National Retail Real Estate Investment Top Dog

The midwest is not known for the flashiness of the Investment Banker business of the East Coast nor the coolness of the west coast brokers, but here in Chicago is the Best Retail Investment Team in the Country!

You thought that 2022 Retail business sucked? Look at these numbers:

Transactions – 113 (More than two deals closed a week)

Up 30% over previous 2021 record level!

13 million square feet

$1.8 Billion sales value

• 22 states
• 67 open air centers
• 18 strip centers
• 28 net leased buildings
• no malls! (For the first time in 25 years)

Team made up of 5 senior brokers, 3 analysts, 3 assistants.

George Good and Rich Frolik are the two remaining senior partners with
Bob Mahoney and Mike Richwine retiring from the original team. George good is the acknowledged leader and backbone of the team.

The team was founded 25 years ago when Mike Richwine returned to the brokerage business after the sale of Homart Development Company (a sub of CBRE and Sears). Coming back to CBRE in the investment business in the Chicago Office, Jeff Barrett- the manager of Chicago office, had to make room for Mike and forced a merger of the George Good/ Rich Frolik team along with Bob Mahoney from the Schaumburg office into a team with Mike. George had worked with Mike right out of college in a pre-sales position while Mike was the National Retail Marketing director in Houston. George and Mike focused on selling Regional malls on a national basis, Rich Frolik focused on Outlet Centers and Bob Mahoney on large Open-Air centers. The team won the first Team Recognition award for CBRE at their national Convention in Hawaii in 1998 and never looked back. Recognition however was difficult within CBRE as All Awards are given to the top individual producers The way the Chicago team split its revenue, they were never the ‘top” dogs within CBRE. These awards typically went to brokers who collected all of the fees in their name and then distributed them to their teammates. CBRE, after several iterations formed the National Retail Investment Group under Greg Vorwaller which increased the profile of the eight nationwide Retail Investment Partners across the US, and created an actual platform for Retail Property investment sales. Commercial Real Estate was getting larger and larger in dollar amounts as Pension Plans jumped in with both feet. The team has sold over 100 regional malls.  It should be pointed out that these are typically individual sales, not sales of companies or huge portfolios.  This is the grind-um-out business of day-to-day Brokers.

A rising tide floats all boats

While one would think doing a national business out of Chicago was simple, it was not! Not only does each state have different laws about Brokerage licensing, but CBRE now has offices in each of the states. Encroaching on the local office’s territory was touchy and collecting commissions out of state proved cumbersome. What happened over time was that while the business was becoming more national in nature, the local brokers had opportunities to work on transactions that they did not have the ability to compete for in their market. Each deal they did in cooperation with the chicago team enhanced their resume as well as their pocket. The retail partners now count 65 members in 10 offices with transactions in all 52 states and provinces. The Chicago team was the first in CBRE to add a dedicated Mortgage Banker to the team to offer financial services to the buyers. Mike Kaider was added to get into the “Net” lease business.

Retail is the most difficult Sector – financially.

Large retail projects have over 50 and in regional malls over 150 tenants who make up the financial cash flow stream of the properties.

The ability to read all of these leases and other documents, analyze their financial contributions and understand their recriprocal rights of occupancy is an incredibly difficult task for a broker. The ability to express this bundle of income and rights to a buying public is indeed difficult. While office buildings come close in multi-tenants and entangled occupancies, nothing is more difficult to analyze than a Five Anchor Regional mall with 150 mall tenants and 6 out lots on 200 acres of encumbered land.
This level of analysis takes years of experience and an internal workforce who can put this together! Computer analysis has come a long way from the time when we literally did the analysis by hand or put it into a data feed that you would then send out and get a response in a day or two from a centralized computer! Buyers wanted to not only know what today’s income was but they wanted to see a projected 10 year income! The ability to put together financial analyst team to consistently help in the production of theses analyses was paramount to the Chicago Team’s success and they lead the CBRE effort. CBRE now has dedicated financial analysts throughout the investment business and people dedicated to the Chicago Team. The Chicago team has completed over 1,000 financial analyses or valuation pitches and the sales process. And you thought they were just a pretty face!

Packaging and presentations

While financial analyses is the crux of the package, the ability to put all of this material into a cogent package that described why you would want to buy this property, it’s place in the retail marketplace, and it’s future ability to continue earning is daunting. George Good is one of the best writers as well as the hardest worker and meticulous notetaker in the business. He lends his touch to all of the brochures and marketing materials presented by the team.

Promotion

While every investment broker in chicago knows who George Good, Rich Frolik, and Bob Mahoney and Christian Williams  are, the Retail Investment team does little promotion. ( George is being installed in the Chicago Broker Softball league Hall of Fame this year) Aside from George Good being a very non-assuming guy, CBRE does very little individual promotion, and because 80% of the teams sales are out of the Chicago Market, their presence in Chicago is soft. The team led by George has won some local awards and they are well known as good (no puns admitted) guys. The team takes a very low heads-down profile. Completing 100+ transactions a year does not allow much schmoozing time! More time is spent doing opinions of value (BOV) today than pitches! While it seems counter intuitive, the team is doing more and more local business because of its connections with National owners and Advisors. Last year, approximately 25% of its business was local, which is probably a record.

Future

While the team’s plate is certainly full with probably over $3 billion being marketed, it can be argued that they are at the top of their business even though Bob Mahoney has recently retired and Mike Richwine retiring from the team many years ago. They have built up the bench with Rich Frolik, Christian Williams, Michael Kaider, Adam Forte and 10 other members, and are at their height of experience and efficiencies- Well oiled Machine

Please find a link to the Team’s 2022 Retail Investment Market Recap and 2023 Forecast. https://cbreemail.com/collect/click.aspx?u=UkxGVWhkdkVvd3J5K29CKzhIMnBrYUJITmtUNjlmZ01pUjE4VzdLaldLL1pJZzE4RTZ6N3V0RDY2ZXNMd1lWUmtFV29pT0p4dFZKZUNjbW1vOGEzN1poS2ZrVzF2eWgyY0VRbEsramNoaEJ1WUsxcjYzTiswUVgxdUM2MlJiVDVWMDNmSU5ZWk9JTGNKejUxelpVV3BHNDd1WHN1SWdIZQ==&rh=ff01b0445cf0e9640413d0827a43ae3a7edd4f52  

Because this is my blog, I can say that the biggest mistake I have made was leaving the team when I did.  I left when I thought the Regional  Mall business would dry up as all the malls were being uploaded into REITS as a result of high interest rates and lack of ability to refinance in the 90’s. (chapter 12 (IPO) or 11 (bankruptcy).  REITS traditionally do not sell, but are cash flow machines. I was wrong about that as they subsequently churned their portfolios.  I left in search of the development dream, which did not come true.  I had many more years as a successful Broker with Colliers until I decided it was time to slow down and settle into a life as a local broker, after 50 years in the business.  Over my career I have participated in over 300 transactions and $6.5 billion in sales.

George, Bob and Richie have remained and will remain lifelong friends and I am very proud of their well earned success. They are the best Brokers I have ever met.

 Even though they did it without me.