Franklin Street Beefs Up South Florida Retail Team

MIAMI—Franklin Street is beefing up its Miami retail team.The commercial real estate firm just hired Robert Granda as director of retail investment sales for the South Florida market. 

Granda will join forces with Franklin Street’s Greg Matus, regional managing partner in South Florida, and retail investment associate, Peter Crane. He will also assist in building the team by recruiting retail brokers for the firm and focus on the acquisition and disposition of multi-tenant and single-tenant retail properties throughout South Florida. 

“We are thrilled to have a person of Robert’s caliber on our team, especially at a time when the South Florida retail market is on fire,” says Matus. “He comes to us with significant experience and a great personal brand in the market. We are excited about the continued growth of the firm and will be announcing some other new-hires very soon.”

Granda comes to Franklin from Marcus & Millichap, where he served as associate director for the firm’s National Retail Group. During his M&M tenure, he specialized in advisory services and transactional leadership, with a concentration in non-anchored shopping centers and single-tenant retail properties.

“Demand still exceeds supply for multi-tenant retail product across all of South Florida,” Granda tells “Due to the lack of inventory, sellers are achieving pre-recession, top-of-the-market pricing for class A, well-located centers and continuing to experience cap rate compression.”

Before entering commercial real estate in 2010, Granda worked in the financial services industry as a licensed financial specialist and associate vice president for Wachovia Bank. 

Granda graduated from Florida Atlantic University with a Bachelor of Science degree in Finance and received an M.B.A. from Nova Southeastern University’s Huizenga School of Business.

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A Growing Trend for Multifamily Investors

ATLANTA—A growing trend for multifamily investors searching in secondary and tertiary markets is not only chasing yield but product that appeals to higher-income renters. So says Jake Reid, senior director of Atlanta multifamily investment sales for Franklin Street.

“Investors are beginning to recognize that higher income tenants are choosing to rent versus own and that this trend is not limited to major metropolitan areas,” Reid tells “They are also realizing the importance of not only investing in quality product but also the proximity to restaurants and shopping in suburban downtown markets.”

As Reid sees it, the underlying value of the land far surpasses the value from a traditional multifamily standpoint. At a sales price of more than $75,000 per unit, he says the sellers realized a premium on existing net operating income. 

“This metric was highly dependent on the lower density of the existing apartments coupled with desirable zoning,” Reid says. “ With a lot of interest for well-located sites in the market it was important for the sellers to know they were working with a buyer that had the true wherewithal and capacity to close at the proposed terms.”

While the residential market continues to steadily improve, Reid says certain markets are outperforming the rest. The popularity of both neighborhoods and the ability for the developer to move quickly towards the finished product should make these very successful projects.

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This news was the biggest culmination of a long wait

It may still be two years out, but 2015’s biggest payoff of a long wait was the announcement that Ikea would finally — finally — come to Northeast Florida.

The Swedish superstore announced in October it would open a location on Gate Parkway near the St. Johns Town Center in fall 2017.

For years, Ikea has said that Jacksonville did not have the population to support one of its iconic Scandinavian-designed home stores.

Usually, Ikea looks to enter areas with a population of 2 million or more.

In 2012, after the announcement of a second South Florida store, Ikea USA spokesman Joseph Roth said Jacksonville “ wasn’t there yet.”

“If you don’t have population size, you don’t really get to the second point,” he said at the time. “It’s basically our stores are so large, they’re very expensive to build and need lots of customers to support them.”

Roth added then that there was nothing Jacksonville could do other than double its population.

In the intervening years, that hasn’t happen, but Jacksonville has grown its retail market, with booming success at the Town Center, including the addition of Nordstrom one year ago.

“[Population] was the Town Center’s biggest hudle when it was built,” said Whitney Kantor, director of retail leasing for Franklin Street. “The density in numbers wasn’t here. But the dollars had always been here.”

She said she thought a combination of factors — the region’s proximity to Georgia, Jacksonville’s gateway status to Florida, millennials moving to the area and even the success of events like One Spark — have helped change Jacksonville’s image.

“It’s no longer sleeping,” she said. “Jacksonville is coming alive. Businesses are looking at Jacksonville, and that’s what spurs growth.”

And in the years in between the announcement and construction, Ikea could mean other big retailers could follow suit. “Having an international retailer of that caliber means other retailers will follow,” Kantor said. Ikea is “iconic across the world. It really is a confirmation that Jacksonville is quickly becoming a sought-after city.”

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The Multifamily Story in Tampa Says This

ORLANDO—Tampa multifamily vacancy rate will slip 30 basis points in 2015 to 4.9% on the back of net absorption of more than 5,000 units. Tenants also moved into 5,000 rentals last year, slicing the vacancy rate 60 basis points. That’s according to Marcus & Millichap.

Projects containing 5,000 apartments will come online in 2015, outpacing last year’s production of approximately 4,100 units, M&M reports. And nearly 2,100 multifamily rentals will be placed in service in Pinellas County this year, an increase from 1,900 units during 2014. 

But what do Franklin Street multifamily gurus see? caught up with Kevin Kelleher, senior director of multifamily investment sales in the firm’s Tampa office, to get his thoughts.

“We continue to see demand exceeding supply for well-located apartments in the Tampa Bay MSA,” Kelleher tells “Pricing has certainly increased, but relative to other markets in the US, investors are finding value and growth potential in our market. We believe this trend will continue into 2016 despite the additional supply coming to the market.”

Luxury multifamily is part of the bigger picture.Construction is underway on Aurora, a $67 million luxury multifamily property in Downtown Tampa, FL. Richman Group is building the property, one of five market rate projects the firm has closed in the last 12 months.

Located at 124 South Morgan Street, Aurora sits along the new Selmon Greenway bike path and next to the $1 billion redevelopment project around the Amalie Arena.  The multifamily project should start leasing in Spring 2016.

“Excitement is growing about Downtown Tampa’s urban waterfront renewal,” Todd Fabbri, executive vice president for Richman, tells “Aurora’s modern amenities and chic industrial vibe will enhance this revitalized destination.”

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Franklin Street Arranges Sale of Family Dollar in Odessa, Texas

ODESSA, Texas — Franklin Street has arranged the sale of a newly constructed, 8,353-square-foot Family Dollar store at 520 N. County Road West in Odessa, Texas. Mac McCall of Franklin Street’s Atlanta office represented the Alabama-based seller.

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Atlanta’s Top 30 CRE Brokerages

Atlanta’s Top 30 Commercial Real Estate Brokerages

# 25: Franklin Street
2014 gross dollar volume from sales and leasing transactions out of Atlanta office: $245 million

List Makers – Top 30 Commercial Real Estate Brokerages:

Mac McCall

Regional Managing Partner
Franklin Street

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Real Estate Forum’s Fastest Growing Companies 2015

From several dozen entries, Real Estate Forum has compiled its first-ever ranking of the commercial real estate industry’s Fastest-Growing Companies: firms that are outpacing their competition and positioned for success in 2016 and beyond. Twenty-eight companies made the inaugural list, which is segmented into four categories by average annual revenue: Heavy Hitters ($1 billion-plus in average annual revenues), Large Companies ($101 million to $999 million), Mid-Sized Companies ($11 million to $100 million) and Small Companies (up to $10 million).

The winners were calculated based on their scores for two fields – revenue growth and headcount growth – over a three-year period. The sum of those scores determined the final ranking of the firm.

Franklin Street
Tampa, FL
Overall Growth Rank: 9*
Revenue Growth Rank: 8
Employee Headcount Growth Rank: 9

2014 Revenue: $17,134,274
Three-Year Growth in Revenue: 67.36%
Projected Year-End 2015 Revenue: $20,000,000

Number of Employees in 2014: 224
Three-Year Growth in Number of Employees: 24%
2015 Projected Headcount: 230

Head Executive: Andrew Wright, CEO and Managing Partner
Primary Business: Brokerage
Additional Businesses: Property/Facility Management, Insurance/Risk Management
Region of Operation: Southeast
Date of Inception: 2006

*Tied for 9th place in the Mid-Sized Firms category

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2 Big Atlanta Retail Predictions

ATLANTA—The retail market is on an upswing nationwide. But what should Atlanta developers, investors and retailers expect in 2016? caught up with two experts at Franklin Street to get some perspective. We asked Monetha Cobb, managing director of retail tenant services and Bryan Belk, senior director of retail investment sales, for some thoughts.

“Across the nation the retail market is experiencing a lack of space, especially in class A core markets,” Cobb tells “Towards the end of 2016 or early 2017, we’ll begin to see the deliveries of new construction, which will loosen the competition for available space.”

As Cobb sees it, this should slow down rent escalation in core markets. With new space being delivered six to 12 months down the pipeline, she says, retailers are using this time to figure out how to expand their brands beyond bricks and mortar locations.
“Conversely, online-only retailers are seeking bricks and mortar space as well,” Cobb says. “There’s no ‘one size fits all’ way to be in the retail industry today, so retailers have to do it all in order to keep shoppers constantly thinking about their brand.”

Cobb believe Atlanta could see some co-branding or multiple brands partnering up to reside under the same roof. Her conclusion: it’s certainly an exciting time in retail.

“Buyers are investing in smaller markets to get yield as pricing in primary markets continues to rise,” Belk tells “Many great value-add opportunities lie in suburbs of major markets where stores have closed and active tenants like Walmart Neighborhood Market, Hobby Lobby, Academy Sports, et cetera, can backfill retail spaces with strong credit and immediate create value to a center.”


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Best Bets

Investor appetites shifted in 2015 and are likely to continue changing next year. Where should capital focus next?

Strong. That’s the word many industry analysts are using to describe capital flows into commercial real estate through the fourth quarter of 2016. But, of course, there are various factors that could weaken that strength, from high prices and valuations to rising interest rates and economic uncertainties.

Still, strong is the trending keyword. According to the Urban Land Institute Center for Captial Market and Real Estate, the commercial real estate market is on pace to experience favorable conditions through 2017. Specifically, commercial real estate prices are projected to rise by 10% in 2015 before slowing to a 6% increase in 2016 and finally dipping to a 4.5% rise in 2017. Vacancy rates are expected to continue declining and rents to continue rising.

“Although common sense would dictate a slowdown in 2016, I do not see a meaningful slowdown, since equity raises are at an all-time high,” says Brian Sykes, senior vice president of loan originations at Capital One. “Investors who are tired of anemic savings and bond rates and are less than enthused by the stock market volatility are clamoring for the attractive yields being offered by real estate funds.”

How Appetites Have Shifted

All that said, it’s clear that investor appetites have shifted and may continue shifting in 2016. From the big picture view, the market has seen a gradual shift from prime class A properties only to a willingness to explore and invest in secondary and even tertiary markets, as well as class B assets. That’s ultimately because investors are looking for better returns.

“In the Southeast, we continuously heard from institutional investors that they were only interested in Atlanta, Raleigh, Charlotte and prime Florida markets,” says Bryan Belk, senior director in Franklin Street‘s Atlanta office. “Now that returns in those markets have compressed, we are seeing more large investors willing to stretch out to markets such as Nashville, Huntsville or Jacksonville to get returns they promised to their investors because competition and lack of supply in primary markets is so great.”

Steve Grimes, CEO of Oak Brook, IL-based Retail Properties of America, a self managed REIT focused on the acquisition, development and management of strategically located real estate assets and one of the largest owners and operators of shopping centers in the US, sees investors shifting from new acquisition returns to properties with long-term development or redevelopment/densification opportunities, especially in urban areas.

“From a return-on-cost perspective, development and redevelopment returns are strong in contrast to new-acquisition returns,” Grimes says, “and with the continued lack of new supply, especially in the class A retail centers, redevelopment opportunities and secondary markets have been driving better returns-on-investment as demand continues to outweigh supply.”

The office sector has seen a definite shift in the past year, according to Martin Caverly, chief investment officer at Los Angeles-based Resource Real Estate, a national real estate firm specializing in opportunistic and value-added investing in and financing of commercial real estate. He is starting to see a commercial office space migrate out of the big five gateway markets – Los Angeles, San Francisco, Washington DC, New York, Boston – into surrounding areas, such as Brooklyn, West Side L.A., Downtown L.A. or Orange County.

“Like most asset classes today, it’s a search for yield. In every cycle, core central business districts in most markets recover first and then demand moves out to secondary markets,” Caverly says. “Two years ago, investors wouldn’t touch Phoenix. Now, it’s gaining traction. Unfortunately, people forget that secondary markets trade at higher yields to make up for the fact that they are more volatile, so your changes of losing occupancy in a downturn are much greater.”

Clear Challenges Ahead

Nobody has a Pollyanna attitude about commercial real estate investing in 2016. Clearly, challenges lie ahead. Kurt Westfield, managing director of WC Cos., a group of real estate, investment, property management and financing companies based in Tampa, FL, expects the biggest challenges to be finding quality inventory and competing with liquid and institutional investors.

“On the heels of Blackstone, there are still a number of smaller, albeit capital-heavy, institutional players absorbing units,” Westfield says. “Additionally, with interest rates still low, more investors are able to secure mortgage instruments with low debt thresholds. I don’t foresee any major barriers to entry or new challenges in 2016 that haven’t been witnessed or overcome in 2015.”

Rising interest rates are an ongoing concern and a frequent topic of discussion. That said, investors have been listening to failed predictions of rising interest rates for the past five years. Interest rates are bound to rise at some point, though, and Sykes says that would reduce available leverage and investor returns, adding volatility to the already razor-thin prices groups are paying for multifamily assets.

One thing is certain: REITs in particular can no longer rely on record-low interest rates to push cap rate compression and value bumps. The focus, says Grimes, needs to be on improving organic growth to drive NAV. But there are still other concerns, like finding good deals, even valueadded deals. These are fewer and farther between in a mostly recovered market.

“The biggest challenge for investors in 2016 will be finding a suitable product that meets yield and return expectations without taking too much risk,” says Caverly. “Supply is certainly going to start becoming an underwriting issue in some markets as well. Rate uncertainty may create some short-term wobbles, but, over the longer term, historically higher rates have been good for real estate.”

What to Bet and Bank on

With all of these factors in mind, what are the safest bets? What can investors truly bank on? What sectors should be approached with caution or avoided altogether in certain markets? Franklin Street’s Belk recommends taking a “back to basics” approach that entails buying well-located real estate that can survive tenant turnover.

“For desired locations we are seeing continued rent escalations that landlords are getting in the 20% to 30% range,” says Belk. “A lot of those locations signed five-year leases back when the market was softer and landlords have continued to be able to successfully raise rents, as those leases have rolled for renewal because there is more tenant competition for spaces in this market.”

Grimes stresses that retail has been considered ripe for capital investment. That’s because investors, from a yield perspective, are having a tougher time finding what they are seeking in other sectors like office, industrial and multifamily. “With retail recovering, the time is ripe for investors to reap extremely compelling returns on retail properties,” he says. “However, specifically in the retail space the push is definitely still focused on an investment in mixed-use/lifestyle developments.”

From Sykes’ perspective, the best bets in 2016 are the ones from which everyone else is shying away. He says that locating well-priced deals in secondary markets and buying them with more conservative leverage—70% versus 80%, for example— could make a good strategy for private real estate owners.

Caverly has a more specific take. He’s betting on creative office space. He sees an evolutionary change occurring in how people use office space, and predicts investors who can identify it and invest in it early will enjoy higher risk-adjusted returns. Multifamily is still a darling.

“I am still bullish on multifamily through 2016,” says Westfield. “The rental market remains a driving force. Millennials have yet to exceed average figures for home ownership and continue to rent at high volume. Interest rates remain low. Capitalization rates remain above average. Economics of scaling remain beneficial and cash flow remains positive. This continues to be the top sector through 2016 through my glance.”

Proceed with (Some) Caution

Although fundamentals seem to be solid across the board, some industry watchers do take pause in some sectors. Westfield is particularly concerned about the hotel sector—and so is Joel Ross, a member of the Urban Land Institute who began his career as an investment banker on Wall Street in 1965.

“It’s not that hotels are bad as investments,” Ross says. “Many people have bought hotels over the past five years and made good returns because they bought distressed deals and did the needed renovation to be able to resell this year at high returns. There are still very good hotel deals around where there is poor management, failure to renovate, and deep value add. I am doing one myself so I am not saying no hotels.”

Ross’ point: don’t drink the Kool-Aid. He cautions not to just accept the nationwide averages of RevPAR as being at all meaningful to investors. His advice: Dig into the individual deal and submarket, look for deep value add and a very good manager, and most of all do your own due diligence and your own projections. 

“If you just buy an ordinary branded hotel now and think you will make good returns because the hotel industry puts out things like false value improvements and says things like it being ‘the golden age,’ you will get disappointing returns,” Ross says. “The brands in search of ways to keep revenue flowing to maintain stock prices are coming out with a flood of new brands and then ignoring impact areas for existing franchisees, which harms their ability to raise rates. This is a huge issue now.” 

Westfield is concerned about overbuilding in some of the 24/7 cities and Belk shares similar concerns, especially on the multifamily front. With the amount of new development, Belk thinks the market is teetering on oversupply of higher-end apartment living. “They’re being marketed as targeting Millennials,” he says, “but I don’t see how your average recent college graduate can afford $1,500 to $1,800 a month in rent when wages have not increased substantially for recent college graduates.”

Marketing the X Factors

X factors may be unknown, but not completely. Industry watchers are keeping a close eye on various issues, beyond interest rates and global economic volatility that could impact commercial real estate markets.

Caverly, for example, is watching for tax law changes that could hit the commercial real estate market, such as eliminating mortgage tax write-offs or 1031 exchanges and keeping or increasing restrictions on treatment for foreign investors. Many feel that tax law changes in 1986 worsened the real estate decline that ran from 1989 to 1992.

“Over-leveraging debt continues to be a hot button for me,” Westfield warns. “Too often we see investors seeking copious amounts of debt in growing their portfolios. There is no denying an ability to leverage smart debt. However, cash remains to be king and assets owned free and clear still provide the most upside with the least amount of risk.”

As for Grimes, he’s looking at the big retail picture. For consumers and retailers, technological innovation will continue to drive changes in the retail experience and in the ways that consumers shop, which impacts a center’s success. “Today most analysts are moving away from the idea that the Internet will obliterate bricks-and mortar retail and are focused on it adding a new and exciting dimension to the buying experience,” he says, “but centers must keep up and adapt or they will be considered irrelevant moving forward.”

Then there are the X factors on the development front. Belk says he continuously hears concerns from developers about the potential delivery dates of their projects. “Time and again they have expressed they would like to have their projects finished before 2017,” he says, “because they do not know what the market will be like when all the 10-year debt from 2007 rolls over.”

Looking Ahead

With all the challenges, X factors, data points and opportunities, what will 2016 see on the investment front? It goes back to the first word in our story: strong, at least through 2017.

“Major economic drivers have maintained a strong presence from leveraged and financed investors and cash sales still make up an above-average chunk of the investment-class assets being purchased,” Westfield says. “Property values have risen, dramatically in our local market, amongst most major metro regions nationwide and rental rates continue to rise, promoting strong investment opportunities across the board in the multifamily sector.”

Belk echoes the sentiment of most industry watchers. From a 20,000-foot view, he is betting 2016 will be very similar to 2015. He predicts the market will see a slight increase in interest rates in 2016, but because of lack of supply and the great demand for commercial real estate he doesn’t anticipate an immediate dip in prices. Caverly is taking a little bolder approach. He predicts more commercial real estate investing in 2016 compared to 2015, on account of the tremendous search for yield across all investment asset classes.

“Real estate happens to be one of the few areas where you can construct a fairly attractive portfolio yield relative to the risk-free rate yet take less perceived risk than in other assets—like stocks and high yield bonds,” Caverly says. “Though some gateway markets have seen asset pricing exceed prior peaks, the spread one can achieve in yields versus financing costs is still at historic highs. With banks just starting to lend due to regulatory issues and plenty of capital liquidity, 2016 should be robust for commercial real estate, in spite of rising rates.”

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Crime-free program can turn housing communities with insurance woes

Owners and managers of affordable housing communities often face crime incidents that harm the tenants and the property. A proactive, public-private program that reduces risk will improve the residents’ quality of life and can reduce liability exposure and insurance costs.

Too often, property owners and managers react to crime. They call the police, hire a security company or evict troublesome tenants. None of those actions prevent problems from reoccurring, reduce liability or help residents. When violent acts in a community become regular fodder for TV news, the property is perceived as a place where criminals live. Its value, income and insurability are all affected.

Programs to keep crime away

Police and safety consultants have recognized this type of situation and developed programs that keep trouble from starting. Landlords and property owners who commit time and resources to these programs can see results from adopting their practices.
If you sell property insurance, these 10 terms are foundational to the work you do.
The International Crime Free Association, a non-profit organization dedicated to those whose mission is related to the goal and purpose of the Crime Free Programs, and other private firms offer assistance with policies that:

• Identify the types of crime in the community
• Screen for offenders before they sign leases
• Develop and execute a plan for improved security
• Engage residents through communication and participation in crime prevention

While the particulars vary according to the property and plan, the goal is essentially the same: to keep crime away from the community.

Property owner liability concerns

A property owner has many good reasons to invest time and money in engaging the police and security consultants, to upgrade the property’s security. The most obvious is liability; a jury can hold a property owner or manager liable for damages if they knew there were dangerous people on the property and that the property owner or manager did not take reasonable security measures to prevent a criminal act.

If you sell property insurance, these 10 terms are foundational to the work you do. 

Insurance companies set rates and decide whether to renew policies for apartment communities based largely on payouts and the response of the property owner and manager to recurring problems. When claims are extensive, the annual liability insurance premium could jump 40% to 100% at renewal versus the more typical 8% to 10%. If a property becomes known as dangerous, it could become uninsurable, even if the policyholder offers terms at a six-figure deductible.

A much less-expensive and more-effective solution is to partner with police and private firms on a crime prevention plan. In Hillsborough County, Florida, more and more property owners and managers work with local police implementing a program known as Crime Prevention Through Environmental Design. They coach the property management company on improvements ranging from lighting and security cameras to door, window, lock standards and landscape design and maintenance. The police walk the property to see that changes are made and track progress through the number of police calls and arrests.

Once the police certify a property as crime-free, the owner can advertise that fact to tenants and prospective residents. Just as important, the property manager can tap into a database shared with other crime-free properties of offenders worthy of tracking, including people arrested or involved in crimes. The list can be used to screen applicants and evict residents.

The database gets a boost from the Crime Free Lease Addendum that the International Crime Free Association developed. Once modified to meet state law, it gives the landlord a quick way to evict a tenant regardless of whether the individual has been convicted of a crime.

Crime-reduction plans

Private firms can play a role, also. Consultants, many who are former police officers specializing in community problems, create and implement crime-reduction plans. They also make sure that calls for police assistance are promptly answered and that the authorities take note of the improvements.

Our clients in the Tampa Bay area say crime prevention programs are working well. Programs in other metro areas that have a longer track record proves that they work. Those that implement these type of programs, report less vandalism, fewer personal injuries and fewer police calls.

The most direct measure of a program can be the insurance premium. Our research shows that the liability rate per door for multifamily properties is 30% to 60% lower for properties with a clean loss experience versus one with a poor loss experience.
Insurance companies won’t immediately slash premiums based on the short-term success of a crime-free program. They look at three-to-five years of data when setting rates. However, they do look at year-over-year claim figures when determining whether to renew policies and by how much to increase or, in the present soft market, decrease premiums.

The benefits of a crime-free program benefit everyone. Tenants enjoy a better life, one free of fear from crime. This in turn, changes a property’s reputation, which can raise occupancy rates and rents and in time, insurers will see the positive changes and reflect them in their rates. 

Tom Kersting is president of Franklin Street Insurance Services in Tampa, which provides coverage to multifamily and other commercial properties. He may be reached at