Developing Buildings, Developing Brands

CHICAGO—How do you create a new real estate brand in a mature, $5 trillion industry? This spring, I sat down with one of Chicago's hottest new developers, Matt Garrison at R2 Companies (formerly South Street Capital) to talk brands and buildings. Matt is an object lesson in how to create an upstart real estate brand in a hotly contested space. Remember that brands are composed of many things: a strong unique selling proposition (like FedEx's “overnight delivery”) and a great positioning statement are key, but a compelling founding story and a passionate leader also help.

“The brand starts with the founder,” Garrison told me. Let's look at how he created his company out of a story that's as eclectic as it is interesting, in the process making R2 into an iconoclastic alternative in the Midwestern real estate market.

Make no mistake, founding myths are central to a brand: consider the number of Silicon Valley giants that still recount their start in a garage (Hewlett-Packard, Google and Amazon, among them). In Matt's case, it started withbeing a young real estate agent who became the world's leading Coldwell Banker Real Estate agent with 761 condo units sold in 2006. With his partners, Marc Muinzer and Nate Laurell, he then invested in student housing, and, when values soared in 2011, grossed $70 million for their new company. He was three years shy of 40 at the time. That was the beginning of R2 which today owns nearly 1 million square feet of loft offices, most notably 909 West Bliss, 900 North Franklin, and 224 North Desplaines.

Garrison's biggest real estate project is a new 350,000 square feet, $90 million loft conversion on Goose Island that may create an entirely new submarket to rival River North and the West Loop. But Garrison's personal brand is unique because it extends beyond real estate to being a serial entrepreneur who is industry agnostic (he also co-founded energy.me, which supplies power in deregulated markets across the US to the tune of $125 million this year). As he told Crain's: “Whether it's real estate or energy, the goal is to find inefficiency.” This founding story affects the company's brand because it gives it an outsider cachet; unlike most other developers, R2 is led by people who have succeeded in other sectors – a core team of natural problem solvers and risk takers who can crack the code of new development with capital and a hacker's creativity.

Scanning their touchpoints, the R2 brand can best be described as DIY and restrained – an alternative to the upbeat verve of Sterling Bay and the pinstripe cool of Hines. “I see it as an independence in comparison to other real estate companies," said Garrison. “We have an opportunistic and contrarian mentality. We focus on setting sustainable and realistic standards and sticking too them without oversubscribing to market trends. Our brand is designed to express that quality.”

The brand experience starts when you visit their striking offices at 1130 West Monroe, a converted gear factory/film studio that houses 30,000 square feet of office space. Evoking a Chuck Palahniuk novel, it features a 45-foot-high atrium with interior balconies, roof deck, and a gym. Which fits because R2 mirrors Garrison's restrained, informal demeanor and his design mantra of “revealing the natural elements with a light footprint.” It's timeless without the pressure to be hip and contemporary. “Our brand is positioned to be minimalist, stylish but not hyper stylized,” he said (that attitude emerges nicely in their public statements which talk about “running from the herd” and “hunting whales”).

That counterintuitive brand extends to R2's central innovation at Goose Island: They are pioneering a new segment in the Chicago office market. At a time when Sterling Bay is developing in-fill sites in the dense urban core and BECO is converting the Motorola Mobility campus in Libertyville into a transit-oriented suburban business park, R2 is creating the tweener.

“Unlike a building in the West Loop or River North or even 600 West Chicago, we can park 400 cars,"  Garrison says. "It's a Near North urban campus.” The question is whether he can overcome the obstacles at Goose Island–most significantly, as a Planned Manufacturing District, it doesn't have retail or restaurants. But strong brands often transform roadblocks into defining elements. It's hard to recognize, for example, that before the arrival of Hillshire Brands at 400 South Jefferson in 2011, the West Loop was considered a distant also ran to established office markets like River North and Wacker Drive.

On top of this, the building that Sterling Bay purchased for $10 million had little architectural appeal next to the gleaming class A suburban buildings in the East/West Corridor which were competing to sign Hillshire. But there was a brand vision for the building which made its antiquarian exterior the source of its cool and uniqueness. In addition, the old was balanced by the new which created a compelling hybridized experience--Sterling Bay spent about $50 million retrofitting the interior with stunning public areas and amenities including a roof deck. 

In the same way, Garrison is unapologetic about Goose Island's zoning challenges, making that the springboard for some of the building's flair: “Goose Island used to manufacture product and in the future it will manufacture tech and Intellectual Property." There are plans for offbeat, interesting features like a pedestrian and cycling bridge that would connect the river and Ogden Ave., making it for easy Chicago Blue Line commuters to get to work. They've even entertained bringing a water taxi stop to the new development. Yet another example of running from the herd, it's these features that make a brand and a building memorable.

Tom Silva is founder of Silva Brand, a brand consultancy and marketing agency in downtown Chicago. A business strategist and creative director for two decades, his work has been recognized by the International Academy of Digital Arts and Sciences, the International Academy of the Visual Arts and the Web Marketing Association. Tom's writing about business and branding has been featured in numerous publications, including the Huffington Post, UK's Hot Topic Magazine and Thomson Reuters' Inside the Minds series of books. He was previously Senior Vice President of Marketing and Strategy for The Alter Group, one of America's leading commercial real estate development firms, and Communications Director for PM Realty Group, an international property manager. He holds a Bachelors in Marketing from Long Island University and an MAPH in the Humanities from the University of Chicago. For more information about Tom or Silva Brand, please check out www.silvabrand.com.