Investing In Distressed Opportunity Zone Assets With Chris Loeffler – RFP 48 Transcript
Chris Loeffler (00:00): We look for opportunities where we don’t have to compete with most people, because the more competition, the higher the price and the less upside in the deal, in our opinion. So if everybody’s running away from office, that’s why we’re going to run toward it.
Gordon Lamphere (00:21): Hi, I’m Gordon Lamphere, and welcome to The Real Finds Podcast, the podcast that interviews key entrepreneurs, activists, and researchers shaping the real estate industry and, as a result, our world. On today’s podcast, we’ll be speaking with Chris Loeffler. Chris is the founder, CEO, and chairman of Caliber, a publicly traded commercial real estate investment firm with $2.9 billion under management. Chris and Caliber focus on finding competitive advantage in untapped markets. On the podcast, we discuss making the most of opportunity zones, office-based conversions, and asset management strategies to find value in disrupted markets. It’s well worth a listen. Hey, Chris, happy to have you on the podcast. Thanks for hopping on.
Chris Loeffler (01:13): Happy to be here, Gordon.
From Finance to Real Estate
Gordon Lamphere (01:15): You started off in more of a finance-driven role. Why real estate?
Chris Loeffler (01:21): Typical story. I read Rich Dad Poor Dad and said, “Gee, I want to have some passive income.” I had a good job, good credit, and no money. So I asked, “What could I invest in?” Well, I could get debt and buy some real estate. That’s how I got started as an investor, and the rest is history.
Making Money in a Disrupted Market
Gordon Lamphere (01:48): I know your company has a motto: make money in all market conditions. What are the market conditions right now, and how can we make money in them?
Chris Loeffler (02:02): I’d call it a disrupted market. There’s distress, real distress. A couple of weeks ago, we bought our first distressed asset since 2012. We just came through a pretty long and extended development cycle that ended with the rise in interest rates and some of the disruption from COVID. Over the last 18 months, the interest rate environment caused commercial real estate to drop in value about 20 percent across the country. Depending on what market you’re in, that could be a deeper drop or a less painful one. But we are definitely in a disrupted market, and it makes sense to take a step back and ask, “Should I build this project? Or am I building into a cost that’s going to be higher than what the guy next to me can pay for an existing asset?”
Where to Find Distressed Assets
Gordon Lamphere (02:55): You mentioned it’s the first time you’ve bought a distressed asset since 2012. How are you going out and finding distressed assets? We’ve talked about this with other guests, but I’m curious what your methodology is.
Chris Loeffler (03:10): First and foremost, where can you find them? You can buy from the distressed owner, be a white knight, and help them fix their own problem. Going to the owners is not a bad idea, but it’s not always easy to execute, because a lot of times you have different expectations. The next step is: who’s the bank, or who are the banks? Mezz lenders and preferred equity are a lot easier to deal with than the traditional first-position lender, so you need to be in conversation with both if they both exist. What you’re trying to do there is buy the note, so you’re in the driver’s seat on whether to foreclose or take the asset back through some sort of deed in lieu of foreclosure.
Then you’ve got auctions, which is the moment in time when the asset goes from the owner’s hands to the bank’s hands. There’s typically going to be an auction right before that happens. You’ve got bankruptcy, where you can be a stalking horse bidder or participate in a bankruptcy sale. You’ve got receiverships, where you can speak to a receiver and try to cut a deal. And of course, you’ve got brokers.
In a normal market, you show up to buy an asset, and whoever has the most cash and is willing to pay the highest price typically wins. In a distressed market, it’s different, because the seller just wants to know the deal is going to close. If you’re buying, like we just did, two office buildings, two parking garages, and a development site, it’s complex, and you have to be able to show that you can actually execute. So the highest bid doesn’t necessarily win. The best bid wins.
Most of what comes to Caliber walks in the door. That usually comes from our own employees who are out there looking, following data sources like Trepp, and tracking foreclosure notices and other filings. And then there’s the reputation you build in the industry. When people know you’re the type of player who can work through complexity and close on a distressed asset, that’s what you’re going to get. But it’s a very small crowd of people.
Why Run Toward Office
Gordon Lamphere (05:35): I can say definitively that we purchased a couple of notes in 2020, when things started to go south in the office asset class, and it’s amazing how effective it is to be an all-cash buyer, particularly in distress. One of the things a lot of people are scared of right now is office, so it’s interesting to see that you’re dipping your toe in the water there. Why did you decide to invest in that office in particular? And do you think the market is generally right to dip your toe in for selective office deals?
Chris Loeffler (06:17): We look for opportunities where we don’t have to compete with most people, because the more competition, the higher the price and the less upside in the deal, in our opinion. So if everybody’s running away from office, that’s why we’re going to run toward it. This particular project is located in an opportunity zone. It’s in the center of the city of Phoenix, right off the freeway, and it’s already zoned to convert to multifamily residential. We needed a density waiver, but other than that, we can convert these buildings to multifamily and have a great housing project in the right location. Is suburban office the right asset class for that location today? Nope. But as a conversion, it makes a lot of sense. We’re looking at another office deal, and it’s the same thing: a conversion opportunity. We’re not buying office by the pound just to hold office. I don’t see how that works, considering what the leasing environment is like. But there are guys who do that too.
Solving the Office-to-Residential Conversion Puzzle
Gordon Lamphere (07:24): You mentioned opportunity zones, and we’ll circle back to that, but how are you doing conversions? I’ve talked to folks on the podcast who are doing conversions by knocking everything flat, and others who are pulling back the office floor plate and creating large patios to reduce the depth. What are you doing on that site?
Chris Loeffler (07:47): We’ve got two buildings on that site. One is skinny enough that that’s exactly what we’re going to do: pull back the windows a bit, create patios, and you’ve got a perfect apartment unit. The other one is a big, fat building. It’s too wide everywhere, and it’s awkward. So we were originally planning to keep it as office and try to attract a new tenant class, because our basis is lower. I don’t have to lease it at $28 a foot. I can lease it at $15 a foot and maybe attract a call center. That was our original business plan.
But we spent a lot of time with the asset, and we realized there was a need in the market for two- and three-bedroom apartments with an office. That was an unfulfilled need in that submarket. So we said, “If we build big enough units here, we can have the offices of each unit interlock with each other and be the room with no windows on the back side of the unit.” That shrinks the depth, so I can have a normal hallway down the middle. That’s how we figured it out: through layout and design. But every deal is different.
Gordon Lamphere (08:56): Have you done conversions in other markets, or is this your first dip into the office conversion landscape?
Chris Loeffler (09:04): I’d say we have a history of figuring out hard problems in real estate. We’re converting a hotel to multifamily right now. And on this particular project, we partnered with a specialty group, really two individuals, who just converted an office building down the street. So we know what their conversion cost, how their lease-up went, and what price they got. We’re approaching this with an unfair competitive advantage.
How Opportunity Zones Factor In
Gordon Lamphere (09:33): Speaking of unfair competitive advantages, one of the things I think you’ve done pretty well is work in the world of opportunity zones. How do opportunity zones factor in when you’re looking at an investment?
Chris Loeffler (09:51): Having started out in public accounting and being a finance-oriented person, I think capital flows influence real estate values much more than what kind of patio I have on the side of the building. So I look for that. Anything where you have a concentrated desire to put capital into a specific area is going to push up values over time.
That’s why we like opportunity zones. We get a tax advantage for investing, and we help our investors avoid capital gains taxes. Even when it’s not money flowing into our project, the program is attracting other developers to invest alongside us in the same place. That’s the whole “development begets development” concept. There are about 8,700 opportunity zones across the country, and there are only a couple that we like. We’re investing in the ones we think are the most attractive submarkets that qualify as opportunity zones, and we think other people see the same thing we do. That’s played out quite well. In most of the opportunity zones we’re investing in, other parties are also investing in the same spot. On the other side of the freeway from the project we just bought, one exit up, a developer is putting over a billion dollars of investment into an old mall to convert it into residential and lifestyle retail. We’re happy they’re doing that, because it makes our apartments more valuable.
What Makes an Opportunity Zone Worth Investing In
Gordon Lamphere (11:25): What makes for an attractive opportunity zone? As you mentioned, there are a lot of them out there. We’ve dabbled in it, but a lot just don’t make sense financially. What’s a worthwhile opportunity zone, and what are those factors?
Chris Loeffler (11:43): What we did was look at how they were selected in the first place. Nobody expected that program to come out. It was slipped into the Tax Cuts and Jobs Act right at the end, and nobody knew what it was. The statute required governors to select their zones within 90 to 120 days of the law taking effect, which is a very short period of time.
Gordon Lamphere (12:09): Yeah.
Chris Loeffler (12:13): Exactly. So then you ask which states, at that moment in time, the beginning of 2018, had growth-oriented governors. That doesn’t necessarily mean Democrat or Republican. In Colorado, there was a Democrat. In Arizona, there was a Republican. But both were growth- and business-oriented. That was starting point A.
Starting point B is whether they understood the actual nature of the incentive. In Chicago, for example, they said, “This will be great,” and they identified all the worst parts of Chicago as opportunity zones. But they didn’t understand how the tax incentive works: I have to invest and keep my money in for ten years, and at the ten-year mark, if my investment isn’t worth significantly more than what I put in, I get no tax benefit. So it has to be an area with growth and a trajectory for development. You’re not going to attract money into a place that just hasn’t done a thing for 10 or 20 years.
We looked at the logic and the way the decisions were made, and that’s how we picked our states. Then, within those states, we dug into the areas that had grown a lot since 2010, because everything was based on the 2010 census, but the zones were selected in 2018, almost a decade later. Anything that had grown a lot since 2010 was likely going to be an attractive opportunity zone, because maybe back in 2010 it was at 80 percent of the area median income, but today it might be higher.
Gordon Lamphere (13:47): Where are you seeing growth in particular, at least on a macro level?
Chris Loeffler (13:54): I’ll just tell you where we’re investing. We just bought a huge parcel in basically the center of Scottsdale, Arizona, but it’s tribal community land. Because we know land leases and how to manage through them, we can work with that. It’s community land, but it’s in the center of a great city. We’re also investing in downtown Bryan. Most people don’t know where Bryan is. It’s in Texas, the sister city to College Station, and it’s basically Texas A&M University’s college town. We’re investing in their downtown, which is really exciting.
Most of the opportunity zones in the good places we like to invest, like Phoenix, are located in commercial corridors: around the airport, near industrial areas. As you might know, there’s been a lot of reshoring and a lot of movement in industrial real estate. Arizona has a lot of activity in semiconductor manufacturing. Denver has a lot of activity in the tech space. So you go to those areas and figure out where the opportunity zone is near all that activity, and that’s where you should invest.
Industrial Trends: Reshoring and Manufacturing
Gordon Lamphere (15:08): You mentioned reshoring. Maybe we can move toward the industrial market as a whole. What are the big trends you think are influencing opportunity zones in industrial? Is it just reshoring, or are there other macro trends that help you target sites?
Chris Loeffler (15:26): I think it’s the reshoring concept. Also, industrial real estate from the 2018 to 2022 era was like catnip for investors. They were just piling money in, and it’s working out, which is great, but that’s something to watch: where those flows went. Semiconductor manufacturing is a big topic because the government put a hundred billion plus dollars into bringing more of it back. High-tech medical manufacturing, for drugs and that kind of thing, is a big topic. And of course there’s the run-up of regional centers and distribution centers. That’s everywhere. I haven’t seen anything else that’s that exciting yet, but I anticipate quite a bit of growth in manufacturing real estate. I’ll save the rest for my ten-year prediction.
Why Hospitality Is Ripe for Opportunity
Gordon Lamphere (16:30): Your firm has done a lot with distressed hospitality. COVID hasn’t been the best thing in the world for hospitality assets, though maybe it hasn’t hurt them as much as office. How do you target a distressed hospitality asset when there are all sorts of factors involved?
Chris Loeffler (17:08): Interestingly enough, in the last twelve months, hospitality has been the best-performing asset class in commercial real estate. And the second most distressed asset class in the country is… do you know?
Gordon Lamphere (17:21): What is it?
Chris Loeffler (17:23): Multifamily. You’d think office, and everyone knows office. That’s an easy pick. But multifamily is the second most distressed asset class, even though rents and occupancy are at all-time highs. What does that mean? The market went a little nuts, overpaid for a lot of multifamily on short-term loans, and there are a lot of problems in that sector.
But back to hospitality. There are a couple of things to understand. First, it’s a difficult asset class, so most real estate investors are reticent to get in, or never do. The ones who finally do typically get in because everything else has played out. In a development cycle when everyone’s building, the last thing that typically gets built is a bunch of hotels, because everyone’s already built all the multifamily and industrial, there’s no cap rate spread anywhere, and they say, “Let’s build a hotel.” In 2019, we were starting to see a lot of construction starts and planned hotels. Caliber decided to sell all of our hotels, but we were a year late, so we didn’t sell them all before 2020. What we also saw is that none of those planned hotels were really built. So there was never an oversupply in the last development cycle.
The second thing that happened because of COVID is that, depending on the market, supply shrank. How many times in your career have you seen less multifamily in a growing market? It doesn’t make sense, right? Well, there are fewer hotels in growing markets because of COVID. They were converted to other uses: behavioral health centers, assisted living, homeless shelters, housing, you name it. Those aren’t coming back. So you had no oversupply from the last development cycle, and then supply shrank.
On top of that, if you own a hotel, Hilton or Marriott or whoever your brand is requires you to renovate every seven to ten years. After 2008, most hotels in the country were given a moratorium on their renovations, their PIPs, for at least three to four years. You can see how that squeezed all the renovations together in 2013 and 2014. Seven years later, in 2020, the brands gave the same moratorium: “We know it’s COVID. You don’t have to renovate right now. We’ll give you some time.” Now all the brands are pushing owners to renovate, at the exact same time those owners need to refinance, interest rates are high, and they’ve burned all their cash keeping hotels alive through COVID’s operating losses. It’s a perfect storm.
Chris Loeffler (19:48): We think any opportunity to buy good hospitality assets in this type of environment is smart. Our strategy is to roll up those hotels into an UPREIT, so we don’t have to come up with the cash to buy everything outright. We can do it with shares and a smaller amount of cash, and we offer the investors who own those hotels a much better path forward than trying to figure it out on their own.
Multifamily Distress and Extend-and-Pretend
Gordon Lamphere (20:38): You mentioned distress in the multifamily world, and a perfect storm. We might be in a minor perfect storm in some regions of the United States, and we’ve definitely had some multifamily and residential doomers on the podcast. What are you seeing generally in the multifamily space, and where are you seeing the most distress and maybe the most opportunity?
Chris Loeffler (21:08): The distress is in the math. Just look at the bridge loans coming due. We’ve got over a trillion dollars of loans trying to turn over this year and next year, and you can do the math. They paid this much, the property is operating at its best results ever, and there’s still not enough income to cover any form of refinance without a major paydown. So how’s this all going to work? Right now, it’s working because the banks are happy to extend. Every bank I’ve talked to has said, “No one from the Fed is forcing me to foreclose, so I’m going to keep kicking the can down the road.” They don’t want to deal with it.
That could continue. The doomers out there could be proven completely wrong if everybody can kick long enough that interest rates come down a bit, you get natural rent appreciation, and you close the gap and bump along. It may not be the best return an investor will ever see, but it avoids foreclosure and the natural consequences of the distress. But those of us who’ve been in the market know that sometimes the government changes its mind, and sometimes it does so really fast. If for one reason or another the regulators say, “No, you can’t keep kicking the can on these loans,” you’re going to see the hammer come down fast, because the banks need to get these loans off their books. They have too many bridge loans at three and four percent interest on assets that aren’t worth the loan balance. So it should be an interesting twelve months.
Gordon Lamphere (22:54): The doomers we’ve had on, often with good reason, have said the Sun Belt in particular is where they’re seeing the most distress. We’re going to have a couple of folks on from other regions, where there wasn’t as much excitement during the 2020 phase, and many of those markets are doing pretty well, particularly where there hasn’t been a lot of development. Is that what you’re seeing as well? Is the distress primarily in the Sun Belt, or is it an issue across the board in multifamily?
Chris Loeffler (23:30): It’s definitely concentrated in the areas that were super hot. And at the end of the day, it’s all of our fault. There were a lot of capital flows, a lot of people bought assets at prices that don’t make sense, and we just don’t know whether they’ll hang on by their fingernails until the problem eventually corrects itself or whether there will be a forcing function that changes that.
Raising Capital in the Toughest Environment of His Career
Gordon Lamphere (23:57): A sure thing is sometimes the deadliest place to put capital. Speaking of capital formation and funding, many of the investors I’m talking to are a little light on capital these days. How do you go out and find capital in the market so you have capital to deploy?
Chris Loeffler (24:24): It’s the most difficult capital environment I’ve experienced in my entire career. So if you’re experiencing that, so are we. If anyone tells you different, give me their number, because I want to know their secrets.
Gordon Lamphere (24:39): I want their capital.
Chris Loeffler (24:41): Exactly. And it’s interesting, because it’s been both debt and equity. Normally it’s just an equity problem, but debt has been really tough as well. So what are we doing about it?
One thing about our platform is that we directly solicit capital from investors through a licensed sales force. We have over 3,000 investors who have invested with us over roughly the last fifteen years. They know us, and we stand in front of them, tell them what’s going on, and say, “We know it’s tight, but this is the best time to buy.” That’s one way we try to overcome it.
Our business has also built the infrastructure necessary to raise capital at scale from investment advisors. There’s a sizable amount of capital on the sidelines there, but you need the roads, the sewers, and the connections to bring in money from those advisors: doing it in a compliant manner, supporting their customer service needs, having it show up on their statements. There’s a bunch of other things you have to do, and we’ve done that.
The third thing is that capital flows like a river, and you have to know where it’s going. Right now, it’s going to family offices. That’s the number one category. So we’re doing a family office roadshow, meeting with family offices and teaching them about Caliber. I’m sure you’re laughing because you’re probably doing the same stuff. But that’s how we do it.
1031 Exchanges, OZ Fund Mergers, and the UPREIT Roll-Up
You can solve the capital problem with fundraising, or you can solve it with structure. On the structure side, we’re doing three unique things to address our desire for capital. It’s an anxiety-driven desire, because the deals are here, I’m getting them now, and I’m so excited. But you know how it is: whenever the deals are here, capital is always scarce.
First, we opened a 1031 exchange program that’s designed to be better than a DST and better than doing it on your own. You get a professional partner and access to our deal flow, and if things go well, it’s a relatively cheap 1031. We do it in a tenancy-in-common structure as a partner with you. Then, if everything goes swimmingly, we give you an option to roll into our fund. So you can go from no partner, to Caliber as your partner with good deal flow, to diversification over time, all through tax-free exchanges.
Second, we’re doing an opportunity zone merger program, where we help smaller opportunity zone funds, whether investors or managers, merge their fund into ours. A bigger whole makes it easier to raise capital.
Chris Loeffler (27:21): The third program is the hotel roll-up through an UPREIT strategy. Because we’re using an UPREIT, instead of paying $20 million in cash to buy a hotel, I’m buying the hotel for $20 million by assuming $10 million in debt and giving shares for the other $10 million of equity, plus a little bit of cash. So with a much smaller cash check, I can roll up a $20 million hotel.
Gordon Lamphere (27:45): Can you explain that a little further for somebody who might not fully understand it?
Chris Loeffler (27:49): Most REITs in the country were built through an UPREIT strategy. It’s a really good strategy when there’s been sizable disruption in the market and everybody is facing similar problems. The hardest part is getting a bunch of partners who don’t know each other to agree to roll their portfolios together. But if you can overcome that, there’s absolutely no reason not to do it, because depending on the asset class, the public markets are valuing equity at a much better number than the private markets today.
You can roll these portfolios together, even inside your own company. If you’ve got a bunch of syndications, you can get them into a single pool, which gives you access to more institutional capital sources. An UPREIT lets you do that as a tax-free exchange. Instead of selling for cash, you sell for shares or OP units in the REIT, and like I said, it’s tax free. The REIT can pay cash for part of it, and you pay tax on that piece. At that point, the REIT owns the asset, and you no longer do. If you’re doing it with us in hotels, for example, you can continue to manage the hotels. You roll your equity and ownership into the trust and get a management contract back to run the hotels. We then operate the trust at scale, bring in financing at scale, and eventually take it public. Your OP units and private shares essentially become common stock, and you can trade your stock and do whatever you want.
The Pros and Cons of Going Public
Gordon Lamphere (29:22): Have you found going into the public markets to be a net positive, or has there been a lot of stress associated with that process?
Chris Loeffler (29:32): Yes. That’s the answer to your question: all of the above. Like everything in life, it has positives and negatives, and I’d like to end on the positives. On the negative side, we listed our management company, not any of our funds. So it’s not like a REIT, where there’s a bunch of real estate assets in the company. We only have the fee income from managing our various funds. We came public at four dollars a share, and the stock dropped below a dollar, even though the only thing that’s happened since we became public is that the company has been growing and achieving its business plan. Seeing that kind of volatility in your share price in a challenging capital markets environment is never fun. As real estate guys, we’re not used to that. We’re used to steady Eddie.
The other negative is that people look at our share price and assume something is wrong with our company, and that does affect our ability to fundraise into our funds and assets, even though people investing in our funds and assets don’t have exposure to our operating company. It creates a perception that doesn’t necessarily match reality.
On the positive side, it’s unbelievably interesting to see, after only about a year and a half as a public company, how that has ripped through the company and changed my own expectations and the expectations of everyone around us. Everybody’s watching. Every time we do something, it matters. If you’ve seen The Bear recently, they have that “every second counts” line, and that’s what it feels like in the hallways at Caliber. Before, it was a little more like a typical real estate company, a little more lackadaisical.
There’s an amazing interplay between the public and private markets, and if you can get it right, which we’re trying to do, you can gain a strategic advantage for your real estate platform. You can decouple harvesting your carried interest and the value you’ve built in your business from having to sell all your assets.
Chris Loeffler (31:57): You can gain better access to talent, because you can truly give someone an interest in your company and a share of the upside, since they have real stock. You can get cheaper financing, because even a small public company is a better sponsor for debt than a private company. And you can get access to corporate finance you wouldn’t otherwise have. So there are lots of positives. But you have to be willing to deal with complexity and constant change.
The Final Four: Consolidation and Factory-Built Real Estate
Gordon Lamphere (32:32): Complexity is tough, and one of the most complex things is the future. I’d like to move into our final four. It’s always a great way to get to know a little more about you and to see where real estate is going. We’ve talked about a lot of asset classes today and a lot about capital and fundraising. But where do you think real estate is going? I know it’s hard to put on that Nostradamus cap, but I find the men and women in the arena tend to know at least where it might be going down the road.
Chris Loeffler (33:06): I’ve been thinking about this for the last two days, because it’s a great question. For real estate fund managers and sponsors, my peers in the industry, I think it’s going to consolidation. There’s no need for so many of us out there. Investors are confused. They don’t want four hundred choices of cereal. They want ten that they like. Even though it’s been an amazing run and a great business, this industry needs to mature and consolidate. That’s going to be driven by the environment we’re in, by demand from investors, and frankly by the regulators. We’re starting to see the SEC find all kinds of ways to try to force private funds to report like public companies. At some point, when you thought you were just a real estate deal guy doing fun deals, you’re going to find out you’re an investment manager, subject to a lot of stuff you may not want to deal with. So consolidation could be good. You can still be a great real estate entrepreneur, but you might be part of a bigger platform. I think that’s a big thing that will happen in the next ten years.
As far as the actual assets on the ground, I think the biggest trend in the next ten years is that a sizable amount of our real estate, and I won’t tell you what percentage, starts to get built off site.
Gordon Lamphere (34:31): Yeah.
Chris Loeffler (34:32): I think the rest of the world does it really well. When you see what China and Europe can produce in terms of affordable housing, quickly and at a low price, it’s clear we’re not going to solve our affordability problem with material prices magically going down. Labor isn’t going to get any cheaper. So I think you have to look to factory-built real estate. If you’re not already deep in the weeds on that, you probably should get there.
Gordon Lamphere (34:59): Ironically enough, since we film these ahead of time, the episode that drops right before this one is all about that topic. Great minds think alike. That episode is primarily about the residential space. I’m curious about your perspective as someone who’s seeing it. I’m actually investigating this as well on behalf of a number of clients interested in the flex industrial world, making more and more of the process manufactured. What are you seeing on the commercial side?
Chris Loeffler (35:42): On the commercial side, it’s technically hotel, and that’s basically the same thing as residential and apartments. You see a lot of it in hotel and residential. I’ve also seen some interesting applications in retail. Last week I sat down with a Chinese manufacturer who can build an entire outdoor market in about twenty days. And not just something that looks like an outdoor market. Literally, each stall is a food stall with a kitchen.
Gordon Lamphere (36:04): Wow.
Chris Loeffler (36:11): A kitchen you can actually cook food in. So there are really cool applications in what I’d call retail and entertainment. I haven’t paid much attention to industrial, so I don’t know, but I think it’s the same principle. Think about it this way: if you built a car the way we build real estate right now, you’d say, “We’re not going to build an assembly line. We’re going to put all the parts necessary to build a car on the same lot, but we’re going to leave them outside. Every day, someone’s going to come in and do their piece of building the car.” Whether it’s raining or snowing, some new guy comes in the next day and does his piece, and another new guy comes in the day after that, and it’s all exposed to the weather. Versus putting it in a factory and just moving the car down the line. So just move the property down the line.
Gordon Lamphere (37:13): Henry Ford did amazing things for the auto industry. I’ll be curious to see who our Henry Ford is. He or she is probably already around and ready to push some of us out of the real estate process.
Chris Loeffler (37:30): Please have them call me so we can participate in their next round.
Advice for Young Professionals: Make Sure the Ladder Is Against the Right Building
Gordon Lamphere (37:33): Exactly. Speaking of looking back in time at Henry Ford, one of the things we love to do is look back at our own past, and yours. We have a lot of younger listeners, and I count anybody under thirty-five as younger in the real estate industry. When you were starting out in real estate, what advice would you have given yourself?
Chris Loeffler (38:00): I think I believed there was a defined path to success, more so than I should have. I set all my goals based on what I cared about at the time, but I was 23 or 24. Now I’m 40 with kids, and my goals are different. I think Dave Ramsey says it: go ahead and climb the ladder, just make sure it’s leaning against the right building. That would be my best advice. To the best of your ability, make sure the destination you’re trying to reach is the one you actually want. We’re all going to climb the ladder and strive to get where we want to go, but it’s more difficult to change direction once you’re halfway up. Not that I’ve made that dramatic a change, but I wish I had been a little more thoughtful about where I wanted to go in the first place.
Book Recommendation: Lucky or Smart?
Gordon Lamphere (39:02): As somebody who started out in law before getting into real estate, I totally get that. One of the things we like to get our hands on is new books. I don’t care if you’re listening in audio format or sitting down by the fire with a good novel. We love to read. If there’s one book you could recommend, what would it be?
Chris Loeffler (39:27): Going along the lines of what I just described, one of my favorite books, one that every entrepreneur should read before they get started, is Lucky or Smart? by Bo Peabody. It’s about 67 pages, so it’s perfect for an entrepreneur. You can get through it really quickly, and in a very short period of time, he forces you to think about whether you’re really an entrepreneur, or whether you’re a technician or a manager. If you’re not an entrepreneur, that’s okay, but find one to start a business with. Don’t try to start a business as a technician and be the entrepreneur. And if you’re an entrepreneur, don’t try to be the technician. It’s a really good quick download for someone trying to get something started. So, Lucky or Smart?
How to Reach Chris Loeffler
Gordon Lamphere (40:13): There’s one last thing we always want to make sure of: if someone wants to get in touch with you, what’s the best way?
Chris Loeffler (40:20): I’m easy to find. Our domain is caliberco.com, C-A-L-I-B-E-R-C-O dot com, and my email is just [email protected].
Gordon Lamphere (40:31): Chris, thank you so much for hopping on the podcast today. We really appreciate it.
Chris Loeffler: Appreciate it.
Gordon Lamphere: Thanks again to Chris. We appreciate his insights. If you enjoyed the podcast, please give us a like, a five-star rating, and a review. Your comments, interactions, and subscriptions truly matter and help us continue to bring on quality guests. You can find us on YouTube, Spotify, or wherever you get your podcasts. I’m Gordon Lamphere with The Real Finds Podcast. Thank you for listening.
Van Vlissingen and Co. has been the Midwest’s oldest commercial real estate brokerage, development, and management firm since 1879, and today is independently ranked the #1 commercial real estate agency in Chicagoland, home to the #1 independently ranked agent, Gordon Lamphere, and the region’s #1 ranked commercial property management team. If you own, manage, or invest in energy-adjacent, mixed-use, or transit-oriented property across Lake County, the North Shore, the Northwest and O’Hare corridors, DuPage and the I-88 corridor, Will County, or southern Wisconsin’s Pleasant Prairie, Kenosha, and Racine markets, contact Van Vlissingen and Co. at 📞 847-634-2300 or 🌐 vvco.com. For a market-wide view of where these dynamics sit today, see our State of the Chicagoland Commercial Real Estate Market for Q3 2026.