Baird & Warner Holding Company

views updated

Baird & Warner Holding Company

DEATH OF WYLLYS BAIRD: 1928

FOUNDED IN 1855

Baird & Warner was founded in 1855 by Lucius D. Olmsted. The son of a Yale University professor, Olmsted came to Chicago at the age of 21, forsaking literary pursuits according to his obituary in the Chicago Tribune to pursue a business career in the fast-growing town of Chicago. He found work as a clerk at a dry goods store, T.B. Carter & Company. He soon became head clerk and bought a partnership in the business. In 1855 he sold his stake and went into business for himself, establishing a real estate loan company in the T.B. Carter & Company building. He made his first loan in March of that year, $5,000 to Edward Casey & Brothers, the first known transaction in the history of Baird & Warner.

With Chicago expanding rapidly, the business thrived, and Olmsted soon needed trustworthy help. He convinced a childhood friend, Lyman Baird, to leave his job in the office of the treasurer at Yale to join him in 1857. Three years later, in January 1860, Baird became a copartner in what became known as L.D. Olmsted & Company. Together they began investing heavily in Chicago real estate, the bulk of the funds coming from New York and Connecticut insurance companies. The partnership lasted little more than two years, however. Early in 1862 Olmsted took ill and after three or four weeks returned to the East to convalesce at his father-in-law’s house in Springfield, Massachusetts, but his condition took a turn for the worse and two weeks later he died at the age of 35.

After Olmsted’s death Baird brought in another New Haven man to serve as his partner, Francis Bradley, and the firm assumed the name of Baird & Bradley. A former bank teller and cashier, Bradley had been working as an auditor for the Rock Island Railroad in Chicago since 1857. The firm at this point expanded beyond lending, becoming involved in property management and insurance sales. By this time, the country was mired in the Civil War, which provided Baird & Bradley with an opportunity to help companies set up factories to supply the Union’s military needs.

Following the war, Chicago’s population continued to soar, approaching 300,000 by the end of the decade, a threefold increase over the course of the decade. Chicago suffered a major setback when a large portion of the city was destroyed by the great fire of October 1871. Baird & Bradley played a key role in Chicago’s recovery because the firm’s safe was able to survive the fire intact, which could not be said for the rest of the offices. The courthouse’s public real estate records were also destroyed, and the city came to rely on Baird & Bradley’s paperwork to re-create property titles and boundaries. The firm was also instrumental in Chicago’s recovery by raising $140 million over the next ten years from East Coast investors to rebuild the city.

A new generation of the Baird family became involved in the business in 1878 when 19-year-old Wyllys Warner Baird joined his father. He was just a year old when he moved to Chicago with his family, grew up in the city, and received his education there. He started out as an office boy and made partner in 1887. In that same year, Lyman Baird’s 36-year-old brother-in-law, George L. Warner, was also named junior partner. Born in New Haven, he had come to Chicago in 1868, and worked as a shipping clerk at a grocery wholesaler before joining Baird & Bradley in 1883. The new partners were dispatched to live in other parts of Chicago to bring in business, with Wyllys setting up residence on the North Side and Warner in the Hyde Park suburb. By this point Chicago’s population had reached 850,000.

The 78-year-old Bradley died in 1892. Lyman Baird became consulting partner, as the younger members of the firm reorganized as Baird & Warner in 1893. That same year brought the World’s Fair to Chicago, officially called the World’s Columbia Exposition of 1893. One of the many innovations that emerged from the fair, including the first Ferris wheel, was the elevated railroad system that had been created to transport fairgoers from downtown Chicago to “The Great White City” where the exposition was held. Afterward the public demanded more elevated lines and Baird & Warner was hired to acquire property and right-of-ways for several of the traction companies. The firm also became involved in the new suburbs that were created because of the expansion of the railways. In 1897 the firm opened its first branch office, established near the end of the North Side elevated line. In addition to houses, Baird & Lyman also increased its property management business as large numbers of apartment buildings were constructed in the city.

In 1903 Wyllys Baird was named president. Lyman Baird died in 1908 and five years later Warner passed away as well. By this time, a third generation of the Baird family had joined the company, Warner Green Baird, who took over the building management department in 1911. His training had been in engineering, and he worked for Illinois Malleable Iron Co. for three years after graduating from Cornell University.

The firm retained the Baird & Warner name and continued to grow. A second branch office, in Rogers Park, was opened in 1917. Following a recession in 1919 after World War I, the economy boomed across the country, and Baird & Warner prospered as well. It became involved in the development and management of cooperative apartments and office buildings in the city. A fourth branch office opened in Evanston in 1921. Two years later Baird & Warner was incorporated, a move made to increase the firm’s ability to borrow money in order to meet the large demand for mortgages and construction loans. The change in ownership structure would also prove beneficial when Baird & Warner soon faced the most difficult period in its history.

COMPANY PERSPECTIVES

Founded in 1855, Baird & Warner is the largest independent real estate broker in Illinois and the oldest in the country.

DEATH OF WYLLYS BAIRD: 1928

In April 1928 Wyllys Baird suffered a stroke while in Florida. He returned to Chicago and appeared to be recovering when his condition suddenly worsened and he died in June at the age of 68. Warner Baird took over as president and bought back shares of stock in the firm his father had awarded to nonfamily members. With that matter settled he would soon be faced with a far great challenge, the Great Depression that enveloped the country after the stock market crash of 1929. Baird & Warner gained some protection because of its corporate status, but the emphasis at this time was on sheer survival. Funds dried up as did the demand for mortgages, but because a large number of mortgage defaults resulted in properties being seized Baird & Warner was able to increase its property management business, serving life insurance companies that took possession of apartment hotels and other buildings. For a few years in the early 1930s, property management provided most of the firm’s income. Three more branch offices were opened in 1933 to manage these properties around the city. After the federal government made money available for single-family homes through the Federal Housing Administration, real estate sales improved in the late 1930s and Baird & Warner converted the building management branches into sales offices.

While the United States’ entry in World War II in December 1941 spurred the economy due to military spending, Baird & Warner suffered because of a lack of new construction in Chicago. That would change after the war when a housing boom coincided with a baby boom and a surging economy. The end of the war also saw the arrival of members of the fourth generation of the Baird family, who had been called away to serve in the military. In 1946, John Wyllys Baird, a holder of a Harvard MBA, joined the business. A year later he was joined by Warner Green Baird, Jr., who held a law degree from Northwestern University. During the postwar years, Baird & Warner took advantage of the measures the government took to alleviate the housing crunch. Rent controls were lifted by the Housing and Rent Act of 1947, spurring apartment building, and the firm began providing a large number of construction loans for apartment buildings. In the 1950s Baird & Warner teamed up with insurance companies and other investors in building shopping centers in the Chicago suburbs, where it also opened offices to become involved in the residential home business. In addition, Baird & Warner became one of the first real estate firms to participate in urban renewal projects.

In 1963 John Baird succeeded his father as president while his brother became vice-president and secretary, although the elder Baird remained very much involved, serving as chairman of the board. John Baird soon found himself a controversial figure in Chicago real estate when in the mid-1960s he became a vocal supporter of fair housing initiatives that sought to eliminate the mechanisms used to keep minorities from moving into white neighborhoods. He made headlines in 1965 when he resigned from the Chicago Real Estate Board, which his family had been instrumental in founding in the 1880s, because the organization was supporting the Property Owner’s Coordinating Committee, a group that espoused housing discrimination. While his stance cost Baird & Warner some business in the short term, John Baird’s beliefs were borne out when new housing legislation was passed later in the decade outlawing the practices he found so abhorrent.

In the 1970s John Baird played an important role in the preservation and restoration of Chicago’s historic neighborhoods, and the firm participated in the redevelopment of the Printers Row area, one of the first loft initiatives in the city. Also, in 1971 the firm formed the Baird & Warner Real Estate and Investment Trust (REIT) to raise capital for an increasing demand from industrial, office, and housing developers. The REIT was strong enough to withstand the recession of the early 1970s, and later in the decade it caught the attention of New York corporate raider Carl Icahn. He won a proxy fight over the company in 1979 and renamed it Baywater Realty & Investment Trust, a tribute to the neighborhood where he grew up.

In 1980 a fifth generation of the Baird family joined the firm, John Baird’s son Stephen W. Baird. Also a Harvard graduate, the younger Baird took a position in the shopping center division. Two years later he launched the firm’s real estate securities division. In 1983 Warner Baird finally turned over the chairmanship to his son John. He died a year later at the age of 98.

KEY DATES

1855:: Lucius D. Olmsted forms Chicago real estate company.
1862:: Firm becomes Baird & Bradley.
1893:: Firm is reorganized as Baird & Warner.
1903:: Wyllys Baird is named president.
1928:: Warner Baird becomes president after father’s death.
1963:: John Baird succeeds father as president.
1979:: Baird & Warner Real Estate and Investment Trust lost to Carl Icahn in proxy fight.
1991:: Stephen Baird becomes fifth-generation president.
2000:: Home Services division is formed.

After more than a decade of grooming, Steve Baird succeeded his father as president in 1991, and like his father before him, John Baird retained the chairmanship while the next generation assumed day-to-day control. Maintaining something of a family tradition Steve Baird graduated from Harvard and came to the family business after studying something unrelated to real estate, graduating with a degree in psychology while taking a minor in art history. He took charge of a company with sales of $1.5 billion. It served northern Illinois’s residential real estate market with 35 offices and more than 700 brokers, and the property management unit managed 35 buildings containing a total of 2,500 apartments. The firm also established a ten-person office in Denver and considered opening an office in Milwaukee. However, a drop in oil prices adversely affected the Denver real estate market, and Baird & Warner lost a significant amount of money on a development deal in the city. To make matters worse the economy soured as did the real estate market around the country.

To weather the storm, Baird & Warner pulled out of some development projects and restructured others, while also narrowing the firm’s focus. More emphasis was placed on the residential sales group, which in 1995 posted the best year in its history with more than $2 billion in sales. A year later Baird & Warner joined forces with Christie’s Great Estates, an offshoot of the famous Christie’s fine arts auction house, to market expensive homes, exceeding $500,000, in the Chicago area. With the housing market booming, Baird & Warner began adding related services. To focus even more attention on residential sales, two major units were sold in the late 1990s: the commercial mortgage business, which took the name Baird & Warner Real Estate Capital, and the property management division, taking the name BW Phillips.

NEW CENTURY: ADDING SERVICES

As Baird & Warner entered its third century, it had to adapt to a rapidly consolidating industry and contend with large national firms that were rolling up small independent real estate brokerages at a steady clip. In order to remain competitive Baird & Warner had to continue to add what it offered residential customers and become adept at cross-selling. In 2000 the firm launched its home services division to connect home-buyers to contractors, movers, and other service providers. “Nowadays,” Steve Baird told Crain’s Chicago Business in 2003, “a customer may buy four or five services from us, where 25 years ago, they only bought one. Today, we’re looking at increasing our marketshare by offering more services.”

Baird & Warner celebrated its 150th birthday in 2005, and despite his 90 years of age, John Baird continued to take the train into work four days a week. The company remained very much an independent firm and the Baird family made it clear they had no interest in selling, although Steve Baird received an occasional inquiry. Sales volumes had grown to more than $6.2 billion, compared to the $1.4 billion when Steve Baird took the reins in 1991, and annual revenues totaled $170 million. Baird believed that continued growth was a must, and that standing still was the beginning of a company’s decline. In order to fuel expansion the firm began thinking of franchising to open new offices rather than incur the expense of building from the ground up. Baird & Warner was a strong brand in the Chicago area and, should it pursue franchising, might well begin yet another phase in its storied history, becoming a regional powerhouse.

Ed Dinger