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Woman of Influence: Lisa Jesmer

Groundbreaking, glass-ceiling shattering or simply long overdue, women in commercial real estate are powerhouses, forging their way from the bottom up or through a series of calculated management moves. However they got there, these women are forces of nature, with high-level positions that are influencing the industry every day. And, if that was not enough, their commitment to young professional mentoring and community and civic endeavors gives a whole new meaning to the concept of multitasking. 

Lisa Jesmer
Vice President
Franklin Street

In a field generally dominated by men, Jesmer has emerged as a power player. She came to Franklin Street last year after serving in senior-level positions at institutions for more than two decades. Jesmer has been a catalyst for the company’s dramatic growth and instrumental in the launch of a robust commercial management division, with a focus on office, industrial and retail properties. Outside of her day job, she is involved with the Miami Downtown Development Authority, the Brickell Area Association, Habitat for Humanity and Miami Children’s Hospital, where she volunteers.

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Recipes for Success

Is a financially strong franchise or a corporate-backed restaurant the best choice for a new retail center?

As all retail real estate professionals know, restaurants are red-hot right now. The total number of restaurants in the U.S. is expected to reach 1 million this year, 100,000 more locations than in 2005. This year, sales will top $783 billion, according to National Restaurant Association estimates.

While the demand for restaurants of almost all categories is undeniable, picking the right one for your project remains a tricky business. For developers and the brokers who advise them, the choice of food and beverage tenants is as essential to the tenant mix as the selection of in-line stores. and oftentimes determines the success of a property. Restaurants usually pay higher rental rates per square foot and generate excellent foot traffic.

Setting Goals

Though multiple factors determine which restaurant-related tenants are the best fit for a property, the choice ultimately depends on the developer’s goals. We believe that a developer that intends to sell the property for immediate proceeds should target corporate-backed tenants in most cases. The reason is that retail properties that offer a lineup packed with credit tenants tend to sell more quickly and command higher prices than comparable centers lacking those attributes.

For these properties, the goal of the owner and the agent should be to fill the center with high-rent tenants. The developer is generally willing to pay a higher tenant improvement allowance in order to amplify the cap rate.

Take the quick-service category, for example. Several popular Mexican-style concepts—Chipotle Mexican Grill, Moe’s Southwest Grill, and Willy’s Mexicana Grill, for instance—invite customers to create entrees from a variety of ingredients to suit their individual tastes. However, selecting the best option isn’t quite so simple.  Sometimes it will be a corporate restaurant, and at other times it may be a franchisee with multiple locations.

For instance, if a developer intends to flip a property quickly, the preferred choice may be a corporate-backed restaurant like Chipotle. However, for a developer planning a long-term hold, a financially strong franchise like Moe’s is the better bet. The challenge for the broker and developer is to determine on a deal-by-deal basis which restaurant tenant is able to pay the highest rent and provide the strongest credit.

The same analytical approach holds true for another increasingly popular market segment, the fast-casual category. These restaurants typically require space ranging from 1,500 to 2,500 square feet, with multiple concepts vying for available space, particularly in new developments. It’s up to the broker and the developer to determine the best fit based on credit, the number of similar tenants in the market, and the experience of the owner or operator that would oversee the concept.

In general, most retail developers today are trying to sell their projects as quickly as possible to take advantage of low interest rates and the relatively small inventory of product on the market. For that handful of project sponsors planning a long-term hold, which offers the flexibility to incorporate more franchisees and unique local tenants.

Wise Owl 

In Kennesaw, Ga., part of the metropolitan Atlanta market, we are working with a local developer on a new 17,000-square-foot center called Owl Creek Commons (the name is a tip of the hat to the mascot of nearby Kennesaw State University). Together with the developer, we created a plan to bring restaurant concepts to four of the seven available spaces in the center.

With that in mind, we identified concepts that would be willing to pay premium rents but could also provide strong guarantees in the event the developer decides to bring the property market earlier than anticipated. After working on several other nearby retail projects in prime locations, we were able to advise our client on which popular brands were seeking to expand or enter the market. The upshot was that Chipotle Mexican Grill, Capriotti’s Sandwich Shop, Taziki’s Mediterranean Café and Tropical Smoothie Café all signed leases at Owl Creek Commons, and only one 1,850-square-foot space remains.

We’d like to leave you with a final thought. When a retail project first starts coming to fruition, it’s imperative that the developer takes the time to find a broker who understands their goals. Brokers who know which retail tenants are in the hunt for space, where they want to go and what they need give their developer clients a leg up on competition and eliminate some of the risk associated with new developments. By working together to create the best possible tenant mix from the start, the sponsor and adviser greatly raise the odds of developing a successful project that meets the developer’s goals.

Justin Berryman and Reid Mason are Atlanta-based directors with Franklin Street, a diversified real estate services company. They specialize in retail landlord representation and leasing throughout Georgia, Eastern Alabama, and Southern Tennessee. In the last two years, Berryman and Mason have advised clients on 10 developments in Greater Atlanta ranging in size from 10,000 to 150,000 square feet.

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Women of Influence: Whitney Kantor of Franklin Street

Whitney Kantor was destined to end up working in development, at least in some manner. As a youngster, the director of retail leasing for Franklin Street spent many a Saturday accompanying her father downtown as he worked on The Wells Fargo Center – then known as the Independent Life building.

“It didn’t just give me an appreciation for hard work,” Kantor says of spending time with her dad, a general contractor. “Seeing the impact an individual could have on a city or environment where people spend every day of their lives definitely stirred something up insiåde of me.”

Kantor’s work today is certainly having an impact as she is responsible for the exclusive retail leasing and landlord representation for more than 3.4 million square feet of shopping center space in North Florida.

“That’s one of the things I love about retail development,” she said. “We have the opportunity to enhance neighborhoods and places where people spend time and use services.”

Kantor spearheads Franklin Street’s involvement with Daniel Kids. She’s also a member of The Urban Land Institute where she participates in Urban Plan – one of ULI’s largest outreach programs. Urban Plan brings together professionals, students and teachers through a project-based curriculum that helps students understand how communities change over time.

Kantor says one of the greatest things about the work she does is being able to “help individuals realize their dreams” by pairing potential entrepreneurs with the right commercial space.

“You’re educating people on the market, helping them understand where they fit into a shopping center and why, and helping them make informed decisions,” she said. “To see people have success and live the American dream is what it’s all about.”

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Is This Key Coverage Missing From Your Insurance?

MIAMI—The first hurricane to hit Florida in nearly 11 years could rise up this weekend. Known only as 99L, there’s a 60% chance a storm system in the Atlantic could develop into a tropical storm named Hermine.

With that in mind, GlobeSt.com caught up with Evan Seacat, a senior director atFranklin Street, to get his take on what commercial real estate owners need to know in part two of this exclusive interview. You can still read part one: Why Some CRE Owners Are Skipping Hurricane Insurance.

GlobeSt.com: What kind of coverage and conditions do lenders place on the hurricane policies they require property owners to have? Given that not all lenders have the same requirements, does it pay to shop lenders and insurers at the same time?

Seacat: While I am not a capital/lending specialist, experience has shown me that it’s advantageous to look at lenders and their specific insurance requirements. Some lenders are more thorough with their requirements.

GlobeSt.com: When do insurers usually stop writing policies? Is it enough to call an agent and get a “yes” from that person?

Seacat: Coverage cannot be bound, altered or amended through an e-mail or voicemail. A client must speak directly with a representative of its respective agency to ensure any and all issues are handled.

When a storm gets within a certain area of the coast of Florida, all insurance carriers will put a compulsory restriction on new business being bound. Please keep in mind that at renewal of a policy, the premium must be in the hands of the current insurance carrier before this restriction occurs. Specific binding restrictions vary by carrier.

GlobeSt.com: Let’s say a storm damages a building so badly that repairs or replacement will require bringing the building up to current code. Is that covered under a hurricane policy?

Seacat: No. Owners need law-and-ordinance coverage.

Older buildings that are damaged might need electrical, heating, air-conditioning, plumbing, or additional updates based on current city codes. Most areas have ordinances that require a building to be demolished and rebuilt in accordance with current building codes rather than simply being repaired.

The extent of damage is typically 50%. Law-and-ordinance coverage provides coverage for: loss of the undamaged portion of the building; cost of demolishing that undamaged portion of the building; and the increased cost of rebuilding the entire structure in accordance with any and all building codes.

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Why Some CRE Owners Are Skipping Hurricane Insurance

MIAMI—The National Hurricane Center on Tuesday issued a warning. There’s a weather system in the Atlanta ocean and 50-50 chance it will turn into a tropical cyclone. That could eventually turn into a full-blown hurricane and threaten Florida.

Against that backdrop, GlobeSt.com caught up with Evan Seacat, a senior director at Franklin Street, to get his take on what commercial real estate owners need to know in part one of this exclusive interview. Stay tuned tomorrow for part two, in which he will discuss when insurers usually stop writing policies and other issues you need to understand.

GlobeSt.com: Property owners may be getting complacent because we haven’t had a major storm since 2005. What aren’t they most likely to be overlooking or forgetting?

Seacat: With no hurricane to hit South Florida in the past 10-plus years, we are starting to see more and more clients self-insure for windstorm-hurricane insurance. If no lender is involved, companies are more willing to take the risk that they’ll lose 100% of the property. They are also not insuring coverages that we feel are extremely valuable and important: loss of rental income with windstorm insurance and law-and-ordinance coverage.

GlobeSt.com: What in their corporate finances needs attention, given that windstorm policies never cover 100 percent of the damage and exclude items such as landscaping?

Seacat: Most windstorm policies in South Florida have either a 3% or 5% deductible. An owner with a $10 million building will pay out of pocket either $300,000 or $500,000 before the insurance policy kicks in.

We always recommend to our clients, “Be prepared for this. Have a reserve fund set aside in this instance.” This region has been extremely fortunate to see storms pass by our region, but that luck is going to run out and we need to start getting prepared.

GlobeSt.com: When shopping windstorm insurance, what should property owners be looking for in terms of deductibles and loss of rental income coverage?

Seacat: Insurance companies charge a higher premium for the lower of the two deductibles, but, in the event of a claim, the out-of-pocket expense is lower. Property owners should shop both deductibles to determine which best fits their budgets now and when a storm hits.

Many companies self-insure the loss of rental income. This is a huge risk.

If a hurricane displaces half of the tenants of an office, retail, or industrial center, the owner loses rental income for the two or three months before they can return. Property owners with coverage for lost rent should review the policy with their current insurance agents to ensure it is there. A lot of times an owner will have loss of rental income coverage but it will be special form excluding windstorm insurance. Now is the time to check, while storms are far at sea and weak.

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Retail Rents, Pricing Not Going Down Anytime Soon

Retail may be nearing the top, but we’re not coming down soon, many of our panelists said during our Retail & Restaurant Roundup last week. Franklin Street‘s Monetha Cobb, who moderated a panel of development gurus, says rents are near a top on what the typical retail tenant can afford.

“I feel momentum picking up,” says Loudermilk Cos’ Robin Loudermilk. Robin also says land prices are still high, making new developments difficult to pencil out. In fact, if you haven’t tied up land for development, he predicts it’s too late since sellers still have “stars in their eyes” when it comes to pricing their properties. “I think we’ll have an economic rollback,” he says, “but I think there’s still a runway on some of the land prices.”

Robin and Monetha were part of a lineup of developers and brokers that included Marcus & Millichap’s Michael Fasano, North American Properties’ Ron Pfohl and Halpern Enterprises’ Jack Halpern at the JW Marriott in Buckhead last week.

Restaurants are still a darling tenant for many retail developers. Jack highlighted his redevelopment in Smyrna, the 48-acre Shops at Belmont project. The development, which will include medical office and retail, will feature a majority of local restaurants. “Over half the square footage in that project is devoted to restaurants,” Jack says, adding they’re all locally run operations. “We take chances with people whose credit might not pass muster with larger retail owners.”

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Franklin Street Brings In JLL Heavy Hitter

ORLANDO—Franklin Street is continuing to beef up its commercial real estate ranks in its new Orlando office. The firm just added T. Scott Williams as general manager in the office and industrial division.

“Scott is an extremely strong operator who gives building owners confidence that their assets are being well taken care of,” says Melissa Hazlewood, vice president of property management in the Orlando office for Franklin Street. “With his experience and talent, I believe he will be a critical element to us winning even more management contracts in Central Florida.”

Williams brings over 15 years of commercial real estate experience in property operations, client relations, leasing management, and construction management to Franklin Street. He comes to the firm from JLL, where he served as vice president and group manager in Florida and was responsible for management and building operations of approximately 1.2 million square feet of class A office in Orlando.

“The Central Florida office market is very tight right now for those looking for large blocks of space,” Williams tells GlobeSt.com. “Rates are up, but not enough to justify new construction that would make those larger spaces available.”

Prior to JLL, Williams managed multiple class A-plus properties in Washington, D.C., Maryland and Virginia. During his career, he has successfully completed more than $18 million in capital improvements for a variety of clients.

“Over the next few months, we expect to see cap rates push closer to the national average, but it still remains to be seen if they will be enough to warrant new development,” Williams says. “We are in a bit of a holding pattern so we are helping our clients navigate through this time. For smaller spaces, leasing activity is strong and steady.”

Williams has earned several management excellence awards including the highly coveted “Office Building of the Year” Award given the Building Owners and Management Association ands out annually.  Last year, JLL named him property manager of the year. Williams earned his Bachelor of Science in Communications from Old Dominion University in Norfolk, Virginia.

“In addition to his strong operations and client management skills, Scott also stands out for his ability to oversee building construction projects,” says Hazlewood. “He has significant experience in project management which makes him very valuable to us. I fully expect we will use him across our platform, managing building projects for our retail and multifamily clients in addition to office and industrial properties.”

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Leases Tampa Bay | Bulla Gastrobar

Leases

Bulla Gastrobar leased 5,5500 square feet of space at 936 S. Howard Ave., Tampa from Metis Property Group. Brian Bern and Ryan Derriman of Franklin Street and Steve Friedman of Strategic Retail Advisors negotiated the transaction.

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Franklin Street Snags T. Scott Williams, Adding More Top Talent To Orlando

The hiring boom continues for Franklin Street in Orlando.

Most recently, the commercial real estate company added T. Scott Williams to the team as General Manager in the office and industrial division. He has more than 15 years of real estate experience in property operations, client relations, leasing management and construction management.
 
“Scott is an extremely strong operator who gives building owners confidence that their assets are being well taken care of,” said Melissa Hazlewood, Franklin Street Vice President of Property Management in the Orlando office.  “With his experience and talent, I believe he will be a critical element to us winning even more management contracts in Central Florida.”
 
“I’m excited to be part of the Franklin Street family, helping the company grow in the Orlando area by providing superior service to our clients,” said Williams. “Franklin Street’s client-first mantra really resonated with me, and I’m looking forward to growing the company’s service platform, both geographically and in capabilities.”

Prior to joining Franklin Street, Williams was Vice President and Group Manager with JLL in Florida, responsible for management and building operations of approximately 1.2 million square feet of Class A office in Orlando. Prior to JLL, he managed multiple Class A-Plus properties in Washington, D.C., Maryland and his native Virginia.  During his career, he has successfully completed more than $18 million in capital improvements for a variety of clients.
 
“In addition to his strong operations and client management skills, Scott also stands out for his ability to oversee building construction projects,” said Hazlewood. “He has significant experience in project management which makes him very valuable to us. I fully expect we will use him across our platform, managing building projects for our retail and multifamily clients in addition to office and industrial properties.”

Williams has earned several management excellence awards including the highly coveted “Office Building of the Year” Award given out annually by the Building Owners and Management Association.  Last year, he was named Property Manager of the Year by JLL.

Williams earned his Bachelor of Science in Communications from Old Dominion University in Norfolk, Virginia.

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With Channelside Bay Plaza in flux, Vinik-Cascade team launches program to buoy tenants

The Vinik-Cascade real estate team is looking to buoy tenants in Channelside Bay Plaza with a new promotion meant to reel in residents of the surrounding neighborhood.

Strategic Property Partners and Franklin Street — which SPP tapped to lease and manage the property — have launched the “Channelside Bay Plaza VIP card,” which is good for special promotions and offers at the plaza. Currently, for example, there’s a buy one get one free offer at Cold Stone Creamery and 25 percent off bowling, food and beverages at Splitsville.

Ali Glisson, a spokeswoman for SPP, said 12,000 households received the mailing.

“Thanks to our partners at Port Tampa Bay, we were able to open the wharf to the public earlier this summer, and now, in partnership with the plaza tenants, we’re launching this program as another way to connect with our neighbors in the Channel District,” Glisson wrote in an email Monday. “Ultimately, the plan is to grow and extend it to include other offers, such as special pricing for entrance to events hosted at Channelside Bay Plaza.”

The VIP program comes as the fate of the beleaguered retail property is still in flux. The plaza is part of the $2 billion mixed-use district that SPP is planning in downtown Tampa. SPP, controlled by Tampa Bay Lightning owner Jeff Vinik and Cascade Investment LLC, acquired the ground lease to the plaza in 2014. Port Tampa Bay owns the land underneath the plaza.

SPP CEO James Nozar said Monday that he would be giving an update on the property to the port board on Sept. 20. He declined to specify whether that presentation would be a general update on the plaza or include redevelopment plans for the property.

Since taking over the ground lease, SPP has spent ” seven figures” on cosmetic upgrades to the plaza. In April, SPP moved its offices from Amalie Arena to 8,000 square feet on the second floor of the plaza as it prepared to ramp up hiring.

SPP has also hired an events manager to oversee programming at the plaza.

“We think by being there, clearly, we’ll be a lot more visible and approachable to the tenants as well,” Nozar told the port authority in April.