Steve Fifield, chairman and chief executive of Chicago-based Fifield Cos., isn’t afraid to take big risks. During a 30-year career in real estate, Fifield has developed more than 50 high-rise office and apartment buildings nationwide. The son of a homebuilder from northwest Indiana, Fifield suffered a spectacular flameout in Chicago in the early 1990s, when he had to give back to his lenders nine office buildings worth an estimated $800 million. Several years later, he earned the nickname “Comeback Kid” when he redeveloped Chicago’s Civic Opera Building. He also led a resurgence of the Windy City’s downtrodden Western Loop. In the past decade, Fifield has switched direction again, moving from office properties to luxury apartments and condominiums. Last year, he made a radical career move, moving his wife, Randy, five children (he has two additional children from a previous marriage) and a 170-pound Newfoundland dog from Chicago to Brentwood. The reason? To be closer to the half-dozen properties he’s developing in Los Angeles, Las Vegas, San Francisco and Hawaii, all part of the company’s West Coast expansion. The firm is the lead developer of the Californian, a high-rise ultra-luxury condominium on Wilshire Boulevard, where a 5,000-square foot unit sells for $8 million. He’s also part of the team developing the southeast corner of Wilshire Boulevard and Comstock Avenue, known to locals as the Pumpkin Patch, where a proposed 21-story, 35-unit building will overlook the Los Angeles Country Club.
Question:
Why did you uproot your family and move to Los Angeles from Chicago?
Answer:
We have deep roots in Chicago and I miss our friends there, but it’s really been so pleasant to come here and meet so many creative people. I think Los Angeles is a little like Geneva, Switzerland, in that it’s a place that people chose to go to. Geneva doesn’t have a lot of manufacturing it’s more of a white-collar services industry. And we’ve found that in Los Angeles, all these people come from New York, the Midwest and Florida, because they want to live here they didn’t get transferred here for their jobs. When we first came and had to establish our network of people pediatricians, an internist, dentist you meet these people and you realize that creative people in finance and the arts really only go two places, Los Angeles or New York.
Q:
How big is the Fifield Cos.’ pipeline of projects?
A:
Our current pipeline is a little over $2 billion. Our specialty is urban infill, high-rise both luxury and ultra-luxury. When we came to do the projects on Wilshire Boulevard, we decided to redefine the idea of luxury condos. The difference between luxury and ultra-luxury generally is the size of the units and the amenities. You can go to New York, Las Vegas and Miami and everything that’s selling are luxury apartments. What all the luxury apartments have in common is that you get granite countertops, nice cabinets, nice appliances, but they’re usually 700 to 1,200 square feet. Those fit a great lifestyle, but “ultra luxury” condos have higher ceilings, they’re larger and they offer more amenities.
Q:
Tell me about your view of urban infill projects in Los Angeles.
A:
I thought it would be neat to continue our urban approach in development and California has a solution, which is more dense housing. That’s why I think downtown Los Angeles will continue its renaissance. My bet is that the mid-Wilshire district will compete with downtown Los Angeles and office buildings will be replaced with condos, all the way to downtown. Los Angeles, after all, has one of the highest percentages of high-rise luxury apartments.
Q:
What makes the Californian on Wilshire Boulevard different from other high-rises there?
A:
When we designed the building, we actually thought we were creating the largest units on Wilshire. But we realized that a lot of people wanted to combine units that even we weren’t large enough for them. So we started off with units that were 2,500, 3,400 and 5,000 square feet and we ended up with a lot of people who bought a 3,400-square-foot unit and a 2,500-square-foot unit and combined them.
Q:
You’re seeing more demand for big units in the high-end space?
A:
Wilshire Boulevard is the largest concentration of high-rise condos in the United States and they start at over 2,000 square feet. If you go to New York, Miami or Chicago three of the major high-rise markets for condos you would see that the average condo size is 1,600 square feet. The large units do have more demand than the smaller ones. The Wilshire Comstock project, which we’re calling Clubview, overlooks the Los Angeles Country Club and has an average size unit of almost 5,000 square feet. We’re designing a full floor at 8,000 square feet or half floors of 4,000 square-feet.
Q:
Maybe your wife can tell me, how is the lifestyle really different?
A:
(Randy Fifield) Not only do you get 8,000 square feet on one floor you don’t have to deal with the pool man, the gardener or security. All you have to do is drive up with your car, somebody puts your car away, washes your car, does your dry cleaning and takes in your packages. A lot of homeowners are held hostage to maintaining a home and when you look at some of the fees they have to pay. Here, they’re writing one check for their association dues instead of 10 to 12 checks a month and you’re upgrading your lifestyle. You can actually leave the building and have no worries. There’s somebody babysitting your unit 24-7 and you can have somebody in and clean when you’re gone.
Q:
Do you do market research to determine who your buyers are?
A:
(Steve Fifield) There seems to be no rule of thumb for our condos. Even in Orange County, (where Fifield has the Californian at Town Center in Costa Mesa) we thought “empty-nesters” and retirees would buy our condos. Instead, because of the high housing prices, we found lots of young couples, married and unmarried, who are buying condos together. The other thing we’re realizing is that these neighborhoods are not homogenous. In Orange County, there’s a good-sized Asian population. One of my institutional partners gave me a hard time by asking about a fee we have in our budget for a feng shui consultant. The fellow said do you believe in that stuff?
Q:
Do you?
A:
When you read the reports, you realize there’s a lot of common sense and practical things to feng shui. Granted, to me it’s really a theory that a single-family home with a staircase facing the door means your wealth is going to go out the door. But feng shui can also be an important selling feature. One of the things that we try to do in our projects is work from the inside out, we try to figure out what people want. That isn’t just feng shui, it’s also interior layout and services.
Q:
What do you think of all the vocal opposition to the Comstock property the Pumpkin Patch property on Wilshire Boulevard from neighbors who believe homes will sink if the property is built?
A:
There are a half-dozen people in the neighborhood who have thrown everything they could against the wall for years to not see the project go ahead. To me, that’s also indicative of Los Angeles. The term NIMBY (an acronym for Not-In-My-BackYard) was invented in Westwood in about 1980, our land use attorney told me, when somebody formed a group called that. Basically, there’s a small group of very vocal people who protested the project.
Q:
What’s the status of the project?
A:
The city signed off on it two months ago. We did get an appeal, but the appeal only judges whether the original design was appropriate and we haven’t changed the size of the building, the shape or the number of floors. We had an engineer and a consulting engineer review the project for safety issues. They knew the neighborhood was concerned that homes would sink if we built the building. And certainly if the building wasn’t built correctly, it could have created settlement problems. But the engineers designed the plan and then we spent months with the city, which made us go back and do all sorts of tests and drills holes and wells and all this other stuff and at the end of the day, based on the design the engineers came up with, we’re going ahead with it.
Q:
How did you two meet?
A:
Randy out-negotiated me on a business deal. She was the head of sales of a unit of Cingular Wireless and I liked her a lot and asked her out to dinner.
Q:
There are plenty of homebuilders in Southern California who create cookie cutter homes. What do you think of that phenomenon?
A:
Many real estate companies have a monkey on their back. I had breakfast with a senior executive at KB Home recently, and he was complaining about how they have to maintain their volume. That’s the problem you have with public companies. Wall Street forces these guys to have quarter-over-quarter increases in revenues and earnings. If a market is booming, then you expand your business. If it isn’t booming, then you have a loss.
Q:
Your grandfather started a company that built many of the houses in Gary, Ind., and he served as chairman of the Republican Party in Indiana from the 1920s to the 1950s. And your father continued in the residential construction business. You went a different route.
A:
My Dad and uncle were small, custom homebuilders in Northwest Indiana, which is essentially a modest suburban area of Chicago. I liked their business but was really drawn to the larger urban market of Chicago itself.
Q:
What about politics?
A:
I observed that my grandfather and father’s involvement in local politics helped open doors in their business, which was a valuable lesson to learn. But all of the entrepreneurs of my generation went into industrial and commercial or office development. Guys like Eli Broad (who founded Kaufman & Broad, which later became KB Home) really revolutionized homebuilding and in the last 10 years, that’s where all the entrepreneurs have gone, into the homebuilding side.
Q:
What was your first project?
A:
It was an infill for sale townhouse project in Wilmette, Ill. in 1973. I bought and rehabbed apartments and strip malls from 1974 to 1977 when I partnered with Chuck Palmer to do suburban offices and, eventually, downtown office high-rises. The office business was so hot from 1977 to 1990 that I just stayed with it until the market dried up. With hindsight, being more diversified in the 1980s might have been better. That’s why we try to work the different niches more today.
Q:
Many years ago you owned several savings and loans as part of your real estate company. What happened to them?
A:
We built Great Northern Savings from a $40 million, single-branch acquisition to a $200 million group with a good-sized mortgage-processing subsidiary in the 1980s. Luckily, we sold our S & L; Holding company to the second-largest S & L; group in Illinois just before the Feds changed accounting rules and crippled the S & L; industry. Better lucky than smart.
Q.
What’s the biggest change in real estate that you’ve witnessed in your career?
A.
Understanding that the big institutional money managers and pension funds have become the primary source of funding for larger urban deals. That modified our business planning 20 years ago, when we started to do deals that we could get “buy in” from these money sources. If I didn’t like new building construction so much, I would have chosen to be a money manager in a real estate investment firm, because there’s good pay and less financial risk.
Steve Fifield
Title:
Founder, chairman and chief executive
Company:
Fifield Cos.
Birth:
1948, Gary, Ind.
Education:
B.S., Indiana University; M.B.A., University of Chicago
Career Turning Point:
Reading Steven Roulac’s “Real Estate Syndication Digest,” which detailed how to raise private money to buy properties, in 1973.
Most Admired Person:
Mohandas K. Gandhi. “He really thought out-of-the-box and stumped the British by simple passive resistance instead of guerilla warfare.”
Personal:
Married to Randy Fifield; seven children ages 5 to 32, including a son and daughter from a previous marriage.
Hobbies:
Going to the movies
