons in the fire for development and new management opportunities and believe that the continued strength in the multi-family market will result in growth for Habitat.
Editor: What changes are you planning for Habitat?
Fiascone: We are going to expand our horizons both geographically (new markets within and outside the Chicago area) and in product type (not only hi rise development but mid and low rise possible).
Editor: The economy seems to be recovering in a lot of sectors. Are you seeing that as well?
Fiascone: The rental residential market has been in full out recovery for a few years so, while I do think the recovery is broadening, it doesn’t impact our business that much.
Editor: Previously, Habitat had a keen interest in development in Chicago’s River North and Near North neighborhoods. What do you see in the future for that area?
Fiascone: Those areas have attracted a lot of development making new opportunities harder to find. So, while we remain interested in developing in those sub-markets, we aren’t limiting ourselves to those areas.
Editor: Some people believe the downtown Chicago apartment market is about to become saturated. Others think it’s just getting started. Where do you see it?
Fiascone: I think it is likely that we have seen the peak in rent increases in those parts of Chicago that have seen the largest share of new apartment construction (River North, Streeterville, Loop). That being said, I don’t think we have reached a “saturation” point yet.
Editor: Do you think there are other Chicago neighborhoods that are underserved when it comes to high-density residential development?
Fiascone: We have seen developers who have built in neighborhoods that have not seen much new development enjoy great success. 1225 Old Town and Halsted Flats come to mind as two examples. There are several neighborhoods with similar characteristics that offer opportunities to serve an unmet demand.
Editor: Condo owners often bristle at the notion of an apartment building going up next door. They see renters as lower class, transient, and not invested in the neighborhood. How do you address those worries?
Fiascone: It is always difficult to overcome perception that is based on emotion instead of fact. It is interesting to note that there are many examples where new apartments cost as much or more as neighboring condos. That makes it hard to say that the residents in those apartments are “lower class.”
Editor: Habitat was one of the few developers in recent history that didn’t maximize the building envelope with plain square boxes, balancing beauty and profit. How much weight will you place on the design aesthetics of your new buildings?
Fiascone: Design is always a top priority at Habitat. While it is difficult to prove, we believe that superior aesthetics, while costly on the front end, translate to greater value over the long term.
Editor: Are there certain architects, big-name or otherwise, that you wish you could work with?
Fiascone: Our founder (Dan Levin) had the opportunity to work with Mies van der Rohe and I can only imagine what it would be like to work with someone of that stature.
Editor: What do you look for in an architect when starting a new building?
Fiascone: A balance of creativity and practicality. Also a spirit of partnership.
Editor: Does the economic recovery making property values higher mean we’ll see taller buildings in the future?
Fiascone: Not necessarily. Taller buildings are not necessarily more economical.
Editor: There’s a lot of speculation about when condo development will re-start on a large scale in downtown Chicago. Do you see that coming? Is it something you’re looking forward to?
Fiascone: Real estate will always be a cyclical business and what is out of favor now will most certainly be in favor at some point in the future. We are already seeing an increase in condo development albeit from a very low level. 2015 should see that momentum building and perhaps the announcement of some larger projects.
Editor: When developing an apartment community, is there a sweet spot for the number of units that makes it work? Can a building be too big, or too small to work well?
Fiascone: This is largely a matter of developer preference or style. Habitat has typically targeted projects with 200 or more apartments as this size allows you to provide a level of amenities and services to the residents. There are successful developments of all shapes and sizes though.
Editor: How important is mass transit when locating your projects? Is it driven by customer demand or other forces?
Fiascone: We do think transportation and walkability are very important factors in site selection, but here as well, there are developers who succeed that don’t prioritize these elements.
Editor: Are there new types of amenities and interior design elements that you’re adding to Habitat buildings in response to customer demand?
Fiascone: Over the last few years the increase in the amount and level of amenities has been described as an arms race. At Hubbard Place, our goal was to create a “they thought of everything” concept. Signature amenities are found both indoors and outdoors at Hubbard Place. The entrance is set back 150 ft to create a park-like setting with impressive landscape design, seating and shaded areas that are also open to the public. The attention to detail is evident in the structure of the building as well. Hubbard Place is oriented southwest to provide unparalleled views of the skyline down Wacker Drive and the Chicago River. Their automated package retrieval system, has been dubbed “the James Bond system.” Handsome wood drawers were built into the lobby wall – the resident receives a text with a code, they punch in the code and a drawer opens up. Standout features such as black-out solar shades, Distributed Antenna system and a radiant heat system built into the driveway are all superior amenity and design elements of Hubbard Place.
Editor: If you had to, which Habitat building would you live in and why?
Fiascone: Hubbard Place. Not only is it an awesome building, but I would have no commute to my office (next door).