Episode 300: 01-22-15
Jim interviews thought leaders LIVE from the 2015 CCIM Commercial Real Estate Outlook Conference in Miami.
He discusses the retail, office, apartment, condo and industrial markets with some of the Florida real estate market’s top thought leaders including:
– Residential Market: Lew Goodkin, Goodkin Consulting
– Financing Market Conditions: Omar Ojeda, Senior Vice President, Total Bank
– Investment Opportunities: Arnaud Karsenti, Managing Principal, 13th Floor Investments
– Retail Market: John Crossman CCIM, President, Crossman & Company
– Appraisals and Valuation: Britt J. Rosen, Incoming President, CCIM Miami
– Office Market: Danet Linares, Vice Chairman, Blanca Commercial Real Estate
– Industrial and Office Markets: Tony Puente, Senior Vice President, Fairchild Partners
Episode 300: 01-22-15 (To download, right-click and select “Save Link As”.)
Transcription:
Jim Fried: Alright South Florida welcome to Fried on Business. We were broadcasting live from the 2015 CCIM Commercial Real Estate Outlook Conference and to get us started we’ve got Frank Melo. Frank is the President of the Miami CCIM. Frank, welcome to the show.
Frank Melo: Hey, thank you Jim.
Jim Fried: Hey, thanks for inviting us out to the CCIM Commercial Real Estate Outlook Conference. We really appreciate it. We are looking forward to rolling the tape.
Frank Melo: Absolutely. It’s our ninth year and we hope that you join us for the next nine years on it.
Jim Fried: Oh I really hope so. We had some great interviews. I can’t wait to get to them. Give me your feedback and we’re going to get rolling.
Frank Melo: So, we really want to thank you. And first of all, without our sponsors we just couldn’t make it. We want to thank Akerman Senterfitt for their great sponsorship and also we want to thank BAC Colonnade for sponsoring the event. They are now the leasing agents for the BAC colonnade and the CCIM’s want to really thank them. And, thank everyone that came out to the event and that enjoyed it. The speakers were phenomenal. They were right on point. People were asking us actually to extend the amount of time that they are on the podium. We want them to speak 20-25 minutes, so that’s why we came up with the great idea to bring you on so that there’s an extra segment and additional information on these speakers. That’s what you are going to do today, right?
Jim Fried: Oh we’re going to rock, we’re going to roll. We’ve got all kinds of people from Total Bank, your elite sponsor, to one of your top speakers Arnaud Karsenti, Lew Goodkin, John Crossman. We’ve got them all Frank. It’s going to be awesome.
Frank Melo: It’s phenomenal. We really really think you had a lot of fun right there with all these gentlemen as they came out and you interviewed them one by one and I…
Jim Fried: And ladies we interviewed tonight too.
Frank Melo: Oh you interviewed Danet?
Jim Fried: Oh yeah.
Frank Melo: That’s phenomenal, fantastic. Make sure she’s on. It’s all yours Jim. Thank you so much.
Jim Fried: Alright Frank, give him the thanks. We’ll be back after this short break with the CCIM 2015 Real Estate Outlook Conference. Great interviews! Great info! We’ll be back after this.
[commercial break]
Jim Fried: Alright we’re back at the 2015 CCIM Commercial Real Estate Outlook Conference. It’s also episode 300 for Fried on Business. We’re here with my old friend, John Crossman. John welcome to the show.
J. Crossman: Thank you for having me.
Jim Fried: It’s my pleasure. Now John you’re an expert because you’re from out of town and you brought a briefcase. Now tell us a little bit about the retail market I guess your an expert on retail, tell us a little bit about what you’re seeing in the retail market.
J. Crossman: Sure. We’re going to talk about the retail market today here in Miami Dade. And, here’s something interesting you may not know, there are 75 public sector centers in Dade County.
Jim Fried: Wow!
J. Crossman: We control 26 of those.
Jim Fried: Wow!
J. Crossman: And so a lot of times people don’t know we have that kind of insight.
Jim Fried: That’s amazing. That’s a lot of gravitating.
J. Crossman: So, but the big thing I’m going to talk about is kind of a lot about retail basics, which is what retail follows. And so, the big thing you’ve got to look at, it’s like explosive job growth down here in Miami and followed that was residential growth and tourism growth and with that you’ve got good old retail.
Jim Fried: Well, you know, I’ve always said that Dade County was somewhat under retail, and it looks like that’s being addressed right now. I’ve got to say if I was going to be one thing in the real estate market as far as leasing goes, I’d want to be in the retail leasing market, especially as it pertains to ground floor retail on some of these buildings. Now you do the public anchor centers. I’ve seen public out there buying more and more, I guess with Publix buys something do they bring you in to run the deal?
J. Crossman: That’s true we do leasing for them. We do that work but we also do high street retail and we do power centers. We do malls, we do the whole thing. We are in seven states in the southeast and over 20 million square feet. The unique thing about us is we’re pure landlord representatives, anything that a landlord can do.
Jim Fried: Wow! So, what if somebody that owns a shopping center wanted to call you up and bring you on board as their representative in the market, how would they find you, get a hold of you?
J. Crossman: Well they could call me. They could go to our website at www.crossmanco.com and they could call me at 407-581-6218. But Jim, before we get done here I know you got to…
Jim Fried: Oh no we’re not done by any stretch of the imagination and I just wanted to make sure we got that in there. Tell me some of the nuggets you’re going to share with the guys and gals inside the CCIM conference.
J. Crossman: Well can I share a nugget?
Jim Fried: The nugget, yes.
J. Crossman: That I’m not going to share?
Jim Fried: Even better.
J. Crossman: Would you like that?
Jim Fried: Oh yeah.
J. Crossman: Alright, so this year, this January, March 25th anniversary of Crossman Co, okay, did you know that?
Jim Fried: I didn’t know it was the 25th year but I did deal with your brother way back when so..
J. Crossman: Got you. Now when you think of a 25th anniversary, do you know what anniversary that is?
Jim Fried: Silver?
J. Crossman: That’s correct and so one thing we did was we made, I’m going to hand this to you…
Jim Fried: Oh my God look at that, it’s like a coin.
J. Crossman: Hang on one second before I give it to you. This is a silver coin and you can see it’s got the Crossman logo on the back and it’s got the 25th anniversary on it and it’s pure silver. Okay and so what we did was we did a lot of thought and research about what has the last 25 years at Crossman and Co meant? And so we decided to make a list of people who were the most influential, helpful and supportive of our company and helping to make our company what it is and so one of those people is you Jim.
Jim Fried: Gosh I’m going to cry. This is just awesome. Gosh John this is so wonderful.
J. Crossman: Don’t tell everybody because I don’t…
Jim Fried: I’m not going to tell anybody except the media audience.
J. Crossman: So that’s for you, don’t sell it on Ebay. That’s real silver.
Jim Fried: Oh my God. I’m going to keep this. I’m speechless. I’m on the radio and I’m speechless. Thank you so much.
J. Crossman: On behalf of Crossman and Company, my brother and I, thank you we would not be where we are now without the help of numerous people, and you’re one of those guys because you have been there for us and have helped us so many times.
Jim Fried: John thank you so much. Listen God bless man, this is so beautiful. Oh gosh I’m getting mushy on the radio. Well John…
J. Crossman: Let me say one more thing about that.
Jim Fried: Go ahead.
J. Crossman: Because I want you to hear this.
Jim Fried: Yeah, I can’t talk right now anyways, so go ahead.
J. Crossman: You know what’s funny is that when I got started in the business, you know, I was 21-22 but I looked like I was 12.
Jim Fried: And still do.
J. Crossman: Thank you, and when my brother started the business we were a small company and when you are a small company people don’t know you, a lot of people ignore you, they don’t call you back whatever, and you Jim, when we were nobody and nobody knew us you always called us back. You always helped us. You’ve always been there for us at every single moment and we appreciate that and the industry appreciates that too.
Jim Fried: Wow John I really appreciate it.
J. Crossman: Absolutely.
Jim Fried: You know you do set the bar as far as reaching out, outreach and marketing and providing service. You also have helped numerous young people as a mentor and adviser. John being a part of this with you and your brother has just been terrific. I want to thank you so much for that. Golly G, this is really special because it’s my 300th show so you know…
J. Crossman: I know isn’t that cool?
Jim Fried: It’s like really something, you know, that I will treasure for the rest of my life.
J. Crossman: A joint anniversary present.
Jim Fried: Oh my God that’s beautiful.
J. Crossman: Alright. Let me tell you a couple of things real quick.
Jim Fried: Yeah, tell us a couple of tidbits that we’re going to talk about inside.
J. Crossman: Well here’s the big thing, is that at Crossman and Company we’ve been known for our research. We took a year off of doing retail report and so we came back bigger and stronger. And, I’m pleased to announce here live on your radio show that if you go to our website www.crossmanco.com and you will see a retail report on there and it covers the six states of the southeast. Anyone can download it. It’s free and we have it. We had over 30 different people contribute to it from across the country, with an interview with the COO of Brixmore in there.
Jim Fried: Wow!
J. Crossman: So it’s great data. And one of the things that we like is, we got asked one time, I think I told you this story, by a Fortune 500 company, if we consider ourselves to be leaders in the industry. And that’s a hard… How do you answer that question? Well we decided to answer that question by saying that leadership is a process of influence and we are seeking to influence the industry and the one way to do that is that we have data that we provide for free and that goes to everybody. And some small companies don’t have the manpower to do research and we do, so they can have our report for free and it’s there and it’s out there. So, we could have all kinds of stuff but I want you to know anybody listening, they could go and download that report and have it, use it anyway they want. And, we are trying to help grow the entire industry, make it better for everybody.
Jim Fried: John, you have made it better for so many people. You and your brother have been industry leaders forever. I first met you guys in the early 90s with the RTC meltdown when we were buying some strip centers up in Orlando and your brother was up there on 436. Listen John Crossman, Crossman and Company is celebrating their silver anniversary, the 25th anniversary for Crossman and Company. We are here at the 2015 CCIM Commercial Real Estate Outlook Conference. It’s the 300th show. John Crossman you touched me man, thank you so much. We’ll look forward to seeing you at the UF conference coming up in a few weeks. And, we’ll be right back after this short break with more from the CCIM 2015 Commercial Real Estate Outlook Conference and the 300th show for Fried on Business. Thanks for joining us.
J. Crossman: Thank you.
Jim Fried: Alright, we’ll be back after this.
[commercial break]
Jim Fried: Alright, we’re back at the CCIM Commercial Real Estate Outlook Conference our live broadcast and it’s show 300 for Fried on Business. So, high five for everybody who’s here and our first guest is Omar Ojeda. Omar is with Total Bank. Omar welcome to the show.
Omar Ojeda: Thank you, James, thank you for having us here.
Jim Fried: Okay, now Omar tell me a little bit about what Total Bank’s perspective is today on the commercial lending field?
Omar Ojeda: Well, you know, as a community bank we’re very active in supporting our local economy and our local businesses. And, we are really involved in the real estate arena of Miami Dade County. We are a 2.5 billion dollar institution that is owned by a very large bank from Spain, Groupo Banco Popular from Spain. One of the largest banks in Spain and has been able to give us support that we need financially to continue growing in this market.
Jim Fried: Now I know that Total Bank is a community bank and a lot of the community banks are restrained by relatively low loan limits, what’s your loan limit for individual to a product then an individual borrower?
Omar Ojeda: We have easily over 35 million dollars, but with participation of our parent company we are able to fund products larger than that.
Jim Fried: Wow! It sounds like you can cover just about anything then.
Omar Ojeda: Pretty much. We believe that we can attend to all the needs of all the businesses in this market.
Jim Fried: Now since we are at the CCIM, we won’t talk CNI today, we’ll just talk real estate. What’s your borrower? What’s a profile of a perfect borrower for you?
Omar Ojeda: Well we like to know our borrower very well, especially local people, local companies. We like the owner occupied market. We like the business that is in need to finance commercial real estate property and we also love the income producing side of the business. Anything that is from multi-family, industrial, commercial, anything that generates cash flow is what we like to see.
Jim Fried: Omar, I saw that you have got a lot of literature that’s focused on the owner occupied project, is that one of the focuses of Total Bank market segment that you’re trying to go after?
Omar Ojeda: Yes, absolutely. As the Director of Small Business for the bank one of the things that I concentrate on, you know, specialize is on the small business administration loans. I have been doing SBA lending for 10 years and one of the programs that we like to utilize the most whenever we are financing this owner occupied property is the SBA file 4 program. We are the lead bank in Miami Dade County when it comes to reestablishing those actions. And, we believe that’s the best product out there for businesses to finance their offices, their warehouse, their commercial property.
Jim Fried: Now is there a specific product type that you find to be most attractive to you? I know that multi-family is usually very attractive for lenders here in town. Are you guys focused on some multi-family?
Omar Ojeda: We are. I mean anything that is income producing is something that we like to see. Not necessarily multi-family but anything in the retail side, office, anything that has cash flow, that has a stable cash flow that’s been stable for a couple of years is something that we like to see. We believe multi-family, you know, every bank is going after the same market, the same clientele and multi-family is always something that all banks are very interested in. So, we try to get a little bit away from what everybody is trying to do, so that’s why we look at retail and offices and industrial in Miami, Dade County.
Jim Fried: Now you talked about how all the banks go after residential and you’re trying to go after some different stuff, what would differentiate Total Bank from one of the other community banks?
Omar Ojeda: Well one thing I think is we’re the local bank. We make our decisions locally. All you have to do is go up the elevator and speak to our CEO and reference the particular transaction and he can gather our Board of Directors and the decision making is pretty easy and fast. So, we are able to understand the market a lot better since we have been doing this for a long time in this community, and our customer service is one of the things we pride the most.
Jim Fried: Tell me a little bit about one of the recent transactions that you closed that would be indicative of some of the deals that you are looking to do.
Omar Ojeda: Well gosh there’s been a lot of transactions last year.
Jim Fried: You closed some deals last year?
Omar Ojeda: Last year it was actually one of the best years that the bank has had. We closed well over 300 million dollars in real estate transactions. It’s funny you mentioned in the beginning we are not going to talk about CNI, although that’s the new talk in the industry right?
Jim Fried: What does CNI mean because we’re pros, I don’t want to talk about jargon?
Omar Ojeda: That’s right it’s commercial.
Jim Fried: So, you bank small businessmen too then not just real estate?
Omar Ojeda: Absolutely. I mean that’s one of the things our parent companies do bank the small and medium enterprises which they define over there in Spain. And, we believe that is a sector that we’d like to continue going after, you know, these one million businesses are the ones that make our economy at the end of the day.
Jim Fried: Well Omar we only have a couple of minutes left for this segment, tell me a little bit about how people can get a hold of you, Internet, phone, things like that.
Omar Ojeda: Well, you know, they can reach out to me, through our website. We recently revamped our website and it’s a very excellent website, which is at www.totalbank.com or you can reach out to me directly by phone. I like to always give out my cellphone because I like to be able to…
Jim Fried: Okay, I’ll be using that at the club tonight.
Omar Ojeda: Anytime you can call, Jim, not a problem.
Jim Fried: What’s the cellphone Omar?
Omar Ojeda: That’s 305-773-0039.
Jim Fried: Hold on you went a little fast because there’s usually some Jets fans in the audience so I need you to go a little slower.
Omar Ojeda: Alright, it’s 305-773-0039.
Jim Fried: Okay that’s good, 773-0039. Okay great, so Omar we are wrapping up here today. If we can give somebody a takeaway, what’s a good takeaway about Total Bank in the lending as far as real estate and also business lending.
Omar Ojeda: We are a small bank that cares about the needs of every small and medium business out there and we encourage responsible lending and are here to stay and to serve our community.
Jim Fried: Well Omar I want to thank you so much for being the grand sponsor, the lead sponsor for the CCIM event today. It’s show number 300 for Fried on Business. We are here with Omar Ojeda from Total Bank. We’ll be right back after this short message with more CCIM.
Omar Ojeda: Thank you James for having us.
Jim Fried: Alright we’re back with Britt Rosen, Britt is with Brittex Appraisal Services, Inc. He is the CEO at CCIM. His pop was one of the first CCIM’s in Miami. Britt, welcome to the show.
Omar Ojeda: Thank you Jim. It’s nice to be here.
Jim Fried: Now Britt tell me a little bit, you’re an appraiser, what do you seeing as far as valuation and trends here in the marketplace? I’ve seen… People have been talking to me that interest rates rose, we would see some upward trends in cap rates, what do you think is going to happen?
Britt Rosen: Well, first of all this is a commercial seminar. We do a lot of residential.
Jim Fried: Oh okay.
Britt Rosen: Now looking at residential, it kind of predicts the commercial market and so when we had the recession and values dropped on the residential sector, we saw the commercial was hurt as well because those commercial services that deal with, you know, residences effected the commercial markets. So, now everything is back and great again. Both commercially and residentially things have come back, we see that and things are good right now.
Jim Fried: Well, I agree with you. I’ve always believed that residential would lead commercial that if somebody is having a problem and they are not exactly thinking about how am I going to get my office building done or redo my office lease. What do you see as far as trends of the appraisal business? I know that when I see a commercial loan and when you go in to get an appraisal could be that your appraiser could be somebody that you could jaw bone, talk and basically get it made and constructed. Today the process is a lot more, can you tell us a little bit about that?
Britt Rosen: Sure, there’s been a trend to what we call appraiser independence. So now what’s happened in the past 10 years is that when a lender hires an appraiser to do an assignment that the borrower is not involved in that process. So, the bank will have an employee or someone designated to deal with the appraisers so that it is more of an unbiased relationship, and that the borrower really has no communication at all other than maybe meeting the appraiser at the property. So that the communication is through the bank and that the bank selects, sometimes on a rotating basis, the appraiser, and I think it’s really a good thing for the industry.
Jim Fried: Now what are you seeing as far as trends in appraisal? We talked a little bit about cap rates. We talked about the impact of interest rates on cap rates, I’ve always found that appraisal uses three methods, the comp, the income, and the cost to replace. We do you think is the most effective way right now of valuing property because costs have been going up dramatically, has the income approach kept up with that?
Britt Rosen: That’s a great question. You know when the appraiser takes on an assignment the most important thing for the appraiser is to be credible. So, the appraiser has to look at those three approaches to value and determine what is the best data? If it’s an income approach, lets say the property is rented and there are no good comparable sales for it, it would be an income approach possibly. So, lets just say it’s an owner user and it’s not good income data and that there are good comparable sales for the property, the appraiser would pick the comparable sales approach so it just depends. Let me give you a third example. Lets say it’s a church or a special use facility, maybe a cost approach would be appropriate, taking in and building the building and profit, and then maybe two or three approaches may apply. One or two approaches may correlate. So, there is no real set answer for that. The appraiser has to look at each property and determine what is the best approach to the methodology and arriving at a credible market value.
Jim Fried: I also think the definition of what value you’re seeking is important, is that something that you’re finding as well? Is that there are different types of values you’re asked to evaluate?
Britt Rosen: Yes, it’s important to understand your assignment from the very beginning and know what it’s for. It might be that you are hired as an expert in a litigated matter. Someone might be after an insurance value. Most typically we are after market value, which is defined by the appraisal institute and certainly there is a definition for market value.
Jim Fried: Okay, well Britt I want to thank you so much for coming on the show. If somebody needs an appraisal how do they find you guys?
Britt Rosen: They can find me Brittex Appraisal Services and it’s www.brittexusa.com on the Internet.
Jim Fried: Well thank you so much. I really appreciate it and I really appreciate your answers, there were some sort of technical questions and I appreciate you delving in there.
Britt Rosen: Thank you for having me.
Jim Fried: It’s my pleasure. We’re broadcasting live from the 2015 CCIM Commercial Outlook Conference in Coral Gables. It’s also the 300th episode of Fried on Business. Thanks Britt for being on this show.
Britt Rosen: Thank you Jim.
Jim Fried: Alright, we’ll be back after this short break.
[commercial break]
Jim Fried: We’re back with the 2015 CCIM Commercial Real Estate Outlook Conference. We’ve been doing interviews with the key speakers and key sponsors. It’s also the 300th episode of Fried on Business. What a super way to celebrate and now I’ve got one of my old friends, gosh everybody’s my old friend, Arnaud Karsenti. Welcome to the show.
A. Karsenti: Thank you for having me, Jim. It’s a pleasure.
Jim Fried: Man I’ve been waiting a long time to interview you Arnaud. Now Arnaud tell me a little bit about 13th Floor and what you’ve been doing because I met you so long ago when you were going to school. It’s so great to see how you’ve evolved and built one of the powerhouses in South Florida real estate.
A. Karsenti: I appreciate that. I’m not sure about powerhouse but 13th Floor is a boutique investment and development company based here in Miami. We focus on trying to find value opportunities throughout the entire market. So, we are pretty agnostic with what we do, you know, residential, commercial, mixed use. What we are looking for is pretty much good deals. We represent a number of investors ranging from friends and family, literally high school buddies of mine who’ve been with me since I started, to high net worth individuals to a couple of institutions. All told we’ve done about, lets see we’ve put out about 250 million in equity in the last seven to eight years and we’ve managed approximately one billion dollars in real estate in total costs.
Jim Fried: Well Arnaud the markets are changing now. We’ve gone through an incredible growth spurt in all product types here in Miami, Dade County and now we’re seeing an evolution into the next phase of the market. What do you see coming up and do you have any special approaches that you are looking at to take advantage of the market opportunities?
A. Karsenti: Well I think that first and foremost it’s an exciting market. There’s no question about it that I’m excited to be a part of. We are very grateful that we are in a rising and growing economy because obviously we don’t take that for granted. Having said that, that strong growth makes it difficult sometimes to think about what’s in the future. I mean we cut our teeth in the distress cycle, we’re buying assets at pennies on the dollar, so it’s a little difficult today when you are looking at pricing and velocities and where they’re going. We are believers in Florida, we believe in South Florida so long term these assets should do well. We’re just trying to be very careful in the way in which we acquire them. It terms of answering your question to where we see the growth, I think you got to stick to the basics, you know, population growth, wage growth, those are translating into interesting ideas in the residential space, both in multi-family and in housing. The condo business right now is obviously very exciting but it’s also very volatile as we know, we have to be careful about that. And so, one of the challenges is just being able to see the forest through the trees, that’s what we’re trying to do.
Jim Fried: It seems to me that the big word in your shop starts with a “D,” discipline.
A. Karsenti: Yes, discipline. It’s actually not a fun way of living your life in business unfortunately. Because you wake up in the morning wanting to get something done and often times you fight really hard and you work really hard to turn something down, doesn’t seem like a logical way of making a living. But unfortunately in this business, you know, you spend most of your time on the things that don’t work and so you have to be careful of what you jump in and out of. The hardest part is actually the discretion and the trust that the investor or investors present in us to actually go out and buy the right things and so at the end of the day we are more comfortable not doing a good deal than getting involved in the wrong one.
Jim Fried: Well what do you think that’s a good deal? Is it the real estate? Is it the market? Is it the way you capitalized it? What makes a good deal?
A. Karsenti: I think to begin with it’s the fundamentals. I mean it’s got to defend itself, you know, at the end of the day what makes a good deal are all the things that everybody talks about, about the people, the values, used the location. But at the end of the day, it’s answering one very simple question, “What If.” What if everything you just said or everything that you believe in nor everything you assumed doesn’t happen the way you want it to or what if it takes longer? Or what if the markets turn a little differently? And so, the what if is how we underwrite and that’s why we are hounds when it comes to value.
Jim Fried: What are you seeing as good opportunities in today’s market as you continue to evolve as a company?
A. Karsenti: Well as an example in downtimes you want to be buying and in good times one strategy is to lend. By lending what you do is you’re still in the game, you’re a player in the game, obviously you have to lend at a certain yield that will meet your investors and I’m not going to be able to compete with local banks and things of that nature, but by lending capital you can be in the game but you also reserve the opportunity to also be helpful because we are operators. A lot of times what we are doing today is we’re creating debt structures that also have an equity and/or maybe an option to become equity. And, it might not necessarily be the way of getting the most of the upside but it’s a nice defensible strategy to play in this game without necessarily taking all the risk.
Jim Fried: So, you’re making risk adjusted returns and you’re solving problems and people would not want to come to you because you don’t only provide capital but you also provide not only financial capital and what sounds like intellectual capital as well.
A. Karsenti: In fact we look to make the highest return on our intellectual capital more than our actual dollar capital in the sense that our biggest value in our shop is our team. I mean we’ve got the biggest guys, you know, these guys are very impressive. We’ve in house architects to developers, operators, managers.
Jim Fried: Don’t forget Mike.
A. Karsenti: Well he runs the shop. Mike is probably the smartest guy, you know, these are guys who they live it and they breathe it, and at the end of the day when you walk into my shop I wanted to feel more than a deal shop or financial firm so you feel like your project is going to get taken care of. You know we are going to lift this and make it happen and of course we are going to do that so otherwise I don’t think people would knock on our door. I don’t think that good looks are enough.
Jim Fried: Well you’ve got that covered.
A. Karsenti: Yeah, but I think it’s more than that. I think it’s understanding nuances of the cycle. Understanding where we are, understanding how to get a commercial loan and taking it from concept to reality.
Jim Fried: Well Arnaud we’ve only got a minute or so left so why don’t we give somebody a takeaway with the folks in there for a couple of minutes. What’s your takeaway that you are going to give them?
A. Karsenti: You know my biggest takeaway right now is to be cautiously optimistic. I think you want to get out of bed. You want to get excited about it. You want to participate in this market, but don’t be afraid to pull back sometimes and be cautious about it. There is nothing wrong with that. I guess to summarize it I’ll tell you, you can live with the trains that you don’t catch, you know, but make sure you get on the right one. And, do all your homework early because it’s game time when you buy and do the deal.
Jim Fried: Arnaud Karsenti, 13th Floor Investments, one of the true visionaries here in our market today, and one of the people that’s taken good bets, risk adjusted returns. Arnaud congratulations on what you’re doing. I can’t wait to hear you speak inside.
A. Karsenti: Thanks for having me, Jim. It’s always a pleasure.
Jim Fried: It’s my pleasure. We’re here live at the 2015 CCIM Commercial Real Estate Outlook Conference. It’s also the 300th episode of Fried on Business. We are here with Danet Linares at the 2015 CCIM Commercial Real Estate Outlook Conference and it’s also the 300th episode of Fried on Business. Danet welcome to the show.
A. Karsenti: Thank you. It’s a pleasure to be here.
Jim Fried: Now Danet lets talk a little bit about what your specialty is, it’s Office Leasing, no?
D. Linares: That’s right. I’m in Commercial Office Leasing, primarily in the downtown area but we also have product in Doral as well as Coral Gables, and we are actually one of the silver sponsors of this event, BAC colonnade office hour.
Jim Fried: Well first of all, thank you so much for being a sponsor of the event. Now tell me a little bit about what’s going on in the CBD office market because we haven’t had too many new additions to supply other than…Well I guess we’ve had two big additions to supply, how they’ve been absorbed.
D. Linares: They are doing really well, 1450 Brickell was one of our key assets in the Brickell area and we are 100% leased right now.
Jim Fried: That’s a beautiful building.
D. Linares: That you very much. It was done in record time. There are two other office buildings that are actually leasing up quite well. Brickell in downtown is in a hot demand.
Jim Fried: I mean you almost cannot drive your car there anymore at night.
D. Linares: Nope you can’t but, you know what, that’s the new plan of mobility, mass transit all over Florida. What they are doing in bringing their rail and activity that it’s a wonderful place. Uber and Lyft and all sorts of alternative transportation routes are coming in to play.
Jim Fried: Listen it doesn’t even matter. My wife has already been to that Whole Foods Market, she says it’s like a spaceship that everybody has to go there, it’s the most beautiful store in town.
D. Linares: It’s unbelievable. It just literally stopped traffic last week, so it’s very exciting.
Jim Fried: Oh something stopped traffic downtown, what a concept. Now Danet if you were going to talk about the office market. Where are we in the cycle for needing the office because it sounds to me that Squires is about to want a more beautiful office space?
D. Linares: They are. Ackerman Center Foods is the lead tenant in one of their office towers and there really is enough office space to come around but as for large blocks of space that are available, it’s really dwindling. And, right now the office environment is pretty healthy. We are seeing a lot of tenants coming in from the Northeast, a lot of hedge funds coming over, as well as California. We’ve got the great advantage of the taxes that we have here as well as our beautiful weather.
Jim Fried: Now let me ask you about the hedge funds that are moving in, because you read about them in the paper but they are sort of like a unicorn. Are they really moving in and if so how big? Because when you compare office space to Atlanta, Atlanta takes a large block of space in Miami, maybe Atlanta takes 20,000 square feet so the Miami offices may take five, so how are you seeing the hedge funds coming in. Is it just the senior person building out a whole platform down here?
D. Linares: It’s true. We are actually a very small tenant market. The average tenant size is between 20,000 to 25,000 square feet and the hedge funds that we have been seeing are more on the smaller side but they are establishing an office here and they really are growing. And, you see the big guys coming here and they’d rather establish their home base in Miami, in South Florida.
Jim Fried: Well what I found is that people tend to cluster together. Smart people are coming and they are developing their hedge funds and their venture capital funds and they are finding success here and other people are following them. Are you starting to hear like a buzz in the industry about Miami?
D. Linares: We are hearing a buzz in the industry in Miami as well as there are technology companies are coming, and we have emerged America is in and what Manny Medina has done is incredible.
Jim Fried: High five to Manny.
D. Linares: Oh absolutely. He exceeded expectations last year. He thought 5,000 people would attend his conference and he had over 6,000 people, so this year is going to be unbelievable.
Jim Fried: Yeah, I’ve been following Manny. He is one of my favorites of all time. Now Danet if somebody wants to get a hold of you or one of the other terrific people over at Blanca Commercial, how do they do that?
D. Linares: Email is the best, it’s www.danet.linares@blancacre.com.
Jim Fried: One of the most professional people in the office leasing business, Danet Linares. She is here with me broadcasting live from the 2015 CCIM Commercial Real Estate Outlook Conference. It’s also the 300th episode of Fried on Business. Thank you so much for joining us today.
D. Linares: It’s a pleasure, thank you so much.
Jim Fried: My pleasure Danet. We’re here with potentially my favorite guest, probably the person I’ve known the longest but it’s Jim Fried, it’s the 300th episode of Fried on Business broadcasting live today from the 2015 CCIM Commercial Real Estate Outlook Conference. We’ve got Lew Goodkin here. Lew Goodkin set the bar in market analysis in commercial real estate. That’s where I got my start in one of the big accounting firms. Lew was the one that basically taught us the whole business. Lew welcome to the show.
Lew Goodkin: Well thank you so very much and very kind of you.
Jim Fried: Now Lew you’re going to be here talking to the CCIM’s in a couple of minutes, what are some of the points you’re going to be bringing up?
Lew Goodkin: Well I think one of the things is how unique the condo boom we have, plus where did all of the inventory go that we were saying “oh my God look at these thousands of units we have overhang.”
Jim Fried: So, when did we ever have the amount of institutional buying that brought thousands and hundreds of thousands single family foreclosures and bought entire inventories of condominiums and put them into the rental pool? Well you could have never projected that but one thing I did project is the fact that they’d have a public sector or exit and you are starting to see that right now as Blackstone came to the market with their first trench. So Lew the overhang really wasn’t there, it’s all a bunch of rental properties. What do you think about what’s being delivered to the market right now? It seems to me a lot of these floor plans in building they are not targeting people that live here. What’s going to happen?
Lew Goodkin: Well, you know, like an overwhelming percentage of those people that bought are…It’s an investment buy. They are looking for safety. They are looking for modest returns, much more modest than we’d ever think about. Some of them are reaching into their pocket, but what it’s done is it created a tremendous dynamic in that all the young people that were frozen out of ownership are now having this huge rental supply that they can respond to. And, it created an energy downtown that we never had before.
Jim Fried: Oh my gosh downtown has turned the corner and it all happened with all of the residential units. It’s a true 24-hour city now and it’s a very exciting place. What do you see as the future of downtown?
Lew Goodkin: Well I see nothing but exciting things. It’s going to get better. The biggest problem and challenge in my opinion, and it’s twofold. One is transportation.
Jim Fried: Oh yeah.
Lew Goodkin: That has to be addressed because traffic is a very critical issue. With all of these buildings and the high taxes that these folks are paying, there should be enough capital out there in the form of taxes to pay for a lot of this stuff. The second thing I see is that it’s going to continue to be very much investor driven because the way the pricing is going it’s not affordable to the domestic market. So as a consequence, since these people aren’t moving into this product and choosing to rent it out, you’re going to have that kind of growth assured with young people. The other thing is where else do you go? Broward County has no land to build out. The urban thing, younger people are very much attracted to the energy of the urban decor, which was not the case before. So, it spells nothing but very high promise for the city.
Jim Fried: Wow! It sounds like you’re really bullish on Miami, Lew. Is this the time for Miami?
Lew Goodkin: Well I think so. I mean if you look at Miami, we’ve always talked about it being the capital for Latin America and what have you but with the airlift it has, with the international demand, with the imagery…You got to Europe, you know, it used to be you talk about Miami they didn’t talk about great things and now every time you say where you are they are telling you what an exciting place. I love this city, you know, this and that. I think that Miami, it’s going to be nothing but up as far as we’re concerned. The biggest concern I have is, like I say, is affordability for the people that are working here.
Jim Fried: Yeah that’s something that they are going to have to address. Maybe it will be a lot of people will be roommates. You really can’t tell what’s going to happen but it is a great housing stock. Lew I want to thank you so much for being on the show and talking to us a little bit today. If people want to get a hold of you and get some of your reports, how do they do that?
Lew Goodkin: Well we are downtown by EMI. They have a drone that will come and pick up the report.
Jim Fried: That’s right.
Lew Goodkin: And I’ll deliver a pizza with it, but our number is 305-860-0771.
Jim Fried: Well Lew Goodkin, the true legends in economic consulting with real estate. So, great to have you on the show. It’s the 2015 CCIM Commercial Real Estate Outlook Conference. This is the 300th episode of Fried on Business. We’ll be back after this.
[Commercial break]
Jim Fried: Alright, we’ve thumbs up which means we are back at the 2015 CCIM Commercial Real Estate Outlook Conference here in Coral Gables, which is show 300 for Fried on Business. We are here with my good friend, Tony Puente, welcome to the show.
Tony Puente: Thank you so much. I’m excited to be here.
Jim Fried: Now Tony you are with Fairchild Partners. Fairchild is one of the top boutique firms here in South Florida, what do you guys specialize in?
Tony Puente: Thank you. Yes, we are a small boutique commercial real estate shop specialized basically in anything related to office product, industrial land, investments. Our group, which is a small group. We are about seven or eight in the office, most of us on the brokerage and sales side, you know, really compete in that arena. Most of our activity is in Miami, Dade County in South Florida, and we are glad to be a part of the community.
Jim Fried: Well I want to give a shout out to my good friend, Jose Juncadella, your partner over there. Now Tony what are you guys seeing in the marketplace? We are here at the Outlook Conference, what are some of the things you are going to share with the people later on today?
Tony Puente: Well again, I’m part of the CCIM organization. I’m on the local board and we are super excited to put on what I believe is our ninth event.
Jim Fried: Wow, high five to you.
Tony Puente: Yeah, the early years were a little bit of a struggle but it’s really caught on. We really feel we’re a significant conference, very well attended. The information and the speakers that we have on a year-to-year basis really do a great job. I’m honored this year actually to be one of the speakers. I was asked to speak on the office market in Miami, Dade County, so I’m excited about that. It’s a good market. It’s a landlord time right now, if you are a landlord you probably have a smile on your face. Most of the elements right now are pointing in the direction of, you know, rising rental rates, lowering concessions and, you know, vacancy really dropping. You are going to hear a little bit more of that when I put on my speech here in a little bit.
Jim Fried: Well Tony if people want to get a hold of you or somebody at Fairchild Partners, how do they reach you? We’ve got Jets fans that listen so go slow.
Tony Puente: Absolutely. Well we love our Jets fans. We love our visitors from the Northeast. Our telephone number is 305-668-0620, and you can prompt us with different numbers by listening to our names and my email is tpuente@fairchildpartners.com.
Jim Fried: Hey Tony I want to thank you so much for being on the show with us today, really appreciate it, really appreciate you having us here at the CCIM Outlook Conference for the 300th episode of Fried on Business. We’ll be back after this short break. Thank you so much Tony Puente.
Tony Puente: Thank you very much.
Jim Fried: Alright, you take care now. I want to thank the CCIM’s for letting us broadcast live from their Outlook Conference. I want to thank KIND Snacks, South Florida Business and Wealth Magazine, UHealth, the Miami Marlins, Lauren’s Kids, Magnum Energy Solutions, the Miami Dolphins, Eric Ross, the NFL alumni association, The Aztec Group, the Bergstrom Center for Real Estate Studies. Thank you to our listeners. Go to our Facebook page, like our show. Tell your friends. Look for me on Linkedin, Facebook, we’re on Twitter Fried on Business @jimfried. Website is www.friedonbusiness.com. This is Jim Fried from Fried on Business. Look for us next week on 880 AM because I just love doing this. Remember this is not a rehearsal this is your life. Do something, the others find an excuse. This is the 300th time I say to go out there and make it happen
[Commercial break]
