A Corner Deli With International Appeal
By MICHELINE MAYNARD
Published: May 3, 2007
ANN ARBOR, Mich., May 2 - On an unseasonably warm Sunday afternoon in mid-March, hundreds of food lovers packed a tent on Detroit Street in front of Zingerman's Delicatessen here, lining up for samples to celebrate the deli’s 25th anniversary.
Zingerman's, based in Ann Arbor, Mich., also does business by mail.
Kristen Hogue delivers a tray a food at Zingerman's deli, which may be more popular outside its hometown of Ann Arbor than it is there.
They could taste bread from Zingerman's Bakehouse, barbecued pork from Zingerman's Roadhouse, fresh goat cheese from the Zingerman's Creamery and coffee that Zingerman's roasts itself.
The variety startled some people who still think of Zingerman's as simply a red brick building on a cobblestone street. Yet, as it turned 25, Zingerman's had gone beyond being simply a deli to being a gourmet enterprise with sales of more than $30 million expected this year. And it is now known across the United States thanks to its catalog and mail-order business.
But neither the festivities nor the variety would have been possible if Zingerman's co-founder, Paul Saginaw, had not dragged his business partner, Ari Weinzweig, to a bench in front of the deli about 15 years ago and demanded that they start thinking about where they wanted their business to wind up.
Mr. Weinzweig was reluctant to break away from his routine of running the deli, then generating about $6 million a year in sales, to brainstorm. But Mr. Saginaw insisted.
Two years later, the result was a vision for what they hoped to achieve by 2009 — well beyond the 5-year or even 10-year plans that most businesses scope out for themselves. But at that time Mr. Saginaw and Mr. Weinzweig wanted to send their employees a message that the business, which was facing increased competition and many proposals to expand or franchise, had a solid future. Its customer-friendly approach and emphasis on expensive but high-quality products would not be abandoned as the company grew.
That kind of long-range thinking is hardly typical in the food business, where restaurants and gourmet stores can hang around for years, then vanish overnight.
"If they want to look out that far in advance, great, but it is unusual," said Jim Anderson, a management counselor with Score, a nonprofit organization that provides advice to small business owners.
Plans of three to five years are more the norm for businesses the size of Zingerman's, he said. "The biggest criticism levied against this would be that we’re not smart enough to project that far into the future," Mr. Anderson said. "But to criticize what they've done would be foolish, because they’ve been so successful."
The deli alone has earned Zingerman's an exalted status among food lovers, said Michael Ruhlman, the author of a number of books on the food business.
"Places like Zingerman's are important for two reasons: they become arbiters of taste in America’s booming artisanal food industry simply by what they choose to put in their stores; and second, they are fundamental middlemen between the artisan producer and the consumer," Mr. Ruhlman said. "There’s not a lot the consumer can do, really, to get Iberian ham, but Ari can."
Both Mr. Saginaw and Mr. Weinzweig thought Zingerman's could be more than just a corner store, however. When they brainstormed back in the early 1990s, they thought Zingerman's could handle as many as 15 different businesses, generating $20 million a year in sales, with the deli at the heart of the enterprise.
They were off-base on several counts. Zingerman's revenue swelled 50 percent greater than that, to an estimated $30 million this year, with eight separate operations, including a bakery, restaurant, coffee-roasting company and catering business, as well as a training business meant to share Zingerman's people-friendly management approach.
And though 2009 is still 19 months off, Mr. Saginaw and Mr. Weinzweig are brainstorming again on a vision for the year 2020, which they have begun sharing with their fellow managers, employees and even, via a newsletter, customers.
By then, Mr. Saginaw wants to expand the operations on the corner of East Kingsley and Detroit Streets, home to the original deli, its outdoor seating and a coffeehouse called Zingerman's Next Door. There could be as many as 18 businesses: the company is weighing ventures like a microbrewery, a small hotel, fish and meat-smoking business and a publishing house.
Paul Saginaw, left, and Ari Weinzweig are celebrating 25 years of being in the food business. Despite expectations of more than $30 million in sales this year, their profit margins are fairly slim. But they seem unfazed. "Our goal in 2020 is to leave our world better than it was when we came here," Mr. Weinzweig said.
Zingerman's is making it clear that it plans to stay in the Ann Arbor area, bringing food products from around the region, the country and the world to Southeast Michigan. Mr. Weinzweig likens that philosophy to the French word "terroir" meaning "of the earth," or the idea that food and wine reflect the area where it is produced.
In the case of Zingerman's, that means the Midwest and specifically, this college town where Zingerman's has sometimes eclipsed the University of Michigan as its most notable attraction - among food enthusiasts, at least. The late New York Times correspondent R. W. Apple called it "the deli of my dreams." It was a campaign stop for the Democratic hopeful John Kerry in 2004.
"Zingerman's is unique in that it has a continental reach" in the United States, said Peter Foynes, curator of the butter museum in Cork, Ireland, who led a butter-tasting program at the deli last month. "I can think of no food premises in Europe that has that kind of reach."
Mr. Saginaw added: "We're better known outside of Ann Arbor than we are in Ann Arbor. You're always underappreciated in your own hometown. And that's good, because it keeps you in your place."
To be sure, Zingerman's touches a nerve here. Locals have learned to avoid the deli on peak days and times, like weekend afternoons, when lines filled with out-of-towners run around the corner and street parking is nearly impossible to find (the deli has no lot of its own, and city parking enforcement is rigid.)
Some bypass the deli altogether to visit Zingerman's other shops south of town near Ann Arbor’s small airport, where the company makes its bread, gelato and cheese.
Likewise, the deli's prices, which approach New York levels, raise plenty of Midwestern eyebrows. Its sandwiches, available in "nosher" and "fresser" sizes, run $12.50 and $13.99, respectively, for a Reuben, and $8.99 and $10.50 for a bacon, lettuce and tomato sandwich. A blintz is $3.99, and a hot dog with bacon, cheddar and ketchup (albeit homemade) is $7.99.
So it may come as a surprise to learn that Zingerman's profit margins, which it openly shares with its employees, are razor thin. The deli, which is expected to generate sales of nearly $10 million this year, is forecast to earn only about a 3.5 percent return. Its mail-order business, the next largest at nearly $8 million in annual sales, is expected to earn about 5 percent.
One reason margins are not higher, said Grace Singleton, who manages the deli, is the company's commitment to high-quality products.
"The price difference between regular turkey and free range isn’t just 20 percent higher, it’s three times as much," she said. "Could we do something different? Sure. Would it be authentic and feel as great? No."
Some of that determination stems from Mr. Weinzweig's curiosity about food, which he, a Chicago native, began acquiring after he graduated from the University of Michigan with a degree in Russian history.
He met Mr. Saginaw, a Detroit native, while working at Maude's, a defunct cafe in Ann Arbor. Though neither was a trained chef, they bought the deli’s original location in 1982, deciding that the community was ripe for a business that would echo a traditional New York deli.
At the beginning, only the two men and a handful of employees ran the business. Mr. Saginaw often called his mother during Jewish holidays for cooking tips.
Now, the tiny deli is crammed with meats from Niman Ranch, the California specialty producer, cheeses from the United States and Europe, honeys from France, vinegars from Italy and an entire wall of olive oils. That is in addition to the rye bread and bagels produced in Zingerman’s own bakery and the fresh cream cheese it makes to go with them.
Even though they now have 545 employees, Mr. Saginaw and Mr. Weinzweig can frequently be spotted there and at Zingerman's Roadhouse, opened in 2003, which concentrates on American classics like fried chicken, barbecue, grits and seafood.
During a busy week, Mr. Weinzweig and Mr. Saginaw joined the company's partners for a regular meeting.
The gathering, punctuated with laughter and words of praise for a number of employees, included a brainstorming session on a name for a packaged ice coffee (candidates included Joe Cool, Witches Brew and Java the Hut, a take-off on the "Star Wars" character.)
There was also a lively debate over whether the company should spend money on a new payroll system, as well as an on-the-spot interview of a new manager, who was drilled not only on his background but on his favorite gelato flavor, dulce de leche.
Managers also discussed the company’s latest financial data. Zingerman's pushes its employees to take an interest in its financial picture, which helps determine their generous compensation. Along with hourly wages, vacation time (as much as six weeks after 20 years), health and dental care and food discounts, full-time employees receive "gain sharing," which pays out if their part of the company exceeds its annual business plan, Ms. Singleton said.
The structure also helps explain why margins remain low even as revenue has risen. To pay employees, support local producers and contribute to the community, "a big piece of it is charging enough money," Mr. Weinzweig said.
But Mr. Saginaw said profit, in itself, was not Zingerman's motivation. "We've had dozens and dozens of opportunities to franchise, sell the name, take the check and walk away," Mr. Saginaw said.
Instead, Mr. Weinzweig said, the idea was to create a special experience. "Our goal in 2020 is to leave our world better than it was when we came here," he said.
Ann Arbor area tops list for educated, talented labor
Trade publication ranks 362 metropolitan areas
Saturday, April 21, 2007
BY STEFANIE MURRAY
News Business Reporter
As cities in pursuit of economic growth begin to rely more on the people who live in them rather than the natural or transportation features that surround them - like rivers, rich soil or railroads - Ann Arbor is better positioned than almost any other place in the nation to prosper.
That's according to trade publication Expansion Management's fifth annual Knowledge Worker Quotient, which earlier this month ranked Ann Arbor first in the country for its knowledgeable workforce.
The publication considered demographic factors like college education levels as well as the nearness of local colleges and universities and their research and development spending, and the number of scientists, engineers and medical doctors.
It ranked 362 metropolitan statistical areas for their ability to provide talented workers and an "innovative environment.''
"These are the communities that will thrive and prosper in the future,'' Expansion Management wrote, noting that having a major research university contributes tremendously to having a top-notch work force for knowledge-based businesses.
Ann Arbor also ranked No. 10 among the 362 areas for college-educated workers.
"Since this whole Pfizer closure announcement, we've been so engaged in the community with identifying the work force.'' said Elizabeth Parkinson, spokeswoman for local economic development agency Ann Arbor Spark. "What's become really clear is we have some of the most talented workers, I would say not only in the country but in the world.
Contact Stefanie Murray at smurray@annarbornews.com or 734-994-6932.
Ann Arbor area tops list for educated, talented labor
Trade publication ranks 362 metropolitan areas
Saturday, April 21, 2007
BY STEFANIE MURRAY
News Business Reporter
As cities in pursuit of economic growth begin to rely more on the people who live in them rather than the natural or transportation features that surround them - like rivers, rich soil or railroads - Ann Arbor is better positioned than almost any other place in the nation to prosper.
That's according to trade publication Expansion Management's fifth annual Knowledge Worker Quotient, which earlier this month ranked Ann Arbor first in the country for its knowledgeable workforce.
The publication considered demographic factors like college education levels as well as the nearness of local colleges and universities and their research and development spending, and the number of scientists, engineers and medical doctors.
It ranked 362 metropolitan statistical areas for their ability to provide talented workers and an "innovative environment.''
"These are the communities that will thrive and prosper in the future,'' Expansion Management wrote, noting that having a major research university contributes tremendously to having a top-notch work force for knowledge-based businesses.
Ann Arbor also ranked No. 10 among the 362 areas for college-educated workers.
"Since this whole Pfizer closure announcement, we've been so engaged in the community with identifying the work force.'' said Elizabeth Parkinson, spokeswoman for local economic development agency Ann Arbor Spark. "What's become really clear is we have some of the most talented workers, I would say not only in the country but in the world.''
Contact Stefanie Murray at smurray@annarbornews.com or 734-994-6932.
IT is a fine feeling to step into the elevator of an apartment building, press the button marked “PH” and take a ride to the top — or at least near the top. And at a time when the wealthiest New Yorkers are getting even wealthier, there are more buildings in Manhattan with many more of these elevator buttons that bespeak the privileges of penthouse living.
Christine Harris, a 34-year-old director at UBS Global Asset Management in Manhattan, expects to experience that feeling when she and her boyfriend move into their $2.5 million 11th-floor penthouse on the northern edges of Chelsea when the apartment is completed next summer.
Speaking by telephone over the clatter of the UBS trading floor, Ms. Harris calmly envisioned opening her apartment to friends for French feasts and glasses of pinot, and unwinding after work on her private 700-square-foot terrace.
“It’s just nice to come home on a summer night and have a bottle of wine when you’re in all of this madness in the city,” she said.
While many Manhattan developers are scrambling to find buyers for their newly constructed and converted luxury apartments, they say they’re having little trouble selling their penthouses, which have become the trinkets of choice in the wake of the city’s record Wall Street bonus season. These apartments, which have accounted for just 2.5 percent of the sales transactions in Manhattan over roughly the last two decades, are now often selling faster than the cheaper studio, one- and two-bedroom apartments.
At Ms. Harris’s new building, the Onyx at 261 West 28th Street, Bronfman Haymes Real Estate Partners has contracts to sell all three of the building’s penthouses, while 30 of the other 52 units remain unsold.
At 170 East End Avenue (at 88th Street), Skyline Developers sold one penthouse for $12 million, and the one next door for $14 million. Skyline’s president, Orin Wilf, said he had turned down an offer of $14.5 million to see if he could get $16 million for each of the two remaining penthouses. Fifty-one of the 93 units are unsold in the building. He said he had negotiated on prices for apartments on the lower floors in the past.
Mr. Wilf says he thinks that the penthouses will sell even better when buyers see the completed apartments. “We’re in no rush to sell them,” he said while standing in one half-constructed penthouse over the barks of dogs in Carl Schurz Park, 19 stories below.
Even at 15 Central Park West (at 61st Street), all 15 penthouses in the project’s two buildings have been sold for prices as high as $45 million, while about 30 of the building’s 202 units remain unsold. “I wish we had 20 more to sell,” said William Lie Zeckendorf, a co-chairman of Zeckendorf Development.
Penthouses, which once were identified more with bachelors and newlyweds seeking terrace space for their cocktail parties, are even attracting the stroller crowd, which seems to like the extra bedrooms and terraces found in the newer residential buildings.
When Gregory O’Hara, a private equity investor, needed to relocate his family to New York from Miami, his wife, Glorimar, started looking for homes that would give them some outdoor space for their 14-month-old son, Henry.
The couple bought a $5.5 million triplex at 5 East 13th Street. Standing in the penthouse she will move into next month, Ms. O’Hara described her plans to set up a swing set, sandbox and outdoor movie theater on the terrace as Henry grinned and toddled his first tentative steps.
“It may be great for a bachelor, but it’s great for a family,” Ms. O’Hara said. “We have lots of outdoor space.”
Brokers say that Wall Street and hedge fund executives are often the first in line for penthouses, because the apartments confirm their “master of the universe” status among their neighbors.
Maureen Carroll, who previously worked on Wall Street and who now has her own brokerage firm specializing in selling apartments to Wall Street executives, had one client turn down an apartment when he found out there was a better one in the building.
The “second best” notion apparently contradicts these executives’ self-image. “They’re not going to live in a building where they’re the second-largest shareholder or there’s another unit that’s larger,” Ms. Carroll said. “The game doesn’t stop when you go home at night.”
Average prices for penthouses in Manhattan jumped by 16.6 percent to $2.3 million in 2006, from $2 million in 2005, according to data collected by the Miller Samuel appraisal company. The number of deals jumped to 225 in 2006, from 184 in 2005. Jonathan J. Miller, the company’s president, predicts these numbers will grow in 2007 because most penthouse buyers like Ms. Harris have not yet closed on their new condominiums.
These strong penthouse sales are persuading more developers to push the limits on how they define penthouses, and in some cases, they are making them more lavish than ever before. Shaun Osher, the chief executive of Core Group Marketing, which is handling the Onyx, is advising developers on the 25 other projects his company represents, to design all of their penthouses with more elaborate finishes so that they can ask even higher prices.
Josh Guberman, the president and chief executive of the Core Development Group (which has no relation to Mr. Osher’s firm), sold the O’Haras their triplex at 5 East 13th only 48 hours after sales began last summer. He said he now planned to divide one penthouse in his next project, on the Upper East Side, into two duplexes, which will be priced at $5.5 million each.
Edward Minskoff, the president of Edward J. Minskoff Equities Inc., sold five penthouses at 101 Warren Street in TriBeCa at prices ranging from $4 million to $20 million within 10 days of its opening last April. Since then, he has sold about 150 of the building’s 227 apartments. He is now building more apartments on top of the building than he had originally planned.
Donald J. Trump, who has been trying to sell his penthouse on the 31st and 32nd floors of 502 Park Avenue (59th Street) for $32 million on and off for the last two years, is now enlarging the master bedroom suite to about 1,400 square feet, up from 665 square feet, by enclosing an existing terrace and building a new terrace on top. He said he now planned to list the apartment at $42 million because the new terrace space will be on the higher floor and will open from the living room.
While Mr. Trump’s penthouse is, in fact, on the top two floors, he contends that the definition of a penthouse has now become broader, a point his peers have also caught on to.
“Penthouses are starting to go lower and lower in terms of the top of the building,” Mr. Trump said. “The top three, four or even five or six floors of the building can be defined as penthouses. The key is the number you put on the elevator.”
Mr. Trump says he typically builds six floors of penthouses in his towers. Mr. Minskoff calls the apartments on the 34th and 35th floors at 101 Warren “sky homes” and the apartments on the 32nd and 33rd floors penthouses.
On the other hand, at the Onyx, Matthew Bronfman and Evan Haymes stick to a strict interpretation: only the apartments on the top floor, the 11th, are called penthouses.
There are also penthouses in far shorter buildings. Mr. Guberman refers to the apartments on the top floor of his six-story building at 5 East 13th Street as penthouses, and he plans to do the same for his Upper East Side duplexes.
Michael Morris, a professor in Columbia’s psychology department and the head of a social intelligence program at its business school, said the trend in penthouses revealed a marked preference for displays of conspicuous consumption. He said the people buying the penthouses exhibit their wealth by purchasing real estate that is physically higher than their neighbors’, even if their apartments offer little more than views of surrounding buildings.
In many cases, he said, such buyers would rather have a penthouse on a high floor of a new building than an apartment in a prestigious but shorter building like the Dakota. “It’s a very simple marker of status,” Professor Morris said. “It’s very easy to see. It’s very easy for other people to see.”
But some penthouse buyers reject the idea that their purchases have anything to do with status. They say that newly constructed penthouses typically offer the most room, highest ceilings and most expansive terraces. They emphasize the privacy that such spaces can create in the heart of Manhattan.
Maria Bosoni and her husband, Alexandre, have put down a deposit for the $12 million penthouse on the 19th floor of 170 East End Avenue. The Bosonis currently live in a penthouse in the Bloomberg Tower.
Ms. Bosoni sees no special cachet in the “penthouse” designation. “It makes no difference to us,” she said. “It’s just that the penthouse is the better apartment. It makes for a better apartment because of the square footage and the height.”
Brokers agree that while their buyers are pretty direct about what they want from their penthouses, they also like the fact that newly built versions have more room than those of the past.
Servants were typically the city’s earliest inhabitants of apartment buildings’ top floors, because getting up there involved climbing so many stairs. Few New Yorkers wanted to spend time on terraces because of the black soot spewing from the elevated trains.
Kathy Sloane, a senior vice president of Brown Harris Stevens and the broker for Mr. Trump’s apartment at 502 Park, said that buyers who think they want a prewar penthouse may not like what they find.
“Penthouses were more difficult to sell because they’re often quirky,” she said. “They weren’t designed to be penthouses. People weren’t necessarily ready to take on the task of making a great penthouse out of a lot of rooms.”
Developers are also expanding the definition of penthouse to link it more to lifestyle than to height. Mr. Guberman is adding play areas to the fifth-, sixth- and seventh-floor apartments at a second East Side project, at 433 East 74th Street, to attract family buyers. He plans to call the seventh-floor apartments penthouses and the fifth- and sixth-floor units “flex” penthouses.
“A penthouse talks to the world of exclusion and privacy,” Mr. Guberman said. “It doesn’t really matter if it has five stories or eight stories. Once you get up there, it’s about having your own oasis separate and removed from the balance of the building.”
Mr. Minskoff, the creator of sky homes and penthouses at 101 Warren, said that even he can be confused by the definitions he has come up with. “They’re all very large apartments with high ceilings almost at the top of the building,” he said. “I’m not sure if you can absolutely differentiate.”
Mr. Trump is cautious about how long the penthouse craze may last and won’t say how many penthouses he may build in his next New York project, a condo in SoHo that won’t be completed for two and a half years. But he contends that penthouses will always have more allure than brownstones, with their understated charms.
“I live in a beautiful penthouse because I love the views,” Mr. Trump said. “I look at brownstones: You’re looking at garbage cans, and you look at air-conditioning units. You just can’t compare.”
Planning a New Life in the City
By VIVIAN S. TOY
When developers talk about who will buy all the high-end condominiums that they are building or planning to build in Manhattan, empty nesters invariably make the list.
And since the oldest baby boomers turned 60 this year, more and more of them are becoming empty nesters, in many cases with more disposable income than their parents had before them.
But not all of the baby boomers being drawn to New York City are wealthy retirees seeking aeries on Central Park. The city is also luring middle-class suburbanites on the lookout for houses and condos in Brooklyn and Queens. Not yet of retirement age, but with children grown up, they see the city as the place where they want to grow old, and they are making the move as part of a future retirement plan.
They are wooed not only by the city’s cultural attractions, but also by lower property taxes, better public transportation, a highly accessible health care system and the chance to be closer to city-dwelling children.
Louis and Susan Greer are empty nesters who have decided to pack up their five-bedroom house on a six-acre spread in Campbell Hall, N.Y., in Orange County, and move to Brooklyn. They are seeking either a one-family house for under $600,000, or a two-family for under $800,000.
Mr. Greer’s 2-hour-and-15-minute “commute from Hades” to his job in Lower Manhattan was one factor, but he said it was rising property taxes that finally persuaded him and his wife to start their Brooklyn house hunt. “That was the nail in the coffin,” he said, “because we don’t have children at home anymore, and most of the taxes go to schools.”
William H. Frey, a demographer with the Brookings Institution in Washington, said people like the Greers are at the leading edge of a baby boomer trend of “young seniors” with grown children. (Baby boomers are generally defined as people born in 1946 through 1964.)
“Especially as they reach early retirement, as in ages 50 to 55,” Mr. Frey said, “baby boomers will be testing out areas like New York for the longer term.”
According to a report issued by Mr. Frey with the Mortgage Bankers Association in Washington last month, the baby boomers who do not age in place or, like previous generations, move to sunnier climes, will be lured into big cities.
“You can’t really compare baby boomers with previous generations,” Mr. Frey said, “because boomers are forever young. They also have education levels and cultural interests that would suggest they might be more likely to find cities attractive.”
The number of older residents moving into New York and other cities is still smaller than the number who move out to the suburbs or to places like Florida and Arizona, but demographers, economists and gerontologists say that “in migration” numbers are sure to grow as baby boomers age.
Ken Dychtwald, a gerontologist and founder of Age Wave, a consulting firm that focuses on baby boomers’ retirement, described them as generally wanting more out of the experience than the typical resort lifestyle associated with golf courses and recreation rooms. As a result, he said, boomers will probably move in increasing numbers to cities and college towns.
“Life that is nothing but leisure is not appealing to them,” he said. “They’re dreaming of action. They want to be around bookstores and coffee shops and art galleries, and they will be less about showing up at senior centers and more about taking classes at N.Y.U. or finding a way to the Cream reunion at Madison Square Garden,” which he noted was sold out for three nights straight last year.
The Greers, who have three grown children, started their search for a house in the city in May and have already seen more than 50 houses, mostly in Bay Ridge and Dyker Heights. They chose Brooklyn because they lived in Dyker Heights until three years ago and Mr. Greer’s mother still lives in the Bensonhurst house where he grew up.
They originally moved out of the borough because they were fed up with the rumbling and rattling of trucks — their house was on a favored detour off of the Belt Parkway. They love having a huge garden in Orange County, but deer have eaten everything they have planted. Besides, they said, they never have enough time to enjoy the outdoors.
Mrs. Greer admits that she has been extremely particular in their Brooklyn hunt. “You can ask my husband — I can find something wrong with any house,” she said. To which Mr. Greer responded with a nod, “You can quote that.”
But she is unapologetic — because, she said, “when I move this time, I want it to be the last time.” They are still years away from retirement — Mr. Greer is 55 and Mrs. Greer 45 — but they nonetheless want their next home to be the place they retire to.
“We think that New York City is a great place to be if you’re an older person,” Mr. Greer said.
Mrs. Greer said they had already resigned themselves to having a smaller kitchen and even forgoing a garage, as long as they found a house with a decent-sized backyard.
"We want to be able to go for walks in parks, be near the express bus and the subway, and be able to walk to restaurants," Mr. Greer said, adding: “It’s beautiful out where we are now. The air is great and we can see the mountains, but there’s nowhere to go and nobody to do it with."
Brokers across the city who have worked with empty nesters moving in from the suburbs say that while retirees may move lock, stock and barrel to be near their grown children and grandchildren, younger boomers may initially use the apartments they buy as pieds-à-terre.
Alan Nickman, an executive vice president at Bellmarc Realty, said he had helped many empty nesters buy apartments in the city. “These are people who have done reasonably well, but they don’t have to be gazillionaires,” he said. “They can spend $500,000 to $600,000 for a studio or a one-bedroom before they’re fully retired, but the majority of them are thinking about making this a permanent place when they finally do retire.”
For baby boomers moving from other parts of the country, or from suburban areas where home prices have not reached the dizzying heights that they have in Manhattan, moving to the city can be a financial stretch.
Pat and Manny Fuchs knew when they decided to leave Rochester Hills, Mich., last year that their real estate dollars wouldn’t go as far in New York City. They sold their 2,400-square-foot Michigan home for about $325,000 and paid about twice as much for less than half the space in Lincoln Towers, near Lincoln Center.
“Rochester Hills was a nice, comfortable middle-income area,” Mr. Fuchs said. “But we knew we were in for a price shock, so we factored it in.”
He and his wife are retired and in their 50s. They are originally from the Chicago area, but chose New York because, Mrs. Fuchs said, it “has more of all the good things that we love about Chicago — it’s like Chicago on steroids.” They love being within walking distance of Broadway shows and museums. “In some ways,” Mr. Fuchs said, “it was very liberating to get rid of the cars and to downsize.”
Joe and Debbie Karp are another active couple in their 50s who see themselves someday retiring to New York City. The Karps are born-and-bred New Yorkers who moved to Florida in the 1970s and now live in Palm Beach. With their two sons nearly out of college, they decided last fall to buy a one-bedroom apartment near Lincoln Center.
They plan to start by spending about 12 weeks a year in the city, but their eventual goal is to spend only their winters in Florida. “We see what happens to people in the suburbs,” said Debbie Karp, who is 55. “When you lose your car, you become a prisoner. If and when we retire in an official sense, I would want to do it in New York.”
Mr. Karp, who turns 60 next month and practices elder law, agrees. “Although all of my clients are moving to Florida from New York,” he said, “I’m going to be the Floridian moving to Manhattan.”
Shelley Morris and her husband, Seth, have just started the process of reversing the typical migration from city to suburb. They are still debating whether to give up their suburban lives in Bedford, N.Y., and get a large two-bedroom apartment in the city, or to get a smaller apartment and still keep a country house for weekend use.
Either way, they’re ready for a big change, because their house has become very quiet since their daughter graduated from college and moved into the city.
“It just crept up on me that I was living in a community with a lot of young families and fewer and fewer empty nesters my age,” said Ms. Morris, who is 49. “And I worry that if you’re in an isolated place, you can become reclusive and that’s not really a good thing, especially as you get older.”
Others are making the switch more gradually. In Kew Gardens, Queens, for instance, many of the Long Island homeowners who have considered moving into the Park Lane Tower, a new condominium, have been reluctant to downsize so significantly from their large suburban homes, said Aroza Sanjana, the broker for the building.
“At the end of the day,” she said, “no matter how many closets we have, it can’t compare to the space they have in the suburbs.” Instead, many have bought apartments for their grown children but are keeping the apartments in their own names. “The parents are very picky about it because it’s not just for their child,” she said. “They envision moving into it themselves eventually.”
Vincent Koo, owner of Exit Kingdom Realty in Forest Hills, said that his office had worked with many Long Islanders looking to downsize and move to Queens. “We see a lot of people who want to cut down on the commute,” he said, “and property taxes are a big issue for them.”
Gary Englehardt, an economist at Syracuse University who has studied housing trends among baby boomers, foresees “a lot of competition for suburbanite baby boomers” among developers. Even though cities like New York may attract many of them, he said, builders are working hard to create retirement communities to keep them in the suburbs.
Mr. Dychtwald of Age Wave said cities might have to do some retrofitting to accommodate an aging population better. “Cities are really geared for people in their early 20s,” he said. To make things easier for people with weakening vision and slower gaits, he suggested, restaurants might consider better lighting, city officials might want to lengthen the time it takes for a traffic light to change.
“We’re not talking about a new alien form of baby boomer,” he said, “just older people who will have more time and probably more money to spend who are looking to take in all that the city has to offer.”
But Judy and Jay Greenfield, who moved to the Upper East Side from Mamaroneck, in Westchester, last summer to be closer to their children and grandchildren, said they had found the city perfectly suited for a couple in their early 70s.
“When you reach our age,” Mr. Greenfield said, “everything has a reduced price. You get these big reductions in transportation and in the subway, even pregnant women offer me their seats. But I don’t take them.”
America's Smartest Cities
America's Smartest Cities
By Elisabeth Eaves
We hear a lot about brain drain, the flow of highly-educated workers away from economically-stagnant regions. The flip side: Some places are magnets for the brightest of the bright. And whether you want to locate your new biotech firm near hotshot recruits, or you just want to socialize with the smart set, our list of America’s 10 smartest cities provides a roadmap.
Using data from Sperling’s BestPlaces ( www.bestplaces.net), we looked at data from the 200 biggest metropolitan areas in the U.S. and ranked them based on the percentage of the population age 25 and over with at least a bachelor’s degree.
Of course, educational attainment isn’t a perfect proxy for intelligence. Plenty of innovators--perhaps most famously Microsoft (nasdaq: MSFT - news - people ) founder Bill Gates--were college dropouts. Still, taken collectively, education is a good, if incomplete, guideline to the level of intellect and capability you’ll find in a given area.
In Pictures: America's 10 Smartest Cities
Boulder, Colo. may seem like a surprising winner, but it’s no ordinary university town. The University of Colorado’s students and staff account for about 38,000 of the city population of 282,200. Boulder, though, is also sticky enough to keep many of its own graduates around--and attract others.
“Boulder is recognized as a very exciting town to go live in,” says Bert Sperling, founder of Sperling’s BestPlaces. “It’s attracting young degree holders who want to go somewhere with an outdoor lifestyle.” If they don’t come for the mountain scenery, it’s for the employment opportunities. The National Center for Atmospheric Research, located in Boulder, has more than 120 Ph.D. researchers on staff and hosts hundreds of visiting scientists.
Other urban areas on our list also benefit from a high quotient of university faculty. Third-place Ann Arbor is home to the University of Michigan, while Durham, N.C., which ranks sixth, is home to Duke University. The Fort Collins-Loveland metropolitan area, home to Colorado State University, came in seventh.
Some of our winners are no-brainers, so to speak. Cambridge, Mass., home to both Harvard University and the Massachusetts Institute of Technology, ranks fourth, with 43.4% of a population of 1.47 million holding a university degree. A slew of biotech firms are located there, as is a major research center owned by pharmaceutical giant Novartis (nyse: NVS - news - people ).
If you ever question the wisdom coming out of our nation’s capital, don’t blame a lack of education. Washington, D.C., (together with its Virginia suburbs, Arlington and Alexandria) ranks eighth, a fact probably related to its many lawyers. Bethesda, Md., a D.C. suburb and a growing metropolitan area in its own right, comes in second place. It’s home to the National Institutes of Health, which employs 18,627, and Lockheed Martin (nyse: LMT - news - people ), which employs 135,000 in the aerospace and defense sector.
Silicon Valley, not surprisingly, makes an appearance on our list, with the metropolitan area around San Jose, Calif., coming in at No. 10. Home to corporations including Apple (nasdaq: AAPL - news - people ), Google (nasdaq: GOOG - news - people ), Yahoo! (nasdaq: YHOO - news - people ), Hewlett-Packard (nyse: HPQ - news - people ) and hundreds of other technology icons, there's a reason that 2.4% of the region's population holds a Ph.D.
Still, when it comes to doctorates, small towns are the standouts. Looking at all metropolitan areas with populations of 50,000 or greater, Ithaca, N.Y. ranks No. 1. Home to Cornell University, a whopping 7.92% of residents hold Ph.D.s. Ames, Iowa, where Iowa State University is located, is second, at 7.2%. Other university towns round out the top five: In State College, Penn., the figure is 6.04%; for Corvallis, Ore., it’s 5.63%; and in College Station, Tex., it’s 5.14%.
We can’t guarantee that moving to any of these hubs of mental wattage will make you any smarter, but at least you’ll benefit from the sort of perks demanded by highly educated citizens, like good schools and a vibrant cultural scene. Not incidentally, many of our top ten are pretty places, from the California sunshine to the leafy streets of New England. Degrees aside, those smart people are clever at making lifestyle choices too.
Credit peter Allen for ULI
By William Watch - published in Ann Arbor Business Review
It's remarkable what beer and pizza can spawn. Later this month, many of the nation's top commercial real estate pros will convene in Detroit, along with 300-400 members of the local real estate community and U-M students, to discuss redeveloping Detroit and other real estate issues.
Beer and pizza made it happen. At least that's Peter Allen's explanation.
Allen, a long-time Ann Arbor developer and U-M adjunct professor, is the founder of the University of Michigan/Urban Land Institute Real Estate Forum that this month marks its 20th anniversary.
The forum is the impetus for the visit to Detroit by such icons of the real estate industry as Sam Zell, Stephen Ross, Albert Ratner and Richard Baron.
The seed for the U-M/ULI Forum was planted by Allen, whose zeal for real estate is matched only by his passion for the students he teaches his at the U-M Business School. It was Allen who in 1986 organized an after-class meeting of students at an Ann Arbor eatery.
Over beer and pizza at Dominick's, the group discussed real estate job opportunities. With that, the forum was launched.
When it convened again the following year, real estate trends and issues were added to the forum agenda and speakers from the national real estate scene were invited to take part.
That meeting set in motion a chain of events that sparked the forum's evolution over the last 20 years from an informal, intimate gathering of students to its present status as one of the must-do events for commercial real estate professionals in Michigan, and indeed, the Midwest.
Now a two-day event incorporating workshops, roundtable discussions, bus tours of development opportunities and presentations by renowned real estate leaders, the forum regularly draws hundreds of men and women - seaonsed professionals and fresh-faced, young students to discuss and debate the key issues affecting their industry.
For students, the forum offers opportunities far beyond the chance to rub shoulders with icons of the industry.
Shortly after its creation, the forum began presenting scholarships to graduate level students in the schools of business, architecture and urban planning, law, public policy and engineering.
It has since awarded thousands of dollars to hundreds of U-M students.
Moreover, with the launch last year of the U-M Graduate Real Estate Development Certificate Program, funded by the forum, its reach into real estate education extends well beyond the actual two-day event. Through the immensely popular Certificate Program, the forum will continue to promote and shap real estae education for years to come.
If you ask Allen, he's not the least bit surprised by the success of the forum or its progeny.
"I always knew the subject was important," said Allen. "But I give credit to Doug Kelbaugh and Joe White," dean of the Taubman College and former dean of the U-M Business School.
"They got all the academic elements aligned behind it. It was my vision, but they made it happen," Allen said.
As one who has attended every forum, I can attest that there are many lessons learned, but perhaps no more important one than this: If you aspire to make something happen - like launching a new initiative and watching it flourish and grow, you can try the beer and pizza approach.
Better yet, find someone with the stamina, drive and commitment of Peter Allen and then... just let him go.
Ann Arbor Project stresses 'green' buildings ideas
Ann Arbor project limits parking, stresses 'green' building ideas - by Jennette Smith (Crain's Detroit Business)
Buyers at the Kingsley Lane loft project in Ann ARbor don't get an automatic parking pass for underground parking on site.
In fact, the developers are encouraging buyers to bike, walk or park cars in a deck down the street if they wish because underground parking is sold separately - and is only available for about half of the buyers at the 50-unit project.
Kingsley lane developers Peter Allen and Mark Berg expect to begin construction on the residential project in August. The project applies green building concepts from top to bottom to the site at Kingsley and Ashely streets in the northern part of downtown Ann Arbor.
The project is planned with light-gauge steel construction supported with cement, low-emitting paints, bamboo and cork floors and highly energy efficient windows and appliances.
Berg and Allen are including smaller, more affordably priced units in the mix for the project. Prices run from $220,000 to $600,000, with half of the lofts under $300,000. The units are 425 square feet to more than 1,400 square feet.
"By making these a bit smaller, the overall cost point (of using green building techniques) is not out of line," Berg said. "Buyers are willing to pay for that."
Buyers will have options to live an "Ikea-style" lifestyle with space-conscious cabinetry that has, for example, a kitchen island that doubles as a table.
But Allen said the lifestyle change of encouraging more walking is a larger issue for the enviornment than some of the green construction materials.
"In suburbia you have to drive to everything," he said. "This kind of housing ... you begin to use a bike, get closer to your job, culture and dining."
Kingsley Lane is giving away tennis shoes and bikes to home buyers as part of its marketing efforts. In addition, buyers receive a two-year lease at the nearby Ann Ashley parking deck to store their car. For those who want to pay for the on-sire parking, that is available for $25,000. The project has 25 underground parking spaces.
The plan "decouples the price of the parking from the price of the unit," Berg said. That contrasts to most high-rise loft projects, where the high cost of building underground parking can add $40,000 to $50,000 to every unit, he said.
Allen and Berg have 13 reservations so far. THey plan to begin construction once they have 50 percent of the units sold. The Ann Arbor Area Board of Realtors reports that May condominium sales in the city limits were steady, with sold listings on the market for about 90 days and an average sales price of $206,316.
Neal Warling, CEO of ANn Arbor-based Bluestone Realty Advisors, said Kingsley Lane matches with what the city has pushed for: smaller, more affordable units.
"Ann Arbor is a very environmentally conscious community," he said. "I think this sort of building should be well-received."
THe parking solution is a new idea, and the project should be appealing to "a core of software developers and entrepreneurial companies who want to be close to downtown," Warling said.
Kingsley Lane will include retail and office space in addition to the loft units, when a historic building renovated for the model and sales office is made available for lease. The four-story Kingsley Lane West building will include 15 lofts and five penthouses. Kingsley Lane East is a ninestory tower with th ebalance of the units. The historic building, a former butcher shop at 111 W. Kingsley, is 3,000 square feet.
Allen said the project will apply Leadership in Energy and Environmental Design concepts as outlined by the U.S. Green BUilding Council, but the partners are still deciding if they will seek formal certification. The LEED rating provides third-party verification of green features.
Guy Bazzani, a green developer in Grand Rapids, said he expects the green-building trend to spread to more Michigan residential projects. West Michigan was ahead of the curve on green building, primarily because companies such as Herman Miller and Steelcase pushed the issue. Michigan has more commercial or educational LEED projects than residential so far.
"It's healthier for the occupants. ... We have cut our energy costs in half in our buildings," said Bazzani, owner of Bazzani Associates Inc. who lives in a LEED-certified histroic building.
Developments in more desnely populated downtowns, such as Ann Arbor, also lend themselves to less parking and more walking, Bazzani said. Devlopers and communities should do as much as they can to encourage such projects, he said.
The contractor on Kingsley Lane is J.C. Beal, and the residential brokerage handling sales is Charles Reinhart Co.
Online titan does its own search for office site where it plans to spend millions, hire 1,000
Tuesday, July 11, 2006
News Business Reporter
Google, the Internet powerhouse whose name has become synonymous with online searches, plans to invest between $20 million and $50 million in an office in the Ann Arbor area that could employ 1,000 or more people in the next five years.
The deal to bring the company here, expected to be announced today, hinges on approval by the Michigan Economic Development Corp. of a 20-year tax credit at its board meeting today. The board is almost certain to make way for the significant investment that documents say would create $165 million in new state revenue.
The company has not picked a location yet, but Mayor John Heiftje said city officials have been told that Google is most interested in downtown Ann Arbor.
Executives at the Mountain View, Calif.-based search engine company said Michigan and Ann Arbor in particular, has the motivated, creative and high-minded people it desires as employees as it expands to meet demand for its advertising products.
It is one of the most significant job creation announcements in years because it not only infuses much-needed employment into a sagging state economy, it also helps establish Ann Arbor as a leader in the highly desirable information technology industry.
"I think it's a tipping-point kind of project that signals to the world that Michigan is the state to come to if you have cutting-edge technology,'' Gov. Jennifer Granholm said.
State officials say that, in addition to the 1,000 direct jobs, Google could create an additional 1,200 related jobs in Michigan to support the work in Ann Arbor.
Google would become one of the largest private employers in the area.
The state's tax credits are worth $38 million, said Jim Epolito, president and chief executive officer of the MEDC.
Assuming the board agrees to the tax credit, Google will begin recruiting immediately, advertising positions on its Web page: www.google.com/jobs. The jobs, primarily sales, marketing and business positions, would pay an average of $47,000 a year.
"We expect to have the office up and running by this fall,'' said David Fischer, director of online sales and operations for Google, told The News.
Hieftje said Ann Arbor was picked over other cities such as Boulder, Colo.
"It is the high quality of life we offer,'' Hieftje said. "It's the vibrancy of downtown and it's the talented pool of potential employees that attract companies like Google. These are the kinds of jobs Ann Arborites can do.''
He said city staff has been involved in the discussions.
"We'll be working the governor on a financing package,'' Hieftje said. "At this point, there are no discussions I know about the city's contribution.''
"This is huge for Ann Arbor,'' said City Council Member Leigh Greden, D-3rd Ward. "This proves that Ann Arbor can lead the way in Michigan's economic revitalization.''
Local connections
Google, established in 1998 by University of Michigan graduate Larry Page and Sergey Brin, is one of the fastest growing companies in the country, both in terms of revenue and employees. It had 6,800 workers worldwide at the beginning of April - 1,100 more than at the end of 2005.
Its search engine accounts for 43 percent of all Internet searches. Nearly all of its $6.1 billion in revenue in 2005 came from advertising. The office in Ann Arbor would be servicing the company's main advertising product, AdWord.
The AdWord system allows businesses to bid against one another for use of a search term. The winner then pays Google a set amount every time a Web surfer clicks on their Web link from Google's search page.
"Google's philosophy is to go out, find and hire the best talent we can,'' Fischer said. "We recognize that perhaps not everyone wants to live in California. As we looked around at where we might be able to find the best and brightest and most motivated individuals, Michigan jumped out at us.''
Specifically, Ann Arbor. The University of Michigan was a big factor as was the lifestyle and mentality of the people who live here, Fischer said.
Page, who graduated in 1995 from U-M with a bachelor's degree in engineering and graduated from East Lansing High School, also influenced the decision, Fischer said.
"Larry Page ... knows firsthand about the strong talent pool in and around Ann Arbor,'' Fischer said.
He sits on the university's College of Engineering Advisory Board. During an engineering college commencement address in Ann Arbor in 2005, he asked students whether they would be interested in working for the company.
How the deal happened
Google already has a small office in Ann Arbor that is dedicated to the archiving of U-M's seven million volumes contained in the school's libraries to make them available in digital format. The office has fewer than 20 employees.
The Ann Arbor News reported last June that an agent for Google had contacted local real estate brokers to scout locations but has not reported anything since then.
Granholm said that report prompted state officials to court Google and to stop information about it from leaking to the media.
Michael Finney, CEO of Ann Arbor Spark, a technology business development organization, and the Washtenaw Development Council, said he was contacted about a month ago about Google.
he council has helped Google scout locations and although none has been selected, he said there are three "communities'' in and around Ann Arbor in the pool of site candidates.
Any municipality chosen would have to approve a property tax abatement in order for the company to get the state tax credits.
Finney said a company with 1,000 employees likely would need at least 200,000 square feet, and there are very few existing offices in the Ann Arbor that meet that criterion.
Fischer said the company may move into temporary space until a permanent office can be leased or a new office built.
"All options are on the table,'' he said.
Leasing an office would require a lower investment - apprximately $20 million - while building a new complex would run around $50 million, according to state documents.
One local real estate official said the company was interested in being close to the U-M campus. There isn't enough space in one office building large enough to accommodate that number of employees.
Several real estate brokers mentioned that the Earhart Corporate Center near Plymouth Road and US-23 had 200,000 square feet available and could be a contender. That would be close to U-M's north campus, but several miles from downtown Ann Arbor.
Fun and interesting company
No matter what location is chosen, the office is likely to be one of the coolest around. Google prides itself on creating an innovative, fun and interesting environment.
n the early days of the company, desk "chairs'' were inflatable exercise balls and computers were mounted on doors sitting on sawhorses. Dogs roamed the halls and the company hired the Grateful Dead's former chef to cook meals.
Its employees hold equity in the company as a motivational tool and are expected to work with zeal, but to have fun.
"We all work hard, and take our work seriously, but don't take ourselves seriously,'' Fischer said.
Grady Burnett, the director of online sales and operations for the new Michigan office - and a University of Michigan alumnus, said his biggest challenge would be handling the recruitment of hundreds of new employees and establishing Google's corporate culture here.
"I think ultimately, really establishing the culture of the company and allowing us to expand on that in Ann Arbor'' will be his challenge, Burnett said.
It's unclear how quickly jobs will be added, but Fischer said the company is gearing up. Google will be transferring some people, including Burnett, from California but most of the staff will be new hires.
George Fulton, an economist at the University of Michigan, performed the economic impact analysis for the state used by the MEDC to determine the value of the investment. The model he used predicts the company will produce $2 billion in personal income for workers over the next 20 years.
The development is significant to the local economy because of the gain in jobs, something that could support the struggling real estate market and bolster the retail and service sectors.
But, Fulton said, more importantly, the expansion would attract other tech business.
"The image enhancement. That's really one of the major impacts because it puts Ann Arbor even more on the map as a center for information, technology and scientific innovation,'' Fulton said.
The cool factor of Google puts not only Ann Arbor, but all of Michigan on the map.
Granholm said it's the type of company she hopes will convince college students to stay in the state.
"It is so excellent for those young people trying to decide whether to stay in Michigan post graduation or go somewhere else,'' she said. "They should stay.''
Epolito said the combination of Google along with the expansion of other tech businesses in Ann Arbor and the life sciences initiative at U-M could begin a snowball of new-economy jobs in the region and state.
"For us, this is a home run,'' he said. "I think in the state, we've hit some singles and some doubles along the way, but this is a home run.''
Epolito said Google never tried to play Michigan against another state, but that the state always felt as though it was competing against others.
"In the end, we put our absolute best economic package on the table, that we think could potentially compete with any state,'' he said. When the deal is public "there will be a lot other states that probably could have surpassed it, but I don't think it was all about that.''
Tim Marshall, president of the Bank of Ann Arbor, said the announcement points to a strong future for the area.
"It's a sign of the future. ... Ann Arbor has shown a nice track record of attracting and growing technology-based companies and this just a continuance of that progress.''
News business reporter Stefanie Murray and staff reporter Tom Gantert contributed to this report. Mike Ramsey can be reached at mramsey@annarbornews.com or 734-994-6864.
