CRE N Illinois

Q&A: Tim Anderson of Focus

Tim Anderson, CEO and founder of Focus. Tim Anderson, CEO and founder of Focus.
167 N. Green Street, a joint venture by Focus and Shapack Partners scheduled for completion in summer 2020. 167 N. Green Street, a joint venture by Focus and Shapack Partners scheduled for completion in summer 2020.
The Atworth at Mellody Farm in Vernon Hills, Illinois, developed in partnership with Regency Centers. The Atworth at Mellody Farm in Vernon Hills, Illinois, developed in partnership with Regency Centers.
1717 Ridge, a 175-unit apartment development in Evanston, Illinois that fetched the highest in the area at the time when it sold. 1717 Ridge, a 175-unit apartment development in Evanston, Illinois that fetched the highest in the area at the time when it sold.

Tim Anderson is CEO and founder of Focus, a Chicago-based firm that delivers development, construction and consulting services. He got his start in commercial real estate over 40 years ago and since then has been a trailblazer for industry diversification.

After graduating from IIT in architecture, he got a job as an architect at Fujikawa Conterato Lohan & Associates [now Goettsch Partners], the successor of Mies Van der Rohe’s office. After 10 years there, he worked for David Hovey at Optima for a number of years as executive vice president. He founded his own firm, Focus, in 1993.

Can you tell me a little about the company you founded and what your vision was for it?

I started Focus in my house about 26 years ago. I didn’t want to do architecture in house because I felt like every community and product type needs somebody that understands that. For example, we’re doing a new office building with Gensler, who are great office guys. We do stuff with Larry Booth [of Booth Hansen], who does architecture that echoes history without necessarily being historical. We’ve done historic restoration with Antunovich. All of these guys have specialties. I didn’t want to do the architectural analysis, but I did want to have some control or give direction to design. We have about seven architects on staff here and they do construction, project management and development management. But I did like the idea of doing construction in house and doing our own sales. We did that for years and we were primarily in the condo business until 2008.

Well, gee, what happened in 2008?

[laughs] It was hard. I tell people in other industries, “Our home sales went down over 90 percent,” and they’re like, “Nothing does that.” We had a number of loans, we worked them all out, we didn’t get foreclosed on and we didn’t give anything to the bank. That was tough, but we had good partners that worked with us and we appreciate the banks that worked with us.

So how did you pivot in 2008 and 2009?

It was interesting. We were doing condos as mixed-use buildings where you had retail or office in the base. We had a construction group that knew how to do that stuff. So we started doing receiverships for people, we were advisors for banks on deals and then we started doing third-party work. We got into restaurants, we did a lot of Lou Malnati’s, we built for other developers, we finished out a broken condo deal for a distressed fund that we were a receiver on. That kind of saved our butts where we were able to get fee work and keep the office going, keep our core, experienced people engaged throughout. We downsized massively, but we were able to keep going and service the loans and get them extended and feed the beast.

Coming out of that, we saw that we could make money on the third-party GC side. It was a matter of necessity then. We started to go into multifamily rental because a bank came to us with a piece of property in Evanston. We hadn’t done large apartment lease ups, so we partnered with Atlantic Realty Partners, Richard Aaronson’s firm, and did five or six deals with them that were very successful. 1717 Ridge set the high mark for suburban when it was sold and it was very successful for our investor. We used institutional partners instead of family and friends, which was the way of things in the condo era.

This last year, 30 percent of our construction volume was third-party work for other developers. And we like that. We’re doing Logan Crossing for Steve Fifield in Logan Square. We just finished Noca Blu for Savoy Development and The Hunt Group in Logan Square. We’re working on another deal for somebody else in Old Town and we’re in pre-construction for another developer in the West Loop. So we’ve gotten more active in that space.

What do you get out of the joint venture set-up as opposed to if you were driving the whole project?

Well, when you’re doing the whole development yourself, you get all of the developer fees, but you also take on the entire risk. So you share risk with other people. Like with Richard Aaronson and Atlantic Residential, we are doing a project with them called the Atworth in Vernon Hills. They have a property management group locally, they have people that are experts at leasing up properties. That’s something that we don’t have in house, so it’s great to have them as a partner. Jeff Shapack, his team at Shapack Partners is doing the lease up on an office building, 167 N. Green, that we’re doing with him. He understands that neighborhood really well because he’s embedded there. He brings that to the table and we bring construction expertise. We like to see partnerships where somebody else adds something that we don’t have.

We have great people here and we believe in the integrated delivery method where we are at the table day one with construction input and we think we can drive value that way. Our interest is totally aligned as an owner/developer when we’re constructing. On Atworth in Vernon Hills, we were under budget, we had good contingency for construction, we had early release of that contingency so we could upgrade the product or do something that we thought would add value on the exit or on the customer experience.

Your portfolio includes a lot of activity near the Illinois Medical District. Do you foresee the IMD being the next Fulton Market, or will most of the development be concentrated in the number of proposed megadevelopments?

I don’t know. I think there is a danger with projects like Lincoln Yards and The 78. I don’t want to be negative, but the South Loop, when you get out of Printers Row, has a certain quality to it that feels manufactured. It doesn’t have an organic vernacular. When you go to Fulton Market, the beauty of it is there are historic buildings there, they were there for a long time and they gradually morphed into something else. That’s what I think the strength is. I appreciate what the city did in creating a historic district that identified certain buildings that remained. I think that will help long term to create that dynamic between something with a sense of place that’s historic and new development.

The Medical District is not going to have quite that dynamic, but I think Little Italy has a lot of possibilities. When you look at those residential areas just northeast of Ashland and Taylor and go back in those streets, there are some great townhomes and there are great restaurants in the area. It has the basis of the neighborhood that you need to build on and we’re hoping that building some development near Ashland and Taylor will provide mass that will give momentum to that neighborhood. The problem is the other side of Ashland is all new buildings that are totally work-oriented, so it doesn’t have the bleed of organic neighborhood like you see in Fulton Market. But on the other hand, there are 29,000 people that work over there, plus you have the bookend to the east of UIC with that student, staff and graduate population. So we think long term, the prospects there are very positive.

Then there have been proposals to cap the Eisenhower with park space to better connect the IMD with the rest of the West Loop. Could that help catalyze development in the neighborhood?

It takes a lot to come over a certain amount of inertia, like how we jumped over the highway to get to the West Loop; that took years. But then people don’t see the highway as much of an impediment anymore and now the West Loop is a destination.

The most efficient structure is a cube pulled up to the allowable limit, but they get boring after a while. So how do you find the balance, when talking with stakeholders, between aesthetic design and sound financials?

We did The Parker Fulton Market, which has this bow-shaped curve to it. From a design standpoint, it opens up views to multiple units towards the east, northeast and southeast. We talked to the subs about any issues with how they would lay it out, but in the age of computers, this complex curve doesn’t really matter. We didn’t think we were going to be paying a big premium for it compared to what it would do for the product inside. That’s the value. We aren’t going to pay a big premium for this and it will make the building iconic and make a better experience for the users inside. Coming from an architecture background, I really believe that good design pays. I think if you design a good product with a good sense of space, flow and materiality, that will make a difference.