Brian Quigley: CRE's Transformer
Brian Quigley started in the real estate industry in 1987 after graduating from DePaul and cut his teeth at JMB Realty as a CPA in the financial reporting department. Quigley said JMB was a great place to start because of the tremendous deal flow and exposure to multiple property types and multiple venture structures. During the decade of the 1990’s, JMB would create multiple new acquisition funds every year and then go out and invest billions of dollars in commercial real estate. For a person just out of college and new to the industry that high volume environment created a unique opportunity to quickly learn how the industry functions.
“My advice to college students thinking about a career in commercial real estate would be to sign up for an extra accounting course,” sad Quigley, Midwest Partner at Dermody Properties. “Accounting is the language of business and it is important to have a solid understanding of accounting in the commercial real estate business.”
After 25 years in the industry, what Quigley enjoys most about commercial real estate is the physical transformation process that takes place in the development business.
“I find it very rewarding to start with a vacant piece of land, or a building ready for a wrecking ball, and then transform that property into a new highly functional building,” he said. “Even more rewarding is to start with an environmentally challenged site located in a neglected part of Chicago and then develop a Class A industrial building. That development will bring not only jobs and revenue into a community but also a sense of renewal.”
He continued, “Redevelopment of a blighted property can breathe new life into a neighborhood, and is environmentally friendlier than developing a green field in a rural location. I think redevelopment is a win all the way around, the City puts a property back on the tax rolls, the neighborhood residents have new job opportunities close to home and the business that moves in is closer its customers, that is exactly the type of project that keeps me motivated to work hard to find the next one.”
“The most rewarding part about working in the Chicago real estate industry are the genuine friendships I have made over the last 25 years with colleagues in the industry,” Quigley added. “There are multiple customers, brokers, lenders, investors, contractors and design professionals that I have come to know well and now call friends. I feel very fortunate to have chosen to work in the industrial real estate industry in the City of Chicago as both are filled with high quality and talented people.”
The industry has certainly changed since Quigley entered 25 years ago, and that rings especially true for the challenges he faces today.
“One of the biggest challenges facing industrial property owners today is how quickly a building can become functionally obsolete,” he said. “The increasing rate of functional obsolescence is driven by the changing requirements of the customer, particularly the e-commerce customer. E-commerce is clearly the fastest growing driver of demand for industrial space today across the Nation. Today, roughly 30% of all demand for warehouse space is related to E-Commerce, and that number is likely to double in the next 5 years.”
Quigley continued, “For a new bulk warehouse to be considered functional by an e-commerce company, the project must have a minimum 32’ clear height (preferably 36’), greater floor load capacity requiring a thicker concrete slab, higher car parking counts to accommodate the employees that pick and pack orders, wider column spacing for more efficient racking and more trailer parking than what was considering Class A product a decade ago. The result is that a typical warehouse built 10 years ago with a 24’ clear height is no longer considered Class A industrial product. Another important consideration is that each of these e-commerce requirements add cost and reduce FAR, which in order to be sustainable must translate into higher rents.”
According to Quigley, a recent trend in Chicago is an increasing number of end users seeking highly efficient industrial product in infill locations along strategic highway transportation routes.
“Many of these users have been, or are, in the process of being displaced by the gentrification of the west loop with office projects like the Google conversion of the Fulton Cold Storage facility on West Fulton. Similar gentrification is occurring on the near north, and near south side, in the industrial Goose Island and the Stockyards areas. Many of these businesses require travel distances no more than 10 or 15 miles from downtown in order to efficiently serve restaurants, hotels, the convention center and office buildings.”
“I see this trend picking up momentum as more fortune 500 Companies relocate from the suburbs into the City in search of young professional employees who prefer to live and work in the City,” he added. “Much of the industrial land that surrounds downtown Chicago will be converted to office and residential use. But the good news is that process will create requirements for new industrial product that will spur development in neighborhoods within or adjacent to the City that have not seen development activity in 30 or 40 years.”
So what sets Dermody Properties apart from the rest?
“Dermody Properties has set itself apart from other national developers by creating the “Logisticenter” concept, which is a trademarked brand ensuring every new development results in a highly functional industrial building. The concept involves designing facilities that are innovative, efficient, strategically located near transportation corridors and cost effective from an operational perspective. Dermody Properties has developed more than 40 million square feet in over 20 markets in the U.S. over the last 50 years based on this concept.”