Why you should upskill in 2024 and the use of possession contingencies in retail real estate
Topics: 2024 goals, possession contingencies
Transcript:
Chris Ressa 0:00
This is Retail Retold, the story of how that store ended up in your neighborhood. I’m your host, Chris Ressa, and I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC Management.
Ressa 0:18
Happy New Year and welcome to Retail Retold everyone, I’m your host, Chris Ressa. Thank you for joining me today. Hope everyone had a great holiday season. Mine was fantastic. I actually unplugged a little bit which it’s been some time since I did that. I got some work done. I actually, I probably over the week, between Christmas and New Year’s sent, I don’t know 125 emails. Here’s the thing. I didn’t send any, and those are emails to outside outside of the company. So those are emails to either clients vendors, deals that are working.
And what I did was, unless it was urgent, which there wasn’t much urgent, we had done a pretty good job of, you know, closing before year end and closing before Christmas. I gotta tell you that, on that note, it’s one of the biggest reliefs ever, normally between Christmas and New Year’s, at least on, you know, my side of the business, we’re racing, we got a lot close before Christmas, which I feel like there’s there’s usually the spillover after, so there wasn’t this year as much.
There was some, but they weren’t ready to sign anyway, they’re gonna have to get signed in January, February. So that was weird. Anyway, I digress. What I did was, I sent the emails that I’ve sent, and there’s like 125, emails, delayed delivery to go out between 7:30 and 8:30am this morning, since they weren’t urgent, I thought last week, they wouldn’t get a lot of attention. And I figured being top of mind first email this morning, so I’ll get more attention. Now. A lot of those emails are action oriented emails.
So they’re requiring what, they are emails about setting up a future meeting. So I had to message my assistant and say, hey, listen, I don’t want you to get concerned that you missed anything. Because on Monday, or Tuesday morning, you’re going to get 150 emails that you are copied on about setting meetings, because I deleted all of these. So I’m very curious when she gets in when she checks her inbox how she’s going to react to that. Anyway, on to the next.
So every year, I talk about that I learned a new skill, or to learn maybe is the wrong word, maybe improve a skill. And normally those skills are business professional skills. I’ve told everyone I’ve hired a voice coach before, hired a copywriting coach, social media coach. So I think it’s pretty important to just keep improving skills.
Ressa 3:31
These are outside of goals, in my opinion, right with goals, like, you know how much, you know what you want to do about your health, what you want to do about your financial situation, what you want to do from a career perspective, this, to me is different. This is a skill that helps all of that. Well, I started thinking about it, and I have one that I think I’m gonna, I’m negotiating a deal with the person who would be a coach in this scenario, but so I have one that I’m working on, this business professional.
I think by the end of January, I will probably be starting that enhancement. But one thing that I, you know, I am now talking to people about is improving a skill outside of the business professional ones. And that could be physical, like golf, right? Or something, anything.
But how much effort should you put in that if you’re laser focused on your career, and someone you know, I sat down with who’s very successful is like, I think it’s time for you to really think about a skill improvement outside of your career because it will actually clean up your career. And so prior to thinking about this, right, I would tell you, I started thinking about my next year skill in the summer of the prior year. So probably July August 23, I started thinking about, what am I going to do in 2024.
Ressa 5:29
So, and this summer, I will do the same. Anyway, one of my hobbies, many you know, a little bit inside of me, you may or may not know, is I’m a pretty avid sports cards collector. So, I collected sports cards when I was a younger kid. And then I kind of went on a hiatus. And then I started back up again, about a year and a half, two years prior to COVID. So 2018, 19. And by the way, that was the start of the Meteor hockey stick growth of the sports card hobby. And I love it. It’s a really cool hobby.
It’s interesting. It’s grown so much, I can’t believe how big it is now, the sports cards hobby. It’s fascinating. But and so you have some wins and losses, right? And it’s very, it’s very correlated to how sports players play. It’s obvious, but it’s super correlated. So there’s a lot of timing involved. And you got to know the comps. But typically, there’s this thing called graded and typically, a card that’s graded well is better than a card that’s not graded well.
And so, but it’s, you send it to a grading agency, it’s like think of like S&P or Moody’s, the grading agency for sports cards, PSA. That said, the graded cards are much more valuable than the non graded cards, even the same card. As long as it reads well. And that would be well, they call it Jim cards. So why am I talking about sports cards, I’m talking about sports cards because last year, the end of last year, I signed up for a class to learn how to grade sports cards, I say learn how to grade, how to look at a sports card and be able to have a better indication if you will grade well, if you send it off.
Ressa 7:47
So when you’re buying sports cards you have to really understand the condition. And this was a class I took, a skill I was learning some of the sports hardcopy. Now, if you can think about it, you’re looking at a sports card. And you might be looking under a microscope, right? Well, this is a highly detailed skill. I am not, I’m gonna run, run, run, make business move, make business happen type of person, really type A personality. Go go go go, go, go go.
And sometimes I’ll leave details out where I miss a detail. I’m not the highest detail oriented person, have a lot of other skills. That’s not one of them. So this is very hard for me. Right? This is very hard for me. And, but it’s been interesting and fascinating. As I’ve, you know, I went to one card show over the Christmas holidays. And so I was trying to use this skill, and looking at cards was very hard for me. But it doesn’t matter, whether it’s cooking, doesn’t matter if it’s surfing, golf, whatever.
Spending time in learning a new skill, or it could be something that’s professional, is something everybody should do. And it’s really been super helpful for me over the years. I recommend to you in the new year, find a skill. As I said, stay tuned to the end of this month. There’s a business professional skill that I’m working on. Hopefully I can walk down the aisle and tell everybody what that is.
I’ve talked about it a little bit on the podcast before but I’m sure you will enjoy it. Okay. So let’s talk some retail real estate. This is gonna be a quick hitter episode. It’s not about E store. It’s about a bunch of deals around stores that I find interesting .
Ressa 10:00
It’s interesting because as we’re acquiring centers, that’s what I’m learning about talking about, it’s not always done other places. And there’s a gap in a deal if it’s not done. And that is something called possession contingency. Now I’m releasing a newsletter, stay tuned, once a month, that the first newsletter is going to speak about this possession contingency concept, but possession contingency is when I sign a lease with someone for space A.
And the deal, the lease with that person, let’s call them tenant, you know, toy store, signed a lease with the toy store. And for space A, but space a is occupied by someone else. So my lease with the toy store, we would put in there, is contingent on us getting possession from the existing tenant in space A. Now let’s, let’s back that up, that makes sense on the surface. Now, let me, is that necessary? If the following conditions exist? Toy store, I suddenly sort of toy store my delivery date back to deliver to the toy store. July 1 2024.
Okay, delivery date, July 1 2024. Everyone’s got that. Now, existing tenant in the space lease expires January 31st 2024. I’m signing the lease with the toy store November 2023. So I sign the lease November 23, to deliver July 24. And there is a tenant in that space until January 1 2024.
Ressa 12:09
The question becomes, do I need to have a possession contingency with the toy store, which means the following the provision would say something to the effect of this deal is contingent on the landlord getting possession from the existing tenant in the space within call it 180 days from Lisa. So I signed the lease in November, I have to get possession from the tenant space by April, something like that. I don’t have to deliver to the toy store until November anyway. So why would that be necessary?
That would be necessary because everyone forgets, while the person or persons, the business in the space a right now. Their lease expires January 31. But what if they don’t leave? Regardless of their lease? What if they don’t leave? Well, now as a landlord, I’m in a pickle, right? Because I got a tenant in space. But if signed an agreement that gives this up, this toy store the right to that space, but I don’t have physical possession.
And that tenant probably has a holdover provision where probably they’re allowed to stay month to month until I give them notice to leave. But even if I do that, what if they give them no sleeve and they don’t, just don’t. And now I have to go through the court process and evict them. I might miss my , depending on which state this is in. I could miss my November delivery day. Not out with the toy store. We’re not out. My, just to make sure everybody’s on the same page is this possession contingency?
And I mentioned, we look at acquiring a lot of shopping centers where there’s a tenant going into a space and sometimes require shops that are with a tenant going into space. And in that space is an existing tenant, and this possession contingency doesn’t always exist and leases. So there’s a gap, there’s room for something to go array. So I put that out there. There’s going to be an enhanced story, a true story about this going out on my newsletter, this week, first time newsletter. I think everyone will like it.
Ressa 14:55
But it revolves around this possession contingency. Does the landlord need it, should the toy store get it? Isn’t it good for the toy store? To who, I say toy store in this example is was toy store. So anyway? Think about that possession contingency, is it necessary. Do you have it in all your agreements? If not, should you, who knows? With that, I hope everyone had a great New Year. Pick up a new skill everybody. It’s good for you.
And stay tuned for next week’s episode of retail retail. Thanks everyone. Thank you for listening to retail retold. If you want to share a story about a retail real estate deal that you were a part of on our show. Please reach out to us at retail retold at DLC mgmt.com This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you are a retailer, broker, entrepreneur, architect or an attorney. Also, don’t forget to subscribe to retail retold so you don’t miss out on next Thursday’s episode
Thank you for listening to Retail Retold. If you want to share a story about a retail real estate deal that you were a part of on our show, please reach out to us at retailretold@dlcmgmt.com This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you are a retailer, broker, entrepreneur, architect or an attorney Also don’t forget to subscribe to Retail Retold so you don’t miss out on next Thursday’s episode.