My Way
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My mother was right, the older we get the faster time flies. It was only a few months ago that we were in Vegas for the ‘99 show and here it is, May 2000 and we’re doing it all over again. |
This year’s show should be good, even excellent, but I’m not sure if it will set any records. Then again, who cares? There will be more "dealmakers" present than any of us can handle. I think the crowds will be uncontrollable on Tuesday, the first day of the show , busier than hell on the second day until 1 p.m. and than slower then molasses thereafter (Don’t hang around the exit doors after 1, the crowd running to the airport could kill you). With a booming economy, most brokers, developers and retailers aren’t that hungry. They’ll come in for a day, maybe a day and a half, and then leave. The amount of vacancies is minimal and the amount of new development is also low, so few have to work hard to make deals. Since almost everyone is making more money than they ever have in their life, they aren’t eager to bust their chops putting in extra hours just for a few extra bucks.
Certain retailers might be an exception to this rule, because although business is booming, they’re under pressure to open more stores. They need spaces, but because of a "lack of product", they can’t find enough acceptable locations (the key word here is acceptable-- there are sites that have been vacant for years, turned down by everyone and their mother and won’t be leased as convention retail in the near future) and therefore they might have to "hang" around Vegas longer than most to find sites.
This is the largest issue of the Dealmakers ever, which is the third or fourth year in a row we’ve set a record, but everyone is setting records since the economy remains so vibrant.
The only reason this issue isn’t even larger is many of our "regular" May advertisers did not run their usual Vegas ad. They had no vacancies to promote ( not the worst position to be in ).
There will be a lot of activity/talk regarding REITs discreetly trying to market their "troubled" properties (since everyone knows about it, I guess they are not being that discreet). One REIT I know is selling eight of their centers but gave an exclusive to a brokerage company that will not split commissions with other brokers. Talk about stupidity. In today’s marketplace, if you want to maximize your selling price why would you limit the amount of brokers bringing in offers? Now I admit there’s a shortage of centers available at prices people are willing to pay, but why would anyone (except out of stupidity) not insist their exclusive broker co-broker? Oh well, if most REITs were bright, they wouldn’t be in the situation they are.
It use to be the "best" day of the Vegas show for us was the last day of the event, Thursday, when many of the exhibitors had closed early and headed home and we were one of the few booths still manned. People we had never heard of would wander in and we’d talk. The talking usually lead to the start of a deal we never expected to make. Last year was the first Thursday that was not "profitable" and I’m not optimistic about this year, but we’ll be hanging in all day Thursday, so come on bye and let’s talk. Maybe we can make some money together.
Oh before I forget, we (RD Management & TKO) are hosting a beer blast on behalf of W.I.R.R.E ( Women in Retail Real Estate ) on Tuesday from 4 p.m. to 6 p.m., so come on by, have a beer and hot dog, learn about W.I.R.R.E and say hello
On a different note, we usually lease "C" quality centers and below. By accident , we’re now working on a strong "B" center and I was initially excited by all the interest generated on the site.
(While I have no qualms about groveling to make a deal, it’s nice to be the pretty girl at the bar for a change). Then, after the first wave of interest came I began to worry about the future of our industry. We had 15 retailers interested in the center but couldn’t make a deal with any of ‘em. While the site is good, we don’t have any money for TI, just substantially below market rent and that wasn’t good enough. All of the tenants needed a vanilla box plus anywhere from $10-25 psf in TI. The market rent is $15 but we can do deals at $9, so even if you discount $20 in allowance, we’re still $4 psf below market, and most of the retailers were willing to pay $17-18 a foot if we gave an allowance. They’re making the cost of money equivalent to charging it on your credit card and they don’t care.
We now have an industry of retailers addicted to TI money. That’s scary. Most wanted a kick-out in addition to the TI which we are willing to give, but without the TI the deal was unacceptable. In my youth, when I was a virgin and a retailer, the two biggest accomplishments I could negotiate in a lease were options and kick-outs; now, the TI is more important and I don’t think it should be, especially if every retailer we speak to is as financially strong as they claim.
On with the show: I’ve been reading other real estate publications lately and many seem to be starting new magazines, usually specializing in all aspects of commercial real estate for specific
regions of the country. While I wish them well (I really don’t but doesn’t that sound nice), I don’t know if I agree with their approach. The commercial real estate industry is maturing and the Internet has made all real estate "local". Also, I don’t know how many more publications I can read a week.
All that being said, we’re starting a new publication which we feel reflects a tremendous growth area for all commercial real estate: the Internet (or, at least, how the Internet interacts, affects, helps and hinders commercial real estate). This month, the first issue of
@dealmakers.net has been published (drop by our booth at 667 6th Avenue to pick up a copy)
It’s purpose in life is to assist real estate professionals in their search for financing and properties for sale or lease by reviewing Web sites and passing along the information we find. Also @dealmakers.net will offer a discussion of software that can make our lives more productive and therefore more profitable.
Of course we will have some "hard news" in the publication to help keep you abreast of what’s happening in commercial real estate but as I said, it’s primary purpose will be to make dealmaking on the Internet easier. Best of all, it’s free, (we’re going to be distributing it to 50,000 of our closest friends) which is something new for us. Hopefully our sales department is as good as we think/hope they are. Anyway, from now on you can fax your press releases on any aspect of commercial real estate to us at 609-587-3511.