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CRE Lessons From An A List of All Star Experts · Between Two Chairs - Demystifying Commercial Real Estate

• 0:00
  Welcome to Between Two Chairs, demystifying commercial real estate, the podcast that brings you the latest insights and trends on the South Florida commercial real estate market with your hosts, Fernando Arencibia, Jr. and Jennifer Wolman.
• 0:15
  In each episode, we dive into the world of commercial real estate and break down complex concepts to make them accessible for everyone.
• 0:23
  Whether you're a real estate professional, a curious investor, or just interested in the South Florida market in general, Between Two Chairs is the podcast for you.
• 0:33
  So pull up a chair and join us.
• 0:49
  Hello everybody and welcome back to Between Two Chairs, demystifying commercial real estate.
• 0:56
  I'm here with Fernando Arencibia, Jr. my wonderful host, and he's going to talk a lot today because today's episode is going to be over two conferences that we attended recently.
• 1:11
  The first one is going to be the C5 NAR and CCIM conference that was in Atlanta. I know it was back in August, but we haven't debriefed since you came back.
• 1:21
  And our goal when we go to these conferences is to come back with three takeaways. They can be ideas that we want to implement in our business, information we want to share, anything, but three actionable takeaways in addition, obviously, to all of the networking.
• 1:37
  So this was the first time that the C5 wasn't held in New York. And I understand from you that it was the best one yet. These conferences tend to get better and better over time.
• 1:47
  And next year is going to be even greater because it's going to be here at the Hard Rock in Hollywood, Florida. But what were your three biggest takeaways from this conference?
• 1:56
  So as you mentioned, you know, C5 is this is the third iteration of this conference. The C5 stands for 5C stands for Capital Connect Commerce, Community and Commercial.
• 2:09
  And what made it really special this year, I thought, was the combination of bringing in a partner like CCIM Institute.
• 2:16
  And so from this year and for hopefully for forevermore, it will be a C5 CCIM Global Summit. You know, as always, it was just great energy in the room, a lot of very impactful presentations.
• 2:31
  And what I would say in regards to the way that this was curated, for lack of a better term, is that number one, in a lot of ways, Atlanta was a part of the amenities of this conference.
• 2:42
  And by the way, I just wanted to correct you. The conference was at the end of September. So we're not that far removed.
• 2:50
  Atlanta was definitely the amenity. And there were on the first day a couple of tours to this Microsoft campus.
• 2:58
  And I heard from people that attended the tours that it was a great, wonderful experience. And then CCIM had a couple of classes on the first day.
• 3:07
  The first takeaway for me was our keynote speaker. So on the official first day of the, you know, of the conference, the first general session, we had the NBA legend, Hall of Famer David Robinson.
• 3:23
  And one of the things that I found really impactful here is, and I told you because I was raving about it when I came back, is if you ever have an opportunity to listen to David Robinson speak or be on a panel or any Q&A, in this case, it was Q&A with NAR president Tracy Casper, who did a wonderful job asking the questions.
• 3:43
  You will be hard pressed to find a more genuine human being. He has mastered the task of being comfortable in your own skin. But one of the biggest lessons is that here's a person who was in the Navy, right?
• 3:58
  His family are all from the Navy. So he's got that discipline and he's got that approach to everything that he does. And then, of course, he goes on to have an NBA Hall of Fame career, a world champion, and then has another career, which is in commercial investments.
• 4:18
  And there's a lot of philanthropic venues that he does, including in the world of education. But one of the lessons, and I think, you know, we love your opinion on this, is that he speaks about the first time that he lost money for his investors and that everything that he had done up to then, it was only his money that he was risking.
• 4:39
  But he spoke about the awesome responsibility of jumping into a bad deal when you have other people that have trusted you with their money. And what he learned from that experience is that he was outsourcing a lot of the research, a lot of the approach to other people.
• 4:58
  And he realized that he needed to take reins of how things were taken care of, the process, the procedures, the people involved, everything about it. And what it got me thinking, Jennifer, was this idea that we throw out this word of being a passive investor, right?
• 5:18
  That there are so many venues to be a passive investor. But I think that that is a misnomer. I think a lot of people think that that means you sit back and you just passively collect. But I believe that, you know, part of the lesson that he was invoking, and he didn't mention it in this exact way, is that you cannot be a passive investor when it comes to having a point of view about what you're investing in, why you're investing in it, and in your perspective, how you can be successful in that investment.
• 5:46
  And so you can't be passive about why you're investing in the product and what you're doing. And I think that that is one of the things that he conveyed during his keynote.
• 5:56
  So I think that's a great point. I agree with you 100%. Passive basically to me just means you're not in the day-to-day management of the asset, right? But I love it when they say, oh, multifamily is a passive investment.
• 6:09
  Well, not if you're the GP or the property manager overseeing the million calls you get for stuff, you know, stopped up toilets and the locks not working, etc.
• 6:20
  So I agree with you there. And the part about the having a clear investment strategy, we've discussed this in a previous episode.
• 6:31
  And as you're describing this, all I could think of is the question when you ask somebody who calls and says, hey, I'm looking for a property, I'm looking for an investment property or I'm looking for a warehouse or I'm looking for this.
• 6:44
  And you say, OK, specifically, what are you looking for? Oh, I'm looking for a warehouse. That's a good deal anywhere in Florida or anywhere in the United States.
• 6:55
  It's like, I'm sorry, I can't help you. So then then our job becomes asking the questions to make sure that this person has, at least in their mind, so that we can work with a really well-defined investment strategy.
• 7:10
  That's right. Because if it's just, oh, find me something anywhere, any asset class anywhere, as long as it's a nine cap.
• 7:18
  Like, how do you even start with that? Right. So I think that's a really valid point. And to your point, even if you are a limited partner on a syndicated deal, which is about as passive as you can get, you still have to do your due diligence to determine whether or not you want to get into the deal.
• 7:42
  Like, I have certain criteria for my investments. And even though I have been approached by some people who I can't wait to get into a deal with them because I love working with them, I think they're wicked smart.
• 7:53
  They're super, super successful. Not them, but they're whatever investment they're pulling out, whatever they're they're putting together doesn't meet my criteria.
• 8:04
  Right. So then I'm like, no, keep sending them my way. I swear I'm going to work with you one day, but this doesn't meet my criteria. So I think to your point, even if you are a limited partner and looking for passive investment where you basically once you pick the deal that you want to get into and agree to sign in that you've done your due diligence before, and then you still need to check up.
• 8:29
  Right. Because you still need to see is my investment is my asset performing the way that the GP had described it. And if not, what can I find? Like what's going on in the economy or what's going on locally or nationally that would change those.
• 8:46
  And if there if I can't pinpoint anything, then it might be time to have I know all my GP friends are going to hate this, but it might be time to have a call with the GP like if they don't do a good job. Most GPs do a really good job of sending out at least quarterly.
• 9:01
  Quarterly, quarterly letters. I don't know why that one was a time for me today. But quarterly updates stating look, this is what the assets doing. This is these are the issues we ran into. This is why we're above or below what we were expecting.
• 9:19
  And they do a good job if they do that. Leave, leave them alone. But if they don't do that, that's when you need to have the phone call and and say, hey, you know, what's just curious.
• 9:29
  Exactly. The other thing that was really interesting is, of course, we had this great panel with Lawrence Youn, chief economist for the National Association of Realtors, and he had two other economists there.
• 9:41
  And there was a lot of conversation at the time. So imagine we were there the last week of September and we were right up against the deadline of the government shutdown because the debt ceiling was not going to be raised.
• 9:53
  So everybody was concerned about is the TSA going to be working and we're going to be able to leave Atlanta? Do we have to rent a car? That was part of the dynamic of the conversation.
• 10:02
  And imagine three economists on stage. That was part of the conversation as well. One of the little tidbits out of that, and this comes from the chief economist for Moody's Analytics.
• 10:12
  And one of the things that he mentioned was this K-shaped recovery when it comes to office. And so he says that office will be bifurcated. A and B quality buildings, Class A and Class B, are going to do well.
• 10:26
  And then everything that is C or below is going to struggle. So the reconfiguration of the move back to the office, it's more of a, you know, a move to quality.
• 10:37
  And the other buildings are going to have to get either repurposed or they're going to have to upgrade or there's going to be some some amenities that are going to attract the people back.
• 10:47
  I think there was a general consensus that we're going to have some form of a hybrid, you know, office, you know, moving forward.
• 10:53
  There was a really cool presentation by Bobby Flash Durembos. She is a fighter pilot. There was this presentation about a fighter pilot secret to business success.
• 11:05
  What I loved about it is that it was interactive. She brought an entire team and they would play this black box recordings.
• 11:12
  They would go through these recreations of what what happened. And the biggest lesson there was that sometimes there was a really terrible accident that really occurred because people were focusing on a small little thing and getting away from the bigger picture.
• 11:29
  There was this idea of sometimes you could be so hyper focused on one little problem that you not only ignore others, but you create other problems.
• 11:38
  So I thought that that was a good a good lesson. And and if I may, I'm going to finish with, you know, I think the person that you missed out on the most.
• 11:46
  It was Chris Voss, the master negotiator, the FBI.
• 11:51
  Yes, I've taken his master class, read his book a million times. I love him. Absolutely. And I've watched every YouTube ever done.
• 12:00
  No doubt. And really a wonderful, wonderful presentation. He runs a company called Black Swan Limited, which I even like the name of his company.
• 12:09
  I mean, like I'm I'm you're a fan girl. You're a fan girl for sure.
• 12:13
  And if you haven't read his book, his book has never split the difference. And it's it's an amazing read. Or if you're not a book person, it's an amazing listen as well.
• 12:23
  He does have a great voice. I believe he narrates his own book and he it's not a monotonous voice.
• 12:28
  It's so soothing. And that's one of the things that he says when you're negotiating with your voice.
• 12:34
  The presentation was full of humor, but a lot of it had to do with the number one thing in negotiating is empathy.
• 12:41
  And in what he was saying is that people misconstrue what that means.
• 12:46
  But what he says is that it's not about what is what the thing is to you, whatever you're analyzing, it is what it is to them.
• 12:53
  He says that when you're an FBI negotiator and you're speaking to a family who just went through one of the most horrific, they're going through one of the most horrific experience of their lives.
• 13:02
  You got seven to ten seconds to establish trust and credibility. And he says, you know, that's very different than than confidence.
• 13:11
  You know, trust and credibility is something where it comes from from from years of what you're practicing.
• 13:19
  But the moment you make it up by yourself, then you lose that ability to convey that in that seven to ten seconds.
• 13:26
  Overall, it was an amazing experience. Is there is there something that you remember from from from Chris Voss that that you always keep in mind when you're.
• 13:35
  So I do remember the empathy that he says it works both ways. Right.
• 13:40
  Like he always says if he gets asked a question that he knows he can't fulfill.
• 13:47
  Yeah. Yeah. His answer is always. OK.
• 13:51
  Now, how how do you expect me to do that? Right. So I love that.
• 13:56
  Like, OK, how how is that supposed to work? So I liked that.
• 14:00
  I really remember that. I remember his midnight radio host voice because especially in negotiations, things can get heated.
• 14:08
  And oh, my gosh, I can't imagine being an FBI negotiator and having that stress.
• 14:14
  I mean, somebody's life is literally in your hands and in your brain and in your heart.
• 14:18
  And by the way, because some people might think, well, we're you know, what's his voice have to do with it?
• 14:24
  If you look at his master class, the intonation of your voice is a tool.
• 14:29
  Correct. Very much in negotiations and people sort of undermine a little bit of that.
• 14:35
  But that right there is power there. You speak in a midnight radio host voice.
• 14:40
  But he says during certain times when things are getting heated, that's kind of a way to calm the situation down and take any.
• 14:49
  It's very neutral and soothing. So I remembered that.
• 14:54
  I mean, obviously, he says, like, never split the difference going back and forth on negotiations and meeting halfway,
• 15:01
  which is interesting because a lot of times that's what, you know, people in real estate tend to do.
• 15:06
  Let's just split the difference. Well, according to Chris, that's a big no, no.
• 15:10
  But what I find interesting, I wrote some notes because I did not go to this conference and I wrote some notes.
• 15:16
  And it was interesting because both David Robinson and Bobby Dorenbos talked about learning from failure.
• 15:24
  And both David Robinson and Chris Voss talked about the importance of being genuine.
• 15:30
  So for him, I think when when you say seven seconds, seven to ten seconds to establish trust and credibility,
• 15:37
  the only way to really do that is to be genuine.
• 15:41
  And he's probably genuinely empathetic with the situation, with the person.
• 15:47
  Like, I remember in the book, to your point, I remember him stating that he would he would empathize with the bank robbers.
• 15:56
  Right. Right. He'd be like, wow, I imagine it's pretty stressful right now. This probably isn't going the way you imagined.
• 16:02
  Like, you know, so he's like, my guy's probably sitting in there going, of course, it's not going the way I imagined.
• 16:08
  So anyway, so but I think that the only way for him to be that, to establish that is because he can picture the other side.
• 16:15
  He is empathetic. I'll tell this quick story because I think people will enjoy it because I really enjoyed it.
• 16:20
  But, you know, he says that trust and credibility, credibility is very different than confidence.
• 16:24
  Right. And some people confuse it. Some people just want to act like, like, I know what I'm doing and all the stuff.
• 16:30
  So it's like, you know, he tells a story about whether you want a confident plumber or you want a credible plumber.
• 16:38
  You know, when things are going bad, you don't want a confident plumber. You want a credible plumber.
• 16:43
  You know, you don't want the guys like, I'll figure it out. Don't worry about it. I got this.
• 16:47
  You know, so he's telling the story, you know, he gets called because there is a young boy that is kidnapped in Haiti of Haitian parents.
• 16:57
  The young boy was was an American. He was born in America. So they call the FBI.
• 17:02
  You know, this is happening on a Tuesday. And the father calls the American embassy and say, my son has been kidnapped.
• 17:08
  And so the American embassy says the FBI will be contacting you.
• 17:12
  And he says, people, what do you when you hear that, what do you think you're thinking?
• 17:17
  Like there's three guys, you know, and he puts a picture of the men in black.
• 17:20
  It's like the movie. He goes like showing up at the door.
• 17:23
  Like, don't worry, sir, we got you, you know, putting a bunch of equipment around, you know.
• 17:27
  And instead, all he's going to get is a call from me.
• 17:30
  And he says, I got that seven and ten seconds, you know, it's a nine or whatever in that seven to seven seconds.
• 17:35
  Basically what he says, sir, my name is Chris Voss. I'm an FBI investigator. Your son will not be harmed.
• 17:42
  Kidnappers love to party. They want to get paid right before the weekend.
• 17:47
  Right. If you do everything I say, you will have your son by Saturday morning.
• 17:51
  So he's conveyed. He sets the expectation.
• 17:54
  He's conveyed like I know what I'm talking about. Right.
• 17:57
  I know exactly what's what's happening here. And to his credit, the son was returned Saturday morning.
• 18:03
  He's not only putting themselves in his shoes. He's he's looking at kidnapping as a business.
• 18:09
  So he's looking like there's a product, there's a bag man.
• 18:13
  There is the person who's going to make the call. There's a person who's got who has to pick up the product.
• 18:17
  The person who has to deliver the product.
• 18:19
  So even though we're talking about the human being as a product, he he is looking at it from exactly their perspective.
• 18:25
  So he's able to get in there and really be effective in negotiating the release of the boy.
• 18:31
  You know, so in real estate, it's similar, maybe not as high stakes. Right.
• 18:35
  But we are talking about a lot of money. I like how you said, maybe not as high stakes, maybe not as high stakes as a human life.
• 18:42
  But I mean, there's a lot of money on the line either way. Right.
• 18:45
  Oh, my God. So I was trying to do a lead in to get you back into real estate.
• 18:51
  And I get it. I know we're in a commercial real estate pockets, but, you know, not a lot of people get a chance to go and see these presentations.
• 18:58
  So I wanted to share because, you know, there might be a lesson in it for you.
• 19:02
  That's what I was thinking. I mean, I literally was thinking.
• 19:06
  OK, so because when I mean, obviously, when I read his book the first time, I was thinking about it as negotiating real estate.
• 19:13
  I'm not planning on going to work for the FBI and their kidnapping division anytime soon.
• 19:18
  And the second time I read it was because I did get so much out of his stories of how he negotiated for something as high risk as a human life and being able to bring it down to, OK, how would that apply to real estate?
• 19:34
  So what you were just saying about who he empathizes with, there's there's so many different roles in negotiating on a commercial real estate deal.
• 19:43
  Right. Whether it's a lease or a purchase or a sale. Right. You've got all the different players involved.
• 19:49
  Anyway, if you get a chance to read his book, read his book.
• 19:52
  We obviously are big fans and there is a lot of really good information in there that applies to negotiating real estate transactions.
• 19:59
  And then in terms of credibility and confident people, which are both, I've got to move on to the Miami Realtors Commercial Conference.
• 20:10
  So what can I suggest to research Ponce City Market in Atlanta?
• 20:15
  This was I was very impressed with the project. This was PONCE. Correct. Ponce City Market.
• 20:22
  It was a Sears and Roebuck in 1926. Then it became a city hall and then it was abandoned.
• 20:27
  And then eventually the city in 2011 sold it for like twenty seven million dollars and this group comes in and they invest one hundred and eighty million dollars in adapting and repurposing every single bit of it.
• 20:41
  And, you know, it opened first in 2014. So it's coming into its 10 year anniversary next year.
• 20:46
  And so I do want to say that if you want a case study on a great adaptive reuse project, it's a very fun place to go and spend time.
• 20:56
  You know, it has everything you could ask for. So even if you're not doing a repurposing redevelopment, go visit and have fun if you happen to be in Atlanta.
• 21:04
  Exactly. All right. Let's talk about the Miami Commercial Conference.
• 21:08
  So the Miami Commercial Conference was packed full of local and national stars that we love.
• 21:16
  And I was going to do a massive name drop, but I figured that would take up most of our time.
• 21:21
  So instead, we'll list them and the schedule of speakers in our show notes.
• 21:27
  But just curious what you what you got out of it, what your takeaways are. I mean, especially for us, right.
• 21:33
  We're attending. We're local agents. We're local brokers. We're local investors. And we're attending a local conference.
• 21:40
  You kind of probably wonder how much are you going to really get out of it. But I got a lot out of it.
• 21:45
  A huge amount. And I want to hear your take. But I will say this. This is a conference that the Miami Association of Realtors,
• 21:51
  namely the Miami Commercial Board, has been putting together for years. It has grown incredibly.
• 21:57
  The quality of the speakers has every year gotten better.
• 22:00
  And the amount of attendees to the point that we've had to change venues twice in order to accommodate.
• 22:06
  We had 400 people at this local conference.
• 22:09
  I just love the diversity and the quality of the speakers that are around.
• 22:16
  And what I would say is that if I'm investing in commercial real estate and this is if I am a commercial investor,
• 22:21
  I wouldn't miss the midyear conference that happens around May of every year.
• 22:26
  And I certainly would not miss the commercial conference every year, because, again, the information is hyper local.
• 22:32
  But we also have, you know, national speakers that come in.
• 22:36
  We usually start with a national overview. And then this year it was Lonnie Hendry with Trap Inc.
• 22:43
  Who's amazing. And they have a great, great podcast, The Trap Wire.
• 22:47
  But I know you're going to talk. So Lonnie, I know you told me you want to be...
• 22:51
  T-shirts, Lonnie, T-shirts. We're expecting T-shirts.
• 22:54
  We are expecting T-shirts. Plus, you know, I know you want to join us in this podcast.
• 22:59
  So, you know, the invitation is coming.
• 23:01
  Yeah, exactly. We're going to interview you. I'm sure that's what you want another podcast to do.
• 23:06
  But so Lonnie comes in and he gives a big overview of what's going on on a national scale in the different asset classes.
• 23:15
  And then he, you know, broke it down to the local level.
• 23:21
  And just to tie it in with what you were saying about the K-shaped office market,
• 23:25
  one of my takeaways was from Lonnie's presentation and he was talking about office properties.
• 23:32
  And the reason I'm trying not to beat this horse to death with the office and office and offices,
• 23:38
  because we've often said that we're not seeing the same things in Miami that we're seeing on a national scale.
• 23:44
  For sure. But we should always put in yet, because at some point,
• 23:49
  some of the macroeconomics come down and affect the local level.
• 23:55
  And one of the things that I could definitely relate to is he had a chart and it showed office properties that were reappraised in 2023
• 24:06
  and the value decline by age of the properties. So to your point, the K, right?
• 24:11
  The A's and B's might be declining, but not as rapidly and are going to increase faster.
• 24:18
  You know, come back faster and the lower leg of the K, not so much.
• 24:23
  So pre-1950 buildings had an average total value loss of 60%.
• 24:33
  The build date from 1950 to 1980, minus 55% average total value loss.
• 24:42
  1980 to 2056 and 2000 and on 52%. Now, again, this isn't local.
• 24:50
  This is on a national level. But the reason it rang with me is because we have a lot of office buildings that were built in the 50s to 80s.
• 25:00
  We have a lot of buildings in general that were built in the 50s and 80s.
• 25:03
  So those are probably the ones. And we've talked about it when we did our office episode that, you know,
• 25:09
  some of those C quality, C and D quality office buildings are really ready, not even for a repurpose.
• 25:15
  Some may be for a repurpose, but others for ground up redevelopment. So that was one of my takeaways.
• 25:21
  What I love is in Lonnie's presentation, there was that macro to micro.
• 25:26
  And, you know, what's interesting is he speaks about all these trends nationally, but then he gets to South Florida, Miami, and we're bucking the trend in every way.
• 25:36
  And of course, you know, one of the things that I took from there, which has been part of the conversation,
• 25:41
  and it's an ongoing conversation, it's going to be an ongoing conversation, is that where is the biggest issue that everybody sees?
• 25:47
  And that is the skyrocketing cost of insurance. And definitely it's in the radar of every major financial institution,
• 25:55
  anyone who's going to, you know, lend or invest in South Florida. It's going to be part of that conversation.
• 26:02
  Part of the conference is also having these presentations that are asset class based.
• 26:07
  I wonder what did you get out of the wonderful panel that was put together and moderated by Michelle Gonzalez,
• 26:16
  which had Mr. Robrero from JLL and then of course, the canvassing queen, right? Beth Azor. Paul Dean. Rod Castain.
• 26:27
  That was a great panel, but I'm partial to retail because that's where the fun happens. It's the fun asset class.
• 26:33
  So what I loved seeing were, you know, he did overall rent growths or declines and overall retail across the country is doing fairly well.
• 26:44
  The only place that saw a drop in rent growth was San Francisco and well, to San Francisco and Honolulu.
• 26:51
  San Francisco was minus three percent and Honolulu negative two point four percent in rent growth.
• 26:57
  And then Florida in general was really strong. Miami rent growth was four and a half percent.
• 27:03
  So not too, too high. But given where we've been and how far we've come, that's still pretty high.
• 27:10
  And Orlando was seven point four percent and Tampa was eight point three percent.
• 27:15
  So I thought that was that was super interesting because it put, you know, kind of a picture over the sunshine states,
• 27:23
  which are the smile states that they call them, you know, everything from Phoenix, Texas, Atlanta, Florida, et cetera, all extremely, extremely strong.
• 27:33
  I really enjoyed how in this presentation there was almost like a call to action to focus a big portion of your of your space to local businesses,
• 27:43
  support the local business, make sure that they have a home and make sure that they're part of the way that you curate the shopping center.
• 27:51
  And how important those mom and pop. Oh, for sure.
• 27:54
  Every single one of the people on that panel, even if they do do big box retail and, you know,
• 28:02
  and cap retail with the bigger companies, they all said mom and pops, mom and pops,
• 28:08
  which we love because we believe they are the lifeblood of the community.
• 28:13
  And every everybody on the panel said that and that they always make sure that they're a big part of who they bring in.
• 28:20
  I also thought the focus, as always, we've been seeing it.
• 28:24
  We saw it before the pandemic.
• 28:26
  And then there was kind of a break, you know, with everything closing during the pandemic.
• 28:30
  But the experiential real estate and how before, you know, Jeff said and everybody agreed, you know, when he first started out,
• 28:40
  if you had a shopping center, you know, you always had the same five people.
• 28:45
  Right. You had your grocery anchor. You had your nail salon.
• 28:49
  Yeah. You had a quick delivery pizza, Asian fast food, Chinese restaurant and an insurance company.
• 28:59
  And he said, and you rarely wanted restaurant other than those two fast foods.
• 29:04
  And he says now, yeah, you still want the grocery and you probably still have the nail salon.
• 29:09
  But now you have a lot more medical uses and a lot more restaurants.
• 29:14
  And and he said, and it's the quality of the restaurants.
• 29:17
  It's not just the fast food pizza delivery people.
• 29:20
  It is Michelin star chefs are happy being and some were happy to say locally grown.
• 29:27
  Yes. Yes. Michelin star chefs. Yes. Yes.
• 29:30
  I also to go along with that is the brick and mortar is where the profit are. Correct.
• 29:35
  Right. And the average size of the stores is below the 10 year average.
• 29:40
  Right. We keep shrinking. Right. And making it more and more efficient.
• 29:43
  And so that that was another another component of that,
• 29:46
  especially when you have people in the stage that have 20 plus years of experience.
• 29:50
  Right. So they can recall back when it was the big box stores and then that was that was the focus.
• 29:56
  I also enjoyed we had Nathan Cogan with Miami Dade County zoning and planning department.
• 30:05
  And we also had one of the sponsors of the Live Local Act, Senator Alexis Calatayud.
• 30:12
  And, you know, one of the things that I found interesting is that when we go to Tallahassee,
• 30:16
  we see how they they're putting together these this Live Local Act.
• 30:19
  It's great for her to be there to to give face to why some of the discussions that were had about the impetus for for the bill.
• 30:29
  But more importantly, how important it is for the proper implementation.
• 30:33
  And the reason why was that is because we've had some zoning and planning departments throughout the state of Florida that are not, you know,
• 30:39
  necessarily enthused about the implementation. Right.
• 30:42
  And so I love this idea of, you know, it's not just enough to pass the bill.
• 30:47
  But now the fact that you have to travel around and kind of promote it and really the effectiveness is in its execution.
• 30:55
  So how important that part of it is.
• 30:57
  And so I was very happy to to to see them there and to really drive the point of how important it is for us to encourage
• 31:04
  the development of new additional units in order to address the affordable housing crisis and that it's not about rent control,
• 31:13
  but that it's more important to encourage that development and that growth.
• 31:17
  And what was interesting was Lonnie did state that that Live Local Act was going to help Florida immensely in turn in a lot of ways in terms of offsetting
• 31:28
  some of the hurt that's coming down the road with CNBS loans maturing across asset classes,
• 31:36
  but also with the affordability issue and Sebastian who did the section on industrial also made the comment that one of the challenges for industrial owners
• 31:49
  and users here in Florida is that there has been an exodus of the middle class due to the increasing cost of living in Miami.
• 32:00
  And he felt that this is really going to help, especially with, you know, with warehouse workers and everything else is it's going to help stabilize the middle class a bit.
• 32:12
  So I thought it was interesting that the Live Local Act, which is something that is so progressive from Florida's standpoint to try to do and override
• 32:21
  working out the kinks to your point, trying not to step too much on local zoning boards, you know, toes and yet also giving local politicians and zoning boards
• 32:36
  a little bit more breathing room against NIMBYism, right, which is part of the issue.
• 32:41
  Everybody wants affordable housing. Nobody wants it within five miles of them. Right.
• 32:45
  So anyway, that was super interesting. And then just to go back to Sebastian, because he had one of my takeaways that I took away from there was that
• 32:53
  for every person that moves to Miami, you need 700 sorry, 77 square feet of industrial to meet the demands and that this has been most consistent.
• 33:04
  That's been a consistent number over time.
• 33:07
  And this is coming at a time when right now we've got the largest amount of inventory coming on the market.
• 33:15
  We have 11.2 million square feet under construction. That's the most ever delivered historically that's going to be delivered in 2024.
• 33:24
  A total of 8 million square feet of that is unspoken for. So a very small percentage has leases.
• 33:33
  But what he also said that I thought was really interesting was that our historical absorption has been three and a half million.
• 33:41
  So even though we're delivering double our absorption rate, new starts are almost no. Correct.
• 33:48
  So, yeah, we're going to have vacancy in the very high end industrial, the larger spaces, but it's going to stabilize pretty quickly.
• 33:57
  Shout out to Sebastian. It's always a very entertaining presentation. He's a lot of fun to listen to.
• 34:04
  One of the things he says that is over the course of the last 24 months, and there's a very key metric currently in our market is that rent growth for industrial has gone up 40 percent.
• 34:14
  And based on the factors that you mentioned, the fact that there's not a lot of new construction starts, it's the lowest that it has been in eight years.
• 34:21
  He's saying basically that rent growth will slow down in as far as how much is appreciated, but will continue to go up.
• 34:29
  And so the prices and the cost of renting industrial warehousing is going to remain high.
• 34:36
  Yeah, it's going to remain stable to the new realities.
• 34:41
  I love the dynamics of this. You learn so much.
• 34:44
  One of the things that we always talk about understanding the dynamics of each asset class, but even though we bifurcated by asset class, it's a symbiotic relationship.
• 34:53
  And it's all driven. Any asset class is really driven by population growth, right? Which you might not think of that so much sometimes, right? But it's all driven by population.
• 35:02
  Yeah, that was another thing that was mentioned, that retail follows residential. So again, you know, you have that population growth. It affects industrial, affects residential, it affects retail.
• 35:11
  You know, that's why, you know, economic development agencies, you know, their job is to bring, you know, you're bringing people here, you're bringing jobs here, you're bringing big companies here.
• 35:21
  Shout out to the Beacon Council for the job that they've been doing. Absolutely. And Rod Miller, who's been doing a terrific job as heading the Beacon Council for sure.
• 35:33
  I think we're going to wrap this up.
• 35:36
  Just because we've been throwing a lot of numbers. It's a lot of numbers and stats out there.
• 35:41
  But since November is the month of gratitude, and we did a lot of name dropping, I did want to do a huge thank you and shout out to all of the people who make these conferences possible and a success.
• 35:55
  I mean, I've been to some conferences that have been kind of a duds that, yeah, you take some stuff away, but you're really like, I don't know if I'd go to that again next year.
• 36:04
  With both of these, I mean, I had complete FOMO over the C5, missing the C5 CCIM conference, but I, you know, I was really glad that I did go to the commercial outlet conference.
• 36:16
  So I want to give a huge shout out to Johnny Noon and his entire team at NAR to the whole CCIM team, because those guys, the volunteer leaders of CCIM don't have a staff and they do the work themselves.
• 36:31
  And for them to come on board and give it their all and really take this conference to the next level was a huge task.
• 36:39
  And I'm really grateful for that. And to all of the staff at NAR who put together all of the tours and coordinating guest speakers and really listening to their advisory team.
• 36:52
  I really, really appreciate it. And then, of course, to the Miami Realtors Commercial Board and Danielle Blake, the VP of Commercial, Jennifer Forbes, the current president of Commercial, pulling this off is huge.
• 37:07
  And to get the caliber speakers that they got at this conference towards the end of the conference circuit, when most of these people have been in conferences since August, right, was a huge pull.
• 37:20
  And you guys did an amazing job. Absolutely. I completely agree. Is that your stat of the day? That was not my stat. That was my gratitude.
• 37:31
  So, as always, we end with a stat of the day. We're entering November by the time that this debuts.
• 37:37
  And but I did find some great data on Halloween that I wanted to share. And this is actually from the National Retail Federation. And so their expectation for 2023, once the numbers all come in, is that the spending is expected to reach $12.2 billion, which is about $2 billion more than last year's number.
• 38:01
  And so I wanted to break this down for you. So that's $4.1 billion in costumes, $3.6 billion in candy, $3.9 billion in decorations, and about half a billion in greeting cards.
• 38:16
  Half a billion dollars. Who is giving greeting cards for Halloween? I want to know. Half a billion dollars in greeting cards? Yeah. All right. Well, God bless them. My goodness.
• 38:29
  Well, I'm not surprised. I think at your home that there will be more candy than, more dark chocolate than costumes, right? Or no? No, I only buy candy I don't like because if I have leftovers, I don't want to eat it.
• 38:41
  That is not good at all. I'm so sorry. I'm going to have to figure this out. Carlos, Carlos, please. Kids likes. We got to fix this. That doesn't sound good at all.
• 38:53
  I think the Halloween decorations are getting creepier and creepier. I went on a run the other day. You know, I run when it's still dark out and I hear this noise and it's this voice and it's like, hello, it's kind of windy out here today, isn't it?
• 39:09
  And I'm like, who's talking? Like, I'm looking around. I'm like, it's got to be one of these Halloween things, but I haven't run by one. And there is this the scariest ghoul I've ever seen. But he was like, hello, look what the wind blew my way.
• 39:24
  I'm avoiding that, that running path. My market stat goes back to Sebastian. And because I think a lot of times when you throw out stuff about increased inventory or harder times in the market or stuff like that, that people think, oh, you know, vacancy rates are going to go up.
• 39:44
  Prices are going to crash. You know, I'm going to be able to buy. I'm going to wait. I'm not going to buy because I'm going to wait. Right. The famous last words. So he stated that the tenants, tenants market starts at about 8% vacancy rate, meaning, you know, attendance market over a landlord's market starts at about 8% vacancy rate.
• 40:05
  And the highest rate expected as we go into all of this brand new inventory is only three and a half percent vacancy at the worst, the worst, worst, worst time of the Great Recession.
• 40:17
  The lowest occupancy for industrial was 91% 9% vacancy. Right. So he's like, we're not going there. We're not going there.
• 40:27
  So the dollars per square foot going back to your point is going up slowly, but it is going to continue going up, even though sales are going to be down due to inventory.
• 40:38
  So thank you for joining us. I hope we didn't overwhelm you with numbers. If we did go back and listen to it again so that you can pull some information out that we got from the conferences.
• 40:50
  And until then, thank you for joining us. Thank you, everybody. See you next time.