RETAIL RISES? CHANGING PACE AND CHANGING GEARS IN COMMERCIAL REAL ESTATE

[00:00:00] Andreas Senie: Welcome back to this month's round table, your all in one comprehensive view of what's happening across the real estate industry, straight from some of the industry's earliest pioneers and foremost experts in technology, marketing, brokerage, construction, cybersecurity. As always, this is a three part show, part one, introductions for those new, uh, audience members, what each of us does, where we are in our business.

Part two, we dive deep into the biggest issues affecting our sectors. And part three, how or what you can do to help improve to outpace your competition in the coming month. I'm Andrea Seni, founder Siri, collaborative brokerage owner, commercial director at kw, as well as the technology growth strategist for both the nonprofit and for-profit sectors.

Joining me this month is Nu Sal Klein, realtor emeritus Data Advocate futurist, the original internet evangelist for real estate on the residential sign, residential side. Excuse me, Saul. Always a pleasure. Nice to see you. Good to see you as well. And Rebecca Carlson, founder and c e o Carlson inter inter integrated past President of Night Car Future, future something rather, at N na r.

We'll see. Um, moving forward, things are growing, things are happening. I could not be more blessed today to have you both on the call. We've been doing this a long time at this show we have. Um, so I'm excited to dig in with you both and, and really see what's happening from your side of the fence. A lot going on here in the northeast.

As as usual. I'm gonna go to my right first and that's on my screen. Sa what's going on in California? What's going on in the futurist world you live in? 

[00:01:54] Saul Klein: Well, you know, California's an interesting place and, uh, always has been and will continue to be I'm sure. So we've got pretty much the same issues, good and bad that everybody else has, and it just might be multiplied just because of the population.

But I think just like anywhere you look at the residential real estate side, just like anywhere in the country or most places in the country, we find that uh, there's just not enough product. And so the listing inventory is down. Uh, the number of sales overall, typically it looks like, you know, anywhere from five to 6 million a year was the standard, the number of of home transactions for year after year.

And this year people are predicting, you know, four to four and a half million. Um, again, look at the, at the inventory, look at all the people that are in property where their interest rates are 3% or less. And so a large number of people that might be buyers today would have to sell where they live now.

And of course, if they went out to get a new loan, they'd have to pay almost twice as much maybe for that. And so it's just things are slower. And for, on the residential side, we'll probably continue to be slower. Some markets are better than others. Um, and, uh, we've been here before, right? We've seen these 

[00:03:11] Andreas Senie: cycles before.

Right? Uh, I was gonna say, you, you've been through a few cycles now. Interest rates are, are just that, right? The numbers change depending on what decade we're in. Um, 

[00:03:22] Saul Klein: But it is interesting because interest rates were artificially low for so long. So there are so many people in 30 year loans at 3% or less.

And if they have to sell their house, there's plenty of buyers, but then they're gonna have to replace it with something and the loan on the replacement's gonna be 6%. And so that's, you know, for a lot of people it's like, I'm gonna stay put for a while. I don't, unless you have to move. Um, there's no reason to list your house and put it on the market.

And we're seeing the result is that the number of properties I looked at, the number in, in San Diego, it's that this month over last month, down the number of active listings down 11%, number of closings down about 8%. Um, so it's probably, I look at this online all the time, right? Every MLS publishes these numbers on a weekly basis.

And, uh, so it's probably pretty consistent no matter where you go, that's what you'll see. There's not enough product and not building. So the bottom line here is we need to build more, 

[00:04:25] Andreas Senie: more housing, more. We need to build 

[00:04:26] Saul Klein: more housing. We know that affordability's a big issue. We need to build more, we need to get away from this.

Not in my backyard doing yes in my backyard. That's kind of a political statement, but, but that's what has to happen. The largest component of a home, the largest cost is the land cost. If you're gonna bring anything down, you gotta bring the land costs down. The only way you're gonna bring the land costs down is if you increase the density.

And so we're actually seeing that taking place, uh, around the country where you have, um, policy and funding to increase densities, which should in time, bring down the cost, overall cost of buying and dwelling. And maybe we can get this affordability issue under control, but it will not. We will not get it under control unless we can address this density 

[00:05:19] Andreas Senie: issue.

Well, and it, and, and too true on the, on the density issue, the affordable need, the necessities here policy has to be written, has to come through to help us build even the affordable developers in my area. I mean, getting it through, because a city and municipalities behind on their affordable housing, enforcing that development up takes time, takes money, takes labor, um, and the inventory, as you said, is not there.

And I look at the m l s and the m l s is the 29th place I look for commercial real estate, right. Because it was, it wasn't built for commercials built for residential. But for the first time in 15 years, looking at it, I'm starting to see, you know, 20 commercial properties in any given town, 10 listings residential.

It's, it's just a phenomenon to see there's, there's so little residential inventory. Out there. The, and commercial brokers are becoming much savvier in technology and pushing it in more places. And then more and more MLSs are adapting for commercial that it's, uh, it's just, for me, it's interesting to watch the numbers, the hot sheets, everything change and everything evolve in those systems.

You know, I used to 

[00:06:29] Saul Klein: sell apartment buildings and there were some buildings that nobody ever got a chance to resell. And it really was the brokers who knew the people who owned the buildings. Mm-hmm. And there were choice apartment buildings in town, but you never had a shot at those because they didn't go into an m l s.

So you didn't really have a marketplace for residential or office or com commercial. And, and a lot of that had to do with the culture of selling real estate. And the commercial culture is different than the residential culture. Right. And so what the MLS does at the residential area is it creates this rule, these rules where you have to participate if you're in the MLS residential, you have to participate, you have to put your listings in.

If you put your lousy listings in, you have to put your good listings in as well. And on the commercial side, commercial brokers in, well, we're not joining something like that, right? We'll put our lousy listings in if we can't sell 'em. But we're not putting our good listings in. We're keeping those good listings in our pocket, and they're only gonna be for, and we'll trade 'em and exchange 'em.

And so one of the reasons that commercial MLS has never really worked is because you didn't, it wasn't mandatory that you put all of your listings in it. Whereas residential, it's mandatory pretty much that you put all of your listings in. And once everybody got used to the idea that if we share and collaborate, everybody benefits.

That's how the residential, uh, MLS works. But the commercial, and I've been involved with many of 'em, uh, over the years, they don't work the same way. And I think the primary reason is there's no mandatory submission rule. Right? You put in what you wanna put in, you hold back what you wanna hold 

[00:08:14] Andreas Senie: back.

Absolutely. There are brokers that don't co-broke. And I heard this the other day and I loved it. Uh, don't co-broke go broke. And I, I was dying on the commercial side. Uh, I thought that was a great way to put it. Many brokers, the industry is opaque. Commercials still opaque, as you just said. Industry owners on main street, industry insiders, the old guard you're referring to, the guys who used to meet for lunch every month.

And I love those meetings. We'd share deals and do deals then and there now is it, it's the only way to get to 'em. Yeah. Um, that and I C S C annually start a deal and finish a deal. Take a year, go to Vegas twice, and Becca, you're just back from. From Vegas. I know. And, uh, you know, if ever there's an example of why, why one side of the industry needs more marketing than the other, if I can say that commercial does, because we pick and choose where we put what and how.

Cuz it's, it's very important to our business models and how we co-broke. How's, how is Vegas, how's the industry? What's going on, on your side of the fence? 

[00:09:17] Bekah Carlson: Vegas was fantastic. Mm-hmm So it was, uh, well attended. Lots of energy, everybody with meetings. I don't love the compression into two days. And one of the reasons for that personally is because I had a lunch where I had 260 people on Monday, which kind of shot my day.

So I couldn't have meetings on Monday because I was worrying about my luncheon and handwriting name tags at the last second and those sorts of pieces to make sure everybody felt welcome, which had left me only Tuesday, which was an abbreviated day for meetings. So I just ran like a little bunny around Central Hall, south Hall.

It's for both floors of South Hall on Tuesday to do my meetings. So there's a, you know, it is compressed. They're trying to, I C S E always evolves this conference, this is, this was my 19th, believe it or not. So I've been, I've been going for a while, but I also think that some of the attendees have more institutional knowledge of what has worked and what hasn't worked than some of the staff.

Because I C S C had a big, uh, layoff right. During 

[00:10:17] Andreas Senie: covid and a name change. I'm dead set again. Uh, yes. But 

[00:10:22] Bekah Carlson: I tried to, I, I have tried to tell people, multiple people in the past several days, what I C S C is and stands for. The, the former name was so intuitive. You said, say the name, they got an idea of who, what you were doing in Las Vegas.

The new name is a little bit more challenging to explain through who all is at this conference and what all happens and what all occurs at the show. But it was nice to see kinda people, people being back and. I have a theory that it's retail's turn. So we've had every, right, every product type has, at least throughout my career, everyone's been like the sweetheart industry.

And I think it's back to retail. It's, I think, retail's on its way up on the upswing. Certainly. I think that adaptive reuse and, and to, to Sal's point about housing, when I was thinking about some of the innovations that have happened in the de malling of malls, right? It's adding residential, it's adding, turning a mall into live, work, play.

We have a couple of examples of that in Chicagoland. Some of the earliest developers of live work play who've been working on this for three or four years in demoing our malls. And they're, you know, probably four to six years ahead of other groups that waited to start the Dalling process until during or after covid.

So we're seeing those actually, you know, three, four story buildings of residential and even driving around with my kids, my, uh, College kids. Ah, my college kids are so old. Uh, they would say like, wow, that's cool. That would be such a neat place to live. I'm like, yes, yes, it would. So I'm seeing that adaptive reuse.

And then I was actually talking to, um, a, a dear friend yesterday who's at an s b loan platform, and they're talking a lot about, they're administering some funds that were originally for small businesses and but are not now for small businesses. So they're, they're applying, the city of Chicago is applying those funds to development of LaSalle Street to redevelop those office buildings into residential.

So in addition to. Normalized supply sources. We're also seeing adaptive re reuse as a supply source for hopefully increasing that density. Hopefully in driving that, that residential 

[00:12:43] Andreas Senie: development, the mi mixed use. At the end of the day, mixed use wins. We as humans, circle wagons. The closer we can get together, the more of us we can get together in an encampment a community, the the better off we are always, uh, in my opinion and why, what better place to, to aggregate around or congregate around in a mall where I can shop?

Um, that, and I've seen that here. I mean, so many deals. I, I agree with you that retail is on an upswing. Um, main streets up and down the different towns here in Connecticut, especially vacancies for office is on the rise. The exception of medical coming in and helping out, helping be, help acting as a backstop to some of the.

The offices, the utilization of these offices really diminishing. Uh, a lot of people are pivoting. We haven't seen as much adaptive reuse of office development, but I've seen a lot of interest. Um, sounds like Chicago's got it. Got their, got it together. They're moving forward in this area. California's usually ahead of the curve.

Uh, in last we spoke, so I, well, a few months ago now, they were, they were doing major infill development on your right around your car wash. I mean, are you're gonna be a mall? Are you gonna be a 10 story mall plus apartment building? Are we at that value point yet? I'm kinda hoping, 

[00:14:02] Saul Klein: you know, I'd like to think, uh, 20 to 30 stories on that car 

[00:14:06] Andreas Senie: wash bottle.

I could, you know, there's a height restriction, I'm assuming of sorts. Well, but 

[00:14:11] Saul Klein: yeah, as long as we're not in the flight path, you know, sky's the 

[00:14:15] Andreas Senie: limit, right? I wanna fly in cars, so, hold on. We've gotta, we've gotta equate for that. We gotta, we gotta account. So I C S E was a success. Retail's on the rise. Uh, regulations out there.

We don't have, uh, Dan, uh, this month to talk about 10 31 or or government policy. But at the end of the day, I mean, so you, you hit it on the head early on it's pockets. And Becca, you, you also stated the same. There's, there are markets that are doing very well and there's, I, you know, Shelton is flooded with good deals, inventory is growing, a lot of stalled deals.

And when it comes to financing to Saul's earlier point, I can't speak to the residential side, but commercially, everyone who bought three years ago, five years ago, I mean, there's a lot of good stuff coming on for newer operators. Operators that aren't sitting on the sidelines with a lot of dry powder, but the, the younger hungrier, high earners, not rich yet type operators, um, who are just ready to move.

And that's, that's what we're seeing. That's what we're moving through, uh, at least here in the Northeast. And it's been fantastic. 

[00:15:23] Saul Klein: But with, on the office side, a lot of people are worried about leases being renewed. Mm-hmm. Percentages of leases being renewed. How will that affect cash flow of the buildings?

How will that affect valuation of the, of the properties downstream so people are taking haircuts. At least that's what I'm hearing. And, uh, and then there's the, the, the danger aspect. And you look at San Francisco and, uh, the big companies that are moving out of downtown San Francisco because they don't want their employees to have to go to work because it's too risky, because they might get hurt.

And so there's lots of these different dynamics that are gonna affect. And then how does San Francisco bring people back to the city, bring businesses back? How? Once Nordstrom's leaves, how do you bring 'em back? And these are big things. Good brokers, they're 

[00:16:11] Andreas Senie: moving out, huh? Good brokers. That's how do you bring, yeah.

How do you bring them back? Good brokers actually places Go ahead. And good marketing. 

[00:16:20] Bekah Carlson: So, no, I have a, a client who actually is, has a fantastic marketing company I'm working with on, on a little piece of what they do, but they do a lot of really cool things. But they're based in San Francisco. They're taking San Francisco to other cities.

Yeah. They're literally doing a like PR road trip of bringing like the best of San Francisco to Chicago. He's coming this summer, so I was talking to him a couple weeks ago. He is looking for some referrals for like event planners here in our market that could help him set this up. But they're, they're like innovation, right?

Innovation of bounds. They're literally taking it on, taking San Francisco on the road to remind people of all the great things in San Francisco. 

[00:16:59] Saul Klein: Yeah. And to, but you still, you, you gotta somehow negate the negative stuff that you can't, you know, walk down Market Street in San Francisco today, if you dare.

Right. Or 

[00:17:09] Andreas Senie: Mission. New York's the same way. There's a York's higher crime, come to the suburbs, come to Connecticut, come to, come to Oakbrook instead of downtown Chicago. There's so many opportunities to be where your employees most likely have moved at half the size, half the space to to what you Yeah, to your point, Becca, office utilization and, and I mean, we're, at least here in Connecticut, we are seeing that toll on these owners.

The shadow vacancy, which I, which is really utilization. 33% of the offices that are occupied, the space that is occupied is actually being used. The rest is just being paid for hopefully. Um, and so to your point, that's gonna impact the bottom line across the board. Municipalities, budgets, taxes, all of it.

How do we adjust for that now? I mean, I've been a huge fan of brownfield development and then adaptive reuse or mixed use development in those areas. And I think here in the northeast, that's gonna be the biggest ticket, uh, biggest opportunity for those that can afford it. It's just a long-term hold and not many want to get into that game.

I don't know if that's, you know, 

[00:18:27] Saul Klein: a phrase that, that, uh, one of my business partners Chris Leinberger uses is, uh, downtown adjacent. And it seems like the downtown adjacent areas are doing much better than the downtowns are doing. Right. So those are, and he, he's got sites numerous examples around major metropolitan.

Areas where the adjacent areas are doing much, much better. Well, 

[00:18:53] Andreas Senie: is it, is it because they're adjacent to downtown or they have a great economic development director promoting those areas? Uh, Westport as a, as a municipality just came out and they, they're gonna be the new innovation hub. They want to be the next, uh, the next, um, tech corridor of the northeast.

This was the claim to fame that happened at, uh, a month ago with the mayor. And that sounds well and good, but a lot has to go into that for that to happen. And there's lots overcome. 

[00:19:20] Saul Klein: Well, and, and, and a lot of it's been going on for the last 10, 15 years. 

[00:19:25] Andreas Senie: And in many other places, many with more sun and better, better climate.

I believe they call it Silicon Valley, 

[00:19:32] Saul Klein: even DC Right. Crystal City and the old, uh, Northern Virginia area around DC seems to be 

[00:19:38] Andreas Senie: thriving. Yep. I, uh, um, I, before I bought this house, I was funny. I looked, there was a sweepstakes I heard about and I applied for it and I was gonna move to. West Virginia. If I made it, I, why not?

They were gonna give me a house. I said, I got, I'll go be a technologist in West Virginia. I could open a brokerage there, give me the house and everything else at these terms. If I won the lottery, of course I didn't win the lottery. I'm still in Connecticut. I'm very happy here in Connecticut, but I applied, why wouldn't I?

So, uh, Becca, you're, you're there, you're in Chicago, you're cut, you're all back from icsc. You're saying retail is the hottest item. Last month you spoke about, uh, different investment groups. Everybody's got a lot of dry powder. What's any change there? Are they coming off the sidelines? More people coming in into the game, so to speak.

Excuse 

[00:20:29] Bekah Carlson: me. Tiptoeing off the sidelines, tiptoe quietly, putting some things under contract. I think when you have the ability to be a cash buyer. Mm-hmm. And it's not an interest rate situation. And you see opportunities as prices come down. Then it really, it feeds your business model. I would say one of the most exciting things that I've seen is, you know, a handful of alternative financing ideas come forth slowly but surely outside of kind of traditional, traditional loans.

Those are exciting to see because we all know that for most people, you can't have transactions without money, without financing of some sort. You have a capital stack, and if you're not building that capital stack or not able to fund parts of that capital stack, you literally are kind of hog tied. You can't do stuff Right.

Can't do any of it. Yeah. Can't develop. You can't buy you if you can't and you can't get a, there's no point in buying the land if you can't get a construction loan, if you can't get a, um, you know, if you don't, can't develop it. Construction takes a little bit longer. There's a lot of moving parts in the financing area.

So as alternative financing ideas come forward, I think there's gonna be a lot of innovation there, which is exciting. Now I am doing, I'm, um, we have a panel next week for ncar, which is on, you know, workouts and is this, is this deja vu? So that'll be interesting to have. We've got, um, a guy who did all of the r e o disposition for a bank in the 2007, 2008.

So he did a repositioned over a hundred properties that ended up being bank owned. So there's a piece there, we've got a receiver coming in and speaking. And then we have a guy who, uh, subcontracted with the F D I C to close 48 banks Wow. And do 48 bank takeovers. So that's literally a week from today. So next month I may have a whole different story to talk about as it relates to the economy, but I do think that all of us.

Certainly the three of us have been through cycles, but there's a whole nother younger generation who hasn't seen this before or has only seen little snippets of it earlier on in their careers. It's, it's a good time to seek out mentorship. People who have been through, yeah, like advisors and mentors who've been through things before.

[00:22:56] Andreas Senie: I, I, you know, I got licensed in 2007, three generations of development. I happen to like turbulence because then the riff raff tends to disappear. People who don't really work very hard at it. Um, and you're right, there's this younger generation, then there's this, let me rephrase that. There's a, the next generation of realtors.

And investors out there who don't even want to get on a phone, they just wanna text each other. So much is lost. And that's a different conversation. Uh, you sound old, Andrea. I don't care. It's driving me Absolutely batty. Please call. You know, a phone call is never an imposition. Matter of fact, it's a preferred means of communication because then I can hear you and I can understand what you mean.

And when I give you an offer, I can, I can kind, I can judge how well it's received, right? And I've got texts and, and emails coming in. I've got little texts where the clients want to just text everything. Well, great. That makes it harder to understand nuanced communication for deal making statements. Yes.

But nuanced communication is a big deal in this industry, especially now to understand what people are doing and how they're moving about. And especially given the number of screens I have. That's why I really hate texting. It's the number of screens. But, so I mean, you've been, of the three of us, you've been through more cycles.

This isn't a paradigm shift, right? There's nothing new. There's nothing reinvented here. There's, there's new technology to help us places, uh, is one, and Occupy retail. There's, there's a lot of information to guide us to opportunities, I think is a fair statement above and beyond your network, which was never available before.

I think network still remains paramount, which is why I C S C mentorship, this, having people like you on a call like this is so important. But then there's the tools out there to find information. What are you guys seeing? Any change in the way people are operating, God forbid, and this is not an ai, an opening to talk AI that's on the 15th with, uh, one of the Forbes technology council members, Kevin Collins, but.

What other tools, what other changes are people doing in their day-to-day? Interesting. Well, I'm gonna, I wanna 

[00:25:11] Saul Klein: go back on this to talking about, uh, the people and people aspects and closed MLSs or no, MLSs and the way you put deals together where you met every Wednesday at a title insurance company. And if you, you are a broker and you'd been around for 10 years.

You had a pocket full of 10 people who owned apartment buildings or office buildings. You knew what they owned. You knew what the debt against it was. You knew what their tax situation was. You knew that they had some cash in the bank and that they could exchange and how much property, how much equity, and how much cash and you would pitch.

Yeah. You would say, I have a 15 unit, I have a 30 unit building, and so much in cash and we're looking for this. And you'd, and we called 'em exchangers meetings and, and they weren't really, you weren't exchanging, you were pitching. And you weren't necessarily pitching with the permission of the, of the owner of the property other than you had carte blanche to pitch cuz you were their broker.

Right. And you would go in and if you, so you pitched and it was something that somebody else had, a client that might be interested in, then you would write proposals. I don't remember what we called 'em, but they were Right. These sample proposals. And you'd take 'em back and you'd actually put deals together.

Uh, human beings, brokers would actually broker deals. And it was all about the people. And then on Thursday you'd go to another meeting Yeah. With other brokers involved. Right. And that's the way that it took place. Now today, you, you probably could still do that, and you just have more tools to give you more transparency into the status of the properties that you're 

[00:26:52] Andreas Senie: talking about.

Right. The due diligence of it all. And I, I couldn't agree more with that statement. I, I. Gain more from my monthly meetings. They're not weekly, they're monthly now in my different counties than I do off the tools. I use The 29 listing platforms commercial, like you said, it's not mandatory one to upload deals.

It's also not mandatory to pull 'em down, which means most of what you're seeing isn't, isn't actually there. And now that's compounded by the fact that your investor, consumer clients are now out there becoming internet sleuths and saying, well, wait a minute, I can kind of do this. These are the newer investors, newer operators.

And you're like, well, no, no, you really can't. And as you explain it, it all comes to light. But just uh, and all due credit to the CIDs commercial investment divisions of the local associations statewide Night Car Commercial Association. Right. These specific groups for just putting people in a room and pitching.

Deals, needs and leads. This is what I have, this is what I need, and that's how deals have gotten done, haves and wants, haves and wants, needs and leads. And once, uh, so I mean, what, you're there, here you are today. What's the biggest need you see for the industry then, uh, Saul, as you're looking forward, what's talk the biggest need 

[00:28:17] Saul Klein: for the industry?

Well, for the residential industry right now, it's people putting the financing together to make deals happen and overcoming this artificial obstacle we have, which is low interest rates that have gone on for so long. Right? That's kinda locked people in from a technological perspective, you know, Andreas, we're looking at different retail platforms.

We're looking at different data platforms. Um, a a need that I was looking at the other day had to do with, uh, not only information and. What's taken place in the, in the retail space, but the fractionalization of ownership or ability for, for people to get in with less money. You know, it's hard to put your finger on what the one need is right now.

Right. But there's a lot of innovation taking place and looking at a lot of things that are possible. And good time to, for these things to kind of come to light is when there's kind of a lull in the marketplace, right? When people are willing to look at new ideas and 

[00:29:22] Andreas Senie: new things. Yeah. Well, I mean, cons, commercial continues to be consistent.

So I like to say there's deals out there, uh, but innovation is finally happening. Covid spurred technology into the space, and this next generation of brokers are out there trying things to do things as are the investors back up. Um, speaking of trying to do things, what's, and given the many needs, Saul mentioned, one of which is getting out there.

What's going on on your side? What's the biggest need from a marketing standpoint, even at the association level? You're on the ground at night. Car Saul was literally boots on the ground. 600 associations, one after another of the MLSs. Right? What's the change? 

[00:30:07] Bekah Carlson: So I have a, a couple things I wanna talk about.

One of them is innovation and building, because I we're missing Chris, but I wish he was here because I have had like a crazy week of, of three different innovative building ideas coming in front of my eyeballs, which is really unusual. But I also, I think because there, there's that need industry wide for innovation and building because of the high cost of development, because of the lack of building materials and those sorts of things and some supply issues that we've had for the past several years.

It is really finally coming to ahead with a lot of innovation in that sector. But as far as what I'm seeing a need. In that marketing, in that association world where I'm, where I'm walking. I think the biggest challenge that I'm seeing post covid, and I do think it is a post covid issue, is there's a little bit of a delayed return to networking, to relationship building, to seeing people in person there.

It's like it's easy to hop on Zoom. Mm-hmm. I have, in particular, I'm seeing attendances starting to climb, but we're still not at pre covid levels for most things. The problem with that is that we need to build future leadership and we can't tell who's actually engaged in our organization. And I think a lot of organizations are feeling this stress that you have the few doing the work that really need to ha have the opportunity to cycle out and to develop new leaders, but there's a.

Not ambivalence, but a lack of participation that makes it harder to gauge whether somebody coming up is gonna be a new, a great leader and contribute and really give to the organization. And all of our organizations are built by Le are, you know, our volunteer organizations. Right. True. And there's always been the excuse of like, I'm too busy to do it.

That's, I, you wouldn't believe how many people I've gotten to join the board who are too busy to do it. I can fix the, too busy to do it, but I can't fix the, that you're nev never there. And I don't know if you wanna do it or not because you don't participate. Ever 

[00:32:18] Andreas Senie: showing, showing up is half the battle.

And how do you get tapped for leadership? How do you have that advocate in leadership to look down and, and pull you forward and, and propel you forward if you're not present? 

[00:32:30] Bekah Carlson: Yeah. And I think, you know, from an organizational standpoint, many, many organizations are experiencing this, this similar challenge again coming out of Covid.

Yeah. 

[00:32:40] Andreas Senie: The um, It's funny, it's funny you say that because it's, it's all about contact sport and being in front of people, getting to know people, right? That's our network is net worth. Saul's earlier point about financing the clients that I have that are in front of their lenders, that have a relationship with their VPs at their banks, we're not having trouble slowing things down with the slowdown in financing, yes, there's more due diligence, maybe there's more cash reserve.

There are other considerations that are coming into fa into play with underwriting. But if you've built that relationship, then your rates, your ability to close are there. I mean, that's then the, the big need today as we all put it out, is capital. But getting there creatively is, is a relationship business, those creative solutions, um, and owner financing, something I'm starting to see more and more of, but that's really a, a byproduct of the fact that the owners are still too.

The bank's not gonna lend them here. So the owner goes, great, I'll finance it. At least part of it. The bank will lend you halfway. Um, but who knows? Maybe we'll have the government step in on some of these reposition plays, which would be helpful. We don't have, all right, go ahead. Okay. So can I 

[00:33:56] Bekah Carlson: talk about creative building ideas?

Oh, yes. 

[00:33:59] Andreas Senie: Sorry, I jumped in. This is breezy. 

[00:34:00] Bekah Carlson: You guys have to hear about this stuff. Okay. So I was meeting at, at I C S E with one of the members of, um, we have an organization, a real estate association that we, um, staffed their booth. So brief from my team flew out there and staffed their booth, and one of their members was chatting and he's doing a, like a 1500 acre development, like in Panama.

He does really cool stuff. Well, and in Florida he develops all over. Um, but he's gonna do housing that's, that's made in a factory, like you build the factory on site and it makes the houses and they come out three a day, pop, pop from the factory. And he was touring a factory in Las Vegas while we were there.

How amazing is that? So that is number one. Number two, I get an email from one of my NCAR members talking about a concept he wants to learn more about. He'd got an email from a colleague that he knows in China talking about inflatable warehouses. Like what? Inflatable warehouses. So that's another completely mind boggling piece for me thinking about, and I guess like sports films can, like, they look inflated.

I don't know if they really are inflated, but they look like little bubbles. Uh, so inflatable warehouses. So that's, that's number two. And then I talked to a gentleman who's been in the industrial development world and he's looking at modular building. I was speaking with him yesterday. He's been looking at it for 10 years.

And he says, nobody's even. People just now are starting to listen to modular building. It is so cool to me that in one week I have all of these completely different concepts that are floating around in front of me. What are you guys seeing in this innovation piece of development and building and in the marketplaces?

[00:35:50] Saul Klein: So Elon Musk talks about it. If you go to Mars and then you've got print, right? You're gonna have to take the raw material that's there and turn 'em into houses, right? You're gonna have to be able to disolve that. Imagine the technology to do these kinds of things. Is there, people are working on it. And then is there a practical application for it here and now?

And you know, probably 

[00:36:15] Andreas Senie: Absolutely there is. Well, it's modular building. Not a new thing, in my opinion. I mean, steel construction, steel modular before that, precut, you know, precut lumber up, develop, you know, put it together on site. Great puzzles. I mean, you're, you're decreasing cost. That's a way to get to that necessary capital stack number if you can remove those costs.

There are cranes with, you know, AI driven models that, that lay the bricks. It's something like 300 times the speed of a team. So instead of tilt up development for, let's say a grocery store, your anchor and taking months, it's now gonna take a couple weeks to get that foundation up and running. That, that shell, I mean, that's incredible to me.

I haven't seen it. I've seen it on, on Facebook. Facebook realizes that I like seeing it and I see a lot of it, which I don't like. Um, but, um, inflatable Warehouse is definitely new to me. And when you say Panama, I think of, uh, uh, the Panama guy, John Hill, who was a commercial guy, ran into years ago overseas.

And that was his thing. Here's, here's the Panama guy. Are they doing inflatable and factory development overseas? I mean, that's their solution. Is that what you were hearing to the housing problem? Or is it just a solution to how to build housing for the future? It's 

[00:37:35] Bekah Carlson: a solution of how to build housing.

But the, I mean, when you think about like the broad implications of really, really affordable housing in that manner, think about like poverty alleviation. Think about people in other countries. That would benefit from having a little factory like right there that's popping out. Little houses that are small, but sus, but sustainable materials that, um, people living with dirt floors.

Yeah. People living without walls. The, the sheer impact that that could have is just, it's on a global scale is to me incredibly 

[00:38:14] Saul Klein: exciting. Yeah. Think about it though, Becca, even if we had that here, the problem we would face is the governance side of it. The right and the fees and the insurance and all of the costs that would Quadro price, all of the savings that would come from the manufacturing side would get gobbled up by the bureaucratic side of this.

And that's one of the things we're, they're fighting in California, right? With laws to be able to increase density, get by the local ordinances to change building codes because these are all things that restrict growth. Mm-hmm. 

[00:38:53] Andreas Senie: Right? Yeah. Laws, laws haven't kept pace with innovation as it stands today.

God forbid we start inflating warehouses in Connecticut. I don't even know how, what that would look like. Although if we do, they should be dirigibles cuz we can't make any more land. Let's put 'em up in the sky and ship it down. But it is incredible. Um, some of the things we're seeing out there, Siri Tech's coming up and I can't wait to see the latest in Prop Tech.

Siri Tech New York. Talk about a bit later. Oh, oh, oh. Yeah. Cause I'm coming. Yes. Uh, come Saul, please. Well, if we can get you to come from Californian, California, come on over. Uh, r e Tech New York, c a Tech London was a huge success. New York is coming up, let's see, sorry. Yeah. September 19th. The Javit Center's gonna be the largest event yet for C R E Tech.

Those that don't know, c r e Tech was one of the early on adopters, early on events. It was originally c r e Disrupt. It was back when there were 80 technologies in the room. There are now 15,000 different vendors, technologies, things, doing things. Uh, use our, use that code as we threw up on the screen.

It'll be in the show notes as well. So much innovation happening, but at the same time, I'm pushing everyone. Under me, it's a broker as my clients. Hey, go back to basics cuz it's my earlier question. So there's no paradigm shift here. There is a return to does this pencil out and we are no longer at, at zero cost of capital.

That's what you're saying this, this ability to borrow for basically nothing. Um, but the banks, Becca, you mentioned, and it's an interesting thought, it's an area we're focused on coming into this quarter is, is getting our relationships with our banks, getting the REOs, getting line of sight on which banks are struggling closures, uh, which banks are increasing their rates to make up for shortfalls potentially in their, in their portfolios where they may call those portfolios.

Getting in front of those owners now so that we can be there at their point of need, providing them the, you know, an early warning to say, Hey, that your bank may be in trouble. They may come call your loan. Let's talk about selling it. Let's talk about moving it before you're one of a hundred properties that need to be moved in this community because it's a community bank and the majority of commercial businesses done through community banks, as far as I can tell, all I've been doing it.

What else? Uh, go, uh, on the regulation side, Saul, I know the MLS has been a big thing. You said something No, M mls before the MLS has been trying to standardize for years. Are they any closer to that unification on the re residential side? Are we gonna see that? Are we gonna see what side of it?

Unification of the MLSs? Well, you know, we 

[00:41:44] Saul Klein: have seen, I think we're at like something like 600 MLSs now and we had 1200 not that long ago. So there is, you know, consolidation of multiple listing services as there is, has been consolidation of local associations of realtors. So you'll probably see more of that.

The, you know, there, there's this litigation going on that might change the way that residential real estate is sold and change the MLS because the offer of compensation is being challenged, uh, civilly and probably as well by the Department of Justice. So we're not sure how that'll turn out. N a r is very positive about it.

Of course, that's n AAR's job is to be very positive about where they see the outcome. But as I look at those cases, uh, I can see the defendant, the, uh, plaintiff's case. I can understand the plaintiff's case. And so because I can understand the plaintiff's case because of my experience in the industry, that means as jurors might also see the plaintiff's case.

And so we're talking about potential billions of dollars in damages. Elimination of an offer of compensation clause, which is a foundation of ml mls, which interestingly enough, Has only been the foundation of MLS since about 1993. Prior to that, there really wasn't this offer of compensation. What we had prior to that in 1993 was MLS was an offer of sub-agency.

And so perhaps the, a solution to get around the, the possible decision against offers of compensation might be that we revert back to an offer of Subagency, which is what the m l s was prior to Agency Disclosure Laws in the eighties. In the official change, in the mid nineties 

[00:43:39] Andreas Senie: commission, commission becomes, uh, a key part of negotiation and set by each broker and independent of that system.

You're not tied to the mls every, everybody works for the 

[00:43:47] Saul Klein: seller under an offer of Subagency. 

[00:43:50] Andreas Senie: Well, we all, yeah, we all get paid by the seller in most cases. And if it's least that's what we hope for. Um, unless they're unwilling to pay us. 

[00:43:57] Saul Klein: Well, so argument Cause uh, comp payment of compensation doesn't indicate agency.

Right? Right. So it doesn't matter who pays you, who you represent is who you represent, regardless of who pays you in real estate. Mm-hmm. And so it was prior to 93 where if you joined the mls, and this is the glue that held the MLS together, was that if I took a listing and put it in the MLS and you wanted to sell it, you became an agent of me.

And I was the agent of the seller. Therefore, you were a sub-agent. And the seller compensated me, and I compensated you. And the buyer was a customer. And the first 75 years of MLS on the residential side, that's the way it worked. And that changed in the nineties. And when they eliminated this offer of subagency, they had to cr, they added, offer something to hold it all together.

And what, what became the foundation of MLS was an offer of compensation. So you could represent the buyer, but the compensation still came from the seller. And that's been the model since, you know, 93, 94. But now that's being challenged. So it'll be interesting to see where that all 

[00:45:05] Andreas Senie: goes. It's, um, one of the most common things I bump into when I run into resi new reser agents.

We're trying to work deals or commercial agents and that, that joke before a co-broke or go broke. Many brokers don't offer app compensation. They're not a member of the mls. They don't have to. Uh, that's not part of the terms. And many agents out there don't know to ask. They try to play in the commercial pool and all of a sudden they get to the closing table and there's no money for them.

And having that conversation with your buyer, that at the end, like, wait a minute, uh, you've gotta pay me is, is certainly a sticky one, uh, to have, which is, you know, Another reason why you shouldn't just jump put, you shouldn't dip your toe into commercial without training the knowledge, mentorship, and guidance that's available out there.

There's plenty of it out there somewhere. Speaking of guidance, I can't believe it's 6 46 already. Um, here we are, it's in, we're in June. We have some new tools. We we're relying on our networks, we're pushing back on our networks, trying to build, build those relationships, offering out, I mean, in my case, I'm looking for mentees.

I'm sure you guys have done the same. Um, I've heard that siren call that, that we just discussed of, of who are the next leaders in different areas at different companies. It's happening everywhere. And I'm also seeing a lot of, uh, exhaustion from certain leadership in certain places. Like, come on, like get, get to it already.

Where is my next leader and how do we find. But I, I just continue to put my head down, meet you guys every month and enjoy this call and keep working deals while I see more and more people sort of aggregating online. And I'm happy to hear I C S C was a big success, even though they did down downsize a bit and as the innovative commerce something, or rather, as opposed to the International Council for Shopping Centers.

It's tough, right? I mean, your name, your brand, what you do has to be clearly evident or else how, how is the next generation gonna even figure it out, let alone join and show up to those events? 

[00:47:22] Saul Klein: You know, Andreas, you may, I'm gonna go back to something you talked about earlier, cuz I just heard this expression the other day and it's experience.

Mm-hmm. The ex people are looking for experience. So I was talking again to Chris Leinberger and so I had to order his book right. And when I, after I had a conversation, the option of urbanization of, uh, Urbanism, right? Investing in a new American dream and ta. He talked about the hunter-gatherer phase, right?

And the agrarian right phase, and then the industrial revolution, and then the knowledge revolution. But now it's the experience Revolut revolution. And so you guys were talking about retail and retail coming back and I guess part of what retail now is, is experience. Very much so. Yeah. And so that kind of all makes sense.

Yeah. When people go out, they wanna, they go to the movie, they go to this rink, they go to it's experience. And this generation now the youngest or whatever we might call them, generation looking for this experience side of things. And so there's opportunity on the experience side. 

[00:48:35] Andreas Senie: And hopefully not experience through the VR glasses.

That Facebook also shows me all the time that I like virtual experience, in-person experience, real experience, real ex, but, but real experience together, not texting back to that, um, out there and growing and, and life experiences. How to pass them forward. Mall, at least here, malls have been shifting to experience, you know, fashion, fun, function, furnishings and experience.

Outdoor centers have done better because they had the, the picnic area, right? They had enough to draw people. But now as more of these centers, larger anchors in these centers are closing, maybe turn it into a trampoline park. Something for more of an experience. Yeah. Um, we'll see. I mean, that's the goal.

By the way, if you kind of, uh, if you have 12,000 square feet, we've got the trampoline park that needs a place as an example. It's top of mic needs and wants, but absolutely needs and wants. I've got a list. Any broker has a list and they a any commercial broker always has a list. And they always carry a business card.

A card card, sorry. Um, another, another jab at the residential side of it. The one other thing I've really noticed the push for, especially with these, uh, with the smaller investors is cashflow properties, carwash, laundromat, any of the, any of these businesses. If they can get the real estate attached, they're all about it.

The banks like it. Uh, you guys, have you seen that as well back on your side? 

[00:50:14] Bekah Carlson: I'm just thinking we haven't had a solid update on the car wash today. 

[00:50:18] Saul Klein: Yeah, it's been cloudy and overcast here in San Diego for the last month. You know, it's may gray, and now we're in June gloom, and then summer will get here.

But we've had a, you know, the carwash has done well and, and will continue to do well just because this is a driving economy. 

[00:50:35] Andreas Senie: And, and it's California. In 

[00:50:37] Saul Klein: California, right. So people need to wa they need, and they can't wash their cars at the apartments they live in. Right? So it's typically against the rules they don't want.

And then the, and also there's no water capture if you're washing your car at your apartment. So if the city kind of likes the idea. So no, this car, this, it's interesting though, for many years we couldn't get a loan on the carwash. We had to get private financing. So whenever we wanted money and we had a network of people who would always loan us money, and back then we would pay 10%.

We'd borrow money against the carwash, we'd pay 10% and we'd use the money for whatever. Because to get an SBA loan or any type of loan with a business on, it was more difficult than getting a loan where people paid rent to live in the property. Oh my. That was for many years. And so it's been years. Our car has been paid for, for a long time and so we haven't had to go out to look for this, but early on we've owned the thing for over 40 years.

Right. But early on you, you couldn't just go to a bank and get a loan against it. It was more difficult and more expensive. And so we actually raised money privately whenever we needed money to do things. It was all through private sources. And so you're saying 10% It's easier today. I haven't tried, but it's easier today cuz you gotta, you're right, you got cash flow.

It's a, it's greater return on the money. Mm-hmm. It's, you know, yeah. People don't need to wash their cars where they need a place to live, but they do wash their cars and so you think that it would be easier and we just haven't tried in a while. So is financing, is that what you said? Financing businesses easier today than it has been decades 

[00:52:18] Andreas Senie: ago.

It seems that the, these investors are hungry for cash on cash return and buying a building with that cash flowing laundromat, dry cleaner, car wash, some part of that mixed use that they could also own. They're all over it. And getting the numbers to work where the owner's willing to sell and getting the repairs.

I mean, they're just a little complex on the inventory side, machine upkeep, what have you. I'm no car wash expert. Maybe I should call you on a few, but it seems they're readily available. The people owning them are ready to move on from them for whatever reason. Um, which is an opportunity, right?

Businesses are looking to move and expand. Becca's point on retail, Fairfield Main Street, I didn't see a single vacant retail sign. I've got a lot of vacant. Office. I got a lot of vacancy everywhere else. These businesses, plenty of people always looking to build their life, their business and TD Bank, we were with them the other day.

They said they're, they're ready, willing, and able to loan on good business models, right? And economic development, small business groups are there to support it. Grants are there to fund it. I mean, the money's there. Put the business in. Get an SBA loan finance a hundred percent 98% of your deal through that SBA loan.

There's your capital stack. If you can do it on a smaller deal, you remember SBA with a property, you have to have more than 51% not remember to U2 to the audience, uh, which is ex. It's just an exciting time. I think you just gotta put the legwork in truly day in, day out. And there's certainly a lot of, uh, a lot of dead ends to avoid that.

Leadership, mentorship, people that have been here before can help you avoid, it's easy to go chasing dreams. That's my number one thing. Don't chase dreams. Chasing chase revenue. One of the, 

[00:54:17] Saul Klein: I'm working with the company that, that builds, uh, for lack of a better term, uh, backend MLS systems, right? Okay. Um, with blockchain type of technology.

And their, their vision is to create MLSs and NARS has tried this for years, hadn't been able to do it around the world, country by country. And if you, I build something like that on a sta with a standard, right? A data standard of some sort, then you can start to link these countries together. And before you know it, you really do have a worldwide marketplace for real property.

And I thought that was, got multilingual multicurrency, uh, blockchain. Privacy, um, being able to co-op with who you want to co-op with, and being able to expose not only the property and the characteristics of the property, but field by field. You know, Becca, I wanna give you 10 fields. Andreas, I only wanna give you five.

I mean, right. 

[00:55:27] Andreas Senie: Well, that's credential access. Yeah. Leveled. Provisioned access. Credentialed access differently. When you say fields, you mean, you know, individual point, not a field, not, not a field, not an anchor in Mexico, not an acre in the us. But therein lies the problem. We can't, we have yet to get to a standard, uh, reso as, as an organization that's very close and has a standard.

But in the US we have yet to get to a standard reside in the residential world, let alone the commercial world. Well, so the 

[00:55:54] Saul Klein: concept here is you, that it is more, it's more difficult here than it is in a country that doesn't have 

[00:55:59] Andreas Senie: an m L s. That's true. Uh, less dev, uh, less developed country. It, it's much easier to come in and build this technology and grow it.

Uh, India has got, I think, one major exchange for properties. So they were the first, the biggest, the baddest. And now they're at the top. They're the co-star of India, whoever they are. Cause like, I'm not gonna name it, um, at this time, but they didn't have to deal with the regulations and everything else.

Right. They didn't have to deal with privacy concerns. I'm very curious how your, this company you're working with is handling those, that globalization aspect when the entire world is in the middle of a privacy crisis, and then data ownership crisis on who owns what and where. It's very hard to go global at once, but country by country nation strategically.

Nation by nation. Nation by na. And the 

[00:56:49] Saul Klein: biggest areas we're of concern with regard to privacy, I think is Europe and 

[00:56:53] Andreas Senie: California, right? Yeah. And, and I think there are three other middle states now in the US with, with laws. Yeah. Uh, Ireland is also, uh, got, got quite a bit going. Um, but that, but I digress into that conversation and that's one we can absolutely have on globalization, new markets.

And then, you know, candidly, AI's gonna help machine power, computing power to get across those borders. And the evolution of FinTech and the ability to transact across borders and track it through blockchain in a way that's actually, uh, in an immutable ledger, right? So in a way that people are comfortable with is an exciting, it's an exciting time all around top of the hour.

Guys, that went incredibly, that went fast. Well, uh, as I said, this is, uh, it's, it is the shortest hour and my favorite hour of the month talking with you. Thank you for coming on to host the show. Thank you to our listeners for coming on and watching. The show continues to grow, Facebook, LinkedIn, Twitter, everywhere.

Uh, we put it, although we're getting better at putting it at new places. How and why or should anybody reach out to you and for what, over the coming month or what's the book you recommend? Saul? You cannot pick up the book you just showed us. 

[00:58:17] Bekah Carlson: I wrote, I'm gonna order it. 

[00:58:19] Andreas Senie: Yeah. Well, I, no, he's got another 

[00:58:21] Saul Klein: one.

It's, it's the op, the Option of Urbanism Investing in a New American Dream by Chris Leinberger. Chris, a great guy. Yeah, professor Emeritus at George Washington University. A book that I read, I don't know if I recommended it last month, but it's just a fascinating book by Peter Zhan called, the End of the World is Just the Beginning.

The end of the world is just the beginning. Fascinating book. And, um, you'll enjoy it, 

[00:58:46] Andreas Senie: guaranteed. Love it. Yeah. I, I've enjoyed every recommendation you've given me. I think one of the favorites, oh God, what was it? Um, the Hype Machine. Here's Your Throwback, the Hype Machine, if you haven't read it, was an incredible book.

Uh, incredibly insightful and still applies, I think, in almost every way today. So there's my recommendation. Okay. 

[00:59:10] Saul Klein: I'm gonna give you another one. It's the New Grand Strategy by another one of my partners, actually two of them. Uh, the New Grand Strategy, and it has to do with sustainability, prosperity, security, all the things 

[00:59:21] Andreas Senie: we've been talking about.

The new grand strategy. The new brand. Well, and, uh, not a shameless plug, but Commercial Shift was an incredible book for brokers out there who are just. No, don't know which way to turn. You're new to the business. There's definitely literature, ways to get, uh, training, education. Becca, what's your book or one big piece of advice for our audience?

So my 

[00:59:48] Bekah Carlson: book, I actually just ordered it. I found that one of my LinkedIn friends, uh, Esther Deutch, wrote Musings of a Networking Mavin, which a practical, you know, a practical guide to self-awareness and business networking skills. Since I have ordered it, I am super excited. She's absolutely phenomenal and I know that it's gonna be very instructive and I a training manual for younger people who are coming into the industry and going out and networking to have as.

You know, a guide on how that kind of works, I think is gonna be really helpful. So I'm excited to read it and I just ordered it and I'm gonna read it this weekend, 

[01:00:29] Andreas Senie: so. Well, that's fantastic with that. Well with that, it is gonna be a wonderful June for everybody out there. It's can only go one way. God, the only direction God gives us is forward and business is booming if you know where to look and how to look.

Mr. Mendoza, thank you our producer. Lead us out, please and for those listening, don't forget to tune in on the eighth for the sector interview with Larry Rothenberg, president and a agenda we're gonna talk about clean air, clean air tech with the wildfires in Canada and the terrible air quality I'm going through here in Connecticut.

Uh, it's gonna be a great listen and, and certainly applies to what's happening in your day-to-day. And then June 15th, uh, sector interview with Kevin Collins, Charlie Ai, c e o, Forbes Technology Council member. Super excited to dive deep into how AI is used and misused the, uh, true behind the scenes look on the evolution of the space and what you should be doing or shouldn't be doing.

As always, download our show anywhere you get your audio and everywhere you get your video. And don't forget to subscribe to our YouTube channel or simply ask your Alexa device to tune into the correcto AI round table. Please do share rate, review us, connect with us, ask questions. Tune in next month.

Thank you again for tuning in. Thank you again to my co-hosts and thank you to the audience. Have a wonderful month of June.