North Shore, May 2007

The Boomer Effect; The first baby boomers are making their mark yet again—this time propping up the ailing real estate market.

By Sherry Thomas

In 1948, the cover of Newsweek was plastered with a picture of a blanketed babe and a headline that spread glee through postwar America. "Babies Mean Business," editors of the news glossy pronounced, citing the potential effect the dramatically rising population might have on the nation’s economy.

More streets must be paved! More houses must be built! Let there be more clothing, more electricity, more food! All hail suburbia. All hail the great American dream. All hail a generation unlike any other, a generation that would — for as long as they could defy convention and define modern politics — change the world.

Indeed.

The estimated 76 million children born in America between 1946 and 1964, swaddled in a swell forever known as the great postwar "baby boom," have proved more powerful and prosperous than any single generation in U.S. history. But with the first postwar babes crossing the six-decade divide and brokering the concept of maybe (possibly, theoretically) retiring someday, the effect on the real estate market could be as monumental as their birth.

With their three children out of college and all grown up, long-time Highland Parkers Robin and Richard Buxbaum did what baby boomers across the nation are starting to do en masse — they sold the big house with the big yard and began thinking about life’s next great adventure. But for the Buxbaums, the 8,000-square-foot home on Sheridan Road will be replaced not with the retirement-ready condo of their parents’ generation or a property that’s necessarily even easier to maintain. Robin and Richard, owners of Westmont-based Antiques on Old Plank Road, are making the kind of bohemian move they might have considered as starry-eyed newlyweds, renovating and restoring an old stable on one acre in Lake Forest.

"I see some of my children’s parents moving downtown, but most are staying in their houses because they want room for their grandchildren," says Robin, who plans to accouter the new place with all the antiquities and vintage touches they adore. "I’m the only one I know moving to Lake Forest!" It probably won’t stay that way for long. In Lake Forest alone, two major luxury residential projects tailor-made for the empty-nest set are luring in discriminating boomers. Never mind downtown Evanston. Never mind the Center of the Northshore in Northbrook, Laurel Glen in Highland Park or Waterbury Place in Buffalo Grove. Not to mention the real estate wild card — the city. Unlike the Buxbaums and their friends, there are plenty of North Shore boomers eagerly waiting to move into high-rise developments in Chicago’s Gold Coast, Lincoln Park and Millennium Park neighborhoods.

The 2007 real estate market may be unpredictable, even fickle. But when you factor in the boomer effect and a generation that has been marketed to since the day they were born, it just might get interesting.

A boomer icon once said, "You can’t always get what you want," but that has certainly never stopped them from asking.

"For the North Shore boomer … they are starting to enter their 60s, and they are looking for service and comfort and a lifestyle which is comfortable," says Lucien Lagrange, architect of such tony projects as The Elysian, Ritz Carlton residences and the new Lincoln Park 2520."They want to be pampered, so this is why spas in the building are so popular."

In fact, defining that "comfort," that feeling of being "pampered," is exactly what every savvy real estate developer is trying to do. And in true boomer fashion, there is no "one size fits all" — no one perfect answer.

As Lagrange can attest, in the end, it all comes down to lifestyle.

At The Elysian, the ultra-luxury hotel and private residences at 11 E. Walton St. in Chicago’s Gold Coast, buyers are not only purchasing a luxurious property in one of the most luxurious neighborhoods in the city, they are also purchasing the social cache that comes with it. Private residences feature two private terraces; gourmet kitchens with Sub-Zero refrigerators, Wolf gas ranges and Bosch dishwashers; and master suites with such touches as natural stone vanities and radiant-heated floors. Another luxury perk Elysian residents can look forward to impressing their friends with in 2008 is the addition of an exclusive dinner-only restaurant created and captained by none other than chef Charlie Trotter.

Nancy Nugent, director of sales for Related Midwest (formerly LR Development), says catering to the boomer’s need for luxury and customization is what’s driving the continued success of the downtown market.

"I noticed this start about 10 years ago," says Nugent, who worked on another Lucien Lagrange project at 840 Lake Shore Drive. "It was the first new-construction, luxury custom high-rise where we offered large floor plans knowing that our buyer profile could respond to that just like they customized their suburban homes."

Empty nesters Rich and Lori Stearns of Northfield say they wouldn’t have even considered moving downtown 10 years ago. In fact, neither has ever lived in the city.

"We lived in east Wilmette for 20 years," explains Rich, who will move into a new 15th-floor condo at Metropolitan Tower on The Park with his wife, Lori, sometime next year. "When the daughters went off to college, we moved to Northfield."

That took care of the "honey, we need to shrink the house" phase, but something was missing. Both Rich and Lori work downtown and have become recently enamored with the cultural offerings at Grant and Millennium parks.

"With the kids gone, life changes. Especially when they’re out of college, they don’t come home for that long … to keep a big house doesn’t make a lot of sense," he adds. "We’re very excited that there will be other people down there who are doing the same thing. It should be a neat sort of community of people doing the same sort of thing we are."

Nugent says the Stearnses are making all the right moves — buying into a property with time to adjust to the major lifestyle change ahead. "It takes people from the North Shore awhile to make the move," Nugent explains. "They are a little afraid, but I say buy it now and you have three years to adjust to the move. If you don’t buy it now, the building will be sold out, and there will be no choice, and the prices will be higher." Good strategy, but what some North Shore homeowners are up against now is that in addition to getting into the right post-kid property at the right price, they need to think about selling the places where they raised their families.

And with multimillion-dollar homes sitting on the market a bit longer than usual, that’s getting to be risky business.

Ross Friedman, who founded Windward Builders with his wife, Nancy, and began work on the Regents Row "boutique real estate" development in downtown Lake Forest several years ago, says sales at the property have been strong, but a few buyers have experienced more obstacles than expected in selling their existing properties.

"In the last two years, the market has dropped, and that has impacted our buyers’ ability to sell their homes," he explains, adding that the $1.6 million cost of a Regents Row townhome may not be a second mortgage everyone wants to take on. "One of our purchasers had difficulty selling their current home, and they had to flip their Regents Row home," Friedman says. "The good news is, they sold it for 10 percent more than they purchased it for, so we were pleased to learn that the unit continued to appreciate, in spite of a down market." Another positive note on the North Shore end of the existing-home sales market is that many of the properties that are becoming available due to boomer downsizing have appreciated significantly over the last two decades.

Even with an adjustment, those who have been in their homes for a long period of time stand to make a healthy return on their investment — returns the new-construction, boomer-centric luxury market is banking on.

While Ross Friedman and Windward Builders bring the Lincoln Park lifestyle to downtown Lake Forest, across town, another reinventing "country life." Amberley Woods, a condominium development on the historic 30-acre Blithefield Estate is giving boomer buyers the opportunity to enjoy living in an English Tudor-style structure — on a fully wooded Lake Forest country estate — at prices that start in the $500,000s. "It’s all English country architecture with an exhaustive tree-preservation and restoration plan for the site that was all done and approved in concert with the City of Lake Forest," explains Ann Danner, president and owner of Residential Homes of America, developer for the project. "We did an extensive analysis of our registration list, which was over 460 people, most of which I’m sure would be classified as boomers because of the demographic age. On the comment section, most of them said that they were looking for a maintenance-free lifestyle, looking to downsize." Windward Builders used a similar "customization" strategy when the concept for Regents Row in Lake Forest was introduced two years ago. "We had these focus groups, which turned out to be very instrumental for us," Friedman explains. In addition to bringing in a very targeted demographic to give input on what kinds of amenities they wanted, didn’t want, and couldn’t live without (yards weren’t essential, for example, but large terraces were a must), the Windward crew created a preregistration list. Anyone who participated in the focus group had the opportunity to preregister at preconstruction prices — knowing the Lincoln Park-style rowhouses being built were practically being tailor-made for them.

Barbara Sloan and her husband, John, were among the first Regents Row buyers. "One of our children is married; the other one is in high school," says Barbara, who recently moved into her new row home. "We love the location. We’re right around the corner from the high school and Market Square." Even though the family’s old house was larger and had a fairly substantial yard, Barbara says the 4,000-square-foot Regents Row house seems more functional — and appropriate for the 50-something phase of life.

"We pretty much use every room, whereas before we had a lot of rooms we didn’t go in very much," she says. "I think it’s a healthier lifestyle because, although we do have the (private) elevator, now that I can walk to restaurants and the library and go down to Market Square and get a coffee … (it) just seems like, in the long run, it’s a more elegant way to live."

Ground has just broken on the condominium portion of Amberley Woods, but plans are already being studied for the restoration and conversion of the 1927 mansion to a mixed-use commercial and retail site — a site Danner says could include anything from office space to restaurants or even a spa. She does, however, stop short of classifying this as a boomer-only project. "The floor plans and ease of lifestyle address every group. It definitely would address an upper crust; people who are traveling now might have a place in the South in the wintertime … and you can’t dismiss developer is the fact that it’s in the Lake Forest school district."

Again, the final package will be as much a lifestyle choice as a real estate choice, and perhaps that represents the evolution of the market — and a generation on the cusp of life’s next great experiment.

"We’re going through a cultural shift here and a shaking-out process," Friedman says of the market. "It’s nature’s way. Things always correct themselves."

Winnetkans Mary and Rory Finlay have two children at home. One will soon follow her older sibling to college; another will graduate from North Shore Country Day School in three years. Within that time, the Finlay family has some adjustments to make.

As the nest begins to empty, as construction of the Finlays’ new condominium at The Legacy at Millennium Park commences, Mary and Rory will begin thinking about their youth. How they met in New York City, how they always imagined being back in the "hustle and bustle" again someday. "We’re already looking at downsizing," Mary says. "We know we won’t have the space that we have in the suburbs. Simplifying is part of this. I will miss having a garden, but we’ll figure that one out."

Meanwhile, there are the Buxbaums. Like the others, they are embarking on a new chapter. Building the residence of their dreams, doing everything they always wanted to do when they grew up.

And maybe that’s the thing. Boomers are still growing.

Even as they begin to approach the so-called "golden years," their individual journeys are far from over. If anything, it will keep the real estate market moving — both for boomers and their offspring.

"There is a tremendous need for the empty nest lifestyle nationally," says Friedman, a boomer himself. "They have the health, the time and the wealth. Here on the North Shore, it translates to boutique properties. We’re going to continue to address that niche." After all, if babies meant business in 1948, how could they not mean business today, and in 2010, and — who knows? — perhaps even in 2048? "Looking into the future," a reporter wrote in the 1948 Newsweek article, "business analysts predicted that eventually the boom in babies would have salutary effects on every corner of the nation’s economy."

All hail the great American dream. All hail a generation unlike any other, a generation that would — for as long as they could defy convention and define modern politics — change the world.

Indeed.

Lisa Skolnik contributed to this story.