Lee Kiser co-founded Kiser Group with his partner Estella Kiser, in 2005, and has developed the company into the most recognized brand in Chicagoland for mid-market multi-family commercial real estate brokerage. Kiser Group currently has 23 staff members.
LD: Congratulations on Kiser Group’s 10-year anniversary! Your team has a very impressive track record for selling apartments throughout the Greater Chicagoland area. Can you tell us a little bit about how Kiser Group distinguishes itself from other commercial real estate brokerage firms?
LK: Kiser Group brokers are the most highly educated, best-trained agents in the market. Our brokers’ ability to lead their clients to solid investments is unrivaled. Another differentiator is that Kiser Group provides its agents with everything they need to help their clients, including the latest technology, research, and marketing tools. No other firm in Chicagoland knows multi-family investment like Kiser Group.
LD: Everything we have read lately indicates all signs for apartment investments remain strong: 1. Financing remains active, 2. Occupancies remain strong, 3. Rents are increasing. However, there is strong market opinion that a rate hike is right around the corner. In your opinion what will the next 1-2 years look like for Apartment Investment Sales on a National basis?
LK: Everyone seems to agree a rate hike is inevitable. The first moves will be nominal – 25 basis points per – and the Fed will monitor how the economy adjusts. I anticipate that we could be as much as 200 basis points higher by the end of 2017. If so, cap rates will also adjust. At the same time, I do not anticipate rent grow slowing; meaning NOI’s should continue to grow through the end of 2017. The effect of the simultaneous trends of cap rate increase and rent growth will be a leveling of values in multi-family over the next few years but I do not anticipate a decline in value (price per unit/foot)
LD: Throughout your tenure in selling apartment buildings in Chicago, has Chicago seen an increase in outside capital (non-Chicago based companies) investing into its real estate; driving valuations higher and cap rates lower? Where is this capital coming from geographically?
LK: Chicago has become a world-class city in the past 10 years and with that has come world-class investment. We are currently closing Chicagoland apartments with investors from both US coasts, Canada, China, Japan, Israel, and several Western European countries. The profile buyer having a greater impact on cap rate compression, though, is the fund-driven investor, not the foreign investor. Chicago has seen institutional and pseudo-institutional investors moving into traditionally non-institutional assets. This means increased competition for the traditional mid-market private landlords. The return requirements for the fund-driven investors are substantially lower than the private market. This has been the biggest factor in cap rate compression in Chicago.
LD: Do you believe the increase in outside real estate investment dollars into Chicago is an indicator that real estate in Chicago is under priced when compared with other leading US Cities? Has the City of Chicago has elevated itself over the years?
LK: Chicago has definitely elevated itself over the years but local cap rates are still significantly higher than other major US markets where foreign or fund-driven investors have traditionally purchased (NYC, San Francisco, LA, Miami). Chicago multi-family real estate is the best investment relative to the same asset class in any other major US market.
LD: Have tenants become more demanding on the level and quality of the amenities they expect from their landlords?
LK: Amenities are certainly more of a competing chip for landlords than previously but not necessarily due to tenant demand – due to beating the building next door. Chicagoland’s new construction pipeline boasts buildings with world-class amenities such as pet grooming areas and salons, outdoor grill areas that mimic high-end restaurants, demonstration kitchens, smart technology for laundry and parcel service, and many more.
LD: Can you tell us a little bit about what types of debt you are seeing on the acquisition side (CMBS, Agency, Fannie, Freddie, etc.)? What types of leverages are typical on of these lenders on the deals your team is closing?
LK: The only thing I think is unusual is the return of the CMBS market. I’m seeing loans completed at LTV’s, price points, and on appraisals that make me think no one really learned anything in 2008-10.
LD: Everyone has a few transactions that stand out in their careers. What is one deal thus far in your career that stands out to you and what is the significance to that deal?
LK: Each year brings transactions memorable for different reasons. The ones I remember most are the ones I’ve sold more, than once. I really enjoy watching the same asset in the hands of different clients over time. Each client adds value in a different and unique way. Kiser Group’s record so far is selling the same asset four (4) times, with several in the “3-times” category. Nothing to me speaks more loudly than repeat clients and repeat assets. This means that we’re helping clients create wealth over time and continually being called to assist in that process. I anticipate Kiser Group has the longevity to be transacting the same asset a dozen times. Right now I’m seeking the 5-peat.
LD: What advice would you give a young Lee Kiser just out of college and starting his professional career?
LK: Move to a big city (Chicago) earlier than you did, align yourself with an industry mentor as quickly as you can, learn everything you possibly can about your chosen field. Immerse yourself as quickly as possible in your chosen field, then as quickly as possible think about how you can make things better for your clients. Once you have the knowledge, you will create new ways of working within the field. If you do this at an early enough age, you’ll be in a position to change things in your profession.
For more information on Lee Kiser and Kiser Group, please visit www.kisergroup.com
In 2015, Lee co-founded KIG and KIG Analytics with his Partner Susan Tjarksen. KIG is an institutional multi-family broker based in Chicago. Licensed in 9 Midwest states, KIG currently has listings in Illinois, Wisconsin, Indiana, and Kentucky. KIG has 10 staff members. KIG Analytics is a data analysis and visualization company that is a wholly owned subsidiary of KIG. For more information on KIG and KIG Analytics, visit www.kigcre.com.