Beating the recession: Springwood eyes rosy year

After talking with David Hogg, you might wonder if he knows there is a recession going on.

He does, of course. Hogg is president of York County's Springwood Commercial Realty, Springwood Real Estate Services and Springwood Hospitality. He said all three groups are doing well. And his multifamily housing company, the real estate services group, could have its best year yet, he said.

Hogg's hotel development arm, Springwood Hospitality, will break ground this year for a $10.5 million Country Inn & Suites, Hershey at the Park hotel in South Hanover Township. This is the first year Springwood Commercial Realty, Hogg's 3-year-old real estate brokerage, will make a profit, he said. And Springwood Real Estate Services plans to start building 96 apartments in an affordable-housing development this year called Hopewell Courtyard in Stewartstown, York County.

"The housing and hotels are both doing very well - housing primarily because we're focused on affordable housing for seniors," Hogg said. "(Seniors) are not as dependent on job stability, and when things are tight, affordable housing is even in more demand."

Hogg is able to develop hotels in this economy because he knows the market well, said John Koshivos, vice president of franchise development in the Northeast region for Hilton Hotels Corp.

Hogg worked with Koshivos in opening a Homewood Suites by Hilton in York County in December. Hilton was willing to work with Hogg because the company liked the site and the model for the project. But there was more to it, he said.

"It's not just about opportunity. It's about having the wherewithal to do the project appropriately, having a proven track record, the relationship and the adherence to brand standards," Koshivos said. "If we had some design issues, we worked together to fix them. He was flexible."  

Hogg said his spirituality plays into his success. He firmly believes everything his companies accomplish is by the grace of God, which is why he dedicates his work to God, he said.

It also takes due diligence on Hogg's part, which is another reason Hogg is building now, he said. Hotel and multifamily construction projects take a long time to develop. A developer has to satisfy numerous municipal requirements. The hotel he plans to begin building this year has been in the works for five years, long before the economy fell off.

But Hogg hasn't considered shelving plans because of the economy, as other developers have done. He called his hotel development group a "fledgling" hotel developer. But lenders seem to think otherwise.

"In terms of Hershey, Hogg did a market analysis," said Steven Welty, regional vice president of Camp Hill-based Integrity Bank. "He had an outside group do a study of the market and whether it could support a hotel. And when the economy started to change, he did another analysis."

That type of assurance and planning is why Integrity worked with Hogg and is lending him the capital to build his next hotel. His track record is clean, Welty said.

"Dave knows the industry," Welty said. "We're always talking to Dave about different projects going on."

Hogg assembled three divisions 10 years ago to offset each other financially in a countercyclical fashion. But that hasn't been necessary recently, since all three are profitable.

To move forward with the Hopewell Courtyard project, Springwood Real Estate Services needs the Pennsylvania Housing Finance Agency to approve $9 million in tax credits for the project. Hogg thinks it will happen; but even if the project doesn't, the company still will have one of its best years, he said. He would not disclose how much his companies earn.

"Economists and everyone I read are all saying (the economy will recover) sometime in 2010," Hogg said. "So if you want to develop a hotel, would it be today when you can buy construction better and have it open when the economy is going to recover? Now is a good time to build."

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Words to work by

David Hogg's three real estate companies are thriving amid the recession. And Springwood Real Estate Services, which primarily develops multifamily senior housing, is on track to have its best year, he said.

The following are Hogg's tips on how his companies are charging over the dreary economic landscape.

Work with local community banks

"They are not caught up in the nonsense nationally. They still have money to lend, and they have people you can talk to. And you can get decisions quickly."

Maintain a healthy culture

"It's one of the reasons we have attracted quality people. If you put together a winning team that fits the culture, they will feel comfortable and will want to work for you. We don't want people burning out. We want balance. We want people to balance their work with family, church and community. If someone needs to get to a baseball game at 4:30 and take off, that's fine. We're looking for results, not punching out on time." 

Have integrity

"A lot of people in our industry lack it. Everyday there are decisions we make where we could overlook a few things. (Integrity) has cost us money in the short term. But it seems to work in the long term"

Care

"We simply do what we say we are going to do. You can only build relationships by treating people right."