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Article posted: 7/5/2014 12:01 AM

Longtime builder sees strength return to Chicago market

Brian Hoffman, left, and Todd Fishbein work together on projects for Red Seal Homes, a family-owned company that has been building homes in the Chicago area for 80 years.

Brian Hoffman, left, and Todd Fishbein work together on projects for Red Seal Homes, a family-owned company that has been building homes in the Chicago area for 80 years.

 

Courtesy of red Seal Homes

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By Jean Murphy

Northbrook-based Red Seal Homes has been building upscale residences in Chicago and its North and Northwest suburbs since it was founded by Joe Horwitz in 1934. In fact, for a time the firm even expanded into Wisconsin and Florida and got involved with sizable commercial and hotel construction ventures, as well as both production and custom homes.

Red Seal was also heavily involved in the new construction of housing and infrastructure at the former U.S. Army base at Fort Sheridan between 1998 and 2003 and was the general contractor chosen to build new Navy housing at the southern end of that property between 2005 and 2009.

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Today the family firm is owned and run by Horwitz's son-in-law, David Hoffman, and by Brian Hoffman and Todd Fishbein, his grandson and grandson-in-law, respectively. The third generation is firmly at the helm as the company celebrates its 80th anniversary after successfully weathering a deep housing recession that lasted for more than five years.

"In June 2012 we purchased 27 lots in the Coventry Creek subdivision in Lake Zurich, which is part of the Stevenson High School district. That was our first post-bust venture and we have recently sold out there," said Brian Hoffman, vice chairman and chief financial officer.

In the past few months the company has also completed one project it began before the recession -- Deer Park Estates in Deer Park -- and has only one home left to sell at Sheridan Point in Wilmette.

Last year Red Seal purchased land for a townhouse project in Arlington Heights called Arbor Lane. It demolished some old buildings on the site and recently broke ground for 16 upscale townhouses there, Hoffman said, continuing its decades-long emphasis on infill sites in the city and suburbs.

Red Seal crews are also about to break ground on a duplex community called Willow Lake in Lake Forest. Begun by another developer before the recession, it will eventually feature 52 duplex homes.

How did Red Seal successfully weather the recession?

"From 2009 through 2012, almost all of our clients were banks for which we did receivership, management, turnaround and completion of dozens of projects throughout the Chicago area," Hoffman said. Successful receivership projects included the mixed use development at 2300 S. Michigan Ave. in Chicago, the Timber Trails subdivision on Western Springs and The Skokie Theater.

Fishbein, president and CEO of Red Seal, also provided extensive consulting and asset management services to several area banks, assisting them with entitlement, development and disposition issues relative to the real estate properties they had taken back from borrowers.

What are you seeing in the local new home construction market today?

"We are seeing real strength in select spots within the Chicago area," Hoffman said. "Red Seal is not chasing first-time buyers, so they are not an issue for us. But we are seeing enduring, solid demand from both move-up and move-down buyers who enjoy the level of service we provide."

With that in mind, the builder is focusing on infill locations in northern Cook and southern Lake counties and within the city of Chicago. In recent years, Red Seal has been delivering between 25 and 30 homes in the low $300,000s to $1 million-plus price range each year and are hoping to see that number grow again.

What is your business philosophy

"Our philosophy has been unchanged for 80 years. We build great communities and homes of excellent quality and enduring value," Fishbein said, "and we are really nice people to do business with."

What is the best part of being a builder?

"I enjoy working with a great team that is comprised of smart and fun people," Hoffman said. "And I love the entrepreneurial aspect of being a builder. You never know if that will be the day when the phone rings and an opportunity presents itself that will take the company in a totally new direction for several years to come -- the opportunity to pull another great development out of the ground."

"But we can't chase every interesting piece of property that we find. So we evaluate each opportunity in terms of its surroundings, school districts and feasibility. Does it play to our particular strengths?"

What are the biggest changes you have seen in the business?

"The most obvious change is the abrupt transition from a marketplace that was totally dominated by privately-held builders, to one where 80 (percent) to 85 percent of the new home projects are being built by large publicly held builders," Fishbein said.

Hoffman added that real estate financing has also been turned on its head since the bust. While controls on borrowing have eased up recently, lenders are still very conservative. On the other end of the deal, the same is also true. But many more banks are now interested in helping builders to finance new homebuilding projects.

Architecture has also become much more organic in recent years, Hoffman said.

What do you see in Red Seal's future?

"We will continue to compete for infill opportunities in established suburbs," Fishbein said, "and since we believe in the dynamism of Chicago and our need to be in that market, we will continue to make offers on infill properties there, as well."

Executive backgrounds

Fishbein received his bachelor's degree from the University of Michigan in Ann Arbor, with highest honors. He then earned his law degree from the University of Illinois Law School, Magna Cum Laude. While in law school, Fishbein served a judicial clerkship in a federal-district court.

Upon graduation and admission to the Illinois and Federal Bar, he entered into private practice with Katten, Muchin & Zavis and, subsequently, DLA Piper, where he practiced transactional real estate law and land-use/zoning law.

Fishbein leads Red Seal's land acquisition, zoning and development efforts. He is also responsible for overseeing all in-house legal matters and is involved in all aspects of Red Seal's operations.

Hoffman graduated from Stanford University in Stanford, California, with a bachelor's in international relations with concentrations in Middle East politics and post World War II Japan's economy. His early exposure to real estate and construction included stints as a laborer, concrete worker and apprentice bricklayer. After college, he worked in accounting and finance with a major New Orleans-based development and holding group (the Santopadre Cos.), starting as a financial analyst and eventually becoming comptroller of its franchising company, Tastee Donuts Inc.

Hoffman is responsible for Red Seal's market strategy, targeted land acquisitions, sales and financing efforts. In addition, much of Hoffman's work over the past 21 years has concerned the redevelopment of environmentally impacted former industrial sites. From the removal of the landfill at Fort Sheridan, to the clean up of contaminants at the former General Fire Extinguisher factory in Northbrook and the redevelopment of two former rail yards in Chicago, he has developed an expertise in dealing with the development of environmentally impacted sites.

For more information, visit www.redsealhomes.com or call (847) 272-5600.

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