His work is turning Rockford’s forgotten urban treasures into valuable economic engines and breathing new life into the city’s urban landscape. Step inside some of these new developments and the hardworking personality driving the charge.
When Justin Fern looked at 324-330 East State Street in 2012, he saw a diamond in the rough on this downtown Rockford block. Anybody else might only have seen a condemned building.
“It was an abomination,” Fern recalls. “It really should have been torn down – and I’m not a tear-down guy. That building was so bad.”
Inside, Fern found structural walls so deteriorated they had to be fully removed and rebuilt. On the third floor, he found a system of tarps that had been catching rainwater for the past 30 years.
“And the back wall was missing – it was covered up by tin and a tarp,” he says. “It had fallen down years ago and the prior owner had covered it up. You name it, it was wrong with this building.”
Look at the block today and you’ll see a fully refurbished building with loft apartments, rooftop decks and thriving small businesses.
Since 2008, Fern and his Urban Equity Properties team, 134 N. First St., Rockford, have been a visible force in the city’s revitalization as they aggressively transform unloved properties into economic engines.
This year alone, the development firm is refurbishing nearly 200,000 square feet of space – about a quarter of its total holdings. By year’s end, Fern expects to have brought to market 112 new apartments and about 40,000 square feet of ground-floor retail space.
To say it’s an ambitious year is probably an understatement. Fern is bound and determined to succeed where others have failed.
“Once you’re in, you’re in,” he says. “There’s no option for failure. Once we’re in, we move full steam ahead.”
Hard work and entrepreneurship are nothing new for 34 year-old Fern. When his friends went off to college, Fern went his own way and launched a business. At the age of 19, he bought a two-flat in South Beloit, Ill.
“I had $1,000 to my name and I was a one-man team,” he says. “I was the manager, I was the maintenance guy – I was the whole package.”
Eventually, Fern bought other properties, soon acquiring a new one every six months. He launched Urban Equity Properties in 2008, with help from the late Mark Baker.
“Old, architecturally significant buildings are what really drive this company,” says Fern. “We started doing our first couple of projects and they were extremely successful. We saw a need. We saw there wasn’t a supply and we thought, ‘let’s fill this supply.’”
Today, the company manages some 800,000 square feet of property, primarily located around Rockford’s urban core. Those properties include apartment buildings in the city’s northwestern neighborhoods as well as mixed-use developments like the Metropolitan Hall Lofts, the Ralston Block and the Talcott Building.
The firm is working on properties including the Rockford Trust Building at State and Wyman streets and several properties on Seventh Street, in the Midtown District. Fern expects to begin work soon on the Valencia Apartments on Fisher Avenue.
“It doesn’t matter the size – it really comes down to the look, the style of the building, and possibly who built it, the history, what tenants or owners used to occupy the building,” Fern says. “There are a lot of stories that go along with these old buildings.”
When purchasing a property, Fern identifies a few key principles. First, he looks for a project that fits a certain budget range.
He also looks for architectural significance and any form of financial incentive, such as state and federal tax credits or TIF districts. He’s also mindful of market demands.
“We have our finger on the pulse all the time,” he says. “We know what units are renting, we know what areas people seem to want to rent in, we know what kind of finishes people want, and we know what price point is hot and what price point is not. We continually watch that market to make sure we’re not overbuilding a product.”
Fern takes a long-term view on real estate investment. He estimates that he’s sold just five or six properties over the past 15 years. “I actually still own the first property that I bought,” he says. “I’m a buy-and-hold guy. I don’t sell a lot of property.”
Starting his company around the beginning of the recession challenged Fern, but it also fortuitously placed him ahead of market trends. Over the past seven years, he’s seen a booming market in the millennial generation, primarily young professionals in their 20s and 30s who are attracted to the urban landscape.
“They want to rent, and what they want to rent is something unique, something cool, something where they can entertain, where they can bring their friends back and hang out,” says Fern. “And a lot of these folks work from home, too.”
In many cases, these young people are looking for no-maintenance properties close to work and an entertainment district.
Leasing agent Caleb Wilson, who is a millennial and an Urban Equity tenant, fields calls from a wide variety of demographic profiles.
“There’s a range from young working professionals to empty nesters who want to live down here,” he says. “There’s a range of people we see interested in these units.”
Standing inside the Midtown Lofts building, located on the 400 block of Seventh Street in Rockford, Wilson shows off an unfinished ground-floor retail space. This particular building holds as many as seven retail pads, for which Wilson is already in negotiations.
For now, the space is littered with construction equipment and the remains of its former occupant: old carpet, broken glass, sagging ceiling tiles. The original tin ceiling peaks out; Wilson says it will be restored once the space is leased.
Upstairs, residents have already filled four loft apartments. The thoroughly modern spaces – each about 1,400 square feet – boast new kitchens and spacious bedrooms with modern amenities.
“I took pictures of this unit and put it online, then I started getting calls about units here on Seventh Street,” says Wilson, showing off a spacious third-floor unit. “Before we finished construction of the other three units in this building they were pre-leased.”
Ten more units are expected to open here by the end of the year. Expect them to be finished as close as possible to deadline and budget – no light task when gutting these age-weary properties. Fern and his team plan for worst-case scenarios and build in time for unforeseen issues.
The real estate developer also places a premium on action, the result of hard work and persistence.
“The No. 1 reason I have survived is because I have given it everything I have – everything,” he says. “There were times when I was doing 80- or 90-hour weeks. I still do some of those weeks here and there. You do what you have to do to make sure these things get done on time and budget.”
Barely midway into an ambitious year, Fern is still making deals to acquire new properties and attract retail tenants. And he’s not just dreaming – he’s living the dream.
“Real estate, once you get into it, if you’re passionate and you enjoy it, it’s hard to get out of it,” he says. “I don’t want to get out. I love the business and I wouldn’t trade it for anything. It’s definitely my favorite line of work, and my passion. I enjoy what I do.”