E2A 078: The Consumer-Driven Transformation of Commercial Real Estate with Joe Brady 

Episode Transcript

Please note: The transcript is produced by a third-party company from an audio recording and may include transcription errors.

Scott MacMillan:

You're listening to the Entrepreneur to Author podcast.

Announcer

Welcome to the Entrepreneur to Author podcast, the podcast that brings you practical strategies for building authority and growing your business. And now, here's your host, Scott MacMillan.

Scott:

Today I'm speaking with Joe Brady. Joe is a partner with LRG Investors, former CEO Americas for the Instant Group, former head of real estate for Walgreens and author of Workshop, The Consumer Driven Transformation of Commercial Real Estate. Joe, it's great to have you on the podcast.

Thanks so much for being here. Thanks, Scott.

Joe Brady:

Great to be here with you.

Scott:

Perhaps we should start with a bit of context for those who may not be familiar with corporate real estate. Could you share a very quick primer of what it is and kind of the main types of assets that are considered commercial versus a residential?

Joe:

Sure. So commercial real estate would be anything that is income producing. So if you think about an office building, if you think about a retail mall, if you think about multifamily retail, industrial data centers, there's a vast number of areas and specialties within commercial real estate.

The three big ones, though, tend to be office, retail, and industrial. When you think about the business, when you think about work and commerce happening, and then the live part, I always talk about live, work, play in terms of healthy ecosystems of communities. The live part is the multifamily.

And what we've seen now is even single family residences have gotten huge in terms of acquisitions to rents. There's large funds out there buying large swaths of single family homes so that they could rent. So there's another element of multifamily.

So really anything that helps drive revenue.

Scott:

Interesting. Interesting. And so you talk about consumer centricity and how it's changing things, in particular for the office sector most recently.

Tell us more about that. What changes are occurring and what are the implications for commercial real estate?

Joe:

Yes, I thought about what was happening in early 2020 when the pandemic came upon us and everyone was at home, working from home. And a couple of things came to mind. One, the residential Internet infrastructure held up and no one ever thought that that could happen.

Two, levels of productivity and effectiveness were probably higher than they were before the pandemic. Some people were working way too much, unfortunately, because it was difficult to delineate between home life and work life. And then the concept of return to office started.

And what I observed, Scott, was the same type of headlines, and I call it click bait, that I saw starting 15 years ago in the retail world, that was really driven by what I would say is technology, the acceleration of technology. And the story, for me, starts on the retail side, where Jeff Bezos created Amazon in 1994. In 1999, he was in the cover of Time magazine.

And then it evolved to the point where the click bait said that the store is dead. No one would ever go to a brick and mortar store again. Flash forward, now we were hearing the same sentiments.

No one's ever going back to an office. And in reality, the consumer had a very profound say in what they decide, how they decide. It was done so with agency, autonomy, and optionality.

And they really, from a retail perspective, were voting with their wallets and determining which retailers and what malls were relevant and which ones weren't. And we saw a pretty rapid decline in a number of different companies filing for bankruptcy, some getting restructured, some going away forever. And in fact, there's been over 100 million square feet of retail space taken out of the supply over the last 10 years because the consumer has voted with their wallets.

And so the same thing's happening now where it turns out we're all the same people that we're just spending our money. And now the pandemic created this tectonic shift where the consumers can vote with their feet and decide how they're going to make their money. Do I want to stay with a company that says, I have to be in the office Monday through Friday, nine to five?

And so there's a consumer revolution happening. There's some companies that are failing to understand that their employees are consumers and they're doing so at great risk.

Scott:

Interesting. It's funny, as you talk about some of the clickbait and the fact that it's repeating itself, I think of the industry that I work in and similar clickbaits around the death of books. When e-books came about and the rise of Amazon, there was the same type of fear and loathing, which hasn't entirely materialized.

But in a similar way, it's kind of changed the dynamics of the publishing industry. And as we speak about books, you've recently published your new book, Workshop, which goes into all of this in great detail. Perhaps you could share a little bit about who the book is written for and what you're hoping that they'll get from it.

Joe:

Yeah. Thank you. And first, I do want to plug Grammar Factory and Scott, you and your team.

It was for a first time author. This is a seamless and actually fun experience. So thank you.

I do want to let you know that. And who is this book written for? I would say anyone that is making decisions around either occupying or investing in or owning or lending to, I would say students who have an interest in real estate and want to get grounded in a bit of history and context going into it.

I would say futurists who have a stake in what's happening in healthy communities. I think civic leaders would benefit from having the context of the history, because ultimately the book doesn't answer the ultimate question. What should we do?

And the book addresses the fact that we tend to be highly reductive as a social media class where we just want to have the answer. It turns out one size fits one size. There is no one size fits all.

And so what I've tried to do is create a framework that if you are a principal engaged in the industry in any which way, that you can start thinking differently and asking better questions of yourself and your partners and other key stakeholders to say what is important. How should we design a building? And in what neighborhood or what area of a city should we engage in commerce?

How do we lead versus how do we manage? And I do lean pretty heavily into areas around behavioral economics, which I find fascinating. And there's even a section in the book that says the nudge is mightier than the mandate.

And nudge was coined by Nobel laureate Richard Thaler from the University of Chicago along with Cass Sunstein from Harvard's law school. They wrote a book called Nudge. And it's just really interesting how you can create an environment and a framework that allows consumers to make decisions with agency and autonomy and optionality intact, but create a series of conditions where you're able to steer folks into making decisions that really benefit them.

As an example, a 401k is a perfect example of a nudge. We're all terrible savers. But if you can create a structure whereby your employer is going to match money that you put in and it gets taken out of your paycheck every two weeks, you don't even think about it.

It just happens. And next thing you know, your 401k is significant. That's an example of a nudge.

So I try to talk about some other nudges for companies and office owners to say, how do in an office? Because it's really it's really about it's not about passive attendance anymore. You know, the keyboard economy, this new collar economy that we're in doesn't lend itself to a Monday through Friday, nine to five industrial era construct.

Right. So so those are some thoughts.

Scott:

Yeah. Yeah. I completely agree.

Right. The nudge versus the mandate, so much more powerful and a wonderful concept. Joe, how did you find the writing process?

You know, some people, you know, struggle to get words down on the page and others kind of thrive writing. Do you find it fairly natural or, you know, what was that experience like for you?

Joe:

It's hard. It was work. And so it required me leaning on my organizational skills to say, we're going to block out, you know, three hours every every morning after a cup of coffee.

And there may be more words or less words any particular day, but just keep going, keep going. And, you know, the advice I was getting from from the Grammar Factory team was just, you know, put it down. Don't self edit.

You know, there was really good coaching along the way. So I know I was supposed to deliver 30,000 words by the end of December of 23. And beginning of December, I was at 10,000 words.

So I really had to knuckle down. So having a deadline was helpful. And, you know, and really just sticking to it and not not overthinking it.

You know, and if there were whole paragraphs that get thrown away, so what? And it was it was somewhat liberating to know it was OK to do that. Right.

And I always have this fascination that, you know, great writers sat down and all of a sudden genius appeared. But turns out this is hard work, isn't it?

Scott:

That's right. Yeah. And you're you're an avid cyclist.

So you kind of get the idea of, you know, putting in the time and the reps. And, you know, I find there's a lot of parallels. I run versus cycle, but the same idea applies.

You know, any kind of endurance sport. I find that there's a similarity to writing.

Joe:

You know what? That's an awesome analogy. It's it's it's slow twitch, isn't it?

Right. And, you know, I'm trying to get back into running to to do a triathlon to, you know, round out the bike riding. But some days you just feel bad.

You know, there's some runs where you have to walk a half a mile. There's you know, there's there's some bike rides where, you know, you you need more fluids than than others. And so but it's not any one episode or any one run or ride.

Right. It's just it's the it's the compilation of it and stitching it together and knowing that there's always forward progress. I guess that's the point.

And I'm a pretty optimistic guy. And, you know, the down days, you know, tomorrow's going to be better. I might have a better idea.

Or if you just shut up and kind of let things marinate, all of a sudden something pops to the floor, doesn't it?

Scott:

That's right.

Joe:

And by the way, I found that that marination time, like sometimes I listen to, you know, audible books when I'm riding with those bone conductive earphones. So I can hear cars. But other times I choose not to just just like see what comes out.

And I did find during the writing process that that the writing helped the writing because I I'd have something. The biggest problem was that I couldn't capture the idea. I'm like, oh, please remember.

Please remember.

Scott:

I've had that experience, too. Tell us a little bit about the publishing process as well. What did you find perhaps most interesting, most surprising, most challenging with with the publishing phase?

Joe:

Well, I again, I found I found it so well organized. And, you know, for me, the writing is not my primary function. I do a lot of other things.

I do a lot of philanthropic things on different boards. And so for me to then turn my attention to the writing part and once we got into publishing, I felt like it was massively organized for me to make fast and good decisions, to ask questions. And a lot of them I've leaned on you a lot, Scott.

And there was always there was always great context for me to draw from and then to make a decision and then to move on. So, you know, again, I don't want to say seamless, but pretty darn close to it. And it was enjoyable.

And now we're now we're into selling books, which is fun. And anytime I need anything, I know Ania or any of the team members can respond immediately. So it's been yeah, it's been seamless.

Scott:

Yeah, well, that's wonderful. I'm really happy to hear that and appreciate the kind words. You spoke about how you're now into the stage where it's all about selling the book and leveraging the book.

What what were what are your business goals for your book? How are you using it alongside your business to help achieve your goals?

Joe:

Yeah, so I'm I'm currently partnered with LRG Investors, you mentioned at the top. And my friends and partners, Steve Cutter and Josh Amoroso are fantastic. And so we are investing and developing retail real estate.

So if you think about grocery anchored centers, if you think about even an extension, our why as a business is building next. And although most of what we do is around retail real estate, we really talk about delivering the space that consumer centric businesses need to thrive today and tomorrow. So and we're seeing and as you know, we don't want to limit ourselves necessarily to just building a single Starbucks and let it sit there.

We are and have been doing those, but we're also looking at other really interesting experiential businesses as well. So think about combinations of Topgolf or what's happening with Pickleball and things like that. There's some really, really cool experiential consumer businesses that are looking to grow.

And so what I found is. Having a discussion, people will look up on LinkedIn and they'll check you out before you're engaging. And so whether it's a landowner that we're looking to buy land from or a client of ours.

I would say and I've been really surprised, but the level of reputational lift you get just by being an author, even if the book is terrible, which hopefully mine's not, yours is not. But but just but just the sheer act of becoming an author is profound. I found that there's there's a different level of respect that you get.

Many are astonished that you actually wrote a book. And it's but it's it's been it's been really impactful. And so my goals, my first goal was to do it.

I just had a life goal to write a book. I felt that that was that was something important to me. The second now is the call it the elevated calling card and the reputational element.

The third is really about speaking. I'm passionate about how we can help shape communities. And while I talk about specific companies and specific assets, I'm really concerned about the communities in which live work play happens.

And we're seeing some I'm in Washington, D.C. today. I still have a active travel schedule. You know, I've been in Baltimore, Chicago.

You know, I've been in New York here recently. San Francisco. And I'm seeing a lot of cities that are struggling.

Now, again, back to the whole reductive point. San Francisco. As a city is doing just fine.

There are some really bad parts in the city, just like there are in Chicago. And so how how can the civic leaders in the business leaders help turn around some of the struggling parts? And the common denominator in all of the cities where there's struggle is what I call monocultures.

And I define a healthy ecosystem as live, work and play. It's a 24-7, 365 community where these cities have gotten into trouble. Now is where there's been an over-reliance just on the work side.

Chicago is a perfect example. And if you look at the loop in Chicago, you know, trophy building after trophy buildings, going back to the lender. Occupancy is super low.

Before the pandemic, there was probably four and a half, five days a week. Think of what in retail parlance we'd say daytime population. So if you were a mom and pop food and beverage business, or even if you were Walgreens, it's tough to survive on five days a week of revenue.

Now, in post pandemic, if you're down to two and a half days a week, it's near impossible. So the mom and pops can't survive. And the large national chains are just hemorrhaging and hanging on.

But in Chicago, if you go two miles to the west, you have an area called Fulton Market. Randolph Street is the main thoroughfare that goes through it. And it is truly a live, work, play.

I was there last Friday and it was just bursting with energy. Companies like Google have opened offices there. McDonald's moved their world headquarters right on Randolph Street.

Nobu opened a hotel. Some of the best restaurants in the city are located there. And so I'm really passionate about that and thinking in terms of live, work, play and speaking about it.

In fact, I'm going to be in Santiago, Chile, right before Labor Day in the U.S. And then in Lima, Peru on September 3rd for WorkTech. So I'll be speaking at the WorkTech conference that takes place in both of those locations. And again, speaking about Workshop, bringing the message to Latin America.

It has different challenges, but by and large, there's a lot of similarities. In my previous role, I did a lot of business in Mexico, Mexico City, Colombia and Argentina. So I'm excited to go see my friends in Latin America and have a chat about Workshop.

Scott:

Yeah, you know, it's funny. A lot of the stuff that you're talking about, even for those of us that don't work in commercial real estate, a lot of what you're saying makes intuitive sense. I mean, we've got a new development just down the street here in Toronto called The Well.

And, you know, it's got residential units, it's got offices, I think Shopify is there and Netflix is there. It's got retail restaurants and it's a really vibrant community. So, you know, I think what you're saying and the message that you're preaching resonates not just with people within the industry, but also those of us who are just experiencing the end result of it.

Joe, how can people get in touch with you to learn more about what you're doing and perhaps engage with you on some stuff that they're working on?

Joe:

Sure. Yeah, thanks for that. So I set up.

I didn't set up. Scott helped me set up a website called JoeBrady.ai.

So JoeBrady.ai

And again, Grammar Factory's full service. Again, shameless plug. Sorry.

JoeBrady.ai

So on that website, there are links to articles I've written, podcasts that I've been on. There's also direct links to Amazon and other retailers to buy the book.

You can download a chapter of the book. And so hopefully you have a chance to go take a look at that. I have other links to my LinkedIn page where I post quite a bit.

But JoeBrady.ai is the best spot.

Scott:

Perfect. We'll be sure to put that in the show notes for easy access. Joe, thank you so much for being here.

It's been really fascinating to hear about your experience writing and publishing and all of the interesting stuff that you're working on. So thank you again.

Joe:

Scott, thank you. Thanks for the partnership. And now now I have to start working on book two.

Wonderful.

Scott:

As we wrap up this episode of Entrepreneur to Author, remember this...

Now is the time, time to write, time to publish and time to grow.

I'm Scott MacMillan.

Until next time.