What Larger Developers Can Learn from Mom-and-Pop Shops
In this condo cycle, larger developers are taking cues from their boutique counterparts and adopting more personal touches for their clients. No one is a bigger expert than Avison Young principal Jim Hanson, one of our panelists at Bisnow’s Condo Development & Residence of the Future event Nov. 19.
Jim, who recently brought Mesa Development to AY with his father, Rich, says in a post-recession environment, the family-owned business model he and his dad cultivated at Mesa Development was unsustainable, even with large-scale projects like the Heritage and Legacy condo developments near Millennium Park. Given the discipline of lenders in the capital base and a smaller pool of equity partners for projects, Jim says Mesa and other smaller firms cannot continue business in this vein.
Meanwhile, Jim says larger firms are adopting the hands-on practices of boutique firms. The culture at Avison Young, Jim notes, is very entrepreneurial and personal, which was important to him and his father when they merged Mesa into AY. Jim also welcomed the opportunity to reunite with his mentor, AY president Earl Webb (pictured, left, with AY CEO Mark Rose). It was Earl who showed Jim the real estate ropes at JLL, where he worked in capital markets for 12 years before founding Mesa.
Jim says he's sold over $30M in units at the Legacy at Millennium Park (shown) and the Heritage at Millennium Park this year, but there are multiple opportunities for buildings with 20 to 50 units, close to downtown, targeting affluent buyers. The other strategy is in the suburbs, near locations with some core, like train stations, retail and walkable areas. Jim says the US population has always been mobile, but that mobility has been on hold in recent years, and there’s been little in the way of new construction. Suburban demographics these days skew toward empty nesters who no longer need the large homes where they raised their families. These buyers are looking to downsize, but there’s nothing available.
At AY, Jim (pictured with Hines senior managing director Tom Danilek) says there are multiple opportunities to assist other developers with management services in construction and development. During his time at Mesa, Jim did everything to get condo projects delivered, which taught him how to interact with community groups and contractors, and he realized he had a set of skills he felt was important to provide to others. Jim says he knew real estate would be his calling from an early age. His father, Rich Hanson, founded Stein & Co (which grew to over 400 employees before selling to Mesirow) but he wouldn't let Jim work for him, so he had to find his own way.