1 00:00:00,000 --> 00:00:05,290 Welcome, everybody. We have Jeff Janda of Lee & Associates Chicago with me today. 2 00:00:05,620 --> 00:00:09,820 And excited to spend time with Jeff and learn from one of the legends in 3 00:00:09,820 --> 00:00:14,670 The Chicago office. And so, Jeff, thanks for spending time with me today. 4 00:00:15,220 --> 00:00:18,230 Yeah, appreciate that kind intro. That's great. 5 00:00:19,840 --> 00:00:22,410 Excited about kind of chatting with you for a bit. 6 00:00:22,780 --> 00:00:26,560 Yeah, it's so fun to connect with the seasoned 7 00:00:26,560 --> 00:00:30,000 Vets in some of the big offices in our big markets. 8 00:00:30,000 --> 00:00:35,280 I feel like not only do you have a track record and experience, but like 9 00:00:35,280 --> 00:00:39,410 A great perspective on what's going on out there and what people need to know about. 10 00:00:39,520 --> 00:00:45,240 So it's been a great opportunity and I'm glad that you're here with 11 00:00:45,240 --> 00:00:48,810 Me and spending some time going through it. How long have you been with Lee now? 12 00:00:50,420 --> 00:00:55,940 So let me think about this. So this is my 24th year and next year will be 13 00:00:55,940 --> 00:01:01,340 25. and I was at Collier's for about four years before 14 00:01:01,340 --> 00:01:05,480 That and I was one of the founders here of the Chicago office and it was kind 15 00:01:05,480 --> 00:01:09,960 Of fun being the lineage of we worked a little bit with Bill Lee and Bill 16 00:01:09,960 --> 00:01:14,100 Gosnell or some names that less and less people know as we were starting the 17 00:01:14,100 --> 00:01:18,840 Chicago office and we were actually, when we started Chicago we were kind of 18 00:01:18,840 --> 00:01:24,080 Jeff: Your east office like literally if we started more Justin: East Coast. 19 00:01:24,080 --> 00:01:27,480 Or less I mean it sounds kind of crazy to say but it was basically 20 00:01:27,480 --> 00:01:32,540 California, Phoenix, and then Chicago. So we were very significant for 21 00:01:32,540 --> 00:01:36,180 The Lee organization to start. A lot of our institutional clients were 22 00:01:36,180 --> 00:01:39,760 Familiar with Lee already, but it was very significant. We were kind of 23 00:01:39,760 --> 00:01:44,630 Your first people, you know, outside the far west coast more or less. 24 00:01:46,200 --> 00:01:49,970 And what was it that got you going on the general idea? 25 00:01:50,140 --> 00:01:53,540 I'm sure that's a risk there of who are these guys and 26 00:01:53,540 --> 00:01:57,690 What's it going to be like if I leave this well-known shop. 27 00:01:58,440 --> 00:02:02,320 You know we really love the entrepreneurial platform Colliers is a 28 00:02:02,320 --> 00:02:05,680 Great company but it was just a great opportunity we knew in a major market 29 00:02:05,680 --> 00:02:09,680 Like Chicago there was room for another good quality brokerage firm we 30 00:02:09,680 --> 00:02:13,730 Like all the standards and what Lee is built on entrepreneurial 31 00:02:14,700 --> 00:02:19,520 Incentivizing brokers to appropriately own real estate um just being 32 00:02:19,520 --> 00:02:22,800 In control of your own destiny is pretty straightforward is you know kind 33 00:02:22,800 --> 00:02:26,250 Of why we jumped in as soon as we saw the opportunity like we're in. 34 00:02:26,300 --> 00:02:30,260 And we were able to, it was kind of fun when we started, we took people from our 35 00:02:30,260 --> 00:02:35,830 Original core group, myself and my mentor and long-term partner, Jim Planey. 36 00:02:35,920 --> 00:02:41,530 We were Colliers. We had some Grubb. We had Cushman, CBRE. 37 00:02:41,680 --> 00:02:44,920 So we kind of took a lot of people from different firms and we're able to kind of 38 00:02:44,920 --> 00:02:48,220 Mesh it all together. And we're basically all still partners with the exception of a 39 00:02:48,220 --> 00:02:52,530 Few people that have retired really since we started 24 years ago. 40 00:02:53,400 --> 00:02:56,410 Yes, but Jim did not teach you how to grow a mustache. 41 00:02:56,940 --> 00:03:00,730 No, no, he has it. He has it. Fair point, no. 42 00:03:01,200 --> 00:03:05,080 Yes, but Movember's coming up, so you'll have another opportunity if you'd 43 00:03:05,080 --> 00:03:09,780 Justin: Like to try. And how many people was it when Jeff: Yeah, absolutely. 44 00:03:09,780 --> 00:03:13,440 Justin: You first started? It sounds like five or six. Jeff: When we originally started, we had like seven or 45 00:03:13,440 --> 00:03:18,760 Eight people, a couple of associates, so total of about roughly nine, 10 brokers. 46 00:03:18,760 --> 00:03:23,820 Jeff: So predominantly focused on industrial and since Justin: Yep. 47 00:03:23,820 --> 00:03:27,750 Then we've grown all the other major disciplines in our office so 48 00:03:28,540 --> 00:03:33,550 Justin: And how many people do you have now? Jeff: We have about 45 brokers 49 00:03:34,160 --> 00:03:37,410 Justin: All right, that's pretty big. Jeff: Great yeah great 50 00:03:38,140 --> 00:03:41,870 And probably 10 associates, I would guess. 51 00:03:41,980 --> 00:03:43,890 Yeah net range yeah correct 52 00:03:45,060 --> 00:03:48,910 Yeah, and then have you ever gotten a chance to manage? 53 00:03:50,420 --> 00:03:55,750 Jeff: When you say manage, like manage the office or? Justin: Yeah, like managing partner, managing director. 54 00:03:56,900 --> 00:04:02,260 No, you know, we're kind of unique here. We have an executive 55 00:04:02,260 --> 00:04:06,360 Committee that helps oversee our office and we nominate people to the committee 56 00:04:06,360 --> 00:04:11,230 And they have some nominal compensation to oversee it. So that's how we run it. 57 00:04:11,460 --> 00:04:15,780 We have a very, very great business manager, great office manager. 58 00:04:15,780 --> 00:04:18,490 And then we have an executive committee that runs the office. 59 00:04:18,720 --> 00:04:21,180 So that's kind of how we did it. In the past, we've had 60 00:04:21,180 --> 00:04:25,260 Kind of an executive that would be like a managing director. 61 00:04:25,260 --> 00:04:28,700 And it just it wasn't the right fit for how we wanted to do it. 62 00:04:28,700 --> 00:04:32,800 So we find if we kind of break it up to an executive committee, then we have 63 00:04:32,800 --> 00:04:36,580 A person that oversees finance. And we have a couple of other areas that 64 00:04:36,580 --> 00:04:40,070 We have individual people that oversee it. We find that it works better. 65 00:04:40,560 --> 00:04:44,040 So they're actually partners in the office that have a small part-time 66 00:04:44,040 --> 00:04:49,000 Job and helping oversee it. And they get some nominal compensation. 67 00:04:49,000 --> 00:04:52,460 We find that they take a little bit more seriously when it's in theory kind 68 00:04:52,460 --> 00:04:55,970 Of a job. So that's kind of how we've set it up and it's worked very well. 69 00:04:56,400 --> 00:05:00,070 That's the joy of being able to run your office how you see fit. 70 00:05:00,120 --> 00:05:03,570 Justin: I know for us, we've juggled having one person, Jeff: Totally. 71 00:05:03,720 --> 00:05:07,820 Having two people, having someone from the outside, someone who grew up 72 00:05:07,820 --> 00:05:12,000 From the inside, and then trying to figure out what's the right mix for us. 73 00:05:12,000 --> 00:05:15,100 And at present, we have two, and that's one way to break 74 00:05:15,100 --> 00:05:19,360 Down what is a big job that can be tough to run brokerage and 75 00:05:19,360 --> 00:05:24,000 Still have the office have what it needs and have people who 76 00:05:24,000 --> 00:05:27,630 Justin: Manage to be able to do their thing too. Jeff: Sure. 77 00:05:28,640 --> 00:05:33,850 Yeah, that's awesome. And then if you wouldn't mind, Chicagoland. 78 00:05:34,220 --> 00:05:37,780 It's one of the biggest markets there is. Would you mind helping 79 00:05:37,780 --> 00:05:43,270 Describe how big it is and just generally what the dynamic is? 80 00:05:44,040 --> 00:05:48,410 For sure. So yeah, Chicago is obviously a very significant industrial market. 81 00:05:48,920 --> 00:05:52,640 Depending on how people look at the square footage, it varies a little bit. 82 00:05:52,640 --> 00:05:58,100 It's somewhere between 1.3 and 1.5 billion square feet, billion 83 00:05:58,100 --> 00:06:03,710 With a B. Vacancy is hovering roughly around 5%. 84 00:06:04,180 --> 00:06:08,180 New construction as far as industrial is only about 18 million square feet. 85 00:06:08,180 --> 00:06:12,690 So it's really in check. If any, there might be too little new construction. 86 00:06:13,940 --> 00:06:18,780 You know, and Chicago in general is a big grid system. So obviously on the east 87 00:06:18,780 --> 00:06:24,010 Is Lake Michigan, and then everything is going to sprawl either north, northwest, 88 00:06:24,280 --> 00:06:29,840 West, southwest is basically the evolution of our marketplace. And as you get 89 00:06:29,840 --> 00:06:34,840 Further away from the lake, it's generally real estate is less expensive. and 90 00:06:34,840 --> 00:06:39,980 O’Hare is kind of the central part of our marketplace, which is kind of more 91 00:06:39,980 --> 00:06:45,450 Or less west or more northwest of downtown Chicago or Lake Michigan. 92 00:06:45,780 --> 00:06:50,280 And what we're starting to see, which is kind of unique and it's way more 93 00:06:50,280 --> 00:06:53,400 Commonplace than probably California, but we're starting to see a lot 94 00:06:53,400 --> 00:06:58,080 Of teardown redevelopment in O’Hare, which is really, it's been going on for a 95 00:06:58,080 --> 00:07:02,460 Solid 10 years, but it's very significant now. And some of the rates are very 96 00:07:02,460 --> 00:07:06,290 Staggering, but we're starting to see a significant amount of it right now. 97 00:07:07,420 --> 00:07:11,060 And, you know, in theory, the redevelopments are a little bit more 98 00:07:11,060 --> 00:07:14,360 Tricky, but they're still, if you look at an aerial photo, as you 99 00:07:14,360 --> 00:07:18,210 Start getting out into, you start sprawling, mainly more, I would say, 100 00:07:18,300 --> 00:07:22,110 Southwest or northwest, there's still a fair amount of land available. 101 00:07:22,660 --> 00:07:25,960 And those are very easy. Entitlements are not like what you guys deal 102 00:07:25,960 --> 00:07:30,340 With in California. They're pretty straightforward. You know, some of the 103 00:07:30,340 --> 00:07:33,780 Infill redevelopment, if anything, there's some environmental here on some of these 104 00:07:33,780 --> 00:07:36,200 Buildings that were built in the 50s and the 60s, but they 105 00:07:36,200 --> 00:07:39,420 Can kind of muscle through that. That's not a big deal. But the 106 00:07:39,420 --> 00:07:43,510 Barriers to entry are not very significant as you get further out there. 107 00:07:43,740 --> 00:07:49,280 You know, those are generally the Southwest, like 55 and 108 00:07:49,280 --> 00:07:53,080 I-88 are kind of our West and Southwest markets. Those are where most 109 00:07:53,080 --> 00:07:57,180 Jeff: Of our bulk distribution is. Kind of closer in is Justin: Yep. 110 00:07:57,180 --> 00:08:01,140 More regional facilities, know, two, three hundred thousand square feet. 111 00:08:01,140 --> 00:08:05,240 As you get further Southwest and West, you're going to see, you know, the 112 00:08:05,240 --> 00:08:08,590 Million square footers. But we have a shortage of those right now, too. 113 00:08:09,340 --> 00:08:14,580 I was going to ask you about them. I would imagine you guys have, I don't 114 00:08:14,580 --> 00:08:18,850 Know, under 100, but probably like a good amount in the total inventory. 115 00:08:19,480 --> 00:08:22,920 Yeah, I should know the number. don't know how many are north of 116 00:08:22,920 --> 00:08:25,870 A million square feet, I would say, in that 100 range, for sure. 117 00:08:26,120 --> 00:08:29,920 And also another kind of interesting stat is we have a multi-story 118 00:08:29,920 --> 00:08:34,240 Industrial facility in downtown Chicago that was built by a developer. 119 00:08:34,240 --> 00:08:39,150 And it was available for a bit, but recently Amazon just acquired it. 120 00:08:39,263 --> 00:08:42,923 It was right downtown Chicago. Very, very unique to do that in 121 00:08:42,923 --> 00:08:46,113 The Midwest, but eventually Amazon came and acquired the property. 122 00:08:46,243 --> 00:08:51,583 Yeah. It's funny. You have their mothership footprint that 123 00:08:51,583 --> 00:08:56,293 They commonly do for like a two to four million square feet. 124 00:08:56,303 --> 00:09:00,863 And then I think of like the other version of multi-story that 125 00:09:00,863 --> 00:09:04,093 Is like the corkscrew trucking ramp that goes on the side. 126 00:09:04,163 --> 00:09:07,963 And yeah, you would think of all places where land is plentiful, you wouldn't 127 00:09:07,963 --> 00:09:12,273 Have the constraint to drive the cost up high enough to have that pencil, 128 00:09:12,283 --> 00:09:15,643 Justin: But Amazon in proximity. Jeff: This is in downtown Chicago, like at 129 00:09:15,643 --> 00:09:18,563 Jeff: Main and Main, you know, tons of residential Justin: Yeah. 130 00:09:18,563 --> 00:09:22,593 Within a stone's throw up there. So that's what drove it for sure. 131 00:09:23,443 --> 00:09:29,092 Yeah. Yeah, and then I think John Cassidy, if I remember correctly, was saying 132 00:09:29,092 --> 00:09:34,572 When you build east there's land as far as you can go or as far as you would want to 133 00:09:34,572 --> 00:09:39,132 Justin: There's no shortage or west yes Jeff: West. I think you said East West. Yeah. Yeah. 134 00:09:39,132 --> 00:09:44,102 That's okay. Yeah. Yeah. For sure. Uh, there, there definitely is, you know, 135 00:09:44,292 --> 00:09:48,672 It, you know, there's a tremendous amount of farmland in Illinois, like 136 00:09:48,672 --> 00:09:52,172 Tremendous amount. And that's, what's happening is you get down to like the 137 00:09:52,172 --> 00:09:57,332 Joliet areas or the far West suburbs, like DeKalb, places like that, 138 00:09:57,332 --> 00:10:00,662 Where it's just, it's farmland that's being put into production actually 139 00:10:00,892 --> 00:10:05,817 Yeah. Yeah, without having mountains in between, just 140 00:10:05,817 --> 00:10:09,607 Justin: Straight shot. Yeah. Jeff: Thousand percent for sure 141 00:10:10,777 --> 00:10:15,537 What would you say your book of business is between like landlord, tenant, or 142 00:10:15,537 --> 00:10:20,537 Justin: Leases, or sales, or in-market or out-of-market? Jeff: Good question I I 143 00:10:20,537 --> 00:10:24,987 Would say um in an average year it varies as everyone's business does but 144 00:10:25,677 --> 00:10:30,937 30 to 50 percent is listings um the other 145 00:10:30,937 --> 00:10:34,257 Remainder depending on the year 30 to 50 percent is tenant and buyer 146 00:10:34,257 --> 00:10:38,897 Rep and then mixed in every year is you know one two three investment 147 00:10:38,897 --> 00:10:43,337 Sales sale lease backs things like that uh it's pretty commonplace 148 00:10:43,337 --> 00:10:46,637 But and yeah I think I think that's a strength like when you go in and you 149 00:10:46,637 --> 00:10:49,777 Meet with somebody you know on the listing front you be listen I don't 150 00:10:49,777 --> 00:10:53,137 Only do I don't focus only on listings but I do a fair amount of tenant and 151 00:10:53,137 --> 00:10:56,657 Buyer rep So you kind of understand all aspects of the business pretty well, 152 00:10:56,657 --> 00:11:00,387 Jeff: I think. So that's really the focus. Justin: Yeah without no doubt 153 00:11:01,177 --> 00:11:05,957 You can understand the person across from you what they're going through 154 00:11:05,957 --> 00:11:10,357 And what they need that's the best and then I've noticed every year when 155 00:11:10,357 --> 00:11:14,177 You actually look at what crossed the finish line and paid the bills and 156 00:11:14,177 --> 00:11:19,697 Attributed to your revenue is that mix changes regardless of if you are 157 00:11:19,697 --> 00:11:23,877 50 50 landlord tenant or 50 50 leasing or sales like every year is going 158 00:11:23,877 --> 00:11:26,407 To be different regardless of the mix or your intentions. 159 00:11:27,237 --> 00:11:30,517 For sure. And I would say another unique thing I have in my office, and 160 00:11:30,517 --> 00:11:34,797 I'm not anti it, but when my long-term mentor kind of retired five, six 161 00:11:34,797 --> 00:11:39,417 Years ago, seven years ago, out of anybody in our office, I probably 162 00:11:39,417 --> 00:11:42,347 Work with the most amount of internal people on various projects. 163 00:11:42,357 --> 00:11:46,337 Like I team up with eight to 10 different people, depending on what the project is. 164 00:11:46,337 --> 00:11:49,737 I almost always have a partner. These are a lot of long-term clients and 165 00:11:49,737 --> 00:11:53,697 Business that I have. We're usually to service the ultimate customer the best. 166 00:11:53,697 --> 00:11:56,897 Usually bring a partner in. So I almost always partner with somebody 167 00:11:56,897 --> 00:12:01,297 And I work closely with about eight to 10 people here in the firm. 168 00:12:01,297 --> 00:12:03,527 It's some associates, it's some partners. 169 00:12:03,877 --> 00:12:07,647 It just varies on the project, but it's kind of a fun way to do business. 170 00:12:07,657 --> 00:12:09,737 There's nothing wrong with having a team, but I 171 00:12:09,737 --> 00:12:12,077 Kind of have multiple people on my team, I would 172 00:12:12,077 --> 00:12:15,057 Say. So I've set it up here. And that's the nice thing with Lee is 173 00:12:15,057 --> 00:12:18,407 You can kind of do what you want. If you want to have a team of three, 10, 174 00:12:18,497 --> 00:12:21,817 Whatever it is, you can do it. Or if you want to just kind of use the best 175 00:12:21,817 --> 00:12:25,327 In class internally, you can do that, too. And that's more or less what I do. 176 00:12:25,697 --> 00:12:29,777 Yeah, do you guys divvy up neighborhoods or it's just kind of wherever 177 00:12:29,777 --> 00:12:34,577 Your growth happens and you take your skill set or you focus on where 178 00:12:34,577 --> 00:12:38,807 Justin: It is best utilized or deployed? Jeff: You know, that's a great question. And I think, 179 00:12:38,997 --> 00:12:42,657 You know, we kind of pride ourselves on this. We have areas of 180 00:12:42,657 --> 00:12:46,567 We have areas of concentration where we're experts and we know what we're doing. 181 00:12:46,697 --> 00:12:50,437 Justin: Okay. Jeff: Um we don't nobody has any ownership over a zip 182 00:12:50,437 --> 00:12:54,577 Code here we kind of take pride in that um you know we want to be careful 183 00:12:54,577 --> 00:12:58,357 When we're bringing people in like let's say it's the O’Hare market there's 184 00:12:58,357 --> 00:13:02,207 Probably four or five guys here that work the O’Hare market and which is 185 00:13:02,957 --> 00:13:06,997 Reasonable coverage but we're not tripping over one another uh we probably wouldn't 186 00:13:06,997 --> 00:13:10,497 Want to hire a team of eight people working O’Hare but at the end of the day 187 00:13:10,497 --> 00:13:14,937 Is to answer your question is it's just you can work wherever you want when you're 188 00:13:14,937 --> 00:13:19,117 Trained by like a very seasoned you know unbelievable professional like Jim Planey 189 00:13:19,117 --> 00:13:24,057 You know he had just tremendous market knowledge tremendous reach so I'm blessed 190 00:13:24,057 --> 00:13:28,417 I have a pretty good understanding of multiple areas just through doing this for 191 00:13:28,417 --> 00:13:33,537 25 plus years and working with somebody that was you know really an awesome mentor 192 00:13:33,537 --> 00:13:38,637 So to answer your question is you can kind of work where you can do a reasonable job 193 00:13:38,637 --> 00:13:42,497 But if somewhere where I'm not an expert I'm instantly going to bring somebody 194 00:13:42,497 --> 00:13:47,217 With you know that can that is an expert when you have 45 people in your office we 195 00:13:47,217 --> 00:13:51,027 Jeff: Have somebody that can handle it appropriately so Justin: Yes. Yeah. 196 00:13:51,137 --> 00:13:54,417 It's always fun for the new associates to come in and then think through 197 00:13:54,417 --> 00:13:57,717 Where do I want to build my book of business and what's our office need 198 00:13:57,717 --> 00:14:01,287 Or where is our coverage short or where can I gain traction. 199 00:14:02,003 --> 00:14:05,563 I remember, I certainly remember when I was them and me trying to find 200 00:14:05,563 --> 00:14:08,263 Justin: My way and find my market and figure that out. Jeff: Totally. 201 00:14:08,263 --> 00:14:11,723 And there are certain ones that are super saturated or ones that 202 00:14:11,723 --> 00:14:14,913 You just have like a liking to or you get better traction in. 203 00:14:15,663 --> 00:14:21,293 Jeff: Totally, for sure. Justin: You must have some like, um, Planey-isms. 204 00:14:21,823 --> 00:14:26,043 If you spent a good time and had a good mentor, what are some things you 205 00:14:26,043 --> 00:14:30,503 Took away from that? I mean, I'm sure it was countless, but things that 206 00:14:30,503 --> 00:14:34,603 Stick in your mind as like some of the lessons you appreciate or hold on to. 207 00:14:34,603 --> 00:14:39,423 You know that that's a great great kind of uh point to bring up Jimmy 208 00:14:39,423 --> 00:14:42,723 Used to always have a great and we talk often he's a great person uh 209 00:14:42,723 --> 00:14:47,023 I would always love it when you you know somebody's like oh you'd be 210 00:14:47,023 --> 00:14:50,743 Like I'm just working a half day today and and he'd be like 12 hours 211 00:14:50,743 --> 00:14:54,823 You know people are thinking you know half day you're working four or five 212 00:14:54,823 --> 00:14:58,203 Hours that was something that always said but I think the biggest thing is 213 00:14:58,203 --> 00:15:02,063 You know he just instilled like you know just you only have your 214 00:15:02,063 --> 00:15:06,763 Reputation you know at the end of the day just tell people what because 215 00:15:06,763 --> 00:15:10,623 You know tell people the right way to handle things even if it's talking 216 00:15:10,623 --> 00:15:15,033 Yourself out of a potential project, give them the straight scoop. 217 00:15:15,163 --> 00:15:18,263 And, you know, you're just going to have a long, successful career and 218 00:15:18,263 --> 00:15:21,703 You're going to make way more money by just always giving people the proper 219 00:15:21,703 --> 00:15:25,563 Advice in the situation. That's just the way I roll. And that's the way 220 00:15:25,563 --> 00:15:28,823 I would say, you know, most Lee & Associates agents around the country 221 00:15:28,823 --> 00:15:32,243 Roll, which is, that's why they have their entrepreneurial, they do long-term 222 00:15:32,243 --> 00:15:35,823 Business and they're very successful is because they give good guidance and 223 00:15:35,823 --> 00:15:39,403 They're not forced by the mothership to say, you need to do this or that for 224 00:15:39,403 --> 00:15:43,793 These reasons, you know. So I think that's really important the way we are set up. 225 00:15:44,943 --> 00:15:48,883 Yeah, then the client can learn to trust you and you guys can go figure it out 226 00:15:48,883 --> 00:15:53,233 Together rather than say you can figure it out and then they learn not to trust you. 227 00:15:54,123 --> 00:15:55,713 Thousand percent for sure. 228 00:15:56,083 --> 00:16:01,727 Yeah. Yeah, that's fantastic. I would imagine you also have 229 00:16:01,727 --> 00:16:06,867 People that bring business to you that like have people out of market 230 00:16:06,867 --> 00:16:11,617 And doing business in Chicago is not the same as doing it in Southern California. 231 00:16:11,747 --> 00:16:17,127 What are some of the differences or things that like a people trip up on when they're 232 00:16:17,127 --> 00:16:21,677 New to doing business in the Chicagoland market, other than calling it Chicagoland. 233 00:16:23,127 --> 00:16:28,077 Yeah, no, I think that's a good, that's kind of, let me kind of digest that. 234 00:16:28,127 --> 00:16:31,607 What's kind of unique here versus, we have a lot of 235 00:16:31,607 --> 00:16:34,927 Different lease structures. Usually I think it's kind of 236 00:16:34,927 --> 00:16:39,727 Jeff: Unique. I mean, you've got maybe a little bit, but, Justin: Commissions are different, if I remember correctly. 237 00:16:39,727 --> 00:16:43,187 You you guys are obviously monthly rents pretty much in most of California. 238 00:16:43,187 --> 00:16:47,567 We do everything annual, but we sometimes will see an older real estate 239 00:16:47,567 --> 00:16:51,087 Like a true gross lease where people don't even like really understand 240 00:16:51,087 --> 00:16:53,377 What that is. We're literally everything's included. 241 00:16:54,727 --> 00:16:58,507 You know, there's a lot of different lease structures here that 242 00:16:58,507 --> 00:17:02,407 I'd say you don't see as much around the country is kind of unique. 243 00:17:02,407 --> 00:17:07,267 Um we're you know just due to the size of the market we're becoming very very 244 00:17:07,267 --> 00:17:12,727 Significantly institutionally controlled um you know cook county is the major 245 00:17:12,727 --> 00:17:16,527 County which is the city of Chicago kind of sprawls out into Elk Grove Village 246 00:17:16,527 --> 00:17:21,847 And kind of stuff near the airport um there's some significantly high taxes 247 00:17:21,847 --> 00:17:27,127 There so there used to be significant institutional presence there but 248 00:17:27,127 --> 00:17:32,307 The taxes are getting to be very very expensive so less and less in in investors 249 00:17:32,307 --> 00:17:36,007 Want to own in Cook County. So that's kind of interesting. And the interesting 250 00:17:36,007 --> 00:17:38,087 Thing is understanding the tax dynamics because 251 00:17:38,087 --> 00:17:42,497 There's tax programs there that not every state deals with. 252 00:17:43,187 --> 00:17:48,127 So those are kind of unique in our marketplace compared to other places 253 00:17:48,127 --> 00:17:51,057 Around the country where you have to protest your property taxes. 254 00:17:52,007 --> 00:17:57,767 There's tax programs like a class 6B that eventually will end. 255 00:17:57,767 --> 00:18:02,527 If they don't get renewed, like taxes could go from $1.50 a square foot to 256 00:18:02,527 --> 00:18:06,847 $5 or $6. And so you have to kind of learn what does it do to a tenant, but 257 00:18:06,847 --> 00:18:10,017 Then also what does it do to the landlord if they lose the tax program? 258 00:18:10,227 --> 00:18:13,447 Because at the end of the day, users only look at roughly the gross that 259 00:18:13,447 --> 00:18:16,707 They're going to pay monthly or annually, however they look at it. And if 260 00:18:16,707 --> 00:18:21,617 The taxes go up by 3x, you're basically eroding value in the real estate. 261 00:18:21,667 --> 00:18:27,167 So it's really tricky to really manage investment sales, leases, 262 00:18:27,167 --> 00:18:30,587 Et cetera. We have to have a lot of knowledge of kind of how the tax programs 263 00:18:30,587 --> 00:18:35,167 Work and what to anticipate and how do you possibly get them renewed? What are 264 00:18:35,167 --> 00:18:40,077 The odds that they get renewed? So that's kind of an interesting part of our 265 00:18:41,147 --> 00:18:46,527 Is that because they sunset? Or is it because, like, what causes 266 00:18:46,527 --> 00:18:50,647 The drastic change? That's just new taxes being voted in and implemented? 267 00:18:50,647 --> 00:18:55,537 They do in Cook County, the main program would be a class 6B. 268 00:18:55,707 --> 00:19:00,807 And the whole point behind it is it wants to make the taxes roughly equivalent 269 00:19:00,807 --> 00:19:05,987 Jeff: To the adjacent counties touching Cook County. And Justin: Okay. 270 00:19:05,987 --> 00:19:11,177 It's basically a 12-year program, but then it ratchets up to in year 11 and 12. 271 00:19:11,447 --> 00:19:14,937 But it's like you blink your eyes and eight, nine, 10 years goes by. 272 00:19:14,987 --> 00:19:17,947 And if it doesn't get renewed, like literally taxes can 273 00:19:17,947 --> 00:19:22,737 Go from $1.75 to $5 or $6. So it's very, very significant. 274 00:19:22,927 --> 00:19:26,347 So you really have to learn to kind of manage through that. That's a very 275 00:19:26,347 --> 00:19:31,097 Interesting part of our business. That's not very commonplace around the country. 276 00:19:32,167 --> 00:19:37,167 And what do you do about it once you're cognizant of it? You can't have your rent 277 00:19:37,167 --> 00:19:42,117 Be offset, can you? That would be like what a tenant would want, I would imagine. 278 00:19:42,287 --> 00:19:46,447 You know, a lot of times if it's expiring, it's uncertain if you're 279 00:19:46,447 --> 00:19:49,717 Going to get it renewed. You have to make the lease line up for it. 280 00:19:50,007 --> 00:19:55,337 At times, you can find landlords that will give you some sort of a buffer. 281 00:19:55,467 --> 00:19:58,227 Let's say the taxes are, for quick math, $2. 282 00:19:58,227 --> 00:20:00,907 And if the program doesn't get renewed, they go to $6. 283 00:20:00,907 --> 00:20:04,997 The landlord will say, well, maybe you share these costs with me. 284 00:20:05,107 --> 00:20:10,027 And, you know, if the taxes get above $3.50, I'll pay the next X amount 285 00:20:10,027 --> 00:20:14,807 Above that or something. There's landlords that really understand it. 286 00:20:14,807 --> 00:20:19,377 And if you've got a good credit tenant within reason they’ll work with you, 287 00:20:19,527 --> 00:20:22,967 It just there's a million variables to getting to that point. 288 00:20:22,967 --> 00:20:28,027 But, you know, there's a possibility that you can get a partner because at the end 289 00:20:28,027 --> 00:20:31,867 Of the day, nobody wants higher taxes. not good for the tenants, not good for the 290 00:20:31,867 --> 00:20:35,347 Landlord. It's not good for the brokers. Nobody does. So you have to kind of work 291 00:20:35,347 --> 00:20:38,717 Together to try to resolve it and make it as reasonable as possible. 292 00:20:38,987 --> 00:20:42,447 Yeah, it's like a general partner, limited partner 293 00:20:42,447 --> 00:20:46,077 Waterfall, but instead of you're splitting the profits, you're splitting the taxes. 294 00:20:46,787 --> 00:20:51,867 Jeff: Yeah. Yeah. Justin: I could see, I do remember on an 295 00:20:51,867 --> 00:20:57,397 Assignment I worked on with Jay Farnham of the client saying, 296 00:20:57,567 --> 00:21:03,127 We'll look within 20 or 30 minutes of O’Hare, but in no 297 00:21:03,127 --> 00:21:07,387 Way will we possibly consider that county because we're not going to deal with it. 298 00:21:07,387 --> 00:21:11,187 And that was the baggage they brought to the table. And we ended up staying out of 299 00:21:11,187 --> 00:21:16,627 It and signing like 40,000 feet, Class A building. And that 300 00:21:16,627 --> 00:21:20,047 Was something that was like, okay, you're like, no matter what, just there's 301 00:21:20,047 --> 00:21:24,027 Justin: No doing anything. That was just the stigma. Jeff: It's funny you say that. That's very commonplace 302 00:21:24,027 --> 00:21:26,347 Because like the center part, backing up a bit, the 303 00:21:26,347 --> 00:21:30,047 Center part of our market is basically O’Hare and a significant amount of 304 00:21:30,047 --> 00:21:34,707 The O’Hare market is impacted by Cook County. and it's very commonplace first 305 00:21:34,707 --> 00:21:38,467 Meeting, second meeting, 10th meeting where people will say, I don't want to be 306 00:21:38,467 --> 00:21:41,597 In Cook. But at the end of the day, the gross rents are about the same. 307 00:21:42,687 --> 00:21:47,147 So the buildings are worth less money if they're in Cook County versus DuPage 308 00:21:47,147 --> 00:21:51,247 County, which is right next door. So the gross winds up being about the same, but 309 00:21:51,247 --> 00:21:56,487 It's still very tricky if the program's running, burning off of what you 310 00:21:56,487 --> 00:21:59,927 Do or not do. And there's times where landlords will let buildings sit vacant 311 00:21:59,927 --> 00:22:03,487 For one and two years so they can get the program. Where they literally 312 00:22:03,487 --> 00:22:06,727 Will have it on the market, but they won't do anything because they won't 313 00:22:06,727 --> 00:22:09,607 Get the program, but they don't have, it depends on where it is. 314 00:22:09,607 --> 00:22:13,607 Sometimes you need one or two years of vacancy. So it's not super uncommon 315 00:22:13,607 --> 00:22:16,957 For landlords to let these significant assets just sit there vacant. 316 00:22:17,887 --> 00:22:20,557 You got to play the game. This is what it is. 317 00:22:20,987 --> 00:22:25,257 Justin: Yeah. And that affects which landlords. Jeff: For sure, for sure. 318 00:22:25,327 --> 00:22:28,277 Do you have, who would you say are the top landlords? 319 00:22:28,347 --> 00:22:31,587 Justin: For industrial. Jeff: You know it's like it probably 320 00:22:31,587 --> 00:22:36,457 Isn't any other major market you've got Prologis and link 321 00:22:36,947 --> 00:22:40,447 By by far are the most significant landlords what's interesting about 322 00:22:40,447 --> 00:22:44,407 Prologis and they're we're blessed they're very big customers of our firm with 323 00:22:44,407 --> 00:22:47,397 Jeff: Everyone that works here they're great partners. Justin: Yep. 324 00:22:47,687 --> 00:22:52,457 And then EQT, that's a tongue twister, formerly Exeter, EQT. 325 00:22:52,487 --> 00:22:56,007 I have to think about that before I say it. I don't know why, but they're 326 00:22:56,007 --> 00:22:59,577 Very significant and they're acquiring Stockbridge right now. 327 00:22:59,747 --> 00:23:05,207 So, and then there's all the other, I mean, basically most of the 328 00:23:05,207 --> 00:23:09,707 Major players that are in major markets around the country are here for the most 329 00:23:09,707 --> 00:23:13,427 Part, I would say. I know there's a couple of like regional people on the West 330 00:23:13,427 --> 00:23:17,067 Coast that have never made it out here that you would rattle off in two seconds. 331 00:23:17,067 --> 00:23:20,515 If you said that, would recognize the names. They hover somewhere 332 00:23:20,515 --> 00:23:24,565 Between 75 and 80 million square feet Prologis alone here in Chicago. 333 00:23:24,855 --> 00:23:28,003 Yeah. But thankful to have them be the biggest player. 334 00:23:28,003 --> 00:23:31,573 I feel like they always have quality. They're great to work with. 335 00:23:31,583 --> 00:23:35,963 And then I have had clients in the clear lease actually be something 336 00:23:35,963 --> 00:23:41,163 That clients ask me for or a few clients that once they have it, like it 337 00:23:41,163 --> 00:23:46,383 Causes them to want to shop those buildings first just because they 338 00:23:46,383 --> 00:23:50,093 Like that if they are in one market, they can be in another market. 339 00:23:50,403 --> 00:23:53,923 Justin: Contracts the same. The expenses are like Jeff: -hmm. 340 00:23:53,923 --> 00:23:59,343 Transparent. And then to go from I want it in a proposal to 341 00:23:59,343 --> 00:24:04,603 A signed lease could be once you have one, you can do it in a week. You could 342 00:24:04,603 --> 00:24:07,803 Justin: Do it in a couple of days as opposed to like Jeff: For 343 00:24:07,803 --> 00:24:12,843 Sometimes the lease contract negotiation can be so daunting sometimes 344 00:24:12,843 --> 00:24:16,783 Where people don't want to go through it or they've gone through it. 345 00:24:16,783 --> 00:24:20,513 And if they're starting over again, it's a friction. 346 00:24:20,683 --> 00:24:25,553 If you know you've got seven rounds ahead of you and you've got 82 red lines, 347 00:24:25,703 --> 00:24:31,303 I've had some clients just have institutional lease fatigue 348 00:24:31,303 --> 00:24:35,933 Where it's hard for them to get excited about doing a new deal. 349 00:24:39,423 --> 00:24:41,873 They're great. They're great partners for sure. 350 00:24:42,123 --> 00:24:47,283 Yeah. Yeah. And is there a big, are Class A rents and Class B 351 00:24:47,283 --> 00:24:52,313 Rents on their own trajectory right now? Are they going up and down similarly? 352 00:24:52,983 --> 00:24:58,483 I would say it depends a little bit in the kind of the micro markets 353 00:24:58,483 --> 00:25:02,863 Of what the dynamics are. But in general, significantly have increased 354 00:25:02,863 --> 00:25:07,573 In the last five years, like most areas of the major markets of the U.S. 355 00:25:08,103 --> 00:25:13,453 Just high level. Like if you're in a class A, 100,000 feet plus in O’Hare, 356 00:25:13,763 --> 00:25:19,483 You know, your rents are going to be somewhere between like mid-15s 357 00:25:19,483 --> 00:25:24,393 To $18 net in that area. And then if you're in like 358 00:25:25,503 --> 00:25:30,673 Aurora, Naperville, or if you slide down into like Joliet, Bolingbrook, etc. 359 00:25:30,763 --> 00:25:33,623 It varies a little bit on the type of building and stuff, but 360 00:25:33,623 --> 00:25:39,183 You're going to be upper sixes net to eight to nine dollars 361 00:25:39,183 --> 00:25:42,783 Depending on you know build out trailer parking all those things but so 362 00:25:42,783 --> 00:25:47,723 New construction in O’Hare is about double of what it would be for further 363 00:25:47,723 --> 00:25:52,303 Out properties and in general our O’Hare is our most expensive marketplace 364 00:25:52,303 --> 00:25:57,623 In general so and then as far as land like 365 00:25:57,623 --> 00:26:03,083 You know in O’Hare right now um let me think about this 366 00:26:03,083 --> 00:26:08,663 So yeah land would always like three, four, five years 367 00:26:08,663 --> 00:26:12,370 Ago, land for a redevelopment in O’Hare was about a million dollars an acre. 368 00:26:12,370 --> 00:26:17,000 Now we've seen sales in O’Hare that are basically double that. 369 00:26:17,030 --> 00:26:22,350 They're getting close to $50 a foot. Data centers will pay about $3 370 00:26:22,350 --> 00:26:27,010 Million an acre for industrial land. There's a shortage of power here. It's 371 00:26:27,010 --> 00:26:30,810 Like that everywhere around the country, but we've seen significant increases 372 00:26:30,810 --> 00:26:35,750 And we've seen redevelopment going further out, like into like our central 373 00:26:35,750 --> 00:26:41,120 North DuPage markets, which are five to 10 miles west of O’Hare. 374 00:26:41,290 --> 00:26:46,700 We're seeing redevelopments there now for $30 a foot on land, which, 375 00:26:46,730 --> 00:26:51,480 You know, probably 10 years ago was seven, eight, $9, and now it's 30. 376 00:26:53,550 --> 00:26:56,610 And I think what we're seeing is there's so much institutional 377 00:26:56,610 --> 00:27:00,350 Presence in our market, it's harder and harder for entrepreneurial 378 00:27:00,350 --> 00:27:04,330 Companies to really own real estate unless it's 10,000, 379 00:27:04,330 --> 00:27:07,490 20,000, 30,000 square feet where a lot of the institutions don't really 380 00:27:07,490 --> 00:27:10,930 Play in those size ranges because usually the functional obsolescence of the 381 00:27:10,930 --> 00:27:14,470 Buildings, things like that, they're too small to redevelop those sites. But 382 00:27:14,470 --> 00:27:18,770 Anything bigger in a decent location, mainly that would be 383 00:27:18,770 --> 00:27:21,470 Jeff: Non-Cook County, there's institutions that Justin: Yep. 384 00:27:21,470 --> 00:27:23,700 Will even buy these buildings vacant in a heartbeat. 385 00:27:23,950 --> 00:27:26,520 Yep. Yep. Just to get their hands on the product. 386 00:27:26,990 --> 00:27:31,650 Jeff: For sure. Justin: So that would tell me you guys didn't come off 387 00:27:31,650 --> 00:27:36,630 The peak too much. if you think of like the 2023 peak and the COVID run 388 00:27:36,630 --> 00:27:41,170 Up in rents and land prices, if you have land that's more today than it 389 00:27:41,170 --> 00:27:45,510 Justin: Was a couple years ago. Jeff: Super fair point. We really didn't. 390 00:27:45,510 --> 00:27:51,000 We were blessed. We've never really been overbuilt. You know, we're in a very, 391 00:27:51,050 --> 00:27:55,080 Very, you know, we're in the center of the country. We're a well-educated workforce. 392 00:27:56,070 --> 00:28:00,760 We've got good readily accessible unskilled semi-skilled skilled labor 393 00:28:02,410 --> 00:28:05,310 You know we've got all the class one railroads that kind of come 394 00:28:05,310 --> 00:28:10,170 Together in Chicago we've got some of the biggest inland intermodal yards 395 00:28:10,170 --> 00:28:13,890 Jeff: In the country here you know we're blessed just Justin: Yes, it's the greatest city 396 00:28:13,890 --> 00:28:16,290 Jeff: Being in the center we're being blessed being in Justin: In the world. 397 00:28:16,290 --> 00:28:19,790 The center of the country and we got some pretty good food too if you're not 398 00:28:19,790 --> 00:28:24,580 Jeff: Aware of that yeah Justin: Yes, that's the rumor and the rumor is true. 399 00:28:25,850 --> 00:28:28,710 So if you're coming out of a lease right now in 400 00:28:28,710 --> 00:28:32,130 100,000 feet and it's time to renew, then and that would tell you your rent's 401 00:28:32,130 --> 00:28:35,750 Not going down, it's maybe staying the same or it's going up. And if it's going 402 00:28:35,750 --> 00:28:40,520 Up, it's going up nominal or a couple percentage points or something like that. 403 00:28:40,850 --> 00:28:46,110 You know it depends on where the building is what what your 404 00:28:46,110 --> 00:28:49,820 Landlord's being motivated by are they a public landlord or not? 405 00:28:49,970 --> 00:28:54,150 Are they a little concerned about? Because you look at some of the bigger public 406 00:28:54,150 --> 00:28:58,510 Landlords that unfortunately, even though they're not impacted as much as you would 407 00:28:58,510 --> 00:29:01,680 Think by interest rates, the interest rates still impact their stocks. 408 00:29:01,990 --> 00:29:05,480 And they're concerned a little bit about occupancy. 409 00:29:05,650 --> 00:29:10,010 So I would say they're being more reasonable on renewals. They still want 410 00:29:10,010 --> 00:29:13,680 To get a market transaction, but they might not be squeezing as hard. 411 00:29:13,710 --> 00:29:17,910 And when I'm doing a renewal, I always explain to the person, go, usually 412 00:29:17,910 --> 00:29:22,230 The way, the lens that a lot of the landlords look at, let's just say the 413 00:29:22,230 --> 00:29:27,740 Market rate for simple math is, you know, $9 to renew in your building. 414 00:29:28,290 --> 00:29:33,710 And, you know, you're paying $6.75 or whatever. A lot of these landlords 415 00:29:33,710 --> 00:29:39,010 Say, I want to get $9.50 because you're not going to move for $0.50. So a lot 416 00:29:39,010 --> 00:29:43,130 Of landlords, in my opinion, try to get a little above market for the renewal 417 00:29:43,130 --> 00:29:47,030 Because they know the tenant's not going to leave for $0.50 a foot. not all of them 418 00:29:47,030 --> 00:29:49,850 Do that but that's generally the metric a lot of them look at and 419 00:29:49,850 --> 00:29:52,750 Jeff: That's just kind of how I explain it that's the Justin: Yeah. 420 00:29:52,750 --> 00:29:55,240 Quick math you're not going to move for that amount of money 421 00:29:55,410 --> 00:29:59,270 You're like, what happened to 95% of fair market value? 422 00:29:59,270 --> 00:30:02,580 It's turned into 105% of fair market value. 423 00:30:03,030 --> 00:30:07,650 And what's interesting is I've been doing this like you for a long time in the 424 00:30:07,650 --> 00:30:11,350 Past when you're doing a deal and it's cooled down a little bit on this front but 425 00:30:11,350 --> 00:30:15,050 A renewal option was always a no brainer at market to throw it in there. When 426 00:30:15,050 --> 00:30:18,150 The market started getting very strong, you know, six, seven, eight years 427 00:30:18,150 --> 00:30:21,770 Ago, landlords were acting like they were doing you a favor, giving you a renewal 428 00:30:21,770 --> 00:30:23,410 Jeff: Option at market because Justin: Yep. 429 00:30:23,410 --> 00:30:27,110 They just wanted the flexibility. If you were a good, solid company, but like 430 00:30:27,110 --> 00:30:30,390 A Fortune 100 company came along and wanted your building, like they were 431 00:30:30,390 --> 00:30:33,730 Possibly thinking about booting out of there. They didn't want to say that, 432 00:30:33,730 --> 00:30:37,540 But we're starting to see now landlords are kind of back to within reason. 433 00:30:37,550 --> 00:30:41,110 We'll give you a renewal option at market, but a lot of them still try to avoid 434 00:30:41,110 --> 00:30:44,990 Putting it in there is what I see. And I don't think it's that big of a give, but 435 00:30:44,990 --> 00:30:49,690 A lot of landlords just don't love giving them. It just muddies the water 436 00:30:49,690 --> 00:30:53,770 On what they can or can't do. So I get why they don't put it in there, 437 00:30:53,770 --> 00:30:57,160 Jeff: But I don't think it's that big of a deal. Justin: Yeah, I do. 438 00:30:57,390 --> 00:31:01,190 I agree with what you're seeing for sure. Yeah, and that like having it 439 00:31:01,190 --> 00:31:06,010 Be 103.5% of market or some version of that where you're like, okay, it's 440 00:31:06,010 --> 00:31:10,520 Guaranteed you'll overpay, but if you need that insurance policy, you've got it. 441 00:31:10,990 --> 00:31:13,490 Well, and there's always some sort of complicated way to 442 00:31:13,490 --> 00:31:16,190 Account. calculate what your rent's going to be and you 443 00:31:16,190 --> 00:31:20,150 Do a bunch of renewals like I do, you rarely ever see the 444 00:31:20,150 --> 00:31:23,610 Landlord follow what’s spelled out in the lease document of how they're going 445 00:31:23,610 --> 00:31:26,510 To determine what it is and how the process is going to be. What 446 00:31:26,510 --> 00:31:29,850 I always say, if you're a quality tenant and you have a good 447 00:31:29,850 --> 00:31:33,030 Rapport with your landlord and you have the right representation where 448 00:31:33,030 --> 00:31:36,190 Hopefully the person that's working in your best interest truly is, 449 00:31:36,190 --> 00:31:38,930 Justin: Yep. Jeff: That there's usually a reasonable way to 450 00:31:38,930 --> 00:31:43,000 Get to a position that makes sense for everyone within reason. 451 00:31:43,010 --> 00:31:48,600 Yep. And I agree with that. I've heard that from a 452 00:31:48,600 --> 00:31:52,780 Couple of my favorite clients, too, that just never get options because they are 453 00:31:52,780 --> 00:31:58,210 Like, reasonable people will figure out an answer, and I'm not worried about that. 454 00:31:58,520 --> 00:32:02,040 And it's so funny. Do I still suggest those sometimes? 455 00:32:02,040 --> 00:32:06,470 But it's been interesting to see some companies just like, we don't need them. 456 00:32:06,520 --> 00:32:10,890 We'll figure it out. And it's always served us. And that can be OK, too. 457 00:32:11,180 --> 00:32:14,250 And we're seeing a lot of kind of along the same wavelength. 458 00:32:15,040 --> 00:32:18,770 Rents have gone up a significant amount in the last seven, eight, nine years. 459 00:32:18,980 --> 00:32:22,450 A lot of big companies are like, I just want to own my building now. 460 00:32:22,620 --> 00:32:26,480 So we're seeing like Ferguson just acquired a 450,000 461 00:32:26,480 --> 00:32:29,330 Square foot building that's coming out of a lease building. 462 00:32:29,960 --> 00:32:34,520 They got a fair price on the buy and they just said, we want to be in control 463 00:32:34,520 --> 00:32:38,000 Of our destiny. And they're like, if we're going to overpay for something 464 00:32:38,000 --> 00:32:41,790 A little bit, we'd rather own it and just kind of control what we're doing. 465 00:32:41,800 --> 00:32:45,720 But it's not easy to find a building to buy anywhere in the right 466 00:32:45,720 --> 00:32:48,850 Type of real estate, in the right zip code, in the right location. 467 00:32:49,060 --> 00:32:52,180 It's tricky to find. Like, I think in most major markets, it's hard 468 00:32:52,180 --> 00:32:54,050 To find anything to buy that makes sense. 469 00:32:54,700 --> 00:32:58,510 Yeah, it's funny how fast it comes down to a handful. 470 00:32:58,940 --> 00:33:02,280 Even if you think of like, oh, there's 50 or there's 20 or whatever, and 471 00:33:02,280 --> 00:33:05,950 Then when you boil it down, there's maybe this one or maybe these two. 472 00:33:06,698 --> 00:33:12,118 You said you had data centers competing for land too, but a power availability is 473 00:33:12,118 --> 00:33:17,828 Not necessarily available enough to make it so sought after. 474 00:33:19,398 --> 00:33:22,778 How many have you seen pop up? Or would you say like one in 10 475 00:33:22,778 --> 00:33:27,518 Sites go to them, or there's five of them that stand out, or there's 476 00:33:27,518 --> 00:33:30,648 Justin: 20 now, or how do you categorize it? Jeff: It's tricky. 477 00:33:31,698 --> 00:33:36,918 You know it's such a sprawling and huge market I can't give you actual numbers 478 00:33:36,918 --> 00:33:40,918 Just because a lot of times they're looking at stuff off market etc etc but 479 00:33:40,918 --> 00:33:45,478 Even before I answer that I would say an interesting metric that a lot of landlords 480 00:33:45,478 --> 00:33:48,218 Are looking and I've seen even in my own personal business and 481 00:33:48,218 --> 00:33:53,238 A bunch of guys in our firm ours companies that are doing things manufacturing 482 00:33:53,238 --> 00:33:57,118 Or supplying stuff that ultimately goes in the data centers is driving a 483 00:33:57,118 --> 00:34:01,907 Significant amount of transactions everywhere. Like it's very significant. 484 00:34:01,917 --> 00:34:07,357 Justin: Yeah. That's buoying the market at Jeff: Very significant. 485 00:34:07,357 --> 00:34:12,857 Justin: Present. For sure. I can't take that bet. Jeff: You know, unfortunately, this. 486 00:34:12,857 --> 00:34:16,097 Justin: I think you're right. Jeff: Yeah, unfortunately, data centers, 487 00:34:16,097 --> 00:34:19,197 Everyone wants everything in one second on their phone and all that. 488 00:34:19,197 --> 00:34:23,337 But like, it's just unfortunately kind of a negative term. Like a lot of these 489 00:34:23,337 --> 00:34:26,417 Communities are like, we don't want to take in all of our water. We're 490 00:34:26,417 --> 00:34:28,367 Not taking all of our power. We're not sure. 491 00:34:28,437 --> 00:34:31,857 Like, is there a problem if residents are near these buildings? I don't know. 492 00:34:31,857 --> 00:34:33,657 When answering these questions, but like 493 00:34:33,657 --> 00:34:37,367 Jeff: There it's very negative data centers in general. Justin: Yeah. 494 00:34:37,397 --> 00:34:41,417 Like a lot of communities like five years ago, welcome them with open arms 495 00:34:41,417 --> 00:34:45,447 Because they pay a lot of building fees. They pay the same amount of taxes. 496 00:34:45,477 --> 00:34:49,717 There's no truck traffic. And now it's like a complete 360 where 497 00:34:49,717 --> 00:34:53,657 They're kind of like maybe maybe the warehouse or the Amazon facility 498 00:34:53,657 --> 00:34:57,227 Is not so bad in my backyard. Like we've seen that change a little bit. 499 00:34:58,007 --> 00:35:01,987 Justin: The last one I got for you, Jeff, is owning real Jeff: Sure, 500 00:35:01,987 --> 00:35:07,317 Estate. Okay, so that is something that is a lot of people apply their craft. 501 00:35:07,427 --> 00:35:11,707 And then if you've been in the game for a long time and been successful, ultimately 502 00:35:11,707 --> 00:35:15,687 You've got to figure out what you're doing for your own long-term wealth, building 503 00:35:15,687 --> 00:35:21,257 Activities and investments. So what's your journey look like there? 504 00:35:21,867 --> 00:35:23,757 Yeah, great, great question. 505 00:35:24,607 --> 00:35:28,537 Myself and several others here internally, I'm partners with a bunch of people. 506 00:35:29,047 --> 00:35:33,167 We own several buildings, interest in several buildings, where we're always 507 00:35:33,167 --> 00:35:36,767 Very, very cautious that we're not competing with our customers. Some of 508 00:35:36,767 --> 00:35:39,817 Jeff: These we actually own with some of our customers. Justin: Yep. 509 00:35:40,927 --> 00:35:44,207 You know, we talk about it often when we present to 510 00:35:44,207 --> 00:35:46,897 Somebody that we understand both sides of the table. 511 00:35:47,207 --> 00:35:50,097 We're pitching on some guy who has a 100,000 square foot building. 512 00:35:50,827 --> 00:35:54,387 You know, we're probably not going to own a 100,000 square foot next to him. 513 00:35:54,387 --> 00:35:58,887 But we own part of a 20,000 square foot building, one town over, and we've 514 00:35:58,887 --> 00:36:03,527 Owned it for 10 years or 15 years. You know, it's kind of a great story. 515 00:36:03,527 --> 00:36:07,107 And, you know, we're probably one of the only major real 516 00:36:07,107 --> 00:36:11,837 Estate firms that we don't hide from it and we encourage it. 517 00:36:11,887 --> 00:36:14,887 And that was a big part of what Bill Lee did. And Bill Lee owned a 518 00:36:14,887 --> 00:36:18,187 Bunch of buildings, as you know, and Gosnell some of the original kind of 519 00:36:18,187 --> 00:36:22,477 Founders of many of the significant Lee offices, the Earnharts, you know. 520 00:36:23,287 --> 00:36:27,087 So exactly like it's it's a good thing. It's just harder and harder 521 00:36:27,087 --> 00:36:30,327 To find transactions that make sense because there's just there's 522 00:36:30,327 --> 00:36:33,587 A lot of institutional money that wants to buy everything 523 00:36:33,587 --> 00:36:37,337 That's industrial now. But very, very great question. 524 00:36:38,127 --> 00:36:41,827 Yeah, and they play by a different game. What have been some of your 525 00:36:41,827 --> 00:36:45,967 Experiences as you guys have owned them? I'm sure you've gone through replacing 526 00:36:45,967 --> 00:36:51,267 Roofs that cost more than you'd hope them to, figuring out if you kick out 527 00:36:51,267 --> 00:36:55,007 A tenant that's a deadbeat, or knowing what kind of deal you're going to 528 00:36:55,007 --> 00:36:59,387 Give tenants and what it's worth to you guys. And God forbid you want to 529 00:36:59,387 --> 00:37:02,667 Sell, or half the people want to sell and half don't. I'm sure you've gone through 530 00:37:02,667 --> 00:37:04,227 Justin: Some of that. Jeff: Yeah, you 531 00:37:04,227 --> 00:37:07,317 Know, we're pretty conservative, like kind of how we advise our clients. 532 00:37:07,347 --> 00:37:11,667 We try to do what's right. We try to do things long term. We try to be reasonable 533 00:37:11,667 --> 00:37:15,127 And fair with people. That's kind of how we manage the stuff that we own. 534 00:37:15,127 --> 00:37:19,387 We'd say we'd rather keep somebody in there instead of getting an extra five 535 00:37:19,387 --> 00:37:23,327 Cents in rent and having six months of downtime, just be fair with them. That's 536 00:37:23,327 --> 00:37:28,147 Kind of our thought process. You know, we try to like, it's just like kind of 537 00:37:28,147 --> 00:37:33,607 Going to the doctor, do the preventative maintenance on the buildings, some 538 00:37:33,607 --> 00:37:37,087 Rainy day funds set aside for replacing the roof, things like that. I mean, 539 00:37:37,087 --> 00:37:40,137 Jeff: That's just kind of how we set up our projects. Justin: Yeah. 540 00:37:40,707 --> 00:37:44,517 That's awesome. Yeah, and then have you bought anything outside of your market? 541 00:37:46,067 --> 00:37:49,267 No, really kind of where I kind of understand what's going on. 542 00:37:49,267 --> 00:37:52,327 Jeff: I haven't. That scares me a little bit. Justin: Yes. 543 00:37:52,327 --> 00:37:55,407 Justin: I figured it would. I just had to ask. Yeah. Jeff: I I like to 544 00:37:55,407 --> 00:37:59,977 Touch and understand and maybe be able to drive by what I own part of, for sure. 545 00:38:00,187 --> 00:38:05,413 Yeah. that's awesome and then any last advice for people coming up 546 00:38:05,413 --> 00:38:10,533 You got a lot of associates I'm sure you have meetings where they 547 00:38:10,533 --> 00:38:15,653 Are training sessions. And now in the age of AI, it's 548 00:38:15,653 --> 00:38:19,313 Interesting to see associates do different things for gathering 549 00:38:19,313 --> 00:38:23,623 Research and for trying to automate parts of the business. 550 00:38:24,033 --> 00:38:27,843 What do you notice with the next generation and any words of wisdom? 551 00:38:28,273 --> 00:38:32,193 Well yeah great great kind of segue to winding this down I would say before 552 00:38:32,193 --> 00:38:35,853 I answer I'd say the most important thing is when there's an associate and 553 00:38:35,853 --> 00:38:40,653 And any kind of sales I think is the mentor is the key before it kind of 554 00:38:40,653 --> 00:38:44,133 Answers the second part of the question you know you could have the smartest 555 00:38:44,133 --> 00:38:47,913 Most successful person but they got to be willing to spend time money 556 00:38:47,913 --> 00:38:51,553 With you and there's a lot of very successful people that are not the best 557 00:38:51,553 --> 00:38:55,913 People in training people like I'm blessed that Jim Planey was great with his 558 00:38:55,913 --> 00:39:00,083 Time, his resources, his money, like trained me to do things the right way. 559 00:39:00,133 --> 00:39:02,873 And didn't just be like, Hey, here's the keys to building, go 560 00:39:02,873 --> 00:39:05,473 Do all the showings and figure it out on your own. Like he 561 00:39:05,473 --> 00:39:09,243 Made sure I knew how to show building, how to do things appropriately. Um, 562 00:39:09,733 --> 00:39:14,553 Because we've seen a fair amount of like young associates that 563 00:39:14,553 --> 00:39:18,363 Are successful, smart kids, didn't have the right training and don't make it. 564 00:39:19,113 --> 00:39:23,243 Or the mentor is afraid to kind of let them actually talk to the client. 565 00:39:23,293 --> 00:39:26,313 Like he wants to keep the client over here. I'm like, you know, just 566 00:39:26,313 --> 00:39:30,233 It's time to kind of hand it over and let other people kind of grow in the business. 567 00:39:30,233 --> 00:39:32,673 But that doesn't always happen. So it's hard to figure 568 00:39:32,673 --> 00:39:35,553 That out, but I think that's critical. And then technology is 569 00:39:35,553 --> 00:39:41,003 Amazing with AI now to jump in. Like it's a huge time saver. 570 00:39:41,533 --> 00:39:45,010 It's a fine line, though. you know, you can text somebody in two 571 00:39:45,010 --> 00:39:47,850 Seconds, but I'm like, I haven't talked to this guy in person. 572 00:39:47,850 --> 00:39:51,670 Sometimes I'll show up at a guy's office to have a three minute meeting with him 573 00:39:51,670 --> 00:39:55,210 Because I'm in the area because I could have texted him and resolved it quickly. 574 00:39:55,210 --> 00:39:59,070 But there's something about just a personal touch, being in front 575 00:39:59,070 --> 00:40:04,110 Of somebody like technology is great, but it's harder and harder for 576 00:40:04,110 --> 00:40:09,210 People to like walk in and have a conversation and just do it in person. 577 00:40:09,210 --> 00:40:11,560 And like, that's very, very important in my opinion. 578 00:40:11,730 --> 00:40:17,070 Yeah not to forget about it or diminish it or to like 579 00:40:17,070 --> 00:40:21,010 Recognize that that is at the end of the day like the most 580 00:40:21,010 --> 00:40:26,500 Impactful for sure. Yeah. Awesome. 581 00:40:26,648 --> 00:40:30,718 Have a great day and I appreciate your time and Go Bears.