Latest / Icons of DC Area Real Estate / Henry Fonvielle- Urban Retail Marketing Guru (#110)

Transcript

Henry Fonvielle- Urban Retail Marketing Guru (#110) · Icons of DC Area Real Estate

• 0:09
  Speaker A: Hi, I'm John Koh 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 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 coenterprises.com separately, my private company co enterprises. Now we'll 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 please review my website@coenterprises.com. Dot thank you for listening. Thank you for joining me for another episode of Icons of DC Area Real Estate. Today. I'm thrilled to share the insights from my recent conversation with Henry Fonville, president of Rappaport. Henry is Gary Rappaport's right hand man at the firm, and he runs the in house and third party leasing and brokerage activities for the company. Henry brought his team from the Charles E. Smith companies to Gary's company in 2005 and transformed it from primarily a suburban retail operating company to what I would call a powerhouse retail services company, which now leads the region in retail space under management and leasing. My takeaways from the conversation with Henry are his early learnings about urban retail with the Charles E. Smith Company and how he was how it works on the ground of office buildings, primarily in downtown Washington. Also the variety of urban and infill suburban retail settings that the Smith company managed, including the Crystal underground skyline, which is in Fairfax county, and the Potomac Yard center south of Alexandria, which they developed. In addition, where he met Gary was actually his first day in the retail business when he went to the ICSC convention in Las Vegas and was impressed with Gary's leadership in the Washington real estate booth where all the DC area real estate companies were together. And so their relationship began that way. And Gary approached him and said, okay, come join me and bring your team if you can. And Bob Smith allowed him to do that. So it was pretty exciting. That was one of the more dynamic moments in the conversation. Henry also talks about place making changes with regard to how they affect urban environments. And finally, he talks about his life priorities and what he calls his spread love message to all. So without further ado, please enjoy this wide ranging conversation with Henry Fonville. So, Henry Fonville, welcome to icons of DC area real estate. Thank you for joining me today.
• 4:56
  Speaker B: Thank you, John. Excited you're here.
• 4:58
  Speaker A: So, as you know, your boss and mentor Gary Rapoport has joined me twice before on the podcast, shared his and the company's story both before the pandemic and afterward, recanting the pain and then the recovery to what now looks like resilience among quality retailed properties. Contrast your role at the company with Gary's role and how would you, how you work together to manage the firm.
• 5:24
  Speaker B: Thank you, John. Well, first off, I mean, Gary is just an incredible mentor, not only to me, but to so many people and to me all across the country. And, you know, he just has this way of pulling out the best of you. And it's just amazing to now have worked with him here for 18 years. As you know, I was senior vice president, department head at Charles E. Smith, working with some fantastic people for 17 years. So I've now been here longer than I was at Charles E. Smith. It's quite a date in history, so to speak.
• 6:05
  Speaker A: It would be interesting to understand the differences culturally between the two firms, too, as we talk through here.
• 6:11
  Speaker B: Well, thank you, John. Chelsea Smith was an incredible organization. I started as a leasing person after being in the investment business with Ferris, the company, and then Legg Mason. And I was recruited because one of the things I enjoyed when I was in the investment business, addition to the stocks and bonds, was syndication of real estate. And so I kind of already had that basis. And I was recruited to go work at Charles E. Smith by Matt McCormack, who head up the retail department at the time. And it was a really fantastic move for me. So I started out with a lot of analytical ability and I was a series seven broker before going to Charles E. Smith. At the time, Charles E. Smith was the biggest developer in Washington, DC. Oh, sure. 20,000 apartments, close to 20 million office space. It was an incredible organization that spanned residential, office and services. Charles E. Smith companies had engineering and property management, construction. So it was an incredible organization, and I learned an enormous amount there. Ultimately moved up senior vice president, department head at 38 years old, which was, to think back on it, pretty amazing. And Bob Smith. Bob Co. God, Kenvery, incredible. Also incredible mentors. And, you know, you didn't go into a meeting without knowing everything because they were very demanding, sharp and really sharp, really smart. And it was a wonderful research lab to grow in.
• 7:49
  Speaker A: Well, we'll get into it more, because my first day at the BFSol company in 1985, we had stacks of leases, Gerald E. Smith buildings, and we financed probably half of crystal city. So we know I knew the company pretty well myself. So that's how we met, actually. I think.
• 8:06
  Speaker B: Yes, it was Charles E. Smith company.
• 8:09
  Speaker A: So before we go too deeply into your responsibilities here, perhaps share your origin story. Henry, where did you grow up and what did your parents do? How were they influenced?
• 8:21
  Speaker B: So both my parents were a huge influence on me. I grew up in North Carolina, Wilmington, North Carolina. Wrightsville beach is a short 5 miles away. It was an idyllic lifestyle in that really hot. And we used to go to the beach, which was only 5 miles away the summer. I've got two older sisters and two older brothers. I'm the youngest of five kids, and my next closest sibling was seven years.
• 8:49
  Speaker A: Oh, my goodness.
• 8:50
  Speaker B: And my oldest sibling is, I think, 14 years older than me. So it was quite a difference between me and them, and they played a huge part in helping me grow up. And that was my sister, Maggie, Laura Ellic, my oldest brother, and McLean, a brother who's an artist and a very unique individual.
• 9:16
  Speaker A: What about your parents? What did they do?
• 9:18
  Speaker B: Oh, gosh, John, we could spend 2 hours on that alone, and this is almost like talking like a movie script. My father was a PT boat captain in world war two.
• 9:29
  Speaker A: That's funny because my dad drove him, too.
• 9:31
  Speaker B: Oh, no. Kids catch up about that. He got out off the war and came back and got an MBA and a law degree at UNC chapel hill, where he had gone in the undergrad. My mother went to law school and graduated from law school in 1943 during world war two.
• 9:51
  Speaker A: Interesting.
• 9:52
  Speaker B: So she was amazing woman who did not practice law for a number of years, but then later on in life, did, and was one of the first women to clerked and did all those things. So she was one of the first women to become a lawyer in North Carolina, specifically new hammer county, and she was a trailblazer her whole life.
• 10:11
  Speaker A: Did they grow up in that area?
• 10:13
  Speaker B: My mother grew up in North Wilkesboro, North Carolina, which is on the western side of the state. And my father grew up in Wilmington. And my grandfather had started a savings loan and a construction company. And my father came along and kind of did those two things along with practicing law. So he did. He was the master of a lot of trades.
• 10:34
  Speaker A: So you're the son of two lawyers. That's interesting. But obviously you're not in law, so you went a different direction. So talk about your influences to get the other direction you decided to go.
• 10:45
  Speaker B: Thank you, John. I went to Wake Forest. I was the black sheep. Most of my family had gone to Carolina, unc Chapel hill. And when visiting my sister up at High Point, North Carolina, who was involved with the furniture industry. Maggie. I met a person who had just graduated from Wake Forest and was talking about a program called Casa Artem, which is the american consulate on the Grand Canal in Venice, Italy. And during the early seventies, Wake Forest bought it from the United States government, and they took 20 students every semester. And growing up at the beach, I thought living in a city that only had vehicle transport by boats would just be a complete dream. So I chose, against my mother's wishes, to go to Wake forest. And had so much fun at Wake Forest with my friends, I almost forgot about Casa Aram and just barely got in the last student to be accepted, really. So I went my fall semester of my junior year, and it was truly an amazing experience. And now it's very in vogue for most students to go to Europe for the summer or for a semester in college. But back then, taking a semester in Europe was pretty unique. And to live in your own house in the Grand Canal was just a miraculous event. And it really changed my life. So when I got out of school, I decided I wanted to move to either New York or DC, and I immediately moved up here when I graduated from Wake Forest.
• 12:22
  Speaker A: So talk about what you started doing.
• 12:24
  Speaker B: I started in construction supplies with a company called Ferguson Enterprises, and I was there for a couple years. God, what a great group. Super people. I still have friends that work there. Incredible group. But I really wanted to get into investments.
• 12:40
  Speaker A: Sales you were doing for them?
• 12:42
  Speaker B: Yes. So it was sales training, but I majored in economics at Wake Forest. I was a little bit of a geek. I was the lab assistant in the economics department, which was. There was only one of those. I had an opportunity to actually go get a doctorate in economics, but I.
• 13:01
  Speaker A: Decided, so what is a lab of economics?
• 13:04
  Speaker B: You go out and help all of the students and grade the papers and answer the questions.
• 13:11
  Speaker A: All right, so you're not, you know, it's not a chemistry lab. No, it's a numbers lab.
• 13:15
  Speaker B: That's right. Numbers lab. And it was really fun. And because of that, I was offered to go get a doctorate in economics at Vanderbilt. But I decided that I was tired of being a starving student.
• 13:30
  Speaker A: I just couldn't imagine you being a doctor of economics.
• 13:34
  Speaker B: It's funny because it always happened, but I decided to move up here and start working, and I started at Ferguson Enterprises, and then just in the back of my mind, I really wanted to get into the analysis stuff. And so I got a job at Fersen company as an investment broker, which was super fun. Just an amazing experience. We could talk for 2 hours about that, and great, great people, amazing welcoming toy guy from North Carolina.
• 14:04
  Speaker A: What turned you on about the securities industry? Just out of curiosity.
• 14:07
  Speaker B: I just love studying all the stocks and investments, and when things started moving towards more managed money, was about the time that I was offered the job at. Well, I went to Lake Mason, and then stock market crashed in 87.
• 14:24
  Speaker A: Right.
• 14:24
  Speaker B: And then even though I was one of the largest account, not largest accounts, I opened a lot of accounts. I wasn't opening large accounts, I was opening small accounts, but I was opening more accounts, and I'd won a couple of awards.
• 14:38
  Speaker A: Where were you in leg in Baltimore or.
• 14:39
  Speaker B: I was in DC Avenue.
• 14:41
  Speaker A: Okay.
• 14:42
  Speaker B: And then I had the opportunity to go to Charles E. Smith, which, you know, if you work downtown, all those buildings were Charles E. Smith buildings. So it was a pretty heavy opportunity.
• 14:53
  Speaker A: Pivot from securities to real estate. Talk about how that happened.
• 14:57
  Speaker B: I had so much training at Ferris and company in Lake Mason that the transition to real estate was really easy because I had gotten a lot of great training and prospecting and dealing with clients in complex transactions. So it was just super fun to come over and start working at Chelsea Smith. And my name starts going off on all these buildings on K Street, Pennsylvania Avenue, El street. It was really pretty heady time.
• 15:27
  Speaker A: So you were leasing very seriously? You were leasing?
• 15:29
  Speaker B: I was leasing. I took that responsibility very seriously and consequently moved up fairly quickly, you know, by taking care of the Rappaport, excuse me, Chelsea Smith buildings. And it was a really mostly downtown originally. Downtown Crystal City and Skyline.
• 15:49
  Speaker A: All three?
• 15:50
  Speaker B: All three, yeah. And we had a lot of buildings downtown. And I think I kind of made a name for myself because of my going to school in Italy. I studied architecture and kind of understood what we needed to do with the buildings downtown to take them from their original designs to a more current design with storefronts that came out to the street and weren't recessed. And I had the audacity to go to the owners who had built those buildings and said, hey, we need to bring the retail forward, either for fashion or services or restaurants. And at that point in time, John, most restaurants, there were a couple of local restaurants on the street, but the majority were delis downstairs. It was pretty basic dining back then. And one of the first deals we did was at 1666K. We took out all the surfaces on the first floor, brought the storefronts out, and did McCormick and Schmick's, which was, you know, the first kind of national restaurant chain to come to K Street and really be a destination. Seafood, old school, white coats, mustaches on bartenders, you know, really, really cool restaurants. We had great restaurants, but they were Duke z birds and a number of other ones that were old classics. This is one of the first ones to really come to town and kind of mix things up. And working with those owners, smalls, the viewers, Kaplan families, you know, just amazing.
• 17:28
  Speaker A: Amazing experience, I think, of retail downtown. When I moved here in 85, it was Connecticut Avenue from basically K to M Street, roughly, maybe a little further north, and of course Georgetown. And then, as you suggested, on K Street, probably from probably 16th over to 23rd, let's say Washington Circle. And that's about. And, you know, I remember obviously the prime rib and all the classic restaurants that were on K Street, and the.
• 18:02
  Speaker B: Prime rib is one of the only ones remaining. Yeah, I went there for dinner about a month ago. It's a classic.
• 18:08
  Speaker A: Oh, sure. Yeah.
• 18:10
  Speaker B: But you're right. All the energy was right there. Connecticut to 23rd and K up to M was CBD, really, that's where everything was. And we spent a lot of time in those multiple blocks there. This was before, of course, Easton.
• 18:28
  Speaker A: Sure. So you started leasing at Smith, and then how did you grow from there? I mean, what did you get into the development side at all, or how did you.
• 18:37
  Speaker B: The first project I worked on was Worldgate, which was a brand new development, but at that point in time, it was more about buying existing assets and again improving them, like the Buchanan, which was a 400 plus unit apartment building on 23rd street in Crystal City with just horrible interior mall. And I de malled that, which we could talk for 10 hours about that, too. That was really interesting. Change the storefronts again. You know, you had to bring the storefront out to the street, and it had three or four steps in front of the building to go down. It was very awkward to go into the mall and what was there. And WDG design Group did a fabulous job we worked with to redesign the retail of the floor on the first floor and create what I would call modern storefronts that really talked to the street. And as I said, we did that.
• 19:36
  Speaker A: Was that a national trend in urban retail at the time or what drove that thought process? And also talk about the crystal underground and how that evolved from the time you started there.
• 19:48
  Speaker B: Yeah, yeah. So, you know, Mister Smith and Mister Cogat created the underground, which was very unique. You know, there were those types of retail in New York, but not really here. And because of all the government workers and the transportation on the metro, it really focused the energy down a path basically, that connected all the way through Crystal city. Some spots that were kind of retrofitted, might have even had stairs and weren't particularly good, but we had retail damn near the whole.
• 20:28
  Speaker A: Just to give perspective to the listeners, the Pentagon is one stop away. The Pentagon is the largest office building in northern Virginia. I think it is still, there are thousands of workers there that provided retail need. Right? I mean, that was really the only place they had before Pentagon City mall was built and all that. This was the only retail they had in agriculture.
• 20:52
  Speaker B: You're right. It was easy to jump on the metro and go one stop. And there were tons of federal contractors in Crystal City, and they all had lunch that day. They all came that morning and breakfast. It was a very efficient way to deliver services and dining food. Chelsea Smith, back in those days, even had restaurants that they had built and ran. One of the first things I had to do was get private operators to come run those restaurants and sign leases.
• 21:29
  Speaker A: Interesting.
• 21:30
  Speaker B: And that was one of the first assignments I had, which was, of course, very difficult to do, including what is now the Ruth Chris Steakhouse. That was a restaurant corp club that Charles E. Smith ran to have a beautiful restaurant overlooking the airport in the river, so that all the executives would have a place. Interesting. And I ultimately leased that through depressed. And it's still there.
• 21:57
  Speaker A: That's funny. So the mix of tenants at the underground, was that mostly food? I mean, was that, or was there other uses there typically? Were there clothing stores and that kind of thing?
• 22:11
  Speaker B: Or was it women's clothing, men's clothing services, hair, you know, nails bookstore, CV's, rite Aid. It was amazing. It was like a mall itself. It was amazing.
• 22:25
  Speaker A: No department stores, though, there.
• 22:26
  Speaker B: No department stores. And there was a food court that historically had serviced the buses that were coming up for all the tours. They would just let people out and come in. Life was very simple back then, John.
• 22:43
  Speaker A: Well, that was before, you know, the big mall was built down and wood, you know, by Herb Miller, of course.
• 22:50
  Speaker B: Anything else anymore?
• 22:51
  Speaker A: Yeah, changed that retail market. So talk a little bit more about some of the other. I mean, Skyline is another interesting project. Talk about the evolution of that project as well.
• 23:04
  Speaker B: So Skyline was a mall, too. About 225, 250,000 sqft included a Safeway, as well as AMC movie theaters. Bart Eisner actually put in two movie theaters there. There was like six screens over here and six screens on another side. And it worked. It worked really well for a number of years. But ultimately, when the company started divvying up the different assets from the residential, the health club, and the office buildings, from being, you know, basically one company under the umbrella of Charles E. Smith companies to Charles E. Smith residential and then Charles E. Smith Commercial, they started divvying up the buildings. And when that happened, the mall became less important and Safeway moved. And then movies were on the downswing, too. So I de malled that and actually sold it to target. Charles E. Smith residential had two assets amongst all their residential. Wall street would tell them to get rid of those two residential assets. And so Worldgate was one of the assets. And I sold that to Gary Rappaport, which kind of started that relationship between Chelsea Smith and Gary. And then also I sold, demoled the mall and then sold it to Target, which still operates a store there today.
• 24:23
  Speaker A: Interesting, interesting. So demoling was kind of the big thing back then. What was the thought process doing that? I mean, how did you think that through? How did you get your tenants to say, okay, I get it, we're going to close and you're going to do this, and then I will reopen a year later, or however long it took. Talk about that process.
• 24:46
  Speaker B: Yeah, John, thank you for asking that question. I haven't thought about that in a long time. So skyline was experiencing vacancy problems, and I just did a lot of analysis about the common areas in the middle of the property. If that was turned into leasable square footage, what value would you derive? And Safeway space after they left became movie theater and a discovery zone. So we had a leased it lived on another probably 15 years after Safeway moved. And we also looked at putting in a grocery store store like a Harris Teeter and going back to the grocery model. But it just made sense when target, I'd done well, I'm sorry, I'm jumping around, but previous to this, I was on the development team for Potomac Courage center. So Charles E. Smith developed that for RFP. So we did the construction and leasing and all the master planning, including pretending having.
• 25:47
  Speaker A: How big a center is that? Was it originally.
• 25:50
  Speaker B: Gosh, from memory, I think it's probably a half a million square feet.
• 25:53
  Speaker A: It's a big property.
• 25:54
  Speaker B: It could have been twice as big targets.
• 25:57
  Speaker A: It's all open air.
• 25:58
  Speaker B: All open air. And that was a fabulous market. Let me go back to targeted skyline. But what I knew was that Target was doing so much business out of Potomac yard that they could keep shelf stock. So they need to relieve pressure off that. That store. So I worked with the Target guys and Dave Sittler, a Charles E. Smith employee who was just fantastic. We were able to get a traffic light, and they had told us over and over we'd never get another traffic light because there were already two pretty close together. But we were able to get a traffic light, which made the target deal work. But back to Potomac Yard, we were told over and over again that was not going to be a good site for two reasons. One, the river's right behind it, so you kind of cut off your radius. And number two, we insisted upon a 20 year development sunset. So everybody had a sunset for 20 years. And obviously we were successful in leasing it. And to this day, it's extremely successful. And what's amazing about it is how many people come from DC and Maryland to go shop there. If you go shop there, it's amazing. And obviously now Virginia Tech going there and there'll be redevelopments going on in the future. But it's an amazing.
• 27:25
  Speaker A: The Washington Capitals and wizards would have gone there, too, had the state of Virginia said, no, we're not going to make it happen. So it's amazing how that site is transformed over the years. Right?
• 27:40
  Speaker B: So there'll be future things, fantastic things going there. But obviously, I'm happy that I'm a Virginia resident. I was applauding the deal because the Caps Wizards need a new home, but I'm really excited they're staying where they are. Right. I think it's really needed for the district and absolutely, I agree. Mayor Bowser did a great job with Leon. Making them or not making them, excuse me, coming to a deal, a mutually beneficial deal to keep them in DC. We do a lot of business in gallery Place area, 7th street, you know, all around Washington, DC is still a very, very important market for us. We still do a tremendous amount of work, CBD and east End and even southeast and northeast.
• 28:27
  Speaker A: So you mentioned it already. So I'm going to bring it up. Worldgate and meeting Gary Rapoport.
• 28:33
  Speaker B: Talk about that now. So I met Gary literally on the first day I ever got into the retail business. Really I flew just because of the timing, accept the job of Charles Smith. And I immediately flew to Las Vegas for the ICSD convention. And at that time we were part of the greater Washington area retail development group. And Gary ran that group. And so I met him on my first day at.
• 29:04
  Speaker A: Was he combined at the time?
• 29:06
  Speaker B: No, no, he was running Rapaport. And he had put together this group of developers that shared a booth. I remember that in Vegas. And, you know, he's just larger than life and everybody knew him. And I just watched him from our little corner of the booth the whole time. And Gary gave me actually one of my first listings outside of Chelsea Smith as well, because we were allowed to do brokerage as well as inside leasing. And he gave us one of our first listings. But yes, when, when Charles E. Smith was divesting of the retail assets in the residential REIT, Gary and I worked together and he bought Worldgate, which has been an incredible asset for Rapoport. I believe the year was 2000.
• 30:04
  Speaker A: So you've owned that asset for 24 years now. It's amazing. So what was the challenge? I knew that that was a, that was a challenge when it was built, you know, to get at least. And the movie theater struggled and there were a lot of issues there with that property.
• 30:19
  Speaker B: John, you remember everything.
• 30:22
  Speaker A: I remember when Gary was making popcorn in the movie theater.
• 30:28
  Speaker B: True story. So gate was developed, the shopping center. Worldgate center was developed for the amenity package for the next crystal city. Charles E. Smith was going to build a band of office along the toll road. The economy changed in, I guess that was 1988 for listeners.
• 30:52
  Speaker A: This is in Herndon, Virginia.
• 30:53
  Speaker B: Herndon, Virginia. Thank you, John. And I think they had 2 miles along the toll road. I mean, it was a fantastic site. They went to a JV with a company out of Florida to own the land. And they had actually built one office building across the street. There was no demand for office and they pivoted and started building residential. And so there was residential built. And then the market came back and they started building office again. But back to Gary, when he bought Worldgate, he did some amazing things. The movie theory went bankrupt. He started running it as Phoenix theaters with a consultant, he also. The movie theater industry changed. There were at one time 2000 seats. That's back when movie theaters were small with, with the little seats and even rock. And I think Gary took it down from 2000 seats to a thousand seats with rocker seats, which was a big deal. And that opened up all this ability to put in restaurants, because up till then, it had a lot of fashion. And fashion, as we all know, is moved out of a lot of properties. Worldgate was not the right place for fashion. So Gary did an incredible job of opening up all these seats, and it became more of a destination for dining for all the office tenants in the area. And that's still true to this day.
• 32:16
  Speaker A: Did you work for Gary at that point as an agent in leasing it or.
• 32:20
  Speaker B: I did not. Jim Wheeler and Gary did that. I don't, I don't even remember us actually bringing any tenants. We were doing tenant rep back then as well. But that was Gary and Larry spot that figured that out and changed the paradigm of parking demand for the property. And then, of course, the health club was a health club that was owned by Charles E. Smith that was then taken over. They took over all the clubs by sport and health. So it was a sport and health club.
• 32:56
  Speaker A: Interesting, interesting. So then talk about the evolution of your situation, Charles E. Smith, and how you transitioned to what, to Rapaport then.
• 33:08
  Speaker B: So, not sure the exact timing, but let's call it around 2000, part of Charles E. Smith and Charles E. Smith family, Cogott family, did an incredible job of doing a tax advantaged program where all those assets were traded up to Vornado, so there was no tax consequence. It was incredible upreit structure, incredible deal with tax protection. And at that point in time, Crystal City was, was still very, very strong. But, you know, there was the patent trademark office moved to Alexandria. The base realignment Commission moved a lot of people out of Crystal City. So there just wasn't as much demand. But what we were doing was, in 2003 to four, was making Crystal city more of a not so much of a government enclave and make it attractive to outside parties. So we actually changed the streets from one way to two way. We tore down a garage from 20th to 23rd and added street retail, a lot of great restaurants. Hillo, OEML, Cormac and Schmick, you know, really added streets scape. And that was Crystal City 2.0. And that was an amazing experience to work with. Our development team. Chris Garland was in charge of that, working under Al Neely and Mister Koga and Mister Smith. It was just a fantastic development. Bill Dickinson did the leasing on that, and it was an amazing opportunity to kind of create a city that had a lot of people there. And we just literally went after every great restaurant in town and got a phenomenal lineup.
• 34:57
  Speaker A: Okay. So when Bernado came in, I know Mitchell Scheer came in to run the operation at that point, and he was at Kempfer. So it was an interesting deal where Bernado came in and bought the Kemper organization and the partial interest in the Charles E. Smith operations at the same time. And I was at the Uli fall. I remember, I'll never forget this. The morning of the trends conference for Uli, it was announced. Mitchell Scheer was on stage and announced that morning. It happened at that conference. I'll never forget that. That was quite an announcement because that was an obviously complicated transaction to close.
• 35:42
  Speaker B: Very much so, yeah. And Mitchell was a big part of picking the architects and really did a great job of taking up the, what I would say the final product of what we delivered on Crystal Drive. We had a bunch of great people there at Charles E. Smith Slash Vernado, and it really was fantastic. But it was also clear that Vernado was going to take a bigger, bigger role. And Mister Smith actually said to me, you know, Henry, you're a really talented guy. I think you need to consider going to another company in town. And that made for just a natural progression, progression to start talking to Gary, because Gary had been ICSC chairman 2002, 2003, and nobody had more goodwill and better branding than Gary at the time. And so I just thought it would be a fantastic opportunity to come work with Gary at Rappaport. And luckily Gary wanted me to come run his portfolio. Jim Wheeler, who is one of the original employees, was retiring. And Gary met with me a couple of years prior and said, you know, I think you're the right guy to come run the portfolio. But I really wanted to continue doing third party brokerage. And I had a really, really good team at Charles east.
• 37:12
  Speaker A: Did you talk to anybody else other than Gary?
• 37:15
  Speaker B: Really didn't.
• 37:16
  Speaker A: That's interesting.
• 37:16
  Speaker B: Really didn't. Because we wanted to have a team that was very client focused and that I was going to be a true manager and not a player coach because the national platforms, I wanted a player coach. And I saw what that did to how business was distributed and just didn't think that was the right way to run it. And Gary, after we spoke for a couple years, said, okay, I want you to come out of my portfolio. You can have brokerage, but I don't want to have anything to do with it. It was really funny because only about 60 days later, Gary said, I really like what you're doing. We produced some great collateral, brochures and everything, and he got in, all in. And then it was roadshow for me and Gary to go meet with all of his connections and all his friends and all the people he had done work with over the years. And that really enabled us to grow phenomenally. But a big part of it was Bill Dickinson and Melissa Webb, who came from Chelsea Smith. And then we were just off to the races.
• 38:33
  Speaker A: What's interesting is that Mister Smith would give you that opportunity and then allow you to keep all the listings that you had. I mean, there was a lot of fees there that he let go, which is interesting how that all happened. And what was Fornato's opinion about that? It just seems kind of strange to me that they walked by all that revenue like, whoa, you know, John, thank.
• 39:00
  Speaker B: You for that observation. Yeah, I guess it was a pretty cause.
• 39:05
  Speaker A: Strike a check to buy you.
• 39:07
  Speaker B: No, no. I guess it was a pretty outlandish request. But we had done a great job, you know, working for Charles E. Smith. We were just finishing up Crystal City 2.0. Yeah, we, you know, Crystal City itself was 98% leased, even in the internal retail. John, the TLC that we gave the tenants, we knew every tenant by name, their family. We'd go there every day to say hello. We understood their problems. We helped them whenever we could. And the Crystal city community was a very tight knit community. And still to this day, there are people, if I walk through there, they're finally closing it down now, you know, just absolutely amazing. The people we're still representing some of the tents, to move them out now, because they were so committed to that community, it was truly amazing. But yes, back to Mister Cogod and Mister Smith, they were amazing. To help me get the listing, not only in all the Charles Smith Bernado owned properties, but all our clients and partnerships, which are still our strongest clients to this day. Just amazing support from families like Sunny Small and the Gewers family, Michael and Stephen, Bernie Gewirs, you know, just amazing support and mentorship for my career. Just, if you look back on it, it's truly amazing.
• 40:39
  Speaker A: Well, it just, you're an economics major and finance guy. You understand numbers. Did you ever kind of figure out what the value of what you brought to Gary at that point was? I mean, the actual corporate and personnel value that you brought to the table for him without him writing a check for it. I mean, that just, that's mind blowing to me, almost. It's incredible.
• 41:02
  Speaker B: John, thank you for saying that. You know, the Washington Business Journal did a story above the fold back when people read it. You know, of course, read the hard copy that said Rapaport and Fawnville, you know, combined portfolio. So it was outlandish because I had not spoken to any press and, but other people obviously were, and it overstated our value in my book. But thank you for what you're saying. I mean, we clearly were just very excited to come work with Gary and because of his goodwill in the industry from being ICSE chairman and all the knowledge he had, and he had worked with ICSC for years and years. So thank you for that observation. It is truly amazing what happened, but we never looked at it that way.
• 42:00
  Speaker A: Well, that's, that's really a testimony to both you and Gary, because when I think of, even when I was in mortgage banking, I mean, to hire a real strong producer from another firm, I mean, there normally was a big check written upfront to that person and, or just to move to another firm just because the kind of net present value, the value that person brings to the table. And that's why I'm stunned, honestly. So that's the case. So kudos to both you guys. So then, as you started coming in, you brought brokerage to the, to the firm. So basically, as I said in my notes, you guys basically turbocharged this company. It went from, you know, Gary running his portfolio to really now a full service real estate organization in retail. So talk about that, the growth of that evolution and all that.
• 42:58
  Speaker B: Well, Gary at that point, philosophically would only lease things he managed. And so that was big change. You're right. And we also did tenor representation. So that just enabled me to have more confidence when I went into a meeting with Gary that I knew what the market was. That goes back to what the philosophy I was talking about earlier, is that it's important for me to have all that information when I go into a room that I have. That. And that was just drilled into me at Charles E. Smith. I mean, as a young executive there, if you wanted to do a meeting with Mister Smith and Mister Cogodt, I would have all the notes, all the answers just for questions they might not ask. But if they did anticipate anticipating, it was all about anticipation and having two or three different items you were presenting and maybe have a throwaway, you know, if things weren't going well, you know, you go back and think about how to present it differently because you were only going to get one shot at presenting these ideas like Mister Smith. This is a funny one. I'm taking a side car here though. But we were doing, we were doing retail on the street. We were just done a Starbucks, or we're going to do a Starbucks, the first Starbucks in Crystal City. And Mister Smith loved trees and landscaping and he didn't plant three inch caliber trees. He was, he was planting like eight inch trees and they would grow very fast and it would start blocking storefronts and I had to come up with a way to say, oh no, we're going to have a sign here, you know, the big siren, Starbucks siren on a medallion that you could see. And on one of those walks with Mister Smith telling my vision for crystal Drive, he would not let me cut the trees, glimpse. He would cut little pieces and take off the leaves, but you couldn't cut them down. It was really funny. And he loved trees and somehow we made it happen. Got the Starbucks deal. And as we're walking down the street I said, and I want to talk to you about another issue. This was tearing down a three block long parking garage that was creating a lot of income. And I said, I want to tear this down and I want to build retail here. And you know, I really thought that he might fire me over the request because it was just so outlandish to throw away all that income from the garage. But it worked. He thought about it about a week and I'm sure talked to Mister Koga and called me back into his office and said, you know, I understand this vision. I want you to do it. Go get architecture. It's just amazing. The, you know, if you're willing to kind of stick your neck out, what can happen?
• 46:09
  Speaker A: Well, it's interesting. The Smith family is a long term thinking firm.
• 46:13
  Speaker B: Yes.
• 46:13
  Speaker A: I mean, you know, we're talking multi generation thought process. So they built something more or less for the ages. Oh, that's kind of their thought process.
• 46:23
  Speaker B: Yeah.
• 46:24
  Speaker A: And you know, family offices like that think that way. And that's a tough, totally different mindset than a buy, fix and build and sell type of thought process. So you're fortunate to be in that type of environment. And of course Gary thinks the same way.
• 46:39
  Speaker B: Gary's creativity is truly amazing. I told the story about Worldgate. You know, we just don't know how to say no. If we're in a property and there's an issue, Gary just says, well, we'll run it. So we have run shared office space, an ice skating rink, a ghost kitchen, a food hall, the movie theater.
• 47:07
  Speaker A: Worldgate.
• 47:08
  Speaker B: We talked about with Phoenix theaters. Health club currently running. Health club now brewery. We just decided to build a brewery, really. And we actually, this past winter, I spent a lot of time with a friend and employees at village at Leesburg, basically creating an underground pickleball club. There you go.
• 47:29
  Speaker A: Why underground?
• 47:31
  Speaker B: Well, we were trying to prove that there was a demand for a pickleball club. And it just so happened at village of Leesburg. The way the residential lays out over 24,000 sqft, it laid out perfectly for pickleball. I mean, it's a needle in a haystack. Any of these buildings all have columns. I've been in a bunch of buildings looking for places for different racquet sports. Not just pickleball, Padell, badminton. You know, I get crazy calls about everything. Most things just won't fit because I see in the heights or column space, and this particular space was just perfect, as if you had built it with 20 foot.
• 48:11
  Speaker A: That's something.
• 48:12
  Speaker B: Floor to joist clearance. And I'm very, very excited to say that USA mid Atlantic signed the lease based upon these pop ups. We had showed the demand. And they're going to open a pickleball club in May for 24,000 quarts. It's going to be phenomenal. Eight quarts. Wow.
• 48:34
  Speaker A: Well, let me shift from pickleball to urban retail, if I can.
• 48:37
  Speaker B: Yes, please.
• 48:39
  Speaker A: So Gary was always known as a suburban retail developer. So he stripped centers and open air. He wasn't a mall guy. He wasn't a big power center guy. Mostly strip centers, grocery anchored type things. And then you come along with the urban things, all the ground floor. So it was probably a little bit of a learning experience for him having that. But talk about that about urban retail. You talked a little bit about it, but, you know, what are the challenges there? You're working with office developers, they're scoping their site, their project. How are they going to the walls, the entrances, how you work? You know, do you have a separate entrance for the retail? Is it all fan from the lobby? Talk about all those issues a little bit, if you can.
• 49:29
  Speaker B: So it's an amazing, amazing amount of work, you know, because as you said, you have to start at the beginning. You've got to design the back of house, loading, exhaust, plumbing, you know, everything. And so it's very time consuming. But we had done that at Charles Smith. I mean, they were doing mixed use developments for years with retail in their first floor residential office building. So we felt very comfortable doing that. And so we took a big role, as we said, in trying to bring those storefronts forward, in making them modern. And we were really, really fortunate to have a bunch of great clients continue to do a lot of that work. But what we also understood, John, was that it wasn't. We saw all the QSRs, quick service restaurants starting to come downtown. So I think up until that point, the various brokerage firms thought of retail as urban, suburban, two different animals. I think we were the first to understand that it's a lot of the same people. And Chipotle is going to be doing urban stores, suburban stores, Starbucks, and, you know, restaurants like that. So we were really early in on that and we're able to capitalize on that for, for our group, and we're still doing a lot of that business. And I left out something earlier, John, I want to mention that the original group that came over from Charles E. Smith was me, Bill and Melissa, then Mike Howard, who was at car America running all their retail, which was a tremendous amount of urban retail too. Carmerica was sold, he came over, and then Jim Farrell came over from Madison Retail. So we had a lot of people that had a lot of contacts and experience in Washington, DC, urban Retail. So that group was just phenomenal. And Mike is still one of our leaders today here. And I was just willing this morning talking about a restaurant that we're working on downtown.
• 51:43
  Speaker A: Your market share in that business had to have been at least 50%. I mean, there aren't that many other firms doing it, the urban retail stuff.
• 51:51
  Speaker B: Right? I'm not sure where it stands today because more brokerage firms are coming after it. But at its time, we were definitely over 50% because all the big firms were hiring us as well. Cassie Pinkard used us, JLl used us. And. And so, you know, it enabled us to really grow quickly. And still to this day, it's fun. We just did a STK on the tenant rep side. STK Steakhouse in the Marriott Marquis hotel just opened last month. I went down there for lunch yesterday with a client of a suburban shopping center who happens to be a lawyer downtown. And I still love that business, you know, helping create that excitement and synergy that will hopefully re energize urban retail. Because we are struggling in a number of quarters on the urban side.
• 52:47
  Speaker A: You know, I mean, when you look at the pro forma of an office building, an urban property, retail rents on a net basis can be higher than most of the office rents in the building. So the retail space is really a critical piece of underwriting a deal for an office building. Typically, obviously, you were just talking about your challenges. The pandemic obviously threw a monkey wrench into urban retail in major cities as their customers were not showing up. Perhaps discuss its evolution from when you started in the business through the pandemic and then subsequent to it till today. So how that's evolved.
• 53:22
  Speaker B: So Gary's been very outspoken on this and had some great quotes in various publications, which is get the office people back in the office, you know, federal workers especially. I saw something last week where it was amazing how few people were coming in massive buildings, you know, and, you know, if it's a 500,000 square foot office building, you would expect there to be a couple hundred people. This article was saying there were like ten. And I've witnessed downtown what's going on with restaurants that are having a hard time staffing. So if people are only there Tuesday, Wednesday, Thursday, how are you going to staff a 5000 or 8000 square foot restaurant or if the weather is good on a given day? You know, I saw one of the restaurants we have on K Street that we work on, you know, might have two waiters for a full restaurant and they just said, work with us. We don't have many people here today. So, you know, it's incredible what's going on and we're going to have a lot less retail unless we can get people downtown. It's just that simple. There are a lot of restaurants that are on rent relief right now and the new buildings, when it's going to cost 2300, $400 to build a new restaurant without demand, it's going to be very hard to make any.
• 54:41
  Speaker A: How do you repurpose that?
• 54:44
  Speaker B: There's going to be some spaces that are going to have to go non retail, but that being said, there are some fabulous properties that are getting the traffic. You know, Oliver Carr has done a fantastic job. The Fannie Mae headquarters there at the corner of 15th and L. Our son McLean is actually working on office to residential convertible, 1125 15th and also one on El street. And those I think will bring life to the street. As you know, Fannie Mae, I think is going to either has or will do a deal where they're not going to be a tenant there, I think in 2029. But Oliver Carter and his company has created wonderful destinations in Choteau and dolphins and other restaurants. So there are some standouts. You know, RPM is still doing very well. Joe's crab, I think, is still doing very well. So there are standouts and the ones that are stronger are getting stronger. It seems like the wharf has, of course, taken a lot of, a lot of wind out of the sails of the CBD and 14th street. But right now the focus is union Market and the wharf, and that'll come back around. Even Georgetown has suffered down on the harbor. The Washington harbor, I think they'll come back, but they're still. The Cafe Milano is still doing great business. Maybe not what they did in the heyday, but they're still doing good business. So we take this very seriously to try to create a place where people want to be. And one of the places I think that will be successful is Market Square on Pennsylvania Avenue between 7th and 9th. He just bought that property. It's a fabulous property. It's got incredible, incredible architecture. You know, when we're creating these places where people are going to gather, I think it's going to be even more important to create something fantastic. And just to throw out a name with a tenant that's done. That is Tate, the bakery.
• 56:43
  Speaker A: Yes. Tate is cool.
• 56:45
  Speaker B: Tate's done an incredible job of creating demand and doing something really interesting and unique. But I still put Starbucks there, too, you know.
• 57:00
  Speaker A: Did you bring Tate to the market?
• 57:02
  Speaker B: We did the first New Hampshire Avenue and M. Yeah. Thank you, John. You have an amazing memory.
• 57:07
  Speaker A: Well, the one I go to is the one at Bethesda.
• 57:10
  Speaker B: Okay.
• 57:11
  Speaker A: Oliver Carr.
• 57:11
  Speaker B: Yeah, yeah. It's so good. And, you know, I just. I literally, I spent all my time going out to eat mostly. It seems like, in trying out different places, and it's all about the experience. And somebody recently said, you know, it's about how you make people feel, you know, exactly. It's not just the dining. You've got to come away with that feeling of, hey, I like this. And I think Tati's doing that. You know, I spend. I know Starbucks is everywhere, and we represent Starbucks exclusively, by the way. We're so excited that Angie trasper works here with us now. You know, they deliver an experience that is so good. And I just love what they're doing. I got, you know, honey, citrus tea and the egg white bites for breakfast this morning. You know, it's just one of my go to. Chipotle is another tenant we represent exclusively. I love Chipotle. You know, I get the bowl, no rice, super, super healthy, tasty and extremely convenient. So I love what we're doing as a company.
• 58:25
  Speaker A: Talk about the differences between your tenant representation business and your landlord business. Do you have staff them differently? Do you have a different approach. What are the differences? How do you look at that?
• 58:41
  Speaker B: Well, I think that's one of the secret sauces here at Rapoport, is that I don't do things by region or by tenant or, you know, simple lines of silos. We work as a team. Everybody on, on our floor here is sharing information, and it enables us to have information, as I mentioned earlier, that I feel so confident when I go to a meeting with a client, a landlord, a pension fund, a tenant, or Gary, to say, this is what's happened. This is what I've seen. This is what we should do. And there are some brokers here that only do tenant rep, but majority have some landlord positions, too, because they have the information. They can do a great job. Angie's done every deal with Starbucks, I think, for over 20 years. I mean, she knows every property. She knows every property they've ever looked at. I mean, it's amazing. The encyclopedia of information she has. If, you know, there's like an acre here and you go, hey, Angie, have you ever looked at this? And she goes, oh, yeah, it's too small, it's too big. You know, landlord won't do this or that, you know, or we can't get drive thru. Which, by the way, you know, I foresee talking about evolution of retail, the drive thrus, traditional drive thrus with menu board will become less important. And then you'll order on your app and you'll just go through a window and pick it up. Shake shack, another client of ours is doing that, just delivered one over here, opened a store and federal, you know, with that, with that pickup window, not a traditional drive through.
• 1:00:29
  Speaker A: How do you segregate when they say, well, I want to be at that center, and that's a rap report center. So how do you, what, you know, the tenant, if you're representing a tenant, do you say, how do you segregate that? Or do you negotiate it internally? You know, one negotiates with another. How does that work typically, and how often does that happen?
• 1:00:49
  Speaker B: Does not happen very often, but we kind of have a process to deal with that. I let Gary be the kind of ultimate decision maker, but we work together in that respect. I give him the situation and kind of bounce off him, and we kind of decide what the right decision is. But I've been here now, as I said, for 18 years, only happened a couple times because it is different than office space, where people are evaluating an office maybe across from each other, but it'd be very different. They could be pretty similar. But retail is all about the location, of course, and Starbucks or Chipotle or anybody like that is going to say, I want to be on that corner. That's my first choice. And they're going to go after their first choice. And I would very quickly tell a client if I had to, the situation. This is the situation. You need to give your best and final. You need to give your best and final. But ultimately the retailer is going to make that decision. And we get in that situation with other clients where we might manage units for them. And they own over here. And they also are a tenant that establishes businesses as well. And we are known to be Boy scouts in our delivering pure fiduciary philosophy. And I think that helps, too. You know that Gary is always going to give. By the way, this is another interesting piece. If Gary happened to be the owner of the property across from the client, he is always given the client to, or the tenant to the client if possible, meaning jump ball. They're going to get it. The arrow goes to the client. But again, most times the tenant knows where they want to be.
• 1:02:41
  Speaker A: Right? Even the little small guy says, no, I like this location better because usually the tenant makes it such that might be more synergistic for them.
• 1:02:48
  Speaker B: Yes.
• 1:02:49
  Speaker A: And so this gets into my next question. So in my 45 years plus in business in real estate, and I grew up in retail, my dad was an apartment store manager and I sold shoes. And I mean, I, I've been inside of retail. So I get, you know, what the dynamics are. I believe retail leasing is one of, if not the most challenging, and some argue, interesting professions. That's not only do you have to merchandise a property like a merchant arranges his merchandise or hers, but you have to negotiate the lease terms, understanding what the, what drives rents, which is projected sales volumes, of course. How do you know that this tenant will make it, will make it when you will commit to them, to your property? Talk about the process from a blank slate to a fully leased shopping center and or ground floor urban space.
• 1:03:50
  Speaker B: Well, John, you're right. I mean, there is a lot of work that goes into that full process and we are very thoughtful about it and we evaluate concepts and try to what I call polish the tent mix because a lot of the centers we have are fully baked with very small vacancies. But you always have to pull the asset forward with renovation, landscaping, branding and tenements. And, you know, when you have the opportunity to make a change, we literally sit around and talk about what's going to pull it forward, make it better. I've got a mission statement that we wrote together here at the office, and I'm going to read it to you. Fueled by a passion for our region, Rapoport is DC metro area's retail authority. Our team of highly collaborative professionals manage and lease more than 160 properties in the district, Maryland and Virginia retail spaces and shop centers that unite and energize the surrounding neighborhoods. By focusing not only on the needs of our clients, but on the communities we serve, Rapoport is cultivating places that enhance the lives of everyone who calls the DC Metro home. I'm particularly proud of that and our group that got together to write that, because it's true. We understand that the third place, the retail spot, whether it be urban or suburban, is a place where our community shares food or shopping or go to the grocery store or whatever. And the value of their neighborhoods are highly affected by what we do. And if we can make those better locations, it gives them more pride in their community. And with few exceptions, we're right here in DC Metro where we're living amongst these properties and we believe that being here and part of the community is a big part of our success. And it takes a lot of work, as you're saying, to do it. And the other thing I want to mention while on this, hopefully, is our giving back to the community and all the various organizations that we support. It's amazing. You know, Gary, we sometimes give space to organizations so that they can establish themselves. She believes in me as an organization in Hernan. They provide needed food to disadvantaged and we're involved with the tall ship Providence Alzheimer's, Manassas, Ballet USA, mid Atlantic, which is trying to create these things.
• 1:07:04
  Speaker A: How do you learn about those opportunities?
• 1:07:06
  Speaker B: Oh, my gosh, John, it's amazing. Alzheimer's was completely by luck. Rob Seidel asked us to help put a team together for the ride. He's been involved with it for a number of years. He really started the ride. We got involved. I posted it on Facebook and just. Just couldn't believe the support we got. And I ended up being the number one rider. I'd never. I mean, I ride bikes, but I've never done one of those fundraisers before. So now, as you know, we're the title sponsor of the ride to NDA LZ, which will be in that's great. Morbid Park, Leesburg, coming up. But again, that goes back to village of Leesburg. We've had events to promote the property, to promote the community, promote participation. Alzheimer's is all about atmosphere, you know, personal health, and genetics. And we can affect two of those. We can affect the way people eat and the way people live and exercise. So it makes our jobs fun. It really does.
• 1:08:08
  Speaker A: So merchandising a property. I mean, I interviewed with the Taubman organization when I was growing, you know, growing up, I met with the lady who, she led policing for malls. Different business and different thought process because they have anchors and department store anchors. And you wanted to mesh each anchor with the type of tenants you had with an open air shopping center, grocery, Anchorage center. You're going to want to have all the different groups, different types of services. Then the larger the center gets, the more diversified the tenant mix has to be to do that. I have to assume. And then you have many anchors that, you know, the TJ Maxxes of the world and people like that. So you have to kind of think those through. So merchandising ace, you know, a hundred thousand square foot grocery anchored center is a little different than a 350,000 or 400. I mean, Leesburg is what, half a million square feet? So talk about the differences between that and how you think that through in each of the pods, you know, between the mini anchors and the grocery anchor centers.
• 1:09:20
  Speaker B: Formula for that.
• 1:09:21
  Speaker A: Or how do you think that through?
• 1:09:23
  Speaker B: Well, I work very closely with Steve Carboni on those type of properties. And Steve is very thoughtful and he's got an intellectual curiosity which enables us to work together and try to figure out the next thing that fits. And it's hard, not only because we're looking to polish the tenant mix, but also because we have. Retail is complex, because we have a lot of exclusives. And so we might come up with a great idea. We can't do it because of Wegmans. Wegmans has got 150,000 Criffitt store there. So Steve does an amazing job, not only on the financial side, but also on the strategic side of working with our group to develop target markets, excuse me, target sectors to try to fit in, but it is really difficult. And he was at federal realty at one point. He's a very successful guy. Federal realty did his own deals as well. And, you know, it's just, it's just an amazing process to find it. Each piece that fits in, whether or not, you know, a tenant, you could lose a great tenant just because. Because they happen to sell too much coffee or too many bakery items or whatever. So there's a lot of.
• 1:11:00
  Speaker A: You can't accommodate an expansion, for instance? Maybe.
• 1:11:05
  Speaker B: Yeah, no, I mean, very, very rarely do we try to do that. Well, we do occasionally. But really, truly, I'm a big favor of as many doors as possible, too. Right. Meaning I don't. Other than the anchors, I want to go to multiple stores without moving my car. I have to move my car. But. But, you know, I want to go from one to the other and make it easy. If I don't want to have this today, I want to have that close by.
• 1:11:35
  Speaker A: I'm going to come out of left field with something that I actually toured last week that was the most unique retail property I think I've ever seen. And it's called Eden center.
• 1:11:46
  Speaker B: Oh, yeah.
• 1:11:46
  Speaker A: It's located at seven corners in northern Virginia.
• 1:11:51
  Speaker B: That's great.
• 1:11:52
  Speaker A: And every tenant is asian.
• 1:11:55
  Speaker B: Yeah.
• 1:11:56
  Speaker A: And this is a 200,000 square foot shopping center that has a. I think it's a vietnamese or korean grocery store that I think has more seafood than I've ever seen in a grocery store of different types that you'd never see anywhere else.
• 1:12:12
  Speaker B: Yeah.
• 1:12:12
  Speaker A: I guarantee you. And anyway, you're smiling, so I'm going to let you. What is your opinion of that property? And have you ever thought about taking that footprint or that thought process into another retail property, just out of curiosity and explain the property a little bit more?
• 1:12:31
  Speaker B: Well, let me ask you a question. When you were walking around, how many places did you see that were serving sushi?
• 1:12:37
  Speaker A: I mean, you know, not sushi. No. It was mostly vietnamese food. You know, it's not japanese.
• 1:12:46
  Speaker B: Yeah. Yeah.
• 1:12:47
  Speaker A: It's korean. Very few. Only small korean, but mostly vietnamese.
• 1:12:52
  Speaker B: Yeah.
• 1:12:52
  Speaker A: And they have a south vietnamese flag.
• 1:12:54
  Speaker B: Flying at the middle of the center.
• 1:12:55
  Speaker A: Of the shopping center. South Vietnam has existed since 1980, 1973. So it's really an anachronism.
• 1:13:07
  Speaker B: It is amazing. It is the exception to the rule, which is. You would never do that.
• 1:13:15
  Speaker A: So I had to come out of left field.
• 1:13:16
  Speaker B: Yeah. Yeah. No, I mean, I've been there with Rob Selden, actually, not too long ago, who's redoing the office buildings at Skyline, by the way, turning them into, converting them in the residential. Doing a great job over there. Yeah. You know, I think the owner is asian. No, they're not.
• 1:13:33
  Speaker A: The center is owned by a jewish family in Florida.
• 1:13:36
  Speaker B: Oh, okay. Absolutely. Okay.
• 1:13:39
  Speaker A: It started because it was built in 1962, and when Vietnam, you know, we had a huge influx of vietnamese people in this country, and they were looking for a place, and apparently they found this place to start, and it just became this cultural icon for them.
• 1:14:01
  Speaker B: It is. People come from all over the region.
• 1:14:04
  Speaker A: Not only the whole east coast.
• 1:14:06
  Speaker B: People come down on tour buses from.
• 1:14:07
  Speaker A: New York, they go to the mall and then they go there to eat because it's all asian.
• 1:14:13
  Speaker B: Yeah. No, it's a very unique property. People over the years have asked me if you'd ever do it again. My answer is no, it works right there. Because of the uniqueness and the history in Washington, DC. There are a lot of Vietnamese here in town. But, you know, we go back to what I was talking about. We work really hard to try to keep tenants from selling the same thing, you know, and because if you do, one's gonna lose, one's gonna win. And it's not very pretty, you know, along the way.
• 1:14:43
  Speaker A: That's an exception.
• 1:14:44
  Speaker B: That's.
• 1:14:45
  Speaker A: Except there are stores that have been there since the 1960s, sixties. They sell the same things right next door to each other. And I was told by an asian person who was walking us through that you go to a place like Saigon and they have all the same merchandise every store has. And it's just this loyalty that builds up with certain merchants with different people. It's unique, apparently, to that culture.
• 1:15:08
  Speaker B: Well, but my guess is, and I haven't gone to everyone, I've only been to one or two. My guess is is they do okay as long as the family runs it together. I don't think any of those are. My guess would be that it's not a, you know, a restaurant with a manager and an owner that lives somewhere else. It's the guy there and his kids and his wife and his grandkids, you know, running it.
• 1:15:38
  Speaker A: It's unique. Yep, no question. So talk about some of the most interesting transactions you got involved in, Henry. Either leases or sales of property or situations.
• 1:15:53
  Speaker B: Well, Potomac yard center was obviously one of the most amazing village at Leesburg. We love working on that. We love all the urban retail. And we talked about demoling malls before. For most interesting assignment right this second, I mentioned Market square. It's the new listing for us. Really excited about that. Spring Valley Village is a new assignment for us. That's really exciting. You know, Central park has always been so.
• 1:16:27
  Speaker A: Spring Valley. That's the crate and barrel.
• 1:16:29
  Speaker B: Yes.
• 1:16:30
  Speaker A: Right?
• 1:16:30
  Speaker B: Yes.
• 1:16:30
  Speaker A: Yeah. Okay.
• 1:16:33
  Speaker B: Central park is amazing at staying power. You know, Susan Bourgeois done a great job at keeping that leased.
• 1:16:41
  Speaker A: How much space do you have down there now?
• 1:16:44
  Speaker B: We've got 500,000 sqft.
• 1:16:45
  Speaker A: That's in Fredericksburg.
• 1:16:46
  Speaker B: Yeah, we've got 500,000 sqft there amongst a 2 million square foot property festival at Bel Air. Oh, sure is one that's kind of unique right now. You know, we've only bought it from pro holdings, you know, in the last couple of years. We're kind of putting the rack before it touches on that and lease up. Christian Kinks has done a great job of leasing that up. We're always trying to find another property, John. Over the last two years, it's been very hard because of interest rates. We've been second on a couple of large properties, but I anticipate we'll buy something else new soon.
• 1:17:26
  Speaker A: Is there any opportunity to build retail today other than as a ground floor or part in mixed use, freestanding retail? I mean, is there any of that being built anymore anywhere?
• 1:17:38
  Speaker B: We're going to build some small strips. We see some opportunity with small strips, but we're not working currently with, you know, a big grocery, anchorage center. Just construction, cost, entitlements, timing make it very difficult. But the rents per square foot on a small multi tenant building we think will be successful. But there's still. God, there's just so much going on in retail. We're really busy and super excited. You know, it's just a. It's just a passion. You know, if you're. If you love what you're doing, then you're happy. And if you're happy, you're going to do a good job. So we just try to keep motivated.
• 1:18:21
  Speaker A: And in addition to Gary, I've interviewed several other retail leaders in the region, including Jody McLean, Don Wood, Jeff Berkus, Richard Lake, and Grant E. Hat. Each of them have their firms and their firms have different approaches to acquisitions, development, leasing and management. Contrast the Rappaport leasing and management approach to federal, Edens, roadside and Woodward.
• 1:18:50
  Speaker B: Well, you know, federal is the gold standard and we admire that group. We've been very, very happy to do leasing for them. So, you know, because of our third party services, we've done some leasing for federal and hope to do more.
• 1:19:08
  Speaker A: You bring tenants as well as landlord rent.
• 1:19:11
  Speaker B: We worked on Rockville pipe for them before they sold it. And we actually had a client that bought a property from them, Leesburg Plaza, that we. So they don't know anymore, but we leased that for that client. So, you know, there are a lot of third party clients that buy assets that then bring us in. So I guess the big difference, John, is we have a menu of services and we're always going to support the client first. So if the client wants to buy an asset, we're going to support them. If we like it, too. We might actually put together a syndication to buy it. But the federals and the chemcos of the world. We do some leasing for Chemco as well. They're on a different level in terms of the REIT structure. They can buy cash. They are the gold standard in my mind. But there's still a lot of properties out there that are really good for Rappleport, and I think we'll buy some more properties. It's just interest rate environment right now is making it very difficult. But we do believe that we can create value through leasing, and we feel very good about our abilities in terms of property management and construction. In terms of value, add storefronts, facades, interior construction, and we also come around and we'll redo the old signs again, kind of give it the rapport treatment. Really big on landscaping, curbs, cutters, paving, and lighting. There's still a lot of properties out there with what I would call substandard lighting. The lighting now and the expectation of lighting because of the new leds. It's so much less expensive in terms of energy wise, but so much better in terms of the feel. When you as a consumer get there to park, you don't have all the hotspots that you used to have. You'd have a light and there'd be a light around the light, but it wouldn't broadcast to the next light, so you'd have those dark spots. And we're now able to create a really safe feeling and reality environment. So that's one of our big things we like to do.
• 1:21:23
  Speaker A: That transitions to my next question a little bit. Place making has been a buzzword for a while now in excuse development. What do you think makes places? What is the magic that certain retailers have that brings buzz? I think of Starbucks, Apple Store, Nordstrom's, many restaurants led by strong operators like a guy like Danny Meyer, for instance. Shake shack. What's your feeling about that?
• 1:21:50
  Speaker B: It's very complex. It's not easy because, you know, there are a lot of properties been built over the last ten years to take advantage of the town center look and feel, whether diagonal parking, parallel parking, parking behind the main street. And I spend a lot of time on travel, going and looking at what works and what doesn't work. And what it comes down to in the end is back to the experience. You've got to feel that happiness that gives you the passion to want to come back. And it's a mix of tenants, it's a mix of architecture, it's a mix of colors and texture that do that. And we're going to continue working to try to create that place, even in suburban shopping centers. Definitely urban, but definitely suburban, too. I think people are gonna continue to go to that place that makes them feel comfortable, happy. You know, I think one of the ones that I go to occasionally is a Merrifield mosaic. I think they've done a really interesting job of creating a space outdoors where people just gather and feel good with a lot of different tenants in a lot of different phases. I mean, it's a really hard thing to do.
• 1:23:14
  Speaker A: Well, Jody talks about that in the interview, and then she also talks about, obviously, downtown, what they've done at Noma with the retail there, which is an interesting experience. It's unique urban retail, I think. I don't know if there's any quite like it.
• 1:23:29
  Speaker B: It's amazing. And it's basically a city that's popped up when you go down there and see all the new residential buildings. We're very fortunate to be working on a project there, and we just signed a couple of leases for restaurants that will open in addition to pallet 22. Another client that just opened bought a building, built their own, bought a building, rebuilt it on a corner. St. Anselm was there. Pastis. You know, there are a lot of great restaurants. It's fun. I enjoy going down there and kind of looking at the structure of what makes it work. Some of it's a little gritty. Some of it's a little authentic in terms of, you know, the warehouses. And then you throw in, you know, great service and dining, and it hits that spot of whatever we want to call it, experiential happiness. You know, the hairs in the back of your neck go up, and you're like, I like being here. You know, and there's a lot to that.
• 1:24:34
  Speaker A: Well, you mentioned Oliver Carr earlier. He built. They built an office building down there. I don't know if you've seen it yet. It's called signal house, but he's going to have a. I think a top, top end restaurant can be on the ground floor. It's a unique building. Spectacular. It's hospitality feeling as you walk in and just think so it's, you know, it just seems kind of fit in really well with that, with that neighborhood down there. But he's got a top floor space. It's spectacular there.
• 1:25:05
  Speaker B: So I imagine the views are incredible.
• 1:25:07
  Speaker A: But it's not just the views. The amenities he's built into the property are unique for an office building, I think. Shifting now to your team. I know. And you talk. You mentioned several people already. I know you brought several people. You brought about Melissa and Bill from Charles E. Smith, you and they already had a strong present servant talk about their contributions and other team members increasing market share, now being the largest in the region as the retail.
• 1:25:38
  Speaker B: Well, we've been so fortunate to get. We have a very strong intern program. So not only do we have people that have been worked with me now for 30 years, but we have people that have come up from interns, Caroline Bosch, Christian Kingston, Pat O'Mira, who we have a really, what I would consider robust training program where we don't just, like, hand people a phone, say, go. Go get it. We're gonna train people to be thoughtful about their decisions and do the research, read the lease, look at the use clauses, and so that they can make those decisions and come to us with information. And it's. I think that is what has set us apart in terms of our organization and the ability to kind of jump on any project that comes in the door. And for me, I consider myself to be the coach of the team, not, you know, I don't tell people what to do. We sit around and discuss the best way forward, and it's really important for, in my opinion, for the team to believe in what we're doing and to be a part of the decision making. And that's what really makes my job fun, because I get to sit around with the team and talk about these goals and directions, and hopefully it makes them feel like it's their action.
• 1:27:21
  Speaker A: That's great. So you'd like to empower.
• 1:27:25
  Speaker B: Oh, I think enabling other people to make the decisions.
• 1:27:29
  Speaker A: That's great.
• 1:27:30
  Speaker B: Is where the magic is. You know? I've spent a ton of time in my career studying all the motivational books, starting with the power of positive thinking by Norman Vincent Peale. My mother gave me that tape. It was a cassette tape when I was graduating from college, and I had to drive back and forth to North Carolina to visit my family. I can't tell you how many times I listened to that. But the whole belief to achieve and the powerful force in everyone, once unleashed, you can do anything, and to dream, you can make it happen. And I'm lucky that I learned very early that the harder I work, the luckier I get. So I've spent a lot of time going to restaurants and meeting with people and working here at night. I like being here at night and kind of thinking about directions and where things are going.
• 1:28:26
  Speaker A: That's great.
• 1:28:26
  Speaker B: And I get a lot of personal satisfaction from that. So Pat goes back to the passion. Gary leads with passion. Of course, he works seven days a week. He leads with passion. And he's a very quick decision maker. We do not have paralysis analysis. We sit down, we have the facts.
• 1:28:51
  Speaker A: We don't have an outside board.
• 1:28:54
  Speaker B: We do not. It's anything like that. You know, it's a really tight group. Gary. Steve Pugh's our coo who just does so many fantastic things with the company. Frank Pierre Cheney, our CFO. Larry Spot, head of development in construction. And Gary is just so immediate. You know, he's going to make a decision now. He's not going to. We have to give them all the information. Don't get me wrong. It's got to be well laid out. And we have a lot of templates we use for financial decisions. And Steve Carboni is just a master of that. So we get all the information on the table and make decisions, and it's fun.
• 1:29:39
  Speaker A: So what trends are you seeing in new retail concepts that will lead to growth? How will AI play into retail uses artificial intelligence.
• 1:29:50
  Speaker B: Okay, so regarding trends, I think we're seeing, it happens every day where we're just focusing so much on wild food. Grocery stores abound in this market. People are paying so much more attention to what they're eating. And it's funny because I use the example of Campbell's food, Campbell's soup. You know, when I was growing up, a sandwich in Campbell's soup was kind of like what we ate. You know, your mom said, you know, go open a can of soup, grilled.
• 1:30:23
  Speaker A: Cheese sandwich and a tomato soup.
• 1:30:25
  Speaker B: There you go. And for the most part, we've gone in a good way. So organic, so healthy on food, but not only healthy on food, but different types of food from all over the world. And I personally love all the different tastes. One of my favorite things to do is go to a restaurant and order a bunch of plates and share them amongst the group and discuss what we like and what we don't like. And I do that. I try to do that at restaurants that are healthy. I do eat steak, steak occasionally, but not that often. But when I do, I really enjoy it. I went to SDK yesterday and a fabulous steak for lunch, you know, with us out. So in retail, I see more, you know, grocery stores aren't stopping of different sorts, from a Wegmans at 140,000, an Aldi at 20,000 sqft, or a trader Joe's at, you know, 11,000 sqft or eleven to 14. And I personally love like that. So I think that's good. I think all the different cuisines we have, ethnic cuisines, as I said, from all over the world. Services in the shopping center versus having to go find them somewhere. Doctors in shopping centers, again, the shopping center in the local market, whether it be neighborhood or regional, are becoming more of a destination where you can get everything done. With the exception of fashion. Fashion is going more and more towards ordering online. I personally still like to get my, my clothes at a store from a person because I know the fit. And even though you know your size is 32 or 34, whatever it is, or your shoe size is 1111, it varies even with the same.
• 1:32:18
  Speaker A: You look at tenants like bonobos, which is kind of an interesting hybrid. You go try and then they ship your clothes to you.
• 1:32:27
  Speaker B: And, you know, we need. We need really cool brands like the enclout or the on shoes from Sweden. You know, a lot of us wear them. I have multiple pairs. Whenever I'm out shopping in old town, I'll go to comfort one shoes and I'll look again, even though I don't need a pair, but I love them. Whatever it is that gets you. Pants, belt, pocketbooks, whatever, those are the things that you tend to gravitate towards. So I think our shopping will continue to evolve and will continue to be more experiential.
• 1:32:58
  Speaker A: What's your feeling about Ikea and that thought process? I mean, it's a unique story. Unique.
• 1:33:05
  Speaker B: I personally go there occasionally. I'm not a big ikea guy, but that's what I'm just telling. Some people love Ikea. When they want to do something in the house, that's where they go. Or they want to organize something, that's where they go. The container store, another great example. If you're that person, you're going to get a box, organize your joy, your clothes, everything. And I get some things from there, and I love the store, but I'm not. I'm an occasional shopper versus people that go there all the time and swear by it, but, you know, everything from knee braces to shoes to coach or whatever, there will be another product that improves upon what there is, and it will create demand. People listening can't see my shoes, but I'm wearing a very unique pair of on cloud shoes, or on shoes, I think is the brand the correct brand name with a really unique lacing system? You know, who would have ever thought there'd be a new way to lace shoes? And this is not the one with the elastic lace either. It's a different one. I mean, you know, it's just, there's always going to be something coming up, new material, the pants, you're wearing or the shoes you're wearing. You know, it's just amazing what is being improved upon and that will continue and we'll always have success.
• 1:34:32
  Speaker A: But what about the interface between online retail and in place retail? And that's evolving too.
• 1:34:40
  Speaker B: It's amazing. On has an incredible website, but I still prefer to get them in the store because the sizing from one style to another is a little different. I might get the next pair of that shoe online. The first pair of that shoe I'm gonna get in person. And there are a lot of brands that are doing that. The omni channel, where it's going to be online and in person. And I think that's going to continue to help us in retail and create excitement. Movies, another example. The last couple years, movie industry has really been struggling with the strike on the SAG workers and movies. But when movies come out and good movies come out, people go, you know. So hopefully that industry gets itself right and puts out a lot of new material. Supposedly this summer, there's gonna be a lot of great movies, and that can create demand. And those people go to movies, they go out to eat.
• 1:35:40
  Speaker A: Well, the last film experience I had was at pike and Rose, and they have, this is a federal property, this theater that the restaurant built into the theater, and very comfortable seating, you know, leathers rocking the whole thing. You feel like you're in your own living room with a gigantic screen. And it's quite an experience. So that's an abolition, obviously. So let's shift now into personal things. What are your priorities among family work and giving back? Honestly, I have to say I derived this question from Gary Rappaport's long explanation of how he allocates his time, which I'm sure you're well aware of is your similar.
• 1:36:28
  Speaker B: So I'm really, really lucky. I've got a wife of 30 years, Lee. The best decision I ever made. From that came our two kids, Katherine and McLean. Katherine is in the family business, so to speak. She's working with career holdings in Dallas. Really super successful. So proud of her. And then our son is working with residential development with Lincoln property Group that just renamed the residential side Willow Bridge. And it's just so much fun to see them grow in the industry. And actually both in real estate. Both in real estate. Actually toured warrior buildings. He's doing office to residential conversion. Yesterday, just to see him tour each unit and be so excited about differences between the two was so, so wonderful. I spent a ton of time with him growing up. We created a little life of snow skiing, where we went to Wintergreen, spent the weekends together, spent a lot of time together. Lee is just a fabulous partner, and we have a ton of friends in the market. We have a ton of family still in North Carolina. We spent a lot of time going to visit with them. Super important with my siblings, her siblings, and then I spent a lot of time on nonprofit things that I'm particularly proud of. Tall ship province is one that it's now a ship at the bottom of King street. It's so fantastic. I'm on the children's hospital foundation board now, emeritus. I've done it for a long time. I've worked with the bisnodiversity board. Very proud of that. During COVID became very important for Rapoport as well. The Atlas theater on H Street.
• 1:38:15
  Speaker A: Oh, sure.
• 1:38:15
  Speaker B: Really important for us. Gary was one of the founding donors there, and I've continued to serve on that. And gala chair. I've been. Washington Education foundation is another one that's been really important to our family. We still support organization, and we do a suite rap report, does a suite at the tennis tournament, the city open every year. Federal city Council Washington, DC Economic Partnership.
• 1:38:40
  Speaker A: What about Skyland?
• 1:38:41
  Speaker B: Skyland Workforce Center Kevin Reynolds and I started a leadership council for the Skyline Workforce Center. I was literally there this week, went in to introduce one of our tenants at Skyland to the organization so they could do a job fair. So important for us to get people to work from the community at Skyland, and that's been very, very rewarding, all those organizations. And I would counsel people that you do those things for the right reasons. You might not get anything in return other than your own personal satisfaction, but it's great for business. You meet other people, you grow as an individual. You learn about yourself, which is really important. And I think it's very motivating to go out and do the other things that give you value and make you feel more energetic about jumping up and doing it the next day.
• 1:39:42
  Speaker A: That's great. So my final question, if you could place a billboard on the Capitol Beltway for millions to see, what would say?
• 1:39:50
  Speaker B: Henry? Well, I love this question. I struggle with the answer because there's a couple different ones, but the one that I like is success is not the key to happiness. Happiness is the key to success. And that would just those words on there and another one, if I was allowed to.
• 1:40:17
  Speaker A: John, go right ahead.
• 1:40:19
  Speaker B: It would just be spread love. Love it.
• 1:40:22
  Speaker A: That's great. Henry, thank you very much.
• 1:40:26
  Speaker B: John, thank you.
• 1:40:26
  Speaker A: Wonderful interview. I appreciate it.
• 1:40:28
  Speaker B: Thank you.