Burlington in Clifton NJ with Kevin Nassimi
Guest: Kevin Nassimi
Topics: Burlington, Nassimi Realty, Leasing
Transcript:
Chris Ressa 0:00
This is Retail Retold, the story of how that store ended up in your neighborhood. I’m your host, Chris Ressa, and I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC Management.
Welcome to Retail Retold everyone. Today I am joined by Kevin Nassimi, the Vice President of real estate at Nassimi Realty. Welcome to the show, Kevin.
Kevin Nassimi 0:28
Thank you for having me, Chris. It’s a pleasure.
Ressa 0:31
So Kevin, we’ve known each other for a while, tell me a little bit about, or tell the audience a little bit about who you are and what you do.
Nassimi 0:39
So we are Nassimi Realty, a family owned, private real estate company been around for for about 35, 40 years, we specialize mostly in suburban shopping centers, have an in and out portfolio of about 30 centers at a time across the eastern half of the country. Specifically within the company, as the VP of the leasing department I work on deal making acquisitions, marketing, and everything on that side of the business.
Ressa 1:13
And how long have you been in the family business?
Nassimi 1:17
Since the summer of 2008. So pretty much about 15 years? I’ve actually never worked anywhere else. This has been it.
Ressa 1:26
Wow. So you’ve seen some cycles? Oh, it was an interesting one. And, you know, March 2020, we started an interesting one, and we’re about to enter a new one. So you’ve seen some cycles, you’ve been around the block a bit a.
Nassimi 1:40
A little bit, a little bit, and some others.
Ressa 1:44
And geographically? Where do you guys buy and sell centers?
Nassimi 1:50
We’re a New York based company. So we prefer to just we have like a three hour flight rule, as we like to say. So it’s generally around the eastern half of the country, it’s, you know, down to Florida, up to Chicago, back to New York everywhere in between, we like to stay in that area. You know, we don’t operate much in Texas or all the way to the West Coast.
Ressa 2:13
Three hour flight rule. I like that. I like that. And have you been getting out lately, traveling, seeing sights lately?
Nassimi 2:26
I have. Because I also do work, some work on the acquisition side. So I see less than I used to, I can’t lie. Certain habits have changed these years. You know, you don’t want, they don’t want to get comfortable. But I still like to get to each side at least twice a year, preferably once a quarter. You know, I also have other members of the team that get out, sometimes we work on as a team as things and not just individuals. So we each try and get out, you know, once or twice a year to add numbers, but not as much as I would like to but still getting there.
Ressa 3:08
Yeah, you know, it took me a while to get back into a rhythm of getting out and meeting with client tenants, and meeting and going and seeing markets and seeing sides. But it’s refreshing to do that, man. I love doing that. So, it is refreshing to do that.
Nassimi 3:28
Especially when it’s also a drive, flights have gotten more and more complicated, you know, with the masking and delays and all the paperwork you have and this and that so I could drive even if it’s a five hour drive, get home at night. I’ll do that any day.
Ressa 3:42
Are you going to the Boston ICSC?
Nassimi 3:45
We don’t, we don’t do that. Now, we’ve just acquired our second site in the New England area. So maybe it’s starting to get worth it. But I’ve never been done that.
Ressa 3:56
I haven’t been in a long time. My team’s always gone. But I am going and you mentioned if you were going to Boston you would drive through.
Nassimi 4:08
On the fence, on the fence. I actually just, if it’s downtown Boston, I would even consider a train.
Ressa 4:15
So that’s what I’m doing. Yeah. So I’m taking the train leaving the city I could get to Penn Station and if you get the Excel or whatever, it’s good Wi Fi.
Nassimi 4:19
It’s not the worst thing.
Ressa 4:25
That’s what I’m doing. I’m taking the train. And there’s a lot of trains. So unlike a flight, like if you decide, if I need to stay an extra hour or I want to leave an hour early. It’s a lot simpler than flying the grid. Yeah.
Nassimi 4:44
Especially if you’re going downtown and where you can then walk or wherever you know if you have to visit sites. Sure. Okay.
Ressa 4:53
Sure. Well, I want to take us to a part of the show called ‘Clear the Air’, I got three questions for you, or about you. Are you ready? All right. Question one. When is the last time you tried something for the first time?
Nassimi 5:12
So about three, three and a half years ago, we I got my first residential conversion project. And I actually, literally this morning, have finally gotten a seal on it. So it’s been the full three and a half years, it’s been a gruesome, troubling ride of doing a completely different animal, being commercial real estate and residential real estate, I’ve learned, almost have nothing to do with one another.
And that was my first residential project. And, you know, I could say I had a tough learning curve. And it’s been a full three and a half years since I’ve tried something because that’s been so rough on me.
Ressa 5:58
What was the, what was it before it was ready?
Nassimi 6:04
It was in one of those neighborhoods, you know, where it has been gentrified. So it actually, it was, its retail on the bottom. And it was three stories of just storage and comfort. You know, just commercial storage, let’s call it, it was uninhabitable. You know, now those apartments, get $50 a foot where it’s worth it, when you know, several years ago, no one would want to live there.
Ressa 6:31
Wow. Very cool. How many units? Awesome, man. Very cool. All right. Question two. What is one skill you don’t possess but wish you did?
Nassimi 6:44
It’s almost correlated, the natural NAF and understanding for construction. It’s a part of the dealmaking, unfortunate thing is, you know, I’m the guy with the, you know, you pull your car in to the shop and they say the left defibrillator is not working. So I’m the guy who just says okay, do whatever you got to do. I can’t answer, I don’t know. It’s technical about any detail. I just, it bounces off my head naturally, it goes in and goes out. I don’t understand it.
Obviously, I don’t try and show the other side that, but I don’t have a natural knack, the natural understanding for it. And it definitely affects my business capability. I’m man enough to admit that it’s tough. I don’t have it, that I’m not good with my hands. I’m not, I have three kids. I’m always struggling, trying to build a toy or something, I got Dad, I’m that guy.
It’s just who I am. I was born that way. I always complained to my father about it. This is a gene that he had. I wish I didn’t have it, but I do. And it’s it gets to my, that my business capability, I just don’t understand construction naturally very well.
Ressa 7:56
Okay, last question. What is one thing most people agree with, but you do not?
Nassimi 8:06
I’m going to title most people as, as other, you know, private landlords, friends, you know, similar. Okay, it’s actually, it’s come up a few times we’ve seen, it’s arguing with brokers, over commissions, I have a soft spot. And I’m extremely generous with their first ask, I usually immediately take it, I don’t ask for a point off, I don’t ask for $1 per foot off whatever it is. I’m extremely, extremely generous when it comes to, you know, tenant rep, landlord rep, whatever, whatever it is, the brokers in our business, which is obviously a major part of it.
I get into a lot of arguments internally about it, I get, you know, I get into a lot of arguments externally, when you know, when you have a peer who says oh, you know, I got the five bucks a foot down the street from so and so, I wanted it here too, but it’s just something I don’t agree with everyone. Let them eat, we’re eating, we got to deal. Let them get, you know, their full price and everybody wins. It’s my mindset.
Ressa 9:12
Got it. Yes, brokers are very important in our business, for sure, and making sure they can eat is certainly important. Okay, I want to pivot a second and I want to talk about a story about Burlington Clifton. So tell me the story. And what time period are we?
Nassimi 9:42
So when you’re talking about that one, it actually, it starts from 2017. We had a site there. It was one of those, I call it a 1990 beauty, it was built with Pathmark and Kmart. Two anchors, and it hung long grape for 20 years and then when Pathmark filed the second time, it’s about 60,000 feet, I called them every week, every two weeks hammered heritage just made so much sense to me.
They were kind of worried, they were to three miles in every direction, you can say, but in the dense parts of North Jersey, it’s just when you know your asset, you know their trade area, you just know that they’re not going there. Try try try try try. They said no, we ended up doing okay, well, we did a Key Foods and LA Fitness that was done.
You fast forward then a couple of years. And our Kmart went out. This is when they filed the second time, also. And then we were at 100,000 square feet to go. So here I am, again, calling them, calling, calling, calling them saying no, no, no, no, no. Even in my office, it was like an ongoing joke. I kept making ICSC meetings with them bringing it up again.
Ressa 11:08
And you’re talking about Kmart right now. Right?
Nassimi 11:11
I’m talking about the Kmart space, called LinkedIn to talk a good portion of it. And, and finally, one day, as some of us may know, I think they got a new CEO from Ross, they built a little bit of a different model, densification, smaller formats, whatever it was, I got the call from their tenant rep broker that has, I called no sarcasm close to 100 times on this site over the course of four years. Is that Cliff? Cliff Simon? Correct. And it’s a fan favorite of everybody.
And, and he said, Kevin, I just want you to know that your persistence has finally paid off. We just got new marching orders from corporate and we need more sites. And we can do this. And you’re the first person I thought of, because of how many times you’ve reached out, and here we are. Let’s go. And we, you know, at that point, we already had about half the building full. Luckily, we still had the other half available. We hammered out a deal. And they just opened in the fall of 2021.
Ressa 12:27
So you brought up a bunch of things that I think are so important, just some fundamentals. One, just to note quick, you continue to call on these for your guys. For years, you thought they were the right tenant for this center, in this tree area to you. And there’s a corollary to that, which is you have to really know your asset and your trade area. Right. And you did, and that persistence, and clearly it carried over the other deals because if you hadn’t released the Pathmark box and had a grocer and a gym that brought in traffic and it was all vacant.
I don’t know if Burlington maybe wouldn’t have wanted to be the only one going in, but you had critical mass. And you had good uses. Obviously, I know the center, it’s been on a really strong corridor in Clifton. So it you know that piece was taken care of. But you needed the, you needed to make sure that you had some critical mass otherwise that you know, it might not have gone without anyone else.
Nassimi 13:54
So, well said. You know, there’s a little bit of luck to a lot of deals at times, timing is also everything, and you’re right, if we were sitting on two empty boxes when he called and looked at it, he would have probably said forget it. But luckily for us, that wasn’t the case.
Ressa 14:10
I’m hopeful, and I’m assuming that the three of them, the rents are higher than Kmart and Pathmark?
Nassimi 14:18
Not Pathmark, okay, I can’t lie on camera, we rented for them and the rents, you know, in those mid 90s were different. Got it?
Ressa 14:28
Yeah, got it, but the Kmart.
Nassimi 14:29
Yes.
Ressa 14:31
Kmart low basis with Kmart. Yeah.
Nassimi 14:37
Okay, well listen, if I’m comfortable airing some dirty laundry on camera, that Pathmark lease, you know, was $32 a foot on almost 60,000 square feet triple net North Jersey taxes. Well, obviously that number was tufted when they filed.
Ressa 14:52
There were a lot of people who were assuming Pathmark leases did any. Was anyone looking at those leases, that lease?
Nassimi 15:05
A little bit. You know, the usual suspects in North Jersey did, but it didn’t even really get passed for a space, I would say. I think there was just, it was covered. There was just so much cannibalization. Everyone’s kind of within a mile of this, and no one really got past first base, I would say, unfortunately.
Ressa 15:27
Got it. Okay, well, listen, thank you for sharing the story. Really appreciate it. I want to, you know, just take the last few minutes with you and I kind of have to discuss what your take is on the market. You operate in many states. I know it’s only the eastern half of the country, but it’s a wide geography. You talk to many tenants, you’re talking to brokers, you’re really plugged in. What’s your overall take on the market right now?
Nassimi 15:59
Yeah, I mean, the question comes at an interesting time, we’re fresh off Vegas ICSC a few weeks ago, it was my first time sitting down with everybody. And at that point, two and a half years, I didn’t make the one in fall of ’19. I was, my wife was expecting a child. I think there’s, you know, there’s a few topics to brush up on on the, you know, the top line of it, I think pads are king, freestanding buildings, ground in the front, I’ve never seen such demand for one specific, you know, let’s call it product type, everyone wants it.
Everyone who used to be in line wants it, everyone wants to drive through, everybody, you know, the demand is just endless, we get one, you know, not even a great one, it’s a decent one. I feel like we have 10 proposals in two weeks, you know, it’s it’s pick, you know, pick one, you know, you can almost get a bidding war going if you really want to have that type of feeling. That type of demand that you have, especially a good center or good anchor, good visibility, traffic, like all that kind of stuff.
It’s it’s a homerun, you have endless users who are interested in it. I think we have the least amount of big box availability, since since I started, you know, like I said, I really got my feet wet in the business more like by understanding of Oh, nine 2010. And there was a lot of carnage already that happens by that point.
You know, I don’t remember a time where there was such little available box space, you know, coming off retailers, that literally, you know, that a couple years ago had their pick of the litter and they say look can’t find anything, you know, I can’t find anything. Do you have anything there? I’ll, I’ll expand it. I’ll do it. I’ll do this. So I found that part to be unique. And not to get geographic or political, I think, you know, certain free, especially franchise driven concepts. That mean expansion is in the southeast.
When you talk to certain groups, you say, Alright, where do you have active people? You know, where do you back to? Where are you growing right now is a gym or a restaurant chain or whatever, it’s anything, mostly franchises in the actions down in the southeast, where they’ve obviously had a major population growth the past couple of years, and they, you know, everyone wants to be in Florida, I want to be in Georgia, I want to be in the Carolinas, Tennessee, Texas, whatever it is, you know, you’re heard a lot of that.
And less, you know, less than the Northeast, less than the coast. It’s that, that was an interesting topic. So those are 333 trends that weren’t really the case a couple years ago.
Ressa 18:50
Yeah, so the first one, I’ll agree with I totally, it’s fascinating. The demand for Pat sites, you know, I think every landlord I speak to seeing the same thing. There’s an endless amount of users, for Pat’s. And one of the reasons is, is there’s over the course of time, you know, you’re you start to run out of land for pads, so there’s actual supply constraint.
The second piece, which I don’t think a lot of people would think is totally true. I think it’s a little bit of saying there’s a couple of reasons one is, so you mentioned your Kmart and Pathmark, one of the thing that’s happened, people talk about the store size shrinking. Well, what’s that’s done is there’s many more users in the 25,000 square foot range, and a lot of these came marks.
It just came Mark, if you think about all the cane marks in America, the amounts that got backfield and we’ll take all the ones that are baffled, which is men, the amount that are backfield with one user versus multiple user is significant. So meaning that the man has multiple users in one space.
So what that does, right, if you take a Kmart box, and you put in four tenants, well, now if one person goes, you, you really you have a small box up, do you don’t have large box space available, and it creates this new scenario where there’s a lot less 100,000 foot stores in America than there was, you know, and I think that’s a key piece. There’s a lot less 100,000 foot stores in America.
The second thing is, I think one of the things that we don’t talk about enough, you know, when people paint the picture of not withstanding government stimulus, and everything would happen in the pandemic, you know, there was a there’s a, you know, spotlight on retail coming in, you know, we’re gonna have 100,000 closures and this and that, and one of the things that people missed was that the retail real estate industry took a lot of its medicine, pre pandemic.
So Sports Authority, toys, R US borders, all these brands that filed bankruptcy and got rid of stores and liquidated James linens and things happened between two 2008 and 2020. And so going in, you know, we had taken a lot of the medicine that people didn’t think we had taken you couple that today with there’s very little new construction and across the country because of construction costs, and there’s this crazy thing happening where you know, obsolete retail space is being repurposed to other uses.
So all that’s doing is limiting the supply so if you own retail real estate, you know if some mall anchors getting changed in the you know, a multifamily great I love it because all it’s doing is restricting the supply of retail space.
Nassimi 22:09
That’s a great point when it just if I may piggyback off on the for the lack of boxes, it’s the other sectors you have a lot of these malls that used to be a million square feet of retail that have been repurposed industrial Self Storage knocked down multifamily. That is really gobbled up a lot of space. And I think that especially industrial the past couple of years is is hypersensitive that, yeah, but a lot of space.
Ressa 22:35
So when we used to talk, we used to talk that we were over stored in America. I now publicly a lot. I’m saying we have too many digital stores, and we’re under stored physically.
Nassimi 22:48
There, so we’re definitely getting there. Yeah, it’s tough to build. You’re right. There’s land restraints. It’s so costly to build now more than ever. It’s just less less supply calm.
Ressa 23:00
Yeah. And I think the making boxes smaller is a key piece too, because like we had 3k Mart’s one of the K March turned into Ali’s harbor freight and Planet Fitness. Another Kmart turned into Lidl harbor freight, Ollie’s and goodwill, and the other one turns into Apple. So the the, I now have a three, what I used to have only three boxes, is now actually eight stores. So making the boxes smaller, right and spreading the risk through multiple tenants is really paid dividends that people don’t see because every landlord’s been doing this.
And I think the the piece that we were where you’ll see a blip. I’ll tell you where you see a blip in this in this what will from the because I feel that we’ll see anything inflation, interest rates, the fundamentals of our product type of in retail, real estate, open air suburban, retail real estate. To me, it’s as strong as it’s ever been. The thing that will make up lip is every year since 2008. We’ve had something that we haven’t had in a long time. And then when I say long time a couple of years, which is a mass store closure.
Yeah. So you haven’t had to, you know, if you think about when what happens when what happens when Toys R Us files, right? There’s a perception in the marketplace, oh my God, all this good real estate snap coming available. And what it does is for the users who are out looking for space, it takes our eye off the ball, whatever they were working on. They’re like I don’t want to miss this opportunity.
And we start looking at all these toys boxes, and they want to make sure that they’ve seen it that from their job, they’re looking at it and it slows down the pace at which they’re doing everything else. So I’m not talking about pruning every retail has got to prune a certain amount of their stores every year. But we haven’t had the mass store closure, when we have a mass store closure that has impacts that we don’t talk about enough in our industry.
Like, even if it’s not in your market, what it might do is that retailer you’re working with, it might now say, hey, timeout, I gotta make sure that I got this covered. Like, there’s massive opportunities come Toys R Us has this amazing real estate. And it slows the world down. And right now, it’s really fast.
Nassimi 25:39
Well said, we haven’t had a little boy, I call it the bankruptcy. Wait, we haven’t, thank God, had one in the last 18 months that we haven’t had a mass closure.
Ressa 25:45
And here’s the other thing. There’s a guy Simeon Siegal, who puts out put out this article in the pandemic, the non-bankruptcy, mass store closures like of pennies, and all these he did an analysis of like any retailer that’s done a mass store closure. And the analysis was, did it work? Did it like actually, we did a master closure? Did it actually save the company? Did it help? And he studied like 20 or 25 that did this? And very few did it actually improve the business fundamentals of the organization?
Primarily, all you’re really doing is shrinking your business. And does like, because no one ever thinks about that. Like, everyone’s always like, alright, like, hey, we’re struggling here. Let’s cut all the stores, you know, we’re struggling in these 100 stores. Let’s cut them. And no one’s ever like really analyzed like, well did that work?
And all these REITs a lot of retailers that you’re not the first one to think of that is the solution. Did it actually help? Like what are you trying to get cut costs, increase margin, what are you trying to, like, hasn’t worked and his analysis like it really doesn’t work?
Nassimi 26:59
It’s going on with a few right now like Bed Bath and so I’m curious to see how it goes. Yeah, I’m gonna track it.
Ressa 27:07
Yeah, the thing that, the things that I would say, the one thing that you didn’t touch on that I would say about Vegas that I was it was really interesting was retailer optimism. Notwithstanding, it wasn’t a great quarter, it was through the roof. Their optimism was through the roof, like people who are selling things in physical real estate, their optimism, whether it’s a healthcare service or a sharp, their optimism is through the roof.
Nassimi 27:40
Well said, definitely agree. Yeah, so the same thing, Mr. Allen, everyone, everyone, not every sector. It was really something.
Ressa 27:51
Okay. Listen, I really appreciate you coming on. Give a lot of good insights. I got three fun questions. Are you ready? Yes, sir. All right. Question one. What extinct retailer do you wish would come back from the dead?
Nassimi 28:08
RadioShack
Ressa 28:10
RadioShack for a guy who can’t put anything together, that’s the one you want. You want you want to go and get like parts to build something.
Nassimi 28:17
I need, I needed a three thing adapter for, to get on this call today, and I was around stores this morning, picking my screens up so I’m ready for you today.
Ressa 28:28
Oh my god. Well, thank you.
Nassimi 28:30
Time to order it online and wait the two days.
Ressa 28:35
Question two. What is the last item over $20 you bought in a store?
Nassimi 28:45
I go to stores all the time. I’m the wrong guy for that question. I protect almost my own interests. My wife makes fun of me every day. She has two, three boxes coming and the next morning I bring most of it back to return. But I just, before the summer I went on a shopping spree, this shirt I’m wearing is from Bloomingdale’s. I bought this towards the middle of June. I did a little spree before before going on vacation.
Ressa 29:12
Where do you go on vacation?
Nassimi 29:15
Hamptons, just Israel? Yeah. All right. No big trip this year. Go to many little ones too complicated.
Ressa 29:23
Yeah. So if you want some advice on the big trip with the little ones, I have to, but I think I’ve got some pieces figured out. So the number one advice, this is going to blow your way. This is my number one advice. This is how I do a big trip now. So I have a great relationship with my in laws, okay.
And my mother-in-law’s like, like, it wouldn’t be a weird thing if like I was on my way home from work and I call my mother-in-law and we just chatted for 10 minutes. Like I have a great relationship with her. And she’s awesome. So the answer is, I bring my mother in law.
Nassimi 30:01
Yeah, she was my best friend too.
Ressa 30:05
Yeah. So I bring my mother in law, that’s the answer, to a big trip. That’s how I saw all the issues that you’re talking about.
Nassimi 30:15
Noted. Noted noted.
Ressa 30:17
Last question, Gavin. If you and I went shopping at Target and I lost you, what aisle would I find you in?
Nassimi 30:27
Snacks, snacks I’m a big, it’s a pet, I call it I have a salt tooth, not a sweet tooth. Yeah, I am a salty guy.
Nassimi 30:37
I still eat Doritos, Cheetos, cheddar popcorn almost every single day. That guy I fight with whenever I get my kids have a birthday on like a Sunday or something. I’m like, I’m like fighting with my hands and candy. I have a real salt tooth, I’m addicted to chips almost every single day. I eat a full bag of something.
Ressa 30:58
The ones you mentioned are pretty solid for me, but the salt world has come a long way, there’s all these like cool brands and custom new chips, every time I go to a store I feel like, what is that brand new chips, kettle this and this new flavor? Are you trying all those?
Nassimi 31:24
No, no, no, like, change. Tries the beachy, bring some chips. Shopping is what is there. I try it, but I still love the oldies. They’re the goodies for a reason. You know, I know they’re not as well for you. Thank God I’m blessed. It doesn’t really negatively affect my body too much. I’m, processed food is fine. It is what it is with me. I’m all good with it.
Ressa 31:52
This has been great.
I really appreciate it. Thank you so much.
Thank you for listening to Retail Retold. If you want to share a story about a retail real estate deal that you were a part of on our show, please reach out to us at retailretold@dlcmgmt.com This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you are a retailer, broker, entrepreneur, architect or an attorney Also don’t forget to subscribe to Retail Retold so you don’t miss out on next Thursday’s episode.