Windy City amid home-building boom

Home Channel News, August 10, 1998

CHICAGO -- Home building in Chicago is back.

Through July, the number of building permits issued in this market increased 71 percent during the same period in 1997, representing "the highest number of permits ever processed in this city," according to Bruce Deason, assistant vp-governmental affairs at the Home Builders Association of Greater Chicago.

Analysts here say renters are being drawn into the home buying market because of low mortgage rates, and a lot of that buying is occurring in the suburbs; currently, 845 subdivisions are under construction, compared with the 480 under construction in 1993, according to Crain's Chicago Business.

This is quite a turnaround from only a year ago; last year, the number of building permits issued fell 8.3 percent to 31,250 units.

"We're seeing an incredible variety of [housing.] Townhouses, lofts, single-family housing," said Deason. "[And] we're seeing empty-nesters coming back to Chicago. They raised their kids in the 'burbs, and they're coming back downtown because they think it's the place to be."

Dealers catering to builders, remodelers and commercial accounts are reaping the benefits of this healthy building market.

"The whole metropolitan market is growing," said Jerry Wille, vp-operations, for the 16-yard Edward Hines Lumber, based in suburban Itasca. "Downtown Chicago itself is primarily rehab, so you have a lot of loft conversions and things like that where there's not a whole lot of land for ground up. But from the Rockford area stretching southward toward Kankakee, there's an availability of land. I'd also assume there's also a strong job market. Building is pretty active."

In February, Edward Hines began expanding its product assortment and redirecting advertising to attract more commercial business. Earlier this year, Bill Maniates, who manages Hines' sales at its Villa Park, Ill., yard, said that unit was using space to expand select commercial-related categories. Edward Hines also planned to place additional advertising tailored to I/C customers in Dodge Construction News. Hines' previous efforts had been limited to direct mailers to trade groups and customers, as well as advertisements in the Illinois Manufacturers Director and the Blue Book for Building and Construction.

Seigle's Home & Building Centers, the six-unit retailer based in Elgin, Ill., generated 80 percent of its sales in 1997 from builders and remodelers. Todd Innocenzi, assistant general manager at Seigle's Kitchen & Bath showroom on Chicago's north side, said that many of those pros are working on townhouses, lofts and condominiums, especially near Navy Pier. Such targeted building allows pro dealers to focus their energies on particular segments of the city.

"One of the things I've noticed about Chicago is that it's a custom market," said Mike Amato, sales manager at Seigle's Kitchen & Bath showroom. "Everything is unique. People have diverse lifestyles in this area, so there are no cookie-cutter projects." Amato added that he's seeing an increased interest among customers for special-order doors and windows, in addition to upscale moldings.

Clark & Barlow Hardware, a four-unit dealer based in downtown Chicago that sells primarily to professional customers, has capitalized on city residents' desire to be different. Its Chicago store has a 10,000-square-foot showroom on the second level featuring 450 skus of decorator hardware. The eclectic mix includes wrought iron door handles designed to look like barn doors and a host of rustic hardware that can serve as curtain rods, towel racks or coat hooks. In addition, company president John Gavin Sullivan said that many of the store's doorknobs and drawer pulls are hand-painted by 20 metal crafters working for Clark & Barlow.

However, the strength of home building and remodeling in Chicago hasn't made it any less competitive. Indeed, pro dealers can point to the fact that Home Depot launched its initial Commercial Catalog in this market. And the invasion of big-box home centers here has caused a seismic change in the way other dealers go to market.

"The boxes have taken a lot of dealers who historically had been 50/50 professional to consumer and made them change their focus solely to the professional," said Wille.