I’ve always been interested in real estate and architecture. My original major was Civil Engineering, but after taking the introductory course and discovering that I’d have to learn way more about concrete than I ever wanted to know, I switched to Electrical Engineering. Ever since then, though, I’ve been trying to find ways to be involved—bought a rental during the boom (bad idea), built out our offices, and was super involved in building our house, which was a ton of fun.
Early in 2011, I was going back and forth between companies and wishing everyone could be in the same space. I was working with Matt Garrison and Marc Muinzer on Energy.Me already, and they had an extensive knowledge and great track record in real estate, so we started to look at buying a building for our companies and projects. We ended up settling on a building in Chicago’s West Loop neighborhood and moved everyone into the space—it was open plan with 18-feet ceilings, bright, and well designed. (It took some work, though, including the extraction of a giant fish tank supported by steel beams.)
With the success of our first property, we began to look at similar buildings. We’ve been lucky on timing, but there is a logic to our strategy. Our belief was—and is—that there is limited supply of loft office buildings, particularly open spaces with high ceilings and good windows. Often, you can buy these buildings at far below replacement costs—no one is going to build a brick and timber loft building today; it’s way too expensive. Thus, you’re buying with a margin of safety in a market with limited supply. Also, from a timing standpoint, by 2011 the banks had finally written down the values on these assets to a point they were ready to transact—most of what we bought was from banks or through bankruptcies.
I believe the spaces you live and work in have a significant effect on you mentally. Big, open, bright spaces make you happy and feel more creative, versus a dingy, dark office that makes you want to leave. There is no better problem to solve than your own, and this is probably the easiest way to find an opportunity—be a user and design for yourself. I knew what kind of office we wanted and figured if we want it, other people do as well. We’re nearly fully occupied everywhere we own and can’t find much else to buy, which is the best indicator. Our portfolio has grown to more than 600,000 square feet of mostly loft office, and we’ve assembled an awesome team including leasing, property management, construction management, and acquisitions.
Recently, there has been a shift in how we work, moving from isolated private offices or high-walled cubes to open spaces with more room to collaborate. More and more, the office is where you collaborate, and home or a coffee shop is where you get heads-down work done. There’s also a major trend from the suburbs to the city with some high-profile companies moving back to the city—we think this trend will continue. It feels like every week, someone launches a new co-working space or incubator, which admittedly makes me a little nervous. However, the trends are strong towards the city, towards our neighborhoods (mostly River North and the West Loop), and towards open, more collaborative spaces.
To me, Chicago’s West Loop feels like NYC’s Chelsea did ten years ago, and if it becomes anything close to that in the coming years, it will be a premier neighborhood. And if by some miracle the highway actually becomes a park, the neighborhood will be all the more desirable. From here, we think you’ll see these types of assets become more of an institutional-level asset class as the credit quality of the tenant mix slowly improves.
As for our office—finally—after three moves in the last couple of years, we’ve settled into a great new building (at least semi-permanently) at 1130 W. Monroe. The 35,000-square-feet concrete loft building used to be a manufacturing facility and has a 45-feet-tall atrium that is stunning. We’ve moved our companies there, filling the third floor, and have some exciting new companies moving onto the second floor within the next few months. Over the next year, we’ll build out the rest of the building into a large co-working space filled with companies whose work we admire and whose people we are excited to work with.
If you’re interested in an innovative, entrepreneurial, creative environment and are in the West Loop, hit us up, and we’ll give you a tour.