| It's All Over With, But the Shouting -- and There's a Lot | | | | believe 'em, they've made too much money off of it). |
| of That to Come | | | | The Chicago show, more than most dealmaking |
| The second largest gathering of retail real estate | | | | events, attracts small developers (other shows that |
| professionals of the year is coming together in New | | | | attract these entrepreneurs are Atlanta and Charlotte), |
| York and there's a lot to celebrate. With 2006 ending | | | | in addition to the Simons and Kimcos. I'm more at |
| up as being a great year (We can debate which was | | | | home with the "little guy" than the "Simons" of the |
| better, 2005 or 2006, but what difference does it | | | | world. They move quickly, know what they want and |
| make?), the big question is, "What will 2007 be like?" | | | | understand that if they don't produce they die. And |
| and that's a question that no one really knows the | | | | above all, since most are self made millionaire$ they're |
| answer to. If they claim they do, they're either lying or | | | | not too conceited or arrogant. The large companies |
| insane, but that won't stop "the experts" from making | | | | have one major advantage over 'em, MONEY, lots of |
| predictions anyway. My answer? I have no clue. Right | | | | it, which usually covers their butt on some of their |
| now, my money is on 2007 being decent but not as | | | | dumber moves. Because the larger companies have |
| good as 2006. But, there are too many outside factors | | | | been doing so well lately, they can afford numerous |
| that can make 2007 a disaster (more can go wrong | | | | blunders before they're in real trouble. The little guy |
| than right), so all we can do at the show is meet and | | | | doesn't have that luxury. Now I'm not saying the big |
| greet old and new friends, go out and party in one of | | | | guys are dumb, I just believe their size prevents them |
| the greatest cities in the world and do a lot of | | | | from making the most logical and efficient decisions |
| dealmaking and praying. (Oh, before I forget, Alyson | | | | (bureaucracies are a bummer). For example, larger |
| went to the ICSC show in Sacramento. It was a small | | | | companies add to their layers of leasing personnel by |
| show, with 350 in attendance (last year was 295), but | | | | having individuals that specialize in "Big Box," medium |
| she said the size made it "intimate" and very | | | | box and small shop leasing. I'm waiting for them to add |
| entrepreneurial. Right now, the show is marginal, but | | | | a specialist for Chinese buffets. Makes no sense to |
| give it three or four years and it could be another | | | | me; can't their people handle the whole gamut of |
| winner.) | | | | retailers wanting to lease space in a particular center? |
| For good or bad, the change in Congress after the last | | | | It really isn't that hard. Anyway, rambling on, I read an |
| election will have an impact on our industry and my | | | | article in SCT Xtra that lifestyle centers will represent |
| "gut" says the Fed will raise interest rates in January or | | | | 65% of all new developments over the next three |
| February. (Hopefully, I'm wrong) So, be prepared to live | | | | years. If that's true, a lot of "poor" performing centers |
| in "interesting times" for the next year. | | | | will be built, as lifestyle centers, by their nature, are not |
| There's no doubt in my mind -- short of a blizzard (God | | | | meant to be located at every street corner (it's not the |
| forbid) hitting the show the day before or the day it | | | | concept I have problems with; it's the execution). The |
| starts -- New York will set another attendance record | | | | economics of these centers don't work for Middle |
| and, candidly, the Hilton can't handle the crowd, but | | | | America and the "upscale" consumer represents only |
| somehow we'll all make it through the event and be | | | | 15% to 20% of the population, so there's limited |
| better off because of it. What makes me feel old and | | | | markets they make sense in. Plus, a lot of these |
| sometimes not as successful as I thought I might be is | | | | "lifestyle" centers are really power centers in disguise, |
| when I speak to some friends of 20 or 30 years and I | | | | using lifestyle as a name because it represents today's |
| ask where they're staying in New York. Many of 'em | | | | "vanilla." |
| reply, "I'm not going, I'm getting too old and tired for it; I'm | | | | Every mall developer is converting their "C, D and F" |
| sending 'my people' instead." I guess I'm not important, | | | | centers to mixed-use and lifestyle centers, and I |
| because I still have to attend, along with "my people." | | | | contend that in 60% of the cases these redeveloped |
| But then, I'll be in good company. | | | | projects will fail. It's a little like 25 years ago when all |
| Talking about ICSC shows, several of the dealmaking | | | | the failed malls were being converted to outlet centers. |
| conferences in other towns are being relocated | | | | The developers believed they found the magic cure, |
| because "we've" outgrown the old facilities. | | | | but five years later the failed center was still a |
| Unfortunately, the Hilton (short of the Javits Center) is | | | | bummer. Then they believe their "salvation" was |
| the largest conference facility in the city and I | | | | entertainment centers and that also failed. To prove I'm |
| personally don't want to go to the Javits Center or | | | | old, I remember my grandmother living over retail |
| move outside of New York, so we're stuck with the | | | | stores in Newark, NJ in the 1940s and saving up |
| problem, a great problem, but a problem. | | | | money so she could move into an apartment, which |
| Changing subjects, we're an industry where you don't | | | | was considered more prestigious. Today, the condo |
| have to be a rocket scientist to succeed and make a | | | | over the retail is considered upscale, proving my |
| good buck, BUT I sometimes wonder if some (not all) | | | | grandmother was a smart lady. |
| of those in the business have any idea what they're | | | | Rambling on...Ann, Alyson, Terry, Rich, Josh and myself |
| doing. I got a call last week on a building we're leasing | | | | attended the Philly show the following week after |
| from another broker who inquired about the lease | | | | Chicago and another winner in attendance was |
| rates. I told 'em we had a lease out on the property, | | | | posted; Philly was smaller than Chicago (the East |
| but leave me your number and if the deal dies, I'll call. | | | | Coast considers the Philly and the New York shows |
| He then asked what it would take to get his client the | | | | as "theirs," so many wait for December to attend a |
| deal over the current prospective tenant and I said | | | | show instead of attending both. I disagree, but that's |
| $13.50 psf, net. He then explained I was nuts, the | | | | what makes horse racing. Attendance was up about |
| market rent is only $10 to $11 psf and I agreed and said | | | | 400 to 2,300 this year over 1,900 last year. The |
| that's what the current tenant is willing to pay BUT if | | | | cocktail party the night before was jammed with |
| the owner is going to be a whore, they want to be a | | | | everyone upbeat. After the cocktail party, most |
| well-paid one. We got into a major debate and I ended | | | | attended private parties such as Fameco's event at |
| the conversation saying, "Why don't I call you if this one | | | | the Hard Rock (which was the busiest). Legend |
| doesn't work out. I'd be a lot more cooperative." He | | | | Properties' party was packed also and they |
| then called me a thief and hung up. Now don't get me | | | | announced Maria Aristone was appointed president of |
| wrong, I have no pride. If my current deals dies, I'll call | | | | the company; they bumped Jim Depetris to chairman. |
| him BUT I would have been less offended with being | | | | Smart move on their behalf. Also, Marcus and Millichap |
| called a whore than a thief. I tried explaining that with a | | | | and Metro Commercial had parties, which were |
| tenant "in-hand," why would I even try to be "fair?" (Oh, | | | | packed. One thing our industry does well is eat, drink |
| both tenants have similar financial statements.) He | | | | and party. |
| wanted to me to do a deal with him for 25 | | | | The Philly show got off to a slow start on Thursday |
| cents-per-foot more; fortunately my client works 5th | | | | morning, but by 10 a.m. it was hectic and stayed busy |
| Avenue, not 42nd Street. | | | | until the end at 3 p.m., which is good. It used to be this |
| Anyway, changing topics again, retail seems to be | | | | show ended right after lunch, so its value over time is |
| dividing our industry like politics, but instead of blue and | | | | improving. The best comment I heard at the show |
| red states, we have high and low end retailers with the | | | | was from Rene Daniels, who said: "Lot's of people |
| ones in the middle struggling. The Nordstroms of the | | | | present, but few decision makers." Cute, but |
| world are doing great (department stores are "back in" | | | | unfortunately true. As our industry expands we gain |
| with the consumer) but it seems that even the | | | | membership, but the ability for these dealmakers to |
| almighty Wal*Mart is having some problems. The | | | | make decisions is lacking, which is why every deal |
| middle class in America finds their purchasing power | | | | takes forever to be finalized. Oh, I read an interesting |
| diminishing and they're having difficulty surviving and | | | | article last week; the author contends that if we don't |
| when they hurt, so will our industry. | | | | have a good Christmas (guesses are between 2.5% |
| I've heard a dozen reports on what type of Christmas | | | | to 5% in sales increases) then Sears will start selling |
| we'll have this year, anything from setting records to | | | | off underperforming Kmart and Sears stores, just |
| down 3%. So, it's a wait-and-see to find out how 2007 | | | | what our industry needs, more available real |
| will start off. But what really confuses me is Wall | | | | estate.posted by tedkraus at 6:10 AM 0 comments |
| Street. I'm the first to admit that finance is not my | | | | links to this post |
| strong point but as I write this, the Dow is climbing | | | | Friday, September 01, 2006 |
| because the Fed has indicated they won't be raising | | | | Mickey Hits Another Home Run |
| rates in December. That in itself I understand but the | | | | Ann, Alyson, Terry and myself attended the Orlando |
| other news that Wall Street seems to be ignoring is | | | | ICSC dealmaking convention, which proved to be |
| that sales and, for many companies, profits, are | | | | another home run. Lots of busy and happy |
| dropping. To my way of thinking, I rather have higher | | | | dealmakers gathering for three days to wheel and |
| interest rates along with good profits than lower rates | | | | deal, a task they were all equipped to do and do well. |
| and lower profits. I think there's trouble brewing in | | | | The cocktail party on Sunday, while active, seemed |
| Dodge. | | | | (but I'm not sure) to have a little less in attendance than |
| When it comes to stupidity, right now, I feel like the king. | | | | in the past, and I have two theories why (the third is I'm |
| A couple of months ago, we got a shopping center to | | | | wrong) 1) Airfare and hotel costs have gone up, so |
| sell and through a MAJOR miscommunication on my | | | | some elected to come for one day less to save some |
| behalf, we underestimated the income by $150,000. | | | | expenses; 2) There was confusion on which day the |
| During this period we received several offers for | | | | cocktail party was, many thinking it was on Monday, |
| about $1 million less than the owner wanted and I, by | | | | not Sunday night. Either way, the show itself ended up |
| pure luck, convinced the seller to lower his price | | | | with nearly 5,000 attending over last year's 4,300 and |
| substantially. Long story short, we finally got an | | | | the cocktail party was a success with all attendees |
| interested party that, before going into a LOI, wanted | | | | being in an upbeat mood. We can't ask for more than |
| more information than what we had. So, I requested it | | | | that. |
| from the seller and after reviewing the numbers, | | | | The reoccurring complaint I heard was on the |
| realized my screw-up and before sending the info out | | | | increasing costs of construction and insurance in the |
| to the potential buyer, I called the owner and | | | | Florida market since last year's hurricanes. The details |
| confessed to my stupidity. He asked how long it would | | | | have been reported everywhere, but I'm told some |
| take to "repackage" and get new offers and I said 60 | | | | insurance costs have gotten close to the $3 psf mark |
| to 90 days, whereby he responded, "No, close faster | | | | and construction costs are up 25% to 30%. Some |
| at the lower price." (Thank you, thank you, thank you.) | | | | claimed that it marks the beginning of the end of |
| I then sent the info to the buyer and told him of my | | | | Florida's great retail market, but I doubt that. It will make |
| screw-up. To say the least, he was a happy camper | | | | dealmaking more difficult, as more secondary sites are |
| but wanted to know if he was competing with anyone | | | | rejected and greater "discussions" on acceptable rents |
| else. I said, "Yes and no." No one else had received the | | | | than in the past occur. The great curse of life. May |
| updated information BUT I will be resending the new | | | | you live in interesting times. |
| numbers to companies that made unacceptable offers | | | | Ann and Alyson attended the Ladies in the Biz cocktail |
| in the past, explaining my screw-up and seeing if there | | | | party on Sunday and they seemed happy with the |
| was new interest. It was then that the conversation | | | | networking opportunity and the excellent turnout. From |
| got nasty; he contended I was being unfair (at least he | | | | what I could see, the booths at the actual dealmaking |
| wasn't calling me a thief) and should not provide the | | | | show were sold out with just a few no-shows, so by |
| income statement to anyone else. | | | | every definition, Orlando was a winner, as has become |
| I asked if he was prepared to go into contract and he | | | | tradition with this event. Every exhibitor I spoke to |
| replied, "Not for another week." I said that I therefore | | | | expressed satisfaction with the show, so even with |
| HAD TO keep marketing the property. We're still | | | | some problems on the economic horizon, the Florida |
| talking and I do believe he'll make an offer, but we're | | | | market is still hot. Of course, trying to figure out the |
| not as friendly as we were in the past. No deal ever | | | | economy is impossible; One day inflation is down, the |
| seems to go smoothly. | | | | next up. One day consumer spending is up, the next |
| Speaking of whores, I was talking to the VP of | | | | down. One week, unemployment figures are up, the |
| acquisitions for a decent-sized company and he was | | | | next down. It's totally confusing, and anyone claiming to |
| explaining how he "beats" the competition out on deals. | | | | understand what's happening is a fool or a liar. |
| Say the seller wants $12 million and they only want to | | | | I'm writing this during the last week of August and, to |
| pay $11.2 million. They enter into a contract for $12 | | | | say the least, business is slow, at least from the |
| million, do their due diligence and then, about 10 days | | | | brokerage end; publishing is busy preparing for all the |
| before closing, call the seller and say they can't close | | | | upcoming ICSC dealmaking events. Phone calls have |
| at $12 million but can at $11. Take it or leave it. Ninety | | | | slowed to a trickle, most people I call are on vacation |
| percent of the time, the seller gets upset and calls off | | | | or getting ready to go on one and 99% of the deals |
| the deal but calls back in a day or two and after much | | | | scheduled to open for this coming Xmas season are |
| negotiation, agrees to $11.2 or $11.3 million. There was | | | | finalized, so no one is under pressure to do a deal; they |
| nothing found in the due diligence period that could | | | | want to enjoy what's left of the summer. Hopefully, as |
| justify the lower price, the buyer just plays the game. | | | | has been true in the past, this changes after Labor |
| In a conversation with another director of acquisitions, | | | | Day and business becomes hectic once again. |
| we were talking about their latest purchase and I | | | | The hunt to find centers for sale is as strong as ever, |
| asked how they could justify a 6.5% CAP on a | | | | with most of the brokers and buyers confused and |
| 360,000 sq.ft. center and he said part of it is that they | | | | frustrated on why CAP rates aren't going up as |
| jack up CAM and make it into a profit center, which | | | | interest rates have (In theory, they have; in realty, they |
| makes the numbers work -- what a business. Overall, | | | | haven't). I guess the only logical answer is "If they can |
| we're a great industry, but we do have our share of | | | | get their asking price, whether it makes sense or not, |
| a-holes. | | | | why not." The single largest complaint I constantly |
| Anyway, here's wishing you a great show and | | | | heard was where/how to acquire property that |
| holiday.posted by tedkraus at 7:33 AM 0 comments | | | | makes economic sense, and there is no answer. |
| links to this post | | | | Where I'm really confused is all the reports that I've |
| Monday, October 30, 2006 | | | | read contend there's a slowdown in leasing and retail |
| The South Not Only Rise Again, It Won, Oh and More | | | | sales, but in the majority of markets, rents are still |
| About Josh..Almost | | | | increasing and a retailer has to be a real fool to pay |
| Ann and I attended the Texas Dealmaking show and | | | | higher rents on declining sales. I must be the exception |
| over 3,000 "Tall hats"showed up to wheel and deal, | | | | to the rule because every property we're leasing I'm |
| nearly a 20% increase compared with last year'sshow. | | | | finding it harder to get decent rents and tenants are |
| You can't ask for more than that, especially | | | | fighting harder on renewals. Of course, some of it is |
| considering it was onlyfive or six years ago that the | | | | sticker shock, when after 10 years a tenant's rent |
| show attracted only 750 or so dealmakers. | | | | goes from $7.50 psf gross to $18.25 psf net, it can be |
| High energy is the only way to describe this event. | | | | difficult to accept. Of course, the retailer's gross has |
| Texans love dealmakingand socializing, and they do it | | | | increased substantially over the years and that they |
| well. Here's another market in which smalldevelopers | | | | have no problem accepting higher sales volumes and |
| excel. The South seems to be an area that smaller | | | | the incoming profits. |
| developerslove; they've found a niche that the REITs | | | | Another change in the sale of properties is that, while |
| can't touch. They may never be | | | | CAP rates have not risen, it is taking longer to make a |
| Kimco or DDR, but they live the good life and have fun | | | | deal and I've noticed more deals are coming back onto |
| -- a great way tomake a living. The only real complaint | | | | the market after a LOI was signed. Deals seem to be |
| we heard at the show was the lack of | | | | dying more often; it now often takes several |
| "real" retailers, and that seems to be the rule at most | | | | acceptable offers from different buyers before an |
| events, so get overit. The broker has become the | | | | actual deal is finalized. If the due diligence doesn't come |
| mainstay of dealmaking for many, if not most,retailers | | | | through perfectly the buyer wants to renegotiate. |
| and you're going to pay that commission, like it or not. | | | | Switching subjects, Josh, as I mentioned attended the |
| Another change I noticed at this and most shows is | | | | ICSC's University in Lansing, MI and they appear to |
| that the actualdealmaking is lasting longer. In the "old | | | | have done a decent job of teaching him the basics |
| days," if the dealmaking startedat 8 a.m., for all practical | | | | and providing lots of networking opportunities, many of |
| purposes, it was over by 1 p.m., even if theofficial | | | | which will probably last him a lifetime. The reason I think |
| closing time was 3 p.m. or 4 p.m. Now, the activity | | | | they did a decent job is that he came back with lots |
| goes on 'til 2p.m. or 3 p.m. So, people are staying longer | | | | of buzz words and sat down with Ann and myself |
| and hopefully making moredeals. I had one interesting | | | | and explained all the things we've done wrong over |
| conversation with a developer who had justfinished | | | | the last 30 years. God, I never realized how ignorant |
| building a Starbucks. He wanted to know what I | | | | I've been. I guess that's what children are for, to point |
| thought the CAP ratecould be. I responded with a | | | | out all your mistakes. Forgetting the sarcasm for a |
| 6.2% to 6.5% rate. He said that's what hisfriends are | | | | moment, the University was well worth the time and |
| telling him, he just didn't think anyone was that dumb. I | | | | money involved. Josh said the "teachers" were great |
| agreedwith his outlook but said there's a lot of dumb | | | | and over the five days he had 10 or 11 teachers |
| buyers out there. Anyway,moving on, Josh and I went | | | | covering all aspects of leasing and management. It |
| to the Atlanta show, which was larger than Texaswith | | | | reminds me a little of talking to him after his first day of |
| about 4,000 dealmakers compared to last year's count | | | | kindergarten; I was more excited than him. |
| of 3,500. (It'salmost getting boring to announce all these | | | | On a different note, we're marketing a center for sale |
| increases in attendance. I'mwarning you in advance: | | | | that, to say the least, is problemed and we're having |
| The New York show in December will be a | | | | trouble generating any interest. I called a few brokers I |
| nightmare;there will be way too many people.) | | | | know who specialize in sales and said we should |
| The energy level of the Texas show was higher than | | | | co-broker and then sent out a complete package. A |
| Atlanta's, but theattendees still did their share of | | | | week or two later one of the brokers called, saying |
| "dealmaking." Like Texas, Atlanta has alot of smaller | | | | very apologetically that one of his clients made an |
| developers and, like Texas, their biggest complaint was | | | | offer but he was ashamed to make the offer. I used a |
| thelack of real retailers. Atlanta has their "Retailers" | | | | line from Lee Cherney of Kin Properties; "As long as |
| show the day beforethe actual dealmaking and I'd | | | | you don't insult my kids or wife, I won't take it |
| guess they had 40 to 50 retailers exhibitingat this busy | | | | personally. So give me the offer." He was right, it was |
| event. But, my gut tells me that the amount of | | | | low ($10 psf to buy) and I promptly turned it down, |
| retailersexhibiting was less this year than last. BUT, that | | | | BUT I did call the seller and tell him of the offer. The |
| didn't stop the wave ofdevelopers/brokers stopping by | | | | good news is that, even though he didn't accept the |
| each booth hoping to do a deal. The cocktailparty in | | | | offer, he didn't get uptight and came back with a |
| Atlanta was jammed and most people in attendance | | | | counter offer, which the buyer turned down, but at |
| had dinnerinvitations for various gatherings right after | | | | least I got him an offer. The other brokers reluctant to |
| the show. So, there were alot of tired people the next | | | | present a low-ball offer reminded me of a trend I've |
| day, which explains why the show got off to aslow | | | | noticed over the last few years. The amount of real |
| start on Wednesday. BUT, by 10:30 that morning, the | | | | "horse traders" in our industry is declining. I'm not talking |
| trade floor washopping and stayed that way until 30 | | | | the typical deal between a landlord and tenant where |
| minutes before closing. | | | | the rent starts out at an asking price of $25 psf and |
| I did hear one interesting tidbit: It seems that the | | | | ends up at $19 psf, but on marginal properties for lease |
| government of Puerto | | | | or sale. It used to be that companies and individuals |
| Rico has sent letters to the major retailer developers | | | | would make an offer on marginal centers IF the deal |
| on the island sayingthey are about to start an | | | | could be bought "right" (and there are still companies |
| investigation into the possibility that theselandlords are | | | | that only want marginal properties where they can get |
| gouging the tenants on CAM and electrical charges. | | | | in cheap), but I guess that secondary centers are |
| Talk abouta disaster looking for a place to happen. | | | | either too much of a risk or too much work for most |
| Now, I'm totally opposed to ownersmaking more than | | | | of the "next generation" to be bothered with. Nickel |
| nominal amounts of money on CAM, taxes, etc.; their | | | | and dime negotiations aren't popular anymore to many |
| profitcenter should be the rents. BUT, I'm also a great | | | | (not all) companies and too many people seem |
| believer in, "Thegovernment that governs least, | | | | ashamed to make a low ball offer; a big mistake in my |
| governs best." Let's hope the developers dosomething | | | | opinion.posted by tedkraus at 8:19 AM 0 comments |
| before the government does. Otherwise, it might give | | | | links to this post |
| some ideas tostates in the U.S., and then we all lose. | | | | Thursday, August 24, 2006 |
| Changing subjects, as you are aware, I've been | | | | Another Josh Story...well almost |
| chronicling the "Adventuresof Josh" since he joined the | | | | I was speaking to a friend of mine who's VP of leasing |
| company going on 5 months ago, and I have toadmit, | | | | for a decent sized shopping center company. As |
| it's becoming LESS frustrating (but still frustrating) while | | | | many people do (since I first mentioned that Josh |
| tryingto teach him the business. Well, I guess my | | | | started working for us) he asked how Josh was doing |
| remarks struck home to a lot ofpeople, since we | | | | and I responded with my typical line: "Great on Monday, |
| received LOTS of e-mail on those MyWay's. Here's | | | | Wednesday and Friday but I'm thinking of firing him on |
| two, whichare typical of the rest: | | | | Tuesday and Thursday (three out of five ain't bad). He |
| Ted, | | | | replied: "No really, I want to know for personal reasons |
| I just started in the real estate business a few months | | | | since we're having trouble finding decent people at a |
| ago and enjoyreading your articles. I am in the same | | | | salary we can justify and our Chairman wants me to |
| boat as Josh and can understand whathe is going | | | | hire young, aggressive, recent college graduates to |
| through. (Cold calling, asking what seem to be logical | | | | train how to lease." |
| questionsto a higher authority.) I, however, disagree | | | | "Don't do it, quit first," I replied, "it's a full time job that |
| with the statement that we haveto be taught | | | | requires the patience of a saint. You'll accomplish none |
| EVERYTHING. It's not that we don't know how to fax | | | | of your other work if you have to deal every day with |
| or pick upbusiness cards, it's that we understand that | | | | the untrained and some days the untrainable. Your job |
| our superiors are succeeding atwhat they do and we | | | | will go downhill." |
| want to learn their style to emulate them. I think it'sa | | | | Now don't get me wrong, young people are the future |
| good thing that you have new workers craving to | | | | of our industry and they can add a lot to what we've |
| learn more and more eachand every day. You should | | | | already accomplished, BUT man are they a pain to |
| see that and be excited to teach them. This isyour | | | | deal with. Their inexperience in retail real estate and life |
| passion, isn't it? As for me, I guess I am getting the | | | | in general requires a commitment of substantial time |
| best of bothworlds. I am starting out like everyone else | | | | and the ability to deal with their mishigosh which too |
| does, however, I think mybosses have a different | | | | many of us "old timers" (Ann asked me not to call |
| view, one tailored more to getting me to their leveland | | | | people old farts) don't have. |
| watching me succeed. I think their reply to your friend | | | | They have to be taught EVERYTHING, from how to |
| would be, "Doit, and find new possibilities." We are not | | | | fax, to picking up business cards from every retailer |
| embarrassed. If we were, wewould sit at our desk | | | | they canvass, to NOT to canvass a regional square |
| waiting for you to come to us. We are seekers, | | | | foot mall for tenants for a 100,000 sq.ft. |
| readyand willing to combat new things each day. I for | | | | supermarket-anchored strip, to "forcing 'em to call 60 |
| sure know that if I don'task questions, I won't succeed. | | | | to 80 retailers a day so as to start to get a "feel" on |
| For you it's "Location, Location, Location." | | | | how to talk to retailers, and to making 'em canvass |
| For me, it's "Questions, Questions, Questions." Shouldn't | | | | two or three times a week even if they're tired. They |
| you always askquestions before you worry about a | | | | KNOW NOTHING and they're always worried about |
| location? In closing, I think we are anasset and need to | | | | embarrassing themselves. |
| be accepted. All those VPs who are training | | | | Now they can be an asset also, as they often are, |
| shouldunderstand and be willing to teach because I am | | | | since most of the time they think outside the box. |
| sure, back in the day, thosewere the guys bugging | | | | They come up with unusual ideas and some are good. |
| their bosses up the wall. | | | | Because they're new to the industry, they have no |
| Tom DiCicco | | | | preconceived ideas and that's great, so I'm not |
| Database Manager | | | | opposed to hiring the uninformed, I just realize it |
| Ted, | | | | requires a structure and commitment of time to do it |
| I read your articles in every issue of Dealmakers and, | | | | right. Otherwise, the newbie quits out of frustration or is |
| typically, they'reperfectly written and have humor to | | | | fired because the supervisor becomes too frustrated. |
| them. This is something I appreciate andlike, since | | | | It's a "lose-lose" for everyone. |
| sometimes I feel this industry lacks some comic relief | | | | There are many development and brokerage |
| and tendsto be too serious too often. Having said all | | | | companies that have a formal training program with |
| that, your article about Josh,while well taken and a | | | | supervision from full time trainers, and that can work |
| point probably shared by many seasonedbrokers | | | | great. These companies are educating our future |
| retailers, has some "holes" to it. I started in this business | | | | leaders. But to tell a VP of a company to be the |
| justover six years ago, when I was 22. Now, my story | | | | trainer is a problem looking for a place to happen. The |
| is somewhat different inthat my father has been in this | | | | good news when it comes to these newbies is that |
| industry since 1981. Because of that, I hada very small | | | | they are perfect for telemarketing to retailers and |
| and limited knowledge of this business when I started. I, | | | | canvassing, something that is hard to justify when |
| too,however, needed that training to get the necessary | | | | you're paying a leasing guy $100,000 to $150,000. |
| knowledge to besuccessful. Here was the key that | | | | Josh's trials and tribulations must be common for most |
| helped me become successful: | | | | young folks, as I recently received this e-mail: "Hi, I am |
| Our company is a very small company in terms of | | | | 24 and new in Retail after just finishing school in |
| number of employees. | | | | Southern California. I was reading your Real Estate 101 |
| However, we compete on a larger scale with the likes | | | | article today about your son Josh and I couldn't help to |
| of the Mid America'sand CB Richard Ellis's of the | | | | chuckle at the similarities between him and I when it |
| world. Our inventory is massive compared tothe | | | | comes to being optimistic about deals that will never |
| amount of people we have that work the brokerage | | | | get done. I am currently cold calling like crazy to fill my |
| end of this business. | | | | listings in Northern Utah. Anyway, I wanted to further |
| Currently, we only have three brokers here, including | | | | my education as a new "optimist" in the industry and |
| myself. When I startedhere, there were only four: The | | | | wanted to speak to Josh about his experience at the |
| three principals of the company and oneother broker. | | | | ICSC University in Michigan. Would you be able to give |
| Since my father is the President and principal of | | | | me his contact info when he gets back?" |
| thiscompany, he certainly had no time to train me each | | | | I give him credit, he knows he doesn't know and wants |
| and every day. Hispartner was and still is equally as | | | | to talk to another newbie to reassure himself that he's |
| busy as my father. The third principal,too, was busy | | | | not alone. And he not. Josh just left for the University |
| doing her own thing. | | | | and I'm extremely anxious to hear his thoughts and |
| My job was simple. I began as Database Manager | | | | see what he learned. |
| here. I took an "old school" | | | | Changing subjects, I recently came across an article |
| 3-ring binder crammed full of years and years of | | | | saying: "Wal*Mart Builds, Waits for Communities to |
| contacts (both locally andnationally) and computerized | | | | Catch Up." In essence, it says Wal*Mart started out in |
| them. Now I didn't just type them in acomputer, I called | | | | mostly rural areas where other large retailers chose |
| each and every one of them. Some were long gone | | | | not to build and now is saturating urban and suburban |
| and nolonger in business, but most were still active. | | | | areas. Now, the retailer is looking to add stores in |
| Throughout my life, myfather has always preached to | | | | communities "in the making." In other words, they're |
| me about work ethic and striving to be | | | | store "banking." opening up in areas that are not quite |
| "moresuccessful than he is." Obviously, that is a typical | | | | ready for a Wal*Mart but will be in the near future. |
| statement and wish froma father to his child. So, for as | | | | They buy and build now, banking on future growth to |
| busy as my father was, he always took thetime to | | | | make the store profitable, which it isn't now but will be |
| tutor me because, not only was I an investment to him | | | | in the near future. I give Wal*Mart credit for being |
| personally ashis child, I was and still am an investment | | | | forward thinking but it's nothing new, since Sears, |
| to his company. Additionally,this was his way of training | | | | Kmart and JCPenney were doing that 30 to 40 years |
| me. He put me on the phones making calls,getting to | | | | ago. But as the costs of acquiring land and then |
| know who people were, learning terms of the business | | | | operating these non-profitable stores grew, they |
| and gettingmy own name out there. | | | | stopped expanding based on future growth. Wal*Mart |
| See, that is what the "elders" of this industry need to | | | | has the money to wait and they are. Smart and |
| realize: Youngnewcomers in this business are not a | | | | long-term thinking, something most retailers don't do. |
| pain in the neck. We're an investmentto the companies | | | | Ranting on...I recently had a meeting to try and get the |
| we work for. We're not just around to bug busy | | | | leasing for a decent sized, well-anchored center in an |
| brokers toask questions. We're here to soak in the | | | | affluent market that has about a 5% vacancy rate. |
| knowledge from them. The one thing | | | | The owner had called me to set up a meeting saying |
| I will always do is, when someone young enters into | | | | they desperately needed help. I hadn't been to the |
| this business, whetherit be a friend or just someone | | | | center for several years, so I arrived early to walk the |
| coming to work at our company, I will alwaystake the | | | | property and see what was happening. Except for |
| time to talk to them and give them as much help and | | | | being a little tired, the center was in good shape, well |
| information asthey need. I needed it when I started, so | | | | leased with a mixture of regional, national and local |
| will they. | | | | tenants. Candidly, I couldn't see what the problem was |
| Remember this, at some point or another, we | | | | and I'm used to seeing problems. My first question |
| (meaning all of us in the realestate business) were all in | | | | when the meeting began was: "What's the problem. |
| the same boat. I'm sure you were when youstarted in | | | | You have a 5% vacancy and the center looks decent, |
| real estate, and I'm sure there was someone there to | | | | just needs a facelift." |
| tutor andmentor you along the road. That's why CB | | | | The owner explained that they will be undergoing a |
| Richard Ellis is as successful asit is today. It seems as | | | | major rehab shortly and will be replacing most of the |
| though the majority of seasoned brokers from the | | | | facade, so they knew that problem without my help |
| Baby Boomer era all started at CB (formerly, just | | | | His concern is that the center's traffic has been off |
| Coldwell Banker). They hadit down perfectly. Each | | | | over the last few years (FYI: over 500,000 sq.ft. of |
| new entrant into the business "ran" for someone | | | | new developments have opened within five miles in |
| whowas seasoned. My father happened to get his | | | | the last three years and, while the market is good, it's |
| first real estate job with CB,and the man he "ran" for | | | | not that good) and about 10% of the tenants are |
| taught him some valuable lessons, which were | | | | complaining and asking for a rent reduction. I asked |
| passeddown to me. | | | | what they currently do to market the center to |
| All in all, let's take it easy on the young newcomers | | | | tenants and was told they wait for brokers to call. Not |
| because one day, wewill be the generation that is the | | | | exactly a pro-active approach. I asked why they were |
| majority within this industry. And again, | | | | not doing more and was told they never had to, |
| I know for sure that when the next wave of young | | | | enough people called in the past to keep the center |
| sales people come throughwhen I am old and have | | | | leased. I explained that they were no longer that cute, |
| many years under my belt, I'll be sure to fill themup with | | | | little 18-year-old girl; they're now a mature woman who, |
| as much knowledge as I can! | | | | before going out on a date has to put on makeup, |
| Jason R. Lenhoff | | | | spend time on their hair and dress right. Their body |
| Horizon Realty Services, Inc. | | | | appeal ain't what it used to be, but that doesn't mean |
| Nick D'Amoreposted by tedkraus at 12:21 PM 0 | | | | no one wants to date 'em. |
| comments links to this post | | | | I think this problem is too common today; we've all |
| Friday, October 06, 2006 | | | | gotten a little fat and lazy after a decade of expanding |
| 2006, Not As Great As 2005 But Still Great | | | | retailers, tons of new developments and easy money. |
| Alyson just got back from the Palm Springs show | | | | We, as an industry, don't pay attention to our existing |
| (next year it will be in San Diego, one of my favorite | | | | centers. We're too busy planning the next center to be |
| areas in the country. Actually it's La Jolla that I love, the | | | | developed or acquired. Long term planning is not part |
| town north. But either way it's a great place to bum. | | | | of the gameplan and that's a problem. Back in "the |
| The reason for the change is the hotel in Palm Springs | | | | good old days," it was a leasing agent's job to market |
| can't handle the increasing size of the ICSC show, a | | | | a center even if it was 100% leased; replacing weaker |
| problem we might have in New York). She said that | | | | tenants with more aggressive ones and having a |
| the show was active, with a possibility of nearly 6,000 | | | | tenant in their "back pocket" if and when an existing |
| attending this year compared to last year's 5,240, so | | | | tenant defaults. It ties into a conversation Ann had |
| California dealmakers are a happy lot. The cocktail | | | | recently with one of the ICSC's people. They were |
| party was active, with everyone upbeat, and meetings | | | | talking about the ICSC's "University" and Ann asked |
| were being held at every available table. Lee Cherney, | | | | why they didn't teach a course on "marketing" a |
| a friend and VP of Kin Properties, was there trying to | | | | property from a leasing aspect. She was told that |
| find property for sale. He contends that acquisitions | | | | business has been so good for the last 10 years |
| have gotten so tough that one broker didn't want to | | | | there's no need, and that's true unfortunately. |
| deal with him because his company knows what | | | | Parting thoughts: I'm trying to do a deal for a big box |
| they're doing and therefore makes the deal more | | | | retailer I'm representing and, of course we're fighting |
| difficult (a dumb buyer is the best kind of buyer). | | | | over rent. After I made my "final and best" offer, I was |
| Another developer told Lee he's currently building | | | | told it wasn't enough and that they'd lose money on |
| shopping centers and then immediately flipping 'em at a | | | | the deal. Now I don't claim to be bright or an expert on |
| 5.25% CAP in California. I'm getting 5% on my CDs. | | | | redevelopment, but "we" are taking a portion of a |
| Something is wrong here. | | | | former "superstore" and I know the cost of TI for us, |
| Ann and I are going next week to the Texas | | | | have an idea what the property costs, brokerage |
| dealmaking, and the following week Josh and I are | | | | commission, etc. And my offer provides cash flow to |
| attending the Atlanta show. And in two months, the | | | | the owner above all these expenses. When I explained |
| "mother-in-law of all mothers-in-law," the New York | | | | this to the owner I was told; "What about the |
| show will be here (God, the year is going fast). Every | | | | vacancies?" I replied "What do you mean?" and was |
| indication is that the next three shows will also be | | | | told that there was a substantial amount of vacancies |
| good, and in all probability New York will set another | | | | after doing the deal with us and if we don't pay more |
| record, so 2006 appears to be ending with another | | | | rent, they have a negative cash flow. Huh? You want |
| banner year for the retail real estate industry; maybe | | | | me to guarantee the entire project is profitable even if |
| not as good as 2005, but what's the difference | | | | I'm only taking a portion of it? No way. I tried to explain |
| between an "A" and "A-minus"? | | | | they had to add to their acquisition costs the cost of |
| The great unknown is Christmas 2006 and how good | | | | carrying the property for two or three years while |
| or bad it will be. If it's good, we're in for a great start in | | | | looking for additional retailers, but they didn't seem to |
| 2007. If not, lots of retailers will be re-evaluating their | | | | understand that concept. We have too many novices |
| expansion plans and a couple of the weaker chains | | | | in the business. If, and when, the recession "hits," we'll |
| will go bankrupt. Standard operating procedure for a | | | | eliminate many of them and that's good.posted by |
| weak Christmas. So far, indications are that while | | | | tedkraus at 7:49 AM 0 comments links to this post |
| some of the economy is slowing, retail is holding its | | | | Tuesday, August 08, 2006 |
| own; don't understand how or why, but it is. Of course, | | | | The Slowdown Is Here...Now What? |
| the ongoing wars, who wins the elections in November, | | | | Well, the slowdown in the economy appears to be |
| which way interest rates go and the price of oil will all | | | | taking hold, getting stronger or weaker every day |
| have an impact on us, but right now we appear to be | | | | depending on how you look at it. But the downturn is |
| in decent shape. But the smart money, I don't believe, is | | | | still having a minimal effect on retail real estate (thank |
| betting either way. They're as confused as I am. Oh, | | | | God, I need the money). Two observations I've noticed |
| and the Federal Reserve is saying there will be more | | | | in the last month. First, as many of you know, we |
| defaults on commercial real estate loans. We live in | | | | manage eight forums on the sale, leasing and finance |
| confusing times. | | | | of commercial real estate (to join, go to The amount |
| On a different note, I read that Kimco bought 19 | | | | of condos and conversions being offered on the |
| centers from GE, which in itself is not significant | | | | forum for sale have tripled in the last month, mostly for |
| (they're buying all the time), but the article goes on to | | | | Florida and Vegas properties, and I have to assume |
| say they're in the process of flipping these centers to | | | | the reason for the vast increase in these offerings is |
| an investment group, which is now part of their | | | | that the speculators, who were developing or buying |
| operating philosophy. Buy, Sell, Flip. If anyone did an | | | | condos on the spec, are trying to get out now before |
| analysis of Kimco's sales, I'd be willing to bet that from | | | | they get massacred. Also, while not a scientific |
| a sales aspect, they are among the largest brokers of | | | | approach, we recently ran a help wanted ad for an |
| retail real estate in the country. I have to give Milton | | | | administrative assistant and probably 25% of those |
| Cooper credit, he's probably the smartest man in our | | | | applying were/are real estate agents wanting the |
| industry. He JVs, manages, buys, sells, loans and | | | | security of a weekly paycheck instead of counting on |
| anything else that can make a buck. He not only sells | | | | commissions. Again, I have to assume the residential |
| the pig, but also the oink. No one does it better. The | | | | real estate market is becoming weaker and the |
| only thing that scares me is that one company controls | | | | tertiary players are not making money. However, to |
| nearly 5% of all the centers in the country. Big always | | | | really complicate matters, every report I read says that |
| bothers me; That's why I hate the government. | | | | leasing is up nationwide in almost every segment |
| Oh well, ranting on. A trend I've noticed since Josh | | | | except industrial. Of course, to further complicate the |
| joined the company (he has several freestanding | | | | matter, I was speaking to a friend of mine who |
| buildings for lease and has gotten involved in leasing | | | | represents a big box tenant that demands great deals. |
| smaller space than I'm usually involved in). Because of | | | | Long story short, he contends that in the last five |
| his canvassing, he's dealing with the smaller chains | | | | months, the number and quality of 70,000 sq.ft. to |
| (under 20 stores) many who want to buy their real | | | | 100,000 sq.ft. boxes being offered to them has |
| estate instead of leasing, wanting the benefit of | | | | quadrupled and the asking rent has dropped, and if |
| appreciation or to take advantage of the full value | | | | leasing is strong, why are so many properties being |
| they bring to a location when they open and bring | | | | offered to him? I'm confused. |
| additional traffic to a center. Besides his properties, I'm | | | | I also see a "little" more resistance to low CAP deals, |
| leasing/selling some vacant big box stores and I must | | | | especially if you can get CDs paying 5.5%. And, most |
| get five to 10 calls a month from brokers representing | | | | importantly, consumer spending was weak for a fourth |
| "big box" retailers (over 50,000 sq.ft., but small chains) | | | | straight month in June as rising gasoline prices left |
| wanting to buy distressed centers with large | | | | Americans with little to spend on other items (but July's |
| vacancies that their client can open and operate in. | | | | sales numbers were good). A key measure of inflation |
| (Oh, I also noticed in the last few months an interest | | | | rose at the fastest pace in more than a decade, not a |
| from some entrepreneurs to open flea markets in | | | | good sign to keep the Fed from raising interest rates. |
| closed big boxes. I haven't gotten these types of calls | | | | The good news is that retail sales are still decent, but |
| in years). Half of the tenants Josh is canvassing for on | | | | middle class and blue-collar oriented retailers seem to |
| his freestanding buildings expressed interest, but only | | | | be slowing down their expansion plans. And to make |
| want to buy and won't lease. | | | | matters even more interesting, is it's becoming "in" for |
| On the same note, we're marketing a 200,000 sq.ft. | | | | non-retailers to acquire retailers, such as Lord & Taylor |
| center with a vacant 100,000 sq.ft. store and I've been | | | | being acquired by NRDC Equity Partners and National |
| approached by several retailers wanting to buy (which | | | | Realty & Development Corp. The trend started 35 |
| the owner is willing to do and the asking price is low at | | | | years ago when Arlen Shopping Centers bought E.J. |
| $15 psf, but the buyers want it even lower). One | | | | Korvettes, which later went bankrupt and every |
| retailer offered our asking price, but wanted "us" to | | | | developer since who has acquired a retail chain has |
| take back paper for the entire amount, pay interest of | | | | filed either "11" or "7" after the acquisition. It's one thing |
| 6% and provide no real guarantee. They couldn't | | | | to acquire a chain for it's real estate and then sell it off |
| understand why their offer was rejected. I also noticed | | | | piecemeal (that makes some sense) BUT developers |
| that there's lots of bottom fishers in the smaller chain | | | | can't retail and retailers can't develop; totally different |
| market (the big boys aren't the only ones), offering to | | | | skills are required. |
| move fast if we did a deal 20% to 30% below market. | | | | Now some good news: in conversations with smaller |
| I guess they're all hoping to find a desperate owner. | | | | retailers (we call 500 to 750 retailers a week because |
| Now, I understand lowballing if you're buying and intend | | | | of TenantSearch). We're hearing that the smaller |
| to be the landlord, BUT if you're going to operate a | | | | chains (under 25 stores) are doing well and want to |
| store in the center, it should be location, location, | | | | expand, a substantially higher percentage than we |
| location and demographics being the most important | | | | hear when talking to the "big boys." I guess the |
| part of the deal, not the cheapest deal that determines | | | | philosophy that smaller chains can respond to their |
| if they proceed. Their main business should be retailing, | | | | customers quicker and more efficiently than the larger |
| not real estate (on the same philosophy, I think it's | | | | chains is correct. |
| crazy when a developer buys a retailer). If, and when, | | | | All that being said, I've also spoken with a dozen |
| the recession hits, we could be in deep trouble. Few | | | | buyers of low CAP centers and, while the CAPS are |
| buyers or retailers seem to be concerned about the | | | | slowly rising, they still don't make sense. What's worse |
| fundamentals of retailing or real estate anymore. | | | | is that the only decent centers they're finding available |
| On a similar note, while we're encountering tough | | | | are still being offered at a 6.5% CAP, about what they |
| negotiations with the smaller chains, I noticed some of | | | | are paying for money, so they can't justify the deal. |
| the larger developers, brokers and retailers are taking | | | | Also, in conversations with numerous developers and |
| a totally different approach. I know I spoke about this | | | | brokers, they say they're busier this summer than |
| before, but we're an industry of horse traders (and I'm | | | | usual, so all the news is mixed with good news coming |
| proud of that fact) and I don't understand this change, | | | | Monday, Wednesday and Friday and bad news on |
| the reluctance NOT to horse trade (there's nothing | | | | Tuesday, Thursday and Saturday. If you understand |
| wrong with tough negotiations, but being a tough | | | | the economy please let me know 'cause I'm confused. |
| negotiator and NOT making the deal is NOT an | | | | On a different topic, we're working on a center that, |
| attribute. Being a tough negotiator AND making the | | | | being polite, I could call "problemed" but being honest it's |
| deal is a mark of success). I gave a proposal on an | | | | a disaster. Anyway, we got a "big box" tenant to |
| outparcel to a developer of "dollar stores," and they | | | | make an offer, a rotten one but an offer. The center is |
| came back saying it's too high and then I practically | | | | 80% vacant and they're willing to anchor 60,000 sq.ft. |
| have to beg to get 'em to make a counter proposal. | | | | at terms extremely favorable to them. I made the |
| When I asked why they can't come back with a | | | | offer to the owners and had my head handed to me |
| counter proposal, they claimed that the difference is | | | | (Oh, no cash outlay is required by the owner, just |
| too big. He contended that a million was too much. It | | | | cheap, cheap, cheap rent). |
| took me a month to get him to counter offer at | | | | Yes, I understand that the deal stinks BUT the center |
| $500,000 and we finally agreed, but why was it so | | | | is in a high-crime area, low income and the last deal |
| difficult? | | | | made there was two years ago with a beauty salon |
| Speaking of Josh (remember he's my only begotten | | | | of 1,200 sq.ft. at $8 per sq.ft. and their rent is always |
| child; that I know of). He's proving what I've always | | | | late. The owner's argument is IF the tenant believes in |
| knew, but have to be reminded of, canvassing pays, | | | | the property, they should make a "respectable" offer. |
| and pays big. Thanks to several friends who gave him | | | | Huh? Just because the landlord owns a dog doesn't |
| centers to work on, he's been doing a decent job of | | | | mean the retailer wants to be stuck (oh, besides low |
| canvassing and in the last three weeks brought in | | | | rent, they want kickouts) with their problems. They're |
| seven or eight proposals. Only one was acceptable | | | | willing to give it a try and if they succeed, the landlord |
| but seven or eight proposals ain't bad. The ma&pas | | | | can succeed by being able to lease the satellite space |
| are still expanding, but they need someone to call on | | | | (that's the philosophy of the '80s but the economy has |
| 'em to get their interest going. | | | | been so good for so long, the newbies don't know and |
| Talking about deals, I also noticed most of the big box | | | | the old farts have forgotten the basic rules. FYI, I'm |
| users are beginning to become easier (not easy, just | | | | one of the old farts. Hell, I still use DOS software |
| easier) to deal with than in the past. I have to assume | | | | occasionally. |
| the reason for this change is not that I've become a | | | | When you have a "winner" center, charge high rents |
| better negotiator, but it's getting harder for them to find | | | | since retailers can and will pay for proven success. |
| sites and the amount of vacant big boxes in decent | | | | The retailer may bitch but you can justify the extra |
| locations is minuscule. However, Real Estate Research | | | | money BUT when you're stuck with a dog the risk is |
| Corp. just came out with a report saying that because | | | | on you and NEVER, never kill the messenger (the |
| of the low CAP rates, retail has the lowest interest of | | | | broker) because you don't like the deal. At least an |
| buyers of commercial real estate. In addition, second | | | | offer was made, which is better than no offer at all. |
| quarter vacancies rose from 7.6% to 8.5%. Maybe too | | | | Going on with a personal rant for the moment, I |
| much of a good thing is bad.posted by tedkraus at 2:01 | | | | recently went to Best Buy to get another computer |
| PM 0 comments links to this post | | | | and monitor for the office. I spent about 20 minutes |
| Monday, September 25, 2006 | | | | looking at their selection and finally decided on what I |
| Chicago Was Hot and So Was The Cheesesteak | | | | wanted but there was no inventory for the two items |
| Alyson and I attended the Chicago (oh, congratulate | | | | in sight, so I looked around for a salesperson, which |
| her, she's now our vice president) ICSC dealmaking | | | | took another 10 minutes to find. He was waiting on |
| event and, besides the beautiful weather, the show | | | | another customer and, after a moment of me standing |
| was "hot," with some 3,400 dealmakers in attendance, | | | | nearby, said there was another customer he'd have to |
| setting another record, which all the shows seem to be | | | | help after this customer, so it would be awhile. I asked |
| doing for the last few years. And while I'm hopeful, I | | | | if there were any other salespeople around and he |
| doubt this trend can continue, especially with all the | | | | said no, so I left and went to CompUSA and almost |
| mixed economic reports that have been coming out | | | | the identical scenario occurred. I became extremely |
| for the last few months (I know I keep saying this but | | | | frustrated and left, went back to the office and spent |
| eventually I'll be right). | | | | 10 minutes online with Dell Computers where I placed a |
| There were two major complaints I heard at the show: | | | | $1,300 order for a monitor and computer. Three days |
| 1) the 45 minute to hour and a quarter wait to get your | | | | later it was delivered to our office. I understand that |
| photo and badge IF you didn't pre-register and send in | | | | $1,300 won't make or break Best Buy or CompUSA, |
| your photograph on time. About 25% of the attendees | | | | but I have to believe I'm not the only customer that |
| had not mailed in their photo, which caused the long | | | | storms out of their stores because of incompetency. |
| waits. I recommend to anyone planning on attending | | | | I'm willing to bet they lose million$ every year because |
| future shows that they e-mail their photos to the ICSC | | | | of a lack of help. In the "pre-Internet" days, stores might |
| NOW so they're not stuck in these lines, especially for | | | | be able to get away with poor service, but with such a |
| Vegas where the wait might be hours. The good | | | | convenient, easy to use competitor called the Internet, |
| news is that at the New York show photos won't be | | | | more retail store sales will be lost to the Net because |
| required because they don't have the space in which | | | | so few retailers believe in service. They're more |
| to take 'em. BUT most of the other shows and Vegas | | | | concerned about keeping payroll costs low than |
| will require it, so don't stall, just do it; 2) was the lack of | | | | keeping the consumer happy and therefore force the |
| "real" retailers. There were lots of brokers representing | | | | consumer to shop online. The Internet will not cause |
| retailers but few actual ones. The only large group of | | | | the demise of physical retail locations, but it will cause |
| retailers represented was fast food-oriented and | | | | the end of marginal stores for retailers that can't get |
| some banks. While the Philly show didn't have a | | | | their act together. |
| problem with registration, the complaint about the lack | | | | Parting thoughts...In addition to the troubled center I've |
| of retailers was the same. | | | | described above, we're working on another problem |
| Anyway, back to Chicago. I attended the Harold | | | | property that's for sale. We spent about a month |
| Eisenberg Memorial Dinner the night before the show | | | | marketing it and couldn't generate any interest or |
| and it was a sellout with 550 in attendance. It pays to | | | | offers, so I called the owner and suggested he try |
| attend this event; not only are you supporting a good | | | | another brokerage company. He asked what I thought |
| cause, but you're also getting a great networking | | | | of auctions to get rid of the property. I said the good |
| opportunity at the same time; two for the price of one | | | | news is that they can generate high interest in a short |
| (Oh, and the food at the dinner was fantastic). | | | | time period (but you need a good auction company |
| The ICSC cocktail party the following day was | | | | that knows how to market), but it's my experience |
| jammed and what was really surprising was that the | | | | they don't generate a sale, but do generate "leads." |
| food was decent (no, I don't have a food fetish). | | | | After the auction is over, you contact everyone that |
| Everyone was upbeat but concerned that the good | | | | bids and see if there's a way to structure a deal, and |
| times can't last much longer (I am not alone). Once | | | | in 50% of the time, a deal is done. Of course, to make |
| again, I heard complaints about the price of acquiring | | | | this work, you have to have a reserve, and with a |
| centers and how they're getting a 10% return when | | | | reserve many potential buyers won't bid. No system is |
| they purchase industrial, which a lot are now doing | | | | perfect, but it's worth a try. Personally, I'm not an |
| since they "say" they've given up on retail (I don't | | | | auction believer. |