Clint Engel
New unit focuses on Class A housing

FARMINGTON HILLS, Mich. — Bernie Moray has found big furiture business in an unexpected place — class A apartments.

The co-owner and CEO of the upscale Gorman’s in greater Detroit started Gorman’s Corporate Housing Furniture about three years ago. A local builder had steered him to the hidden potential of selling to the owners and managers of deluxe apartment complexes, who in turn lease units to businesses.

Since then, Moray has opened a second Corporate Housing showroom in Chicago and watched the business grow to about $2 million a year. He’s honing the concept with plans to open additional showrooms in new markets and franchise or license the concept nationally.

Gorman’s Corporate Housing has found a way to sell packages of residential furniture from suppliers such as Ashley, Palliser and Rowe to a new and growing consumer base that Moray said is turned off by the cost and quality of goods coming from some of the big furniture rental companies.

“If you run a chart on it, it’s amazing how much money they save,” Moray said. He said his company can sell furniture on a three-year financing plan for less than the apartment owners and managers are paying to rent similar, but used furniture.

The average package sale for Gorman’s Corporate Housing is running about $6,700 for a one-bedroom apartment. That includes a full living room of furniture (with tables, lamps and a television cabinet), a dining room table and four chairs and a queen bedroom group, as well as three to four pieces of wall art and two plants.

Currently, the company offers six collections — four transitional looks, a contemporary Scandinavian and a traditional package. They can be financed for 25 or 36 months, said Barbara Porter, manager of the Detroit operations. She said the company is flexible with the terms as well as with mixing and matching of goods.
The monthly payment for the 25-month plan generally runs from $239 to $439, but has been as high as $700 a month for a large apartment, she said.

Gorman’s services the business through 12,000-square-foot warehouses in Detroit and Chicago and typically delivers within three weeks.

Moray said the growth opportunities are tremendous because current poor market conditions for leasing deluxe apartments have their managers and owners turning to lucrative short- and long-term corporate rentals to fill vacancies.

He said he was approached a few years ago by a Detroit-area apartment builder who was spending hundreds of thousand of dollars a year to rent furniture for corporate housing tenants and was unhappy with the quality and the price.

The builder, who Moray declined to name, was interested in buying rather than leasing. Moray pointed out that his Gorman’s Furniture stores probably couldn’t help, since they served a different, more upscale market. (Moray is the only principal in Gorman’s Furniture who is also an owner of Gorman’s Corporate Housing Furniture.)

Nevertheless, the builder, a Gorman’s customer, persisted and got Moray to help find appropriate sources.
Moray researched and developed furniture options for apartment packages of midpriced and lower-end goods. He laid out the details, including his actual cost and how much more the builder would be charged for freight, overhead and other expenses.

Later, he met a few other apartment managers in similar predicaments, including one who managed 15,000 units nationally and another managing 9,000.

“That just blew my socks off,” Moray said. He became enthused and began working on a business plan.
What he came up with has advantages for apartment operators, he said. Purchased on a 36-month plan, his furniture packages require a smaller monthly payment than a rental fee for similar goods, according to Moray. And since purchased furniture goes on the apartment owner’s books as an asset, unlike rental furniture, it can have a positive effect on earnings.

And by keeping the purchased furniture in the apartments (give or take replacement pieces) the units stay in better shape, with fewer scuffs and bangs on the walls from constantly moving rental furniture in and out.
In addition to Detroit and Chicago, where it has stores, Gorman’s Corporate Housing  also has delivered apartment packages to Raleigh, N.C., St. Louis and Phoenix. 

Moray said his main Gorman’s furniture business has continued to do well — partly because other area high-end stores have shut down — but that he believes the furniture industry in general is in a rut and hungry for new ideas.
He believes he has one in corporate housing, and intends to open new locations, and possibly franchise or license the concept. He said he’d like to be operating in six states within five years, noting that some prime markets include Florida, New Jersey and the Atlanta and Washington metro areas.

“We’re being careful and cautious,” he said. “We’re trying to make sure the program is right, that we’re servicing properly and all those other things, because this is not a one-time shot. I would say by year’s end we should be ready to roll out another of our own (locations).”

But if he hears from retailers in other markets who are interested in the concept and want to move faster, that would be great, he said.