Latest / Icons of DC Area Real Estate / Grant Ehat- From Cold Calling to Creating Vibrant Retail Environments (#105)

Transcript

Grant Ehat- From Cold Calling to Creating Vibrant Retail Environments (#105) · Icons of DC Area Real Estate

• 0:09
  Speaker A: Hi, I'm John Co and welcome to Icons of DC Area Real Estate, a one on one interview show highlighting the backgrounds and career trajectory of leading luminaries in the Washington, DC area real estate market. The purpose of the show is to highlight their backgrounds and their experiences and some interesting stories about their current business as well as their past, and to cite some things that you might take away both from educational standpoint as well as lessons learned in the industry and some amusing and sometimes interesting background stories. So I'm hoping that you will enjoy the show. Before I introduce my guest, I'd like to share that both this podcast and the community I started in 2021, called the Iconic Journey in CRE, is now part of a new nonprofit organization with that same name. The new company will offer opportunities for sponsorship to grow the community both in membership and in programs. It also allows you as listeners to show your appreciation for this podcast, which has delivered episodes twice monthly since August 2019 with a charitable contribution. Transitioning the community and podcast into the nonprofit organization is underway. The community, which is open to commercial real estate professionals between the ages of 25 and 40 years old, is currently up to 65 members and growing. If you would like to learn more about either joining the community or contributing to the podcast, please reach out directly to me at John at Coenterprises coenterprises.com separately, my private company, Co enterprises, now will focus only on advisory work for early stage real estate firms and career counseling. If you have interest in learning more about its services, please review my website@coenterprises.com. Thank you for listening. Thank you for joining me for another episode of Icons of DC Area Real Estate. I'm so pleased today to share insights from my recent conversation with Grant e Hat, the co founder of Willard Retail, a successor company to JBG Rosenfeld where he was a partner. Grant focuses on deal origination and capital relationships in his role at Willard, leveraging his expertise to grow the company together with his current partner, Michael Majestic. The takeaways I have from this conversation are Grant's cold calling success in land sales leading up to his retail leasing activity early in his career. The multifaceted approach required for retail leasing, which is we go into some detail, the formation of his company, Willard Retail, how it evolved from the retirement of his two former partners at JBG Rosenfeld, the stories behind the redevelopment of Cascades Marketplace, which is a large mixed use project in Loudoun County, Virginia, and the development ground up development of downtown Crown, another mixed use development in Gaithersburg, Maryland. He also discusses his urban retail experiences, particularly with Walmart stores, both in Washington, DC and northern Virginia. And finally, he ends up with his life priorities and his message of promoting kindness and listening to others, which is a great message. So without further ado, please enjoy this wide ranging conversation with Grant ehat. So thank you, Grant, for joining me today on the icons of Dichiria Real Estate podcast. I've overviewed your background in the introduction.
• 4:19
  Speaker B: I met you when you worked for.
• 4:21
  Speaker A: JBG Rosenfeld, a partnership between Rob Rosenfeld, whose father started his development company, and JBG companies who sought a retail partner at that time. As JBG evolved, and Rob Rosenfeld and Jim Garibaldi, your partners at the firm.
• 4:37
  Speaker B: Retired, you decided to start your own company, Willard Retail. Talk at a high level about your.
• 4:43
  Speaker A: Role at Willard and how you position the company in the market today. We'll get to the details later.
• 4:49
  Speaker C: Well, thank you, John. Thanks for asking me to do this. I appreciate it. So the reason we decided to start Willard was when we founded, it was myself and Jim Garabaldi and Michael Majestic. And Michael Majestic is still my partner today. And Jim, as you know, has retired as of probably at least three years ago. When we decided to do it, it was really largely because I wasn't ready to stop working. I really wanted to try to continue to try to do some of the deals that we. The types of deals that we had done previously, either existing repositionings or ground up, although there hasn't been a lot of ground up that's occurred in the past ten to 15 years. And when I felt that Jim and I were always good partners together. Jim is very smart, very savvy, and as capable as any person I've ever met. And Michael is, we call him magic because of his name, majestic. And so magic. And you'll hear me refer to him throughout the conversation as magic more than Michael, because I always screw up and say magic. Okay. In any case, and he has a skill set that I also felt was complementary with my skill set and with Jim's. When Jim left, it was not extremely sudden. There was some time to think about it, and magic and I decided that we would be able to carry on the idea and the business plan of the business without Jim. If we found another capital partner to be able to help us grow and give us capital and hopefully lp capital for new deals that we would find. We went on kind of a mini roadshow to talk to a bunch of different capital partners, and we talked to a lot of different institutional partners, some family offices, but mostly institutional partners and got down the road with kind of an array from large insurance companies to one significant family office that had some of the larger names in technology that were backing this company and that fell apart for a crazy reason or they lost interest for a crazy reason.
• 7:24
  Speaker B: So talk about the difference between your role and magic's role a little bit and then we'll jump into your background.
• 7:31
  Speaker C: So my role really has been and was sort of the originator of most of the deals, most of the opportunities that we did. That's what I did at JVGR and that's what I do some. I have not the deepest capital relationships, but a reasonable pool of capital relationships. And so between the capital relationships, knowing most of the brokers, if not all of the brokers in the retail investment community, having a very good knowledge of pretty much every retail asset in the greater Washington, DC metro area, and having a pretty good idea just in general about what works and what doesn't work. And then his skill set is he's got a better quantitative skill set than I do. He's more adept financially. He is an urban planner by training. And so he can take a shopping center, site plan, move pieces around, and I'll have a general idea like, oh, if we could get rid of this guy, we can create some residential here or something else, and he'll be the person who actually does the initial layout.
• 8:45
  Speaker D: Cool.
• 8:45
  Speaker C: We eventually get to a civil to do the real layout.
• 8:48
  Speaker D: Sure.
• 8:48
  Speaker C: But he can see whether the idea actually makes sense.
• 8:52
  Speaker B: So you guys frame deals up right in front.
• 8:54
  Speaker C: And he's got good instincts, he's smart, he's capable, he's got a good head for the types of tendencies that work and don't work.
• 9:04
  Speaker B: So let's go back to your origins here. Talk a little bit about your youth and parental experiences, your parents, et cetera.
• 9:14
  Speaker C: So my parents, my mother and my father moved to the greater Washington area. They moved to northern Virginia when I was three. Okay, so I have been here. I was born in Massachusetts, but we moved here when I was three and started in Springfield and then quickly moved to Arlington where my parents bought their first house. We lived there until I was in fifth grade or the end of fourth grade or, no, the fifth, into fifth grade, and we moved to McLean. My parents built a house in McLean and then not that long after that, subsequently my parents got divorced and my father moved out. And so it was my mom and my two sisters and I that lived in that house for a period of time. And then my mom got remarried to my stepfather, who she is still married to, still lives in that same house in McLean. And I go to visit them when I'm in town at least once a week and talk to them multiple times a week. My mom and my stepfather, particularly, were very good influences on me in terms of creating a strong work ethic, a moral code, and them appreciating the skill set that I had, or just my nature and sort of living with it or being comfortable with it. And I'm kind of a jokey person. I'm usually a pretty happy person, and at times for me to focus was a little harder. And I think now in today's world, I would have been for sure diagnosed with ADHD, but then that wasn't a diagnosis.
• 11:03
  Speaker B: What did your stepfather and mother do?
• 11:06
  Speaker C: So my mother did a variety of things, and what I would say the job that she was most proud of and that she liked the most was she ran a program after the Vietnam war. We had a lot of immigrants coming in from southeast Asia, from Cambodia, Laos, and Vietnam, and Arlington county. There was government money that went out to create programs to help these people get educated, help them get them jobs, help them find housing. And she ran one of those programs. Yeah, it was really interesting, and she did a really good job. And those people, as you know, came. The ones who came here have completely assimilated into american society and have excelled, and maybe partially due to the people that came, but it also was due to the fact that the program was very useful for them in helping them to get established.
• 12:03
  Speaker B: Is that a federal program?
• 12:04
  Speaker C: It was a federal program that then went to local jurisdictions. The funding then went down to local jurisdictions, and my stepfather ran the court system for probation in DC. That was his job up until he retired, and then he did a consulting gig for another ten years after that.
• 12:25
  Speaker B: Cool. So you went to high school then in Fairfax?
• 12:31
  Speaker C: I went to high school. I went to Langley. Langley, okay.
• 12:35
  Speaker D: Sure.
• 12:35
  Speaker C: Loved it and still had a great time there. Had a great time growing up. Loved the neighborhood I grew up in. Still friends with some of the kids that grew up in that neighborhood. I'm still very good friends with a lot of guys I went to high school with. Two of my very best friends in the world are two guys that I met when I was in 6th grade, and I still talk to them on a weekly, if not two times a week.
• 13:02
  Speaker B: That's great.
• 13:03
  Speaker D: Yeah.
• 13:03
  Speaker B: So then you went to JMU, and.
• 13:05
  Speaker C: Then I went to JMU. And why did I go to JMU? Well, I went there because I got rejected at Uva. So I ended up at JMU, and I loved it, had a great time. And it's probably just as well that I went there because my grades were not stellar at JMU, and who knows what they would have been at Uva. But as my stepsister will tell you, and my friends who went to Uva will tell you, I spent a lot of time at UVa on weekends. Maybe 15% to 20% of my time was there for a variety of reasons. Do you have a girlfriend there? I had different girlfriends there, and I liked the partying scene there. I liked the partying scene at change Madison, but it was fun. I tell people there used to be a party at Uva called Easter's, and I don't know if you remember, my son went there. Oh, he did? Yeah, but Easter's was long gone by then.
• 14:00
  Speaker D: Probably.
• 14:00
  Speaker C: Yeah, but Easter's was a party that literally had to shut it down because you had 100,000 kids descending on Charlotesville. And it was fun, but it was not sustainable.
• 14:13
  Speaker B: So what did you study at GMU?
• 14:15
  Speaker C: Business. And in hindsight, that may or may not have been the right decision to study that. I thought that that would be a good background for a job in business, whatever that is.
• 14:29
  Speaker D: Sure. But.
• 14:32
  Speaker C: What I learned is the things that I learned about business, there were not that, other than accounting and finance, neither of which I was very good at, really weren't that applicable to what I ended up doing. And maybe marketing was applicable to what I ended up doing. But other than that, I think I would have had better grades if I had been an english major or a history major, because at that time, and even today, I read all the time, and I am a good writer, and I think I would have done better academically because I would have been able to harness that Adhd mind to something that was more interesting to me.
• 15:12
  Speaker B: What were you thinking about in college, about career at that point? Did you have any?
• 15:16
  Speaker C: I had no idea. I had no idea. I knew I wanted to be wealthy. That's all I knew. But I didn't know how I was going to make it happen.
• 15:28
  Speaker B: So when did the real estate bug hit you?
• 15:31
  Speaker C: So, one of my very first jobs was I was working for a company that sold mailing machine equipment, and the company that you've heard of, the firm, Pitney Bose?
• 15:47
  Speaker D: Sure.
• 15:48
  Speaker C: I didn't work for Pitney Bose.
• 15:49
  Speaker D: Okay.
• 15:50
  Speaker C: I worked for their competitor that had 5% market share. Piggy Bows had 90. And so this company, we sold mailing machines and openers.
• 16:03
  Speaker D: Yes.
• 16:03
  Speaker C: I was a salesman.
• 16:04
  Speaker D: Okay.
• 16:04
  Speaker C: And the job would basically be going to office buildings, trying to find the office manager, trying to find whoever cold calling. And I learned how to cold call with that job. And it was challenging. It was really challenging. I tell people the story. We used to go into it. You'd go into office buildings, this is a day you wore a coat and title, of course, and you go into an office building, and you'd go to the eigth floor, you'd elude the security guard, the doorman, and eventually somebody, one of the receptionists would say, hey, you're not supposed to be. No soliciting.
• 16:40
  Speaker D: Right.
• 16:41
  Speaker C: And you'd leave and then go to the second floor and then to the fourth floor to avoid.
• 16:46
  Speaker B: Oh, sure.
• 16:46
  Speaker D: Regard.
• 16:47
  Speaker C: Right, yeah.
• 16:49
  Speaker B: How successful were you?
• 16:51
  Speaker C: I was successful at it, but I did that for maybe a year and a half, no more than that, maybe two years at most. And I even received some acknowledgement there. I got invited to go to this training, which they only invited the people who were better salesmen to go in California, where the home office was in Hayward, California. But a friend of mine from actually 7th grade was, he worked with his father selling land, and he convinced me to quit my job, which had a modest salary, in order to come work with him and his dad and a couple of other people to sell land for no salary. And so I did that.
• 17:37
  Speaker B: I thought, well, straight commission, it's a.
• 17:40
  Speaker C: Straight commission job, but it could be more interesting, more lucrative in the long run. And so I did that. And then I had a little bit of savings. And also during the weekends, I had a painting company. And so I would paint houses on the weekends, and I had a crew working for me during the week. And so the crew would be painting. I'd stop by the job sites a couple of times a day. And I wasn't a great painter. I didn't hire great painters. And I apologize to anyone who's listening to this house. I painted during that period. But I do appreciate you assisting me to survive, to be able to move beyond that. And so I did that for a period of time.
• 18:25
  Speaker B: And that was all in northern Virginia.
• 18:26
  Speaker C: All in northern Virginia. I was focused primarily in Prince William county. And I actually had a, back then getting information. There was no Internet. The way that you got the data was tax records. And so I'd either have to go down to Prince William county, to the courthouse on microfiche, read it, transpose it by hand, of course, or you could call the office, but they only gave you three addresses or three names. Per call. Right. So had to do that. And you had to disguise your voice periodically to call back again. It's just such a different. I mean, not even close to the.
• 19:10
  Speaker B: World that we live in.
• 19:12
  Speaker C: Not even close. So, anyway, I had this wall, and every person in western Prince William county who owned ten acres or more, I had it all mapped out.
• 19:21
  Speaker B: There you go.
• 19:22
  Speaker C: And so I would call them and consistently call them, and I ended up making enough transactions to make a decent living. Were you selling to whole builders, or.
• 19:33
  Speaker B: What was the deal?
• 19:34
  Speaker C: Well, no, I was selling mostly to land assemblers, people who were the middleman in between the home builder or the land developers, basically. That's being generous.
• 19:49
  Speaker B: The hazel. Bill Hazel, for instance.
• 19:54
  Speaker C: I'm sure I talked to somebody in his firm at one time or another, and at the know, I talked to a bunch of the home builders that were around then. Like Miller and Smith was around then. NVR was around then in their first iteration, before they ended or not ended, but went bk and then started over, and. But it was really some names.
• 20:16
  Speaker D: Okay.
• 20:16
  Speaker C: Like, here's a name that you might remember that we sold land to Russ Aronson. And Russ Aronson, at one know, was a very wealthy then, you know, ended up with too many personal guarantees and ended up broke and started over again as a residential agent.
• 20:31
  Speaker A: Bobby Kettler is another one.
• 20:33
  Speaker C: Bobby Kettler is another one. Yeah, there was a ton of people like that.
• 20:36
  Speaker D: Sure.
• 20:36
  Speaker C: Reed Wills, names like that. So those were the people that were who we would try to deal with. And, like, one transaction I was involved with, there was a guy that owned 150 acres in the middle of western Prince William off of Devlin Road. And this guy, he was such a character and kind of unscrupulous, but he lived on this property with all these dogs and horses and the horses that he would feed the horses with day old bread that he'd get that was thrown away. So these horses were bloated and not know, not well nourished, and he sold the horses. I don't know what he sold horses for, but the land was actually worth a fair amount, and he didn't want to pay taxes. So he and I and my partner, multiple times drove around all over Virginia looking for farms for him to trade his farm into, and we ended up finding a few, and he ended up buying two or three of them and selling his property. And I forgot who he sold it to. Whoever he sold it to ended up losing it, and it went back to the lender.
• 21:53
  Speaker B: Interesting.
• 21:54
  Speaker D: Yeah.
• 21:55
  Speaker B: So how long did you do that?
• 21:57
  Speaker C: Three years okay. And then in 1989, which was my best year of working, working with him, the world fell apart. Started to fall apart.
• 22:08
  Speaker D: That's right.
• 22:08
  Speaker C: So from 1989, and I'm pretty sure I made that year $100,000, which back then was a lot, or at least for me, it was a lot. And I got married, bought a house, and then the next year went to making 1990, not much at all, because no one was buying land. It was almost impossible. So married, a mortgage, and not a very substantial income. And so I had to figure out, what am I going to do? So I went and I found a job where I'd found that job, working for that firm, the competitor to Bose Freedom Alcatel, went back to the post and started looking for more jobs. And I found a job working for a company called Glen and Company. And Glenn and company was founded by a guy named Lyde Glenn. And Lide was the former president of Weisberg Corporation.
• 23:04
  Speaker B: Oh, okay.
• 23:05
  Speaker C: Right, sure. And so Marvin Weisberg was a very successful entrepreneurial real estate person, developer who owned an array of assets. And Marvin made enough money and didn't really want to run the business anymore, so he outsourced the management agreements to Lyde Glenn. And so Lyde Glenn founded this company. And a guy named Rick Levy was an EVP for him and ran the leasing and asset management for him. Rick hired me to do, when I started, I was doing some office leasing and some retail leasing. And while I'm doing that, I'm thinking, trying to figure out where am I going to focus? Because now I'm 31. Had a baby by then, I guess I had a baby in 1992. My first son, I was 30. So I was trying like, what am I going to do? How am I going to build wealth? Where is my career going to look like? And doing retail leasing, I started thinking, well, this is not as lucrative as office leasing, but it's more interesting to me, quite a bit more interesting and more challenging. And people are, how did you learn it?
• 24:26
  Speaker B: Did somebody teach you?
• 24:28
  Speaker D: I taught myself. Really? Yeah. Okay.
• 24:31
  Speaker C: I mean, Rick helped. Now, Rick was a very smart guy. Careful. And I remember handing him leases. And back then again, these are type leases where you're sort of filling in some of the material that square footage and stuff. And again, the ADHD is still not resolved. And so I'm making mistakes. And Rick would look at the lease and throw it back at me and go, there are five mistakes here. See if you can find. So I guess I would say he did teach me a fair amount from that. But in terms of how to cold call, how to discern what made sense, what didn't, what kinds of tenants were viable, what aren't you just sort of learn through experience? Osmosis, grocery, Anchored retail, or what? It was all grocery anchored retail except for one little strip center that was unanchored, and I think Weissberg still owns it. So here's one interesting side story on that. When I got. Oh, no, that's right. That was my next job after that. Sorry, I was moving to the next job.
• 25:47
  Speaker D: Okay.
• 25:48
  Speaker B: How long were you with Weisberg?
• 25:50
  Speaker C: I was with Weisberg for a couple of years. And then they lied, was ready to retire, and the business was going to wind. Know. The office management contracts were going one place, the retail contracts were going another place. And JBG at that time was, I think they were taking on the office leasing, the office assignments, the leasing and management assignments for Weisberg. For Weisburg. But they also were founding a retail division. And I think they put an ad in the post. Again, I'm pretty sure I got another job from the post. And this job was, they were looking for a, quote, unquote, retail leasing director. So I answered the ad for that and met with at the time who was running that. So I had to interview with Rob Rosenfeld, who was a consultant for them. And Jim Garabaldi had already been hired. Jim was a property manager who they were turning into an asset manager. So I interviewed.
• 27:00
  Speaker B: Was Jim was at artery before that, is that right?
• 27:03
  Speaker C: Jim was at artery before that. Jim's background was a him, right? He was a CPA. And then he went back and he went to GW and got his master's, but went to JBG. And then they moved him to run this group. And this group. We had one client, one primary client, which was the Heckinger family. And the Heckinger family controlled multiple shopping centers and a bunch of freestanding stores. This is prior to their bankruptcy. So I had two job offers then, and one was from JBG and one was from Saul centers. And the Saul center job was higher salary and better properties, significantly better properties. But the JBG job, for whatever reason, was more appealing to me. It was more appealing to me because I felt like the brand had a lot of upside and a lot of growth potential, and the salt centers was established, but I didn't see the same growth. And the other kicker was I could do outside deals under JBG, meaning I could make side commissions. And despite the fact that it caused some consternation with Jim, and mostly with Jim, initially he got over that pretty quickly, but on whether that would be too distracting from focus on the main.
• 28:30
  Speaker B: You were focused on leasing at that point.
• 28:32
  Speaker C: I was strictly a leasing person at that point. I would do some modest investment sales, but mostly leasing. And that launched me and having that portfolio, the Heckenger portfolio to work on. But something happened early in our. Well, one thing happened is that Rob Rosenfeld then had left the firm that he would do JMB and then came back and was helping his dad with their family assets. And then Rob was bored because he's my age, he and I are the same, and Jim are all right around the same age. And Rob wanted to do more, so he merged his family's assets in with JBG assets, and that's where we became JBG Rosenfeld. And the company then grew from being pretty small to being one of the bigger, more established firms in the DC metro region. For really that was great, because then I had a lot more interesting properties to work on, a lot more spaces, got a lot more exposure to different tenancies and different, larger, more national tenants. And then when Heffinger filed bankruptcy, that was super interesting because that put us in a place where there were these well located store locations, and at that time, there were all these grocers and retailers that were in significant expansion mode. So it gave us exposure to do all these great anchor deals. And some of them are still around. Some of the deals we did at that period of time are still there.
• 30:14
  Speaker B: Side story.
• 30:15
  Speaker D: Yeah.
• 30:16
  Speaker B: I was approached by Jim and I financed a freestanding giant store.
• 30:22
  Speaker C: We did that deal, right? In Fairfax. Yes.
• 30:26
  Speaker B: And that was with our credit tenant lease group, Lake Mason, at the time. So it was a bond placement deal.
• 30:33
  Speaker D: Right.
• 30:34
  Speaker B: And it was pretty high leverage. It was like, basically took all your costs.
• 30:38
  Speaker C: I think I remember that. Yeah, I do remember that. Can't do that today.
• 30:43
  Speaker B: Well, actually you can with the credit. If I hold credit was strong enough, you can get pretty close. Interest rates are such that unless the lease is pretty long, like 25, 30 years, it's hard.
• 30:56
  Speaker D: Right.
• 30:57
  Speaker B: Because of interest rates today.
• 30:58
  Speaker C: I do remember that. And I do remember meeting you at that time when we did that.
• 31:06
  Speaker B: And then tried to do more. Kept trying. So that was interesting. Of all the professions in commercial real estate, in my opinion, retail leasing seems to be the most hyperactive. And you talked about your ADHD.
• 31:29
  Speaker C: ADHD.
• 31:30
  Speaker B: The business requires a multidisciplinary approach and understanding center merchandising, recognizing the retailer's viability and customer base, negotiations with the awareness of your client's position of strength, et cetera. Do you agree with those assessments completely?
• 31:48
  Speaker C: No. I think that it requires a knowledge of a lot of different sectors. And you have, there's more factors that you have to take into account than you do with office leasing than with office leasing.
• 32:11
  Speaker D: Right.
• 32:11
  Speaker B: Talk about those.
• 32:12
  Speaker C: Well, one, obviously, the tenant, let's just say you're leasing a center from the ground up. In order to be able to get financing, you have to have a reasonable amount of credit. Reasonable percentage of the shopping center has to be, quote unquote, credit. And also the right kind of credit, like most of the centers that we developed usually had a grocery store as one of the main anchors in the center. And we did a number of either of ground up deals or repositioning deals where we'd bring in a grocery anchor, and then there was a period of time when we'd do a grocery anchor and a health club. We only did one deal, one ground up deal that was of a large size, a large scale that did not have a grocer. And the reason it didn't have a grocer is because adjacent to our site was a brand new Wegmans, and that was the king of Prussia town center. And obviously, you're not going to get another grocer with Wegmans.
• 33:16
  Speaker B: We had a regional mall right there, too.
• 33:17
  Speaker C: And you had a regional mall another half a mile away or quarter mile away.
• 33:22
  Speaker B: It's a big retail area, right?
• 33:23
  Speaker D: Yeah.
• 33:24
  Speaker B: That's interesting. My dad was a retailer, and I did some retail development, et cetera, early in my career. So just understanding merchandising, how to position stores in a center and ideas like that. And then, as you said, credit.
• 33:46
  Speaker A: But it's interesting.
• 33:48
  Speaker B: Some tenants that are fairly new do extremely well, and they don't have credit. So you have to understand that, don't you?
• 33:55
  Speaker C: You do have to understand that. You have to look at the sizzle, and there are certain tenants that have it and some that don't, and some tenants that you look at and you go, or you meet the retailer and they have whatever it is that drive, that unique sort of style that you think. I think this guy's going to make it. I think that he will bring something to the center, some life, some cachet that we don't have right now that will be really useful. And maybe he doesn't have credit, but he's got whatever that is. That Genesis qua, just the feel that this is somebody that's going to work for the center. And I've worked with a lot of leasing agents over the years and have seen people who sort of can pick, sort of cut through and say, okay, there's a reasonable. I understand the credit profile here. I understand that this tenant has got a unique offering that will be appealing to enough people that it'll survive and that whoever's running it, and this is mostly this mom and pops that we're talking about, that they'll have the drive and the initiative to make this thing work, because as we know, it's a really hard business. And particularly, you know, the mom and pop retail business is exceptionally hard to make it work. And then for the do, you can sort of feel. And sometimes when you'd go to Las Vegas and you'd see sort of the hot concepts and you'd see all these people sort of buzzing around the booth of the, like, Boston market when it first opened, it had that. It had that know nothing lasts forever. There's a great quote that I love that I heard from, and milk Cooper said it. And do you know the one thing that all retailers have in common?
• 35:53
  Speaker B: What is it?
• 35:53
  Speaker C: They all go, that was. And I love the quote. And I think about it a lot, and it's, know, maybe you and I won't live long enough to see giant.
• 36:07
  Speaker B: Or waffles, let's say Walgreens. Do you think Walgreens will ever go bankrupt?
• 36:11
  Speaker D: Yes.
• 36:13
  Speaker B: Okay.
• 36:13
  Speaker C: Well, I don't know anymore. I mean, I haven't looked at their financials lately. I do know this. I know that some of the leases that they signed, they sign, which may give them a survivability rate factor to figure out, is that their options are at the same rate as their initial term. So potentially they can outlive that. But what I see, though, is there's a lot of Walgreens stores that underperform, at least in this market, to.
• 36:51
  Speaker D: I.
• 36:51
  Speaker B: Mean, you look at Rite Aid. What happened to them?
• 36:54
  Speaker C: They went underwrite.
• 36:55
  Speaker D: Yeah.
• 36:55
  Speaker B: And then, of course, my early career, I worked for an affiliate of Sears, robot Home art development company, which became a regional mall. General growth bought them and general growth was bought by Brookfield. So just kind of this evolution of the business. And we look at department stores. Is there one viable classic department store left?
• 37:16
  Speaker C: Well, Macy's.
• 37:18
  Speaker B: And how long will they be here?
• 37:20
  Speaker C: I don't know.
• 37:21
  Speaker B: I don't know if they're going to last another ten years.
• 37:24
  Speaker C: Yeah, probably not, because it's just not where people want to shop anymore.
• 37:27
  Speaker B: They're closing stores now.
• 37:29
  Speaker C: Well, I guess Nordstrom.
• 37:31
  Speaker B: Nordstrom is, but they're not a classic department store. They started as a shoe store. If you understand their history, they don't have everything. They had clothing. That was their focus. They really weren't the classic department store. Sears was the first.
• 37:46
  Speaker C: Well, then would you say that the successors to the classic department stores, and if you think that the classic department stores were starting with JCPenney or, say, Target. Well, Target and Walmart.
• 37:59
  Speaker B: Target, the Successors evolved out of Dayton Hudson Corporation.
• 38:02
  Speaker D: That's right. Yes.
• 38:04
  Speaker B: That's where my father worked. So my dad was at Hudson's.
• 38:07
  Speaker D: Right.
• 38:07
  Speaker B: So I saw, my whole life I've watched the evolution of the retail industry. It's phenomenal.
• 38:13
  Speaker C: Yeah, target is. That's right. And so I would say Target is a good example, but I don't know. Mean, I guess Walmart isn't because they started their grocer and discount merchant.
• 38:23
  Speaker B: Well, Walmart started as a discount store to compete with Kmart, basically. I mean, that's what Sam Walton saw. He saw he could compete with Kmart, which was SS credits out of Detroit, which was a discount store, basically, from the.
• 38:37
  Speaker A: It was a dime store, five and ten dime.
• 38:40
  Speaker D: Right.
• 38:41
  Speaker B: Street retail at that time. Again, a Detroit retailer. It was interesting how it grew from there. My dad managed the three largest department stores in the Detroit area at different parts of the year. The first store he managed was 500,000, was 700,000, was over a million square.
• 39:06
  Speaker C: Feet in different era, too.
• 39:09
  Speaker D: Wow.
• 39:09
  Speaker B: Yeah. The downtown Detroit Hudson store was the second largest retail store in the country behind Macy's.
• 39:15
  Speaker D: Wow. Yeah.
• 39:16
  Speaker B: That's pretty significant when it was at its peak. Anyway, it's interesting to see how retail has evolved over the years in taking on more responsibilities, including asset management and people management. What lessons did you learn evolving out of the leasing side?
• 39:35
  Speaker C: Well, character matters. Loyalty matters in both ways. It cuts both ways. And trust your instincts on people. Usually. Not always, but usually. And when we had at JVGR, we had, the hiring decisions for most positions were done by the three of us, by Jim, Rob and I, all of. And almost every major decision was really made by the three of us once we became partners. And we usually almost always agreed. And the people that we wanted to keep, we kept. We would rarely lose someone to a competitor. I mean, sometimes there were extenuating service where somebody's spouse would move or got to get a job somewhere else and they'd have to go. But usually the people that we wanted to keep were loyal to us, and we were loyal to them, and we tried to compensate them at the highest level we could to make them satisfied. And to treat them as well as we could.
• 40:46
  Speaker B: What about moving from leasing, which was your focus into asset management?
• 40:51
  Speaker C: Well, how that happened, getting into that, and I wouldn't say that I moved, I guess I'm doing it now, but that's not been my primary focus or forte.
• 41:03
  Speaker D: Okay.
• 41:04
  Speaker C: So what I wanted is, while I was doing leasing, not to be denigrained to leasing because it's the lifeblood of the retail business. It's the most important piece. But I just decided that I wanted to do more than that and wanted to use that as a springboard to be able to do acquisitions and development. And it was a good springboard for.
• 41:31
  Speaker B: That because did you learn how to.
• 41:33
  Speaker A: Underwrite a deal and to do a development pro forma?
• 41:36
  Speaker B: I mean, when did you learn doing that?
• 41:38
  Speaker C: I would say that I am adequate at that, but what I am good at is knowing what works and what doesn't work and being able to hire people who can build models much better than I can build them. I can read them and I can interpret them. And I'd say I'd learned that probably when maybe we started doing all those acquisitions pretty early. Pretty early after the merger occurred. But it was a team effort. I mean, it really was. The three of us really worked together.
• 42:17
  Speaker B: Well, JBG had the disciplines too, internally, right?
• 42:20
  Speaker C: Oh, JBG had the disciplines internally. And that was super useful for us to have know one for being able to sort of one. They had the capital. The most important reason was value from them was their ability to raise capital and reputationally. That helped us, too, in terms of when we'd go somewhere, people go. Yeah, I'm familiar with JVG companies.
• 42:46
  Speaker D: Sure.
• 42:46
  Speaker C: And so it gave us what we built up, though. Some of the things that we did, though, there was some redundancies. Like we had a lot of similar people that would do similar skills to what they had. But the structure that we had, they owned a minority interest in our platform. So we had our own asset management, we had our own construction management. We had our own accounting accounting group and owned property management, owned property management and leasing. And the useful thing, it was really useful for both. It was a very positive symbiotic relationship because they didn't have to build for a long time their own retail team. We were their retail team.
• 43:33
  Speaker B: So for mixed use projects, you guys would plug into all their mixed use deals then basically ground floor retail on an office building and a residential. Yes, that makes sense.
• 43:45
  Speaker D: Yeah.
• 43:46
  Speaker C: And we did that for almost two decades and it worked really well. And then we're getting ahead of ourselves. We can get to that later.
• 43:58
  Speaker B: Well, I wonder will just evolved from that and you became a leader, and you recognize the ecosystem of JBG companies, obviously, with wide ranging and influential, as you just said, talk a bit about the culture and how it evolved as the original leaders that's handed the reins to the second generation, and subsequently now in the public company as it's become. We discussed the idea of.
• 44:20
  Speaker C: Yeah, okay, well, I would say by the time I got there, it was almost the second generation.
• 44:26
  Speaker B: Right, because Mike Glasserman.
• 44:28
  Speaker C: Right, so when I got there, the managing partners were. Well, when I started at JVG companies, when I first started, and the partners then were Ben, Mike, Don Brown was still there, and they had some younger guys, Lou Rumpford, Bob Brown, Hohler.
• 44:50
  Speaker D: Right.
• 44:51
  Speaker C: And then those guys. And then Rob came in. Pardon me?
• 44:55
  Speaker B: Rob then came in as a partner.
• 44:58
  Speaker C: Yes. And Rob was, when I met him, he was an associate there. Okay, so Rob got elevated. A group of guys about Rob's age, Brian Coulter and a group of guys their age got elevated. And some of those other guys moved on. Bob Brownhorn moved on. Lou Rumford moved on. And so I watched a series of people come in and grow and become leaders in the company. And I saw that first or one and a half generation move on. And the two people that stayed, those managing partners, were Ben and Mike. So Ben and Mike. And then Rob got elevated and Brian got elevated, and then I watched the next generation come in after that. And the culture at JBG was usually a pretty positive one because it was sort of the best and the brightest. I mean, they were able to attract super bright, super capable people from the top schools in the country. And that was interesting as well, because what I saw, you saw a lot of people that were really, really smart, that some of them had the ability to sort of use that intellect to be practical and create value, and some could not. And I could discern usually pretty quickly, like who I thought, okay, well, this person's going to make it, or this person, they're not practical, or their interpersonal skills aren't going to lead them to a place that this is going to be a long term situation for them. And I was good at sort of discerning who was going to be there and who wasn't.
• 46:42
  Speaker B: Very collegial environment.
• 46:43
  Speaker C: Very collegial environment. And a lot, great interaction, great synergy. Know, at least between our two firms, there was a lot of great synergy and a lot of know. One thing I'll say for both Rob Rosenfeld and Jim Garabaldi. And, you know, both of them, they both engender both, you know, smart, straight up, honest, capable people. And so they engendered a lot of trust from the people at JBG.
• 47:13
  Speaker B: So talk about the evolution of the Willard retail group from JBG, Rosendale. Talk about that.
• 47:20
  Speaker C: Well, okay, so how that happened was JBG was trying to figure out what they were going to do to move away from the funds they had raised. Fund nine didn't look like they wanted to raise fund ten looked like some of the older partners were ready to definitively move on. Some of the younger people wanted to figure out a way to monetize the existing platform. And again, some people wanted to move.
• 47:49
  Speaker D: On.
• 47:51
  Speaker C: And we were content to keep things the way they were, but that was not what was going to happen. Rob Rosenfeld was also ready to move on. So JBG made us an offer to buy out the piece of our platform that they didn't own. They owned 33% and we own the rest. Jim, Rob and I own the rest. So they bought us out for our piece. Part of that was to create a consulting arrangement. Rob moved on, and for Jim and I to stay in majestic to stay on as owners of this new venture that we were creating and called Willard. Willard retail. And the reason we called it that was because that was the name of our street that we were on. And candidly, initially, I didn't really like the name, and now it's grown on me, and I like our logo, and so I'm content with it. And the brand is growing, so it's not going to change. But I didn't love it initially, and honestly, I couldn't come up with anything better. And so that's why we left it at that. And initially, for a few years, it was rather static. We were kind of moving from, stayed in the same building as JBG, but we were there to consult with them, but there really wasn't that much to do. And I was seeing this at the end of the time at JBGR as well, where after we did the king of pressure deal in downtown Crown, I was having a hard time finding the next new ground up opportunity. And it wasn't just me, it was the whole industry. There weren't as many opportunities. The retailers were really scaling back at that point, so there just wasn't as much to do. But again, I still wasn't ready to really stop. So we kind of waited it out and then a few, I guess it was two years ago we had an arrangement with JBG where we had a non compete and Jim had decided to retire three years ago, I guess at this point. So it's just magic and I. And we had a young guy working with us, a guy named Thomas Underhill and another guy named Tom Sebastian, who had all been with us at JBGR. And so the four of us, and we triggered the buy sell, which meant that we could then go after JBG's management, the third party management leasing assignments. And we waited out the six months and went after them and brought over all of those third party accounts and we had to hire a property manager, asset manager and so on. And we hired, almost all the people that we hired were former JBGR employees, which had become JBG employees. And we brought them back. So we're now at 15 headcount and growing the platform. It's probably 3 million sqft under management leasing and at least 5 million.
• 51:04
  Speaker D: Sorry.
• 51:05
  Speaker C: Of management and about at least 5 million of leasing.
• 51:07
  Speaker B: So do you own assets as a company?
• 51:10
  Speaker C: We do own assets as a company, yeah. And each deal is a standalone deal and capitalized on a standalone basis. They run the gamut from Core Grocery anchored center in Lorton, Virginia that we bought from Eden's. It's a giant anchored center. And our capital partner in that is declarations in the general partnership with us. And then Northwestern Mutual is the LP and also the debt.
• 51:41
  Speaker B: Was that a GFS center originally?
• 51:44
  Speaker C: No, it was an Eden center originally.
• 51:46
  Speaker B: Originally.
• 51:47
  Speaker C: Eden's developed it. Edens developed it.
• 51:48
  Speaker D: Okay. All right. Yeah.
• 51:50
  Speaker B: Because I know they bought a lot of the GFS.
• 51:52
  Speaker C: They did. And I'll get to that. Or I can get to that now if you want, we can talk about that. So that's actually one of the more interesting deals that we have right now. So there's a deal that fest developed a property back when they had their development team, Cascades Marketplace in sterling. And at the time, if you remember when that came up, that was really cutting edge. They got best in class retailers to go into the property. And it had a main street feel which was for suburban was unique. It's relatively unique at the time.
• 52:32
  Speaker B: Since you're talking about the history of that, I'll give the listeners a little background.
• 52:36
  Speaker D: Sure.
• 52:37
  Speaker B: So that land was owned by joint venture between Kepler and the BF Salt company at the time, or Chevy Chase bank, which at that point was a joint venture equity source. This goes back into the 1980s. That land, when it was subdivided, Cascades was a major residential development. And then the retail centers sites, giant Food had the first right of refusal because of the relationship between giant and the saw company at the, you know, GFS Realty ended up developing that among other properties that they had relationships with. And so leading up to fact, when Owl took over giant food, they wanted to sell all the assets. And Eden's ended up buying those assets. Right. Probably two to three years after the owl acquisition, if I'm not recalling.
• 53:30
  Speaker C: I think you're right.
• 53:31
  Speaker B: Yeah, roughly. So that's a little backstory on that property.
• 53:34
  Speaker D: Go ahead.
• 53:36
  Speaker C: So Eden's was positioning the property to be able to redevelop it and create a mixed use environment. And what we have been doing for the past three or four years is looking for opportunities like cascades to be able to do exactly that. And we had done it a couple of times, but one time we had done it very recently. I bought it a regal movie theater. My firm, and then Andy Brown, Brian Cullen, and I bought this regal movie theater, which know pretty high cap rate, doing not very strong sales.
• 54:15
  Speaker B: Where is that located?
• 54:16
  Speaker C: That's in sterling, very close to this property. And that property, that whole area was near countryside, if you remember. Countryside shopping center. Right. That was originally developed by a guy named Bob DeLuca.
• 54:30
  Speaker B: That's right.
• 54:31
  Speaker C: Who ended up in the big house. Yes. For. I don't know, I'm sure exactly what. But anyway, he developed that and a couple other properties around it, and we bought this movie theater from realty income with the intention of. We knew that the theater wasn't going to be long for this world, and it was struggling along. And then Covid happened, and they shut down and never paid us another dime in rent. And that pushed us to get the entitlements through Loudoun county and get it approved for town for two over twos. And so we ended up getting approved for 166 two over twos and sold it to Bezer homes. I can't remember if it was 2021 or 2022, but it was one of the more successful deals that we did. But that was proof that our thesis of taking this retail land, which was already graded, and so you have some of the infrastructure already in place, and some of the land development issues are mitigated by knowing that it's already a graded site.
• 55:43
  Speaker B: So when you acquired that site, the freestanding theater was sitting there vacant?
• 55:49
  Speaker C: No, it wasn't vacant. They were paying rent. Oh, they were, but struggling.
• 55:52
  Speaker B: Okay, so when they closed, did you.
• 55:55
  Speaker C: Demolish the building or Beezer? We sold it to visa. With the existing structure in bid. We had a bid. We knew what it would cost to demolish it. And so that was just taken out of what they ended up paying us. And anyway, the success of that and its proximity to Cascades marketplace was led when sort of interesting, Eden's had a buy sell arrangement with Morgan, who was their capital partner in the deal. They triggered the buy sell, and then Morgan went out, did a search and talked to us and a couple other firms and to do presentations and analysis in terms of what we would do with the property and how we would go about it and the valuation. We bought in. So anyway, we bought in and we now, as of the property at that time, though, was not zoned. We had to take it through.
• 56:55
  Speaker B: How much land are we talking about?
• 56:58
  Speaker C: 34 acres.
• 57:00
  Speaker B: And this is right adjacent to Cascades Marketplace.
• 57:03
  Speaker C: Well, the way that, if you remember Cascades marketplace, it's basically four quadrants, right? Home Depot owns their quadrant. And then there's a piece behind Home depot, which was big box tenants at one time, probably had linens and things and sports authority and tenants like that. Approximately ten acres, giants another ten or twelve. And then the other piece was marshalls and Gold's gym, which we replaced with one life fitness. So now it's one life. Marshalls is gone. We're negotiating with Lois with some new tenants to replace marshalls. That's another ten acres. So what our vision was to take the piece behind Home Depot, the ten acres there, and rezone that to give us some flexibility to either be able to do towns, two over twos, or apartments, and then the piece, which is occupied by one life, and the former marshals, we got that entitled to do up to 350 apartments. And I'll give magic credit for this, he wanted to give us flexibility in our entitlements to be able to do whatever use sort of had the highest and best value. When we finished this entitlement process, and I said, you'll never get that approved. No counties, they like more specificity than that. And I was wrong, and we ended up getting that flexibility. So we hired a brokerage firm, enterprise Realty, Steve Varga and his son Stefan, to go to market and sort of take it out and see prove out. Okay, who will pay the most for this land at this point? And so we got bids from apartment developers, we got bids from townhome developers, we got bids from land developers. And the apartment piece is still. We still have seven years, at least seven years to go because of the one life lease. So anyway, we got the bids for that. And the highest offers were by far for townhome developers. And so anyway, that's where we ended up going.
• 59:18
  Speaker B: So talk about how Loudoun county was able to, I mean, are they becoming more open to residential development now because of what's going on with the data centers and all the things going on out there?
• 59:33
  Speaker C: What is your sense of mean? And it depends on the supervisor. We developed a good relationship with the supervisor of this district, which is the algonquian district, Julie Brisman. And Julie was the supervisor of the same supervisor that we got the movie theater approved under. And actually, it was sort of interesting during that process, there was a supervisor that we started with who ended up during the midway through it, midway through our entitlement process, the election occurred, and the Suzanne Volpe was her name, and Suzanne lost, and so we had to start over. And as you know, these political processes are completely dependent on the supervisor of the specific district sponsoring it. Absolutely. And so we're like, oh, my, we. And we had Suzanne. Suzanne was with us and appreciates smart growth, and so she was an advocate.
• 1:00:34
  Speaker D: She loses.
• 1:00:35
  Speaker C: We have to start over. And we didn't know Julie at all, and we ended up developing relationship with Julie. And Julie's also a progressive thinker, and she believes in smart growth and good mixed use development. So Julie approved the movie theater deal, and then we started over again with Cascade's marketplace. So that was probably a two year process, though, to go from the inception of the idea. And we worked hand in know with the county, with staff, met with citizens, met with the planning commissioner a number of times, and to come up with a program that everybody could sign off on.
• 1:01:19
  Speaker B: Let me add something for the listeners. About four episodes ago, I interviewed Art Fusillo of Lerner Corporation. Art talks about the history of Loudoun county zoning in his episode and the evolution of it being very wild west to now. Pretty well structured, it sounds.
• 1:01:39
  Speaker D: Yep.
• 1:01:40
  Speaker B: Much more urban oriented than what it used to be. But his stories were very interesting about how they laid everything out on a whiteboard, basically, back then. So it's a whole different process, it seems like.
• 1:01:54
  Speaker C: I think it is, and I would agree it's a much more structured process than it was when art started, for sure.
• 1:02:06
  Speaker B: So looking at your past and current portfolio of properties, talk about how it evolved over time, both in the types of properties and the focus of acquisitions and development. How did you adapt to the current markets and competition?
• 1:02:22
  Speaker C: Well, it's funny. The way we adapt is we constantly assess what works, what doesn't work.
• 1:02:34
  Speaker B: What are we seeing today that's different than, say, 1015 years ago.
• 1:02:38
  Speaker C: Well, I would say one thing, that two years ago, retail was a dirty word. Nobody wanted to invest in retail. And so it was really challenging to find capital that was willing to do anything. And now in two years time, all of a sudden, it's the second best asset class now, or maybe third, is.
• 1:02:58
  Speaker B: That the infusion of capital by the federal government basically, to the market where there's a lot of cash now for consumers, and therefore they're saying, so what do we do with all this money?
• 1:03:08
  Speaker C: I think that people were terrified that there was a dynamic change during COVID and there was, and there wasn't. Not in retail. I mean, everyone thought, oh, my God, everyone's going to have everything delivered. That's it. It's over, it's finished. And that didn't turn out to be the case. No, people still need to congregate. They want to congregate for whatever reason. They still like going to the grocery store and picking out their produce themselves. And maybe it's because deliveries aren't as clean as everybody thought they would be or as error free. Maybe AI will be a game changer and change that, and maybe robots will become robots and AI will change it, but still seems a ways off. So I would say one of the things that we are pretty good at is seeing trends and seeing things evolve. And I thought years ago that at least 50% of the movie theaters in this country were going to go away. And I know I'm right about that. And Covid accelerated that process and streaming. My kids almost never go to the movie theaters. Never. And so handwriting is more than on the wall. I mean, it's everywhere. And then in terms of.
• 1:04:37
  Speaker B: But what about entertainment in general? I'm not talking about movie theaters per. You know, I read about what edens is doing at some of their centers, this kind of. This whole entertainment engagement type of thing. So what are you seeing as far as that evolution?
• 1:04:55
  Speaker C: I think that things can be over. I think trends can be copied too many times. Like, I would say that there are way too many food courts all over the country.
• 1:05:08
  Speaker B: Food halls. Food hall.
• 1:05:10
  Speaker C: Sorry, food called. I shouldn't have. You're right. Food hall, which is basically a food court, maybe a little more upscale, but I think many of them will fail. And I've seen, like, for instance, I'll give you an example. There's one that I have a house in Delray Beach, Florida, and this beautiful new food hall opened up called Delray Marketplace. It's half a block off the main drag, which is Atlantic Avenue. And it's a purpose built building with parking above, right above the food hall. And at the time, they had good, best in class concepts throughout the food hall and a bar, second level bar. And I walked through it, and the first time I walked through it, I go, this will fail. It will fail.
• 1:05:54
  Speaker B: What told you that.
• 1:05:59
  Speaker C: It wasn't vibrant enough from the beginning and maybe it opened after Covid in Florida. Covid didn't really happen very long in Florida.
• 1:06:07
  Speaker B: It was over. Pretty few people wore masks, right?
• 1:06:12
  Speaker C: That's right. And so I just looked at it and the offerings just weren't unique. Mean, they were reasonable, but they weren't quite unique enough. And I'm not sure you can make them unique enough. I just feel like there's just only a couple of select places where it's really going to work. I'd say union market is an anomaly in my opinion. There are a number of other ones I don't even want to say because I don't want to be negative, but there are a number of ones I've been around recently.
• 1:06:42
  Speaker B: I go to a place like Italy in New York. And how can you get that know.
• 1:06:46
  Speaker C: It'S so hard to recreate something like that. So what I would say is, and I've done placemaking, and placemaking is so hard, and it's an art more than a science. And even then it's hard to make it work. It's just hard to figure out exactly how it's going to work. And so maybe I've seen enough that I kind of move to a more pedestrian view of retail. And I like good, solid retailers that are. Some are credit worthy, some are not. Some have, like what we talked about earlier, that exuberance or that ability to really run a mom and pop business. But in terms of the coolest, hottest concept and giving him $300 a foot to build out his space and getting percentage rent in order to get him. I've never done a deal like that, and I probably never will. I don't believe in that kind of retail. It just doesn't make sense to me. And if I owned an office building where I had to have this cool retailer in order to lease up the office building, I might do that, but that's not what we own.
• 1:08:01
  Speaker B: Well, let's talk about ambiance at a.
• 1:08:02
  Speaker C: Retail center a little bit.
• 1:08:04
  Speaker B: So I go to a federal shopping center, and I know I'm at a federal shopping center. Why do I know that?
• 1:08:13
  Speaker C: I think you know that because of the quality of the design. I think they're really solid in terms of the quality of their design, but there's an aesthetic that they have that they know how to replicate, which not everybody knows how to do. And I would say they do it well. I'd say Eden's does it well. But it takes a lot of capital to be able to do know. And a lot of the assets that federal does that are assets that they've controlled for a long time. So their basis is low enough to be able to do it well.
• 1:08:48
  Speaker B: I look at pike and Rose, and you get it. It's a unique setting there.
• 1:08:52
  Speaker D: Agreed.
• 1:08:53
  Speaker C: And actually, interesting, there's. I'm an investor in a deal not far from there where some friends of mine bought an office building and allowed me to invest in it. And it's a surface parked office building, but walkable to pike and Rose, and they entitled it for townhouses. And it's a home run deal. But the reason is because it's in a good spot in Montgomery county, but it's walkable to pike and Rose.
• 1:09:21
  Speaker B: Interesting.
• 1:09:22
  Speaker D: Yeah.
• 1:09:22
  Speaker B: So you mentioned a project earlier. I wanted to get into one of your bigger projects downtown, Crown. Talk about that project in Montgomery county. And what were you trying to do there?
• 1:09:32
  Speaker C: Well, that was an interesting project. And so the history on that is that piece of land used to be a farm, Gaithersburg, Maryland, one of the last working farms in Montgomery county. And it was owned by the Crown family, which is why it's called. They call the Crown Farm. And the land was purchased originally by two or three home builders. Polte and I forget the maybe Kev manian and then maybe one other. And they ended up losing it in the recession of 2008. Right. So they lost it in the recession of 2008. Bank of America foreclosed. They sold it to Westbrook. Westbrook then had to take the plans that were in place at that point. And there was.
• 1:10:25
  Speaker B: Was this terrabrook or just Westbrook Partners?
• 1:10:29
  Speaker C: It was Terrabrook. It was terrabrook. It was terrible.
• 1:10:33
  Speaker B: Tom del Sandro's group.
• 1:10:35
  Speaker D: Yes.
• 1:10:35
  Speaker C: So it was an affiliate of Westbrook.
• 1:10:38
  Speaker B: It was terrabrook.
• 1:10:39
  Speaker C: So Terrabrook was overseeing it. Terrabrook then had to do a lot of the infrastructure work, and they had to pick someone to be able to create this retail town center that was pretty critical part of the overall project. And the original people that were in it had come up with a vertical plan that I never believed it felt like. I just said, this is too dense for this environment. You need to have a surface parked grocery store here or it's going to fail. And so we came up with a new plan.
• 1:11:12
  Speaker B: Talk about the location a little bit.
• 1:11:15
  Speaker C: Sure. It is at the intersection. It's 273 70 and Fields Road. It's at the intersection of Fields Road and 370.
• 1:11:25
  Speaker B: So it's near the Washingtonian.
• 1:11:27
  Speaker C: Yes, it's right. One road over from washingtonian.
• 1:11:31
  Speaker D: Correct.
• 1:11:32
  Speaker B: Which is a big retail center.
• 1:11:33
  Speaker C: Which is a big retail center. Rio, I think it was called Rio. And that was a concern because there was a lot of retail already there. So we were like, can we create this? Can we not create this? But we put it under contract. We sold Tara Brook on the vision of what we were going to do, and they believed it. And we then went out and talked to a bunch of different grocers and we ended up deciding. And at that time, Harris Teeter was, I felt, had more cachet and was more interesting than some of the Safeway or giant. And this time, I don't know that I think that anymore. But we ended up doing the deal with them and it was going to be, what they wanted was a surface parked traditional store. And we had some small stores around it. But then the rest of the project was going to be, the majority of it was going to be mixed use. It was going to be first floor retail with apartments above. And here we ran to a problem, because the problem that we ran to was JBG didn't believe in the residential at that site. They were okay with the retail, but they didn't believe that the residential was accretive at the pricing that you were going to have to pay for. I don't even remember what it was, 35 or 40 a door, something like that. And they didn't believe that that would be a viable project. So we had to create an incredibly complicated structure where we did in that mixed use building we had. Zoodo came in to do the apartments. So they were the developer on the apartments. We had one, I think Northwestern Mutual was the lender for. I can't remember if they were the lender for both the retail.
• 1:13:21
  Speaker D: It had to be.
• 1:13:21
  Speaker C: They had to be the lender for both the retail and the residential. But there were different partnerships for each deal. So it was really condominium regime. Yeah, it was a condominium regime.
• 1:13:32
  Speaker D: Interesting. Yeah.
• 1:13:35
  Speaker C: And it was a lot of units. It was like almost 550 apartment units. So it wasn't just for sale housing in there, too? We did not nearby. And now, then Terrabrook went out and started selling parcels to these different home builders. And if you go there today.
• 1:13:56
  Speaker D: It'S.
• 1:13:56
  Speaker C: A super successful project. The retail is successful, the residential successful there's an array of different types of residential product in there. There's apartments, there's two over two.
• 1:14:06
  Speaker B: Is it just gross anchor or do you have other anchors?
• 1:14:09
  Speaker C: No. So we got LA fitness in for a health club. You talk about the retailers that are unique, that sort of add the cachet to be able to draw the customers. We went to great american restaurants and great american restaurants. Almost all their stores are in Virginia, in northern Virginia, and they are run a very tight have. I'd say their food is okay, but they appeal to a lot of people, to a broad array of people. And they had never done a store in Maryland or Montgomery county before. So we had to convince them to come across the river and do this deal and their deal, and this fits sort of the model that I'm comfortable with is they'll take a lower rent, but they put in all the tis interesting.
• 1:15:04
  Speaker D: Yes.
• 1:15:05
  Speaker C: And I don't know if they still do.
• 1:15:07
  Speaker B: They have a standard package that they do for all their stores, all their restaurants?
• 1:15:10
  Speaker C: No, every store they customize. They customize every store. So they did a coastal flats in that location and it's a beautiful store, still there, still doing strong numbers. And so we built that guess at this point, that's 15 years ago and they're still there, still doing well.
• 1:15:29
  Speaker D: But.
• 1:15:32
  Speaker C: That project actually turned out to be financially one of the more successful projects that we did. We sold it sub five cap on.
• 1:15:41
  Speaker B: A projected NoI because it was institutional buyer.
• 1:15:44
  Speaker C: Institutional buyer. We sold it to the predecessor to RPAI. We sold it to RPAI and now they merged with kite. So kite now manages?
• 1:15:56
  Speaker D: Yes.
• 1:15:58
  Speaker B: And do you don't manage it anymore?
• 1:16:01
  Speaker C: Oh no. When we sold it, I think we had a one year agreement, or maybe we didn't even have a one year agreement. I think RPAI took it over right away. Yeah, that was one of the things, one of the lessons I've learned throughout my career, that you build these things, don't fall in love with any of your real estate because one, it may not stay as appealing to you after ten years, and two, if the money can be put to a better use or a better yield, then take it. And part of the problem though was that the money that we were using was high octane money and is IRR driven. And we really weren't the ultimate decision maker. We didn't have the luxury of saying, oh no, we want to keep this.
• 1:16:51
  Speaker B: Was that part of a JBG fund?
• 1:16:53
  Speaker C: That was in JBG fund? That was in fund.
• 1:16:57
  Speaker D: Five, I think.
• 1:16:58
  Speaker B: Yeah, so that was all you were JBGR at the time?
• 1:17:03
  Speaker C: That was a JBGR, yeah.
• 1:17:04
  Speaker B: Okay, so how do you see the retail business evolving and where is it prospering from your perspective right now?
• 1:17:13
  Speaker C: I mean, I would tell you that right now our centers are as least as they've ever been in my career. And part of that is due to the fact there's been a lot of attrition and the worst centers are gone and they've become something else. But also, there haven't been any new shopping centers built in ten years. Selectively. There have been properties built or some ancillary retail, but not on any significant basis the way it was during sort of the heyday of my career, for good or for bad.
• 1:17:49
  Speaker B: So are there retailers expanding right now? And if there are, who and why?
• 1:17:54
  Speaker C: Well, I read an article just recently. Walmart said they want to do 150 new stores.
• 1:18:00
  Speaker D: Really?
• 1:18:01
  Speaker C: Yes, but they want to do urban. Nobody wants to do urban.
• 1:18:06
  Speaker B: They don't want to do urban anymore.
• 1:18:07
  Speaker C: Nobody wants to do urban.
• 1:18:08
  Speaker B: That's interesting.
• 1:18:09
  Speaker C: And those urban stores that we did, and we did four of them, and that was actually one of the more enjoyable parts. Know, sort of the projects I ever got to work on was when Walmart was doing that and they had a CEO at the time that was pretty progressive and he wanted to do.
• 1:18:30
  Speaker D: Where.
• 1:18:31
  Speaker C: Were they not and where were they weren't was urban, dense environments. So there was a period of time when they were doing smaller format stores, 80,000ft or so, 80 to 100,000ft in infill locations. And they were being think of one on Georgia Avenue.
• 1:18:49
  Speaker D: Right.
• 1:18:50
  Speaker C: That was the first one. And I tried to buy that site and got outbid by Folger, Pratt and then all the rest of them, except for the one in southeast, which they never opened. We did, and we did the deal at 77 h in near Gonzaga High School. We did Fort cotton, we did Tyson's corner, and we did route one in Alexandria.
• 1:19:16
  Speaker B: How are those stores doing?
• 1:19:17
  Speaker C: Route one is doing well. That's fine. But again, that's not all that unique. It's surface park. Tyson's corner, I think is doing well and that's structure park. And then the other 277 h, unfortunately is closed. And that one obviously didn't do very well for an array, sort of an array of reasons. Among them, it's sort of almost a second story store because of the topography of the site. And then it is an urban store. So they had a lot of shrinkage at that store, I think. And the format was always tough. It just never was quite big enough for what they wanted.
• 1:19:56
  Speaker B: So what's that store vacant?
• 1:19:59
  Speaker C: Georgetown University. We sold the building to. We sold the whole thing, the Walmart and the apartments above it. And by the way, that was the first store I know it was the first Walmart in the United States that had residential above it and might be the first one in the world. I'm not positive about that. But the first part I am certain of, and that was the first one and I was super proud of that. And we won the Uli Deal of the year award for that project. And that was on a ground lease. The city had ground leased the land to a developer who wanted to build an office building there. And they were running out of time. There was just no demand. But they could by right, do residential and do retail. And Walmart was doing this program and so we ended up making a deal with the developer. And so it was a pretty complicated structure, but it ended up working well. Walmart paid a ground rent and paid to build their shell. So again, it's that same idea of mitigating the developer's risk by getting the retailer to share some of the risk of the physical plant.
• 1:21:13
  Speaker B: So if you own that property today, what would you do?
• 1:21:17
  Speaker C: Well, Georgetown University bought it, so we sold it to Clarion and I would do exactly what Georgetown is going to do. So Georgetown bought it and they're going to use the apartments for student housing and the would if I'm Georgetown, classrooms. You could do classrooms, you could do.
• 1:21:37
  Speaker B: Indoor law school right there.
• 1:21:39
  Speaker D: Right.
• 1:21:39
  Speaker C: You could do classrooms, you could do indoor health club. I mean, you could do any number of things. Or I might try to rent it. Walmart is still on the hook for another ten years at least.
• 1:21:51
  Speaker B: It's a covered land play for them to some extent.
• 1:21:53
  Speaker C: To some extent. They're still getting the rent from the Walmart.
• 1:21:56
  Speaker D: Yeah.
• 1:21:58
  Speaker C: And again though, it's disappointing to me that the Walmart didn't survive there and they probably would have been happy if it did. And then they just owned the apartments above because they bought it mostly for the residential, I would assume.
• 1:22:13
  Speaker D: Sure.
• 1:22:13
  Speaker B: That's interesting.
• 1:22:14
  Speaker C: Yeah, that's cool.
• 1:22:16
  Speaker B: So in addition to the restructuring of the retail market, we're now in restructuring of the office market contributed to greatly by the pandemic and its aftermath.
• 1:22:26
  Speaker D: Yeah.
• 1:22:26
  Speaker B: How are you adapting your mixed use properties to compete today? Only residential and retail? Only residential and retail or are you interspersing other uses?
• 1:22:39
  Speaker C: Well, we looked like, for instance, there's a property that we own in Manassas Park Ridge shopping center. And it's a partnership between us and Buchan. I think it Buchanan partners. So we bought the center, and adjacent to the center, there is a data center overlay district. So I thought one of the uses that we could potentially do there would be data center, but it is also adjacent on two sides to the Manassas battlefield. And when we bought the property, the supervisor, the chairman of the board of supervisors, told us that she did not want to see at that site. She wanted something attractive. She didn't want to see data centers because she didn't think they were attractive. And so that idea went out the window. But I am totally open to finding a site that we could buy, that we could do either, whether it be a vacant office building that we could do data center on, or even an existing shopping center, I would have done it here because that as a land, for the land value, there is nothing that's as worth as much as data center land. Not even close.
• 1:23:51
  Speaker D: Not even close.
• 1:23:52
  Speaker B: Even downtown, even midtown Manhattan. I don't think they pay land for the same number.
• 1:23:57
  Speaker C: It's crazy. It's really interesting. It sort of changed. Like, I was talking to a friend today who told me that another friend, somebody you've interviewed, Taylor Chess. And Taylor's really what he's focused on. Well, blame him. He's got really good instincts. And Taylor's out looking for land that he can do data centers on.
• 1:24:16
  Speaker B: Well, I mean, Art Fusillo talked about a sale that the Lerner corporation had in Prince William county recently, which was the largest land sale, I think, in the history of northern Virginia.
• 1:24:27
  Speaker D: Right.
• 1:24:28
  Speaker B: Which was their former regional mall site in Gainesville.
• 1:24:31
  Speaker C: Right.
• 1:24:31
  Speaker B: That they sold for a data center.
• 1:24:33
  Speaker D: That's right. Yeah.
• 1:24:34
  Speaker C: That was one of the parcels that sold. They waited for that 200 million or something for that rezoning to occur.
• 1:24:39
  Speaker D: Right.
• 1:24:39
  Speaker A: Huge number.
• 1:24:40
  Speaker D: I know.
• 1:24:41
  Speaker C: It's crazy. It's really astounding. So what we ended up doing at Park Ridge, since we couldn't get that approved, we got residential approved. So we got approximately, I guess we can do up to 300 townhomes and two over twos. And so we're going to keep portion of the property as a regal there. Now, that first phase is going to be 100 and 5160 townhomes and two over twos. Keep the middle of the center, and eventually the eastern portion of the property will be residential as well. So there's a theme, as you can see, with what the kinds of deals that I'm looking to do now. And we're also looking at opportunities outside of this market. I mean, we're looking in the Carolinas. We're looking in eastern side of Florida, Georgia, outside Atlanta.
• 1:25:29
  Speaker B: So what you're basically doing is taking your retail mind and applying it to how can we reconfigure this asset to maximize the retail that's there, maybe, and then add on other uses that might be complementary to it?
• 1:25:43
  Speaker C: Fundamentally, yes. I mean, we still look at land and real estate in general as land like, what is the highest and best use and what is feasible? I mean, again, highest and best use would have been at Park Ridge. It would have been data center, but politically, that was impossible. So you pivot and you do what makes sense.
• 1:26:07
  Speaker B: Sure. So talk about Willard retail and its services. It looks like you invest, develop, asset and property, manage and lease. How do you implement and staff each of those disciplines? Do you work only on your own portfolio, or do you represent other owners in leasing and management?
• 1:26:23
  Speaker C: Why, no, I think I listed that statistic. We have probably half of our portfolio. Leasing are properties that we own or have an ownership interest in. And at least 40%, hopefully more, will be third party listings.
• 1:26:45
  Speaker B: Just for leasing?
• 1:26:46
  Speaker C: Just for leasing.
• 1:26:47
  Speaker D: Right.
• 1:26:48
  Speaker C: And we also manage third party. A lot of our properties that we manage are third party. We don't have an ownership interest in all of them. We have an ownership interest in most of them, but not all of brought. So the guy who heads up our leasing group is a guy named. He's my partner is Chris Wilkinson. And Chris was a person that we hired at JBGR and loved Chris always from the day we hired him. And he stayed when we sold the business to JVG, Chris went to JVG and was there until we brought him back over here. And now he runs our leasing group for us. And he has done a great job in bringing in ton of new third party clients. And also he's brought in a lot of good hires. So initially just him, and now we have him and three other people who are doing leasing. We have a guy who runs our asset management group, who, again, also used to work for us at JVGR, did asset management for us at JVGR. He did not work for JVG, though he did work for another firm and moved around because his wife is a pediatric surgeon. And so she was moving to residency, and then she moved to get her permanent job. And she and he live in Atlanta. So he runs our asset management out of Atlanta. And one thing that I've learned, and I'm now pretty comfortable with it, is that many of your employees do not have to come in the office on a regular basis. And if you have the right people that are reliable and capable and in the right role, they can do those jobs from anywhere. So he, again, oversees the asset management. So he oversees all the interacts with the leasing with Chris and the leasing department, oversees the accounting, which is outsourced as well. We don't have in house accounting. We have outsourced accounting and then property managers. Most of the property managers never come in the office. They work out of their houses and they have home offices and they do their work. They go to the properties on a consistent basis, which is what they are supposed to do, and they don't need to come in the office very often. That's interesting.
• 1:29:08
  Speaker D: Yeah.
• 1:29:09
  Speaker B: You're like a virtual company to some extent.
• 1:29:12
  Speaker C: We have 15 employees and seven of us come in here on a regular basis and the rest don't.
• 1:29:20
  Speaker D: Come in.
• 1:29:21
  Speaker B: Do you have off sites where you get together as a company and do kind of planning and that kind of thing?
• 1:29:26
  Speaker C: We do. We have that. And we have company events. We have company outings. We have lunch that we have once a month. And people who don't want to come into the office or can't, like our lease administrator is a woman who lives in Connecticut. And so all the people that wanted to come in today for lunch, for pizza, came in, and she's up on the screen virtual. And whoever wants to be up on the screen, virtual is up on the screen.
• 1:29:58
  Speaker B: Well, that's great that you're flexible in that regard.
• 1:30:01
  Speaker C: I think it's the future, and I've seen other firms, and I won't name them, who have edicts. You must come in the office. And, yeah, there are things that are going to get missed by not going in the office and not interacting on a regular basis. But you're also going to lose some people.
• 1:30:21
  Speaker B: It seems that every company has a niche and that they carve out in the market. You have significant competition in each of the disciplines you talked about. Talk about Willard's niche and how you thrive where you thrive in that niche. In leasing, let's say leasing, for instance. Start with that.
• 1:30:42
  Speaker C: Well, I guess really more broadly, I would say we're adaptable. I mean, we see trends and move with trends. And I would say, like a person whose career is probably the closest to mine and who's done something similar is Taylor chess. Taylor sees trends and he follows them. And he and I have always been, we've known each other for 30 plus years, and our careers have been similar. And we see things similarly in terms of real estate investing and development. And so I would say just be flexible and adapt. And Willard is that I'm used to the capital, I mean, to a private equity model of looking for yield and opportunistic yield. And so the deals that we look at, we don't look at single digit return deals. They're just not appealing. And maybe I doubt that we will ever look at deals like that that would be appealing just because the kind of capital that's attractive to or that is attracted to us is also looking for those kinds of returns. And one thing we don't have are very many deals that are sort of legacy assets. And I have sort of mixed feelings about that. There's one center that we developed 15 years ago that we still own that's a great center, market square, Frederick, and still own it, and it's great. And I get a distribution every quarter, and I wish I had more of those. And there are a few assets that we've developed over the years that I wish we still owned, but there's a lot that I've said that I'm glad that we don't for a variety of reasons. And the three that I wish I still owned are, we bought village Senator Dulles years ago from. You remember Batman? Of course. We bought it. Well, Batman was being basically foreclosed. He's being squeezed by.
• 1:32:53
  Speaker B: Had the bell tower on him.
• 1:32:55
  Speaker D: Exactly. Still does.
• 1:32:56
  Speaker B: Yes.
• 1:32:57
  Speaker C: Third, no trust holder put the squeeze on him, and we got in through there and then took over the property, repositioned it, and then sold it to Regency, who still owns it. And that property still hungs. I'm sad we don't own that. And I'm sad we don't own downtown crown, because that is kind of irreplaceable.
• 1:33:21
  Speaker D: Right.
• 1:33:21
  Speaker C: And then king of Prussia.
• 1:33:23
  Speaker B: Yeah.
• 1:33:23
  Speaker D: Interesting.
• 1:33:25
  Speaker B: But you just.
• 1:33:26
  Speaker C: We took the capital and, again, used it for other things.
• 1:33:30
  Speaker B: There you go. Interesting. So when you hire people, what characteristics.
• 1:33:38
  Speaker D: Do you look for?
• 1:33:41
  Speaker C: Well, intelligence. Again, creativity, flexibility and affability. Not necessarily in that order. It sort of depends on, would you.
• 1:33:54
  Speaker B: Hire somebody right out of college and teach them the business, or are you looking for people with some experience?
• 1:33:59
  Speaker C: It depends on the position.
• 1:34:00
  Speaker D: Okay.
• 1:34:03
  Speaker C: If Chris needed a junior leasing person, I mean, maybe I'd rather have one year of experience doing something else, but we'd be open to that.
• 1:34:13
  Speaker B: Even a sales experience of some sort.
• 1:34:15
  Speaker C: Exactly like you had when you started.
• 1:34:17
  Speaker D: Right.
• 1:34:17
  Speaker C: Because it's not an easy sell. It is a complicated sales process. So having some, a little polish, a little background, it wouldn't hurt.
• 1:34:33
  Speaker B: Same with property management.
• 1:34:35
  Speaker C: We have not hired. No, we would have to hire a property manager who's got some experience. Maybe it's our second job, but I don't know. And we did it a couple of times at JBGR. And there's a heavy learning curve. So it's always preferable, I think, to have a little bit of experience and.
• 1:34:56
  Speaker B: You outsource other things, basically accounting and all that. You worked and dealt with perhaps thousands of people in your career, which people have stood out to you as inspirations. And why you mentioned Taylor, Chad?
• 1:35:11
  Speaker C: Well, Taylor stood know Rob Rosenfeld because he's one of the smarter people I know. And great judgment and careful, methodical and really good judgment, though, and has an interesting way of negotiating. And the way he negotiates is this. It's a response of indifference, which if somebody really wants to sell you something or buy something from you, it works. You just go, yeah. And if they really want to, really want what you have, they'll keep coming. And I love it. I've watched him for decades now do so. I really respect him. Rob Stewart, who, you know, I really respect his mind and the way he thinks about real estate and the way he thinks about investing. And he's taught me a tremendous amount. Brian Coulter, who's, you know, I've watched him over the years, and I really like the way his measured approach to things and the way he interacts with people and how he treats all his employees with consideration and fairness. And those are the names that really pop into my head. There's other people who I've interacted with who at different firms over the years who I think, I mean, there are certain people, certain entrepreneurs who I really respect what they created out of nothing. I always respect that. I always respect the person who didn't get handed anything and creates something out of nothing because it's hard to do. It's really hard to do. So I really respect that.
• 1:36:53
  Speaker B: Well, I know you have an equity partner who is sitting in this office you probably have a lot of respect for.
• 1:36:59
  Speaker C: Absolutely.
• 1:37:00
  Speaker B: Tod Rich.
• 1:37:01
  Speaker C: Yeah, sure.
• 1:37:02
  Speaker D: Yeah.
• 1:37:03
  Speaker C: And Todd, I've known him since we worked together at, in fact, when Tod went to declaration and know I was out looking for a capital, I went to him. And obviously we ended up being marrying up. So it was fortuitous that I knew him. It was fortuitous that I respected him and respected his intellect. And obviously he picked a great capital partner, astute investor to affiliate himself with. So hopefully it's been a symbiotic partnership.
• 1:37:38
  Speaker B: A new owner of the Baltimore Orioles.
• 1:37:40
  Speaker C: I know, which is astounding, isn't it? It's incredible.
• 1:37:44
  Speaker B: David Rubenstein, what are your life priorities among family, work and giving back?
• 1:37:49
  Speaker C: Grant? Well, I've only been married once, 30. This year will be November will be 35 years. Thank you. I have three sons, and they're 31, 28, and 26. And my priorities have always been, spend as much time with your family as you can, spend as much time with your friends as you can, and have a broad interest pool. And in terms of giving back, I spend a fair amount of time doing. I mean, probably I should do more, but a reasonable amount of time doing nonprofit work. So I've been on a few boards. I'm still on the board of an organization called OAR, which is an acronym for opportunities, alternatives, and resources. And we work with people in the criminal justice system, justice involved individuals, and work with them while they're incarcerated, and then when they get out, to help them, to get re acclimated and get jobs and educate them while they're incarcerated and so on, help with their families and do what we can.
• 1:39:08
  Speaker B: That's great. What are your biggest wins, losses, and most surprising events in your career?
• 1:39:18
  Speaker C: Well, I don't know if they're surprising, but the wins were some of those great. They were just so interesting to do those mixed use projects and seeing a piece of land and having a vision and then being able to take that vision and turn it into something that will be here after I'm gone.
• 1:39:36
  Speaker B: So development, really?
• 1:39:38
  Speaker C: Yeah. I liked doing development, and I would probably like to do it again. If the right opportunity shows itself, we will do it again. I mean, at Cascades Marketplace, we're redeveloping. So in essence, we're doing it. It's just not quite, it's a little different because it's not a raw piece of land that we're looking at. And some of the things I've learned along the way, the hard knocks, are like, we did that Tyson's west deal where we did the Walmart. That was the worst financial deal I ever did that I was ever invested in, because we ended up paying too much for the car dealership that was there. It was a Cadillac dealership, and then we bought the Sheridan hotel next to it and overpaid for that. And so that deal was a complete wash, even though the first phase is successful, but the overall investment was not a good one.
• 1:40:36
  Speaker B: That's too bad.
• 1:40:36
  Speaker D: Yeah.
• 1:40:37
  Speaker C: And then we built Woodland park crossing in Herndon, and it's a super attractive project. I'm very proud of its appearance in the way that it looks. But we broke too many rules, retail rules. And if you know what I mean by that is we put too much density on a small site, on an 80 acre site. We put 140,000ft of retail and 200 apartments in a suburban surface parked environment. And I learned the hard way that you can't do that or you can, but it's going to be challenging to make it successful if there are competing retail centers that are surface parked, easier access or at least perceived easier access.
• 1:41:20
  Speaker B: So is leasing difficult there?
• 1:41:22
  Speaker C: And not initially because it was super attractive. So we leased it up and then we sold it. And it was expensive to build too because we did most of the parking for the retail is underground.
• 1:41:33
  Speaker B: Interesting.
• 1:41:33
  Speaker C: So we had to do, we knew there was rock but there was more rock than we thought. So it was expensive to develop. And then since we sold it, I go back there periodically just to look at it and the retail has not done very well and I don't think it's a very successful Harris teeter and again, because it's competing with a bunch of surface park, easy, more visible sites.
• 1:42:04
  Speaker B: Live and learn.
• 1:42:04
  Speaker C: Yeah, and you can't force retail. And I learned that over the years because I've watched a lot of people have come to me with sites that either, like in Arlington, the county forced every developer to have every street, main street have retail on the first floor of every building and it didn't work. And now they've acknowledged that. So a lot of times developers would come to me and the county, a lot of planners, they bought into that vision and people would come to me and they go, do you think you can make this retail work? And I'd go, no, I don't. I'm sorry. Some people don't want to hear that. They go, what do you mean? And I go, well, it's just not the right place for retail.
• 1:42:49
  Speaker B: Well, I didn't put this on the list of questions but I'm going to throw out. You just mentioned it looking at downtown Washington right now. If you were leasing down there, how would you manage that process? What would you do to fire things up?
• 1:43:03
  Speaker C: Well, we have some listings down, know.
• 1:43:06
  Speaker B: A fair number of listings in the CBD.
• 1:43:08
  Speaker D: Yeah.
• 1:43:09
  Speaker C: And it's going to be challenging. I would make zoning, I would reduce requirements to make buildings less expensive to develop. I would allow a ton more residential as fast as you can make it happen because I don't think office is coming back anytime soon. I don't.
• 1:43:31
  Speaker B: I interviewed a fellow by the name of Matt Pestronk who's with post brothers.
• 1:43:34
  Speaker C: Oh, I know he is.
• 1:43:35
  Speaker B: And they're doing two huge use development, right?
• 1:43:38
  Speaker C: Those old office buildings.
• 1:43:39
  Speaker D: Yeah.
• 1:43:40
  Speaker B: One on Connecticut, two on Connecticut Avenue, and then one over on M Street.
• 1:43:43
  Speaker D: Right.
• 1:43:44
  Speaker B: Big projects, huge. 600 units plus.
• 1:43:47
  Speaker C: I know. I wish them well. I hope it works.
• 1:43:50
  Speaker B: It's going to be interesting to see how that plays out. So what advice would you give your 25 year old self?
• 1:43:59
  Speaker C: Um, maybe be, you know, be calmer. You know, know that. Give yourself more leeway, you know, be. But I say that, and then I don't know that I would have had the drive if I wasn't anxious. The anxiety, which is painful when you go through it and makes maybe other people's lives around you not so pleasant, but it gives you drive. But in the end, for what does it lead to? I mean, I hope I was a good father. I hope I've been a good husband. I think I've been a good friend to a lot of people. And I just say, focus on that. Think about that more maybe than you did when you were in it. And everybody who's a young parent, it's like, well, you're in it. It just feels so overwhelming. But nothing's better as you get to our age and you look back and that's what you think about.
• 1:45:06
  Speaker B: Well, I reflect back and I think I wish I had been a little.
• 1:45:11
  Speaker C: More present for my children. Totally.
• 1:45:17
  Speaker B: Just be there with them. I did take the liberty of reading to them every night.
• 1:45:22
  Speaker D: Yeah, me too.
• 1:45:23
  Speaker B: At bed. So I'd spend at least an hour.
• 1:45:26
  Speaker D: Before they'd go to sleep.
• 1:45:27
  Speaker B: So that was at least one luxury I had.
• 1:45:30
  Speaker D: Right.
• 1:45:30
  Speaker B: So if you could post a statement on a billboard on the Capitol Beltway for millions to see, what would it say for you?
• 1:45:37
  Speaker C: Be kind and listen to others.
• 1:45:42
  Speaker B: That's almost identical to the one I gave.
• 1:45:45
  Speaker C: Is that right?
• 1:45:45
  Speaker B: Yeah, almost identical.
• 1:45:47
  Speaker D: Yeah.
• 1:45:47
  Speaker B: That's great.
• 1:45:48
  Speaker C: Well, because I know what you know. You need to know what other people think, and being mean doesn't get you anywhere.
• 1:45:59
  Speaker B: Grant Heath, thank you very much for joining me on.
• 1:46:03
  Speaker C: Thank you, John, for the interview.
• 1:46:05
  Speaker B: Appreciate it.