If the city is a jungle and real estate is a turf war in that jungle, then Andrew Heiberger knows just what kind of animal he’d like his company to be and what prey he’s going after.
He points to a framed picture on his office wall, where a tiger races through the underbrush about to pounce on a gazelle.
The tiger? Citi Habitats. The gazelle? The Corcoran Group and Douglas Elliman, he says.
“She’s pretty and she runs fast,” Heiberger says of his competitors, with a laugh.
With the third largest army of brokers in the city, Heiberger may not be totally crazy in trying to take on larger, upscale and more prestigious competitors. Citi Habitats is the undisputed champion of the New York rental market an area where other big companies don’t devote most of their efforts.
The company arranged 8,200 rentals last year, well more than double that of its closest competitor, and is on pace to do 10,000 deals this year.
Citi Habitats, which Heiberger started a decade ago at the age of 25, is now expanding into residential sales, commercial leasing and investment sales on the basis of the connections built up in the rental business. Heiberger criticized sales giants like Corcoran for neglecting rentals as too downmarket.
“I spoke with them at one point [in 1998] about doing something together possibly,” Heiberger said. “Their view was that sales are very sophisticated and they don’t want to muddy their reputation with a dirty rental. I’m not saying they said those exact words. But that was the overall gist of the meeting.”
Michael Moran, director of rentals for Corcoran, said the company has about 80 purely rental brokers, about one-tenth of its 780 total agents. By comparison, Citi Habitats has around 520 agents, the vast majority of whom are in rentals. Moran did not confirm the meeting but said his company doesn’t give rentals short shrift at all.
“We have a very strong rental division here. The agents take it as seriously as any sale. We can show as many apartments as any other agency, and we offer a much higher customer service level than any other firm,” he said.
Douglas Elliman also said it was committed to rentals. “It’s a very robust part of our business,” said Karen van de Vrande, vice president of marketing and communication for Douglas Elliman.
Heiberger, who started up the commercial division in May, is also critical of the way retail leasing is done in the city, and said Citi Habitats stands to profit from what he said are industry-wide inadequate practices.
“People don’t share listings with each other, and they debacle deals on purpose so that they don’t have to co-broke the commission,” he said. “All we have to do is have a little dignity just a little and I think we will clean up in that business.”
Commercial brokers at other companies did not return calls seeking comment on Heiberger’s contentions as of press time.
The story of Citi Habitats began in 1994 when Heiberger started up a company with a high school pal from Dix Hills, Long Island. Heiberger had been working as a broker in the city during the summer while attending law school at the University of Miami, and noticed opportunities here. Three years later, Citi Habitats would be the largest rental company in the city.
“When we came in, no companies were running it like a business,” Heiberger said. “There were a whole bunch of local brokers in different neighborhoods. There were basic business practices they weren’t observing, like calling people back and acting polite.”
Lower-end clients also had nowhere to go. “People who could spend $2,000 a month at that time could get the services of a broker. But people that had $900 to $1,200 to spend couldn’t get any services,” he said.
Eventually, Heiberger said, most of the smaller shops went or are going out of business. “We just became larger and more efficient. People say all the time it’s amazing how fast we grew. But it was kind of easy to knock them off.”
Providing citywide rental services also became easier as the city was cleaned up under Mayor Giuliani. “Manhattan has become one big neighborhood,” Heiberger said. Last year, Citi Habitats increased its Manhattan presence by adding seven offices, bringing the total to 15. New hires have come from a variety of backgrounds attorneys, a recent graduate from Harvard but don’t tend to hail from high-end competitors, Heiberger said.
Now, having made forays into residential sales, commercial leasing, and investment sales, adding the latter two in the last year, Heiberger feels like the company – which he refers to as a “hybrid,” rather than as a “rental” company – for the first time has “a complete set of services.”
“We finally have a command of the city right now as a company,” he said. “You really need major economies of scale, and a lot of offices, and a lot of money to get your arms around this city it’s just so big.”
Take residential sales, which the company started doing two-and-half years ago. Heiberger is confident that people who used the company for finding a rental will come back as buyers.
“We have a client-for-life approach. The average client in Manhattan will rent three or four apartments before they buy their first. We plan to be there when clients make that decision. There’s no question that we’re converting renters into buyers,” he said.
Though Citi Habitats did around 360 sales last year around one-tenth the amount done by Corcoran Heiberger says the company is on pace to make 500 or 600 sales this year. Heiberger said the focus is mainly on sales at what he sees is the underserved lower-end of the market apartments in the $300,000 to $800,000 range.
“That doesn’t mean we don’t have million dollar deals. But that’s not our focus,” he said. Heiberger notices a glut of brokers working the high-end, particularly on townhouses, where there are only a few properties on the market at a given time.
In starting up a new commercial division, CH Commercial Real Estate Group, earlier this year, Heiberger hopes to “walk through the same door” as residential sales by targeting the underserved lower end of the retail market.
“Nobody wants to service the 2,000 to 10,000 square foot tenants,” said Heiberger, who says he is an “expert” in retail from buying stores on his own. He also said what he views as shoddy practices in retail leasing “is going to make it very easy to expose this business.”
Heiberger said much of his retail business would also come from rental contacts. “All these owners have these buildings that have retail. They’re trusting me with 400,000 feet of residential. They’re not going to trust me with 12,000 more?”
Heiberger said one of the commercial division’s first coups was recently getting an exclusive for 12,000 square feet at 800 Sixth Ave. “We beat out all the big boys,” he said.
In addition to commercial leasing, a foray into investment sales by Citi Habitats is also “in the works.”
“I already have relationships with 45 to 50 key residential property owners in the city,” Heiberger said. “You sell your property once, but you rent property every month. The rental relationship we have with these owners is much more of a long-term relationship, so we expect to do well.”
Given his background, it would perhaps have been surprising if Andrew Heiberger didn’t go into real estate.
His father builds customhouses, running Legacy Development USA on Long Island. His mother is a real estate broker.
“Family Sundays were spent driving around to open houses,” Heiberger jokes.
At age 17, Heiberger got his first start in real estate when he worked with his 22-year-old brother, who was in business as a land dealer at the time on Long Island. His first summer, Heiberger made six figures, before heading off to college at the University of Michigan.
“My parents made the mistake of letting me have access to my money,” he said. “I flew all over the country, and spent it all.”
Heiberger, who “wanted to get out of college even before he got there,” finished in three years. He was planning to go into real estate when the 1989 crash hit. That left him with his backup plan, to be an attorney like his grandfather. During summers back in New York while at law school, he was a top earner at Croman Real Estate, before going on to start Citi Habitats with high school friend Igal J. Feibush, who contributed $43,000 to the new company for a 50 percent stake. Heiberger later bought out Feibush, who now lives in California, in 1999. Heiberger lives in Manhattan with his wife, Robyn, and infant son, Lucas. Despite Citi Habitat’s success over the last nine years, Heiberger said what still keeps him going is “nervousness” and a need to protect his back.
“What still keeps driving me is, I’m nervous,” he said. “I’m nervous about the unknown, and it just keeps me on my toes, and keeps me looking into checks and bills and expenses and the competition, and protecting my flank.”
Every year the company has made significant strides, he said. “Now I feel like it is ours to lose.”