CRE Midwest

Hennelly looks to build Ryan's presence in Chicago

Throughout his 25 years of commercial real estate experience, Tim Hennelly has worked almost every angle of a deal. He has spent time as a broker, construction consultant, and a developer. Hennelly recently was named President of the Great Lakes Region for Ryan Companies.

Throughout his 25 years of commercial real estate experience, Tim Hennelly has worked almost every angle of a deal. He has spent time as a broker, construction consultant, and a developer. Hennelly recently was named President of the Great Lakes Region for Ryan Companies. Mark Thomton, editor of the Illinois Real Estate Journal, sat down with Hennelly in his Naperville office earlier this week to talk about the state of the industry, the challenges of his new position, and, reflections on his career. The following is a portion of their conversation.

How did you get into commercial real estate?

I grew up in the shadows of the industrial parks of Elk Grove Village. Industrial real estate made sense when I got out of University of Illinois. I worked for small builder in Elk Grove, but I left there and joined Inland in Oak Brook. That job was to help Inland sell off its apartment portfolio that they had built up over the years. It was a lot of young guys cold calling and trying to sell two flats. It was kind of like being in college, only there was a little more money. From there I went to work for Vern Schultz at Baird & Warner, because I wanted to focus on industrial real estate. Two years after that I joined The Alter Group. I wanted some more stability. Brokerage is tough. When people make it, they make it big, but if you don’t, it’s tough to hang on. I wanted to learn the development angle.

When you look back, who were major influences on your career?

I learned a lot from Vern Schultz and the way he approached deals. He is the consummate deal maker. There is no question I learned from Bill Alter and Rich Gatto at Alter. What I learned from Bill--other than how to yell--was how to see how deals were structured financially. Rich and Bill taught me how to evaluate if deals made sense. Being exposed to Bill Alter’s mind and how he thought through things is very valuable. I rely on computers, but I like to know the numbers. That comes from Bill. He would work things out long hand. I was there for eight years and then went to FCL Builders. I wanted to learn the construction side of the business. I became VP of sales for FCL, which was tremendous as far as learning the construction world and how bids are put together and how projects are built.

Does your work here at Ryan combine all of this past experience?

Yes. It is great to have the brokerage background and the number of personal friends that I have in that world. I can appreciate what they go through. The ability to understand what the construction guys do-I can’t build a building-but I do understand what they are talking about and if the numbers make sense.

You were recently named president of the Great Lakes region for Ryan. What do your responsibilities entail and what are some of your immediate goals?

The number one goal is to double our volume in four years and to make Ryan the first choice. That would bring us back up to $1.4 billion nationally. Locally, that would make us a $250-$300 million company. That is the overriding goal. How to get there is though leveraging the four business parks that we have here, and also by building up the general contracting part of the business. Around the country, 50-70 percent of Ryan’s revenue is for outside clients, not as a developer. Not a lot of people know that here. In order to hit the big goal of doubling our size, I need to make people aware that we are a really good general contractor. In order to do that I still have to do what I have always been doing by bringing in deals and gaining market awareness. The biggest change for me is the management of a lot of people. When I was VP of development we had five people and now I lead and manage 75 people.

You are finding your fair share of projects out there in a difficult time. How have you managed to find new opportunities?

I think it is flexibility and creativity. Ten years ago people would have said that Ryan is a retail developer. We are not doing any of that right now. All of it is gone. We had to retool ourselves to do more industrial. Our retail group has shifted over to senior housing. You have to be creative enough to get something out of the ground when the capital markets are stagnant. We have been able to move our resources to the right spot. We are breaking ground in Gurnee on our third senior living project in this area. We have been successful with medical office buildings in Wisconsin. We are breaking ground on a 140,000-square-foot facility tomorrow (5/10) in Menomonee Falls.

How would you sum up the last 12 months of the CRE market?

I’ve seen it improving. It feels better than it did 12 months ago. Everyone I’m talking to on the industrial side believes that vacancy rates are getting to a manageable place and that we might actually be able to start talking spec in some areas. I don’t see many new office buildings coming out of the ground. I think that what is coming on the horizon in the next 24 months is retail. We could start seeing some smaller deals, not the huge regional shopping centers, but something could come along.

What are you still worried about?

The lingering vacancy on the industrial side in the I-80 corridor. It is not completely healthy down there. It is improving, but it feels like it is taking a long time. There is still trepidation by users.

Do you hear concern from your clients about the business environment in Illinois, or is this overblown?

I think businesses do worry about it. I’m reading more about businesses looking at Indiana as an alternative. In Illinois, maybe we were kidding ourselves for a while. We did have structural problems in this state, but we never addressed them until now. Regionally, I am still going to do my best to bring companies to Illinois, but we can build in Michigan and Indiana too. The state has stepped up a number of times, look at Navistar in the old Lucent building. That deal floundered for a long time, but it was done with a lot of help from the Illinois Financing Authority. They can scramble and get things done.

When you look at your career, what do you consider some of your biggest accomplishments?

The thing I am most proud of is my reputation in the market. Over 25 years there are few people out there that I have to avoid. Businesswise, I’m proud that we have a lot of repeat business at Ryan. That is saying a lot. I’m also proud of the Cisco building (Rosemont Corporate Center). At the end of 2008 banking was nonexistent, but we got that financed.

What is some advice that you like to pass onto young professionals?

Something I always tell project managers is that you can make your career completely different if you focus on networking and business development. Don’t focus completely on things that happen in your office. You become much more valuable to your company if you are able to go out and bring in new business.

What is one thing that people in the industry might not know about you?

I was on a Blackjack team. It was a short-lived card counting team in Las Vegas. The team lasted three months, but I was only there about a week. It was in 1995 and casinos got a lot smarter about how to find people who were counting cards.  I also lived in Hawaii for about six months when I was 20 and I juggled fire on the beach to earn a living.

What do you love about the business? What is the perfect day for you?

For me, the most fun part of the job is the poker game you play when you are trying to get new business. You have to guess what your competitors are doing and out maneuver them. So, strategizing on how to land new business is the perfect day. That…and golf by one o’clock.