Industry Insights with John Jessen
We sat down with John Jessen, Managing Director at Bradley Company of the South Bend-Elkhart area, to get his perspective on the latest commercial real estate trends in the Office and Retail sectors.
You joined bradley company in 2014, how have you seen the company grow since you started?
The company has grown exponentially. When the company was founded in 1978, it was primarily providing property management services in the South Bend and Plymouth, Indiana areas. I joined the company in 2014 and since that time, it has expanded in concentric circles outside of this area into new markets and into new states such as Grand Rapids, MI, and Cincinnati, OH. Through this market expansion, we can now offer our clients much more in the way of commercial real estate services and industry expertise within the Midwest region.
Given that the pandemic hit the office and retail sectors pretty hard, what is your current outlook for these property types?
We’ve seen varying levels of success and failure in the office and retail sectors over the past eighteen months. Retail very early on was one where I think many thought the death knell was being rung, but retail has actually had a nice little rebound. Granted, there are some areas that are still very hard hit within the retail sector. For instance, restaurants with large dining rooms that were not well equipped for carry out or delivery – many of them failed and closed their doors permanently. Other types of restaurants that are more in the delivery business such as pizza, or those already equipped for that type of service, are absolutely thriving right now.
Service retail will continue to be a strong part of the sector. You’re always going to need a place to get your hair cut; that is a service you can’t buy on Amazon. Experiential retail as well, where you go in and touch something, even if you’re not buying it from that particular location. But it is clear we have an abundance of retail, and, in particular, big box retail. It’s the big box retail, in my opinion, that continues to be hardest hit by the pandemic, because often these are goods that you can just as easily buy online. It will be interesting to see the redeployment of some of that big box retail space. We are already seeing companies like Amazon using that space for distribution facilities. Big box retail can also see complete redevelopment into senior living, student housing, and any other number of creative uses for some of that space.
On the office side, I think that story is yet to be written. Any number of experts are going to opine on what they think the office sector will look like in a year, 5 years, and 10 years. I think it’s anyone’s guess as to how that will unfold. For a while during COVID many people were content to work from home and a lot of stuff was still getting done because we have the technology to stay connected. But humans are social creatures, and even though we have the technology to stay connected when remote, it doesn’t mean we have the ability to remain engaged. And there’s a big difference between being connected and being engaged. I think we will see in the future some type of hybrid model where there is a portion of the week spent in the office, collaborating and just being around coworkers. There are certainly some office roles that require a physical presence. One thing is clear- you lose out on that collaboration when you’re working remotely. It is really hard to force that and the only way to do it is to spend some time in person.
What is one piece of advice you would give to a new business today that may be searching for office or retail space?
This is very much a buyers’ or a tenants’ market. There are a lot of good deals to be had, but you just need to find the right opportunities and the right locations. I think it’s essential to work with a professional to find those opportunities; a broker that has the expertise to know how to push a landlord or a seller based on the current market conditions. If it’s a retailer or an office user that is an existing tenant in a building, for instance, you still have a lot of leverage. Have your broker go to your landlord and tell them your pain points. This is a good time to do a blend and extend, where you can pick up an additional term on your lease and perhaps lower your rate right now. Or do some type of give-back of space if the current footprint is underutilized. Landlords aren’t eager to take back additional space, but they would be more willing at least to offer some discounted rent in exchange for some additional term. Many landlords offer other incentives as well, such as free or abated rent for a period of time, maybe a refresh allowance for carpet or paint, or whatever else is needed, for the particular business. Being opportunistic is very critical in these pandemic times. You also need to properly advocate for your business and make specific requests. Landlords are eager to retain existing tenants, so be sure to share what is needed to keep your company happy.
What is your approach to delivering exceptional results to a client?
I think the number one thing in client relations is good communication. You win deals and lose deals all because of communication, so the number one thing I tell new brokers is to err on the side of overcommunicating. Acknowledge emails, do a weekly check in, even if it’s, “Hey, I have no news for you, just wanted to check in, let you know we’re still working on this particular project.” That’s the number one way to not only retain existing clients but to grow business with them. I also think that multi-market assistance with clients is very key. Many clients are outside of just one particular geographic location. And now with Bradley Company having the size and scope that we do in the Midwest region, we have a unique ability to service clients in multiple markets. That also requires good communication not just with clients, but with your peers in other offices. Asking a question of the client, “Hey what else can we help you with? Do you need any type of property or facility management? Are you looking for space in Fort Wayne or Grand Rapids or Indianapolis?” is a great way to offer up the full breadth of services that Bradley Company can offer.
This interview has been lightly edited and condensed for clarity.