Chicago Relocation
 

Leading RE’s Paul Boomsma speaks with Mary Umberger about Luxury Bargains

December 28, 2011

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John D’Ambrogio

Two of Chicago real estate’s most well known names, Mary Umberger and Paul Boomsma, recently discussed upper end clientele and “bargains” in Ms. Umberger’s Chicago Tribune weekly column.

The article, entitled “Even the rich are jostling for bargains” tells is like it is for the so called one per centers. Boomsma, a 20+ year veteran of the industry is president of Leading RE’s Luxury Portfolio Fine Property Collection, a Chicago based real estate network of luxury brokers from around the world.

Following are exerts from Mary’s excellent Chicago Tribune  article, where  Boomsma discussed result’s  from his firm’s sponsorship of the “Survey of Affluence and Wealth in America,” produced by Harrison Group and American Express Publishing:

Q: Who do you study?

A: We’re really talking about the top 10 percent of the nation’s population. We look at people’s discretionary income; what they’re able to spend each year after they’ve paid their primary mortgage and taxes.

We break them down into three groups: The first, we call the Upper Middle Class, has $100,000 to $125,000 of this discretionary income; the Affluents have $125,000 to $249,000; the Super Affluents have $250,000 to $499,000; and the Truly Wealthy have more than $500,000.

Q: You contend that huge numbers of people in these categories, despite their wealth, think of themselves as “middle class.” Why is that? Are they deluding themselves?

A: A large number of them are newly wealthy. They made all their money themselves. In the Harrison Group research, 79 percent of them said they grew up middle class, and they still think of themselves that way.

This shows up in some interesting ways. In their own way, the new wealthy have a tight relationship with the dollar. It shows up in the family that’s very, very wealthy, and they may be staying in a luxury hotel, but they’re going to tell the kids, “Don’t touch the mini-bar, we can’t afford that.” They have, in their own way, a different knowledge base about overpaying for things.

Q: How does this translate into real estate?

A: They are absolutely looking at value. (My organization) had a buyer a couple of years ago who was looking at a multimillion-dollar property in Miami but insisted on seeing the place’s electric bills from the past two years. He wanted to know what it was going to cost him to light the place. You’re talking about a home where the property taxes could easily be $60,000 to $80,000 a year, and the electricity may be $500 a month. It’s almost irrelevant, but it’s a little bit like that person in the big hotel suite: taking the Diet Coke out of the mini-bar isn’t going to kill them, but the newly wealthy have that kind of a relationship with a dollar.

———-

Paul’s right, I guess you don’t get rich by drinking that $5 can of diet coke….

 

Paul Boomsma - Luxury Portfolio

 

REUTERS – Prudential to exit real estate brokerage business

December 8, 2011

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John D’Ambrogio

That’s Rueters speaking, not me!

But that’s exactly what the respected news agency headquartered in NYC wrote this week.  The article - “Prudential to exit real estate brokerage business” says  that Canadian  Brookfield Residential Property Services has confirmed that it will acquire Prudential Financial Inc’s real estate brokerage as well as relocation services business for appoximately $110 million.

Brookfield Res. Chief Executive Graham Badun  ”We’re going to look to digest the acquisition and then look for some organic growth from that into new markets,”  according to the news service.

So what does that mean for Chicago relocation, and Chicago real estate in general?  Well, first of all, if transferees are in the process of being moved by what was once Pru Relo, it will now be handled by Brookfield’s relocation division.  As far as the brokerage brand, “FOR THE TIME BEING” it has been announced that the players will retain the Prudential name, although there is some confusion in the marketplace as to how long, under what terms, etc.  Particularly vexing is the problem of Pru offices carrying debt and how that will be factored in.

It was reported that Earl Lee will still lead the U.S. real estate piece, while Rick Schwartz, president of Brookfield Global Relocation Services, will head the  global relo services.  Prudential Financial’s (PRU.N) stock dropped 4.51% today.

There are a number of Chicagoland Prudential holdings, one of the largest being Prudential Starck in the NW suburbs, and Prudential Rubloff, which was acquired just two years ago by Michael Pierson and Chris Eigel.  Rubloff had been an independent boutique broker since 1930, and Starck had been a staple in the Chicagoland market for many years.  Chicago is home to many “tenured” real estate firms, including Koenig and Strey (now owned by HSA, but over 70 years old, and ironically, where the Prudential Rubloff owners originally started), and of course the veritable Baird & Warner, the nation’s oldest surviving real estate firm, established here in 1855.

So what does it mean?  Likely it means further consolidation of an already shrinking industry, and fewer players vying for today’s pie…