mobile-close copy

Software surge: The rise of proptech in commercial real estate

Episode #: 282
Software surge: The rise of proptech in commercial real estate

Guest: Jordan Hearin
Topics: ID Plans, proptech trends, software pricing models, proptech challenges

In this week’s episode, Chris sits down with Jordan Hearin, Head of Product at ID Plans, a company bridging the gap between cutting edge technology and commercial real estate. Tune in as they talk about the impact of proptech in CRE, challenges it faces, and what the future of proptech in commercial real estate will look like.

What You’ll Learn:

  1. What is the history of ID plans, what do they do today?
  2. What does it mean to be “an inch wide and a mile deep”
  3. What are some of they key problems that proptech endeavors to solve?
  4. Why is a software pricing model based on GLA cause for concern?
  5. How are retailers using proptech like ID Plans?

About Retail Retold:

The Retail Retold Podcast highlights community retailer stories from across the country and gives a behind-the-scenes perspective from business leaders in both retail and real estate industries. The show’s episodes contain valuable insights that help solve the needs of entrepreneurs and real estate pros. Join host Chris Ressa and new guests weekly for amazing insights and thought-provoking stories.


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.

Today’s episode is brought to you by complete solutions and sourcing. Complete is a partner of ours at DLC and they provide waste and sustainability solutions for our properties

Complete solutions and sourcing Inc. is a customer centric, comprehensive managed waste service provider, independently owned and operated. We are the experts in waste and recycling solutions with a key competitive difference. Our boutique approach. We are driven by our desire to support the commercial real estate industries, owners, landlords and managers as they navigate the ever changing and challenging waste industry. We are honored to work with some of the industry’s top brands to strategically craft implement and manage some of the most impactful waste programs available today. As we reshape the waste industry and lead our clients to their diversion goals. Is your waste program complete? Contact us at C-O-M-P-L-T .com, and let the experts at complete solutions reduce the environmental impact of your waste program.

Chris Ressa  00:02

Welcome to Retail Retold everyone

Chris Ressa  00:05

Today I’m here with Jordan here. Jordan is the Chief Product Officer at ID plants. Jordan, welcome to the show. Chris, great feedback.

Jordan Hearin  00:16

Great to be back. Thank you for having me.

Chris Ressa  00:17

I love having you on Jordan. Tell us a little bit more about you. Who you are, and who Id Plans is and what ID Plans does.

Jordan Hearin  00:29

Yeah, for sure. So obviously, my name is Jordan. I’ve been working in technology and building technology products for just over a decade. My experience in commercial real estate sort of fell into it about six seven years ago and consider myself a raving fan. I spend all of my time reading and researching, hanging out with guys like you Chris and others. And my core focus in my day job but also my personal life is to bridge the gap between technology cutting edge innovation, with the constant changes and competitiveness of commercial real estate. So I try to serve as the strategic leader ad ID Plans, but also sort of add value to, folks in commercial real estate, being the technology liaison, and being able to build products that are truly value-add and actually solve problems.

Chris Ressa  01:33

Okay, that’s a lot, we’ll dig into that.

Chris Ressa  01:36

What is ID plans?

Jordan Hearin  01:39

Id Plans. Funny enough, we are celebrating our 25th year anniversary in June. So we’re very excited about that. We got started back in 1999. Thank you so much.

Jordan Hearin  01:51

With a a simple product that was really hard to do. We organized the capturing of relevant information at

Jordan Hearin  02:02

Outdoor shopping malls all across the country, and we put those into booklets and then shipped them across to property managers and asset managers, giving them a point of reference at their property and instantly be a little clearer. We deployed field teams to shopping centers all across the country capturing information like every HVAC unit and what the metadata, or the manufacturer, the tonnage, all that kind of stuff, the electric meters, even more granular information like wire tracking and waste. Basically, every single piece of information a property manager could ever know, the property manager fever dream of information, we captured and distilled into a really clear booklet. Well that progressed over the years into a digital application, what we call remote property manager, or rpm. RPM now became this really foundational data layer that allows guys like myself and our engineering team to build robust software applications that live on top of that data set. So we have over 2 billion square feet and for every square foot, there’s relevant information like all those HVAC’s, and waste receptacles, and utility meters, and lighting fixtures, etc, etc. And now we get to build our inspection platform or work order platform, our robust reporting and business intelligence and most lately, our tenant portal, that all interacts natively with that information. So our goal is to centralize all departments in commercial real estate into one collaborative application or one collaborative data set.

Jordan Hearin  03:35

And utilize visuals to help simplify complex data, create efficiency, really raising the NOI and all the really good financial stuff. And honestly Chris, creating a really positive experience for the property managers but frankly, the tenants too.

Chris Ressa  03:54

Got it, okay. This centralization word, I think is a word a lot of tech people use, so it’s a compelling word. It’s very hard to do though, to get everything centralized especially as all these companies have legacy tech stacks, right. And contracts. it’s challenging to do. We’ll probably dig into that a little bit. But appreciate the insight into ID Plans is, who Jordan is.

Chris Ressa  04:24

Your customers are typically landlords?

Jordan Hearin  04:29

Oftentimes. Oftentimes landlords, property owners, but lately third party management and retailers as well.

Chris Ressa  04:36

Okay. And of all these customers what are some of the key themes you keep hearing from your customers right now  currently?

Jordan Hearin  04:49

Yeah, so I think it another way to phrase it Chris, why do people come back to ID Plans or what is the biggest driving force on why someone would consider ID Plans as a solution

Jordan Hearin  05:00

I think it’s twofold. I think, the original value prop way back 25 years ago, it’s still valid today. The nature of retail. And this is something that when we hire new people, we always, I always really try to hammer and explain is that office and retail, are so radically different. And one of the key differentiators is this concept that in an office environment or even multifamily, it’s actually really likely that there’s landlord representation, on site or close by. Whereas in retail, or industrial, it’s sometimes common for a property manager or a landlord’s stakeholder, to only come to the property once or twice a year, maybe quarterly.

Jordan Hearin  05:48

And so that dynamic is critical. And so the big driver is, these assets need to be managed properly to a high standard remotely. And so the main driver is, hey listen, ID Plans fills in all the gaps and allows property managers who may be far away, to have a realistic chance at managing that asset to the high standards that landlords set on their assets. Now, where we’re hearing things today, and why we’re seeing such growth on our side, is the rise of proptech has been a double edged sword. 10 years ago Chris, proptech wasn’t a word. Maybe even five years ago I’m not sure. And there really wasn’t too many huge players in the innovation space, “do we really care?” Especially in retail, nobody really cared about retail, or industrial, it was all office and multifamily retail was dorky.

Jordan Hearin  06:40

So that’s rapidly changed. And it’s changed in a way I would describe it in a in a very aggressive way. And the manifestation of that is that you would have a large amount of what I describe as inch wide mile deep solutions. And what I mean by that is you have startups who solve a very small problem, but they do it in a very deep way. And they’re selling to folks like DLC, or Kimco or other retailers and retail landlords, and it sounds great. But the problem, is, all of a sudden, over a multi-year period of time, guys like DLC, now have 14, 15, 16 different vendors, that all are solving one problem deeply. But the problem Chris, is that those offerings don’t work well together, they’re only delivering 30% of the value that the charismatic sales guy sold them. And they don’t integrate with the key systems, be it MRI, or Yardie, or JD Edwards or even Salesforce or Microsoft CRM, these key systems. And so this becomes a huge problem, in addition to it’s very expensive. Those 14,15 different vendors are expensive, hard to manage, those contracts are tough, and often they get bought by private equity, raise prices dramatically, and service goes even further. So we hear people coming in droves saying, hey, we need one or two vendors, not 15. And ID Plans, you know, we have a product suite that allows folks to roll in a lot of those vendors into one platform. And Chris it actually integrates with the key systems, like MRI for an example, and talk to each other natively. And so that’s the big driver, people who need to consolidate these vendors, because they’re inundated with tons and tons and tons of challenges and headaches of managing all these vendors.

Chris Ressa  08:38

That is a key issue. I’ve talked to a lot of people. And it’s a great point.

Chris Ressa  08:44

And a lot of people are trying to solve for this and there’s a lot of different ways people are trying to solve for it. The vendors who are inch wide and a mile deep. And it’s a great analogy. Do they know this about themselves? And are they trying to pivot from it?

Jordan Hearin  09:01

Yeah, no question. I mean, everyone realized. For a long time in what we would call in tech, the desert era,

Jordan Hearin  09:08

zero interest rate period, not only did real estate benefit from low interest rates, the tech companies as well. And the rise of these these inch wide mile deep companies, well, their business models were kind of okay not being profitable, and they were kind of okay, just hey, we’re going to capture this very narrow vertical and someone down the line will buy us at a 15x revenue valuation or something because profitability doesn’t matter. And we can we can kind of solve this, we just care about growth growth growth. Similar to the challenges that real estate is facing today, with raising interest rates and harder macroeconomics. These tech companies now need to find a more tenable way to manage and get adoption, wider adoption with their customers. And so you’re seeing the rapid consolidation and rapid roadmapping and product pivots.

Jordan Hearin  09:59

you’ll soon see how how much wider how much how much of that inch could they stretch to capture more customer wallet to insulate themselves from operational expense belt tightening, which is a huge theme right now. You’re seeing guys, a lot of landlord’s tightening belts, you know trying to save save cash in anticipating harder times to come.

Chris Ressa  10:26

Okay, that’s really interesting operational  belt tightening.

Jordan Hearin  10:32

I thought you’d like that.

Chris Ressa  10:33

Are you seeing an M&A? Like a bigger platform go, “okay, I’m a much wider breadth. Maybe I’m, you know, I’m 100 feet wide and 100 feet deep. I’m not. I’m not an inch wide mile deep. But I like what they do, and I could use that for my customers. Let me go buy them.

Jordan Hearin  10:57

Yeah, yeah, it’s a huge trend. I think we’ve all seen. I think it really started it was probably three or four years ago when you saw all the Building engines being acquired by JLL. I think that was big, into their mix with with Corrigo. And then you see the acquisition of Ravti, and a few other of the interesting native innovations that they’re doing

Chris Ressa  11:17

 I Ravti was a really good one. A good example of inch wide mile deep.

Chris Ressa  11:24



see it there

Jordan Hearin  11:26

And I guess not to go down that road too much. But you know, a lot of our customers come to us saying well wait a second, we’re we’re paying. And listen Ravti did a great job, and they solve a real problem. At that point in time. This isn’t about dogging Ravti. But really what it’s about is, our customers saying wait a second, we’re paying a significant premium on a per square footage basis for this solution that is really talking about all these things like procurement, and managing HVAC compliance and really the HVAC compliance with seemingly the larger problem that our customers at least were more interested in.

So Chris, what we did, in our tenant portal, we just rolled right out the HVAC compliance that allows our customers to match similar to sales compliance or regular COI, we’re now seeing customers be able to consolidate right into our platform, and get probably 70-80% of the value of a Ravti-like solution, for a tenth of the cost. Right. And that’s, that’s something that’s really, really exciting. But more on the on the consolidation, M&A side, you see VTS, with their round of CBRE, you’re seeing a lot of the big brokerages trying to hedge their businesses in hard times into technology, and rolling up a lot of these providers.

Chris Ressa  12:38

So let’s talk pricing. Because price inflation for these tech companies is, is getting for the customers, is a big consideration. I think it’s getting insane. And you know, and how, and how proptech companies are thinking about pricing for property owners like, I can tell you, when I hear a proptech company think about pricing, and using per square foot as the denomination, I start to get really like, what does my per square foot have anything to do about pricing, how much GLA we own, have anything to do about what we’re paying for software, because it has nothing to do with it.

Jordan Hearin  13:33

Let’s talk about I think I think that was going to consult for any prop tech company. I think the one thing that’s the quickest way for you to lose deals and not be successful is getting pricing wrong. And what we hear a lot as someone who talks to probably every single technology buyer in the industry. I mean, the top 50 real estate companies, I know them, I talk to him, and I’ve sold to them. Right.

Jordan Hearin  13:56

And there’s one thing that irks technology buyers is you don’t understand our business number one, number two, you don’t appreciate the scale. The GLA  thing, I think is inherently flawed in some senses in a pure software perspective, because you’re right, trying to correlate storage hosting to square footage is a problem.

Chris Ressa  14:21

That’s my point. And a lot of Prop tech, prop tech companies are trying to price that way, and it’s really I’m like, why, why?

Jordan Hearin  14:30

I’ll tell you

Chris Ressa  14:33

They can’t figure out how to price it.

Chris Ressa  14:35


Jordan Hearin  14:35

Right. And so Chris, that’s why we price on a per property basis. And I’ll tell you why. Now, you may be thinking well wait a second, isn’t you know, isn’t a property just an aggregation of GLA. It is and it isn’t, we want to adjust. There’s there’s not a perfect model here, right? How we think about it is this. We need to honor scale, meaning that the more square footage we have, the better we can do.

Jordan Hearin  14:59

discount on a per square footage basis, right. I mean, the larger portfolio is obviously going to be more competitive from a pricing perspective. But also we have to handle things like disposition, these assets are bought and sold all the time. And so we have to have a model that allows us to pivot. Let’s talk about DLC.

Jordan Hearin  15:18

DLC goes on a buying spree. And adds 30% to the portfolio. Acquires lets say, 20 more assets. Well, we need a model that allows us to go up and down to accomodate. And the same thing in reverse. I mean, if you guys sell a whole bunch properties, we want a model that’s able to accommodate, we don’t want to punish you for your inherently, your acquisition and disposition processes, we want to grow and contract with you not necessarily being a deterrance of either those things.

Chris Ressa  15:46

So if I sell sandwiches, okay, what I say is my cost is x. Right? This is my labor, my shipping, my food cost, my cost is x, here’s the margin I want to make. This is how I’m going to price it. And lets us see if the market responds.

Jordan Hearin  16:17

Spoken like a true real estate guy.

Chris Ressa  16:20

Like instead, we’re making these things like. Oh, let’s see, I have a software that sits on in the cloud. And we’re not going to talk about what my cost is to operate. What my labor is, we’re going to talk about is, how much do these guys own?

Chris Ressa  16:43

How much do I think I can get them to pay, and how do I make that in a language that they can understand because “oh, they all talk square footage. So let’s put it in square footage.” And so, people have been selling sandwiches for a long long time and profitably, and obviously the software industry is supposed to be one of the most profitable places, and that’s why people move to tech. And so they’re trying to reinvent pricing.

Chris Ressa  17:12

I look at, and my sandwich example is is silly I understand. But you get my point when I say that, right? It has one of the things that I think on the prop tech side, that’s happened, especially, most prop tech, doesn’t have leverage that some other tech industries have over the over the customers, I’m surprised that pricing has gone to. Let’s see how much they can afford to pay, and apply a denomination that they can understand, to back into that price versus say,

Chris Ressa  17:53

Here’s my cost. Here’s the margin I’m gonna make selling it. Like other industries do, and unfortunately, the sandwich space is is a lot more competitive, and therefore they’re forced to do it that way. And maybe that’s the issue. But

Jordan Hearin  18:10

Yeah, for sure. I mean, listen, I think drawing comparisons to two, I think it’s more than a conversation. And, you know, I think I think we’ve hashed this out before, Chris, for sure. Offline. What I would like to say is, it’s really not exploitive, I’d say. Technology’s a little bit different in that we are scored in a little bit of a different way.

There’s tons and tons of, of engineers and costs and things, we’re squeezed on our end as well, just like you are, and our pricing and how. I can speak for us. When we think about pricing, not from a hey, what can we get but from a how much value are we giving? And how can we make it make just make sense for our customers be it from optimizing for recoverability. Be it optimizing for in a way that works with their model? Right? And inherently.

Jordan Hearin  19:03

It forces us to be competitive, right? I mean, it is getting more and more competitive. And I think you’re seeing there’s some corrections for pricing that are coming. And you’re seeing a lot of folks like ID Plans who have a service component, which I think exempts us, maybe that gives us a hall pass Chris, we do have our field groups, which is a very is a heavy heavy cost to the company. But adds tons of value. I think we may get a hall pass.


for failure.

Chris Ressa  19:28

Yeah, I’m not knocking ID Plans I’m just challenging the pricing of of software and its application.

Jordan Hearin  19:36

It’s inherently abstract, for sure

Complete solutions and sourcing Inc. is a customer centric, comprehensive managed waste service provider, independently owned and operated. We are the experts in waste and recycling solutions with a key competitive difference. Our boutique approach. We are driven by our desire to support the commercial real estate industries, owners, landlords and managers as they navigate the ever changing and challenging waste industry.

We are honored to work with some of the industry’s top brands to strategically craft implement and manage some of the most impactful waste programs available today. As we reshape the waste industry and lead our clients to their diversion goals. Is your waste program complete? Contact us at C-O-M-P-L-T .com, and let the experts at complete solutions reduce the environmental impact of your waste program.

Chris Ressa  19:38

It’s abstract, right? Whereas when I would say like pre-pandemic, I was getting a cold call from a software provider weekly. And as you said, they’re all inch wide mile deep. But here’s the thing, some of them had to do with Proptech. Some of them weren’t prop tech and just software solutions. Here’s what fascinated me.

Chris Ressa  20:06

They knew enough about our company, they were all the same price no matter what they did. All of them, all the same, it must’ve been hundreds, they were all the same price. So there’s a playbook out there. They’re all the same price. And I was like, how can that be? A bowl of cereal, it’s not the same price as a burrito. They’re all the same price, because they weren’t basing it on what they were making an assumption. And it could have been the other way, maybe I could have afforded more. They’re making an assumption of what I can afford to pay, versus some other industries on pricing.

Jordan Hearin  20:49

For sure. Well listen , it’s certainly an art. And there’s one thing somebody that a company can do well it is pricing. And I always applaud as a buyer and a seller of software. I always applaud transparency. And I always applaud folks that spend the time to understand the nuances and the limits of our business. And we try to do too, to try to be as empathetic as possible. And how we structured things in a way. And I think

Chris Ressa  21:16

One of the things that I think as people start technology companies start to like, really dig into real estate, is one of the words that we use all the time. It’s not just square footage is what is market.

Chris Ressa  21:30

What is market? What is the market rent? What is the market cap rate? And we use these terms, and we’re very used to what market is. And I think it’s if you were to ask that question to a software provider

Chris Ressa  21:48

What is market for this product? Their answer would be we’re special. Their answer would be well, this is a different product. I’m not like anybody else, we’re special.

Chris Ressa  21:59

Listen, real estate people try to do this “oh this piece of real estate is different than that piece of real estate.” It always comes down to what is market. And in software. It’s like, oh, we’re unique. We’re different than this product, and we are adding this product, and they don’t do this. And so it’s like there’s no market.

Jordan Hearin  22:16

Chris, I think we should be careful here. I don’t want to talk so loud and paygive more attention to costar to jump into the software business. I guess we don’t we don’t want costar to be analyzing and calling people and putting market prices on on proptech now. We certainly don’t want that.



Chris Ressa  22:35

But I think that’s one of the challenges software has with real estate is real estate people inherently are used to this concept of what’s market. Right. What is market? Right. And I think I think that’s one of the challenges anyway.


I think it’s cool.

Chris Ressa  23:00

So, you have this, you have this issue, right? That’s issue one that your consumers are talking about, which is inch wide, mild deep centralization. Issue two is always pricing. What other issues are customers talking about, Are you hearing about and trends you’re hearing about, that either you’re trying to solve to or you believe that ID Plans is solving to or you want to in the future?

Jordan Hearin  23:24

Man, you know, it seems like especially in these days, there’s never a shortage of problems.

Jordan Hearin  23:31

It seems I talk to people every day. I mean, on the asset on the buy side on the sell side managers leasing folks, if I’m talking to a broker right now, which I try to spend a lot of time because I think I think talking with leasing folks is sort of the the sparkplug of the industry. You know, I think it’s like if you really want to understand the industry looking from a leasing perspective, I think is more interesting to me. At least that’s how I early on got there. And you know, today you’re looking at the big problem is occupancy is so high.

The lack of vacancy is becoming incredibly frustrating for a lot of dealmakers. And when you have spaces apparently, when I talk to brokers, they talk about folks like these larger REITs or larger retailers who are sitting on LOI’s for an extended period of time because well they kind of have their pick of the litter. And I think that’s one of the big problems that we want to help with organizing that information in a way to help when you have a prospect, how quickly can we close? The concept of time killing deals, In my opinion, it can’t be more clear than today. If you are we want to be able to respond quickly and currently, more than ever, with smart products and offerings to ensure that when brokers and dealmakers have an opportunity they can jump on it immediately and quickly and really try to shake out the land mines first.

So we spent a lot of time talking about our ID 360 products, which is that space profile piece, it gives all the information needed to really get to that LOI, and our tenant portal, where we’re able to really visualize the entire horizontal path of a deal into our tenant portal to really help grease the skids for sure.

Chris Ressa  25:22

So, as it relates to the problem you talked about, I think. So supply and demand, we talk about a lot on the show, which is occupancy is high. Those fundamentals depends on who you ask, that that’s a problem, right? A retailer who’s looking for space in the market, maybe that’s a challenge for them, a broker who, it only makes a living if a transaction happens, that’s a that’s the potential a new transaction, that’s a problem for them. On the landlord side, it’s clearly an opportunity today, right? As an owner it’s an opportunity to get to a place where you can, you know, landlords have been in this position.

Chris Ressa  26:13

For over a decade where actual rent growth has been a real challenge. net effective rent growth has been a challenge, we’re now in a position where potentially, you’re seeing that, and we’ve been a place for 10 years where it’s been limited. And so this is clearly a landlord’s time to shine, to drive.

Chris Ressa  26:40

NOI at properties where it’s been challenging to have that same store net accretive NOI growth , you could always buy a deal. But is that net arretive. And now, you’re starting to see landlords have that ability. And I think

Chris Ressa  27:01

there’s some opportunity in that versus just being problem.

Jordan Hearin  27:04

I totally agree. And I think, you know, on that, in some sense, you know, anecdotally, talking to folks on the landlord side, who are choosing not to renew two thirds of their spaces, right, meaning that they’re, they’re willing to go out into market, they’re willing to test the market, they’re willing to prioritize a proper curation of the shopping center, meaning how are we able to create a really good continuity, or really complimentary tenant, really get the voids really trying to stay competitive, and landlord its certainly an opportunity for landlords for sure. But specifically the brokers, we are super sympathetic to the to the challenges on the retail side.

But you’re totally right, I will pick your brain a little bit on not to get too nerdy or too financial. But I do think it’s interesting about how TI is affecting today, because he doesn’t mean interesting, where you can always buy up NOI away or you can always buy rent. And what you mean by that is, hey, I can I can really inject a lot of capital into the space, into the opportunity to entice a higher rent, which that’s a you know, that that’s a great strategy and works, you know, all the time.

Now you’re in the scenario to where with a higher supply of potential tenants, how does that affect your your thinking and how you’re allocating TI? I think that’s something that I’d be curious to learn more about.

Chris Ressa  28:24

So I think, I think a couple of things. So generally speaking, the there is I’ll call it the cost to install a tenant. That could be tenant allowance, landlord work, architecture fees, broker fees, legal fees, whatever your cost is to install a tenant, as you know, since 2007, has really grown. And one of the things was one of the reasons that that grew wasn’t just inflation, and actually that grew for the landlords was pre-2007, there was a balance of those costs were were more evenly distributed between tenant and landlord and to get deals done. Between 2008 and 2019. If your landlord wanted to get a deal done, they had to take a larger percentage of that cost to get the tenant installed.

Chris Ressa  29:40

Post COVID those costs rose from inflation, primarily the construction cost. So that’s made everyone have to get more creative to make a deal pencil. But I would say generally speaking seeing the pendulum is shifting because of a lack of, of supply, where you said the landlords are getting to choose what they want to do. And I would say that generally speaking, deals are incrementally, not all at once it’s not all one ship depends on the property incrementally that wins in capital going into the space is starting to get more evenly distributed.

And so that, to me, when we’re looking at it, it’s on a case by case basis, but we’re cognizant of on a blended average, can we continue to bring that capital back to a more balanced place than it once was that it once was that it is to debt. And that is starting to shift for everybody. And there are some retailers who are out there who are making deals where they’re taking on the full burden. Now they want to do construction. And what they’re doing is they’re saying to the landlords, we want to lower rent for will take on this high capital, because there’s a lot of details, sitting with a significant amount of cash on their balance sheets from COVID.

And looking for the best place to put that to work, you could buy back stock. But if you think about one of the next places they generate return is by stores, so let’s put it into the source. And at the same time, they might lock in lower occupancy cost than they would otherwise because they put the capital work. So the price some retailers are doing that not all retailers that are other retailers just do want the landlord’s buddy, they’ll pay higher rents the credit to do it, but they want to grow so fast that they need the capital requires is insane. And, you know, we look at some retailers to do that, you know, some big national chain QSR is doing that when they want to grow hundreds a year. So I think that balance is shifting.

Chris Ressa  32:08

And I think most importantly, right over the next few years, the foundations that we like don’t even hit the numbers in in the in the data that comes out of a commercial estate that I think is interesting is so there’s all these new tenants that have opened. So we’ve got fresh new tenants, some of when I say fresh, that doesn’t mean they’re like, new first concept, meaning new tenants to properties. They’re the ones that are the strongest coming out of the pandemic.

Chris Ressa  32:42

Landlords and retailers have deployed significant capital into stores and real estate. So that’s good for the experience for just the physical infrastructure of the properties. Right. And we are we put the property’s in a much better place than they were financially physically credit tendency wise. So you have higher occupancies, you have better credit, you have higher, you have you have deferred maintenance taken care of new capital.

And, you know, let’s vacancies so I think this has made the foundation of the real estate much stronger, and is putting the language in a position to now be proactive and offensive to focus on things that may be in 1008. It was like, you know, this tenants leave in this tense, even how do I back from this space where it’s like, okay, let’s take a look at this property. Where does this property need to go in 10 years? How do I drive it that way versus being reactive? I think that’s gonna that’s a snowball effect that’s continued to be better for these problems long term.

Jordan Hearin  34:00

That’s a there’s a lot there. I think I think it’s interesting. And I think I agree with everything you say. And I think that like totally makes sense. I guess the the the other view from a landlord perspective, the more cynical view would be from up from a leverage perspective. We talked about cost of debt and we talked about his struggle the value add strategy, we talked about these construction loans coming due and when you pencil a deal in 2019 expecting a certain cash out expecting certain interest rates to be somewhere and all of sudden now they’re not.

Chris Ressa  34:29

So I think I think so that’s the foundation at the at the property level I’m speaking to. I think the financing of properties is challenging in particular, new development is super challenging right now that’s really right. If you have existing improves the land, you’re at a much better spot and one of the reasons we have a lack of supply it’s it’s really hard to develop right now. And a lot of development deals are open book where you go to a tenant and you say and and

Chris Ressa  34:59

And maybe this will be good for you. When we talk about pricing. There’s a lot of deals in development that are open book where the landlord said, Here’s my costs. Here’s what I need in rent, to pay for my costs and make a little bit of money. If we do, we developed, a lot of development deals are done that way that spread is super tight today, where there’s a lot of development is and driven by the cost of the capital to do the deal. And a lot of other deals that aren’t moving forward right now, forcing retailers looking at existing real estate. 

Jordan Hearin  35:40

Right, which is on the on the buy side creates even more challenges. It seems like there’s a big cycle, right land, building that new is incredibly expensive and hard, which makes the supply constrained, which creates,

Chris Ressa  35:53

I would say, this is a this is I would say, Today, I want to apply to you, it is a unit. And if there’s a bit of unique cycle, typically when the price of real estate goes down from a sale price is usually correlating with tenant demand. Right now tenant demand is going through the roof as price of real estate is coming down that is rare, more than the opposite. So I’d say it’s a tag to make of a cycle, being in a high interest rate environment is not necessarily unique. Except for the last 10 years, we’ve been in much higher interest rates than this. What I would say is unique is the level of tenant demand, given the capital market construction is a unique site.


So yeah, very interesting. And I definitely agree, it seems counter to where demand is being high. And you see some correction from pricing perspective, I think some people would say, well, COVID just just creates such a demand for on the acquisition side that just drove up pricing on real estate so high, we’re seeing a simultaneous correction from that overinflated pricing from from post COVID, or from COVID times two, while simultaneously seeing strong retail demand.

Let me answer your question from a from a fun perspective. And from an action perspective. Again, sorry, sorry to get too nerdy here. But I think it’s exciting. You see the headlines, commercial real estate collapsing commercial real estate dying, and really, you look at office, how do you think that affects retail, commercial real estate? Or does it at all to do those headlines effect your guys’s thinking or how you guys handle your business?

Chris Ressa  37:38

I say we’re gonna answer that. We’re gonna have it. The way I would answer that is. I think headline news impacts business every day. Period, end of story, it does. Headline news impacts business, like a news article comes out in the stock market moves. Right. So headline, news moves, business, it just does. So to me, it’s about when that happens, are you able to take advantage of the opportunity or not?

Chris Ressa  38:24

We’re running short on time, I want to I want to ask one more question. Shoot, let’s stay away from artificial intelligence because everyone’s talking about it. When we look at the prop tech world, five years from now, as a consumer of it, what should we expect?

Jordan Hearin  38:50

Well, not talking about AI. Because obviously, I think there is a place for that for sure. Well, no, I agree. And listen, I think, be it machine learning or generative AI and all these sorts of things. It’s gonna have a role for sure. But I think people can. It’s changed so quick. I don’t want to be clipped three years from now, you know, being proven wrong so quickly, but what I’ll say is, if I think you’re gonna see a continuance of consolidation, I think software modeling and how software companies who niched in Prop tech, raise money in front of their business isn’t going to go back soon.

I think every operator of a of a startup is going to continue to change their models to be more traditionally business focused. So I think you’re going to start seeing buyers have more power. And I think we’re seeing more consolidation into some of the larger organizations who are trying to create this ecosystem that’s really end to end, right a true and system for commercial real estate. also another interesting thing, a trend that I’m seeing is I’m seeing guys, industry guys write Angel checks into startups.

I mean, you’re seeing it all the time. You’re seeing folks and dealmakers, people in the industry who are partnering with all these startups and helping fund them and becoming strategic advisors. I think you’re gonna see tons of that I think you’re gonna see tons of commercial real estate guys move in and write Angel checks into these startups. And I think you’re gonna see which is a good thing by the way, I think you’re gonna see a that knowledge gap of between products engineering, and the industry, I think is gonna be shortened. I think we’re gonna get you’re gonna see product guys get smarter about the industry and start really solving more problems. I think I have no reason to be not the optimistic it plans. That’s what we’re focusing on all the time. We’re learning. we’re iterating. And we’re trying to ensure that we’re solving the right problem. And I expect our competitors and our colleagues in the industry to continue to do the same thing.

Chris Ressa  41:01

I the point that you got in there, that the software platforms are starting to start to operate more like traditional businesses. I think that’s interesting. And I think, we’ll end on that note, and Jordan, thanks for coming on and this is really great. Really appreciate the time,

Jordan Hearin  41:18

Chris. Thank you, sir.

Read Transcript

Never Miss an Episode!

Join the newsletter and get access to bonus content and exclusive updates


Newest DLC white paper


access exclusive retail reports