August 14, 2018 | By John Cumbelich
Way back in the 1980’s, I developed my first really important and impactful client relationship. My client Larry worked for a fast-growing Fortune 500 video store retailer. He was in the fourth quarter of a career in corporate real estate that had begun in the 1960’s, while I was a kid in my early/mid 20’s, just getting started.
I was stationed in a brokerage office in middle of California’s central valley, and I worked in every market along the Highway 99 corridor between Sacramento and Fresno. Virtually all of these communities, including cities like Stockton, Modesto, Manteca, Tracy, Turlock, Madera, Merced, etc. were, and still remain, growth markets that have absorbed a significant amount of California’s population growth over the past quarter century. Consequently, these markets were a natural target for a growth company seeking to penetrate the California market.
Larry and I would drive up and down the Highway 99 corridor and visit each of its many cities, evaluating sites and scrutinizing competition. Methodically we worked together to build a store network for Larry’s employer, positioning the brand to capture a wide audience of customers. My experiences with Larry taught me all the fundamentals: the importance of proximity to dominant grocery anchors; beating the competition into new markets to build up clientele and discourage competition; visibility; signage; access; convenient parking and free-standing locations. Once learned, I would employ these skills over and over again with countless other clients over the ensuing years. On a micro level I was learning how to identify sites, negotiate deals and open stores. But on a macro level I was learning how to build a successful store network that positioned the brand for sustained long term success. I learned about making both offensive and defensive real estate decisions in relation to competition, and how to build a store plan in a given trade area that maximized the number of units that could eventually be opened.
A senior real estate manager who covers dozens of markets in multiple states is someone akin to the General Manager of a pro baseball team. He selects a team of players (brokers) who can maximize the organization’s chances for success. Players are scouted, recruited, interviewed, signed and cut. Over time, the GM forms a team that understands the unique organizational priorities, and can help him to execute them consistently over a long period of time. In building his Oakland A’s teams, their GM Billy Beane finds players who can draw walks more consistently than their peers and hit with power. Unlike other GM’s he doesn’t particularly care about base stealing or sacrifices, choosing not to give up his finite supply of offensive outs in a game. While on a superficial level his needs are very similar to all GM’s (finding high quality baseball players), at the much lower level his priorities are shaded and nuanced in various unique ways. Likewise, Larry taught the virtues of hard corner locations and trade area demographics that tilted towards families (more likely to stay home and rent a movie). He rarely fixated on rents (unlike many value-oriented brands), but rather focused on locations with the best long-term fundamentals for capturing his target customer. He would then negotiate the best deal possible with landlords, leveraging cheaper competing sites, the lack of peer retailers with good credit in his size range, and the opportunity to bring the landlord multiple deals in other locations for the favor of a good deal. Through Larry, I learned these organizational priorities, and soon became the ambassador of the brand to landlords and everyone else in the real estate community, over the large section of California real estate that I covered.
Larry had his quirks, and I had to learn them all. He preferred to travel by train, thus causing me to familiarize myself with train stations in places like Sacramento, Stockton and Fresno. He was an amateur bird watcher and could identify a host of California’s bird life. He was a rabid Cal Bears fan, and held season tickets for a number of their major sports programs. My own Cal undergraduate pedigree made this an easy place to bond, both in celebration and commiseration.
I later learned that corporate real estate guys generally fall into two camps: Day Trippers and Over Nighters. Day Trippers frequently have a young family at home and press to get a long day of touring real estate jammed between a very early and a very late flight. The brutal pace of their rapid-fire visits frequently left sites hastily glazed over, or missed altogether, and important questions left unasked. As an empty nester, Larry was not beholden to such demands and fell in comfortably among the Over Nighters. I emphasize the word comfort.
The typical real estate tour went something like this: Larry would alight his train at the Stockton Station mid-morning of a mid-week day. We would tour sites in the targeted central valley cities until about 1 pm, at which time we would seek out and uncover a local restaurant and enjoy a pleasant lunch, discussing the sites of interest that we had seen, how we would frame the offers, which sites remained on the afternoon itinerary, and finally, what was for dinner. We never ate in the car. Following the afternoon half of the tour, we would repair to a better local establishment for dinner and a beverage or two. The following morning, I would meet Larry for an 8 am breakfast and recap, followed by a half day in my office going over proposals, site approval packages and strategy. I dropped Larry at the train station by mid-day, and he dined en route back to the Bay Area, making calls and catching up on paper work.
Larry had both the pace and the wisdom of an experienced veteran, allowing himself to thoughtfully evaluate his real estate choices, spending both am and pm time in the market to take its pulse, all the while teaching and evaluating his young charge (me). In retrospect, I thank God that I was young and single, not worried about rushing home to my family. Instead, I was pleased to have the chance to spend 12-15 hours per day with my client, and presumably he was pleased to have someone that could give him both quality and quantity of effort.
My work ethic was met with loyalty and a frequently expanded territory to cover. Also, my appetite to consummate real estate transactions was matched by Larry’s desire to exceed his store-opening goals. Over the next decade we would complete over 100 transactions together, opening stores over a territory that covered nearly half of California. By my estimate, those 100+ store openings probably represent 500 to 700 sites that were visited, evaluated and/or pursued. It was a lot of work. But with it went a great deal of success, and many prized relationships across our industry built on mutual success.
Thirty years later, I am now the one who is beginning the fourth quarter. That sounds strange to me, because I still really do have the mindset of the young broker who has to hustle for every break. I realize that a few very important clients who became great friends, like Larry, loom large in my mind and have helped make my career and our firm into what it is. No doubt I’ve incorporated their lessons and adopted their philosophies about succeeding in commercial real estate. And my guess is that some of the young people who work with me will borrow a few of these lessons that I have paid forward, while chuckling at my quirks.
Thank you, Larry. I don’t know if I ever properly said thank you. It just took a while for me put the time we shared into its proper context. But with age comes wisdom, and gratitude for what we have been given. That’s why in my book, you’re the real Larry Legend.
About John Cumbelich & Associates
John Cumbelich & Associates is a San Francisco Bay Area based firm that provides commercial real estate services to Fortune 500 retailers and select owners and developers of retail commercial properties. The firm's expertise is in developing store networks for retailers seeking to penetrate the Northern California marketplace and the representation of premier Power Center and Lifestyle developments.