a three hour tour... a three hour tour

Aaarghhhh ! The Gilligan's Island theme song is stuck in my head. Today I went on a multiple site tour with an ambitious client who wanted to see as many places as he could in one session.

A three hour tour.. a three hour tour... The point I want to make is that if you look at more than 4 or 5 prospective locations in one session it all sort of becomes a blur and you'll end up looking bewildered just like old Gilligan...

It's hard to clearly remember one space/location vis-a-vis the next when you see so many. And so the recommendation I make is (a) due diligence regarding trade areas, demographics, rates, complementary tenant adjacency and the like is a time saver; or (b) schedule more than one tour session.

Anyway, it reminded me of the Gilligan's Island theme song - catchy for sure - but I like this version better. Enjoy!

http://www.youtube.com/watch?v=KTCYLbFxTpI&feature=related

You're FIRED !

No, I'm not having that recurring nightmare of Le Donald firing me from "The Apprentice".

In fact, it was I who did the firing this time (and much more graciously I might add!). Yes, real estate brokers sometimes have to "fire" a client. Odd you might think; but let me explain why.

It was nothing personal because personally I quite like the guy, his product and business plan. The difficulty was that he is a very "hands-on" guy and during lease negotiations he could not resist the impulse to directly negotiate with the Landlord.

Why is that a problem? I have previously written about how brokers play an effective role as a "buffer" between principals. And in this case a buffer would have been helpful as my former client's start/stop/start/stop/start/stop negotiation style has done nothing but make the landlord think he is neither motivated or credible.

Think of the beginning of a negotiation as "big box of issues". The end-game is to reduce the size of the box by resolving issues to end up with a nicely gift-wrapped box (i.e. the lease).

Effectively following the issues, understanding their implications, strategizing how to prioritize them, present them and resolve them is where good brokers provide real value to their clients.

At the end of the day, my former client wouldn't let me do my job and so I had to let him go!

Mission: not Impossible

"Your mission, Ross, should you decide to accept it, is to find some retail space for Bike and Roll. As usual, should you or any member of your Retail Force be captured or killed, the Secretary will disavow any knowledge of your existence. This tape will self-destruct in five seconds. Good luck, Ross."

You know, I really wish he'd stop saying that !

Anyway, I checked out the Bike and Roll website (www.bikeandroll.com) and liked what they were all about - adventure, health, environment - and so I set up a meeting with owner, Darryl White.

We discussed his roll-out strategy. With twenty-five locations in San Francisco, New York, Miami, Chicago, Washington D.C. I liked the vision and the mission. Very specifically, Darryl wanted a new location in San Francisco's Embarcadero district near the Ferry Building.

We walked around and surveyed possible sites but there was just nothing available that met the requirement. Undaunted, the mental-wheels began to churn. A Bike and Roll store at the Hyatt Embarcadero would not only benefit Bike and Roll but also the Hyatt who would be able to promote to their clientele an association with this "green" health-conscious enterprise.

Business is full of barriers these days. I contacted the Hyatt. I contacted the property owner. I wasn't gaining traction. The light-bulb went off. PKF Consulting, a pre-eminent hospitality industry consulting and brokerage firm is under the same corporate umbrella as Colliers International. So I walked down the hall and had a word with my colleague, Henry Bose.

Henry knows virtually everyone in real estate in the hospitality industry and he was glad to help. Through his relationship with the property owner, I got connected to the right person at the Hyatt. Darryl and I met with the person in charge of guest amenities and on Friday October 23, 2oo9 Bike and Roll opened their outdoor store in front of the Hyatt Embarcadero.

Bufferin' that Headache

" I thought about my space and I really got me down...Got me so down, I got me a headache. My heart is crammed in my cranium and it still knows how to pound"

Frank Black - "Headache"

So what percentage of business negotiations do you think have the probability of being contentious at some point?

50% - 62% - 78% ?

From my experience, as one who has been involved in countless negotiations, I figure it's closer to 100%. It's only natural and should be no surprise to anyone.

And that is why some "bufferin" is important. Intermediaries, in this case brokers, can play a valuable role . Once the lease is done, the Tenant and Landlord set sail on a long term relationship - maybe 5 to 10 years - during which there is likely to be many instances of seeking understanding, help and cooperation.

For each side of the equation, why run the risk of carrying unwanted and unnecessary baggage into a "marriage"? Yet, I have also seen countless instances when the principals (Landlords and Tenants) want to negotiate directly between themselves.

The reasons for this are many and perhaps I will speak to them later... but for now, enjoy the song!

http://www.youtube.com/watch?v=TpGD1ZATcuA

Sign sign everywhere a sign

" Blocking out the scenery breaking my mind. Do this, don't do that, can't you read the sign?"

Oops... I got sidetracked once again... what was actually on my mind, prior to this latest musical diversion, was Proposition D, a measure on the 2009 San Francisco ballot.

If successful it could lead to revitalizing the two block stretch of Market Street between 5th and 7th Streets from the blighted area (politely put) it has become over the past couple of decades into a vibrant urban entertainment, residential and retail district.

Everybody would win... property owners... retail business owners...the local economy... and the community who would have one more place in which to live and to go for that unique San Francisco-experience.

A bit of background... In 1997, the San Francisco Board of Supervisors nixed a plan to allow electronic signs in Union Square. Five years later, the majority of San Francisco voters approved Proposition G, which prohibited any more general advertising outdoor billboards.

Most people think of outdoor advertising billboards as static images doomed to dinginess ... but technology has changed and created new opportunities. Case in point is the NASDAQ building in New York (see blog photo). Think of electronic billboards that can be programmed to communicate different messages at different times to different audiences.... public service, promotion of the arts, communication of events.

Kudos to David Addington "the Mid-Market impresario" who purchased the famed Warfield Theater and Carolyn Diamond, Executive Director of the Market Street Association who are working hard to turn this "sow's ear into a silk purse".

And now back to our regular programming, the Five Man Electrical Band...

http://www.youtube.com/watch?v=OQTJF7y9nn4&feature=related

Chain, chain, chain...

No, I'm not singing Aretha Franklin, though I would rather be. I'm thinking about the "formula retail" ordinance that was passed into law in the November 2006 general election. Called the "Small Business Protection Act", in a nutshell it put additional requirements on "chain stores" before they can open in Neighborhood Commercial zoned districts.

So what is the criteria to be deemed "formula retail"? Basically if a business has more than ten stores in the entire United States before they can open another store in San Francisco they will have to apply for a Conditional Use Permit which requires them to notify everyone within a 300 foot radius of the site and go through the public hearing process at the Planning Commission.

Sounds pretty simple, right? What's the big deal? Well, the big deal is that that this more stringent regulation adds considerable uncertainty and risk for the formula retail tenant and the landlord who are negotiating a lease.

If the parties are very lucky, the conditional use permit process will take 60 days to get approval. If the parties are not so lucky multiply that time line by two or three. And if the parties are unlucky, after months and months of trying to get the permit, it would be denied, the lease agreement won't get concluded, the property remain vacant and go back on the market - very possibly only to go through the same process with it's inherent uncertainty and risk once again.

As a native San Franciscan - and small business person myself - I am all for supporting and protecting the small businesses that give our city the great character and unique reputation it has - but I was dead against this particular piece of legislation.

Why? Because economies work in cycles and love or hate "big business" it has a significant role to play in the economic well being of every community. The other day I got a call from a reporter at the SF Examiner who wanted to know my opinion about what would go on at the City Center (that's the shopping complex at the corner of Geary & Masonic) that used to be home to Mervyn's before it went bankrupt.

Zoning in this district is Neighborhood Commercial, so whoever wants to take over the Mervyn's space is going to have to go through the Conditional Use Permit process. Doubtful any small business will want to lease a space the size of a Mervyn's.

The reporter asked me if I thought the formula retail regulations would present problems for filling up this space to which I replied "it would be sheer lunacy if that happened... you can quote me on that!"; however, that little voice in the back of my head said "...this is San Francisco"

Enough venting..... it's time for some "Queen of Soul" time!

May you live in interesting times!

Curse or blessing? The traditional school of thought regarding the origins of this phrase is that it is an ancient Chinese curse implying "may you experience much upheaval and trouble in your life".

But I have always held that "amidst chaos there is opportunity" and I seem to be backed up by people much more noteworthy than myself.

• "The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty" - Winston Churchill

• "In the middle of every difficulty lies opportunity" - Albert Einstein

• "There is no security on this earth. Only opportunity" - General Douglas Mac Arthur

How does this relate to retail real estate? Well, clearly we are in chaotic economic times and for retailers who have the financial resources now is a good time to negotiate a long term lease. Most of the retail leasing business in San Francisco these days is from local retailers and that makes sense. They are "on the ground" and are nimble enough to make decisions (as opposed to national retailers who have to go through layers of corporate filtering to make decisions)

In what you will hopefully accept this as somewhat related, I leave you with one of my favorite axioms - "No matter where you go, there you are". The debate of the origins of that phrase is heated. One school of thought credits it to Thomas a Kempis' "Imitation of Christ" (ca A.D. 1440) and another to the movie The Adventures of Buckaroo Banzai (ca AD 1984) .

So what's 500 years? Like they say "the more things change the more things stay the same" or as per David Byrne and the Talking Heads "same as it ever was".