Floor and Décor in Las Vegas, NV with Deanna Marcello
Guest: Deanna Marcello
Topics: Floor and Decor, Logic Commercial Real Estate
Transcript:
Chris Ressa 0:02
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the rock is your crystal ball and the key to making well informed decisions with confidence in today’s evolving retail climate. Welcome to retail retold everyone. Chris ReSSA here I am really excited today. Today we have Deena Marcelo on the show. Dina is the vice president for logic commercial real estate in Las Vegas, Nevada. She brings a cool perspective because she’s a Vegas real estate expert. She’s one of our first West Coast experts, and I think you’re gonna really enjoy her story. But before we get started, I wanted to give everyone a little PSA. A little something to help with their personal development. Recently, I was able to be a guest speaker at the Weitzman sales institute. Their annual conference not only was a guest speaker I also got to participate in some of the events. One of the most interesting things participating. Was it the most copious note taker in the room was herb Weitzman is the co founder chairman. He was taking such diligent notes. This is one of the most successful entrepreneurs successful commercial real estate pros in the business. If you went to the DLC offices, you would notice that typically the most copious notetaker in the room, the CEO and founder Adam if should it dawned on me if these guys who have these tremendous success in the commercial real estate industry are still learning still taking down notes, very diligent notes than we all should be copious note taker. So my advice to everyone today is wherever you go, bring your notebook, bring a pen and pad and I hope everyone enjoys the show. Welcome to retail retold. Today we have Dina Marcelo. Dina is the vice president of logic commercial real estate in Las Vegas, Nevada. Welcome to the show. Dina.
Deanna Marcello 2:50
Thank you. Thank you for having me. I appreciate it.
Ressa 2:53
No problem. You know, we haven’t had a lot of West Coast guests. And there’s a lot going on in Nevada. And I think there’s a lot of good things going on in Vegas. And so I’m excited to have you on. Why don’t you tell us a little bit about logic and what your company does?
Marcello 3:09
Sure. So logic is a commercial real full service, commercial real estate brokerage that was established in August of 2015. A bunch of us came from another local shop here in Las Vegas. And after being there for a few years, we kind of went and started logic. Since inception, we now have 90 employees. You know, we’ve grown we’re now in Reno, also Las Vegas, so we can service all of Nevada as the entire state. But we do brokerage, property management, asset management, we do capital markets and hard money loans as well. So there’s a lot with logic going on. And then pretty exciting. Wow.
Ressa 3:55
So the company didn’t exist in 2014. And now you have 90 employees. That’s like tech growth. That’s amazing.
Marcello 4:03
Yeah, it’s been a lot of fun. I think the best part about logic is that many of us were born and raised in Vegas and if not more in there than moved here many years ago and just really specialized in our market. We service all different types of asset classes. I particularly specialize in retail but you know, we have Office, industrial multifamily self storage, all of it so we can really service any type of clients.
Ressa 4:33
Given. ICSC recon is held in Las Vegas every year. I think the city of Las Vegas holds a special place and everyone in retail real estate’s part. Why don’t you give us a little bit of color on what’s going on in retail and retail real estate in Las Vegas today.
Marcello 4:54
First of all, I want to just appreciate everybody coming out for ICSC every year. I’m So glad that we hosted here. You know, the conference is the highest spend per person amongst any other conference that we host here in Las Vegas. So I know us real estate people we like to spend. And we like to come out here and have a really good time. Unfortunately, I have to go home with a hangover and you guys get to go back to your hotel rooms after that, but, you know, I really enjoy everybody coming out and meeting tons and tons of new people. You know, Vegas is on fire right now, the Las Vegas Convention Center is expanding. You know, the north side of the strip, we have a lot of activity with Resorts World and the drew going up. Those are the hotels closest to the stratosphere. There’s just a ton of activity. And of course, everybody knows about the NFL stadium with the Las Vegas Raiders having their first season this this year, really exciting. We’re hosting the NFL Draft. From a retail perspective, Vegas is on everyone’s list of, you know, markets they want to be in, they realize that it’s not just the Las Vegas strip that there’s suburbs and there are families that shop there just like a regular retail market. So it’s just really exciting that people are finally legitimizing us. I don’t know if it has anything to do with us getting a sports team, or the NFL team, I should say, but probably started with the Golden Knights, which was really exciting. There’s a lot more infrastructure to our city where I was at 3 million people. And I think that there’s just like, there’s a lot going on, not just in retail, but just structurally as a city. We’re really thriving right now.
Ressa 6:31
So great to hear on Las Vegas, I’m rooting for Vegas. You know, in the recession, Las Vegas really took a hit. It really struggled. Do you think with all the growth and all the things that are happening in the infrastructure it’s built in? I know, we are not economist, but do you think that Las Vegas is now in a better position to withstand whatever happens in the future? The next recession that comes along?
Marcello 7:01
Yeah, I think, man, we’re the wild wild west. At the end of the day. Yeah, like, last day, last height, people were just coming out and just going crazy, the ultimate, you know, wild west type scenario. Now there’s just more infrastructure, there’s more employment, just facts behind everything. That’s just not like it was last time. I mean, our unemployment is at an all time low than it’s ever been. That’s very exciting. And I think it speaks to our internal economy, we also had the biggest crawl back from our last recession, it really took us a slower start to kind of evolve from where we were before from the last recession. So I think there’s just a lot more infrastructure in place, people are a little bit more reserved, not just building, you know, just to build and say, Well, if you build retail right here, mid block, and there’s no houses out here yet, but just build it anyway. Because you know, if they build it, they will come. It’s more, a little bit more thoughtful in those types of developments. And I think the employment like I said, I think there’s just more structure to it this time around. So yeah, I think we’re, we’re in a much better place than last time.
Ressa 8:13
Interesting. You mentioned development. And being an owner, you got me thinking,
What is going on with development in Las Vegas? And what is occupancy look like right now.
Marcello 8:27
You know, it depends on the sector on industrial is going so quickly, all the distribution, how, you know, buildings going up, lots of retailers coming in. And you know, I think Sephora built a 1.1 million square foot facility, Amazon Bed, Bath and Beyond. And I think that that is really adding something that we didn’t have before. So the industrial sector occupancy, very, very high multifamily, you know, again, occupancy, very, very high retail, same same situation, I think we’ve just been more reserved, and not just building retail just to build it, it’s been more selective on where we’re going. And I think it’s just more thoughtful on making sure that the demographic is is there, the infrastructure is there, and just making sure that the bodies are there, whereas before you were just building retail and the houses weren’t even there yet. That doesn’t make any sense. So I think this time around, it’s more thoughtful development.
Ressa 9:31
And what are you seeing from a rent perspective are rents rising remaining flat going down?
Marcello 9:37
Yeah, I think they’re they’re rising a force on new development being more higher rents and probably some of the markets were not as attractive for for for tenants to be and there’s been a little bit of retesting happening. I think they’re a little bit lower. But you know, new cars instruction rents could be in the $50 per square foot or sorry, yeah, $50 per square foot range or lower. It just really depends. But that’s, that’s where we see new construction development happening. And then for existing, I would say you’re anywhere from around probably averaging around $24 per square foot and rents for regular shop
Ressa 10:21
space. That’s really interesting to hear. I
think. This is really insightful. I think when people think of Las Vegas, they think of the mega developments, like the wind and the Bellagio. And not everyone has a good perspective of what’s going on from a traditional suburban retail market. And you’ve given that to us. And like I said, I’m rooting for Vegas. I’m a big football fan. So I am excited about the Raiders. And I think Vegas is going to be an unbelievable place to have the NFL Draft.
Marcello 10:53
Yeah, I agree. I think you know, even if the Las Vegas Raiders aren’t your team, you know, I think just having that you might want to come an extra weekend in Vegas to see your favorite sports team play there. So I think it’s gonna be really exciting.
Ressa 11:06
Awesome.
As you know, this show is the story behind the deal, and how stores ended up where they do. And you have a really cool story about a floor and decor in Las Vegas. So why don’t you tell us about that.
Marcello 11:22
So, um, you know, this is one of my more favorite deals, we worked with a special servicer to help revitalize a shopping center that essentially I grew up right in this neighborhood in the northwest side of Las Vegas. And when we took over this property, it was 60% occupied. Marshalls was vacating the center was drab. It really needed to be rehabbed. And so it was kind of sad to see since I went to high school right down the street from this property, and I’m walking it and you’re kind of thinking man, this center used to be Maine in Maine, it had all the the best retailers in there. And now it was kind of like the retail graveyard that had famous footwear and Payless and all your kind of tenants that you’ve seen kind of come and go. And so when marshals left and brought the occupancy down to 60%, it was kind of, you know, we’re like crap. What’s next? How do you fill a 70 something 1000 foot box that was then subdivided into Marshalls and turned into Collins consignment. And from there it was we had to solve this problem. So we ended up getting in touch with floor and decor as a potential tenant. They were already pretty far down the road on another site. And we knew we needed to land this tenant to make this center, a center that other tenants would want to be out again.
Ressa 12:51
And real quick, what sub market are we in?
Marcello 12:54
So we’re in Las Vegas, we’re in the Northwest sub market. So it’s on a street called Rainbow which is a major Northwest or sorry, South north north south Thoreau thoroughfare and then Cheyenne is the other cross street,
Ressa 13:11
got it, keep going, just wanted to make sure I had my bearings. So
Marcello 13:16
you know, so floor and decor, if you’re not familiar, they sell flooring. And you know, all different types of tiles and stones and all this other stuff. You know, where this center is located. The housing was probably developed in the early to late 90s. Lots of rehab probably needed to be done with these homes. So I really thought that this was an excellent second location for them. Florin decor had one location in Henderson, and this would be their second location. They’re really big stores. They have an excellent, beautiful layout really showcase all of their products really well. And so we were excited to hopefully get them interested. So we call them we tried to get them interested, they said sorry, we’re too far down the line. On this other deal. We already have $100,000. And, you know, having all of our plans set up in our architect, and we’ve already we’ve already done it all. And we eventually were able to get them to come off that site, even though they were so far down the line, come to our center sign a brand new lease, and take up the two subdivided spaces that we had. And then develop one big nice large 77,000 square foot floor and decor, which really turned the center around. They did an excellent beautiful build out and another thing that I really loved about working with floor and decor was that they really advertised their grand opening. They had a like a plane fly in the sky with
Ressa 14:42
a plane. Oh my God, that’s awesome. The whole
Marcello 14:45
banner coming soon now open they did all this video or sorry, TV advertising, social media, radio, it was everywhere. And I just really thought that was great because a lot of these brands come in, even though they’re national they They opened their store, you see a now open sign. And that’s about it. I just really loved that they told everybody that it was there, got everybody excited about it. And that really kicked off this redevelopment of this project. Like I mentioned, this was a special servicer, once we sold this asset to a really excellent group out of Florida. And we’re able to now I’m still working on the lease at this center. And we’re now over 90% occupied so from the drag story to a very nice yet stabilized asset, put over $2 million into a renovation of the entire project. And it’s just been really exciting. So that’s probably one of the more projects that stuck out to me was was that one
Ressa 15:40
Wow, great story of perseverance there. And so you were the third party leasing agent for the special servicer? And for those in the audience, no, no special servicer is someone that or company that services, a defaulted mortgage. So they had taken control of the leasing operations and brought you in to run the property. Typically, special servicers are a little hesitant about reinvesting more dollars into the property. So how are they about doing the landlord work and ti because typically, they’re a little hesitant and you as a leasing person, having probably get them to understand that they needed to do this for foreign decor. So how were they in that process?
Marcello 16:24
Um, we have some great relationships with special servicers. And I think we have a good track record of showing you know, the type of value that can be added during a receivership or reo. And what we did was we put together a business plan, detailed everything out that we we would do if we were owners, and how we would implement this. And part of that was redoing all the awnings, paint, parking lot, landscape, all your typical things to try to get tenants back at the center. I think by providing that business plan and kind of showing the future we were able to get them to want to invest a little bit of something into the property, and then secure tenants like floor and decor. So typically special servicers can’t or not willing to maybe put that type of money back into a property. If it’s, this one was cash flowing still. So I think it made sense for them to do that. But I also think you have to prove that with the plan that you want in place and how you think you’re gonna get a return on that.
Ressa 17:24
Because to do the foreign decor, I’m sure there was some level of investment in the deal. I don’t know if you guys, they gave you a work letter and you did landlord work, or you gave them the keys and some TI, then for those No, no, that’s tenant improvement dollars, but I’m sure you had to invest something in order to land the Florida cordial, correct?
Marcello 17:44
Yeah, T eyes were provided on a reimbursement type schedule. So Florida court did their own build out, and then there was some ti reimbursement. But we were more focused on giving them you know, a market rent that was healthy that they can sustain and be successful with. And we knew that investing to get this type of tenant made a lot of sense, you know, essentially save a little operty. Yeah.
Ressa 18:08
So I’m a floor and decor customer. My bathroom tile came from floor and decor. But the part of the story that I’m fascinated about, then I don’t care what asset class you’re in, whether it’s office industrial retail, typically, when a major tenant is that far along in the process, it is really challenging to get them to pivot. So was that more of something that you did to incentivize them? Or is it something that the landlord they were working with didn’t do when they dropped the ball? How did you get them to pivot?
Marcello 18:42
Yeah, I think part of that is, first of all, just because they’re far down the line doesn’t mean that they can’t pivot, although it makes it more difficult. But there usually has to be an incentive associated with that. And, you know, the question to them is, what have you put at risk thus far? And if it’s your architecture fees, if it’s some legal fees, if it’s your plans, how can we compensate you to either reimburse you for spending that money already, and then getting you now on this site? So I think that was really what probably got the engagement kind of moving along with, you know, how can we help reimburse and take some of that cost off? And, you know, make it work into our deal. And if from a landlord’s perspective, if you’re just looking at as the total deal cost? It makes
Ressa 19:26
sense. Yeah, totally. That makes sense. The other
Marcello 19:29
thing is, I’m very, like, broker friendly with other brokers. And I think that’s really important, is having good relationships with other brokers that, you know, that’s not always the case. They want to cut people out, do a deal by themselves. I think that’s the complete wrong way to do something. It’s having good relationships with other brokers and, you know, knowing that they’re gonna get taken care of, you’re gonna get taken care of, and it’s more of a team effort than just trying to go around people. So I would say that as well.
Ressa 19:55
Did you have to build the case, that even though today Your real estate might not look better, but the real estate that they were going to take was better than what they had on the table.
Marcello 20:07
I think we had already started the renovation, so they could kind of see the bigger picture, we wanted to also make sure that floor and decor kept their, their brand and their image, you know, with we we allowed them to paint their portion of the building how their color scheme and still make it fit with the center. But with the red and the gray and the white, we wanted to make sure that that fill fill, you know, felt like their brand. And the other thing was the other site didn’t have co tenancy like ours did we Walmart to one of the tenants in our center, you know, I think those can kind of go hand in hand. We’re both located towards the freeway, the other site was as well. So they’re not losing any of that we have excellent freeway visibility, it just kind of we felt made more sense with having a little bit of CO tenancy, although Florida quarters destination and they don’t need it. It was nice to kind of show them that it could create more business by having the CO tenancy there.
Ressa 21:05
So they were already down the road. And they said that no, the first time. How persistent did you have to be to really get them to say, you know, and tell them guys, you need to pay attention, we have something really compelling here?
Marcello 21:19
Well, I think the number one rule of real estate is time kills all deals, you know, just letting them know that we’re willing to move quickly that we’re engaged, that we’re ready, checking in with them seeing how their deal progress is going. I think those are all, you know, the best ways to stay engaged. It’s timing, answering your phone, calling them simple things. But in the end, if you’re slow, if you’re not if you’re unresponsive, if the other landlord maybe was unresponsive, if it shows that we’re ready to go and to get it done, and I think time is really the thing that probably saved
Ressa 21:56
it. Awesome. And clearly the deal they were working on with the other landlord was dragging.
Marcello 22:02
Yeah, I think it’s just you know, like I said, staying engaged. And if maybe they weren’t moving as quickly as we were trying to move. It just shows that they know we’re motivated.
Ressa 22:12
Totally. What would you say was the number one thing that you learned from working on that deal?
Marcello 22:19
A deal is never done until it’s done.
Ressa 22:23
Totally sounds like that is something that was really learned in this story.
Marcello 22:28
Well, it’s inked and signed, and all the comments are done and everything’s executed. I mean, it’s not done. And I think that that was just reiterated throughout that deal process and never take no for an answer. Keep pressing Yeah.
Ressa 22:41
Again, definitely a lesson that a deal is never done until it’s done. And totally that persistence is an amazing quality to have, no matter what discipline you’re in, in commercial real estate. So when I get to ICSC recon and I gland in Las Vegas, going with my wife, we’re gonna go tore that center, you guys are still leasing that center.
Marcello 23:05
Yeah, we’re still working on it. We have a couple other national tenants that we’re working with right now on securing some more leases. So goal is of course, always 100% occupancy, but it’s 365,000 square foot center. So, you know, we’ll take 98% If it works out that way.
Ressa 23:25
So it’s Walmart floor and decor. And are there any other national tenants in the center that we might know?
Marcello 23:31
Yes. So Florida core Walmart, raw AutoZone. There is, let’s see Sally Beauty Supply, Portal,
Ressa 23:42
cool GameStop, great national tenant mix, quality credit profile and unbelievable story on how not to give up and even when a tenant tells you no, or even when they might be at least with another location. And I’m assuming for the course doing well in the location now.
Marcello 24:03
Yeah, they’re doing really well. You know, there are other locations in Henderson, which is far from this site. So this really let them have the northwest to west side of the valley, plus them having their other Henderson location. So I think this is an excellent second location for them.
Ressa 24:21
And how long have they been open now?
Marcello 24:22
They’ve been open probably a little over a year.
Ressa 24:25
Fantastic. One last thing. So from the call that you made, and they told you know, when they signed a lease, what was that time period? How long did it take? I can’t quite recall
Marcello 24:37
the timing of what that was a I think it was probably one of the quickest like special service or deals that we’ve done, you know, with the special surrounds a lot of layers of approval, but it’s probably one on the on the quicker side. I can’t recall the timeframe.
Ressa 24:53
Got it. Under 120 days, I would say so yeah. Wow. Even a big box national deal. like that can get done in under 120 days. Amazing. As you know, the last part of the show is called retail wisdom. And I’m going to ask you three questions. You Ready? Ready? Question one, what is your best piece of commercial real estate advice?
Marcello 25:14
My best piece of commercial real estate advice would be to embrace technology. Instead of being afraid of it, it would be embrace technology and use it to your advantage.
Ressa 25:25
What is one piece of technology that all the listeners of this show should start using?
Marcello 25:30
Well, if you’re not using a CRM, I mean, you obviously should be. So that’s, that’s, that’s one on the more business side of things. And then I think social media is a great tool, use it to network use it to really find the right people that you want to network with. I think that’s really important. So I would say those two people are always behind. I feel like in commercial real estate and social media, so I think definitely, that’s awesome.
Ressa 25:54
I hear you there, too. What extinct retailer, do you wish would come back from the dead?
Marcello 26:02
Man? Um, you know, I just really enjoyed those blockbuster days where you could just go to the store and you know, maybe it’s with someone you’re dating or or whatever, but just kind of go and pick out your movie, grab some snacks, maybe get some takeout, and then go watch your movie. It’s really way too easy to get a movie. So that was really fun. I would I was I just really enjoyed always going to the movie store. You know, going to Blockbuster and checking it out.
Ressa 26:36
I loved blockbuster. Great answer sad to see them go. Alright, last question. I am on Target’s website. I am looking at the six quart, seven in one pressure cooker from Insta pot. Which by the way, I just got an Insta pot. My wife is an amazing cook. She just started using the Insta pot in the meal she is making is incredible. And they’re so simple. So quick. i We love this thing. What does the instapot six quart seven and one pressure cooker? Retail foreign Target’s website?
Marcello 27:18
Um maybe for $119
Ressa 27:22
Oh my God. You are the first guest ever to get it right.
That is what the Insta pot retails for. There are a million Insta pots out there different pressure cookers. But the one I was looking at you got right that you are the first guest. Congratulations, you’re spot on.
Marcello 27:41
That’s what I was thinking when 1980 That laptop hilarious. You know, I know a lot of people like to say like how unique they are and how they just, they’re just so different than everyone else. I’m just in Vegas basic history of I love to shop at Target. And I bought an Insta pot. I bought an Insta pot. I’ve never used it. It’s in the box. It’s I’m terrified of it. So I have a crock pot. I’ll put something in there.
Ressa 28:07
Don’t be terrified. The crock pot tastes forever open the Insta pot. It is life changing. Open it up on Sunday. When you’re relaxing. Take a shot. You’re going to be mind blown.
I can’t wait. My wife makes this sausage risotto in the Insta pot that is should be in restaurants. Well, this has been fascinating. I’m excited for Vegas. I’m excited to go to ICSC recon can’t wait to go and connect to the out there and go check out the Florence store. Thanks for coming on.
Marcello 28:38
Awesome. Thank you. I appreciate you having me.
Ressa 28:44
Thank you for listening to retail retold. If you want to share stories about a retail real estate deal and you were part of on our show. Please reach out to us at retail retold at DLC mgmt.com This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you’re a retailer, broker, entrepreneur, architect or an attorney. Also, don’t forget to subscribe to you to retool so you don’t miss out on next Thursday’s episode