From SoCal Real Estate’s November 2018 issue:
What it takes to be a retail CRE superstar
By Carrie Rossenfeld
Working in the retail real estate sector takes a special kind of resolve and creativity, especially given the trials this sector has withstood in recent times. E-commerce forcing the retail industry to reinvent itself has created major shifts that have resulted in serious big-box departures and vacancies, mall closures, and a scramble to find new tenants to backfill vacated space.
Philip Voorhees, EVP of CBRE in its Newport Beach, California, office, has lived through all of these shifts and continues to lead his National Retail Partners–West (NRP–West) team through successful retail transactions in the Western U.S. region. SoCal Real Estate sat down with Voorhees to discuss his background, how NRP–West got its start, and how his team manages to remain successful in the volatile retail environment.
Prior to joining CBRE in 2001, Voorhees had worked for an Orange County–based retail developer, specializing in site acquisition and brokerage of coastal commercial properties in Southern California. “This is what started me in the business,” he says. “Arriving at CBRE, I continued to focus on coastal commercial properties, most of which were retail or restaurant properties, along the coast from La Jolla up to Malibu.”
Voorhees describes this market as “a great niche market, dominated by private capital investors, many of whom own concentrations of properties in cities like Laguna Beach, Manhattan Beach, and others.” He became a founding member of CBRE’s Private Client Group shortly after joining the firm and took responsibility for retail properties in Orange, Riverside, and San Bernardino counties, expanding his coastal practice inland.
“By the mid-2000s, interest rates had declined, and CMBS financing permitted private-capital investors to leverage aggressively, without recourse, and competitively bid on larger retail properties,” Voorhees says. “California has historically enjoyed lower cap rates than most markets in the Western U.S., so we also found we were exporting California-based investment capital to retail properties around the West. This provided a springboard to expand our Southern California–focused business to the other western states. Many institutional and formattable private capital investors seeking to invest in SoCal are also interested in major markets like Seattle, Portland, and Phoenix.”
As the team’s geography expanded, so did the team, Voorhees says. Longtime team partners include Preston Fetrow, Jimmy Slusher, Megan Wood, John Read, Kirk Brummer, Matt Burson, and Tiffanie Farr, supported by deal runners James Tyrrell and Sean Heitzler and recent junior broker additions John Eddy, Eric Shain, Trent Steeves, and Catherine Zhong. Anna Pepper, Kari Wood, Adam Siegel, Andy Hozu, and Terri Black support the team with database, technology, graphics, and administrative functions.
All of the above are part of what is now known as CBRE’s National Retail Partners–West (NRP–West) team, which has grown to 19 retail professionals in the Newport Beach office. Shortly after arriving at CBRE, Voorhees says he began to partner loosely with Todd Goodman (now retired) and his partners Fetrow and Brummer. In 2006, he left CBRE’s Private Client Group, and the executives merged their two retail teams, combining private-capital expertise and a data-driven, broad, cooperative marketing approach with the Goodman/Fetrow/Brummer team’s “track record of selling neighborhood (grocery-anchored), community, and power-format shopping centers for some of the country’s most astute institutional capital investors,” Voorhees says.
Later this year, the NRP–West team is set to exceed $11 billion in successfully completed retail transactions in the Western United States, with more than 700 transactions, Voorhees says. “It’s mind-bending when I look back to my first retail property sale in 1999. If I had not closed 801 East Balboa Boulevard in Newport Beach — formerly Dillman’s Restaurant — after 12 months of grinding work, I probably would have failed in the business as I was out of cash and credit. There really is no easy start in the brokerage business, at least not that I’ve found.”
He also credits Sherry Bower, manager of the Newport Beach office at the time, and Clark Booth, her boss (“everyone’s boss, actually, as well as a friend and mentor of mine”), for the creation of NRP–West. Around the time Voorhees joined CBRE, he says the company keenly focused on establishing teams in product type and geographic specialty as a means to provide better service to clients. Bower urged Goodman and Voorhees to join forces on a retail team and was instrumental in helping them set up its original organizational chart.
“The best teams at CBRE tend to be innovators, generally led by brokers willing to invest in their teams,” Voorhees says. “Without exception, CBRE matched these investments and gave us the autonomy to innovate. Furthermore, most any broker at CBRE has access to senior management, and this access to experience and skill sets cannot be matched.”
NRP–West’s process for acquiring clients and closing deals has been a consistency-over-time model, Voorhees shares. “We’ve been working together with substantially this same team for more than 15 years. We’ve long focused on process and on devising and implementing accretive systems that compound over time.”
The team’s “self-serve” website is one example of such systems. “We’ve got 15-plus years of data on what types of properties investors have considered, who’s offered on what property, and, of course, our version of the ‘naughty and nice list,’” Voorhees says.
The team’s process and what it does functionally probably looks more like a mail-order catalog company than a standard brokerage shop, he goes on to explain. “The majority of our clients and new business comes from referrals or word-of-mouth marketing, in large part due to our marketing platform.”
Since 2012, when NRP–West started keeping close track (at the urging of Daniel Taub from DLC Management Corporation, Voorhees says), it has achieved an average of 98 percent of the list price on priced properties and 102 percent of request-for-proposal (RFP) price — the average of the high and low in its brokers’ opinions of value or RFP response — across all listings.
Voorhees says, “The Broker’s Paradox is that if you do not value a property aggressively, you do not get the business. But, if you over value it, you cannot sell it, and the client is disappointed. In the Western U.S., there are many fine retail brokers — strong and aggressive competitors. No doubt, we’ve lost business from not being aggressive enough on pricing. However, we know the process we’ve developed produces an excellent outcome for the vast majority of our clients, whether we’re selling a $1.5 million single-tenant, net-leased (STNL) investment, a portfolio, or a $100 million-plus open-air center.”
Representing sellers of retail in the Western U.S., California, Arizona, Nevada, Washington, Oregon, and Hawaii is all that NRP–West does, Voorhees points out. “We only sell retail, and only in the Western states. We don’t lease, we do not represent buyers on an exclusive basis, and we do not list assets in markets/trade areas outside of the West. This regional focus continues to serve our clients and team well.”
What keeps the clients coming back? “I expect clients choose CBRE for the company’s industry-leading results and unsurpassed scale and resources,” Voorhees says. “As for our team, I think (and hope) it’s because our clients trust us. We’re real estate pros first and foremost. We love retail, be it trying new restaurants or concepts, or exploring new projects and what makes them superior or deficient. With a retail-only focus, we understand what tenants can pay, and what they need to be successful.”
The team members are also masters of underwriting who follow a checklist-driven approach to ensure a successful outcome for our clients, Voorhees explains. “We also follow the capital markets, domestically and abroad, and we’ve done so for long enough to possess the context necessary to make informed recommendations. And, being at CBRE, we’ve got tenant and landlord leasing/brokerage experts in most Western markets, and debt-and-structured-finance professionals supporting our efforts, not to mention CBRE’s financial consulting group, valuation services (appraisal), and network of brokers globally that readily share information. We try to improve with each transaction, and to leverage CBRE’s resources to the fullest. Perfection may be an illusion, but we strive for it daily.”