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The REI Diamonds Show - Daniel Breslin | Jonathan Tuttle | Flex Space

Host Dan Breslin interviews Jonathan Tuttle, a real estate investor who has transitioned his focus from mobile home parks to a burgeoning asset class known as “flex space.” He explains how the saturation of the mobile home park market pushed him into the flex space, a promising, underserved sector ideal for small businesses poised for significant growth. Jonathan provides a detailed breakdown of his current development project in a high-growth area of Texas, sharing specific financials and outlining his strategy. They also explore broader market trends, including the impact of interest rates and the strategic value of specific locations in a rapidly evolving real estate landscape.

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Jonathan Tuttle & I Discuss the Dynamic Market of Flex Space

Transition from Mobile Home Parks to Flex Space (00:01:33 – 00:04:19)
The Flex Space Business Model (00:04:19 – 00:06:02)
Current Market Challenges (00:21:16 – 00:23:54)
Attracting Capital and Investors (00:15:06 – 00:16:14)

Relevant Episodes: (200+ Content Packed Interviews in Total)

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Flex Real Estate Development With Jonathan Tuttle

Jonathan Tuttle, welcome to the REI Diamond show. How are you?

Thanks for having me. I’m excited to be here.

We normally do a little bit of a location stamp. I’m in Chicago. I spend the winters in Florida. That’s the extent of my nomading. We’ve had one other guest who’s going to give us an answer like you’re going to give us here. A guy who was living in Vietnam and maybe not as Tim Ferris as you’re about to say. Would you mind giving us the location stamp and what your plans have been?

I’ve been doing a whole digital nomad and then come back for conferences, specifically like family office and private equity conferences. I have been to Southeast Asia, Bali, Bangkok, and a lot of Singapore and Hong Kong. I’m going to be back on the other side of the world, basically in the Dominican Republic, Costa Rica for a while and Nicaragua before Miami. That’s the rest of the year and I’ll be speaking in Nashville at the private equity conference. Basically, my schedule is always planned out for five months in the van, so it becomes routine.

Transition from Mobile Home Parks to Flex Space

It’s interesting that we have the opportunity to live a life like this in this digital age with that flexibility and freedom of locations. That’s cool. As we jump in here, Jonathan, you’ve got an interesting story about how you landed in real estate. I will let you go as deep or wide or narrow and shallow as you might like to go on the stuff outside of real estate here.

What I do want you to cap off there is through the evolution into the flex space because that’s relevant. It’s a hot topic and a hot asset class that I believe we’re in the middle of an event, a 3 to 5-year runway where that starts to get superheated. If you could finish there with your intro that’d be great.

It’s a great observation and 100% correct. I grew up in a real estate developer family. My dad was a GC. He built single-family and not commercial, 75 plus custom homes of like 30 years. Most of us were done in the ‘90s. That was like the big boom. I grew up in Chicago, right in your backyard. Rural and York Fell were the fast to page county areas. Those were the fast-growing markets back in the ‘90s, if you’re from Chicago then just segue that into, I worked in Chicago. I got to start in commercial real estate with Sperry Van Ness on the brokerage side. It’s called SVN now. I started with focusing on the mobile home parks sector because that’s where we were also investing at the same time. My dad was also investing in mobile home parks.

It did extraordinarily well in the last downturn and everything else. All the other real estate asset classes were having issues and that was like right in the beginning of the transition into private equity getting into this space in the 2010s. After that, it started just focusing more on the investment side of it. One of the things we’re doing now is the opportunity as we talked about beforehand. The mobile home park space is about 43,000-ish parks. There’s a lot of institutional players in the space now. The deals are far and few between as they were and not as frothy as they were many years ago.

It was a real opportunity where you alluded to. It’s flex space for us, specifically. It reminds me of things like, which you mentioned many years ago, home park and self-storage at that point. Before the institution is still underserved. The markets needed it and so, we’re focusing on the highest gross rates which specifically is Texas. That’s the fastest growing market in the States. We’ve acquired some pretty good prime locations on I-35 and around Austin, San Antonio area. That’s where my real estate story evolved.

The Flex Space Business Model

Let’s throw the reader the definition of flex space. It’s industrial and small but what would you put as very specific definitions of what that is?

The name implies itself. Basically, I say it’s like land with a self-storage type container on it. You can have some storage on it, but it’s built out mainly for eComm stores. People say eCommerce is big now. They have their own brands but also the biggest clientele is going to HVAC plumbing and small manufacturing. It’s usually those guys that want to put the money back into their business, their trucks, and they just want to have a prime location off a major road for some signage and also close proximity to who the actual tenants’ or clients would be.

Think of like a self-storage type but bigger building but just me and a very basic bare bone. It’s just store stuff. It reminds me of self-storage but for holding commercial assets and having a little. Most tenants typically just have a small little office with a little AC in it and that’s it or HVAC. It’s basically mainly for serving that specific need of the audience and now as we know with a lot of people and everything going to AI.

HVAC and plumbing is still like an industry that’s going to be resilient for the next 5 or 10 years. You’re seeing a lot of private equity guys trying to roll them up too. It’s so resilient and you can’t replace the robots. We like to look at the trends of where people are going and what the market’s needs are and try to find a little pocket and niche where other people aren’t. It’s not super competitive.

If we put a square footage size, what would be the size of each unit in the building that you’re working on developing now?

The one we’re doing now, it’s a two-phase with 84,000 square feet and we got a couple others. The second one is already 100,000 square feet. Typically, we look for 250,000 or 100,000. It’s like having a self-storage room. You want to be around 80,000. It’s similar dynamic to that.

What is the size of each bay?

We just put up the signs for leasing, so there’s a new development on this one currently. It’s going to be flexible based on the tenant basically.

You’ll start with an 84,000 square footprint envelope shell and then if a tenant needs 30, that’s maybe why we’re calling it flex. If they need 2,000?

It will probably be too small. We have the top leasing broker and that area. To make sense, I don’t think anything under 10,000 to 15,000.

That’s what I was looking for there because I’m looking at a deal brought to me by some reader of the show. I think the units are probably 2,000 to 3,000 square feet and I have another friend, Saul, a Chicago guy as well. He’s buying stuff that is about that same thing, 1,000, 1,500 and 2,000 and it’s too small for the institutional buyer. You can’t build it that small. It’s expensive, like 130 a foot or 140 a foot by the time you put the HVAC.

You have a small office and a bathroom in each one. It’s like building a multifamily. It’s not economically feasible anymore. It’s interesting to hear that the ones that you’re building are in this 10,000 to 15,000 square foot range. You might end up with 5 to 7 tenants in that building if you had to guess.

Ultimately, the play is a tier player. We’re looking to sell it back as condos to the owners.

Will you lease those units up front first or will there be like a lease and an option on day one?

Both, lease up front and with options. Ultimately, we think they’ll be the most interested but also private equity guys will scoop it up. For example, the market was the second fastest growing market in the country. There’s 3.5 billion with the states putting in between San Antonio and Austin and the infrastructure of the highway. It’s about 110,000 vehicles per day.

There’s 10,000 brand new homes being developed across the street and there’s also an $18 million top copy and belt right down the corner and a bunch of national retailers. I think even Portillo’s coming down there, too. Everyone’s going there. We’re just like in the beginning of the rush. Even when you acquired it, it’s already worth like $1.2 million or more than what you’ve just acquired it from.

I have a buddy. It’s a diversion but it’s a Portillo story. All of our Chicago readers, you and I included. We know what Portillo’s is. We have a little history there and he had, let’s say a 4,000 to 8,000 square foot retail spot with a drive through. I’m like, “You need to get Portillo’s there.” I was texting him. He didn’t even reply to the text. I’m like, “He must not know what Portillo’s is.” They got bought and they’re going all over the country. It would be a phenomenal tenant in your retail spot. That’s what you want, but he didn’t recognize it.

They’re the highest grossing not fast casual restaurant in the United States per location. I think it’s $8 million or $9 million per location.

What A Flex Space Deal Looks Like

That’s phenomenal. Let’s walk through this deal. Let’s pretend that I am going to invest $250,000 so that this is real. I’m putting $250,000 in here and some of the questions I’m going to have up front, Jonathan, are going to be like, what’s the cost to build? What’s the cost to build including all the soft costs and the land? My actual cost basis. What is my rent per square foot? Do I have any pre-leasing going on? That would probably be where I would start as a first look to analyze the risk on the deal.

Flex space is like self-storage, but bigger and just bare bones.

I can pull it up. We just started preleasing. We do have the top leasing broker. It’s the top listing agent and in that market, that’s all he does is flex space and industrial in around Austin and San Antonio. The cool thing about this deal too, it’s with the flex space or I’ll say for our numbers, for example, are very conservative. We have 22 projects and that’s very conservative. That was like a $19 lease. The markets have gone up since we’ve done it.

That’s it, $19 a foot?

The market dynamics because of all the new development coming in and interest. With the leasing agent, we’re going to list it at $20. I don’t have the actual financial modeling of that because it’s just something I found out. There’s also a twelve pref with 80/20 split. It’s very generous towards the investors because we want to make sure we have a bunch of deals in the pipeline. We’re also looking at data centers. We also have a second project which is 100,000 square feet that’s already fully funded and that’s going to be a medical office.

One of our partners already owns the land. The 10.7 acres will be acquired for 2.719 with nearly $1 million equity already secured to a variable deal. It’s gone up because we’ve just seen the market dynamics. The soft costs, we have about 2.46832. To your question about construction, we have it at $10,254,397 and the land at $2.719. Our GC in our team is very seasoned. It’s about the law of the Walmart’s in the area and also many soft storages.

The other partner on the team flipped the land across but he did early across from the Tesla Giga Center. He saw the first side of it but he’s been getting favorable deals because he’s been boots on the ground. It’s his market. The one thing that makes a stand out is we have a seasoned team that all have their expert skill sets. We’re able to source some of these deals that most people wouldn’t have access to because they’ve been in this market for 5 or 10 years before anybody else is even there.

You don’t have your costs broken down on a per foot basis, it sounds like?

I have to look at it because we just did something new and some financial modeling. We just got the new model. On the accent, the proforma, we have a 251 but on the pre, which comes out a little over $21 million.

That’s the all-in cost basis at 251?

No, that’s the accent. I don’t have it because we just change the numbers on it. We have a better financial situation now. I don’t have the full financial breakdown with that. I don’t want to quote the wrong number but we’re keeping that in that GT in house. Even with our cost and even with different tariffs and stuff like that, we have favorable acquisition costs like just the supplies.

Do you guys already have the construction loan lined up? We’re working on a deal now and the construction loan pushes by like six months. I’m like, “That’s not what we were hoping for. That’s going to impact our returns at the end of the day.”

We’re due to close the initial $1.5 million. It’s due October 1st, and then the total for development is due January 1st.

When you say total for development, what does that mean?

The total of what the bank needs.

Meaning you have to have all of your equity raised by that day?

Yes.

When is that wire done then from an investor who’s interested in this deal now?

We’re trying to ramp up this. We’ve just solidified because we’re also looking for a long-term partner too. We’re trying to have everything solidified. We have the conference in Nashville. We have probably like 5 or 10 family offices that are considering. We do a lot of the family offers conferences. We’re just trying to solidify the last few that are just going to, hopefully, dial in. That’s what’s expected. After that, it’s going to be pretty smooth sailing.

If you commit now, the wire is due in three weeks or the wires due on January 1st or October 1st?

Before October 1st. The sooner the better. We always have some people that sit there. Get the initial $1.5 million and we’re in a million now. The last $500,000 probably will be full.

Is there a pref on there?

No. The focus of it is basically about the 12th month is when we figure everything should start going and getting done and eighteen months should be at least out.

I mean a preferred return for the investors. No preferred return?

I don’t know exactly. I have to see the breakdown when I start. Eric would know that better than I would.

It is hard to find deals that will be of institutional quality. You cannot compete with traditional operators because they have better access to capital.

Attracting Capital and Investors

Any depreciation benefits on a deal like this?

The new big bill. I know they just changed the solidified and put everything back in so at the bonus depreciation. We haven’t talked to the accountant yet to see exactly what that entails. They know it’s getting down to about 60% or 40% in the next year. I don’t know exactly what depreciation we qualify for because without having a costing on it.

We’re back to 100% now. We’re all celebrating. Those of us who write large checks and get tax benefits for doing so, are celebrating for sure.

Especially right past everything.

That’s done 100%.

I know they were talking about it. I didn’t know they had already passed.

That works which I guess on a two-year exit, that doesn’t make much difference. It’s like 22. What risk do you think is involved in this condo situation if you were hoping for an institutional exit? Do institutions buy flex condo spaces?

The location is what sells it and the visibility. The play could be a redevelopment plan for 3 to 5 years. Only because it’s on I-35, it’s like the fastest growing condo and the big retailers and national tenants are coming in right next door. The big play is probably somebody, first, that’s going to be the tenant owner. It’s going to get that loan for that and buy it out and/or the institutional play is going to come in and say, “We want to do this. We’ll buy out the leases. Here’s some money to move. We’re going to share this down and put something bigger here.”

You’ve given them all first right to refusal, so that makes you now handcuffed that institutional buyer when they come into do that. You make it a lot harder. That’s what I mean by the risk.

They could come in and pay out the tenant, though.

They could pay you out at a higher price if you just use straight leases one day.

The big thing is, the first one we’re going to go to is the tenants but the bigger play is even the tenants could join together and say, “We’re going to sell this to the private equity.” The play is like 4 or 5 years because the location is so prime. Basically, tear it down. It’s like with mobile home parks when the cashflow and the locations are great but if you go to Florida, a lot of the parks are turned out for senior healthcare centers and things of that nature because it’s way better and higher use for runs at that instead of a 500 lab rat.

I’d almost like the deal better if there was no lease option going on with the tenants. I feel like me, as an investor, getting out in two years is not that attractive if the area is redeveloping long term. It’s going to be a much better deal in five years. I’d rather invest in a deal that’s going to have a refi to pay back a portion of that capital. Those tenants get no first right of refusal. The tenants pay the market rent when the time comes where they move out when the redevelopment occurs. That feels like a safer bet to me, but I’m not going to tell you how to run your business. I’m sure you guys are doing well.

Institutionalizing Of The Asset Class

Here’s what we’re dealing with. You had alluded to it in some of the posts that you had put online, I think LinkedIn, articles or things of that nature. It’s the consensus around these conferences in these events and commercial real estate space. We looked at multifamily from 2011 through 2019 and 2020. Multifamily had this institutionalizing of the asset class. It was already, but we saw that happen a lot and the cap rates go down and the values go up. The competition for product gets superheated then we saw that same thing going on in self-storage from mid-2015 or so, all the way up through 2022.

When the stock price for public storage and extra space dropped, a lot of that institutional frostiness and self-storage had gone away. It became super heated to get your hands on a product for self-storage. You described the same thing happening in the mobile home space. We expect that we’re in this little opportunity for flex space now. Maybe that is 2 or 3 or 5 years.

There are some humongous portfolios for flex space trading in the headlines in the news, $190 million, $300 million or $150 million. These are big institutional deals in flex space that are happening. Are you guys still seeing some mobile home park deal flow coming through for you guys or is it like the parks you have or it’s becoming much more difficult to get deal flow in the mobile home community space?

That’s the general sentiment when you go to conferences. I know a lot of operators that would normally require five day parks a year in the last couple of years. Especially when interest rates changed in ’23. It went down to like one or two deals a year with multitude factors. You have the interest rates. You also have the sellers, which I mentioned before the call. The sellers have this mindset like, “This is what I was getting years ago but it didn’t make financial sense.” Those parks have been sold. The owner wants to go back to those mindset prices that they hacked up years ago.

Plus, there’s only 43,000 or 44,000 parks in the country and very few are ground up developments because there’s an ownership stipulation. As I’ve mentioned before, some of the best ones. Especially in the Florida locations, are some of the best primer locations but the lodges are tiny. You can’t put new modern homes on it because they’re pretty hot pre-1976. The lots are like a third the size they should be. They’re basically like tiny homes. They’d be better converted into like a tiny home community but the locations. You’ll have ocean or waterfront property like in Tampa, their mobile home parks before the zoning came around.

What they’re doing is, a lot of them are like, “What can we tear it down to?” The cities will give you what is best. They’ll give you basically what zoning you want, if it’s going to be the highest and vast. As I mentioned, you’d see a lot of senior healthcare, memory care, senior healthcare centers, and those are very expensive in the cashflow treatment and operator because one luxury senior healthcare tenant could be paying $6,000 to $8,000 a month compared to $500 or $1,000 lab rat. It’s a nice market.

Even for the developer side, it’s a lot more advantageous to that. To your question, it’s hard to find deals. The percentage of the deals are going to be institutional quality. Anything over like $15million or $20 million. Its traditional operators will bid you down. You can’t compete with them. They have better access to the capital. They get the rates and they have tons of billions in that asset class. It’s just rolling it up in their portfolio. There’s also the percentage that goes to the whole mobile home park or the trailer. Whatever you want to call it.

I don’t know what approximate with that is but there’s a percentage of products like that that gravel roads are not going to qualify for HUD financing. It’s going to be a complete turnaround project. You have the biggest challenge for doing a turnaround project. It’s sourcing your homes. Warren Buffett has the 21st program. Basically, he has Clayton Homes. He’s the biggest manufacturer with 50,000 plus homes a year out of 100,000 mobile homes. He also has the biggest financier and they have a program to push the homes, but then you’re just developing a subdivision at that point to get a $500 lab rat. He makes some money on the halls but again comes back to the highest and best use of your capital.

It’s your time, too, at that point.

We have this great return but you’re going to be so boots on the ground in debt. You could do three projects at the same time with a lot of work doing a mobile home park. Probably the biggest misconception to this whole point is it is just turnkey, but to get it turnkey unless it’s like a class A or a top tier professional property management for the last 5 or 10 years and system rules and everything’s digital.

There is a big opportunity in data centers in the next five to ten years.

Ninety percent of parks are not like that. You have to convert everything from the 1970s and ‘80s. Payments are going to different local banks. People don’t even pay online. They don’t even use it online. It’s not like multifamily and even class C multifamily. You’re basically doing a full turn around. A lot of those deals that were attractive have been all acquired and people are just holding on some for forever basically.

I own one with some partners in New Hampshire. It’s out there. It is not a Tampa type of highly developed area. We’re not doing land banking a thing, but the roads were done and it is turnkey. It’s like a hands-off an asset and that’s like a coupon clipper for us. It was well managed and it was bought originally as a turnaround by the previous partnership 3 or 4 or 5 years ago. Maybe we have 80 or 90 homes if I had to guess.

None of them are brand new Clayton Homes. We may add like nine lots but this is not the deal. We’re not raising money for this. This is not going to have an 18 or a 20 or a 22 IRR. We’re going to hang on at least for a decade. Our ad debt instrument on that one is that we can’t get out for ten years and that’s why we got an okay interest rate on the way in all things consider, but we’re going to look back in 3 or 4 or 5 years and be like, “That interest rate is high and we’re stuck. Our hands are tied by the interest rate.”

Again, our motivation is a little bit different. We’re going to be there for ten years. There were great tax benefits for the partners on the way in, and then it’s a cashflow. It wasn’t day one but maybe day 120 or so. Now, all the sudden, it’s just a coupon but that’s not the deal that a guy like yourself or the people who are running the funds are going to be able to go out and do it.

It’s not a capital preservation coupon clipping strategy. It’s more of an entrepreneurial operator/real estate developer strategy where there is going to be a lot more of a heavy lift than I’m putting into that mobile home park for you to bring the flex building in Texas out of the ground, get it stabilized and go through the entire process of executing on that.

It’s a lot faster. To your point, it’s with the mobile home park space. It’s like the mindset. You have to have that mindset. The value is at 7 or 10-year hold. It’s not a multifamily 3 or 5 cash out. You can cash out refi but it’s to keep a long term. The institutional buyers for investors, for example, like family office. The majority invest, who knows the exact number but 70 plus invest in multifamily. When they’re exploring the mobile home park space, for example. They’re like, “These deals aren’t big enough. We need these certain criteria or the fund needs to be like $50 million or $100 million.”

That’s why there’s not any park funds because they can’t source enough deals. A $15 million mobile home park is like a $60 million approximate equivalent like if you’re requiring a multifamily deal. It sounds great for them and they like the bigger numbers but in the realm of where we’re competing at, it’s two different worlds. A lot of the institutional money besides the private equity, the Black stones and the pile groups, the family office have been sitting on the sidelines on a lot of these deals because they just don’t understand the nuances and the opportunity.

Which is unusual because the family office’s whole premise is keeping the money, generational wealth, and preserving the wealth. What’s the number one performing asset for the last 50 years? It has been mobile home parks with the lowest failure rate and as you mentioned, the best tax benefits. It’s a try and shoot way and just preserving wealth. If you already have a capital, just put it in there. Acquire some small parks until you meet your portfolio standards. A lot of family offices have dropped the ball and not understanding where the real value is because that’s the real value of mobile home parks. It’s the cheapest form of affordable housing.

At the same time, the institutions do need to scale. We had a 300 lot deal a few months back or maybe a year ago. Our offer was $13.5 million. I think they traded it at like $24 million or $25 million. We’re talking like 4.5 or 5 cap is what it traded at on its current income.

They’ll bid you out.

It was even rent controlled. It was like a rent-controlled area where it was going to be a big hassle to try to bring anybody up to market rent. We see first-hand the competition is out there, 80 or 60 lots. We did get 1 or 2. There were 150 or 200 spaces maybe again with some partners and those were big projects. Those were the ones where a lot of old homes, a lot of 1980s payments and a big mess to clean up. A lot of work.

It’s not easy. They get sold on that. It’s like this turnkey, but once you get there and you have the property management. I still think parks will be one of my favorite asset classes of all time. You just got to go. If you look at all the other funds and operators, they all have multiple asset classes because of that reason. Bare Brandon started doing multifamily. I think he did self-storage and a couple other friends started doing self-storage and other asset classes and parking lots. Some guys started parking lots.

It’s just mainly because there’s just a scarcity or availability of the park assets. To your point with being bent down, the institutional, if it’s anything in the teens, that’s when they start coming in because they’re trying to scoop up these deals and roll them up. As I said to you, they’re cross acquired. They’re not even getting as nice a great return because they already know what the value is and they bid you out. It’s crazy. We had one deal for example.

It was off market and there’s three bidders. They wouldn’t tell us who it was. It was a family-owned operator. I had a broker relationship with the broker. He was pushing us and one of us wanted to make sure. One of us had $30 million cash in the bank. I couldn’t even believe it. I was like, “Who has that?” He could buy like about $80 million multifamily deals but I was like, “Who has $30 million in your bank account? That’s crazy.”

It’s not a bad thing.

To solidify, we said, “We’re going to take three offers just to show that you have the cash.” They want to see the story and we’re like, “You’re a smaller operator. We have access to capital on your upcoming incomes. We like that,” and that then tells who the better bidders would be. I told the investor, I’m like, “We need to come at like $25 million. We can’t scoop it up.” It’s saying things like, “It’s coming at like 21 or 22. We could scoop it up.” I’m like, “There’s no way.”

At the time, the last in average we’re trading it $48,000. We got a comment at least about what the average lot is trading in America because it was a college town. It was a major Butte College University. I don’t want to give too many details but the cool thing about it was like a waiting list for years. It’s a cool place for college kids to hang out. The parents are buying the homes. They’re ‘70s, ‘80s and ‘90s home stock. Basically, they know they had a safe place and they can flip the homes because there’s a waiting list. They’d still make a few grand into flipping it.

The park had all these amenities. They have a game room, arcade, pool, basketball court, and I think even a tennis court. It was just like a cool spot for people like college kids to hang out. Long story short, I said we came at 26 but we came in at 22 or 25 or something. I was embarrassed by the broker. He was like no. They just looked at it and threw it away. I was like, “I know. I told him we should have come in.” I waited a month. I’m like, “What’s on offer?” “26.2” I was like, “I knew it.” The whole point was like it would have traded in like a 4 something cap. The play was just going to just cashflow. You weren’t going to make much on the equity side of it.

No need to do a deal just to do a deal either.

That investor basically is like, “I’m sticking with a multifamily. I don’t like this.”

That’s fair.

He’s like, “I like the returns better than multifamily.”

What’s In Store For August 2025 And Beyond

If you know the space and you know the space. What are you excited about? It’s August 2025 as we’re doing this. Our hopes were dashed a little bit about interest rate drops. Interest rate aside, what are you excited about in the future here? in the next 12 or 24 months, Jonathan, what are you looking forward to?

Besides flex space, I think the big opportunity is data centers. The next 5 to 10 years, that’s like the long term play we’re like looking at. We’re looking at a very niche of that because instead of the PE or the private equity guys, on the other world, you have the tech guys. I don’t know if people read but Mark Zuckerberg’s building a data center the size of Manhattan. I don’t forget where he’s at, but with everything going on AI, everyone’s on their phones. The amount of data is just going to Skyrocket.

We think that the opportunities can be abandoned office building for the cities that want the tax revenue because they’re not collecting revenue. It’s an eyesore but they already have the power and reconverting that. We’re still underneath the institution. We’re trying to find a niche where it serves. Also, it’s a lot better than developing. You’re still doing reconverting but you still have a lot of infrastructure and the city is going to work with you.

What was it you were going to convert?

Office buildings that already have the power like abandoned office buildings.

The issue they’re having with that on the conversions, we did an episode with the designer a little while back on the data centers. The racks don’t fit. You need like 24-foot clear height to fit the lower rack and the upper rack that have liquid cooling in them now. Engines back in the day used to have fins on them. I remember like dirt bikes in the ‘80s when I grew up and they’d have like fins. There was no radiator there. That’s how engines were. They were air-cooled and that’s how the data center racks used to be before they’ve gotten as powerful as they are now.

The same way engines now have this radiator and the hose. It’s pumping the liquid around. Now, the computer equipment has that cooling system technology in it for them to be competitive. If you end up building something that doesn’t have that cooling, you’re going to have a hard time keeping those racks least out to the tech. We looked at the office buildings too for the same thing. I forget the exact numbers but I think it was 16 or 18 or 20 feet. It was high and that was what was disqualifying a lot of the office buildings from the data center conversion.

We are researching. We’re bringing our team to do that. We have a couple family offices looking at. It’s not a bigger deal. It’s not like $100 million plus. It’s the same premise with people that are doing the retail centers into self-storage and what the height. You need about 17 or 18 foot ceiling clearance for that. The same premise converting the retailing into self-storage.

We’re just getting into exploring that and doing boots on the ground research on that but that’s the big play with AI and technology. I like to say how it trends because it reminds me of when I first got into commercial real estate and mobile home parks back in the day. It’s like, what’s new and what’s going to have longevity trends? Those are the two niches that are most exciting now.

The Biggest Wholesale Deal In History

Are there any books that you’ve read or maybe books that you’ve recommended to other people? Maybe in line with some of the stuff we talked about or maybe wealth creation business in general.

I would say if we’re doing real estate, you got to go with the class in Chicago doing stuff. It used to be, but Sam Zell’s. He passed away a couple years ago but his mindset and how you look at real estate and opportunities in real estate. His cue was always built on the trends and identifying opportunities and getting out before the trends changed.

What was that book called?

Am I Being Too Subtle? I haven’t read in a few years.

When it came out, it was huge, at least for all of us in Chicago. We all know Sam Zell’s name here in Chicago. It was interesting. It’s got an audiobook, too. Sam Zell sold equity office properties in 2007 or 2008. The peak is in the rear view. Everyone knows crap is literally flying through the air to hit the fan in the moment that he’s selling these office buildings and he’s selling them to Blackstone.

Blackstone is buying them and gets the deal closed. They go to a settlement. You can hear both sides of that deal go down. One in Am I being to Subtle from Sam’s perspective and then you hear from Steve Schwarzman’s perspective in What It Takes, the story of Blackstone’s founding but that’s the biggest wholesale deal that has gone down in history. I think it was a $50 billion deal all together and roughly half, so around $25 billion worth of the most trophy office buildings in the country or maybe the world, were sold on the same day they were bought from Sam Zell, which is pretty cool.

He was an innovator. He was, at one point, the biggest owner of office buildings, mobile home parks and multifamily. I think he still has, I don’t know exactly what his family office is doing now, but the last I heard he was selling a portion of his multifamily and keeping the class A stuff. He was like keeping the stuff in the Colorado’s and he was acquiring more mobile home parks and RV parks.

It reiterates what his positioning was. I remember I was going to go to a family office guy. I was in Chicago and I was flying back in for it. He was going to be one of the keynote speakers and he passed away like a month before. I’m like, “I’m not paying $3,000 in this conference now. He’s not there.” I’m sure they probably had a huge drop off.

They did. Half the seats are empty.

That was the whole premise of me going there. He’s not there so I don’t want to go.

Get In Touch With Jonathan

You were coming from halfway around the world. Where can readers go? Do you want to share a website or some contact information, Jonathan?

On LinkedIn, it’s @JonathanTuttle1. I’m not too active there but a lot of people message me there. I just noticed I have ten messages that I responded to. Land-Play.com is the flex space and also, Midwest Park Capital. Those are one off deals with the Midwest Park Capital. We’re just looking for opportunities that, hopefully, I will find something when I’m at a national conference. There’s a lot of the big operators. We’re all pretty good friends. Maybe I’ll score some deals.

The Kindest Thing Someone Did For Jonathan

It sounds like a plan. My final question I asked all the guests is, what is the kindest thing that anyone has ever done for you?

I thought of my mom. My mom’s always been at my back. She’s always on the line no matter what. She’s always there looking out and just helping. I don’t think anybody else could top that because she’s always there for me.

Nothing like our parents. They made quite a sacrifice for a hell of a long time to get us to where we’re at. Jonathan, I got pages of notes here. I appreciate you coming on the show.

Thanks for having me. It’s great to be on.

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About Jonathan Tuttle

Jonathan Tuttle is the COO of Land Play, a flex office space development fund. Their focus is ground up development in an underbuilt asset with low vacancy rates and strong profit margins. He is also the Fund Manager at Midwest Park Capital which is a private real estate investment firm providing select and approved accredited investors with exclusive access to high yield investment in the mobile home park vertical. Midwest Park Capital was selected as one of 45 Best Startups Founded in Illinois 2020 & 101 Top Commercial Companies and Startups of 2021.

Jonathan is also the Founding Director of the AI digital marketing and consulting agency, Revenue Ascend which was selected as one of Chicago’s most inspiring stories by Chicago Voyage Magazine. He is also the founder at Get Podcast Bookings, a podcast booking agency for entrepreneurs, business owners, Funds, and those looking to build brand authority, raise capital, and trust through podcast tours. With 10 years of hands-on experience scaling his own businesses and crafting frameworks that consistently drive growth, he’s earned a reputation as one of the go-to experts in the space.

Category: Podcast