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