John Petrovski is the new managing director and head of U.S. commercial real estate with BMO Harris Bank. Though he will be based in Chicago, he will oversee commercial real estate operations across the Midwest. Midwest Real Estate News recently spoke with Petrovski about his long real estate career and his goals for BMO Harris.
Midwest Real Estate News: Congratulations on your new position. You must be excited. John Petrovski: Right now it’s like a new pair of shoes. It doesn’t feel quite perfect yet, but it is definitely getting there. It’s real exciting. I was head of originations in my most recent job for eight cities, six of them in the Midwest. I touched a great number of deals. I teamed up with Chicago folks to call upon some clients here. I did some Chicago deals, deals in other Midwest cities like Minneapolis, Milwaukee, Madison, Indianapolis and Kansas City. So I’m eager to build on that.
MREN: What are your goals for BMO Harris? Petrovski: I’d like to build on our successes. Coming through the downturn was a real tough time for banks and real estate companies. In the last couple of years we’ve hit our stride with new business. We’re working with great clients on exciting new developments. I’d like to continue and improve on that.
MREN: Are you seeing more deal activity today than in the last year or two? Petrovski: Nationally, most people would say that the real estate markets have recovered. Some on the coast now have values that are above where they were in 2007. Some of the Midwest markets are chasing a bit. But the trend is moving in the right direction. The economy is growing, adding jobs. Because of that, people are able to enjoy real estate more. They need more real estate. We did not see as much development during the downturn. We need new office and retail development. The apartment phenomenon is well-documented. There is a lot of pent-up demand for high-quality rentals.
MREN: How strong are some of the individual markets in the Midwest? Petrovski: Chicago is doing very well. It’s the largest city in my market. It’s a headquarters for BMO Harris Bank. It’s a large city with a really strong urban core that people commute to and live in. There is a lot of opportunity here for real estate to trade and be developed. Minneapolis is another city with a lot of population and job growth, and it’s jobs and population that drive the need for real estate. Minneapolis has perhaps the best growth dynamics of all the Midwest cities. For the others, places like Milwaukee, St. Louis, Kansas City and Indianapolis, the growth dynamics are a bit less. That brings good and bad news. The good news is that they are not being overdeveloped. The not so good news is that they don’t need that much development. They do present a finite number of development opportunities. We are active in them, though.
MREN: You mentioned the multi-family market a bit ago. Do you expect that market to stay as hot as it has been? Petrovski: That market is extremely hot. I don’t see it staying as red-hot as it is now. But it will stay strong. The trend toward rental housing will continue with both empty nesters like myself and the younger population like my kids. Younger consumers want to avoid driving. They want to live closer to where they work. They enjoy cities. The demographic winds are at the back of multi-family. I expect that to continue. There has been a big slug of new supply. That will get absorbed, but it will take time. That might pinch a bit the encouragement of new development. Overall, though, the multi-family market will be strong. That property type will do well.
MREN: How excited are you to be working here in Chicago? Petrovski: Being in Chicago is what gets you excited about being in real estate. Real estate is the study of where people live, work, shop and play. Chicago is an international city. There are so many wonderful architectural amenities and developments. Here you can team up with strong development clients and pursue new projects . That is exciting. You can add to what is already a famous skyline. You can build something that you are proud of. When you walk by with your kids and family, you can point to a building and say that in some small way you contributed to this building.
MREN: A lot of real estate pros tell me they enjoy being able to work on something as tangible as a building. Petrovski: I get excited about working on projects that you can touch and see. They are large. They add to the betterment of the city.
MREN: What do you enjoy most about this business? Petrovski: I also like the intellectual challenge. I like the competitive environment. Whether you are investing or lending, you go into a market and compete with others. There is always that excitement of competing but doing it in a prudent manner that makes financial sense. What it boils down to is that this is an intellectually challenging career.