Office Depot in Miami, FL with Nicholas Roth
Guest: Nick Roth
Topics: Office Depot, retail development
Transcript:
Chris Ressa 0:02
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 we have Nicholas Roth. Nick is the head of real estate for rooms to go. He’s been in the industry north of 20 years, he’s been Senior Director and Head of real estate at multiple companies such as Office Depot, pet supermarket. He’s been on the landlord side, I was lucky enough to do a crazy downsized deal with him in cheek to Wagga, New York. excited to have him Welcome to the show, Nick.
Nick Roth 0:49
Thanks, Chris.
Ressa 0:50
Good to be here. So Nick, why don’t you tell everybody a little bit about you? What the head of real estate at rooms to go does? And what’s going on?
Roth 1:00
Okay, well, interestingly, Ruscoe is kind of an unusual company because it’s privately held. And my job really isn’t, I guess it’s head of real estate, but you wear all the hats. So we are primarily an owner and self developer of retail and distribution centers. So I’m doing the retail on the on the DC. We occasionally ground lease once in a while we do a space lease as a tenant. And we other also the properties that were first gen stores that we’ve held on to the recent real estate, in some cases, even second gen stores because the company’s been around now for 30 years. And we lease them out. So we’re a landlord as well. So you get you get to play all of the games and the business in this job, which is kind of fun. Your landlord, your tenant, Android developer, a lot of fun, you know, and being able to work on the development of the DCS for me is a new thing. Because I’ve been I’ve always worked for bigger companies that had separate industrial folks. So that part of it’s been kind of exciting. And because it’s privately held, and it’s a relatively flat structure, you get decisions quickly, and you don’t have a lot of the typical corporate real estate department BS like, you know, stressful committees. And you know, a lot of times we just meet over lunch and talk through things on a napkin and go forward. And it’s great. So we’re in the process. company bought Carl’s patio a couple of years ago. So we have a lot of undersized stores. So we’re in some cases moving from 24 or 5000 feet to 50 to 60,000 feet, and adding brands into store under one roof because the current facilities are just too small to have adult kids and patio all in one. So it’s an exciting time actually to be at rooms to go. And, you know, we’re in a segment of the market that when we’re not the high end luxury end of the market. So what we sell is selling and tends to be very popular. And you know, the company has been successful for a number of years for a lot of reasons. And that seems to continue. So knock on wood, you know, hopefully we get through Covered okay, but it’s a it’s a fun place to be right now. Because like a lot of companies where they’re laying off and furloughing people, you know, we’re in growth mode. And with our new DC that we were opening this summer in Nashville, we’re going to be able to hopefully go into some additional markets from there. So
Ressa 3:20
it’s very exciting. That’s really exciting. Cool stuff. Where was and where is the majority? Tell the listeners Carl’s patio? Where are those stores?
Roth 3:31
Well, they were Florida company. So we just we operate right now. I’m the furthest west we are as middle in Texas, and the furthest north Where’s Richmond, Virginia. So we’re not in Arkansas, but we’re pretty much at the states in between in Metro Nashville and Knoxville. The Carl’s patio sales were predominantly were Florida. We just opened a number of them at the same within a month or so of each other in Houston. We are in the process of a reload in Corpus Christi. So we’ll have it there. And we’re getting ready to I think roll and roll out some stores in Dallas. But Florida has been kind of a stronghold. We now have you opened in Georgia, went to Myrtle Beach. So we’re creeping northward with it. And we’ve now got it in Richmond store as well. So in Raleigh, so we’re gradually in some cases where we can configuring space and if we add some stores that we have that are larger. In other cases, we’re relocating we’ve added on we’ve built next door in a freestanding structure, but the preference is really to have an all under one roof. We have one under construction in Fort Myers that we’re taking a little bit of kids out of the adult store. So it’ll be fully adult and then down the block. There’s a new 20,000 foot kids and patio store under construction. So it’s we’ve been really creative with it. The nice thing about this company is it’s very flexible. A lot of companies have a specific prototype, and although we do architecturally try to stick to a couple of different prototypes. We’re very flexible Then the store footprint, the layout,
Ressa 5:02
are most of the stores that you’re working on now you’re buying the land and developing,
Roth 5:08
most of them, most of them were purchasing itself.
Ressa 5:11
Will you purchase an existing building?
Roth 5:15
We have. And we have, we have converted, we have one under under, close to closing now. But most of the time, we don’t find buildings often that work for us. So we typically like to have our stores with prototypical glass look on the front, because, you know, our founders vision is that the customer likes being able to interact as they’re walking or driving by and see what’s going on in the store. And it’s very inviting. People don’t buy furniture like the bank groceries. So having a memorable trademark building, in a place that people know is when they’re ready to buy, they know where to go. But that’s kind of the thought. We don’t lease in line. Usually, you know, we’re maybe with an outlet center, but most of the time we’re building up front on on major highways or freeway.
Ressa 6:00
That makes sense, are you are you finding availability of land challenging? Your size is big. Do you have to assemble properties ever?
Roth 6:08
Sometimes? Sure. Yeah. Our corpus was a It happened to be one owner, but it was five parcels. It just it but the oftentimes it’s multiple owners, and it’s, they can be very complicated deals, they’re rarely dirt that’s ready to go. When we get once in a while we we find those but most of the time, it’s some kind of a redevelopment.
Speaker 2 6:26
And when they were looking to bring you on, were they looking for someone with that development expertise, because retail guys who are focused on assembling parcels and developing themselves, right, they’re looking for landlords to do that typically.
Roth 6:40
Yeah, a lot of times they are the found that when they started the company, the very first employee was mentioning Jeff Finkel, who retired last summer, and he was the first employee at rooms to go and he retired at 7275, almost 76. And just a sweetheart of a guy and the nicest guy I’ve ever dealt with in business, I love them and talk to him all the time. So it was a it was an odd hire. Because you know, one person had been in this job for decades. And he was the guy was a machine with his knowledge of the market and knowing how to do things. So I you know, I had a year and a half here with him before he left. And you know, it was so funny, because the last six months have been a little crazy. Because without Jeff here, I’m like, man, there’s really a lot I got to do here. We’re very There’s me and well, Martin, there’s just two of us in real estate. And we have a lot in the pipeline. So it’s a busy job. And it’s a fun job. You don’t get bored. You’re doing something different every day. That’s what’s great about it. That is great.
Ressa 7:41
Well, what’s going on in furniture now, we saw from here,
Roth 7:46
I can’t I can’t give away the trade secrets, Chris?
Ressa 7:49
No meaning what’s going on? High level in the market? What’s going on in furniture? We saw Pier One just filed? What’s going on with the consumer and furniture?
Roth 7:57
Well, you know, it’s it’s interesting, I am not going to profess to be an expert on the furniture, trade business. You know, I’m still you know, I’m a real estate guy. But, you know, we really play in sort of the mid range of the market. I think you’re having I think what you’re seeing the stores like Pier One, Pier One was a great concept for years, I think. But with the advent of some other brands that have come along and online, I just don’t think they could, they could hang on and then you get involved with anytime you get involved with, you know, the crazy debt. And you know, we’ve gotten those I’ve worked through private equity. You never know what you’re gonna get in that bag. But I think they just couldn’t compete. And so it’s, it’s interesting, what I what I have seen with their disposition is they don’t seem to be trying to monetize by monetizing any of the assets. I think they’re just kind of throwing in the towel, they’re done. Which is unfortunate, because they probably had some ability there to leverage some a little bit of that. But that doesn’t seem to be the case, we’re actually looking at some of them for patio stores where we have a store in the market and we can’t fit the patio in the existing facility. So we are you know, we may be opening a few of the old TP buildings as outdoor storage of those TP buildings are probably going to have to be repurposed and redeveloped or changed significantly because a lot of tenants aren’t going to want
Ressa 9:20
look when you’re looking at the landscape of real estate and you’re seeing closings and whatnot, and all this stuff going on. While I know you self developed most of your stuff. Are you guys department stores, JC Penney, do you guys think that’s opportunity?
Roth 9:40
We we actually have one deal right now. That’s pretty far along, but they’re tearing down the box, and they’re redeveloping. So we’re buying a four plus acre chunk of the old part of the old box parcels. We probably wouldn’t reuse the boxes themselves, but if they can be redevelop I have another one I’m looking at where they get the JC Penney back on one side of the mall, they’ve got an open space on the freeway side of the mall, where I could go freestanding, and they would be able to get the parking done because they could tear down the box on the other side, and the box is probably past the time and they need to do Outparcels or hotel or something. So it’s interesting, if you think about just the retail malls, pre COVID, I was really gung ho on mixed use alternative use, you know, university uses, you know, all kinds of things scraping and rebuilding for whatever or repurposing COVID strona wrench in it. So, you know, I do think we have, I think it’ll be interesting to see, after all, this sort of washes out if we reexamine the capacity of our medical facilities and regional hospitals and all and do we need to have, you know, some kind of fallback facilities built, but I’ve seen some repurposing going on with you. On the university side, I’m just worried now with COVID, that that may change because I think the universities are hurting a lot more. I’ve seen too many small towns where this is a town that needs Walmart, maybe a target power. But it’s the day of having a mall is over and somebody comes in and buys the mall and redevelop it spends millions on the interior and it’s a great place for people to go walk but no one’s going to open stores there even after your investment, it was just a bad investment. Because these markets just were too small. They didn’t have a real estate really strong military base to keep afloat or whatever. So you know, in the in the advent of power in Walmart, I don’t think a lot of these small towns, and I’ve been around a couple JC Penney’s by people in towns, and frankly, I’ve never even knew, I don’t even know where they were, like, man, there’s a JC Penney in this town, it was shocking to me, because some of these towns are just so small today, and they’re not really growing. So I think in that segment, it’s going to be tougher in the dense urban market, I think it’s a matter of repurposing, and I think it’d be fine. But we’ve got to take the mixed use comes in. And if you’ve got some governments that are smart, they’re going to be proactive in proposing alternative uses. And maybe you salvage a part of the mall, maybe you didn’t call them all, but you’ve got to do something, you get too many boxes today. So you’re gonna have to do other things. I don’t think Amazon’s gonna come in and save the world and all these empty mailboxes, maybe a few here and there, but I don’t see that becoming a thing. And even if they do, what is that the landlord side? You know, what is the fulfillment center really do for your mall? It does nothing. You know, it doesn’t help your max at all. So, you know, I think it’d be really interesting before all this crisis hit even with some of its really stellar properties. Simon was really aggressive bringing in you know, set hotels and some of the projects, which I think’s helped things being helped by, I think that vertical residential is also going to help and you’ve got a customer base built in living right there. So we’ll see in some of these dental market, which markets would happen, but you know, in the smaller towns, I think it’s going to be really tough unless the cities take an active stance and redevelopment or repurposing
Ressa 13:01
makes sense? Good perspective there. When I go to a rooms to go can I? Is it like most furniture stores? I go in? I see something? I can’t take it off the floor. I you guys deliver it to me?
Roth 13:14
Yeah. Ours, our showrooms, our showrooms. So we have, you know, DC is all over. You know, we have multiple DCS around the Texas in the southeast. And we deliver usually, sometimes same day, but usually next day, unless something for some reason might be out of stock. And we we deliver it from the DC we crosstalk with a lot of we have a lot of these cross stocks and small markets once in a while, depending on the markets, like the border towns are really popular with pickup. So we’ll have pickup facilities as well as cross stock locations. But we generally don’t do it out of the store once in a while. If it’s a big enough facility, we can
Ressa 13:51
do that. And online presence.
Roth 13:55
Yeah, very good online presence, which during COVID Actually, who was very helpful.
Ressa 14:00
I asked this to most furniture folks, what do you think? And I know you’re a real estate guy, but what do you think of Wayfair? Where do they fit in? One? Do you think they’ll open stores? I don’t know. It’s interesting.
Roth 14:11
Hear blurbs once in a while that they might I think Wayfair is a really great concept. I know whenever I have gone on and looked at it. There’s interesting things there. I don’t think it’s particularly well priced. There are buyers who will buy without touching and feeling and sitting on it. I’m not one of them, generally. But I’m not your typical consumer either. I kind of figured that one out. So I do think I think predominantly people still like to go try it out. But um, we’ve seen now with even bedding and a lot of these, you know, beds, boxes that come in now we’re selling them as well. But there’s a lot of people who are perfectly happy trying that out and doing it. It’s evolved anything online has changed everything so much and that’s what’s so intriguing about it. I mean, I never thought I would shop at Atlas shop on Amazon the way that I do now. But every time I kid needs a book for high school, I just go to Amazon because I don’t want to go to Barnes and Noble unless they forget and tell me Oh, I have to have it tomorrow. And then I gotta go to hopefully find a Barnes and Noble that actually has it in stock right that minute and go get it.
Ressa 15:21
Good dad gonna get it.
Unknown Speaker 15:24
I bought this for myself.
Ressa 15:27
For those who can’t see, it’s a plaque that says that ever. best dad ever.
Roth 15:33
I am. I’m gonna pat myself on the back there. I am a very good dad, especially when it comes to those damn schoolbooks. That’s. But anyway, I just think we I think COVID has catapulted online. And I the thing that I’m afraid of now is a bricks and mortar retailer is that a lot of people now that they’ve gotten so accustomed during COVID, I don’t think they’re going back. You know, I still try. I mean, I tried to, I tried to sign up for the pick up the groceries at Kroger, Publix or Target and I couldn’t get anybody to get me appointment for a week. But I think a lot of people have made that switch now with that bush, and I don’t think they’ll go back. I think you’re always going to have a need for it. But I think you’re going to see more consolidation faster now than we would have. I think, from that perspective, especially with the struggling retailers, I actually think cover could be a good thing because it will expedite it. Like let’s just get the bloodbath over. Although I thought Penny’s would close more stores than they are. So who knows. But you know, some of them just need peering one needed to just, you know, throw in the towel. So I think COVID helped do that. And it would have dragged it out longer. Some of the real estate’s really great real estate and it’ll get snatched up, guys after the mom and pop side of the business. For sure, I think that’s the one that really is just going to be brutally brutally hurt.
Ressa 16:52
We’ll see, I think there is going to be obviously, online sales accelerated. But when I think the numbers come out, and I think they will soon we are going to see that most of the increased online sales were fulfilled at a store. I think the supply chain proved out to be better in a store. You know, I looked, I’ve said this on other podcasts, I was looking for Pampers. It was going to be six weeks or four weeks on Amazon, I was like, well, that doesn’t work. need diapers now went to Walmart, there were multiple stores that had it locally. So one the supply chain, too. It’s not profitable for most retailers to deliver to your home. Right. And, and, and therefore that’s going to play out, can’t keep increasing sales at things that don’t make money. And it’s profitable in the store, and buy online pick up in store, while you didn’t have a great experience or the pandemic, I think that could be a solution to the last mile. Because it gives me the convenience that I need as a consumer. And it is a channel to deliver the product at an affordable price to people where they can make money, right? Because I think you know, when you have 78% of Americans who are still paycheck to paycheck, that you can’t pass the price to them. And eventually the retailer will say mercy. No, it’s true. I agree. Consumer demand, consumer behavior is changing, no doubt. And retailers have to evolve. The example. I love is on Father’s Day. I got new workout shoes. I needed socks. I was going to go to Target to get some athletic socks. I said, let me just look to see what they got. And I could the app was amazing. I could get it delivered same day. Well, I needed them right then and there because I needed to work out before my kids woke up from the nap. And then I, I could go buy online, pick it up in the store, I could buy online, have them bring it out to my car, or I could shop the store, all done on the app, couple button pushes, it was pretty impressive. It was very convenient, seamless. And kudos to them for knocking out of the park on that. I’m amazed
Roth 19:16
at some of the retailers that oftentimes I’ll pre shop online before I go to the store. And I’m amazed at the ones that still haven’t figured out how to make it convenient to make it fast on the app. You know, whether it’s to do a lot of Home Depot, you know, shopping and renovation of stuff and you know, sometimes it’s easy, and sometimes it’s not and to compare them to Lowe’s sometimes and how how, how much how much do they have on the features and the finishes and the whatever that you’re looking for with what you’re buying. And it’s just amazing. Some retailers I go on today and they just haven’t figured that part out.
Ressa 19:49
If I go on your app, and you say it’s an aisle four, and I get there 20 minutes later, it has to be in aisle four, right? It’s a really bad experience if I go Oh, there, I looked online, you told me you had it, it’s not on I have four. That’s where buy online pick up in store is great, right? Where if I can order it right there, go get it. And then the potential impulse buy while I’m in the store for the retailer, but I know that I have it. Right, I know that I can get the product. I’ve had bad experiences where people say it’s in this store in this aisle, and it’s not there. That is unpleasant. That’s really inconvenient. And in a world where time is a precious commodity, you have to be convenient.
Roth 20:34
I have been pretty surprised though with some of the smaller companies, whether they’re nationally, local, or just smaller restaurants will bring in whatever vets that have figured out how to make the curbside work, and they’ve done a good job with it. I think people have adapted pretty well to that. So I think it’ll be as a landlord, as a landlord person, I think it’s going to be interesting to see how it evolves with how we to design the parking lots and the facilities to enable pretty much any tenant to bring it out to the car, if that’s the way we’re going to be going in the future. We’ve had, we’ve actually had a request like that on one of our properties beforehand,
Ressa 21:13
before the crisis hit. And I think it’s going to become commonplace. Now with all we are rolling out Park and pickup. That’s what we’re calling it, but we’re rolling it out at all our properties to
Roth 21:25
get smart. If you have to. You know, I think if you can help the tenants, especially the tenants that might not be that sophisticated, figure out how to do it as a service for them as part of being in the center. I think it just makes you more attractive as a landlord.
Ressa 21:39
Yeah, for sure.
Roth 21:40
Yeah, I think it’s great. But I think I think the smart landlords are going to do that. And they’re going to be really proactive about it. I you know, you see all kinds of letters during the crisis about how different landlords handled it. And, you know, those that were proactive and saying, you know, I remember the first one I saw that impressed me so much was what Bush sent out from Irvine company. And it was basically saying, we’ve already got this pre agreed form, if you need to defer rent and blah, blah, blah, and click here and download the form and sign it, we’re good to go. It’s like it was amazing. The landlords that really took the bull by the horns and face this and tried to be helpful and do well through this and their tenants will probably survive better. So it’ll be interesting to see how it all washes out.
Ressa 22:23
Agree, you’ve been a part of some really, really cool deals over the years, you’ve had it, you’ve been on the landlord side, the tenant side, you’ve done multiple markets you’ve, you’ve seen it all. But you have a really unique deal, and a story to tell about a location in Miami, Florida. So why don’t you tell us about this story and how this store ended up where it did and which store are we talking about? What so
Roth 22:51
this is the Office Depot in South Beach. Awesome. And it was the deal was done in the mid 2000s. In sort of little history that time in office depot started in Florida staples was out of Boston. And for a long time, they kind of stayed out of each other’s way and then they started commingling and mixing and then they tried to merge. Well, the first merger didn’t go through. But they had evidently shared a lot of private information about each other in the course of it. And Florida was the stronghold market. At the time, the cash cow market depot and Orlando was its number one market and although they had no stores in Florida or district, Staples immediately went in and open stores in Orlando. And I was hired shortly thereafter to basically defend the motherland from the invasion of staples. So it was a really fun time because depot was expanding in those days, their prototype was about 20,000 feet we were self developed, we would lease it was it was a fun time to be there. And it was you know, the all the code of sort of philosophy, head of the real estate and exec EVP and head charge of construction and real estate and legal at all. It was a guy named Mark Vander who’s from New York and he’s hysterical. And you know, marks whole thing was, we are not going to stop every one of them from opening but damn it, if they’re opening there, it’s going to be because we give them permission. So it was fun because we did a lot of deals. Some of them were very defensive. Well, in Miami Dade County Depot had not opened a store in a very long time. Probably I think was eight or nine years and it had a lot of holes and it was very vulnerable to being in opposition or at least chip around and chip away at some of the cash cows with when you’re coming in seconds. A lot more fun as a retailer because you can go after the fat cat that’s already gotten there and you can pick away at him and and taking profit out of a very profitable store for your competitors a lot more painful the competitor, you know than it is for you and you’re trying to go in and make profit on your incremental investment anyway, right South Beach, the whole Miami Beach market was completely unpenetrated as was really south of North Miami, all of the side of Miami. And at that time it was the mainland part of Miami was really really hadn’t really started taking off yet. And this was, I can’t remember how it all fell in the sort of the lifecycle of Miami Beach that Craig Robins had already bought at Miami Beach, gotten a transition, you know, all the beautiful people came and followed Versace. And Robins was now investing over in the mainland and design district area, which is really hot today. But, you know, you had a great pop with great income in Miami Beach is divided between South Beach, the southern tip, which is a very urban mid Beach, which is largely call it suburban residential, but it’s you know, houses with yards. And there’s a strip kind of between north and mid beach that has retail and office and then you’ve got the density and either on the mainland or down it’s awfully tough market to penetrate. And in those days, Lincoln Road rents were starting to go north of 50 bucks, which is outrageous. So I had in mind this box, and it was a nightclub. And it was more. You know, it was that era of time were sort of that sort of a gay, the gay community’s zenith in Miami Beach was kind of peaking and it was starting to get, you know, move to more to the mainland. But it was had been for a very long time one of the premier gay nightclubs in America had a reputation, you know, all over the country. It had closed and somebody else had tried to reopen a new nightclub in it. And you know, ghostly wasn’t doing very well. But this box is sitting at the corner of Alton and West, right in between right on the cusp of South Beach and mid beach. In that part of South Miami Beach years ago had been developed as a wholesale district. And there was a Publix up the street, there was a very old Publix. Publix was building a new one a couple blocks from the first one. And they were going to keep both and everything. couple blocks between that and here was just largely industrial and kind of grungy. And one of the local brokers in town was trying to buy a lot of it up because he knew what the future was going to be and how this area would transition. Anyway, I my broker was at the time as Paco Diaz is from CBRE in Miami, you know, originally came from Cuba and he was a kin you know, new Miami like back was hand and would turn around and we’re looking at a multi five story project that Berkowitz is going to develop down at fifth and Alton way at the southern end of Miami Beach. That’s not convenient to the bulk of the population. And you know, it’s a pointer to this box and like, look, they have parking. There are a corner of two grade streets, one of which leads to a bridge to the mainland, I’m like, we really need to go after this box. It’s like man, you crazy, you know, not gonna work. I said Paco, find out who owns it, we got to find out. But he calls me back a day later, and he’s not gonna believe it. But I know the owner, he goes to my church. He’s this Greek guy and said, Oh, my mother’s side is a Macedonian Greek great setup for meeting. So we set up a meeting, and nice man, and George tinnitus. To this day, he calls me every once a while to say hello, and said, you know, George would love to lease this box from you or buy this box, or I can’t sell it, but I gotta get rid of the tenant. So it took us nine months to negotiate and get the tenant to finally agree to a buyout. But when I did the site tour, the biggest challenge was I had to keep it quiet. Because if the other brokers in Miami knew about this thing being available, we were doing this deal initially at 15 bucks a foot, it was an as his deal. He wanted to keep the air rights over the building, once I knew probably didn’t matter. But $15 was ridiculously cheap. But we had to renovate the building. We had to keep quiet with everybody. And I had to do the site tours when I took my boss down mark from New York market. He’s a New Yorker, he gets urban retail. We didn’t even go inside we drove we literally drove up to it. And he saw the parking lot. And he saw the building in the presence and he’s like, approved. Go inside No, no, get it done. Amazing. We do the operations tour was a different story. But the operations or you have in those days, operations had a lot of sway. And they you know, they really didn’t. They were very skeptical about a lot of things sometimes with good reason. But you know, this was far from that foreigner from any stores where there would be no cannibalization. We knew were staples was gonna go at the South in the beach, it would completely out position them which was part of the attraction of it had parking. It’s going to be an expensive not to renovate the building. But to go into site tour and I have my you know, my head of ops who’s very polite guy, nice, very reserved guy. And then I’ve got the regional man, the Regional District, whatever, operations manager who’s six, six is this big guy and he’s kind of very bubbly and, you know, just a super nice guy. And we’re going to see it on a Monday. Well, the weekend before had been allowed or bondage theme weekend,
Ressa 30:03
bash. Oh my god,
Roth 30:05
all girls got in free. And they were trying to like have it and so I didn’t know what we were going to find. But I was kind of warned. Well, you know, we haven’t cleaned up yet from from the weekend parties like, Okay, well, we’ll see what happens when we come in, and we’re turning around, and it’s this, you know, it’s doing it stinks, you know, with alcohol everywhere. It’s just nasty. It’s, it’s gross. And it’s a two storey building, which also makes it worse because people really didn’t do two storey buildings. But it had an open atrium area. And so I’m selling as little lamb walking over, you know, all kinds of crap on the floor. And like, no, like it was trying to sell what it could look like and how we could do the floor here. We could open up Windows here, we go upstairs, and there are big cages and chains. And I thought the guy the sixth sixth guy, I literally thought he was gonna pass out on me and collapse because he never seen anything like this before. And I’m thinking man, oh, man, this is not I’m never gonna get this deal approved. And this is this site is gold. And I’ve worked on it’s gold despite it’s called. And, you know, location, location, location, well, all they can see is whips and chains, and, you know, empty cans and glasses and
Ressa 31:21
been on a lot of site tours. I’ve never been on one with whips, chains in bondage, and
Roth 31:26
God, should I have to then so we get through this and manage to convince them. Yeah, and forget the fact that we got to put in an elevator and you know, we got to completely renovate the building. And oh, the city wants us to add a bunch of windows. Well, it turns out originally, it was actually built as a meat market back in the 40s or 50s. And then it was converted years later to that it was like a wholesale market that sold to grocery stores and merchants in Miami years ago. The city wanted us to sort of bring it back to its original retail purpose, and they were extremely cooperative. And we got the deal done. Finally, and you know, there was concern because, you know, occasionally this club could have been rented out for major parties, because there’s still a lot of gay fundraisers and stuff on Miami Beach. So, you know, depot join the Gay and Lesbian Chamber of Commerce invited everybody there. You know, we had the big grand opening smart play. Yeah. So it turned out to be a really fun event. So it really turned out in the store did really well and took off and did far better than was projected to do. So it was a huge win. And when we got to finally open when I went to my first ICSC show and one of the biggest brokers in Miami Beach is Lau Stern. And, and, and Mickey Finkel, and Lau comes up to me, and he owns property across the street that he was trying to sell his you know, future new office office, like individual like condos or office or quasi industrial area. And he came up to me at this ICSE local ICSC show and he looked at me or the screen and his space, and he stuck his hand out. He said, I have been trying to get control of that property. For years. She said, How in the hell did you do it? I said, I couldn’t resist. I’m like, well, I’ll if you’re willing to take it as is you can get anything in Miami Beach for $15 a square foot and he about passed out because it was a really cheap deal. Wow, years later, people were coming this point fresh markets now in a new building across the street. And I was back at depot briefly a couple years ago before I came to this gig. And we would get calls from developers who were trying to get us out of that lease because they were willing to pay my landlord $25 million for that site. And it’s the build go vertical with it. And that lease will eventually run down in that building will eventually it’ll, it’ll come down. It’s not going to stay there forever. But you know, it was a fun deal. And I think out of all of the deals I’ve done, it’s probably the one on the private stuff because it took me nine months to get it done. And I managed to keep it secret and nobody stole it from because it was a really good deal was around.
Ressa 33:57
First congrats because even though it’s years and years later, that’s one of the best stories I’ve heard on this show. That is incredible, from the fact that it was a nightclub, the fact of you know, Office Depot being really smart and joining embracing the community. And that’s a definitely less than all retailers embrace the community. You’re in joining the Gay and Lesbian Chamber of Commerce at the time, that was, you know, really good. And, you know, I think all retailers and landlords need to support and be inclusive to all the communities that they’re in. So that’s really awesome. I think the fact that it was such a it was not an on the market deal, right? It was an off the market deal that you’re like I need to be here and you made it happen. Not a lot of people can do that. A lot of people like
Roth 34:48
Whitewater, beige walls or whatever and say that would look great with an Office Depot sign on it right at MIT, you know, one of the best intersections in the market for for cars. I mean, because it’s not It’s largely picked out and a lot of its pedestrian market. There’s aren’t a lot of good places to go. And I have, like 22 parking spaces. Are you kidding me?
Ressa 35:08
You don’t get that. And so, yeah,
Roth 35:10
so it was it was a great deal and a fun deal and probably will always be one of my favorites. Almost, you know, using my Golden Retriever is bait to get the one bet to sell on for an assemblage once that’s another good one. But that one’s I’m not so proud of that stuff. Like I was using my child.
Ressa 35:27
That’ll be for another episode that you’re on ever. Yeah, I also like a lot of people take the path of least resistance and you had a vision of what this property could be and how powerful it can be to the brand, all the things that did it out position your competitor, it gave you new presents that you didn’t have. Rarely, even in the mid 2000s, could you open a store that wouldn’t in your I don’t want to call it home market but home market that the whole market didn’t cannibalize another store. Wow. All that open
Roth 35:58
to the south. As soon as they could get out of that lease. They laugh. You know, that was the the interesting thing about a lot of the deals I did at that time, we had defensive plays that are literally so that when they open, they would suck and they would closed and they closed a lot of them. One of them actually was the first generation rooms to go building, which was ground leased. And we sublease it, it was complicated. And we just got control of it back and are now opening a patio store. So it’s kind of funny that stuff comes back that whole period with the the office wars and same with the drugstore wars, it’s amazing how that stuff comes back around later and how it gets recycled.
Ressa 36:34
That is really cool. Full Circle, for sure. Anyway,
Roth 36:37
the old enough to be in the business. As long as in the USA, you’ll get it.
Ressa 36:43
feel old. Now I feel young. I’m
Roth 36:45
just kidding. That’s called children.
Speaker 2 36:47
That’s called children. I feel young. I’m just kidding. I’m grinding, I’m still in the grind and faces. I’m going. You know the other thing, you were making all these defensive plays, which is interesting, because I don’t know that that happens as much anymore.
Ressa 37:02
But I think that one of the things that’s interesting about that story is obviously a defensive play. You had the branding of Office Depot, secure this unbelievable piece of real estate. You had to get ops on board, you had this vision. But I think the other part that was interesting is the brokerage community wanted to have you go in a different project. And you didn’t want to go in that project. You didn’t think that was the project? Competitor have that project? Yeah, I think you
Roth 37:32
because we knew it wasn’t the right place to be.
Ressa 37:35
Yeah, I think that’s an interesting. That’s an interesting point that we don’t hit on enough. But you know, you kind of you went contrarian against what the market was trying to convince you to do. And you said, No, I want to be here, which takes some guts, right? Because if that blows up, which this wouldn’t, because it was so dynamite. But if that blows up, and you’re a real estate person, and you’re looking at the CEO, and he’s telling you, the whole market told you to go here, everyone’s saying that. And you took me over here. But it ended up being a win. That’s really awesome. Kudos to you. unbelievable story. I think the listeners are gonna love this. This is one of the better stories we’ve heard, really appreciate it. Oh, my God,
Roth 38:18
I still can’t believe that day. I look back and I’m like, I could have gotten a really I could have lost my job that day.
Ressa 38:25
Unbelievable. Well, that brings us to the last part of the show retail wisdom. Got three questions for you tell me when you’re ready. Okay. All right. Question one. What is your best piece of commercial real estate advice?
Roth 38:40
Um, trust your gut. My gut. I mean, it’s it really interesting, trust your gut. I was gonna tell you something else. You know, when you mentioned this before, but but really, that’s when you said it just now that’s what comes is my gut is whenever I’ve gone against my gut, oftentimes, I’ve gotten stung. Like that’s usually pretty good. So if at all, I think a lot of people are afraid to trust their gut, because they’re, they’re insecure, and it takes a while to develop that level of confidence for the youngsters in the crowd. So you need to develop that level of confidence on your own but you’re generally your gut is right.
Ressa 39:17
At least mine has been that story proves that out for sure. Second question, extinct retailer, you wish would come back from the dead?
Roth 39:26
Well, I consider them extinct because I think it’s a very different concept and what they have, I love the Home Depot brand. I’ve lived in DC, Atlanta and South Florida, all of which had that and you know, I love that concept. And I’m sorry that it didn’t work. Because I thought it was a great brand. Why did you love that concept? They carried higher end stuff, they stocked it and a few everywhere I’ve lived I’ve moved a lot. So I typically buy dumps and I’m gonna renovate them and then I’ll flip up later. So for me it was a you’re able to go get stuff you can’t get in a normal store without custom ordering it and you could touch it, feel it again. Yeah, like the touch and feel it. So you could, you could touch it and feel and try it all out and the prices were great. That was a great concept. I loved it. When they closed them. I was actually the one here in Atlanta rooms to go owns it. And we’ve we have a rooms to go store, a towel shop and the best buy in it. We bought the old Expo that’s down the street from our store here perimeter. And I used to go in that store all the time when I lived in Atlanta and I guess early 90s, mid 90s whatever and it was always in that store loved it.
Ressa 40:36
That’s the first time someone’s mentioned that store. One of the most interesting stories this is turning into one of the better interviews out there we
Roth 40:45
say what do they usually say?
Ressa 40:47
The most common answer has been blockbuster.
Roth 40:51
Yeah, I didn’t. I didn’t care about blockbuster till the kids came along then I was in there every weekend. But yeah.
Ressa 40:58
Last question is gonna throw you for a loop. I’m in the market for a new wallet Nick. I came across one of the hot selling wallets are reached wallets. Very unique. They are metal they are titanium and aluminum. They have all these difference. And they the branding in the story is about trying to get you to do more with less. They’re very simplistic, but you could do a ton with them. I am on their website right now. What is the titanium burnt Ridge wallet?
Roth 41:36
retail for? Well, I’ve never heard of this concept. I’ve never seen it. Now I’m gonna have to go look it up. Um It’s sounds really expensive. I’m gonna go 2999 and say it’s not
Ressa 41:56
$105 But thank you for playing. I was wrong. Nick, this has been awesome. Thank you so much. It was fun. Thank you for listening to retail tools. 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 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 retail retold so you don’t miss out on next Thursday’s episode