March 2009, Center News
E.J. Plesko, president of E.J. Plesko & Associates,
Tim Riddiough, director of the James A. Graaskamp Center for Real Estate,
and John Gates, chairman and CEO of PortaeCo
John Gates, chairman and CEO of PortaeCo and Graaskamp board member, told an audience of real estate students, faculty, and alumni at an E.J.
Plesko Lecture Series presentation to consider the latter halves of their professional careers as an opportunity to give back. The returning phase,
as Gates called it, has been the most rewarding part of his 26-year real estate development career.
"This is a phase when I think real estate people have far more to contribute than most people," Gates said, referring to building development expertise.
"We are very needed." Now in his returning phase, Gates is involved in philanthropic activities by sharing strategies with organizations that are
planning large building projects.
Twenty years ago, Gates started building his expertise in what he calls the earnings phase. He built an industrial properties company, CenterPoint
Properties Trust, from the bottom up. In the early 1980s, he bought inexpensive warehouses in Gary, Indiana, where the once-thriving steel business
was quickly dwindling, and invested the profits from these investments.
Once the business had capital flow, Gates made strategic decisions that eventually led to CenterPoint's success. Perks like a company gym and
daily chef-prepared meals motivated employees to stay with and invest in the company. "You've got to make your business a place where employees are
both proud to work and have a lot of fun," he said.
Pinpointing the company's place in the market was also key. "We had to become the best at something," Gates said, "and we decided we'd be best at
adding value to the industrial real estate market in metropolitan Chicago." CenterPoint stayed in the Chicago area and, as a result, developed a
devoted clientele through trustworthy recommendations from existing clients.
CenterPoint also placed importance on governmental relationships to maintain a good reputation in the name of taxes and incentives. "We made it a
priority to get along with government," said Gates, who once worked for the governor of Illinois. "If they trust you, you can go a long way."
With a strong foundation, the company went public in 1993. At first, the results were not ideal. The stock immediately fell 20 percent. The problem,
Gates said, was that most people had never been to a warehouse or thought of investing in one. "We were not what the stock market was looking for."
Eventually, though, he said, Wall Street became acquainted with the company and invested for its earnings growth per share.
The stock thrived, quadrupling in 10 years. The company sold to CalPERS, the California Public Employees' Retirement System, for $50 a share a few
years later. Life was going great for Gates. "I had pretty much the best of everything," Gates said. "I was living the life of luxury with excellent
living and working conditions."
At the same time, however, Gates was ready to move on. "I took on the role of executive chairman and entered the returning phase." He revisited
friendships and partnerships hed built up over the years and explored his favorite nonprofit groups.
Gates realized that many of the organizations had a lot to do with real estate. "A lot of the companies were really real estate companies in drag,"
he said, "Seventy-five percent of their assets are in bricks and mortar and land."
Gates offered his expertise and strategy to these companies, who he said were terrific at their missions but knew very little about the assets of
their organizations. He came to the aid of health care and education groups, offering advice for crumbling or mismanaged building ventures.
"I've become involved in the most interesting projects I've ever been a part of," he said. Gates has advised on education projects, including the
construction of a public policy school building at the University of Chicago, new campuses for Chicago charter schools, and a $60 million arts center
at Trinity College, his alma mater.
Gates has also been a part of planning for a new, billion-dollar Chicago Childrens Memorial Hospital and a master plan for the Chicago lakefront
as a member of the Metropolitan Peer and Expedition Society.
Gates calls his giving-back phase "the most exciting part of my life." He urged students to use their skills where they are best needed in the public
and nonprofit sectors, and also to never forget about giving back. "This returning phase is the climax of all and something I urge you to aspire to as
you are mapping out your careers."
The Graaskamp Center E.J. Plesko Lecture Series features developers who embody the "Wisconsin tradition" in their spirit, imagination, entrepreneurial
skills, and enthusiasm for improving the quality of our built environment. E.J. Plesko, a generous funder of the speaker series and president of E.J.
Plesko & Associates, a real estate development and management company, called Gates and his attention to giving back to the community a true example of
the lecture series' goal.
Click here to listen to John Gates presentation.