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What Tom Hanks Knows About Real Estate Risk

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What Tom Hanks Knows About Real Estate Risk
We did two things yesterday: 1) Visit  ULI's  breakfast on Downtown vs. The Suburbs at the Union League Club, and 2) rented the Hanks flick The Burbs. One taught us that investment is still trending toward urban core, well-leased buildings, but great opportunities exist in buying and turning around empty buildings. The other taught us to love Carrie Fisher again. Can you guess which was which?
 
Tishman Speyer's Casey Wold and Jones Lang LaSalle's James Postweiler
Tishman Speyer's Casey Wold and JLL's James Postweiler (above) joined JF McKinney's Jack McKinney Jr. and BPG Properties' Joe Neverauskus  for the panel. Casey says he sees each building's rent roll as a series of bonds, and he tried to balance the rolls by giving the best and longest-term tenants the best space. Having a few short-term or low-credit tenants in hard-to-fill spaces is better than nothing at all. James, who works on underwriting, says lenders are hesitant about seeing rent rolls full of leases with termination agreements. Jack says there are lots of cheap spaces available in the suburbs for under $50/SF, which means some risk for investors in that the properties may not lease up, but also could be a great opportunity for improvement and cash flow.
 
NAI Hiffman Mini
 
Charter One's George Hauch, Hines' David Bach and Kensington Advisors' Mark Hahn
Charter One's George Hauch said his bank is also hesitant on loans without a lot of long-term lease tenants on the building. Hines' David Bach  says his company is starting to expand outside of its core product, looking into smaller buildings with one of its latest funds. Kensington Advisors' Mark Hahn says now is a great time to be selling apartment buildings, as many of his companies suburban complexes are  well-leased  and investors are showing interest again.
Bovis Lend Lease's Elizabeth Snell and JMB Financial's John Howley
Bovis Lend Lease's Elizabeth Snell and JMB Financial's John Howley say the best opportunities right now are in smaller and off-beat projects. Elizabeth's firm is working on renovations at Jones College Prep in the South Loop and an MOB at Northwestern Memorial Hospital. JMB worked on putting together financing for the new casino under development in Des Plaines.
VOA's Jeannette Lenear, City of Hope's Sarah Ann Maraccini and Jones Lang LaSalle's Dan Ryan
We snapped VOA's Jeannette Lenear, City of Hope's Sarah Ann Maraccini, and JLL's Dan Ryan making some big plans. Sarah Ann is organizing the Spirit of Hope  Dinner Nov. 3, which will honor Dan for his achievements in real estate and public service.