Guest: Josh Weiner
Topics: Everbrook Academy, KLNB, retail advising

Transcript:

Chris Ressa 0:03
Welcome to Retail Retold everyone today I’m joined by Josh Weiner. Josh is a principal at KLNB. I’m excited for him to be here. Welcome to the show, Josh.

Josh Weiner 0:13
Chris, thanks for having me. I really appreciate it. Look forward to this.

Ressa 0:16
Yeah, man. So Josh, tell us a little bit more about who you are and what you do.

Weiner 0:20
Sure. So I’ll just go back to where I’m from, from small town in Maryland, in Southern Maryland called Leonardtown Maryland and grew up there, spent my whole childhood there and then went off to college at East Carolina University, went down south for four years. And then after that moved up to the Washington DC area where I’ve been ever since.

I spent five years working for a large Blockbuster Video franchisee right out of college, and then got the itch to get into commercial real estate. And one of the reasons I wanted to always get into it was my grandfather was a developer where I grew up as a lawyer and a judge but he also did all kinds of real estate development was office or retail or hotel, he owned restaurants, who was in the slot machine business also when that was legal the first time around and saw how he you know, was able to take care of our family and the life he lived and something I wanted to do. But little did I know that it wasn’t going to be real estate development was gonna be real estate brokers, I got into So April 2007, I probably not the best timing on my part, I decided I wanted to start looking around see if there’s any companies that are looking for, you know, startup, you know, Junior Junior agent, found one via Craigslist, which I appreciate them bringing me on that was third and associates who share it there has an office in Florida and also in the DC market. So she took me on, I didn’t know much and also did not know what was going to happen with the economy. So it’s time to a very targeted beginning, you know, I wrote about this on my LinkedIn stories, didn’t think I was gonna make it through it in the beginning stuck with it.

I was there for three years, nine months, and then moved on to a another opportunity another company called Renewal Consulting, which was building up its presence in the market. And there was there for three years and nine months. Coincidentally, and and then I got a call from the company I’m with now, KLNB.

And they said, they want to talk to me. And I knew a lot about them. I wanted to work from when I started the business, but they didn’t have an opportunity. And met with the principles there and learned a lot about him, which I didn’t know, company’s been around for over 50 years. It’s very unique and structure from the other companies that are industry where you can have ownership in the company. And that was very appealing to me. In the way that works is you know, as you start you reach a certain income level and contribute other things that company, you can invest your hard earned dollars and buy shares and share it with a company. And I thought that was a unique idea. I like to help people that talk to their had a little bit of book of business to bring with me. And I started there eight and a half years ago and been there ever since I think I will be here there for life now.

And it’s kind of my journey to get to KLNB. And that’s been a journey itself to figure out kind of what I wanted to work on and who I wanted to be as a commercial real estate adviser. And the last three years I think COVID especially helped me kind of morphed into a niche of retail pad sites and land deals. I’ve always worked with some pathway clients like Dunkin and Popeyes. And then as I came to Columbia, I picked up the Outback account and learning care group at daycare, and some others. And I really just enjoyed that part of the business where you get to, you know, create something, look at a three acre piece or five acre piece and kind of see what my clients would would fit on there. And then also, so work on the landlord side in the tenant side.

Ressa 4:25
All right, so there’s a lot there. First off, you said East Carolina. That’s where Chris Johnson went right the running back. That’s correct. Yep.

Weiner 4:34
Yep. Football fan. All right. Yeah. No, we had some good football teams were top 25 When there we beat Miami during a Hurricane Floyd went into was actually NC State or like ranked number two. That was one of the highlights of my college career. And that was a fun day. We’re literally shut out from the school because of the hurricane when I went out to NC State they let us use their stadium and was those. Those are some fun games. \

Wow. Did you say your first job? You were worked for a blockbuster franchisee? That’s correct. Actually, it was a good good family friend of mine. They had 42 blockbusters at the time. So I think that’s really interesting. What does that mean? For I think I know but for those who might not you worked for a blockbuster franchisee? Can you talk about that and what you did and what that means versus versus working for blockbuster specifically? Sure. So So yeah, so blockbuster. They had big corporate stores, and they also had franchise stores. Similarly, franchise stores were outside of the major metropolitan areas, the major metro areas, were all owned by corporate. So we had stores that stores in Southern Virginia, Eastern Shore, Maryland,

Delaware, West Virginia, kind of tertiary markets. And when I started working there, but knows what happened blockbuster, and these stores were doing and fantastic. And good real estate story, I guess, to go with this. The owners of of these blockbusters were smart, and owned a lot of real estate. So when blockbuster did actually crash, they still had some very valuable real estate on pad sites, which they still own at this day.

So and I encourage my clients when when they can is to purchase real estate, because, you know, you can own that forever, your business may not be there forever. So and what did you do for the franchisee? I was in the accounting division of the company. So I started getting a little bit more into kind of the real estate and they had some, some real estate they owned, they wanted to sublease. So I got in a little bit of that, and of it, but it was mainly just the accounting division. So I got to see, you know, the numbers and what they’re doing. And

Ressa 6:49
it was it was interesting. I’m gonna, I’m gonna challenge you a bit, Josh? Sure. On the on the whenever you can, you should own as an operator, I think. I think it depends on your strategy. So my first job out of school was I worked at Sherwin Williams. And the goal at the time was scaling growth and for the cost to buy, you would just open up so many few stores. Right. And so we wanted the capital to go to lease. So we could be in the paint business at the time and not in the real estate business and open up a lot of stores. So I think it does depend on what your business is, and your long term plans. If you’re a franchisee that you’re going to have three or four stores, then maybe buying is the best. But if you if you’re like, I need to get to 1000 stores, I think buying real estate is going to limit you in the ability to do that, well you can’t grow. And then in the DC market, a lot of owners are sophisticated, they don’t want to sell, like you’re coming to them. And they’re like, well, we’d rather have a ground lease and you know, you know, collect income forever in Columbus assets. So yeah, it’s, it’s hard to find sites to buy. And you know, when you can, obviously and if it works with your strategy. Yeah, but a mixed strategy is probably like you said that some of these franchisees is the best bit but you know, when I’ve worked on the corporate stuff, like the Catholic VisionWorks obviously, they’re just, they’re just doing, you know, leases, only leases. So, yeah.

So the, you know, we’re gonna get into state of the market in a second. But before we do, I want to take us to Woodbridge, Virginia, because in Woodbridge, Virginia, you worked on a deal with a daycare, Everbrook Academy. And that turned into something much bigger than just Everbrook Academy. So why don’t you tell everybody what happened here and the story behind that? And we’ll we’ll take some lessons from that and then get into a little bit of the state of the market.

Weiner 8:44
Sure. No, no, I think I think this is a very good interesting story kind of shows the full cycle of a deal and how a company like Galen began, I guess all all aspects. So like Chris mentioned, I represent every Atomy with the parent company is learning care group, second largest child care, you know, in the country. They also have la petite and they have you know, other brands 10 Different brands 1000 schools total actually grew a lot during COVID. So it’s a lot of through acquisitions, and you know, taking over some dark child cares. So great client then we’re working with them ever since I joined Allenby and I knew they’ve always wanted to be in this this one location we’ve we’ve looked at it before

in this area wasn’t available. The one location we potentially could have gone to was was purchased by the grocery store Lidl and so that was always Their plan was to build there. And then kind of starts the story starts here is I was actually at a networking event with with with Saul centers, and he was a big landlord and our marketing probably aware of firsthand

I was talking to someone I know there and she’s she’s like you shouldn’t meet the real estate director for Lidl, and she actually happened to be my neighbor. And I didn’t know that she was illegal, it just moved to this neighborhood. And so got her contact with me sat down for coffee with her. And this was before anybody knew everything that was now legal, it was in the business, and it was legal is done a lot of dispositions. They bought a lot of property and disposed of a lot of things. And

I just sat down, talk to her. And she’s like, she’s like, Yeah,

you have anybody is looking for property in these these three markets. And I was like, I heard at one I was like, yes, like, we want to be there. Like, I know, we want to be there. And I’m like, but I bet we can’t afford the price. Because you know, we’re we’re is a daycare development, right. And these are a lot to build. And, you know, we can only pay a certain amount. So I call we have a developer preferred developer to work with whatever book and I called him up, told him about the opportunity said, I like it, Josh. He’s like, and how much land is there? It says about three acres. And he said, Well, perfect was put, put another pad there on there. So

how many acres did they need? They only need about acre and three quarters.

Ressa 11:20
And for everybody there, because I’m in development, this is a common Developer Challenge, which is, yeah, there’s only so much access to land that could be sold to you. And so when you find the right location, but not the right size, you sometimes have to try to make it work. And sometimes the the parcel might be too big for you, which might price you out. And the answer to that is, well, can I subsidize my cost by actually adding another use to the property? If you’re a developer, you know, another tenant to the property? And

Weiner 11:57
that’s whatever Brooke meant. Yeah, Zack, exactly what it was. So. So I talked to the developer and we’ve gotten gotten our way out right away on it, and we’ll, we’ll figure it out. Right? So my brain starts going, I’m like, Alright, we got to figure out what we’re gonna put. We knew that for broke here. They want to be here. But we got to figure out we’re gonna put the house across the street, there’s a great Harris Teeter anchored center, Starbucks without a drive thru, natural fit. Starbucks wants drive throughs. If they can get them, even they move across the street. So they were in course, as Chris knows, it wasn’t just like they were in it was a long negotiation, but we got it done. And then the other piece on the other end was Heartland Dental, which is a fantastic national credit tenant, we were able to land on the other, the other end cap and, and we filled it out with a 10 out of California called Crimson coward, who went in the middle. During all of this, there was a property behind the three acres

that we needed some easements, right. And the owner of that property, said, I’m not going to give you an easement to get the Weimar property. So what the developer did is, he bought that property too, which is another two acres. So now we got a five acre parcel. So they moved ever Brook a little farther back. redid the stormwater management, put the pads originally were talking in front, and that created a third parcel. So now we have ever Brooke we have the pad with Starbucks, Heartland Dental. And then we have this third parcel. And so what happened was developer hired our investment sales team. They sold the Starbucks parcel right before the interest rates went up. So they think it was a it was extremely could rate that they got yet another investment sales brokers sold ever broke Academy at another great interest rate, then we deal with the last parcel is we still on a contract actually today, but the developer, who is who has who does development for AutoZone. And so he has a signed Autozone deal there. And then we have the last number, which is still another parcel left there that we’re about to we’re going to lease with another national brand on. So I say my full lifecycle is we went from land purchase, to lease

to investment sale, introducing property. And then bonus, I guess we got another piece of land to sell. So this is one idea. There’s one meeting I had with this legal representative led to all this. And that’s kind of what I talk to a lot of people about young people, businesses just build relationships because you don’t know what these relationships can lead to. And it’s been you know, great, great situation for everybody involved. Cool. So that that punch line at the end is definitely the the relationship networking advice and sales advice. I want to go back to a little bit of the real estate piece of it.

Ressa 14:57
So first, have you said you needed an easement? Why couldn’t the site plan have been drawn to not require an easement? So for those who don’t know, an easement means this person, this owner of the parcel behind them, would, they needed an easement, they needed to be able to use their property properly to access the access that it doesn’t access to access the property, you were purchasing the three acres you were purchasing. So they couldn’t the engineers couldn’t figure out a way for you to access the three acres with without the easement. And there’s also some utility easements also involved too. It was it was it was a it was a complicated Luckily, my developer. I mean, he’s done probably 500 projects. He’s, he’s done a lot in his lifetime. So yeah, when he figured it out, he’s like, you know, I need to buy this property. We’ve got a, you know, decent deal on it. And I think he’s still made out good, because he got the extra Pat out of it. But yeah, so and, and you were started off you were representing ever Brook, right? The developer that you’re mentioning is not the ever Brook fan franchisee or owner of ever, but someone totally different. Yep, exactly. That. Okay. And then the next piece of it is, you were buying, you mentioned, you were buying a parcel for three acre parcel, then you start to say that you sold off the Starbucks, you sold off the Overbrook. And you had to buy the parcel behind you to AutoZone you’re selling that off. So somewhere along the line, there had to be a subdivision. Yes. There’s three, three separate lots of they did. Yeah, if you look on the tax records, today, you’ll see three lots, two, owned by the California buyers, that bought the two Triple Net Properties. And then one is still owned by the original developer, which he has on their contract. So you’re definitely right. That’s right. Because you bought one parcel and then you had to carve it up and go get go to the municipality and say, I know I bought this one piece of land, I want to make this one piece of land on paper, not physically, on paper, three different pieces of land, which is three different tax parcels. So there could be three different ownership interests, the group that bought the net leased properties between the Starbucks and ever broke, and then the new one that’s going to be nada. So you explain it better than I do. Chris. That’s exactly. That’s exactly what happened. It was and it was a lot of complication in between. Oh, sure. But luckily, I think the Starbucks super supervisor for the county, like that idea a lot. So they were on board with that. They obviously like the childcare and you know, all the tenants that have opened up done extremely well to date. So it’s been it’s been a great project. I mean, there’s a Harris Teeter directly across on Hilde road. So it’s, it’s a strong market, there’s no land left in the market.

Weiner 17:47
Tt’s just it’s it’s tough. That’s and that’s why I like doing the land deals because a lot of stuff a farm is off market, I’ll just call call someone up like it’s great piece of land and then starts a conversation, see, see where we go from there. And I gotta find a developer. And there’s, there’s a lot of those out there. Right. You got to find the right developer. I feel like so. So a couple things. Next question. I have one of the deals you did with Starbucks and Heartland Dental in a in a I guess it’s a small multi tenant building, right? Yeah. 7000 7000 square foot strip.

Ressa 18:20
Why did you choose to do that versus pitch a free standing Starbucks to Starbucks?

Weiner 18:28
Great question. We just leave one more GLA they’re more valuable for the property. We had it we had and we had an acre, we could fit it on there somehow made the parking work. So just a higher NOI we got out of that property, but you’re definitely getting a higher NOI, if you could add more GLA, right, you’re leasing the multiple tenants. But sometimes on the Net Lease market, the math actually works better to make it a free standing Net Lease because the cap rates on like a free standing true net lease are typically lower than a multi tenant building. So that’s why I was curious if I didn’t realize it was 7000 feet. That’s a big enough getting the NOI of all 7000 That’s probably big enough that I think would have been probably still a one or a favor to do that. But we got a good and we got a good rent from from Heartland to wasn’t obviously Starbucks, but then kept drive thru. Yeah. But I mean, we fit it on an acre, which is kind of, you know, kind of amazing. So yeah, that’s tight, for sure.

Well, cool. And well, when you and the last thing, so you were working with Everbrook Academy and you submitted an LOI? Right, on behalf of the developer?

Yeah. On behalf of the developer. Was that Everbrook, like, did they have a relationship with the developer? They’ve done other deals, the developers done other deals with them. So okay, ones that actually introduced me to the developer. And did you so did you Okay.

Weiner 20:04
It was the intent that they were going to use them before this, or did you have to call the developer and say, Hey, do you, you know, Everbrook wants to do this location? Do you want to do this development? What How did it go? Yeah, it was, it was it was it was there. I knew that ever broke wanted to be there. So that’s when i That’s why I called the developer that I’ve done. We’ve already completed other deals, they were single deals just, you know, single ever broke. So it wasn’t, it didn’t have any other surplus land. Because I knew, you know, I didn’t make sure he he wanted to do it, because it’s a much bigger project.

And of course, certainly, you know, obviously, it worked out for everybody. So also, you could have the chance that every book said, you know, he could have put it, you know, but he wouldn’t have closed on it if every book wasn’t going to be part of the deal. But

once we had it all go on, he presented, we presented to them, they liked the idea. And then we kind of just put all the pieces together. And uh, you know, it’s a long process, you know, and I think we, we have something called COVID in between. So, that kind of, yeah, so. So let’s talk about that. You say it’s a long process. When did it start? Oh, I should, I shouldn’t know this. And I probably have written down somewhere. proximately. I’d probably wrote in a probably wrote in LinkedIn. Honestly, Chris, I looked back at that it was it was probably a it’s probably a good. We’re now at 2023 for the for COVID. You know, because I think it’s probably 2019, somewhere that range. And here we are, and it’s not fully complete. He still has a sale, the audits on the go. And so real estate development, everyone is not for the faint of heart. It’s not but I like it. Everybody thinks I’m crazy. But I tell my friends in the brokerage business and like, our carwashes and convenience stores and daycare that they like more power to you, Josh, but I enjoy it.

Ressa 21:49
So all right. Well, thank you for the story of how ever broken got to Woodbridge, Virginia. But let’s move for a minute, let’s let’s talk about

what’s you know, you’re in an interesting space, which, you know, the out parcel world, as I’ll call it.

Weiner 22:08
Sure. And I think it’s interesting, because, you know, there was this craze across the country, in your space, post COVID. I mean, you went on social media and you saw QSR brands were like building three storey drive thru renderings for things were like the drive throughs underneath the store, and it just got wild, that and the competitive landscape for these Outparcels you know, if you had an out parcel in America, there was some tenant of interest. And it’s still pretty hot. But but you know, coming out of COVID It was insane. Right? If you had an out parcel, there was a tenant of interest ultimos you know, multiple tenants, you look at like the carwash craze, you know, where are you You know, and I do represent one in this market. Flexion. And same thing is, you know, multiple loi for competing, and then you know, with the sheets mean store I represent same thing, you know, if less, it’s you know, there’s always competition on Outparcels. Either you think you have an off market deal. At the time, someone else, someone else shows up at the door, you know, because everybody’s looking the same thing. It’s nine, that’d be on costar. But you can look on land vision, see, there’s no land not developed. And, you know, someone else could submit, sometimes we you might sneak one out that gets by someone. But that’s why this whole developer kind of play works, I have a couple of parcels that we’re working on now that are 20 acre plus that we brought developers in where we can put multiple concepts in, and then maybe even maybe even a grocery store in the back or something like that. So it’s a lot of what I’m doing now is trying to help the developers I work with and the tenants I work with, is finding some of these larger sniffing out some of these larger sites.

But yeah, come out of COVID My most active client and and I don’t know what, how you guys more, but, uh, Kailyn V, we felt like for the retail side, like it was like, two months, two or three months of pencils down, call it We kept in touch, you know, from our houses and talk to whatever grew big beard, big hair, and all that kind of stuff. And then it was like back to business. It was like the retail all the retailers came out and said we want to do deals. And that’s not just tennis. I represent those kind of across the, you know, the board game would be my most active client during the time was my Popeyes franchise either 40 Plus store been doing since 1980. Fantastic client, and it is rolled off a lot of deals in markets. And because, you know, that’s been a great story with that brand. Now they’ve gone

Ressa 24:51
well, I think, yeah, and so we came out of that craze. And so what’s the if you were

To sum up, what’s the state of that, and you’re very focused on the DC, Mid Atlantic area. So what’s the give me the landscape of the, you know, the land development out parcel market, in a in that part of the world? And, you know, I think one of the things and I live in northern New Jersey, is that type of environment right in the New York metro area in the mid Atlantic is very different than let’s say, somewhere that’s a lot less developed, like Iowa, or North Dakota, where there’s just land everywhere, land is scarce, where you are, yeah, very, very scarce. And

Weiner 25:36
there’s two, there’s two kinds of things holding back a lot of development. The first thing is, all the businesses are doing well, right now. But there’s the full service restaurants to the car dealerships is not you need somebody really go out of business, when you get these urban areas, because, as you said, they’re not making more land, unless you get down to like, you know, Fredericksburg, and Stafford and some of the you know, or Cole pepper, you know, Southern Maryland, some of these kinds of tertiary areas, and I’ll make them there’s not land, so nobody’s really going out of business. So that’s, that makes it challenging. And then you have the different jurisdictions that may not want to use, like fast foods, not the most, you know, highly sought after use right now, even though they want to be in the certain markets. So their challenge is getting these these drive throughs approved in a lot of these markets. And, and it’s people are shocked, they’re not from the area, you’re familiar with New Jersey, how long it can take to get approved, you know, and that’s, that’s a, that’s a challenge to tie up all this money on attorneys and civil engineers, and everything else in between, and, you know, spend a couple $100,000 and not get approved. So that’s what kind of risks these these tenants are taken out there. And developers don’t forget us. Yeah, exactly. And develop developers tools, I work with plenty of developers. And I mean, one that’s shocking things, I’ve seen a site where costs right now, it would tell us about construction, but the actual, you know, site work costs are, are really high right now, I’m hearing that from tenants and developers, you know, both the like, so there’s challenges out there. But we’re still we’re still finding deals, you know, trying to be creative. I think that’s the word that kind of hits me a lot.

I just, every day I get to the office, and I think, you know, how can I find new deals for my clients today? What do I need to do? How can I be creative, it goes back to you obviously have those relationships, you certainly work on those, use all the technology that you have, but you can’t just sit there looking costarring CoreXY and make you’re gonna find deals, it’s not not going to happen, you got to have those relationships, you got to be able to understand maps, and, you know, where the developments happening. And obviously,

you know, have the, the market knowledge and the data that’s, you know, to find these deals,

Ressa 27:56
the, for sure, or the

anything, like right now, if I were to say to you

give me the Twitter message of 280 characters or less than define the landscape of the outparcel market in

Weiner 28:17
the mid Atlantic. And I said, go, go, alright, wasn’t ready for this one. But I would, I would say it’s, you know, highly, highly competitive

with across all brands, whether it’s carwash convenience stores, fast food, medical.

But the good thing about the DC market is we’re seeing a lot of construction right now. I mean, you don’t see that across the country. But there’s a lot of new development here. We even have big box being developed that’s creating out parcels. So while it’s challenging, there’s developers out there that are creating opportunities also. So that would be my hat. How has the capital market disruption impacted your world?

I haven’t seen it at all. I mean, I’m fortunate I tell people on a phone, I’m fortunate to be in retail. I just feel like we’re like kind of kind of darlings for a change. Honestly. I feel like investment sales obviously are down. They have they can’t, they can’t figure out the interest rate hikes to the buyers and sellers are just, you know, off as far as numbers goes, everybody knows what’s happening the office market right now. That’s that’s the news reports that that pretty well.

industrial market is doing well. Data centers is a big player out here. They’re paying more per land and you know, anything, but the retail market strong even are the shopping centers that we we lease, you know, you know, everything’s 5% Less vacancy, you know, and that’s just like just normal turnover. I mean, it’s and I’m sure your centers What do you mean your centers and all this stuff? I’m sure yeah. So but I said the capital markets piece big

Ressa 30:00
Because to your point, there’s a lot less investment sales, construction costs are up interest rates are up, isn’t it making it more challenging for your developers to build?

Weiner 30:10
I haven’t seen that. Honestly, I get asked that question a lot.

A lot. I mean, I mean, I guess if they’re getting the right read numbers,

to make sense of it, and, you know,

has not been an issue and I get I believe I do get asked that question a lot. But people of industry are just family or friends. And um, I have not, there has not been an issue. I’ve seen one time with that. The only thing I’ve seen as like says a site where calls but there’s still just, you’re working it out because they need to do deals.

Ressa 30:42
Got it? Well, listen, this has been fascinating, obviously, DC markets on fire. And, you know, out parcel world is still on fire. And that’s maybe why it’s the combination of the two, I think is probably why you haven’t been hit with some, you know, blown up developments just yet.

Weiner 31:05
may come? I don’t know. But right now it’s you know, it’s things are things are good and busy. And Excellent. Well, I’ll take it. Yeah. All right. I want to bring it to the last part of the show. I got three fun questions for you. You ready? I’m ready. All right. Question one. What extinct retailer, you wish you’d come back from the dead? That’s easy. Toys R Us. I’m so sad that my kids don’t get the experience I did walk in and there’s big box stores is rubbed out about that running down the aisles. That was one of the best things you can sell for sure. All right. Question two. What’s the last item over $20 You bought in a store? I don’t shop a lot in stores or Amazon? I think there’s my wife does most of that for the for the family. But actually recently, I was in a bind. We were in Outer Banks at the actually on the dunes and brought kites but I had a miscommunication. My wife and we forgot the schools. So I ran across the street to Kitty Hawk kites and bought three schools and I think they’re probably about 20 bucks, maybe a tad over a tad less, but ran back across the dunes. And my kids flew kites and arrows happy. So got it. I haven’t been there in a while. But it’s a great place. Yeah, it was fun. It was fun. And last question, Josh. If you and I was shopping at Target, and I lost you would I would I find you when

I was with my kids. Probably easy answer be toy aisle. You know, because that’s probably who I’d be a target with. Otherwise, I probably wouldn’t probably wouldn’t be there. I’d probably be you know, with them looking at toys. So. Got it.

Ressa 32:44
Well, Josh, this has been great. I really appreciate the time. Thanks so much for telling your story. Thanks, man. Appreciate you having me. Chris. I really enjoyed the time with you, Sam. You