GRE, Not CRE

If you would have asked me 20, or even 10 years ago which part of the Commercial Real Estate (CRE) business I was in, I probably would have answered, “the suburban shopping center business.”  While our brokerage practice has always included a High Street business, and work on select smaller properties, the bulk of our trade has always centered on the sale and leasing of neighborhood shopping centers, power centers, strip centers, malls, outlets and lifestyle centers.

The work we’ve done for decades on behalf of the owners and developers of these assets, and especially in representing the users that populate them, continuously sharpened our understanding of how great real estate is defined.  Sophisticated retail and dining users have an expansive list of site selection criteria made up of a wide array of real estate ingredients.  These include:  ingress, egress, visibility, access, signage, co-tenancy with dynamic anchor tenants, proximity to a targeted demographic audience, convenience to freeways that expand the audience size, traffic counts, nearby residential growth, footfall, convenient parking, storefront width, left-turn access and more.  Just as important to many of these users are the absence of various restrictions, such as anti-chain store ordinances, drive thru constraints, conditional use permits, and various other measures that limit retail success.

A fundamental real estate truth that we’ve learned and re-learned over the years is that in the retail/commercial arena, no two corners are equal.  In the office and industrial arenas, space is much more of a commodity than in retail.  An office or industrial user seeking 50,000 or 100,000 square feet can enjoy equal success on all four corners of the same intersection.  Yet in retail, the wrong corner can spell disaster, and a location one block away, or less, may as well be in Siberia. Whereas office and industrial landlords seek to differentiate their spaces through amenities, financial incentives and rent deals; in retail, location, location, location is the unsurpassed currency.

As markets have evolved over the past quarter century or so, a fascinating real estate dynamic has come into sharp relief.  Increasingly, non-retail uses have crowded the playing field of real estate sites that were once singularly judged as viable for retail uses, both in downtowns and at significant suburban intersections.  Urgent cares and hospitals, automobile or E.V. dealerships and showrooms, private schools and senior living communities, title companies, swim schools, residential real estate offices, breweries, chiropractors, dentists, mixed-use residential projects and a growing list of other use types have determined that they also want to position their businesses at dynamic intersections with signage, convenient access, anchor tenant generated traffic, good parking and the other fundamentals first evangelized by retail and dining brands.

In short, these businesses don’t view their real estate as a commodity, but rather as a strategic component of the success or failure of their enterprise.  Like retail and dining brands, what this expanding list of users wants is the Great Real Estate (GRE) that optimizes the business’s performance.  And fortunately for us, through decades of studying the factors that characterize the most successful real estate, GRE is the only real estate product type that we have ever worked with.  Consequently, we’ve come to realize that our next opportunity to source or lease or sell or develop GRE is no longer limited to the retail and dining users that we’ve worked with so closely for so long.  Today, we’ve inverted the equation, looked at the real estate first and instead ask ourselves “who are the right buyers (or users) for this property?”  And while a retail or dining user is frequently still the best answer, increasingly it is not.

Firms like ours have historically organized themselves in silos that were defined by the user-type.  Big brokerage firms have office and industrial and retail silos, and these practice groups rarely cross lines.  Like our peer firms, 25 years ago we followed suit and styled ourselves as a retail-only brokerage house, offering a highly specialized service that concentrated 100% of our talents on the one segment of the industry where we were experts.  This became an easy way to differentiate ourselves from the big multi-national firms, all of which are generalists, not specialists like us.  How many times would I ask prospective client who needed to address a real estate need, “when you are sick, would you rather work with a generalist or a specialist?”

I still view our expertise as being highly specialized, but defined less by the user and more by the real estate – the Great Real Estate – that we work with.

So today, when someone asks me what business I’m in, my answer is clear – “We’re in the Great Real Estate business”.