As investors continue to adjust their business plans to successfully acquire assets, it has never been more important to understand the strategies and creative solutions that are needed to create value.
Recently, the Chicago Chapter of The Society of Industrial and Office Realtors (SIOR) hosted its Speaker Series luncheon to discuss acquisitions and financing as well as successes and challenges faced in seeking new opportunities. I was pleased to moderate a panel discussion featuring John Butler, executive managing director of acquisitions at Bradford Allen; Jack Brennan, a managing principal at Brennan Investment Group, and Chris Terzich, a relationships banker at CIBC.
Our conversation covered a range of topics, including investment criteria, market conditions, financing challenges, and creative deal-making strategies.
Ryan Moen is president of the SIOR Chicago Chapter. He is also principal and founder of Versa Real Estate Services.
Shifting investment strategies
One of the main takeaways from the luncheon discussion was how investment strategies have evolved due to changing market conditions. Butler emphasized that in the current office market, investors must be highly selective, opting for Class A properties with good credit tenants and with health rather than the value-add Class B assets that were more viable in the past.
He stated that office acquisitions are often distressed, with some properties trading at 80-85% below their peak values, however he noted that the leasing side is getting stronger. “Corporate America is still trying to figure out what the ideal footprint is for their employees and if they can get their employees back on a full-time basis.”
Financing remains a hurdle, with many deals requiring all-cash transactions due to the limited availability of bank financing, he added.
On the industrial side, Brennan explained that the sector has showed continued strength despite some softening in Class A leasing. Brennan Investment Group, he pointed out, has focused on small-bay industrial properties with mark-to-market rent opportunities and short-term leases. These deals, he said, are highly competitive, and often attract 20-plus bidders. Brennan has found success by targeting non-institutional sellers and corporate owners willing to trade at more favorable pricing.
Challenges and creative solutions
Terzich provided some insights into the financing environment during the panel, noting that traditional bank financing for office properties is largely unavailable. Many banks have even put assets on a “do not lend list.”
Given these challenges, he pointed out that alternative financing structures such as seller financing and debt funds have become more common. For industrial properties, demand remains high, but owner-occupiers often find themselves competing with investors who have greater access to capital and need to offer strong pricing to win opportunities
With industrial assets in high demand, panelists said that investors must deploy creative strategies to secure deals. Brennan said that his firm has successfully acquired properties by targeting highly management-intensive portfolios, such as a 700,000-square-foot portfolio in Lombard with more than 100 tenants. While deals like those require significant operational expertise, having in-house property management and leasing teams can provide an advantage to tackle those types of opportunities.
Another way that his firm has found opportunity was by recently launching a $100-million opportunity fund aimed at buying properties from non-professional and corporate owners who may be less discerning on price. By focusing on these under-the-radar opportunities, they have been able to acquire assets at a low basis, improve them, and get them leased and eventually sold.
“Sometimes these acquisitions are as small as $2 million, so more of a volume game, but it has paid off and we’re able to find some good opportunity by hunting in that way.”
What’s next for CRE?
As the discussion came to a close, each of the panelists shared their outlook for the future. Terzich noted that many investors are in a wait-and-see mode.
Brennan remained optimistic, at least when it came to industrial. “We are going to see a lot more leasing velocity here in 2025.” Meanwhile, Butler acknowledged that while the office market has likely hit bottom, a recovery will be slow, with buying opportunities persisting for years to come.
Most of our SIOR Chicago Chapter members know that whether it’s leveraging seller financing in the office sector, competing for industrial assets with creative strategies like Brennan Investment Group, or navigating the financing challenges across asset classes, success in acquisitions in the current market requires flexibility, deep knowledge of the market variables combined with the ability to execute in uncertain conditions. SIOR members are here as advisors to help commercial real estate owners and occupiers navigate the unknown. Find out more at siorchicago.org.
Ryan Moen is president of the SIOR Chicago Chapter. He is also principal and founder of Versa Real Estate Services.
