Episode Transcript
[00:00:00] Speaker A: Foreign.
I am your very green podcast host, Joe Smazel. I'm a broker and partner at Interra Realty. We're a boutique Chicago based and Chicago focused multifamily mixed use brokerage firm.
And I appreciate you tuning into a podcast with me. It's a. I know it's a crowded space for real estate and business podcasts, but I wanted to start one that is Chicago specific, that is very positive on Chicago. I'm tired of the bad press in Chicago and I want to profile some people that make the city great. Like my friend Adam Freedberg, CEO of Maverick Development. Adam, welcome to the show.
[00:00:49] Speaker B: Thanks for having me.
[00:00:51] Speaker A: I met Adam about 10 years ago while we were living in the same condo building together and we had some kind of BS to unwind within the condo dynamic between the ownerships and the building. And it's kind of a funny way to get to know somebody, but we were both hustling to get our real estate careers started at the time. And then since then, Adam has become the leader of one of Chicago's most active development firms, Maverick Development. Maverick, with Adam at the helm, has developed projects like the St. Grand in Streeterville, Portrait and Uptown, Webster and Bissell and Lincoln Park. And in total they've developed about a billion and a half dollars of real estate comprised of about 2,000 units, both apartments and mixed use.
It's crazy. Congrats for the success in the last 10 years. Come a long way since I met you, man.
[00:01:43] Speaker B: Yeah, I missed the days of condo board bs, but here we are.
[00:01:48] Speaker A: Between those and condo deconversions, I had my fill of condo experience for my life. I've sworn to know real estate in an association since then.
[00:01:57] Speaker B: Good for you. We'll see how long that you stick to that.
[00:02:00] Speaker A: Unless it's a good deal or whatever. Right.
So we're going to start with some rapid fire questions. No explanations, only answers. All right.
What'd you listen to on the way here?
[00:02:11] Speaker B: I was on a phone call.
[00:02:13] Speaker A: Total like cre answer there.
[00:02:16] Speaker B: I know. I was on a phone call with a partner of mine in a deal, catching up. This deal in particular is 100 leased. So we're actually talking about the success and hopefully teaming up again on another project.
[00:02:31] Speaker A: Scheduling a closing dinner.
[00:02:33] Speaker B: You know what, we will schedule closing dinner when it's closed. You know I'm superstitious.
[00:02:38] Speaker A: Good stuff, man. Favorite Chicago coffee shop.
[00:02:42] Speaker B: I don't drink coffee.
Sorry to disappoint, but I love the vibes of Sawada. So if I did drink coffee, I'd go there. I'm naturally caffeinated. I think just. I wake up this way every day.
[00:02:55] Speaker A: Okay, pizza place.
I don't eat pizza. I only eat chicken salad.
[00:03:01] Speaker B: No pizza. I mean, it's a boring answer, but I'm gonna say Luminati's.
[00:03:06] Speaker A: It's not wrong.
[00:03:07] Speaker B: It's just consistently good.
[00:03:10] Speaker A: Early bird or night owl?
[00:03:12] Speaker B: Early bird.
[00:03:14] Speaker A: Yeah. Kids.
[00:03:15] Speaker B: Yeah. Used to be cool to stay out late. Now it's cool to wake up early. So I'm up all early as can be.
[00:03:21] Speaker A: Cool.
Best under the radar Chicago restaurant.
[00:03:26] Speaker B: Been super into Tama T A M A. I know it.
[00:03:30] Speaker A: I'm going to write it down here.
[00:03:31] Speaker B: So big equity investor of mine is a Greek guy. Told me about this restaurant. It's in Bucktown. It's insane.
Go. And once it. It's hard to get a reservation there. I'm going to blame this podcast. So.
[00:03:44] Speaker A: Okay, well, I hope that we have the problem of enough people listening to affect a restaurant success.
What's a word that your colleagues would use to describe you?
[00:03:56] Speaker B: I would say without sounding like an imbecile, I would say ambitious.
[00:04:08] Speaker A: That's good. That's a, um. It's a good thing for a leader of a firm. Favorite intersection of the city.
[00:04:18] Speaker B: I love North Damon and Milwaukee. There's so much happening right there.
[00:04:25] Speaker A: Just so happens.
[00:04:27] Speaker B: It just so happens we're developing a building right there. But I've been spending a lot of time there.
[00:04:31] Speaker A: Okay.
[00:04:32] Speaker B: And it's like every walk of life. There's the L, there's good restaurants.
It feels so Chicago to me.
[00:04:38] Speaker A: Very authentic.
[00:04:39] Speaker B: Right?
[00:04:39] Speaker A: Yeah. Yeah, I agree.
Two more plug an up and coming Chicago real estate person that's hustling and you think deserves some recognition.
[00:04:49] Speaker B: I would say. Shane Rockman has been crushing it started Peak Realty now Cross street and he's done a really good job. They lease a lot of our.
A lot of our buildings and it's just evident they're getting better every day and we push them extremely hard. But they've. They've stepped up to the plate.
[00:05:13] Speaker A: Yeah. I mean, he's also a good dude. He's a guy that we're both friendly with. He's also a good guy. And I, I appreciate the. Their rebrand, I think turned out cool. Cross street rebranding I think is fresh and it's like very fitting for that firm.
[00:05:27] Speaker B: So he asked me about the name before they did it and I was like, that's a terrible name.
[00:05:31] Speaker A: No, dude, it turned out. Oh.
[00:05:32] Speaker B: Now I'm like, actually, I really Like.
[00:05:34] Speaker A: I think it turned out cool. Like, business even. Like, the website's cool. Signage is cool. We'll get Shane on one of these days.
Last one. If you had the equivalent of a baseball walkout song every time you walked into the office, what would you pick?
[00:05:48] Speaker B: Oh, God.
I mean, it'd probably be some, like, intense techno because I just like my partner's eye. Well, 7am will be in the office blasting techno. Just. Let's go. Let's. Like, they're. We're not going to sit and wait. We're just going to be. We're in our primes. Like, let's go.
[00:06:05] Speaker A: I like it, dude. I like it.
All right, cool. Now you get a chance to explain yourself. So let's start at the start. Tell me a little bit about growing up.
Maybe pause when you get to how you landed in real estate.
[00:06:20] Speaker B: Sure. Yeah. So I grew up in Cleveland, Ohio.
Better or for worse, right? Not for worse, but, you know, we were just outside the city. My dad died when I was six years old, so my spent a lot of time with my grandfather, who was a real estate developer. And he primarily owned shopping centers. So when I was a little kid, spent a lot of time with him. We'd walk shopping centers together.
He taught me the golden rule of real estate, which was buying, Buy low, sell high.
And I've been trying to do that. You know, it's a little bit more complicated now than it. Maybe it was 30, 40 years ago, but that was really an inspiration. And I remember when I was 15, I asked him if I could work for him, and he said no. And I was heartbroken. And his reasoning was, I don't want you to be me. I want you to be better than me. And it really lit a fire. And I don't think I'm better than him. I think I've got a lot to prove, but I'm off to a good start. And, yeah, I've just had, like, an itch and a burn for real estate since. Since that happened.
[00:07:29] Speaker A: I didn't know that. Yeah.
Is he. Is he still with us?
[00:07:33] Speaker B: No, no, he was in the office until he died at 96.
[00:07:36] Speaker A: Oh, did he. Did he see you at the start of Maverick or he.
[00:07:40] Speaker B: Yes. So he saw me buy my first project.
We took a picture out in front, which was awesome. I've got it hung up in my office. And I tried to explain to him what I was doing at Maverick. And he was like, just buy a shopping center. And I was like, okay, well, there's this thing called Amazon and It's changed things a bit. So, yeah, he may not understand the detail of what I'm doing now, but I think that he was like one of the hardest working guys I'd ever met. And the most important thing was he loved it. I mean, he was there to his 96, loved what he did.
[00:08:16] Speaker A: That's incredible. Man also hopes you stay sharp. As somebody who's, you know, he keeps hustling, he keeps working. It keeps the mind going. You don't give your body a chance to deteriorate. I think a lot of people that are like high producing like that, they just, they just keep going because they love it and, you know, it keeps them sharp.
Do you think that your family or friends saw entrepreneurial traits in you when you were young, or is that something that you feel like you developed later in life?
[00:08:43] Speaker B: I would say yes. I would think it was probably more quantified as hustler than entrepreneur.
[00:08:48] Speaker A: Yeah, those things can't go hand in hand.
[00:08:51] Speaker B: There's like a famous Adam story. When I was, I was six or seven years old, I set up a lemonade stand like every six or seven year old. But mine was free and I just had a big tip jar out there.
And so I made so much money giving out free lemonade because I would just incentivize people to tip whatever their heart desired. It was great. And you know, I think that getting started in real estate, you have to be. If you want to go on your own, obviously you've got to have some entrepreneurial spirit to you. The first real estate deal I ever did was in River Forest. I bought a building that I knew I had to buy. It was a block from my office. Previous owner, it was on the market forever. Previous owners had sunk a ton of money into a commercial kitchen space. And I knew there was value there, but I didn't know what it was. I didn't even know how to get a tenant. I didn't know anything. So I started a commercial kitchen business that was my own tenant.
[00:09:46] Speaker A: Straightforward first dealer, right?
[00:09:47] Speaker B: Well, you know, I officed with a woman who had a jam and jelly preserves company and I asked her where she cooked and she told me it is a law that you actually have to cook in a commercial grade kitchen. And the only places to do that are restaurants after hours. There weren't these huge commercial kitchen commissaries yet. So I started river forest kitchen in 2015.
I grew the business to about 30 tenants. The kitchen was booked 24 7, 365.
And I sold that business in 2017.
[00:10:20] Speaker A: Okay.
[00:10:20] Speaker B: And leased building back to the person I sold it to. So I just sold that building last year, which was sad to, like, sell it, but it was the part of the business plan, so, you know, no one ever went broke making money, and my partner and I did.
[00:10:35] Speaker A: Well, that's incredible. It's also just, you know, I think it's a little bit telling for you because, you know, you didn't do a lazy, easy deal out of the gate. You know, you did something that you know, you could use some of your know how towards and create real value as opposed to just like dribbling a deal along and. And being at the mercy of the market as to whether or not it succeeds.
I want to go back to your lemonade stand, though. Was there anything about that experience of giving out, giving something of value and not necessarily asking something in return, but receiving something in return? Is there anything about that that you feel like applies to what you do today still? And talking about creating value, creating living experiences, and then also creating value for your investors and partners? Right.
[00:11:25] Speaker B: Yeah.
So I like doing this thing where everyone's looking at something and I just turn it, and everyone's like, what are you doing? And they now look at the same thing from a different perspective. So I actually had a guy come up to me recently who I hadn't talked to a while, and he's like, I love when I'm on meetings with you because you say something absurd that everyone just is like, oh, wait, that's actually either a really good idea or a really bad idea, and we don't know which one. And we're gonna figure it out, but maybe we use it in some way. So I. I think that at Maverick, one of the things that we do really, really well is we turn over every single stone. So whether it's giving away free lemonade or if it's finding new revenue streams, diversifying what we do, doing things in house as opposed to outsourcing them, I think we do a really good job at that, and I think we bring a unique perspective. And like you said, these are people's homes.
[00:12:18] Speaker A: Yeah.
[00:12:18] Speaker B: And I had a colleague once tell me how emotional that is, that you're actually creating a space where people live. They are going to get divorced there, they're going to get engaged there, they're going to have maybe their first kids there. This is probably the most important space to them. And you have to think of every single detail, because if you don't, then you've just taken something from them. So it becomes such an emotional experience, developing homes and developing, you know, apartments.
[00:12:48] Speaker A: How do you. How do you balance that with, you know, you want to execute something that's creative, that's fun, that adds value to people's lives, as you just described, with it being a successful project.
You know, these deals do not have.
A lot of times they don't have huge margins. You know, we're developing in a competitive city.
There's risk in developing, and, you know, there's elements of deals that are outside of your control as well as what's in your control. How do you balance developing cool stuff that you feel like is really additive to the neighborhood and to people's lives with keeping the economics of the deal in mind?
[00:13:28] Speaker B: So part of the secret sauce at Maverick is we conceptualize a project with everything. The whole pizza and all the toppings. And then we say, okay, this is condo quality. It's got every nook and cranny figured out, every detail, et cetera. And then you start to peel away where you can with the intent to hold on to as much as possible.
[00:13:54] Speaker A: Okay.
[00:13:55] Speaker B: And I think there's a couple ways to do it. I mean, my partner has been in the construction business for 20 plus years, so we can build. And I know this because we've done it, and we continue to do it. We can build higher quality and cheaper than our competitors. And everyone asks how.
And the reason why is we're in the weeds on every single detail. The St. Grand is a great example. We built that building for under 260 bucks a foot. We had a competitor who delivered a building maybe two months ahead of us for over $300 a foot. We're getting the same rents as them. We're at the same opex as them, but we saved over $40 a foot because we didn't spend money on things that might not generate rent, like the facade. Yeah, everyone likes the look of their building, but people really like closets, People really like hampers, and people like dishwashers that are, you know, you want the things that you're going to interact with every single day. Does your building have the sexiest glass on the outside?
I don't really care.
[00:15:01] Speaker A: It looks cool.
[00:15:01] Speaker B: Does it look cool enough? Sure.
[00:15:03] Speaker A: Yeah.
[00:15:03] Speaker B: But, like, there's ways to get efficient on that. And then, like I said, we start by throwing everything at the project in the beginning and peeling away from there.
[00:15:13] Speaker A: We're going to talk more about the St. Grand. I want. I want to hear. I want to get in the weeds with that a little bit, but I want to Go back to something you said because it's kind of backwards to how I would think about it as a, as a dumb real estate broker. But I would have thought that you kind of like have a deal pencil and then you add whatever toppings to the pizza that you can to. To stay within budget.
What do you think? Why is it more productive to go the other way as a developer to start with.
Start with the pizza and all the toppings. Exactly how you'd like it from lose, apparently. But.
And then take things away. I feel like that would be hard to. Hard to pare it down after you've got this beautiful building designed.
But talk to me a little bit about that mentality.
[00:16:00] Speaker B: So it's funny, this is where our businesses intersect.
[00:16:02] Speaker A: Yeah.
[00:16:03] Speaker B: We're both in the business of setting expectations and yours is probably the opposite of mine. Possibly where you're meeting with a seller and you want them to agree to the lowest number possible and exceed their expectations to get a much higher number.
When I'm negotiating with general contractors, I want to throw every single thing out there and let them price it and then start to erode the. Maybe like the scope from there.
[00:16:30] Speaker A: Interesting.
[00:16:30] Speaker B: But you'll notice that for some reason when you want to deduct something from scope, it's a smaller margin than when you want to add something to scope. Right.
[00:16:40] Speaker A: Then they look at it as like going to an a la carte restaurant where you're at. Yeah.
[00:16:44] Speaker B: So. Well, let's just example waterfall countertops. Right. Well, we can reduce all. We can take these all out of waterfall countertops and just do a traditional countertop and we'll save 200 gram from the scope. If we had done it the opposite way, it was, well, we have all traditional countertops and it's going to cost us half a million dollars to add all. You know, it's. That's just the nature of the business.
[00:17:05] Speaker A: I understand that. Yeah.
[00:17:06] Speaker B: So it's kind of in the art of the deal.
[00:17:08] Speaker A: Yeah. And we've been on. We've had the conversation about expectations before. You know, I've had a chance to represent you guys and it's been, you know, it's gone really well. And it. As a broker, it is, it's a balance because nobody hires us to leave money on the table or to execute an easy deal. But we also have to be realistic with sellers and with prospective sellers. And even in cases where people have.
It's just more of like a business development type conversation around pricing. Because if we're not, and we know we can't perform. It's hard to maintain the relationship if we over promise and under deliver. So that is a fine line that I think everybody in the real estate business in one capacity or another is used to kind of like tiptoeing on.
But I kind of question for you, that's a little bit about your mentality growing up. It's a little bit about how you're executing these projects. And you're developing high rises downtown, you're redeveloping office buildings into high end residential.
How do you manage risk so that you can sleep at night? And how do you balance risk in discussing investor objectives and making sure that you accomplish what you guys set out to do together?
[00:18:26] Speaker B: Sure. So risk is a.
[00:18:29] Speaker A: That question was exactly what I warned people about in this being my first podcast. So don't worry about it. Go ahead. Yeah.
[00:18:40] Speaker B: So the way I think about risk is there's risk in every decision you make in life.
Should I move to Chicago? Should I get married?
[00:18:49] Speaker A: Yeah.
[00:18:49] Speaker B: Should I invest in real estate? And so part of risk is managing it, but also understanding that life inherently involves risk in every decision you make in some way or another. And the way I think about it is I'm not a risk taker. I don't gamble.
When I go to Vegas, I'll throw $20 on black. And that's it for the extent of my trip to Vegas.
I only invest money in projects that I can control the outcome. So I think of it less as risk and more of control.
And the deals that we do, we have a high level of control over every situation, whether it's taxes, tax abatement, whether it is cost, pre negotiated gmp, a gross maximum price contract with a gc, whether it's lease risk, sign a lease before you break ground. There are ways to mitigate risk on the front end. And I think that the most important thing is if you can't control it, then it's really risky.
So if you can't manage a situation, you don't have the legal right to manage it, then it becomes more risky. And I've had plenty of people say, adam, I don't care about the project, I'm investing in you, and it's an honor and I grateful to have that. And if people are going to invest in me, then it's up to me to be able to control every aspect of a situation because when things go sideways, you got to be able to step in and fix them.
[00:20:28] Speaker A: Hmm.
[00:20:28] Speaker B: What's amazing to me is the amount of people I've worked with in this business who sign documents without reading them. And frankly, it's not irregular. And the reason why I read every single document is because my mentor had told me to. And my mentor. Yeah, his name is Mike Straight. He's retired. I said that with quotation marks. And he taught me how to. A few things. Take all emotion out of the business, because if you're emotional, you will make the wrong decision.
He also taught me if you can't measure it, you can't manage it. And so understand how to measure your business and how what KPIs or whatever you use to make sure that you're scaling in an efficient way.
And then he also taught me there's a difference between working in the business and working on the business. And that one is one that's really, really resonated with me over the past couple years, is we scaled Maverick. Scaling Maverick means more employees, it means more money, it means bigger office space.
[00:21:38] Speaker A: Yeah.
[00:21:38] Speaker B: So there's got to be an eye on, you know, working on the business as opposed to just in it.
[00:21:44] Speaker A: It's hard to do. It is because it's a bit, you know, you have an incredibly busy life. You have a very full pipeline of developments, and it's hard to take a step back and say, okay, these projects are great, but what are we really trying to do? Big picture.
And I want to ask you about. I guess it kind of leads you to something that I've wondered about and never really had a conversation with you about. But when, when you started in Maverick, I mean, you guys were doing smaller projects overall. You were doing kind of neighborhood, some neighborhood rental buildings, but also single family homes for sale, condos on a smaller scale.
You know, now we're talking about a pipeline of. You've done over a billion, a billion and a half dollars of developments, and you're doing high rises, you're doing these adaptive reuse renovations, which are just in a different sophistication level, different size for sure than what Maverick was when you started. So in thinking about working on the business versus in the business, when and how did you guys decide to start thinking bigger in the capacity you're doing today?
[00:22:54] Speaker B: I remember distinctly in 2021, I got an email from a colleague who asked if I wanted to go look at a parking garage in the South Loop, that his buddy owned it. And because of the pandemic, it once was full and now it wasn't. It was cash flow constrained. He could barely pay the taxes, and I walked it with him. It was a small little boutique lot. I Think was on Plymouth. And after it was a nice day, I think it was in the fall of 21, I just kept walking north and I noticed another parking lot and it was empty. And I kept walking north into the loop and then into river north and I kept seeing empty parking lots and I thought to myself, okay, well let's find the best located empty parking lot we can find. And I found this one at grand and St. Clair. Four story building. It was probably 20% full and happened to be the same owner as the small lot in the South Loop. And so, you know, in my.
[00:24:01] Speaker A: This is literally on your walk back to the office or strolling and clearing your head on a nice day.
[00:24:05] Speaker B: Yeah, I mean this is what people did in 2021. I remember it was crazy. The vaccines weren't quite rolled out enough or whatever it was. And so you walked outside, you listened to podcasts. That's what you did. Y and so I distinctly remember asking my colleague about this saying, you know, would he sell it?
Because I thought that really the strategy was let's see if we can get it under contract and flip it to somebody else. We have no business developing this.
[00:24:32] Speaker A: Did you at that point you knew what the underlying zoning was or you were. You were just looking at it as cheap dirt and you guys would figure it out.
[00:24:38] Speaker B: I'd probably spent a few days playing around with what can you build as of right here?
But I didn't know the politics of it. I didn't know that there's really no such thing as as of right downtown because you really got to still get the community's input no matter what you're doing. But yeah, it was a. Let's see if we can get this under contract and flip it to a big time developer that loved this site. And after just playing with it and talking to my wife about it for probably three weeks, I said maybe I should underwrite this. Maybe I should take this a little bit further. And then something actually really magical happened.
So Sterling Bay, who I always idolized.
[00:25:20] Speaker A: I remember we talked about that one time.
[00:25:22] Speaker B: Yeah, love Sterling Bay, thought they were super cool, asked them for a job at one point in time, obviously didn't get it, but they gave out a holiday gift this year and it was luggage and on the bag tag it said we're taking the show on the road.
And I was playing with this project in Streeterville. The biggest, baddest developer in Chicago sends a message to all their investors and capital partners that they're going to take the show on the road and this light bulb went off, which was, wait a minute. Everyone's either sitting on their hands because of COVID scared to do a deal, or they're focused elsewhere.
[00:25:58] Speaker A: Yeah.
[00:25:59] Speaker B: When else in my career is the third largest city in the country going to have an opportunity for a small group like Maverick to actually go out and develop something? And it was fortuitous. I put the property under contract and my partners, I said, let's just go. Like this is the time. Everyone's sitting on their hands, let's stand up, let's do a deal. And we put everything we could into getting that deal done. And we knocked out of the park because we bet on ourselves.
[00:26:28] Speaker A: Dude, it's incredible. And I'm going to make, I'm going to double click on a couple things you said, but I distinctly remember we were at a real estate awards dinner and you were accepting with your team development firm of the year award. This must have been in 2022 then.
[00:26:47] Speaker B: 3. 23.
[00:26:48] Speaker A: Okay, so you said. I shouldn't say. You said, you exclaimed, maverick is open for business. And your acceptance speech was about as quick as that.
It was very much a be bold, when others are fearful type approach.
And it's incredible to hear the way it unfolded. And you developed one of the first high rise luxury buildings that had been built in Streeterville for a number of years. You can tell me how long, I'm sure, you know, but it was not, I mean, that's not an easy deal to do. You know, there's a mixed use component, there's a commercial component in addition to the residential. Not that the residential is straightforward, but you know, you're executing a mixed use project that's got some office space, some retail in addition to the resi.
After you decided that you were going to do it, where did you go from there? I mean, I think I don't want to glance over.
You had this inception, you had this idea, you had the conviction to do it, you were bold about executing it. And now it's easy for us to say a couple years later. It's easy for me to say a couple years later. It's developed, it's stabilized. What were some of the things that went into the process that maybe you didn't expect or that our typical listener, whoever ends up being, wouldn't expect?
[00:28:12] Speaker B: Yeah. So I'll break that up into a couple answers.
Doing my first deal, which was a 3,500 square foot building, river Forest, in some ways was just as hard or scary as doing a high rise.
[00:28:29] Speaker A: Was it really?
[00:28:30] Speaker B: And the reason why is I never done a real estate project before, and I had to go out and it was relatively small dollars, but I had to go out and convince people that I would figure it out. And then after that, the first 30 unit project I did was just as hard. I'd never done one, and I had to convince people that I would figure it out. And by the time we had done the same grand, I had started to think about it. I had done a couple of small and kind of organically grew into these bigger buildings. I was getting better at telling people, I'm going to figure it out. I'm going to figure it out. Bet on me. I'll figure it out. And so by the time we had gotten to the st grand, a lot of things were happening. We were in the middle of COVID construction pricing. I don't know if you remember, lumber prices went up one week, then they went down. Everyone shifted to steel. There were so many things happening.
[00:29:22] Speaker A: So jumpy, like, just so tough to pinpoint any.
[00:29:25] Speaker B: It was so hard. So my thought was, okay, here's my chance. I know I can buy the dirt. I know it has favorable zoning. I know that I can build a story around the construction because we're a gc.
[00:29:40] Speaker A: Yeah.
[00:29:41] Speaker B: So what can I do to assemble a team to convince the world that we're ready to step up and do this project?
[00:29:48] Speaker A: Do you think it was almost.
I don't say it as an advantage or anything was easier, but, you know, because there weren't a lot of projects like that going at the time. And there was. There weren't a couple of obvious players to round out the capital stack for the debt and equity. Do you think that it was a. It was a better time for you to learn and to work through that experience because they're just.
Everybody that was developing at that point was trying to figure it out. Everything was different. Everything was so dynamic at that time. Interest rates were changing, like you referenced. The cost of construction was changing.
The lenders were not only changing their terms, but they were coming in and out of the market. Capital partners were harder to find.
Do you look back at that as something that you think favorably about, the figuring it out part, or do you wish that you were developing that property in a period of time when everything was a little bit more like slotted or there were more.
There were some more known factors in the equation.
[00:30:47] Speaker B: You know, all things considered, our timing was impeccable. Yeah, we had.
The interest rates had gone up by. I don't know.
They were so volatile. When we were trying to close on this loan, this was a hundred million dollar loan that we couldn't even underwrite what our interest reserve was because every day it would change so drastically. And one of the best things that had happened to us was we met a lender who flew to Chicago and said, no matter what happens, I'm going to honor my term sheet and shook our hands. And we had better deals on the table and we took his. And it's rare in this business for a someone to fly to you and to believe in the project like we did. But the commitment to the project was something that we just couldn't say no to. And so from a timing perspective, I wouldn't change a thing. We closed on it in a relatively low interest rate. We bought a interest rate cap before, before we had done this project, we'd never even heard of an interest rate cap. We bought it because at that time rates started to get volatile. And thank God we did. We delivered it into a supply constrained market. We achieved over $0.30 a square foot higher than our pro forma. And we're hopeful that we will refinance it in a market that's more stable. So we built through the volatility and we delivered into a more premier market.
But I mean, we really assembled an all star team. You know.
[00:32:20] Speaker A: Do you want to, do you want to share the email or a clip of the email that I asked you about that you have printed in your office?
[00:32:29] Speaker B: Oh, yeah, sure. Yeah. I mean it was one of the best compliments we had ever gotten. But our lender on that project had emailed and said, and they're one of the premier construction lenders in the country.
[00:32:41] Speaker A: Yeah.
[00:32:42] Speaker B: And it's framed in my office, in my partner Anthony's office and my partner Peter's office. And it said out of all their development clients, no one has built faster, cheaper relative to budget and higher quality than Maverick. And he sent it to not only me, but also just some prospective partners. And it was so validating. Yeah, but it's interesting, you know, it, it was more motivating than anything. It wasn't like, oh, we did it, we're done. It was like, wait a minute, let's keep it going.
This is just the start. And you know, we're, we're running with it. We were actively going with it.
[00:33:16] Speaker A: Man, that's awesome. Don't you wish, like on the days that something like that happens at work, like your kid gets the memo and like treats you really special that night or something? Like, I've always Like a good day at work sometimes, and you get home and, you know, the kids still give you a hard time about something. It's kind of like humanizing. Maybe it keeps you. Keeps you in check, but.
[00:33:36] Speaker B: Well, my kid's only two, and so as long as I, like, play peekaboo with him, he's like, still, dude, I.
[00:33:40] Speaker A: Walk in the door, I'm getting, like, shot in the neck with Nerf darts and stuff.
[00:33:44] Speaker B: But yeah, it's so funny. Like, you go from wanting to make your parents proud of you to making. Wanting to have your kids be proud of you.
[00:33:50] Speaker A: Yeah.
[00:33:51] Speaker B: So I. My partners and I, we all have kids. We've been conceiving ways to, like, name buildings after our kids or do something that they can show their friends and be like, yeah, my dad did that one day.
[00:33:58] Speaker A: You know the old movie. See around. Like at the top of the building, you see the kids names.
[00:34:02] Speaker B: Right, right, right.
[00:34:04] Speaker A: How do you think about this wasn't something that I planned to ask you, but how do you think about instilling strong work ethic in your kids when I know you have one son now, so I shouldn't keep saying kids, but you, you know, you're successful, and how do you think about making sure that they're. That Andy's hungry when he's older.
[00:34:30] Speaker B: I think that the thing that my parents did for me, which is the same thing they did for my siblings, was find the thing that I love the most and push me into. Push me in it as much as possible.
[00:34:45] Speaker A: And that was real estate.
[00:34:46] Speaker B: It was always real estate. Yeah, it was always real estate. And they encouraged me to get my real estate license. I was the youngest person in my real estate license class. I was 17. I turned 18 right before the test. When was the legal age you could get your real estate license in Ohio? I got my license a week after my. My 18th birthday. Had no idea what I was going to do with it, but it started this roller coaster of a ride. My brother's a musician. He went to Berkeley College of Music. And he's got different ambitions. So I think the one thing I would do for my kid is help him figure out what he's most passionate about and push him to be the best version of he can in that. In that field.
[00:35:26] Speaker A: That's awesome, man. Do you.
Do you take time? And I know you said that it was motivating when you get these. You get these moments of accomplishment, but, you know, there's. There's so many things on your plate too. Do you. Do you feel like you do a good job along the way of kind of appreciating the success, you know, like, I'm asking the question in a roundabout way, but when you started to talk, I was thinking about, you know, I sit there and play Legos with my kids and, you know, you, you know, you see them build or you see them get nerdy about construction type stuff and, oh, man, what type of truck was that going by? And then, you know, this is your childhood dream and you developed a high rise in downtown Chicago. Do you.
Did you take a moment to, like, appreciate that? Do you? Or is it just that you're so ambitious that you're. You're just focused on the next one so much?
[00:36:19] Speaker B: Yeah, I'm a huge believer in recognizing your achievements.
The reality is it's a team sport. And so when we had gotten our CO at the St. Grand, I went up to the rooftop with my company, we all jumped in the pool with all of our clothes on. We had cigars, we drank tequila. I mean, we did it. We did something that we set our mind to and we accomplished it.
[00:36:46] Speaker A: Yeah.
[00:36:46] Speaker B: And that was level one. This is the ambitious part. Now level two is lease the building and execute on the rest of the business plan. Yeah, but it's great. Every year around. Around the holidays, I write a State of Maverick email. And the reason why I really, really like doing it is because I get to stop and appreciate everything we did for that year. And there's not a lot of opportunities you have to do that. I'm a big fan of therapy. I go to therapy every two weeks because I think it is a great way to prepare yourself because your brain is like the most important muscle that you have. And I was talking to my therapist about this, and I said, isn't it interesting how people go to therapy to talk about their problems? How many people come to therapy and just talk about the great accomplishments they've had?
But I think it's really, really important to acknowledge that because you're doing this for a reason, money aside. Like, there's a sense of pride and there's a sense of productivity that is maybe more important than money sometimes. And I couldn't be prouder that we've done everything we have over the past couple years.
[00:37:56] Speaker A: Yeah, you should be. It's cool. You know, as a friend and so as somebody that knew you before you were executing projects like this, it's cool to see, you know, and it's, you know, frankly, like, a little jealous of the, you know, seeing this tangible product come together, you know, there's some tangibility or building in our business. When we're selling an apartment building and such, you drive around the neighborhood and you see a lot of buildings and such that you played a small part in. But it's cool to see something new developed. You know, you took, you took a dilapidated parking garage on a nice day and built a, you know, you have incredible retail tenants, you've got a world class gym there now and you've got a couple hundred residences where people are having all these life experiences. It's a cool thing. And I, you know, good for you for appreciating it because I feel like some of the people that I deal with are so they're just kind of like on this wheel that they're just onto the next project before they can take a second and like smell the roses. So it's cool.
[00:38:53] Speaker B: I agree. I see it all the time. I think that appreciating your accomplishments is important. Appreciating not only your accomplishments, but your colleagues accomplishments is important.
We are big believers in celebrating the people at our company. Alicia Frame, who works for us, just won BizNow's Emerging Leader Award this week. We are so excited about that. Andrew Stright, our director of finance won an emerging leader re journals real estate award last year. Anthony Rashowski won cranes 40 under 40. So we're getting recognition, which is great. It's validating and it makes you want to work harder and get hungrier for, to accomplish more.
[00:39:38] Speaker A: Well, you've done a good job in putting, you know, the team has come together in a way that everybody that you deal with in your organization, like when we walk through one of your projects, you know, you know, the site superintendents and the subs and everything, like it's just, it's no accident that you're working with good people.
But beyond that, you're also working with good partners, good lenders. You know, we were talking before we started recording this about a couple of the different, like brokers that use for leasing or you know, I hope to be an extension of that. When you apply that, when you apply like that team mentality, it's not only your internal team, it's the partners that you put together to get a deal from, you know, as an example, a dilapidated parking garage to St. Grant. A lot of people play a part in that and I've noticed you do a really good job kind of cultivating that, that culture and you actually care about the relationships. You care about sharing success with them as opposed to just like wanting to get this project Done. And it's just all focused on the dollars and cents of it.
[00:40:40] Speaker B: Yeah, it's amazing. We, we did the math. Over 2,000 people worked on the St. Grand. Damn. And you know, it might be actually more than that because there might have been some peripheral people working on it. But that's incredible to think about how. I mean, you sit in a building like we're in today and look at every detail on the wall. Somebody was involved with every single aspect in planning it and thinking through it. It wasn't just a nail goes into a wall and a building gets built. There's so much thought that goes into it.
[00:41:08] Speaker A: Yeah.
[00:41:08] Speaker B: And one of the coolest parts of the business is working with so many different people. It's what keeps it interesting and frankly, what makes it so fun is that you learn something new every there.
[00:41:18] Speaker A: Yeah, that's awesome.
I'm going to pivot because I think that.
I want to talk about your. A lot of people call it the Morton Steakhouse office conversion. But you are. You just got, I believe, planning development approval to redevelop what a lot of us here know as the Morton Steakhouse office building. But 65 East Wacker, from tired office to high end residential.
I want to talk about. It's obviously so in vogue right now, this idea of, you know, we have an oversupply in office, we're under supplied. On the resi side, it would seem like a natural solution to the problem to convert more of the office to residential. But my observation is there really have not been many projects that make sense or that end up getting executed. So talk a little bit about why this project is different, how it makes sense, and maybe what could change or even what the city could change about the process of converting office to resi for more of these buildings to end up getting. Getting done.
[00:42:29] Speaker B: Yeah.
So I've walked probably 30 or 40 office buildings in Chicago with the intent of converting them. And there's a very specific reason we chose 65 WACR to do it. But it's clear, it's clear to everybody in the business that this is the opportunity. Right. There's little use for tired office space and there's demand for apartments. So if you can figure it out, then there's some opportunity there.
So we had walked wacker and to me, it was funny. I walked it thinking, man, they built this building as an apartment building, but accidentally just put offices in there because.
[00:43:15] Speaker A: Because of the floor plates or.
[00:43:16] Speaker B: Yeah. So this is what, again, I knew nothing about office conversions. And then I walked 20 of or so of them. And I said oh okay, this is what you need to do in order to get one that is a good candidate. The first one is it had operable windows.
Super rare for office buildings. I'm sure if we look in the office building here actually there are operable windings here. But if you think about a lot of office buildings with that are all glass, re skinning it or putting in operable windows is super expensive. Not having to do that. It's a huge, huge value.
[00:43:46] Speaker A: That's not even something that I would.
[00:43:48] Speaker B: Right.
[00:43:49] Speaker A: Wasn't even on the potential list of reasons I thought of.
[00:43:52] Speaker B: Yeah. And I didn't either until you know, you walk a couple of these and you figure that out.
[00:43:54] Speaker A: Yeah.
[00:43:55] Speaker B: The second is the facade. That's all brick masonry facade. You look at the building like the jeweler's building, 35 Whacker. I walk that awesome building, terracotta facade. It would cost possibly millions of dollars to restore that. Whereas you have a simple brick building that's like every two or three flat that you have same type of material. The third thing was the floor plate. So this is what probably is the most common thing that comes up in these apartment building or office buildings is there are these squares and they're super hard to program. This building was the perfect rectangular 12,500 square foot floor plate. Single loaded corridor. Not the bowling alley effect. It again it was single loaded corridor mean it means that you come off the elevator and your units are on one side of a hallway as opposed to two side of the hallway which would be double loaded. So it's just, it was easy to like conceptualize apartments because the units laid out really well. And then the third thing which is probably the most important. I'm sorry, fourth thing now which is probably the most important thing is the structure. And by that I'm talking about the floor structure. The, the between each floor it's just concrete. And in a lot of office buildings you have what's called pt post tension concrete. Or you have clay tile. And this is probably in the weeds a little bit. But again the jeweler's building had clay tile between the structure. So what do apartment buildings need that office buildings don't? Plumbing. Right. And so if you're going to put kitchens and bathrooms everywhere and you've got clay tile in the structure, you better be damn sure you don't break one of those things because if you do it's going to break about 30 other ones and it's going to be really difficult to do in our building. It's just poured in place concrete. So you're just coring, you know, plumbing stacks. And it's far more efficient and simpler to do.
So we closed on that last spring.
The most complicated part of the process was negotiating all the terminations with the existing tenants that remained.
[00:45:56] Speaker A: How many were in there?
[00:45:57] Speaker B: It was about 30% leased when we purchased it. And it's funny, you know, a lot of these leases we had nothing to do with. We inherited them. But you may have someone who has a thousand square feet, hasn't come to the building in three years and has no. Has plenty of rights and no termination. So they can kind of just. They've got more leverage than you do.
[00:46:16] Speaker A: Yeah.
[00:46:17] Speaker B: And, you know, lucky for us, we had a really good collaborative effort with the tenants. They understood the vision, they're realistic, and we were able to negotiate terminations with everybody. So we're kicking that one off in.
[00:46:32] Speaker A: In Q2 this year and delivering.
[00:46:34] Speaker B: So it's a lot shorter of a construction window because the building's built. You're really doing a lot of the interior work. So it's about a 12 to 14 month.
[00:46:41] Speaker A: Oh, shoot.
[00:46:41] Speaker B: So we'll deliver it in summer of 26, where I think the CBRE's last report showed, was it like 500 units delivering in 26 right now. So hopefully we'll have a good market to deliver into.
[00:46:55] Speaker A: Yeah, absolutely. It's a cool project, too, and it's good. I mean, I think it'll be good for the city to see an example of one that works.
In addition to it, adding housing stock to the Loop, I just think that that one will be really well received from the rental market. And I hope. And I think a lot of people hope that those type of conversions, you know, even if they don't make sense in the majority of cases, you hope that more can happen. Because I think bringing some resonance down to the Loop will add some vibrancy to the neighborhood and will be a little bit of the, you know, kind of shot in the arm that the Loop needs right now.
[00:47:31] Speaker B: Yeah, I mean, I. I subscribe to the Warren Buffett investment approach. Right. He, like, invests in Coca Cola.
[00:47:36] Speaker A: He was pretty good.
[00:47:37] Speaker B: Yeah, he invests in things that he likes. Yeah, I do that from the. Would you live here? Yeah, and there are a lot of places in the Loop that I don't know if I would live in. Right. Like, do they have good views? Do they have close access to amenities? I would live in Wacker all day long, dude.
[00:47:53] Speaker A: It's right on the river it's on the river, close to River North. You know, it's close to the lake. Yeah.
[00:47:58] Speaker B: Hopefully it'll be, you know, a good opportunity for Google when they open up that new Midwest headquarters. And the same is true for every apartment project we do is would you live in this unit? Yeah, some. Back to the question you asked about finishes. I'm not interested in developing stuff that I myself couldn't live in because how am I expected to then help a renter to live there if I wouldn't do it myself?
[00:48:23] Speaker A: Yeah.
[00:48:24] Speaker B: If there's something that I am going to do or hope to do less of, it's something that I've been making a concerted effort on is to pull myself out of the weeds a bit. We've done a really good job of getting experts on our team at Maverick. I can go away for a weekend and come back and everything is still in good shape. So something that I'm going to do over the next couple of years is start to pull myself back. I've got a two year old son now and you know, spending time with him would be something I want to really prioritize.
[00:48:55] Speaker A: Yeah.
[00:48:56] Speaker B: But something that I like to do more of is the art of the deal. I mean, it's my favorite thing. I think I'm pretty good at it and you know, put me in a room, give me something to, to sell that I believe in and I feel like I can make a deal happen the majority of the time.
[00:49:15] Speaker A: I love that. I also, it's, it truly is one of the fun things about our businesses.
The collaboration, the problem solving, the relationships, the energy, everything that goes into making a deal is, is definitely one of the funnest things that I think about in the real estate brokerage business too is being, you know, as being a broker you're kind of like occasionally marrying two different styles, two different ideas of a project. It's just, it's never dull. And I think that there's this creativity that you can apply to it that is generally kind of like the bridge between two parties.
And I, I can definitely see it applied to developing whether it's a neighborhood type boutique project or a high rise downtown. And I know you're good at it too. I've been involved in it and it's fun to work with you on them.
All right, what's a piece of advice that you'd give someone starting their real estate career to either propel their business or to set them up for long term success?
[00:50:20] Speaker B: So I learned this one at a buffet in high School or college.
We were sitting there, and there was a huge line for expected you to.
[00:50:30] Speaker A: Start the answer to this. No, it never is.
[00:50:32] Speaker B: That's. See, that's the thing about me. It's always something different. But we're sitting there, I think it was like a pizza buffet, and there's this huge line. And my buddy said, when the line is low, you must go. And I laughed at it forever and ever. And then I was thinking, wow, the line is low. I mean, think about it this way. The line is low in Chicago right now.
[00:50:51] Speaker A: Yeah.
[00:50:51] Speaker B: People are focused elsewhere. People are having heartache with how to make deals. Pencil. Because of interest rates or because of taxes, or you name it.
Now's the time.
[00:51:02] Speaker A: Yeah.
[00:51:02] Speaker B: Go out and meet with every single person. You can beg people for an opportunity. 99% of the people you talk to will turn you down or they will not be helpful to you, but 1% will. And the most important thing I did to propel my career was I kept meeting with people every single week. And every time they'd tell me no, I would say, okay, you got someone else you can introduce me to. And at this point, I don't know if I've met with every citizen of Chicago, but I've met with a lot, and I think that growing your network is the most important thing you can do in this business.
[00:51:37] Speaker A: Yeah. Good for you, man. When I. I started as a broker in 2011, and I think one of the. I think the same idea applies is, like, I didn't really know it at the time, but you could kind of sense it. It felt like the market was a little bit under brokered. You know, a lot of people had kind of been weeded out or had retired, changed other things during the. During the great financial crisis. And so, like, as a young broker starting out who didn't know any better, it was just, you know, hustling. I was able to kind of get some traction maybe a little bit easier than, you know, it was different things about it that were hard, but certainly less competition than in a frothy market when it's very fashionable and trendy to get into brokerage.
So I agree, and I. I see the last few years of maverick success as an example of that, too, is, you know, not only when you started your career meeting a lot of different people, but, you know, you guys have grown the business dramatically in the last few years, and I know that you've only got objectives and goals to. To do more of that.
One of the main reasons I started this podcast was to Spread some. Some good Chicago juju. I think that there's a lot of. There's a lot of news about Chicago that is probably overplayed about you. Just negative headlines. And I am a firm believer that Chicago is a great place to raise my kids, grow my business, invest, go out to dinner, go to sporting games. You know, I love the city so. And I know you do, too, and I want you to tell me why.
[00:53:13] Speaker B: So it's a great question, and I would summarize it with this quick anecdote, which was, every trip my wife and I take, she gets upset with me when I say, man, this isn't as good as it is in Chicago. Whether it's the restaurant, the hotel, the entertainment, it's just never better than it is in Chicago. I live a few blocks from Wrigley Field.
This past summer, I took my son to a game. He was one in. Some change at the time. And we walked in, we went for two innings.
[00:53:46] Speaker A: Dad had his, like, beer helmet on.
[00:53:49] Speaker B: I had the cup snake. We went for two innings. I took a. I had a hot dog, a beer. He had a pretzel, and we walked home. And it was unbelievable. And in that moment, I think there was a street festival happening on Southport or Addison, and it was so vibrant. And I remember thinking, this is the best city in the world. I have searched all over the world for a better city than Chicago, and I haven't found it. Now, there's great experiences you can have in New York, Louisiana. Austin, but this is the most livable city. And I think that as an investor, it makes a lot of sense to invest in the city, because, I mean, think about it just from a natural resources perspective or natural disaster perspective, how insulated Chicago is, how accessible it is to natural resources like water, and the fact that we still have major investment from corporations in the city. Listen, you go to any Big ten school like you did, you move to Chicago?
[00:54:50] Speaker A: Yeah.
[00:54:51] Speaker B: You don't necessarily move elsewhere because it has it all right here, and your friends live here and your family might live by. And it's got every bit of entertainment you could ever want. So I'm Team Chicago.
[00:55:02] Speaker A: I love it, man. Yeah, it's a beacon for a lot of us, like, you know, ambitious Midwesterners.
And I've experienced a lot of the same. There's nowhere I'd rather live. There's nowhere I'd rather work. The people are incredible. The economy is diverse. It's just naturally a pretty city with the lake and with the river running through it, with this established you know, housing stock and new housing stock.
Best place in the world that I've. That I've seen. So green.
We're gonna wrap it up, man. Appreciate you doing it first time.
Let's see. It's the first podcast, so appreciate everybody, like, you know, bearing with me for stumbling on all the questions and stuff, and you were great, so thanks for doing it, man.
[00:55:44] Speaker B: When you called to tell me you're doing a podcast, I thought, what took so long? You are the perfect person to do a podcast. And honestly, I listen to podcasts, and I wish there were a podcast talking about development, because there really isn't one that's applicable to Chicago or the Midwest.
[00:56:01] Speaker A: Yeah.
[00:56:02] Speaker B: So, you know, the more I think we talk and collaborate, the better. I'm an open book, so ask me any questions.
[00:56:08] Speaker A: It's awesome, man. Well, maybe we'll have you back on if we. If this gets some legs and we end up doing it for a few years. But thanks again, dude. I'll talk to you soon.
[00:56:20] Speaker B: It.
