The message from Senior VP Jordan Goldberg on the company’s recently launched Web site, www.layoffproof lease.com invites renters to stop worrying and start living.
It goes on to explain that if they sign a 12-month lease and have paid three consecutive months’ rent, residents are eligible to live for up to two months rent-free if they are laid off, and if they are unable to afford to stay after 60 days, can break their lease without financial consequence. Even if they are unable to stay after the free- rent period, they never have to pay the company back.
“Our thinking was these are people who might not otherwise rent or renew with us because of uncertainty about what the future might bring. Hopefully, the economic climate will get better, our residents won’t be losing their jobs and hopefully this will be something to help give prospects the peace of mind to rent with us. But if they do need to take advantage of the program, we are now able to accommodate that,” he said.
So far, none of Goldberg’s residents, who pay an average monthly rent of $900, have been laid off after enrolling in the new program. But it already has paid off with a number of new and renewed leases and the company received plenty of praise for coming up with something that might help people, said Eric Bell, Goldberg Executive VP. “We have always been focused on creating a lifestyle for our residents,” he said.
“Our goal in creating the Layoff Proof Lease program was to develop a way for people to overcome their fear of the unknown, and to make the choice to live with us knowing that this safety net is there to catch them if they fall,” Bell said. “Fear of job loss should no longer be the reason that people choose not to move into one of our fine apartment communities,” Bell added.
The story of the Goldberg family reads like a traditional American success story. The Goldbergs emigrated to the U.S. in the early 1920s from Eastern Europe and started a fruit market and grocery business upon settling in Cleveland, Ohio. After the end of World War II, brothers Jack and Leo pooled their money from the grocery business and began building single-family homes in an eastern suburb of Cleveland.
Over time, the new family business built more than 4,000 homes.
Jack remained in the real estate industry, and, while continuing to build single-family homes, entered Cleveland’s multifamily arena in the early 1950s. Beginning with garden-style communities, Jack, followed by sons Allan and Larry, built a number of high-rise apartment buildings and even ventured into the commercial sector when the company needed an office. Goldberg bought an office building for its own use in the early 1970s, and when the company outgrew it, purchased another and built and acquired several more. But the firm continued to buy and build apartments, which today remain the core of the business and comprise between 75 and 80 percent of Goldberg’s portfolio consisting of more than 800,000 sq. ft. of commercial space and more than 9,000 apartments in Northern Ohio, North Carolina, Florida and Texas. The company also continues to develop and sell subdivisions.
Bell, Allan Goldberg’s son-in-law, is part of the third generation of management at the company. “Allan has retired, but Larry and his son Jordan are very active in the business,” said Bell.
Another Cleveland company, and frequent Goldberg partner, with an analogous story is Forest City Enterprises, a publicly traded real estate company engaged in the ownership, development, acquisition and management of commercial and residential real estate throughout the U.S. The relationship of the Goldbergs and Ratners, the family that holds majority ownership and control of Forest City, was formed early on and the families and businesses remain very close to this day.
Like the Goldbergs, the Ratner family came to America from Europe in the 1920s, settling in the Cleveland area, where patriarch Charlie and his four siblings diversified a lumber business over the years into various real estate sectors, eventually going public in 1960. Today, with commercial real estate assets valued at $11.4 billion, Forest City is led by three generations of the Ratner, Miller and Shafran families.
Time to expand
For the first 40+ years in business, Goldberg Companies continued to grow exclusively in the greater Cleveland area, but opportunities began to lag in the market. “We started to look outside of Cleveland, but we didn’t want to buy one-offs all over the place. Our eyes went first to Florida, where we purchased three assets beginning in 2002 — the 340-unit Westwood Reserve and the 176-unit Cypress Grand in Tampa and the 300-unit Colony Place in Ft. Myers,” said Bell. Because these acquisitions took place just ahead of the condo boom in Florida, the Goldbergs determined that their best opportunities for growth laid elsewhere.
Following their acquisitions in Florida, growth for the Goldbergs came on two fronts, beginning in Texas, where the Company bought the 260- unit La Costa Villas in Dallas and the 248-unit Toscana at Sonterra in San Antonio.
In addition to Texas, the company entered the Carolinas, where the Goldbergs have acquired more than 1,500 units in both the Charlotte and Triangle area markets, and have over 1,000 units in varying phases of development and construction.
Goldberg was fortunate to get several projects out of the ground before the economy took its current nosedive. In the development process for almost four years, the 400-unit Cobblestone Court apartments in Painesville, Ohio, part of a planned unit development that also includes 150 single-family homes, 150 boulevard town homes and a business center, is scheduled for completion by the end of the year. The community will offer a level of luxury and amenities previously unavailable in the city that is located 30 miles east of Cleveland and 2.5 miles south of Lake Erie.
Goldberg’s 344-unit Legacy Crossroads in Cary, N.C., also slated for completion this year, will compete for lease-ups in the Triangle area with a number of new communities, including Trammell Crow Residential’s 288-unit Alexan Panther Creek and Crosland’s 205-unit Residences at the Arboretum.
Goldberg has several projects in various stages of design and development, but groundbreaking for a 254-unit garden-style community in Ft. Mill, S.C., part of the Charlotte MSA, and a 245-unit garden apartment and town home project in the final stages of approval in Cornelius, N.C., just north of Charlotte, might have to wait until the economy recovers.
Goldberg remains focused on its high level of hands-on management, but continues to look for growth opportunities. “We hope, as a result of the downturn, there will be good acquisition opportunities, but they haven’t really surfaced yet because of the continuing disconnect between what assets should be selling for and what they are priced at,” said Bell, echoing the mantra of most investors today.