Moses Hall, CEO and founder of MoHall Commercial & Urban Development in Chicago, recently joined the staff of Commercial Connections as a guest interviewer to talk with Chicago real estate legend Joe Cosenza.

Hall, a CCIM candidate, got into commercial real estate with a mission: to attract investors into underserved communities. He’s part of an all-minority investment group bringing quality affordable housing and retail to Chicago’s South and West sides. He’s also a jazz musician and the founder of a music publishing business that acquires the rights to collect music royalties of celebrity catalogs. Cosenza is vice chairman for the Inland Real Estate Group and president of Inland Real Estate Acquisitions, based in Oak Brook, Ill. The company was started in 1968 by four former high school teachers — Consenza, Daniel L. Goodwin, Robert H. Baum, and Robert D. Parks. Inland has made real estate investment opportunities available to countless investors, first through the use of limited partnerships and later adding REITs. All four principals remain actively involved, and in 2021, Consenza hit a personal milestone, surpassing $50 billion in real estate acquisitions.

Hall: Joe, can you start by describing your career arc?

Cosenza: We started investing on a part-time basis—and we got all the way up to about 1,600 employees. Now, we’re below 1,000 people because so much of the property that we bought ended up in real estate investment trusts, five of which are on the New York Stock Exchange. We went from ringing the school bell to ringing the New York Stock Exchange bell. Over 53 years, we’ve bought about $51 billion worth of real estate. That’s approximately 3,800 properties of all different types.

Hall: You went from a schoolteacher salary to acquiring over $51 billion of real estate. How did you have the know-how to say, “Hey, it’s time to invest in real estate”?

Cosenza: First of all, we didn’t know a damn thing. We were earning $5,600 a year. One night, Dan says, “Joe, let’s do something to make some money on the side. Why don’t we get into real estate?” We didn’t have any money, so we asked other people for money. Maybe they chipped in $500, maybe $1,000. We’d buy vacant lots, build houses, and sell for a profit—and it snowballed. More people heard about us and wanted to invest. The broker-dealer community and financial planners brought more money to us, and we went into apartments. By the mid-1980s, we had about 45,000 apartment units in the Chicagoland area, southern Wisconsin, and Indiana.

Hall: Nowhere to go but up.

Cosenza: That’s right, but when Congress changed the tax law [in 1986], they took away the tax benefit [of passive investments] and crushed the real estate market. It took from 1988 through about 1994 to come out of it. We couldn’t let our investors lose money, so we took money out of our own pockets. We also decided that if we could find a company that was safe [and buy their locations], we’d see if the partners would vote to trade into the new properties. We found Walmart. After nine months of calling, we made a connection. We did 25-year bonded leases; by the time it was over, we must have had over 150 of their stores. Then, in the 1990s, we went into REITs. And there’s one other entity, Inland Private Capital. That’s about $9 billion in assets, and that’s strictly for individual properties that somebody may want to invest in or somebody may want to exchange into because they sold something and want to defer the tax.

Hall: I’m so glad you mentioned that, because there was a lot of talk last year about potential changes to the 1031 exchange. Can you talk about how 1031s benefit an investor?

Cosenza: Benefiting the investors is one thing. Benefiting the U.S. economy is something different. Yes, a 1031 helps an individual tax-wise, but it also helps the economy, because it keeps the volume of money going through the economy. You’ve got jobs that are at stake, because once you trade into another property, what do you do? Usually, you paint, put in new carpeting, put on a new roof. It goes on and on.

Hall: Real estate is truly a job creator. But has there been a deal where you looked at it afterwards and thought, “We never should have bought into this”?

Cosenza: We do a lot of sale-leasebacks. One of them sticks in my head, and my partners will never let me forget it. Toward the end of 2007, I did a sale-leaseback with Atlas Cold Storage on 11 industrial buildings. Their parent was an Icelandic company, and in 2008, with the global financial crisis, the country’s banking system collapsed. The parent company was ruined. Holy crap! You could not have expected it. They had $2.7 billion in assets, and that went poof.

Hall: On the flip side, what markets are you investing in today?

Cosenza: Florida has started to outperform many areas of the country. I would also include New Jersey. And, of course, a lot of people are high on Denver. Those are three markets that come to mind. But there are so many other places around the country. We've bought in 49 of the 50 states.

Hall: How about Chicago? We’re a world-class city, yet it’s safe to say Chicago is having a bit of a PR issue in terms of getting investors into our market.

Cosenza: Who couldn’t like Chicago? We’ve got theater, symphony, opera, restaurants, museums, sports teams. We’ve got water from Lake Michigan, that skyline, the people. That Midwest Chicago attitude has a level of kindness that you do not see in other places. However, I’m not buying in Cook County because the taxes are crushing the income of the real estate properties.

Hall: I appreciate your transparency. If someone of your caliber is saying, “Hey, it is hard to underwrite these deals with these taxes,” hopefully we can communicate that with our people in Congress and in our state and local governments so we can incentivize people to invest in our community. Speaking of which, rumor has it that your father was a business owner in Chicago with a famous client.

Cosenza: Yes, my dad, Joe the barber. He came to America in 1922, and in 1927, he opened a barbershop on Halsted Street at Harrison. So a bookie joint owned by Al Capone opened up across the street. Capone would cross the street to get a haircut on my father’s chair, which I have right here in my office. When I was a kid, my father would tell me this, and I would say, “Dad, weren’t you afraid?” He’d say, “I was afraid, but a cut was 25 cents, and the tip was $20.”

Hall: So you come from humble beginnings. What advice would you give a newcomer getting into commercial real estate?

Cosenza: Find somebody you can partner with, and I don’t mean some money person. My partners and I didn’t know anything, but we learned together. If I’m by myself, it’s just my opinion, and I always think I’m right. It doesn’t matter what business you’re in; it’s very difficult to do it on your own.

Hall: Absolutely. I concur. If you were looking for a partner, what qualities or background would you be looking for?

Cosenza: I love teachers. They have the ability to explain things, and they need to know what’s going on, week in and week out. In other words, they know how to plan.

Hall: What are you planning for in the next five years?

Cosenza: We’ll probably concentrate on what we’re doing now: apartments, self-storage, the Amazon-type facilities, net leases, sale-leasebacks with grocery stores. Three or four years ago, we didn’t have one single self-storage facility, but when we learned that business and saw the demand, all of a sudden now we’ve got 187 facilities. In December, we bought 38 properties in one deal.

Hall: What gets you excited today, Joe, I mean if you had to pick out one thing?

Cosenza: Truly — and I’m not kidding about this—any deal I go after. I don’t care if it’s a 40-flat or 400 units, I get so doggone focused on the transaction — and I love it. You may wonder, how do we get all these deals? We keep records on the last 3,000 deals we did: 49% are done because sellers called us, and 24% come from what we call “broker first,” before it hits the market. And the balance, about 26% or 27%, are on the market. We bid like other people. Sometimes we’re not the highest, but sometimes we’re the best buyer and so they choose us, even though it wasn’t the highest price.

Hall: And that’s why I will call you when I have a deal for you, Joe.

Cosenza: Moses, so it is said, so it is written, so it shall be done!

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