Just a Minute with Michael Faber, Principal, Capstone Quadrangle

Last updated on May 13th, 2019 at 02:39 pm

Company address: N17W24222 Riverwood Drive, Suite 160, Waukesha WI 53188

Company Web site: www.capstonequadrangle.com

Industry: Commercial real estate development

Number of employees: 15

Education: Bachelor degree in environmental design, University of Minnesota; bachelor’s degree in architecture, University of Minnesota; and MBA-finance, University of Chicago.

Family: “My wife is Chriss Laemmar-Faber. She’s a high school history teacher. Our 6-month-old puppy is our four-legged child. His name is Lucca, but I refer to him as ‘Hurricane Lucca.'”

What was the smartest thing your company did in the past yearω

“Laid the groundwork for greater diversification. In the development business, what you do today may have an effect several years from now.”

What’s new at your companyω

“Pretty much everything, because every project is unique. That’s what I love about it – you are always doing a different building, in a different municipality, with a different tenant and so forth. We don’t create the same building over and over again, we try to create good projects that are functionally cutting-edge and also quality architecture, that work for the community as well as our investors and tenants. That variety makes it seem like everything is always new.”

Do you plan to hire any additional staff or make any significant capital investments in your company in the next yearω

“Yes, we’ll look to hire an administrative assistant and possibly a project manager, depending on whether some of the larger land and acquisition deals we are pursuing come together. Most of the time we see people who emphasize speed or multi-tasking. But we’re not about speed, we are about being right. For developers like us, every project is a significant capital investment, anywhere from $500,000 to $50 million, and we are convincing investors and a lender to go along with us. We don’t do that without a whole bunch of homework to feel comfortable about both the details and the big picture, and that includes a hard look at the fundamental drivers of the local economy. Right now, we are cautiously optimistic about both the U.S. and the Milwaukee-area economies, and I am relieved that interest rates seem to be stabilizing.”

What will be your company’s main challenges in the next yearω

“Probably the biggest challenge is finding the sweet spots where we can apply our skills to create value, but that’s a perennial challenge. Just because there is land available for sale doesn’t mean its time to build. Also, the real estate industry faces huge cost increases for construction, on the order of 10 percent per year overall, so the issue is whether the market will pay the increased rents that those increases dictate. It could cause businesses to live in inefficient or obsolete buildings longer than they should.”

What’s the hottest trend in your industryω

“I think the emergence of ‘tenants-in-common’ or ‘TIC’ investments, as a method for individuals to invest in large institutional-quality commercial real estate. It’s a terrible trend, and I would never do it. Most of them are vastly overpriced, the sponsors take huge fees and there is no easy exit from the investment. There are much better ways for folks to diversify into real estate than a TIC. Now, I’ll get some love letters from the TIC guys, no doubt, and I probably shouldn’t have mentioned this. But they are really bad news as far as I can tell, and a lot of savvy real estate people agree with that. They refer to them as ‘TIC TIC Boom.'”

Do you have a business mantraω

“Several, but my favorite is that it is better to be accurate than fast. One of my partners is named Paul Quick, so he likes to claim with a smirk that he gets to be both.”

From a business standpoint, who do you look up toω

“You know, everybody has different strengths. We have seven partners, but we all kind of look up to Chris Noon. He just has balance. He balances tough negotiations with humor, and the desire for financial success with ethics. It’s pretty much balance in all things, very thoughtful and not just reactive. I really admire that. Also, there are two construction contractors we have hired in the Milwaukee area, Steve Helfer and Leif Nesheim, that are just plain honest, and that’s how they run their companies.

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