Tandem

The idea around risk is something that is always on our mind. As we continue to understand and define risk, we recently discovered the work of Howard Marks from Oaktree Capital Management, L.P.. For Howard, risk isn't the traditional view that is a measure of volatility. For him, risk is the probability of loss, and a superior investor is someone who manages that risk intelligently, not just chases returns. The catch? Risk isn’t something you can precisely measure—not in advance, and not even in hindsight.? Just because a bet pays off doesn’t mean it was smart. Conversely, just because something failed doesn’t mean it was foolish. Marks teaches that risk isn’t about what happens or the result, it’s about what could happen. The best investors and builders, like the best gamblers, don’t just play for upside; they protect against downside. They prepare for the risks they can see and the ones they can’t. Marks challenges the idea that risk and reward are positively correlated. He believes that risk comes with a wide range of potential outcomes, including catastrophic losses. It’s not just about playing the game, it’s about surviving the game. He likens risk management to playing the game of soccer where both the offence and the defense are on the field at the same time. No one tells the players when to switch from one to the other, players have to judge that for themselves while the game is being played. Another mistake people make. Assuming that high-quality assets are always safe and low-quality assets are always risky. Marks reminds us that in the 1960s, the “too good to fail” Nifty 50 stocks collapsed, while junk bonds in the 1970s delivered steady oversized returns. In other words, it’s not just about what you buy, but what you pay. The goal of a superior investor isn’t just making money in good times, that doesn't mean very much. The real challenge is avoiding big losses during bad times. That means sometimes settling for market-like returns when things are good but protecting one’s downside when markets turn. In investing, survival isn’t an afterthought—it’s everything. https://lnkd.in/ewKJAcDc

We continue making good progress at our Avenir Loft conversions project in Chicago’s River West neighborhood! Take a look at our latest updates—Level 3 drywall finishing is now complete and ready for paint, and gypsum cement underlayment has been poured for all units on Levels 2 and 3. Exciting milestones as we bring this transformation to life!?

Chicago Mayor Brandon Johnson’s $830 million borrowing plan for city infrastructure narrowly passed the City Council 26-23 after weeks of debate. Critics opposed the backloaded repayment structure, which delays principal payments until 2045, potentially increasing the city’s long-term debt burden. Johnson’s team clarified the funds would not be used for Chicago Public Schools operations, easing some concerns. Aldermen proposed alternative financing plans, including flatter repayment schedules and shorter bond terms, but Johnson’s plan ultimately prevailed. Some council members, like Ald. Bill Conway and Ald. Timmy Knudsen, pushed for amendments that would reduce interest costs and accelerate repayment. To gain support, the administration highlighted specific infrastructure projects and argued that delaying repairs would be more costly. The total repayment cost could exceed $2 billion, with interest-only payments until 2044. While the ordinance passed, amendments to restructure the debt payments may still be considered. https://lnkd.in/e98HqRMT

Jeffrey Hreben, Senior Development Manager at Tandem, recently joined Chris Arnold on the Transforming Cities podcast. He shared his journey from his initial aspirations to pursue a career in international law to discovering his passion for city planning and real estate development. Jeffrey discussed how his role at Tandem has evolved, where he leads the team in market intelligence, financial feasibility, site selection, and zoning. He highlighted the firm's entrepreneurial spirit as a key advantage in shaping its developments and being staying relevant for current and future generations. He also shared his outlook on Class A multifamily projects and how Tandem is adapting to meet the needs of current and future generations. In addition to the built environment, he explored financing strategies, including HUD and Qualified Opportunity Zones (QOZ), and how Tandem is leveraging these tools to help navigate today’s challenging development landscape.?https://lnkd.in/etyutVMS??

The annual National Multifamily Housing Council (NMHC) conference wrapped up a few weeks ago in Las Vegas, bringing together industry leaders to discuss the latest trends shaping the multifamily sector. We’ve seen some great insights shared post-event and wanted to highlight a few key takeaways for our network. Here’s what industry experts are talking about ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Jay Parsons shared that short-term uncertainty in multifamily remains high, largely due to interest rates affecting debt costs and valuations. While many investors see a long-term upside with rents stabilizing and demand holding strong, deal flow is stalled as buyers and sellers remain far apart on pricing. Institutional capital is also shifting away from high-regulation markets like Los Angeles and New York. Brandon Roth noted that frustration with 2024 deal flow is leading to pent-up demand for 2025. LP equity return expectations remain misaligned with underwriting, and Core Plus capital is scarce. Banks are also signaling a shift, becoming less willing to extend loan maturities. John Drachman pointed out that while the mood at NMHC was somber, occupancy and rental rates are expected to improve in 2025. He also highlighted how institutional investors have cooled on Los Angeles due to regulatory concerns, creating potential investment opportunities. Jessica Beck recently posted that the gap between institutional capital and management/tech solutions is widening. AI is becoming essential, traditional property management models are being challenged, and smaller operators face growing pressure due to shifting capital dynamics. The industry is at a pivotal moment, with tech and strategic partnerships shaping the future. https://lnkd.in/eFRzgpZR

As multifamily developers, we know that meeting resident expectations goes beyond just building four walls—it’s about crafting experiences. This insightful article highlights how amenities play a pivotal role in attracting and retaining tenants in today’s competitive market. https://lnkd.in/dSJ3gkgD

It's always inspiring to see innovation come to life! This glimpse into the Ori prototyping lab in Boston highlights groundbreaking advancements in modular furniture and design, featured firsthand in our Ori Smart Suites at Avenir in Chicago's vibrant River West neighborhood.

Downtown Chicago rents rose in 2024 and are expected to climb further in 2025 due to a shrinking supply of new apartments. In the fourth quarter of 2024, net monthly rent at top-tier buildings reached $3.60 per square foot, up 2.56% from the previous year. Supply constraints will intensify, with fewer than 300 new units set to open downtown—the lowest in over 20 years. High interest rates and unpredictable real estate taxes have stalled new development, making financing difficult. While demand remains strong, job losses in Chicago’s professional sector could temper rent increases. Originally projected at 5%, rent growth for 2025 is now expected to be 4%. Developers anticipate a slow rebound, with more units arriving in 2026 and 2027, but limited supply will continue driving higher rents. https://lnkd.in/eEkUE6E8

We’re thrilled to share an update highlighting the fantastic progress on our 22 unit Avenir loft conversion project! Enjoy the latest photos of the newly installed drywall, framing, and plumbing. Thanks to our construction and development teams for their excellent work?and keeping things on track!?

Dimitri Nassis and Stephane Rambaud recently met at Tandem's Tampa Heights development site. So exciting to move to a new market to redevelop a prime corner of this neighborhood with an eight-story building consisting of 252 new apartments and 10,000 square feet of neighborhood retail.