10/6/22 Chicago Mastermind Group Meeting

Key Take Aways from Chicago’s October 2022 Mastermind Group Meeting!

• Lutalo McGee, Ani Real Estate: Residential and commercial brokers, serves on a couple boards, 35 agents in the group, residential focus. The last 2 years he has been part of discriminatory task force to help push for changes. IL had studies commissioned to look at data, denial trends were based on race studies, started to push more for positive changes with the state. There is cooperation from the current administration, refinancing challenges are twice as high with minorities but it effects everyone, people can’t buy houses and it has a cascading effect, taxes not applied evenly, and rates are affected by violence and other factors.
• Lauren Zangl, ECS Midwest LLC: Her firm works in the environmental space, facilities inspections, not a lot going on now. She shared a story about being at a networking event recently and connecting with someone at the event on LinkedIn before meeting them. The conversation then moved to the high percentage of event attendees that don’t show up even as people are ready to get back out since Covid. It appears a majority of younger people are networking digitally and may not feel the void of face-to-face collaboration as others do. Working from home has been necessary, but are we doing it right? Some discussion from the group suggested the pendulum would be swinging back and the flexibility of working offsite may be pushed aside for in office requirements. How can we sustain the same level of company culture and connection with team members if we are not in the building?
• Hart Passman, Elrod Friedman LLP: Hart shared an article that talked about Chicago hotels being near or above capacity of pre-Covid. As recently as a month ago, he was getting calls converting hotels to residential and the zoning restrictions, but he is not getting those calls anymore. Downtown hotels are key driver of downtown economy, for leisure and conventions. Business travel is starting to come back up creating more downtown activity. He also mentioned the push to change the zoning on LaSalle to residential. There are lots of old buildings which are fine for offices but how will conversion to residential affect the loop? The group discussion included consideration of horizontal mixed-use space or pseudo apartment communities. What is the best mix for LaSalle Street? Removing some of the old buildings, adding green space. These types of areas are cyclical in their popularity. The city is looking for long term plans (30 year) plans to overhaul the street. The location is central, close to shipping on State St. Is a Fulton Market style mix of old and new the best solution?
• Ryan Letzeiser, Obie: Co-founder of Obie, commercial and multi-family real estate insurance and risk management. They are active in 12 states and is a venture backed insurance company. His projections for the future were based on the challenges of climate change and the effects it will have on the industry, especially in 2-3 years. He shared that the costs of rebuilding from hurricanes, fires have increased dramatically, and the insurance companies will have no choice but to raise rates to cover the large increases in building materials and replacement value. The costs of climate change will be spread across all states, not just felt on the coasts, and must be absorbed by all. The middle of the country is already becoming a preferred location for people heading north. Insurance companies are being forced into high-cost claims now, hurricane Ian was the nail in the coffin. He predicts that Florida, Arizona are places that will soon be difficult to get insurance due to the cost of risk.
• Robert Linn, Point B Properties: Owner of a property development company, mostly conversions on the smaller side. Some desirable areas he sees now are Florida, Arizona, Tampa. Outside Chicago, prices have been going up very fast. He has been successful with recent conversions of retail space. Using an Airbnb model for retail space by the hour, he developed a hybrid model. Zoning issues have been a challenge and he is looking for additional opportunities. He has been successful in his appeals of zoning restrictions.
• Mark Myers, Walker & Dunlop: Co-lead focused on investment sales of seniors housing, active adult and hospitals to broker and invest. His company has completed 800 transactions in 46 states. Covid was good and bad, it takes longer for absorption of market challenges. He sees optimal growth to 20% seniors in housing in the future. It is easy to over build in desirable areas for active adults. Atlanta is over built along with pockets in Phoenix and the north shore of Chicago (demographics attractive). It takes 4 people to manage a building for active adults, but it takes a 4 to one ratio of nursing home staff is needed in a more concentrated care situation. Average age for active adult communities is 71 and 85 for nursing homes. Texas and Florida are hot spots with the current population growth.
• Joe Calvanico J2C Valuation: His company provides full-service valuation. There is a lot of work going on in property tax appeals. All of Chicago is done, now concentrating on the northern suburbs. Cook County keeps him busy. Home values will increase, or taxes will increase to hit the budget. First level is 30 days to appeal, then it moves to the assessor’s office for review with assessor. Next you can get in front of the board of review. In Cook County, if your neighbor’s house has a lower tax and your house is comparable, then you have a right to challenge. Comp sales trends are also taken into consideration.
• Rick Rembusch: He just started a new position with a hospitality firm, now in partnership with a developer. The interest rate environment will have a big impact on lending and building, rates are expected to further climb.