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TRC Blog

August 07 , 2009

Q&A: Retail Leasing Roundtable

Despite the high profile closings of national retailers such as Circuit City and Linens ’n Things, occupancy at North Texas shopping centers has dropped only slightly. The area’s retail occupancy rate was 87% at mid-year, down from 87.6% at the end of 2008, according to a report from Dallas-based The Weitzman Group. But retail leasing has sputtered, and construction of new retail space has slowed to its lowest level in decades, the report notes. Many planned retail projects are stalled because they can’t get financing due to the credit crunch. The Dallas Business Journal gathered several North Texas retail real estate experts to discuss the development and leasing scene.


Roundtable participants:

Mickey Ashmore - President and CEO, United Commercial Realty
Steve Lieberman
- CEO, The Retail Connection
Paul Parkey
- Senior Vice President and Director of Leasing, The Herring Group
Tod Ruble
- founding partner, Harvest Partners
Bob Young
- Managing Director, The Weitzman Group
John Zikos
- Partner, Venture Commercial Real Estate

DBJ: What retail projects, if any, does your company have under way, recently completed or planned in North Texas? Let’s start with Tod.

TOD RUBLE: Most prominently: Park Lane, the mixed-use project across from North Park Mall in Dallas that includes about 700,000 square feet of retail and a 70,000-square-foot health club, 600 apartment units, 350,000 square feet of office space, and about 20% of it left in phase two to be developed.

BOB YOUNG: Under the Cencor Realty Services name, we are finishing an expansion of the Shops of Southlake, 50,000 square feet — thank you, Steve (Lieberman), with your Nordstrom Rack — with 35,000 feet for Nordstrom Rack. We’ve also done a little upgrade on a neighborhood grocery store in Garland that has more of an ethnic feel in terms of an Asian market that we did some renovations on.

MICKEY ASHMORE: You know, at UCR, we’re not a development company, but, gosh, we work for so many developers. One of the things that’s just now breaking ground with my former partner, David Dunning, is 122,000-square foot Kroger market, which will be the first prototype in North Texas, one of three stores that they’ve opened, and it’s opening up in McKinney. We’re going to be doing the leasing, and interestingly enough, we’re only planning 15,000 square feet of speculative space right now.

How much spec would that have had a couple years ago?

ASHMORE: 40 to 60 (thousand square feet), depending upon the way you parked it. If you parked it with enough restaurants, and if Kroger would have allowed for the restaurant, based on the parking consideration, you would have done 40 and then some pads, maybe. But now, today, I still think 15 to 25 is about all you need.

JOHN ZIKOS: Regency Centers has cut back. They kind of said we were at 30%, then we were at 25%. Well, now they’re about 10% to 12% right now.

DBJ: Paul, tell us what projects MGHerring is working on.

PAUL PARKEY: Well, we have some big projects. Uptown Village at Cedar Hill is about 615,000 feet, just celebrated its first year, still heavy leasing there. We’ve opened about 18 stores in the last hundred days in the Uptown Village of Cedar Hill. The Village at Allen just opened. Target opened March of this year. It’s a mixed-use development, over a million feet.

Then across the street from the Village at Allen is the Village at Fairview, which grand opens March 3, 2010. It’s a million square feet with about half a million square feet of small shop, 116 rental units above the retail, another 304 apartment units in phase one, 256 in phase two, for a total of 676 rental units combined with the retail.

And then the Village at Allen will open the Allen Events Center this November, and it’s about an 8,500 seating capacity coliseum. That’s where the Allen Americans will play, the new CHL team in Allen. For hockey, it’s about a 6,500-seat capacity. For events, it’s about an 8,500­-seat capacity. Global Entertainment manages that, and I’ve already booked about 105 nights for the events center. In addition, we have a Marriott hotel. It’s a 10-story, 220-room hotel on the Allen site as well.

ZIKOS: You know, like UCR, we’re not developers. The project up in Denton we’ve been working on for quite a while, the Rayzor Ranch Marketplace, which is on the north side, finally broke ground. A couple buildings went vertical. Wal-Mart and Sam’s Club both out to bid. They think they’re starting in 30 days, opening May to June 2010 with both of those. That’s long awaited and very exciting. We’re delivering about 25,000 square feet of shop space in the first phase, along with all the pads. So that’s one that’s been a long time coming but is finally going vertical.

Another new development, Buckner Crossing, we leased for North Point Properties, and have been trying to break ground on that. We’ve got a Ross lease signed and hope to have a second junior announced to allow us to go vertical on that in the next 60 to 90 days. Got three LA Fitness deals under construction right now and new developments, West Seventh and Shops of Mockingbird, with Cyprus, and then up in Denton at Spencer Square.

LIEBERMAN: Our development group is Connected Development Services. We are currently finalizing the third phase of our Weatherford Ridge project, which will take that project to 397,000 square feet. In 2008, we completed Mansfield Point, which is right at 150,000 square feet. And this spring, we just completed the fourth phase of our Arlington Highlands project, a 110,000-square foot phase that brings the current build-out of that project to 735,000 feet.

DBJ: In light of the economic slowdown, what kind of retail development is getting done in North Texas? We’ve talked about all of your projects, but what are we missing from people who aren’t in this room?

ASHMORE: Most of the projects we just mentioned have been ongoing. They weren’t recently started. Paul was talking about Herring’s project in Fairfield. Just south of there two miles in Allen is a million square feet of mixed-use under construction, partially opened and continued to be built, which is going to make for a really interesting marketplace eventually. But new construction, when you’re talking about what’s happening right now, it’s grocery stores. We are working on the Kroger I mentioned earlier, and there’s two that will be announced very shortly. One will open in 2010 and another one will be 2011. And then there will be four Sprout’s deals announced that will happen over in 2010 and 2011.

And then the other thing that I think is pretty remarkable: Aldi will open approximately 27 locations in March of 2010, within a 30-day period, and then there will be five more to follow throughout the year. So there’s a lot of construction in the grocery segment.

What the difference is is that unlike two or three years ago when they were building 60,000 feet of spec space and you couldn’t get it leased, that’s not happening. It’s the grocer and 10- to 15,000 feet of spec, and you better have it preleased if you’re going to get it built.

LIEBERMAN: I would agree that what’s getting initiated in today’s environment is grocer, banks, some restaurant pads, and some of your health clubs. As I think Mickey said before, what’s getting done are projects that were already under construction or already had firm leases in place. I think the other factor that’s going to have a real influence on development is the fact that it was junior boxes and these anchor tenants that were pushing into the suburbs over the last several years that really drove the development cycle, and you’re looking today at 1,200 boxes across the United States, between 20- and 50,000 square feet, that provide, you know, low-cost alternatives.

ASHMORE: Too many empty boxes.

LIEBERMAN: And until that inventory gets absorbed, combined with a paralyzed debt market, new development is going to be very limited.

DBJ: What major projects, yours or others, have stalled or been significantly downscaled because of the credit crunch and the economy and environment we’re in?

ZIKOS: The Lake Highlands Town Center project that’s been announced on the southeast corner of Walnut Hill and Skillman appears to be on hold. Definitely it’s been delayed.

RUBLE: Northwest corner of Central and Walnut Hill.

LIEBERMAN: That’s actually going forward. They’re repositioning it. They’ve got an anchor in place that’s not yet been announced. I think what you’re going to see is essentially every project that’s been teed up over the last several years that did not break ground is going to be stalled or repositioned to fit the economy.

ZIKOS: Downsized in a lot of cases.

ASHMORE: We were working on a project we were calling High Street, south of Stonebriar Mall. And we had Container Store built, and we were very close to finalizing the deal with Crate and Barrel, and financing killed the deal.

YOUNG: Even with big sponsorship?

ASHMORE: Yes. Because the leases are so co-tenancy driven, no bank would let us sign that lease because we could never meet the co-tenancy clauses. So you’re building a box tenant, and they’re sitting there for free forever.

LIEBERMAN: Any project that didn’t break ground, that’s just the reality of the market today. I think many of these are very well-positioned sites, and the underlying sponsorship is there. You’re just going to have to have the rest of the elements get back into place.

PARKEY: You have one that broke ground, that O&S project at 121 and 75. That California developer comes to town, and they broke ground. Steel is up. It’s a horrible eyesore, and I’m told the city of McKinney is suing the developer.

ZIKOS: They’re all suing each other. It’s a mess.

DBJ: Explain a little bit what co-tenancy is, a bit more in layman’s terms.

ASHMORE: The retail world evolved over many, many years. Key retailers will not sign leases unless they have a long list of co-tenants that have to be opened and occupying space with them. You agree to a list with the developer. We were representing Crate and Barrel. We were also, at the same time, representing the project. We were on both sides of the transaction, so we negotiated a list. It’s a list we believe that can be accomplished. It makes the tenant happy and the development lease can happen.

ZIKOS: Three of these five tenants have to be in the project.

ASHMORE: And so, if you don’t hit that, there are penalties. Sometimes the retailer says, “I don’t have to open for business.” Retailer says, “I have to open, but then I can close.” Retailer says, “I’m percentage only.” There’s different things they do. And so what happened in this case was we had all this momentum of all these tenants, then the economy goes south and all the tenants we were talking to aren’t doing transactions. The J. Crews of the world and people like that just stopped. So you couldn’t meet the co-tenancy. Therefore, the bank, in their right mind, can’t do the deal, and the tenant is not going to do the deal without it, so it kills the deal.

LIEBERMAN: It’s really the central issue, to me, of real estate today. Co-tenancy is a real issue. The retailers look for it, and they need the collective strength of these other retail chains. At the same time, these co-tenancy clauses — I call them the weapons of mass destruction of the shopping center industry, because they will literally evaporate your NOI if you have a co-tenancy breach. The best thing that can happen if you’re going to run into co-tenancy issues is run into it before you ever break ground. Because if you have a project that has co-tenancy clauses, then it can lead to a domino effect of retailers then going to alternative rent, which is a percentage rent or half rent or no rent, depending on what’s negotiated, and there goes your NOI for your shopping center.

RUBLE: Well, it becomes a big issue when the center is about to open, too, because many of these tenants would name specific co-tenants, who might not be in the market anymore, and it’s just an opportunistic way for those tenants managing their own store portfolios to either cut the store, or in the light of today’s rent concessions that are being given to tenants looking to seek rent relief where they otherwise might not have been able to achieve that.

DBJ: How much retail space is scheduled to be constructed this year in North Texas, and how does that compare to the last few years?

LIEBERMAN: The challenge is that the metrics for a standard answer to that question just don’t exist, and I think we all track it pretty well. I think currently, sort of the consensus numbers, there’s about 6 million square feet of real estate projected for the year in this market, 5 of which is currently under construction. You know, that’s a pretty healthy number in light of the marketplace that we’re in. It’s a fantastic number relative to the country, considering there’s about 90 million square feet across the United States. But the real challenge is, there’s not a consistent method of measuring exactly what constitutes a construction — under construction or construction start. So those numbers are very fungible.

ASHMORE: We’ve seen projects win awards that were never under construction. So it’s hard to say what’s real and what’s not real in this market right now.

YOUNG: I might say we’re closer to 3 million. How we define it could be a different dynamic than how someone else would define it. I think the key thing that is pretty instructive is that whatever the construction that we deliver is relatively negligible compared to the total inventory of retail in D-FW, and therein lies a good thing. Several years ago, our construction was so skewed, it would have been 15%, 20% of total inventory. Now it might be 2% or 3% of total inventory. Whatever it is, it’s manageable from the standpoint of construction. And I think that’s pretty good for everybody at the table.

RUBLE: The retail market has always had a problem with nomenclature and how they want to define things historically. If they’d simply say the amount of net new delivered space, it doesn’t have to be occupied.

YOUNG: Ready for lease.

RUBLE: Ready for lease. We’d do ourself a favor, but that would make things too simple.

LIEBERMAN: I think on a national level, the consensus is that retail construction is down about 30%, and our market is certainly faring much better. We’re very fortunate that we’re in business in Texas. The other aspect of it is really the impact on vacancy. Typically, with a lower amount of construction, you would say that’s going to be very good for our occupancy numbers; however, with the store closings and reduced demand, we’re going to see vacancy increases at the same time.

DBJ: Which takes us to our next question: What is the retail vacancy rate now, and where do you expect it to be?

LIEBERMAN: Again, it falls in that same category of inconsistent metrics, but we check it pretty closely. At least on a consistent level, we would call occupancy today at 85.5%. And I would say that that’s a moving target. Occupancy peaked probably in 2005 at 90%, and I would say that that occupancy number at 85 and a half can swing a point in either direction with everything that’s moving in the marketplace.

YOUNG: Our comment would be 12% is probably where it’s moved to now and probably is going to end up increasing.

ASHMORE: Vacancy is not as bad in Dallas as I thought it would be. You’re not seeing as many closures as you might think you are. A lot of the landlords are working with the retailers. It seems to me there were more closures in the ‘80s than there are now.

LIEBERMAN: Well, I think one thing that’s different is the financing. Candidly, these stores can’t get the financing to close. You know, there used to be DIP financing that would allow the retailer to go into bankruptcy. Without that financing, they can’t go bankrupt. So the stores are staying open, which has actually made for a healthier market and forced both sides to work together. That’s a positive consequence of a challenging financial market.

ZIKOS: Comparing this market to the mid-late ‘80s, Texas, Dallas-Fort Worth in particular, was Detroit in this one.

ASHMORE: You couldn’t give away space in the late ‘80s. You could cold-call all you wanted.

ZIKOS: I was cold-calling in ‘87, and this guy hung up on me. I called back. I was looking to see if they were expanding. “Excuse me, sir, I think we got disconnected.” “We didn’t get disconnected. I hung up on you.” I go, “Why’d you do that?” He goes, “Man, if I brought in a deal from Dallas, I’d be fired.”

YOUNG: If you take the overall market, there’s probably five to six submarkets that are performing at occupancy levels that are beating the band, quite healthy. And then, if you look at those markets, you really dig down in those markets, the fundamentals are so strong. Quality real estate will continue to be quality real estate. Whether you look at Frisco, Northeast Tarrant County, Rockwall, there’s a couple markets that are just performing better.

ASHMORE: Southlake.

LIEBERMAN: Northpark.

YOUNG: North Dallas. Uptown. Then the other issue is Infield.

ASHMORE: Infield is great. Inside the loop is golden for a hundred different reasons, but you’re seeing vacancies. For example, Southlake Town Square has vacancies for the first time in five years. But you know what’s interesting? It’s filling. There’s a list to get into the good projects. Knox Street has a few vacancies, not on Knox, but on the side streets for the first time because it was so much of a home destination.

LIEBERMAN: I think the big vacancy really is far North Dallas and South Dallas.

ASHMORE: And parts of Fort Worth.

DBJ: And how will absorption in 2009 compare to the last few years?

RUBLE: I can tell you, it’s going to be down.

ZIKOS: 2009 is going to be a lot lighter than 2008, and ‘08 was lighter than ‘07, and before that, it was pretty consistent.

PARKEY: I think we’re fortunate compared to other markets. I think Dallas-Fort Worth has an almost infinite supply of merchants and possibilities. There aren’t many markets in the country like Dallas-Fort Worth in that regard. That’s what we’re focusing on.

ASHMORE: You mean local tenants?

PARKEY: Local, regional, Texas. National leasing is so poor right now, national tenants. I have a big mall to fill, and I’m going to fill it with local and regional tenants.

YOUNG: The answer was absorption down. There’s not been negative absorption in a decade, and even though it’s going down because of the governor on construction, delivery of new space, we’re still going to be positive. So there again lies that modest but real silver lining about the health of the market, even in this cycle.

LIEBERMAN: I think down to flat would have to be the consensus answer.

DBJ: How long and how deep do you expect the recession to be and how severely will the Dallas-Fort Worth economy be affected? Who has a feel for consumer confidence?

ASHMORE: I saw a report that said that unemployment will rebound in Texas before anywhere else in the United States. And they expect our employment numbers to rebound to healthy numbers by the end of 2010, first half of 2011. But if you look at other parts of the United States, they’re saying 2014. Unemployment is critical to consumer confidence. If you’re not employed, you’re not really confident.

YOUNG: Let’s just take the housing industry, which is really connected to us in terms of rooftops. Well, while there was rampant escalation in other markets, we had some great appreciation here, but nothing as meteoric as it was in other areas.

ZIKOS: I just read something that there was eight metro areas in Texas that were in the top ten metro areas nationally projected to come out of the recession. Austin was the only MSA in the nation with a positive job growth. And, you know, Austin, Houston, Dallas and Fort Worth are two separate MSAs, San Antonio, and then a couple others were projected to be eight of the 10 first out.

ASHMORE: You know, when people like Bernie Madoff exist and people see so much of their wealth destroyed in this stock market, even though the recession is coming to an end, consumer confidence is not going to come back like before. It’s going to be measured. I think people are going to be different.

RUBLE: There will be some lasting spending habits changed.

ASHMORE: I’m not sure that’s all bad, but what that means is the right retailers better be the right retailers.

RUBLE: And it’s really hard with some retailers to describe the difference between a staple or discretionary spending. Whole Foods is a good example of that. For a good portion of their core customer, that’s a staple. For a portion of that, they’ve got discretionary spenders in there who aren’t typical Whole Foods spenders, not to pick on Whole Foods.

ASHMORE: For the first time in my life, I can tell you the difference between a red bell pepper price at Whole Foods and at Sprout’s. I never looked before. And you wouldn’t believe how much less expensive they are at Sprout’s, and it’s the same bell pepper. People are starting to think about that. I mean, it’s a different mindset among all people today than I’ve ever seen it.

YOUNG: The real fear is the capital market will create a pricing decline of significant measure on all real estate values. The key to real estate values is somebody paying you rent. And the rents are going to ratchet down, and so there’s going to be a pricing correction. Correction is not the right word.

LIEBERMAN: Price discovery.

ASHMORE: No one really knows what’s happening. I’ve called on several special servicers, and I’ve sat down with them. From my point of view, I’m trying to find out, when is that asset going to come out? Can I manage and lease it? So we’re making those calls, and it’s not happening yet. So with the money being frozen, retailers can’t borrow money to expand. Local retailers can’t get loans to do a mom-and-pop store or to buy a franchise. The issues in the banking world are huge still, and I don’t see any change at all.

RUBLE: Go look at how many recent projects are around 65 to 75 percent leased. It’s not a coincidence that there’s no access to capital for a good portion of shop tenants, which really keeps the vitality of the center there. And I’ve got to tell you, anything that we look at going forward, the guys that wanted $50 need $100 a foot. Guys that wanted $100 need $200, and the guys that wanted $200 need a turnkey deal, and all of this is in light of much significantly reduced economics from where we were talking about earlier.

LIEBERMAN: But it will change.

RUBLE: Yeah. I’m not saying it’s insurmountable at all.

DBJ: Let’s look ahead to Christmas. Are retailers expecting another tough holiday season?

ZIKOS: The value-oriented retailers, I think, are looking forward to a good Christmas. The specialty upscale guys are looking at another tough Christmas. So it’s kind of split there.

LIEBERMAN: I think the retailers aren’t thinking about Christmas right now. They’re thinking about back-to-school, and back-to-school is the next major thrust. It’s actually looking like it will be positive, about a point. That’s about it. We’re seeing, I think, four and a half points for the last 10, 15 years. So it’s going to be down, but retailers are operating like the rest of the world, a quarter at time. They’ll focus on back-to-school. Then they’ll focus on Christmas. And I think that John’s right, you know, value, home furnishings, books, family clothing, those areas are doing well. Luxury, electronics, those are taking a pretty severe hit these days.

PARKEY: Hot merchants today are value-oriented fast fashion.

ASHMORE: There you go. H&M.

PARKEY: H&M, Forever 21, Charm and Charley, New Generation. These guys are all fast fashion.

ASHMORE: Yeah. They’re doing fine.

PARKEY: Moderate to lower price.

LIEBERMAN: Value discounters and grocers.

DBJ: Will 2010 be a year for retail rebound or are things going to get worse before they get better?

ASHMORE: I’m going to say that it’s going to be rebounding in 2010.

LIEBERMAN: I think, at that point, you’re seeing inventory getting absorbed. I think that the other point that Tod made earlier was a good one.

ASHMORE: Retailers adjust.

LIEBERMAN: I think you’re going to see a new basis established on a lot of this real estate. And with a new basis, that’s going to give you the platform to start seeing more absorption. So I think 2010 --

ASHMORE: ‘11 will be better, but ‘10, we’ll be feeling a lot more positive. If we have this meeting a year from now, it’s going to be better.

ZIKOS: It’s a cycle. Planning a project to ground up, it’s two years easy. So I think 2010 is when it starts, and 2011, 2012 is when you start seeing a lot of results of the positive growth.

LIEBERMAN: You’re going to see a lot of change between now and then. You’re going to see a lot of change between now and then. So, you know, to say will it get better or worse before then, it depends on which side of the equation you’re on. There’s going to be a tremendous amount of change, but with that, there will also be a stabilization that will allow the market to start recovering.

YOUNG: You’ve got to look at the retailers and look at the hit that they’ve taken along with the consumer, meaning, they’ve had to readjust. You said the word adjust. So take two examples in our marketplace. You know, Pier One, declared dead, okay? Borders, I mean, by many sources. Now what these people doing now are slowly, whether they meet or are just below expectations on Wall Street or whatever the case, I think they’re reengineering themselves. Their inventory levels, as Steve said, are being sopped up in a different manner. So I think that that -- I know I’ve seen that in the grocery industry, where Wal-Mart was the dominant, and then the other guys kind of hurt for a while, and then they started getting better, smarter, faster. They started doing things differently. I don’t expect for other retailers to sit idly by now and not try to figure out how to make their margins work in this era.

ZIKOS: I think, exactly what you’re saying, is the margins. So much like Stein Mart, who I would expect actually to comp okay, being a value retailer, has not. I think they comped down between five and six percent, but their profits were up 11 percent, you know, based on just cutting back and running more efficiently.

ASHMORE: Just like we’ve adjusted within our companies, they’re all adjusting. They’ll be more profitful. Then they’ll begin to grow again. Wall Street will make them want to grow. They’re going to have to grow somewhat. I don’t think it will be a lot in 2010. It will be more in 2011. We’re going to see the national retailers become more active again in 2010 because those guys all want to keep their jobs. When they go to Vegas in May 2010, they want to be more active than they were in 2009.

DBJ: What North Texas retail properties and locations are seeing the most severe vacancy increases? Are smaller neighborhood centers and specialty boutiques more susceptible to consumer spending cutbacks than big boxes, junior anchors, and national chains?

LIEBERMAN: Far North Dallas, Plano and Allen, McKinney, South Dallas, like we said before. Those are areas that are probably seeing more vacancy than other parts of the market, and neighborhood centers and specialty boutiques are definitely more susceptible.

RUBLE: Especially those who lost their anchors, which is a common occurrence.

YOUNG: Well, but there’s -- you know, while we talk about all this optimism, and we should, is when Steve talks about whatever study he got, because I’ve heard different deals, you said, what, 1,250 boxes of excise and greater?

LIEBERMAN: 1,200 boxes between 20- and 50,000 square feet.

YOUNG: We met with a national there in Vegas, there were saying that CDR did a study in Chicago alone, and they mentioned it. Well, the fact is, we’re resilient in this marketplace to refill vacancies like this. This market has always been good to find somebody there. Paul’s point earlier. Well, guess what? Now that list is much smaller than it was in the past ten years. So a smaller list, more creative negotiating, a capital market that’s making deal making hard, it’s going to take longer for those spaces to backfill. So the power centers that had these boxes, you know, after Dick’s makes all their plays or after Sprout’s goes in and converts X, Y, Z, who else -- there’s fewer people to do that, so it’s going to take longer. That’s what we’re seeing with all the box inventory.

ASHMORE: Well, the question is, what kind of properties and locations? I mean, I think the neighborhood grocery centers are probably least hurt by this. The power centers are the centers that are being hurt the worst because of the boxes. Lifestyle centers, if they’re well located, like a Southlake are fine. Sales are off, but they’re fine. But when you’re in a situation -- I’ll give you an example. We leased this center for Regency, Highland Village in Flower Mound, or in Highland Village. The center is doing pretty good, but not great. New product, 400,000 feet, which is, you know, almost 400, if you -- you need to be that big, at least, they say today, it’s doing okay. But would you have thought that that center would have affected Southlake Town Square? It has. No question. They’ve done some exit studies where people are coming from. So the point I’m making is the lifestyle centers are not hurting near as bad as the power centers are. Power centers are the worst that are being hurt right now, I think.

ZIKOS: But at the same time, like a lot of -- you know, Ross comping up like crazy. Same store sales are up. A lot of the discount retailers and power centers are doing great, but the electronics are off.

LIEBERMAN: Bed, Bath & Beyond is on fire. Just launched a new concept, Bye-Bye Baby, on fire. Have a concept in the northeast called Christmas Tree Stores, on fire, doing $400 a foot in sales. I mean, there’s a lot of success. PetSmart is doing fantastic. Nordstrom’s Rack is doing fantastic. There’s a lot of retailers out there, as you said earlier, that provide value.

ASHMORE: The power centers are doing great.

LIEBERMAN: The guys that provide value are doing real well.

ASHMORE: It’s hard to say.

LIEBERMAN: Well, there’s winners and losers.

RUBLE: There’s not as clear line of demarcation between the power centers today. Some centers are going up that are hybrids that have mixtures of these tenants, because what might have been an offensive tenant to some of these anchors a year or a couple years ago isn’t that way anymore. There’s no social stigma associated with shopping at a Nordstrom Rack or a Sak’s Off 5th or anyplace.

ZIKOS: Or a Wal-Mart.

LIEBERMAN: I think those guys had pretty big smiles when we came walking in the door with them.

PARKEY: I’ll tell you the vulnerable category here really is the regional mall. Southwest, Collin Creek, Valley View. You saw what happened to Prestonwood.

RUBLE: Other than if you’re a fortress impenetrable.

YOUNG: The top guys.

PARKEY: There’s some very vulnerable malls in this market.

LIEBERMAN: Which are going to be -- every challenge is going to be met with an opportunity. Valley View being a vulnerable mall is premier real estate in the marketplace.

PARKEY: That’s right.

DBJ: The Dallas/Fort Worth area has one of the nations highest ratios of retail square footage per person in the nation.

ZIKOS: That is correct.

Okay. So is the area over-retailed?

ZIKOS: I don’t really think it is, because I think what you you’ll also see is our discretionary income is among highest in the nation when you look at the low cost of housing and living. So I think it gets down to what else is there to do here other than shop and eat, you know?

LIEBERMAN: Just like we said earlier, it’s supply and demand. We’re a consumer-driven market. We have a ton of retail space, 170 million feet, which is about 27 feet per person. The national average is about 14. At the same time, it’s all relative. There’s hardly anywhere in the United States that isn’t over-retailed due to the decrease in consumer demand. However, as the market stabilizes, and we’ll be on the front end of that stabilization curve, we’ll come back into balance.

ZIKOS: Our sales per square foot are still good. It has stayed good. When you look around the country, our sales per square foot is good.

YOUNG: But to Paul’s point earlier, he was talking about the marketplace, this is a great place for retailers of all kinds, national to local and everything in between. And so, if somebody is going to explore, if somebody is going to venture, why not the great state of Texas? And more importantly, why not DFW?

ASHMORE: Emerging concepts that typically may emerge on the west or east coast always want to come to the Sunbelt, which is typically Dallas first, to see if their concept will travel. So we get stores quicker, you understand? A lot of times they’ll go east coast, west coast, and then Texas. We’re typically third in the way they’ll work it, or Chicago.

LIEBERMAN: Which is why H&M is in Cleveland already. I’m joking.

ASHMORE: I know. Their strategy was to go -- you know what their strategy was. I think we are overbuilt. I think there’s trade areas that, it’s absurd. I think that -- I think what’s happening -- and this is not aimed at you, but I think what’s happening in Allen and McKinney right now is a travesty. The fact that two centers are being built. One is built and the other one is coming up behind it. It’s way too much space. Neither center is going to be as successful as it should have been, and it’s going to create a blackeye for our market for a while, and then maybe it will be okay later. The same thing that happened with Taubman. When Taubman built their mall at Willowbend and Stonebriar with GGP, that was a problem. Retailers opened poorly. They redlined Dallas. They didn’t want to come for a while. You remember this.

PARKEY: Oh, yeah.

YOUNG: But the sponsorship in Allen right now is big sponsorship, smart people.

ASHMORE: I think we’re overbuilt.

LIEBERMAN: The question is, is the market overbuilt, not the submarkets. We clearly have overbuilt submarkets, okay? But as a total marketplace, as John said, retailers are supported, the sales justify the expansion collectively.

ASHMORE: I think that we just need to be a little more -- I wish that there was some -- no. I’m not going to wish that.

LIEBERMAN: It’s not our choice, by the way. The retailer is going to be --

ASHMORE: Yeah. I agree with what you’re saying. Maybe as a total market, we’re not overbuilt. We have some markets that are severely overbuilt right now, and that does create problems, lasting problems that you have to overcome, and that’s what I think.

ZIKOS: At the same time, when the market heated up like it did in 2005, ‘06, and ‘07, we got ahead of ourselves. And then, you know, when we get out to the further submarkets, I think the developers got ahead of themselves. The retailers got ahead of themselves. But that’s going to catch up. It’s maturing. The construction in the outlying has all but stopped.

LIEBERMAN: We’re not alone, okay? Where is the greatest amount of damage in the United States? California, Las Vegas, Arizona, and Florida, okay? Tell me the four market that are projected to be the fastest growing markets over the next decade? California, Las Vegas, Phoenix. Texas is the same thing. Dallas is the same thing. So with a growth market, you got ahead of yourself with the growth. The brakes hit, but the growth will come back because it’s a great place to do business. We’ve got great infrastructure. We’ve got great distribution. We have huge cities all concentrated all in one state. I mean, there a lot of factors that will lead to coming back out.

ASHMORE: What needs to happen from a retail perspective, there are still, though, concepts that have not come to this market that need to come. There are still things that haven’t happened in our market, types of products that I think will make a difference. So, are we overbuilt? What I’m saying, I think maybe we’re overbuilt in certain types of product types and certain trade areas and -- but there’s still room for new concepts to come in and new product in certain areas.

PARKEY: I think -- putting on my retailer hat, I think we’re definitely overbuilt when you compare the great regional centers of Houston to Dallas/Fort Worth, the number one center here is North Park. What’s number two? Is it Stonebriar? Is it the Parks? Galleria is way off. Galleria is incredible. In our business, they claim it’s up, but I’m not sure the specialty shop is up at Galleria. And then you look at Willowbend and even Stonebriar. A lot of the merchants at Stonebriar are off. Whereas, in Houston, that’s got to be one of the best cities in the country right now.

LIEBERMAN: Houston is rocking.

PARKEY: You’ve bot Maybrook, Willowbrook, Galleria, First Colony, the Woodlands. All those malls dominate. They all do great. You can’t say that about this marketplace. It’s really fragmented.

ASHMORE: It’s fragmented.

PARKEY: It’s Preston Parks, Shops at Legacies. We have all these fragmented sales, unlike a lot of other markets. This place has so many shopping centers.

ASHMORE: That’s what I was saying about Highland Village. Was it really necessary? I’m not saying it wasn’t, but, look --

LIEBERMAN: It was to Regency.

ASHMORE: It was to us. We made a lot of money off leasing that center, but we’re talking -- I mean, I’m being --

LIEBERMAN: This is just between us and the public.

YOUNG: I was waiting for the first disclaimer.

RUBLE: It’s easy in retrospect (Inaudible).

ASHMORE: Tod, at the time, I would have never believed that I -- I thought for sure it was a totally different trade area, no problem.

YOUNG: But your point is, it’s a great sucking sound, what you described.

PARKEY: That’s right.

YOUNG: Maybe not like-kind development, but all of a sudden it starts sucking a little bit of this and a little bit of that. Then if the multiple goes up, which is what we discussed here, then it’s a concern.

PARKEY: A lot of transfer of business.

YOUNG: There you go. Spoken like a great ex-retailer. Transfer of business.

ZIKOS: Mickey is going to start turning down leasing signings just based purely on principle.

YOUNG: When donkeys fly.

DBJ: We touched on this a little bit earlier. Do you think the economic downturn will have a long-term effect on spending habits of consumers, especially here in DFW? And, if so, what implications will that have for retail development and leasing?

YOUNG: I think it’s a brief period of time where there’s an adjustment, and then I think it’s going to be right back where it was. This is the golden state.

LIEBERMAN: I think it comes down to consumer credit to a large degree. I think that if the consumer can’t get credit, he can’t spend. So the decreased credit capacity, they’re going to be forced to become more conservative, and I think we’re going to see a more conservative spending behavior by the consumer for a longer time than we’re expecting.

ASHMORE: The baby boomer was a huge part of the consumption. The baby boomer has gotten older. The baby boomer is seeing their savings somewhat deteriorate, many of them, their investments, so they’re going to be more conservative. I’m not sure they’ll ever be back to what they were. You know, you can only have so many things. The fact of the matter is, you can only have so many things. So maybe there’s a lot of people who have bought a lot of things. You know what I’m saying? Someone else is going to have to come buy these things. (Inaudible.)

ZIKOS: I’d say never say never. It’s kind of trendy to be conservative right now.

ASHMORE: Right now, it is.

ZIKOS: Credit is definitely a factor, but eventually, we’re going to go back to being --

ASHMORE: And the fact of the matter is, there’s going to be a new store, new concept, someone is going to want to go in. I’ll be the first one in the store to buy the new tire, the new shirt. So I agree, but I do think, though, that there’s going to be a little bit of a psychological change. There has to be.

RUBLE: The wealthiest people that don’t feel it might be somewhat less conspicuous in their spending right now, but they’re going to go back and find their equilibrium. And then the people that were overreaching that finally get comfortable again will find that spot. There were people probably had the wealth effect from the credit that they were able to access out of their home because of abnormally low interest rates, they might not ever get back because of what’s going to happen going forward, rates, inflation.

LIEBERMAN: This county is built on consumer spending, built on it. Two-thirds of the GDP. Two-thirds. That’s it. There’s going to be continued consumption.

PARKEY: One of the more interesting statistics I’ve read is the personal savings rate. We talked about consumer confidence and how that impacts our business, but it’s all discretion spending. And these personal savings rates are way up because people are afraid, and that’s worrisome to me. I think it’s going to be obviously dramatic.

DBJ: That’s a bad thing?

ASHMORE: It just says people aren’t spending.

PARKEY: People aren’t spending. It’s a dramatic turn in behavior. Behavior has changed. (Inaudible.)

DBJ: There’s a mindset change.

PARKEY: There’s a dramatic turn of behavior that impacts all of us.

YOUNG: It’s slowly happening. We’ve all seen it. You know when Target was sexy and cool and Wal-Mart wasn’t, and we’ve come through that whole issue. Now the world has changed, and what did Wal-Mart do? Well, they have a new logo. It’s a soft blue with a little yellow in the middle.

ASHMORE: Changing their stores, too.

YOUNG: They are -- to me, they’re becoming what Target was to people that would never go to Wal-Mart. Is that right, or is that wrong?

ASHMORE: I hadn’t thought about it, but that’s probably right.

YOUNG: Think about the logo dynamic. They’re making it feel differently. It was acceptable to go to Target, but it was not acceptable for certain people to go to Wal-Mart.

RUBLE: But that wasn’t only because of the look and feel of the store. Target addressed their soft goods very early on, and because of their disposable clothes to a great extent, because moms are shopping for kids in there to a large degree, they attacked it in their acceptable clothes to wear, and they look good and they’re fashionable. That’s where Wal-Mart has lagged behind in that regard.

LIEBERMAN: Wal-Mart is body covering.

RUBLE: Yeah. I mean, it’s pure function, right?

LIEBERMAN: It’s function. It’s body covering.

PARKEY: If Wal-Mart could ever soften their core and figure out apparel. (Inaudible.)

ASHMORE: Wal-Mart is body covering. That’s terrible.

LIEBERMAN: You said fashion.

ASHMORE: Steve Lieberman said that.

LIEBERMAN: I don’t have any Wal-Mart deals. (Inaudible.)

DBJ: Are developers seeing anchor tenants or junior anchors trying to renegotiate or back out of leases because of the economic downturn?

RUBLE: Yes. I don’t think they’re unique to us. Anybody that’s opening or bringing a center online is seeing requests for rent release. There’s tenants leveraging co-tenancy clauses. There’s tenants without rights leveraging co-tenancy clauses just because they know they can cause their own co-tenancy meltdown in order to get back to an economic level that makes sense at today’s sales thresholds instead of what their historical sales thresholds are. Are they insurmountable? For some of them, no, probably, depending upon what their capital is like. For others, yes. At the end of the day, it doesn’t do the lender any good not to allow these renegotiations to take place on some level, if there’s some prudence associated with it. To the extent they do, I make the joke quite a few times, there’s some examples of some assets here in Texas that will soon come to market, they could literally be a community college down the road if there’s a co-tenancy failure at the center. Especially those that have some sales history to it, where that sales history is poor, you’re going to see those tenants take advantage of those negotiations.

LIEBERMAN: I do think that the most successful landlords and most successful tenants recognize that they’re a team, which means that they’ve got to work together to bridge those gaps. If the landlord, for example, needs a lease term extended to help him get his financing, the tenant needs rent relief, there’s a way to sort of blend those dual needs so that they both can win. And at the end of the day, what you need is stabilization because that’s going to be the cornerstone of the market reestablishing itself. So these renegotiations are not all necessarily going to be punitive. They’re just going to be sort of repositioning assets so that they can work in this environment.

YOUNG: What you’re asking somebody to do, though, is change the historical paradigm.

LIEBERMAN: But the key is, the key is that everybody has got to work together. If they work together, truly work together, not work against each other, that’s the difference, I think that you can have a positive result from it.

RUBLE: Well, I agree. There’s usually a quid pro quo in those negotiations with the tenants where you’re getting something in return for what you’re giving up. Because, let’s face it, if you don’t cooperate with them, that’s not a good circumstance for either one of them. So I have seen a more cooperative effort. At the same time, there’s some tenants that are only doing it for the sole purpose for getting out of that, getting out of their lease obligation, and they’re not being sincere about really looking for relief. But to Steve’s point, I think it’s a good one.

DBJ: The struggles of retailers in the high-profile Victory Park area have been well documented. From a retail perspective, what went wrong there, and what needs to be done to turn that situation around?

ASHMORE: I think the problem was several things. One was location. Two was concept. Three was timing.

RUBLE: Other than that ...

YOUNG: Other than that, it was a great deal.

ZIKOS: Good color schemes.

PARKEY: Good access.

ASHMORE: You know, the plan, the original plan, when they brought in the New York advisor’s plan was to build a much larger scale development, and they weren’t able to do it. When that wasn’t able to be done, that should have been a signal. Retail doesn’t work on one side of the street without another side to look at, especially when you’re trying to create a district. There weren’t enough doors to be successful. You can’t have a handful of restaurants and four or five retailers and have a shopping experience.

ZIKOS: It’s not a destination.

ASHMORE: There was no way it would work.

RUBLE: To the extent locals would go down there, who wants to look at the venue events calendar of the arena to determine whether or not you can even access it?

LIEBERMAN: Well, I think you sort of nailed it. It had a unique opportunity, no question, and the key to that coming together was critical mass. And the key today, really, the key today remains --

ASHMORE: Critical mass.

LIEBERMAN: -- if they can establish critical mass, and if they can take one of the challenges that they have, which is their parking, and turn it into a big advantage, and I think if they were to come up with a sophisticated, high-tech valet system and turn parking into an advantage, you know, that would be a big start from when you start saying, what can they do to turn it around? The other thing they need to do, I believe, is engage the local community, and that’s every level of the local community. You’ve got to get local operators, local restaurateurs, entertaining venues that will bring the locals down, and then you’ve just got to get it woven into the community.

ASHMORE: It’s only 180,000 feet. So today, they’re going to say 400,000 is where it begins, and that’s the problem. And so, the answer is, how do you fix it? How do you fix it? You come up with a plan to prelease the other side of the street, and you start over. The construction is beautiful. The venue is gorgeous. They did so many things right, but so many things wrong.

LIEBERMAN: I think another aspect, you’ve got to put the park back in. Victory Park, they need a park. If you come up with weekly activities and get people down there so that it gets woven back into the community, then you give people a reason to go down there. Those are the fundamentals that you need so it all comes together. You can’t do one without the other. It’s a collective effort that, I think, it could turn. I mean, they do have the capacity to make it happen.

ASHMORE: Let’s think about something. An arena was built on that site at a time when there was a huge movement to revitalize Downtown Dallas, Main Street, and they were spending money in the city of Dallas. They had hired a group, RTKL and some other people came in and did a master plan to do retail downtown, and at the same time, we were giving money to Victory to compete with their own city downtown. The whole thing, when you look back on it, has been totally mismanaged. It’s a disconnect. The city didn’t get it, and that’s why it didn’t work. And now there is some momentum in the city right now, where the Merk is and the park they’re building, with the park being built in the Arts District. The retail belongs in the city. It doesn’t belong on an appendage. Do you understand what I’m saying? It belongs in the central business district.

LIEBERMAN: Well, I think the other solution is it needs to come from locals. You need local operators.

ASHMORE: And that’s where it will start. I think it will start with locals. It will be organic.

LIEBERMAN: That’s right. If it’s not organic and real, it won’t happen. If it can become organic and real, and that’s where it has to get woven into the community, then you’ve got your platform.

ZIKOS: Downtown, you’ve got 7,500 residents downtown (Inaudible).

DBJ: Does anyone else want to weigh in on Victory?

RUBLE: Well, it’s been publicized, okay? So it’s not like Mickey is suggesting something, in fairness to Mickey, that hasn’t already been well reported. I think the unknown down there is in a project that’s been challenged financially, which it has, and it’s been well publicized about that, there’s going to have to be quite a bit of healing to take place before you get an oversees capital partner with a local capital -- with a local now just partner, from what I understand, overseeing it, willing to commit the type of capital necessary to revitalize that. There was an old adage, the best master-planned community is the one the third time the owner has it, right? So maybe in this instance, some of the best centers were either ahead of their time or weren’t fully developed.

ASHMORE: Travis Walk was ahead of its time, just south of Knox. Jim McCart, they built that in the ‘80s. That thing today is humming. I’d love to own that piece of property. One other thing Victory might think about, and I’d like Steve’s opinion on this, the one thing missing in Downtown Dallas and in Uptown is a vertical power center. There’s a play for a Target. There’s a play for a Bed, Bath & Beyond. Every one of those tenants belong. There’s enough density to go down there.

LIEBERMAN: I’m not a believer in vertical retailers.

ZIKOS: I don’t think there’s enough density.

ASHMORE: I think there is enough density.

LIEBERMAN: I think the challenge to vertical retail is structured parking. We’ve had this conversation a million times. I think that women, who are your primary shopper, are most vulnerable in a structured parking lot, and if they’ve got the alternative to go shop where they don’t have to go to structured parking versus where they do --

RUBLE: And let’s say it only takes five more minutes to get there.

ASHMORE: Well, maybe it’s not vertical, but I do think there’s a play for some power retailers. Would Bed, Bath & Beyond not like to be in Uptown somewhere?

LIEBERMAN: Love to be in Uptown.

ASHMORE: Okay. Somewhere down there. So maybe -- I’m just saying, maybe Victory could become -- there’s nothing wrong with Bed, Bath & Beyond being in that market, or a Target, for instance, needs to be down there.

YOUNG: You’re defining Victory as Uptown, and it’s not.

ASHMORE: Well, it is. Yeah, it is. Yeah. It’s part of Uptown. It’s an appendage of Downtown.

LIEBERMAN: I think the biggest opportunity is Victory Park, and I think it needs to be a community park, and I think you ought to have sporting events. Every 10K run, every Susan Komen walk, et cetera, every event, start and finish down there, and it just becomes a community park, and it becomes central to the Dallas community. With that, the retailers will want to be there. You go and get the artists to hang out in the park, and you get the local galleries to put locations down there, and you let it evolve with local sponsorship.

PARKEY: You’re exactly right. That’s where Victory missed it. It wasn’t family-oriented. It was too futuristic. It was a very small niche they were appealing to. So there’s no breadth of customer. Steve is exactly right. I live in Fort Worth. Take some lessons from Sundance Square. It’s unbelievable. Appeal -- just like Steve is saying. Appeal to the community, to families, interactive fountains, green, sporting events. Most of all, make it safe. That’s what’s always killed me about Dallas, Downtown Dallas. Make it safe, then maybe people will shop.

DBJ: How strong is investor interest in the North Texas retail market? What type of projects are investors targeting?

LIEBERMAN: Dallas just booked ten percent of all sales for the first quarter of the year with the sale of Highland Park Village. So I think that’s quite a tribute in and of itself. At the end of the day, investors look for two things, right? They look for location, and they look for credit. And so, I think --

RUBLE: Yield has got to be woven in there.

LIEBERMAN: Right, and return, but fundamentally they’re looking for location and credit that provides that -- the credit and yield come together. So there’s an appetite for good locations, triple net leases, grocery stores, as Mickey mentioned earlier. There’s an underlying appetite; however, I think what sort of paralyzes the market is --

ASHMORE: They don’t know what to pay for right now.

LIEBERMAN: -- the primary driver of the market -- well, there’s a big gap between the (inaudible), right, about a 20 percent gap still. And I think the biggest issue is you’ve got the institutional buyer, who really drives the market, and they’ve had this allocation issue. The denominator effect of their portfolios has taken them out of the game, and now what we’re finally starting to see is, you know, stock portfolios are coming back up. Real estate right now, that element, that balance is coming back into play. Allocations now can start freeing up, which means you’ll start to see buying.

ZIKOS: I think a lot of the answer to the question is the exact same thing, how are retailers performing? Investors are slow in the market, in the U.S. and globally. Investment is down, depending what you’re reading, from 60 to 75 percent.

LIEBERMAN: 60 percent.

ZIKOS: I think our market in Dallas/Fort Worth continues to do better then the rest of the market nationally, at the very least, and investor interest and investor activity is higher than it is in the rest of the country, but it’s still down from where it was in 2007.

DBJ: What is your firm’s big challenge right now, what’s your biggest opportunity, and what will your firm’s success depend on for the rest of this year and into 2010?

RUBLE: Well, Harvest, I’d say about year ago, made a conscious decision whereby, you know, we were going to modify our format. We’re still highly vertically integrated, but seeing some of the storm clouds on the horizon, I went out and aligned ourselves with almost $5 billion of fully discretionary equity capital that has been on the sideline, that’s not leveraged whatsoever. And, you know, our biggest opportunity are probably some of our own properties in the way that we can deal with the deleveraging of those in some form or fashion, and the opportunities beyond that are the lessons that we’re learning from our own projects and aligned with the amount of capital we’ve got with the bank relationships as the primary source of these opportunities and our ability to create a wholistic, non-predatory acquisition program and recapitalization of similar projects to ours, both here in Dallas and around the country, that allows these centers to thrive going forward taking advantage of the current dislocation.

YOUNG: Our biggest challenge is probably not dissimilar to many of the companies sitting at the table, which is that the world has stopped, and while some things are happening, whatever is happening is happening at a pace that’s not what we’ve been familiar with. And so, patience, which has never been one of the better qualities in our industry, whether from the service side or development side, even though you have to be patient, is the biggest challenge is, how do you stay fresh when cycles are extended? And so, I don’t know that that’s, you know, a huge challenge, but you have to be current on the market, and that’s why every bit of good news that’s happening about DFW becomes our daily consumption in terms of positive attitude. So that’s something. The biggest opportunity is that those that are in the game every single day in every way have the chance now, more than any time, to gain market share pursuant to whatever their particular business model is. And so, when capital changes, there will be some good opportunities on development. When capital changes, there will be some good opportunities on acquisitions. When the CNBS market and the debt market, when all that stuff starts happening, there’s going to be some good opportunities. And then, the last thing is that, again, thank goodness that we’re right here in DFW. That’s the biggest opportunity.

ASHMORE: You know, at UCR, I think our biggest opportunity right now in our success the rest of this year and next year, we made a conscious decision last year when we saw the economy really starting to slow down, saw our velocity change, we made a conscious decision that, okay, this is when we’re going to gain more market share. And we also realized it was time now to really become a more fully integrated platform. For a long time, we were extremely good at project leasing and extremely good at tenant rep. We weren’t a management firm. So last year we merged with Prism Partners and brought them in. So they became United Commercial Realty Asset Services, and we’ve done two things. We’re changing our platform from a regional platform to really almost a national platform. We are now managing and leasing product in Florida, Indiana, Illinois, and California. We also, a couple years ago or three years ago, created that UCR urban brand. That’s been huge for us because that brand travels. There’s a very -- as Paul knows, for sure, there’s guys -- we have guys in our shop that are some of the very best at leasing those types of projects in the United States. And so, if you can lease it in Dallas, you can lease it in Illinois. That’s the way the mall companies worked for years. So we’re expanding that base of business. We’re going to be announcing soon a new business line, and I’m actually going to be talking to you about it next week, so I’d rather not comment too much more, but we’re going to add one more business line that will make us fully integrated, and when we do that, we feel really good. I mean, surprisingly, our business is off only about 29 percent this year. It was off seven percent the year before. Our best year ever at UCR was 2007. So ‘08 was off seven percent. We’re off about 29 percent right now, 28, 29 percent, but we’re actually making money because we budgeted properly. You know what I mean? So our biggest challenge, though, is we have guys -- Steve and I were talking about this at lunch yesterday. We had guys that have had five years of great income, and the biggest challenge I have is helping guys understand or how to cope with the fact their incomes aren’t what they’ve been. The fact of the matter is none of us are making the money we’ve made. So I feel kind of a responsibility to keep the core group, keep everybody focused, and that’s what our biggest challenge is, is working with each other and making sure we keep our heads on straight, don’t overreact to the situation.

PARKEY: The challenge for the Herring Group is, I’m in a very competitive market in Allen and McKinney. The opportunity, on the other hand, is I love the fundamentals of both the Village at Allen and the Village at Fairview. Great incomes, great density, critical mass, three million square feet, if the throw in the Allen Premium Outlets, which is an incredibly productive outlet mall. It’s between 420 and 500 foot. It’s fully leased. That’s only going help us in terms of critical mass. There’s incremental trade to any other regional shopping center in the market. There’s great access, great improvements, and it’s just very super regional in nature, and that’s our opportunity, and the Village of Fairview should be a dominant -- will be a dominant regional shopping mall, I believe, in the Allen, McKinney corridor.

ZIKOS: Well, at Venture Commercial Real Estate -- well, I tell you what. We found that everything is harder. Everything we do takes more time. There’s more objections to overcome, and so, to get a deal done, sometimes you have to work two to three times harder. The great news is that there’s opportunity. There’s real deals to work on every single day for everybody in our shop. The attitude is wonderful. That’s real encouraging to see, the positive attitude. I think we’ve got 25, 26 agents at the office, but the attitude is good. I think the challenge is twofold. One is to continue to do a great job of high quality work when, you know, again, when you work two to three times harder to get a deal done. There’s only so many hours in the day. You’ve got responsibilities. For me, I find that the challenge is, how do I do a great job at what I do or try to, which I definitely don’t always do, but how do I try to do a great job at what I’m doing and then keep some space, keep some room to look for opportunity, if it’s undistressed assets, if it’s bringing in new tenant accounts. I want to be strategic and opportunistic, and I need to keep space clear and my head clear to do that, and I think that’s where the challenge is. There’s only so many hours in the day. You know, from a firm, I think the opportunity -- we started as a corporate services division. We saw an opportunity and need there. Retailers were downsizing. We’ve got to bring in some new people that we’ve been really, really excited about from a broker’s point of view. We’ve picked up new clients. I think the market share thing that some of these guys talked about, you know, it is a great opportunity to pick up market share. I’m so excited. Especially our younger guys, I’m going, man, this is so exciting for y’all because there’s a lot of lazy guys that made a lot of money really easily, not doing great work, and you guys, couple years in the business, there’s guys that have been there seven, eight years that have never had to do it right, and you can go outperform them today with some hard work. So that’s where the opportunity is.

LIEBERMAN: You know, it’s an interesting time, and the business world is continuing to evolve at a very rapid rate, and we continue to adapt our respective strategies, literally, for every component of our business. We think we have some unique advantages. We do have a full-service platform. We have brokerage. We have advisory. We have several investment platforms between development and acquisition and our merchant banking. But, you know, there’s challenges and opportunities within each one of those. Brokerage and advisory has remained relatively strong, and our biggest challenge and opportunity, I think, are the same, and that is repositioning our investment platform from tenant-driven development to tenant-driven acquisitions. So we’re very focused on servicing our clients, staying focused on the business at hand, delivering their action plans, and delivering results for them. There are a lot of distractions out in the marketplace, but at the same time, it’s a very exciting time. And as Mickey mentioned, it’s a tremendous opportunity to gain market share, and I think that we’re in a very interesting cycle where most companies are overestimating where we’ll be in the next 18 months, but I think they’re hugely underestimating the opportunities and where we’ll be over the next five years. So what we’re trying to do is look out at the marketplace really with that five-year lens and position ourself accordingly. And I think that we remain as confident as ever for our team and our platform and our clients and our market and looking forward to the opportunity ahead and lots of business with each of you guys.

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