Home is where the heart is, or so the old saying goes. But homes mean different things to different people. In a rapidly shrinking and urbanizing world, how can we ensure a home for everyone?
Los Angeles-based Canfield Development maximizes land use and ensures tenants receive superior quality homes for their families. While weathering the ups and downs of Los Angeles development, the company provides expertise and quality service for tenants.
Canfield’s story begins in 1990, when founder and current president Steve Erdman started the company. Erdman was born in Israel, came to America, and attended California State’s Northridge campus, then “somehow got involved in construction and real estate,” he says. This nonchalant statement belies over forty years of career experience with two development firms before he decided to branch out on his own.
Tired of building dream homes for clients who “often had unrealistic expectations,” Erdman founded the company to address what he viewed as a gap in the Los Angeles development field. Canfield fills what Erdman calls a “small diamond,” completing mid-range projects “too big for the small guys, too small for the big guys.” This medium scale has helped it grow while providing a consistent level of service.
But, like every other company, Canfield was tested during the 2008 recession. While other developers folded during the economic downturn, it managed to finish all five of the projects it was developing at the time by making the best use of the land to increase its value and offset the high cost of development in the Los Angeles area. It also performed smaller contracts thanks to its in-house general contractor, and these smaller projects keep employees on staff and the company running. The strategy of getting the most out of a land parcel, Erdman believes, is at the root of Canfield’s survival and success. Through attaining maximum land value, the company gains steady returns on its investments.
This policy of achieving the most value is combined with a willingness to take calculated risks that other developers might not, such as developing in certain areas. “We are willing to sometimes go into areas that we feel will gentrify, where the cost of land is relatively reasonable,” Erdman explains, “and we enjoy the ascension of the land together as the area gentrifies.” As the land value appreciates, so too do Canfield’s profits.
Erdman describes the company as a full-service real estate developer, meaning it handles every aspect of development – from land acquisition to coordinating plans, entitlements, construction, and even managing and maintaining completed structures. “We basically start from identifying a piece of land and doing the due diligence,” Erdman explains. “We buy the land and do all the entitlements and project planning.” Canfield does not maintain architects or engineers on staff, as Erdman prefers to hire for each project. Also, as he explains frankly, “We’re not big enough.”
The company’s flexibility and proficiency in both construction and land management is also at the root of the company’s survival in the volatile Los Angeles market. A developer can hardly afford to be a one-trick pony, and its mastery of every phase of the process means it can not only manage its own projects, but it can also be contracted for smaller aspects, such as surveying or construction.
This adaptability, Erdman recalls, helped the company stay afloat during the lean months of the 2008 recession. Erdman’s long years of experience have also helped the company develop a long list of suppliers, investors, and clients that are familiar with its reputation.
“I’ve been in business for forty years,” he explains simply. “I know many people and many local vendors know me.” Canfield has built a solid working relationship with many contractors such as Los Angeles-based electrician Art Electric, which has provided “problem-solving solutions in many field dilemmas,” according to Development and Acquisitions Manager Jared Brenner-Goldstein.
Canfield also works closely with its future tenants and neighbors on projects. In one ongoing project, it is working to build sixty-one condominiums in West Los Angeles’ Picfair Village neighborhood. But the company was forced to add more stories and space for parking garages, which led to plans for a massive building of which the neighbors were not fans. But through close collaboration and communication, the company was able to change the building’s design to be “more Mediterranean, more traditional,” and less obtrusive from street level.
The resulting structure is scheduled for completion later this year, and Erdman views it as a triumph. “I think this is a testament to our vision and working better with the neighborhood to make things happen,” he says.
The company boasts numerous apartment buildings across the greater Los Angeles area, suited for tenants of every economic status. Canfield is preparing to break ground on a new housing complex next to the University of Southern California (USC) that will house 187 students when it is completed in 2021.
The company’s quality is evident in its present and future projects, with modernizations for twenty-first-century living such as tenants using phone applications in lieu of keys to gain access to residences and common areas. And water is becoming an increasingly precious resource in the twenty-first century, especially so in a dry climate like southern California. New Canfield buildings are equipped with water sub-meters, allowing individual tenants to pay for water usage instead of paying a flat fee for municipal water access.
With this simple idea, tenants have an incentive to be more economical with water use; the shorter your shower, in other words, the less you will pay at the end of the month. This is the most visible of Canfield’s efforts to reduce its ecological impact – on top of California’s already formidable environmental protection laws.
Other innovations include standardized energy-efficient LED lighting, motion sensors that automatically turn off lights in empty rooms, and parking garages designed for electric vehicles. “As the world gets greener, we as a company have to adapt as well,” says Brenner-Goldstein.
But land is not cheap, especially not in Los Angeles. Erdman admits, one of the company’s major recent challenges is how the price of land has skyrocketed to an all-time high over the past few years. The jump in price has greatly reduced the company’s ability to begin new projects, and at the moment it is focusing on smaller contracts and capitalizing its existing properties –falling back on the same cautious tactics that have kept the company in business for so long.
“Many people are getting into the construction business and do not know the real cost of construction,” Erdman says with the tone of an industry veteran. He tells stories of start-up companies underestimating land development costs, and so coming to Canfield for contracting support. “Sometimes, they thought they had cheap land, not realizing that the land may be cheap, but construction costs are the same no matter where you are.”
This is, unfortunately, affecting the company at the moment, as these high prices have prevented the company from making any new land acquisitions. It was a question of resource management; due to the high price of land, many prospective developments “didn’t pan out,” in Erdman’s words. Rather than purchasing expensive land and overextending company resources, he has taken the conservative approach and pulled back on these projects.
“We simply couldn’t make the numbers work,” he admits frankly. The company has preferred to concentrate on smaller contracting projects and maximizing current projects such as the aforementioned USC student housing.
Yet even as Erdman admits the business cycle is slow at the moment, he takes solace in the company’s steady growth over its nearly thirty-year lifespan – no mean feat for a Los Angeles developer. Rather than a series of crowning successes, he points to the company’s consistency and quality as a mark of success. He defines success for Canfield as “putting out a nice looking project, coming up with the right number of units, and being able to rent or sell for the highest price available on the market.”
As president, Erdman hopes to continue the company’s long record of growth and excellent service. “We want to specialize in what we do,” he says, reaffirming his pledge to maintain Canfield’s high-quality service. “We don’t want to lose control by going too fast.” He resists the temptation to grow beyond the greater Los Angeles area and wants to keep steady business, admitting that he would like to see the company building between five hundred and one thousand units annually when business is good.
“Do what you know,” he advises. “Don’t venture into things you don’t know. Try to do it as close to your backyard as possible, and do the same thing only better and better.”