← The Kirsh Connection
The Kirsh Connection
From Data to Deals: Leveraging Technology to Scale a Shopping Center Portfolio with Sandy Sigal
00:51:36
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A
Welcome to Real Talk Real Estate discussions with Andrew Kirsch. In each episode, Andrew interviews industry leaders.
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We'll hear their real time opinions on.
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Today'S market, their background and unique career highlights and guidance for newcomers into the industry. You can find this show@skalarkirsch.com and on YouTube, LinkedIn, Apple Podcasts, Spotify, Google Podcasts and more.
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Now here's the host of Real Talk, Andrew Kirsch.
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Episode 85 of Real Talk. This will be the last episode of 2025. So I want to reflect on this year which started extremely challenging with the Palisades fire on January 7th. And my one word that I can think about is gratitude. I just want to thank everybody, my listeners, my friends, my clients, family who throughout the year reached out and made sure that me and my family were okay. It wasn't just on January 7th or 8th or 9th when I got these messages. It's really all the way through today and probably for many months and years to come. And so I'm touched by all of you for caring and how my kids are doing, how Courtney's doing and how I'm doing and, and, and I truly appreciate all the outreach. And you know what I can't believe? Almost a year later, where we find ourselves personally settled in Santa Monica in a beautiful new house, a great school for my kids at Franklin elementary, great neighbors and friends and clients. This year, despite starting a little slowly because of the fires, has really been a very active year with transactions with more of my clients playing offense instead of defense. A lot of new transactions occurring the last several, the last three quarters of the year. And so to my clients, I want to say thank you and congratulations to all of our closings and this year. I never would have thought it would have started with a fire that decimated the Palisades, but I never thought it would be ending the way it's ending for me. And that's going on a two week epic vacation with just Courtney celebrating, I guess our 16th anniversary. We're one year late for our 15th anniversary and to celebrate Bonnie Coley's wedding in India. So a couple days in Doha, 10 days in India, two days to round out the trip in Dubai. It's going to be a trip of a lifetime. I can't wait to experience an Indian wedding, a four night extravaganza. I will share on my social media all of the festivities and most importantly, the authentic Indian clothes that both Courtney and I will be wearing. So once again, thank you for all the support, thank you for listening and watching for My podcast. Oh, and I best announce who is on the last episode of the year, and that's my good friend and client, Sandy Siegel, the president and CEO of Newmark Merrill. Sandy is an amazing guy. You'll hopefully enjoy this episode where we talk about his shopping center portfolio of over 100 centers. And Sandy, more than anyone that I know in the real estate business, has leaned into technology and has used technology to help not only his company, his investors, but also his tenants. So I hope you enjoy my last episode of real talk for 2025 with Sandy Siegel. Welcome to another edition of Real Talk. It is my pleasure to be with Sandy Siegel, the chairman, founder, any other titles of Newmark Merrill. Sandy, thank you for coming.
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B
Andrew, I'm thrilled to be here. Great to see you.
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A
You don't sound thrilled.
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B
I am thrilled here. I mean, to be in your presence is really a great way to start the day.
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A
So let's start with this. Do you know there probably would not be a Sklar Kirsch without Sandy Siegel. Do you know why?
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B
Why?
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So if you recall, which maybe you don't, you were my mentor in the. We called it the YLDI Jewish Federation program. And we had lunch in Sherman Oaks because you rarely go over the hill. But today. Thank you for coming to our studio.
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B
Thanks. Yeah. And I feel over the hill, so thank you.
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Sure. And I was at a, I don't know, crossroads intersection of my career. Had just finished Big Law. I was at Reigns Feldman at the time. And you encouraged me to go out on my own and start my own firm.
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B
Yeah. I didn't think you'd take me seriously 13 years later. I thought I was just being funny. But I guess it seems to have worked out, so I'll take credit for it.
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A
I'll let you know after this podcast.
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B
Okay, great.
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A
So you're a mentor, you're a friend, you're a client, you're a YPO peer. You wear a lot of hats. For those that don't know Newmark Merrill, and maybe they're confused about. Is it Newmark, the brokerage company? Tell us about Newmark Merrill.
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B
Well, Newmark Merrill, I mean, I've really been doing the same thing. I'm sort of boring guy. I've done the same thing really, for 40 years. And so.
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A
But you're only 35 years old.
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B
I know it's hard to believe. Negative five. I was. I was quite a. Quite a. I was a very prominent sperm back then. So I was thinking about it, but the. The look, I. My entire background was based around Neighborhoods and shopping centers. And so I got in the shopping center business when I was 21, worked for a company that was a home builder, started their shopping center business, and in 1997, decided. April Fool's Day of 1997, decided to go on my own with two other guys and start New Mart Merrill. And what we do is we build, we manage. We own shopping centers in four states, just over 100 shopping centers, about 2,000 tenants. And, you know, that's a very high level of what we do. We also have a technology division that focuses on prop tech and ways to integrate technology with our shopping centers, our communities. Yeah, that's what we do.
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A
I know most people who are in the real estate business of, let's just say, your generation. My generation. Our generation.
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B
That's kind. Yeah, yeah.
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Their start is either law or accounting.
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B
Yeah.
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And if I recall, your start was with technology.
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B
Yeah, it was computers.
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A
Computers. I haven't seen many people go from computers to real estate.
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B
Yeah. I'm still getting over the notion that you think we're in the same generation.
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Well, I was being kind.
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You are, you're. That's a great way to start.
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Well, I am now 50.
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Yeah.
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So.
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Yeah. No. Yeah, yeah. Unfortunately, I keep aging ahead of you. So. So, yeah, I mean. Yeah. My beginning was I was a computer programmer. I started programming when I was 12. So I. Back then the languages were like Fortran and BASIC and Cobalt and Assembly and a bunch of other things. And I was lucky that I had a middle school teacher who got us access to a mainframe back then when there were mainframes and I learned to program. And eventually I started converting as. As microcomputers came out that the time is the TRS 80 and the Commodore and the Apple One before the Apple II, which. Well, before the Mac. I started converting programs that were written on the old systems, the mainframes, into these new systems. And I did that. And that's how I got in real estate, computerizing. I started computerizing accounting departments when I was 14 and 15 and got hired to computerize an accounting department at a home builder when I was 20.
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A
Wow. It's amazing. I've. Clients of mine are people who are sitting in the very chair that you're sitting in who are successful real estate people. They don't even know how to turn on a computer. They wouldn't know how to run an ARGUS model. They don't know how to do Excel. They just. They figure out their real estate investments on the back of a napkin. And. And I feel like Real estate. You're, you're part of the change of, of, of integrating technology into real estate. But do you feel like real estate is still an antiquated industry?
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B
Yeah, I mean, and I just, I just.
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With respect to technology.
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B
Yeah. No, I think it's antiquated industry in a lot of respects. I, I think we still build buildings the way we've been building buildings for a hundred years. I think we do a lot of things. We're a very generational business. And as a result, you know, sort of the habits and the way we look at things sort of roll has been rolling forward that way. And yeah, from a technology perspective, we're way behind. If you, if real estate companies look at their budgets or we look at the budgets of most real estate companies, they don't have an R and D budget. They don't have a budget for. They might have a budget for technology, but for them technology is. I need something around my accounting software. Right. For them that means, you know, laptops. But the idea that you do R and D or that you experiment with technology like a lot of other companies do or of any, you know, any sort of R and D is sort of alien to what we do. It's not one of our line items. But I think that's a missed opportunity, especially in retail. But in all property types, our projects throw off a lot of data. And to not look at that data, not to synthesize that data, is a big mistake.
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A
I mean, well, before everyone started using the phrase AI in their everyday lexicon, I remember you and I sat down and you flat out asked me and you said, andrew, how is your firm incorporating AI? And honestly, I wasn't even sure what you were talking about. And this was probably 12 to 18 months ago. And now to think of where we've come, where if you're not using AI, then you are light years behind. But I do remember us sitting and you were showing me technology several years ago of almost like infrared technology, where you could see clusters of people and what parts of your centers are working. What parts of your centers may need tweaking because of this technology. You want to just sort of lean into how you have used technology specifically to help your real estate investments and the performance of your centers.
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B
Yeah, I mean, the look, we. From the time I started in the business, for me, technology was always something. The benefit of starting technology as opposed to starting other elements of real estate for me at least were. We always had a very systematic or I always had a very systematic approach to like how you Build up to a place where you develop, where you buy something. Okay. And so for a long time, we were very deliberate about collecting data. You know, when I started, you know, maybe you were lucky if you got retail sales data. You didn't really get other kinds of data, but we would always collect anecdotal data, right? Like, hey, what does the manager say? Where's their ranking? What, how do you, how do you typify what is going on at the shop center? And at that time, we try to aggregate that data using spreadsheets and then trying to disseminate that to the company. Overall, as time's gone on, technology enables to do different things. So one of the things that technology did, you know, now it's already seven, eight, nine years ago, was help us use geofencing phone data to help us track where our customers are. And, you know, as iPhones and other kinds of phones became something that was in everybody's pocket, that made it possible for us to say, well, let's count customers by, you know, when there's, when their cell phones ping, what does that mean? Okay. And then that, that started as maybe advanced customer counter. And then over time, it became something that we learned a lot about the customer from cell phone data. So today, you know, probably what I was showing you back then may have been an early version of placer, which today is more like the, you know, I mean, it's more of a, you know, it's more of a noun than anything. I mean, you know, people say, you know, what does the placer tell you about this? But, you know, for us, that was a big early sign, like, can I use cell phone data to tell me where my customers come from, where they go afterwards, how long they stay in the shopping center, how many stores they visit and use that? So that's one big thing. That. And it gets better and better over time, right? The data gets better and better over time. You find other data sources and you dump those in. And those are, you know, if you know a lot about the customer, first the customer is going to get a better experience, number one. And then number two, you're going to be able to understand, am I attracting the people I want? Is there a pocket of people I should be attracting that I'm not attracting, and so on, so forth. So that's a long way from starting with just sales and maybe basic demographics, which at the time were based off census data, right? So we've come a big way there. Other places, you know, people post a lot of information. They post about, you they post about me, they post about our centers. They post about your firm. I mean, they post about stores. They post. People like to talk about what's going on in their lives and how things they relate with, you know, whether they like the restaurant, didn't like restaurant, all these things. So we use sentiment data, which, which tells me, hey, how are the tenants in my shopping center perceived? Are they perceived as a good place to shop? Are they. Are they at a good price point? Do they. Is it good quality? And I can take that information, sentiment data, and help my tenants become better and also help me define when a tenant either might need help from us or when they're asking for help from us. What are the likely causes of that? Right.
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A
Do you think more people, human nature, they're more likely to post just when they've had a negative experience as opposed to posting when they've had a positive experience?
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Yeah, I think so. Although you'd be surprised, I mean, you'd be surprised that if you look, if you. And we do, we scrape thousands and thousands and thousands of reviews. Most are generally positive, but what we're looking for is greatly positive or greatly negative. Okay. I mean, you know, look, I had to wait in line a little too long might be one thing, but, man, this place of customer service here really sucks. Is something totally different. Right? And so, yeah, I mean, I think people have an inherent negative bias. I think it's because the way we're wired from, you know, long ago, but people today, people just. I think people want to feel connected. And posting is one way to feel connected. But we scrape all that data and it gives us what we call Net promoter score. So I can look at any, I can look at any store and anywhere in my portfolio and say, is this place a strong negative or is it a strong positive? And what is the trend overall? And so, so sentiment data is a big factor for us because if you don't like a place, even though you may have visited, you're probably not going to come back or you're not going to come back enthusiastically. But one thing people definitely do, they pay more attention to negative reviews than they pay to positive reviews. And one negative is worth like 10 positives.
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A
So let's talk about your portfolio. I mean, there's a wide range of shopping centers from the Century City Westfield mall to a corner strip mall. So describe the. If there's a typical center in your portfolio.
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I mean, we have a wide range of centers. I mean, one thing we don't have is any enclosed malls. If we Buy enclosed malls, we demol them. I mean, that's that we've done that. But generally think of us as grocery anchored and up. And so, you know, for us, a typical large center is a grocery, a Walmart or a Target, something like that, maybe a Sam's Club, anything along those lines. Movie theater, you know, restaurants and soft goods and some gathering spots. You know, if it's, if it's just grocery anchored, it's got to be at least of enough of a scale where I can make a difference in the community. I don't want to be, we don't want to be the fifth shopping destination in a community. We want to be the number one shopping destination in the community. And so it's very important we have scale because scale helps us leverage all the other things we do, the technology, the marketing and all the other support. So I'd say, you know, typical versus 100 to 400,000 square feet of shopping. But even more important is that it's the dominant center. It's number one or two in the trade area.
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A
And so what are you looking when you're buying a new center? So that could be one component that you want to be the dominant center within that neighborhood. And anything else with respect to demographics, income, other aspects of.
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Yeah, I mean, look, we want a consumer that wants us to be there and is currently being underserved. Okay. So for us that's a big component. A big component is. Is there a reason for us to be there? Right. I mean, I don't buy just to buy. I don't have a growth goal that I have to hit. I'm not looking to be twice as big next year or anything like that. I'm just. So I'm looking for opportunities when I, and I know it when I see it. If I go into a market and I say, man, this is a good shopping center that exists, but it's just not serving the community well, but it has the potential to be big here. Then I, I get excited about it or if I go like we. I'll give you an example. We were in South Rialto. South Rialto. North Rialto was strong. South Rialto didn't have anything from a great retail perspective. We ended up building a Walmart there, a bunch of pads. And then right next door we brought in a sprouts and we brought in Burlington and five below and a bunch of others in and out. All those, all those people. And that area was just underserved. It was well located right off the freeway, had a Good population. And again, it's not like we're looking for high incomes. Frankly, you know, mid to low incomes are just fine with us because believe me, they deserve to have as great retail as anybody else. And they're very appreciative when we're there.
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A
So before. So when you bought that center, what was there before? Was anything there or you built a ground up?
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It was a field.
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It was a field. Okay, so while you are in due diligence, are you calling up your tenant relationships, the Walmarts, the Burlingtons and getting their interest and then you're going non refundable once you have a solid commitment from these tenants or tell my audience, you know how that process works.
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B
Yeah, I mean, when we're building something, we're not building anything without knowing the tents. I'm not smarter than the tenants. Right. The tenants know their business, I know my business. So, you know, we go in, we build a use case and the use case is, hey, this is an area, it's underserved. Access is good, visibility is good, city wants us. And you know, that's a big component. You know, I'm not going to fight city hall. That's not what we're about. So we're going into cities that want us to do what we do and then we call our tenants and the tenants know us and so they know what they're going to get from us and they know we'll deliver on time and they know, you know, that if they say yes, we're going to get them to the finish line. So yeah, and then we go through and so you take that deal. We knew Walmart made a commitment. Walmart was prepared to go. That was great. Built that center around the Walmart and again integrates that. He was excited. They give us the exclusive right to buy the next property, the one right next door to it. This was during COVID by the way. Before COVID we thought that site might be a movie theater and a gym kind of location. Covid happened, we looked at it, we said, yeah, it's not, that's not, that's not really where we want to go. But we got a Sprouts. This is during COVID We got a Sprouts to commit, we got a Burlington commit, we got the five below to commit. We got, you know, huge amount of commitments and at that got all to commit. But we said, listen, the site's too big, we gotta turn the back into industrial. So we split the site in half. Found an industrial user who was interested in, you know, taking over that part of the project. And we built it out, opened right after Covid. 100% pre leased.
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A
Wow. And so what percentage of your portfolio is ground up versus buying an existing center and retail tenanting it?
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B
I mean it just depends on the opportunity in the year. So you know, next year we're going to be building quite a bit. So over half what I do will be new development this year prob none of my work small. We have a small development but generally it will all be buying existing centers and repositioning them.
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A
So you, so you started your business, you said in 97.
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Yeah, 97.
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And so you've been through.com boom. Then you know the GFC.
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Yeah. Financial Covid.
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And retail has been under attack for much of your existence. Right. Starting with Amazon and going forward. And I know a lot of the conferences that we've been together, it's been this, I guess this fight between retail owners and society of how you consume retail goods. I feel like that fight or that narrative at least from my perception coming out of COVID in the last couple years has shifted and that there's more desire to go to congregate as a society. The importance of being together and, and wanting to be at a really well located, well presented center.
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B
Right.
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If I just presented the case for Newmark Merrill and. And other retail owners or am I is my perception reality?
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Well, I mean you have a lot of perception, so.
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A
So it better be right.
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B
Yeah, I mean I'm a little concerned about that. I mean, you know, look here, here's, here's what I will tell you. First of all, the short answer is yes, but I'll tell you the critics were wrong before about before COVID The critics were wrong and it's easy, easy to be a critic when things change. Right. Retail is literally like the second, you know, oldest business in the world. Right. What's the first? Yeah, I mean probably some, some it's probably the sex trade. No, law came later and interesting story about where law came from. But you know, if you look back in history, but, but, but, but we don't have that three hours you keep threatening with. But, but here's the reality. From the time someone had too much food and someone wanted food, there was a need to have an exchange. Right. I mean this is just the process of life. And as that developed and by the way law was developed somewhere around this notion that hey, I can farm fields and I'm farming for more than myself and I now got a form a farm and sell to others. And actually now I need someone to protect property rights. And I, that's kind of where the law came from. But the, but the idea that there has to be commerce and that commerce needs a place to conduct itself has been around forever. Right? Okay. And secondly, human beings are wired as hunter gatherers, right? I mean, that's just a basic need. Primal need is hunter gathering. Discovery is another big need. So here's the reality. As long as I'm in around and you know, look, when I was, when I was 7 and 8 and I would be walking to school, my communities.
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A
It was just uphill in the snow both ways.
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B
No, it's hard to believe that in Southern California, that one spot, it snowed a lot, but it was raining terribly too. But the, you know, that donut shop, that liquor store, that pizza place, you know, where I played pinball, those were our communities, right? And, and you know, we're skipping all these other things that have happened along the way. You know, big retailers that existed back then that went out of business, the big box boom, the death of downtowns, which have since come back. Right? I mean, there's always a narrative that retails change because retail is just, just an expression of human experience. Okay? That's all it is, right? Humans evolve. And as humans evolve their design, what they wear, how, you know, sometimes it suits, sometimes it's not. I mean, it's, you know, people like fast food, people like, sit down. I mean, this all is an evolution and we got to be prepared for that. It's got to be priced in the model. So here's what happened. We go into Covid and prior to Covid, everyone's saying to us all the time is, you know, aren't you just going to be going out of business? Oh, what are you going to do about Amazon? I mean, how's this all going to play together and what does Covid do? Covid comes along, should kill us, right? I mean, by the critics perspective, Covid kills us, right? Because if, if you're, if the now being told, if you're a late adopter to Amazon and you're now given the choice, Amazon will now deliver to the house and I'll be safe or I go out and I could catch a virus and die, right? You think most people would just stay at home and have food delivered and that would be good enough, but humans didn't act that way. Humans by the millions went out and said, yeah, you know, some stuff I'll have delivered, but a lot of stuff I'm going to go to the center and I'm going to go visit. And believe me, we did everything we could to keep those people safe and to make sure they had a place to go. And we adapted to what was going on. Covid. Covid turned out, you know, except for the obvious tragedy of deaths and everything else. And I lost people who are close to me. But from a retail perspective turned out to be the great proof that we were sustainable for long term in this new environment. Yep. And that's what I see.
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A
And do you feel there is more appetite from your investor base to invest in retail today than pre Covid?
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B
Yeah, for sure. Yeah. Look, we've become. And you've heard it cause we've been at the same conferences, although you're always on your phone networking with people. So I don't know how much you're.
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A
Listening, but I'm doing work.
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B
Yeah, yeah, you're helping keep us safe. So the, I mean, look, the reality is we've become a favored asset class. Now we'll fall out of favor because X or Y or Z. But today, you know, apartments, look, we all have our cross the bear. Apartments have excess regulation as it relates to rent control and a bunch of being able to build and nimby's and all that, you know, office buildings, you know, you know, I mean again the big loser in Covid, but again still have to, you know, we'll still figure out a model that works industrial took a hit because of pricing and you know, a new distribution model which by the way might include more retail and less industrial. I mean so you know, hotels had a, you know, I mean hotels are doing well but had a lot of stress during COVID So we all are crossed a bear. But yeah, I mean today we're a favorite asset class and in this data rich environment I only see that accelerating 100% because we're the safe bet. Right? If you feel like if you're an investor and investor prices risk and you're a lender and lenders price risk, what could, what could give you a better focus on risk than having good data data to back up your risk assessment and retail throws off the most data.
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A
And so talk about your investor base. Are you going after more of a syndication friends and family model or more of an institutional JV model or both?
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B
Yeah, I mean we're, we're the luckiest people alive because thankfully my investors have been investors of mine for, you know, I stole the same investor from the very first deal I ever did and others like them and often their family offices and, or often I'VE met them because they bought something from us and then we end up working with them and they have investing with us and most of them are like we are. Which are long term focused value add investors who are looking for outstanding long term returns. We're not looking to time markets or do anything. And they give me that ability and so I am so blessed. And they're great people and we could talk to them. We don't have a huge investor relations department. It's like, you know, we're in this together and we figure things out and I'm just super lucky with that group.
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A
Yeah. Let's look at this from a tenant's perspective. So you've been in the business for 30 plus years.
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B
Your math good by 40 years. Yeah, 40 years.
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A
Yeah, I was thinking from 97, but. Okay, but you're right, you were. Okay, 40 years.
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B
40 years.
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A
What have the big changes been from the tenant perspective of what they're looking for in terms of the size of their space, parking, complimentary uses for them? How has that shifted over this 40 year period?
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B
Yeah, no, it's a great question.
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A
That's why I asked it.
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B
Yeah. And that you only ask great questions. So thanks for that. The look, they totally evolved. Right. And they also the relationship between the tenant and landlord has changed. Okay. I mean the whole term landlord is a terrible term if you think about it because you know, you know, the tenant's not here and the landlord's not here. I mean it's more of a partnership. And so look, in the old days, you know, would you have a family fun and fitness place right next to your store? No, that was supposed to be in the back. Would you have a gym next to you? No, that was supposed to be in the back. Would you have a school and a shopping center center? No, you. That was not supposed to be part of the shopping center. Urgent cares, I mean, right. You know, vets, I mean all these uses that have now shifted from being, having their own locations to being cohabitated in the same place. And I think what's happened with retailers and has certainly been part of our thesis, but and a lot of our learning as we look at data is, you know, the customer. One thing is consistent with the customer over time. They want to make the most use of their time. Time is still precious for the customer. Okay. And so to be able to accomplish as many things in one stop as possible or to know that this is their place as opposed to going to five different versions of their place is hyper important. So what I'm what we're finding is our tenants where they used to say, oh my God, I needed X amount of parking. That parking's changing because they're realizing how their customer is getting there. Right. Or I don't want the gym next to me. Or all of a sudden say, well, that customer I can see now because dad is telling me that customer comes and shops in my place. Okay. Or the school or whatever. So, yeah, there's been a, there's been a big evolution in the view of the tenant from that perspective and also the view of what the tenant expects from the person who owns the building. You know, in the, I mean, the old days, again, old days being, in my case maybe only 10 years ago, they didn't pay too much attention to the marketing I did for them. I did a lot of marketing for them. They certainly paid no attention to the data I tried to share with them. They thought they knew better. But in today's environment, there's a lot of sharing going on between us and our tenants. And that's been a good thing. Really good thing.
- [31:39]
A
And what about trends of. I mean, look, there's been quite a few, not quite a few, a lot of significant bankruptcies over the last several years of big box store bankruptcies. What do you see over the next 12 to 24 months as to how things are going to shake out? You know, choppy economy, certain in certain types of retailers that you want to gravitate to. Certain types of retailers you would like less of. Yeah, I don't know, and I don't know how much you can talk about that, but sort of your thoughts on.
- [32:15]
B
No, I mean, no, as you know, I'll talk about almost anything often without having any reason, any background to what I say. But still, still, it's the. Here's, here's. Here's a couple things. One is private equity's history of owning retail has been very, very choppy. Right. So to extent that private equity gets involved with our retailers, you know, it's very, it's very important who that private equity is because different people, different firms have a different view. So one of the first tells for us on anything we should be concerned about is when private equity buys something out. Because, you know, there's, there's been good private equity that's good with retail and some that's not so good. Okay. And so we're very focused on that. The stress that goes on a private equity, but in general is also when the markets are in turmoil. Luckily, the markets have been rising, but you know, that's not a forever thing. And you could see, I think there's a super good case that the market has to correct. And when the market corrects that, cheap currency of stock goes away. And that's going to impact both the ability of private equity to exit and do things. And, and the, and the tenants that are, that are public to access capital markets to keep their growth going. And that's what's happened to some of these bankruptcies that you've seen that the markets have not supported their ability to keep funding what they need, what they need to do. And then we're in a place of razor thin margins. I mean, labor is, and it depends on the state. Here we're sitting in California. Labor is a huge problem. We've been redlined by a lot of retailers who will not come to California, certainly any of them in the food business. Very, very difficult to do, you know, food deals here because of, you know, how we regulate. So labor is a huge issue. Borrowing costs, you know, what happens with borrowing costs and then what happens with discretionary income and in an environment with a recession pending, which, which could or could not happen, but very hard to tell whether that's going to happen. You're, you know, you're going to see more turmoil in the markets. And for sure.
- [34:22]
A
Do you have a rule of thumb of a percentage exposure to a particular tenant that you don't want to cross so that you don't have too much concentration with one retailer?
- [34:33]
B
Oh, for sure. Oh, yeah, for sure. I mean, look, I mean, luckily we have a big enough portfolio, so it's very hard to get over like even 10%. But, you know, look at 15, 20%, that's a lot for us. And we're not, you know, we generally won't go there, but again, we have a big portfolio, so it's not going to be that. And the guys that we're in and girls we're in with in the biggest way, these are solid firms. We have a lot of data. You know, shouldn't surprise you considering how much data we have. We definitely understand the financial situation of the tenants that we have in our, our portfolio. And we're forever assessing like, oh my God, they just got bought by so and so. That causes me concern. What are we going to do and what are we, you know, and that's, you know, so, so we're really, if we're, we're rarely caught, knock on wood, without knowing that trouble's on the way.
- [35:26]
A
Yeah, your data driven company, you see a lot of data and over the last several years, there's been a lot of talk and some data about people leaving California.
- [35:39]
B
Right.
- [35:40]
A
Coming out of COVID Political climate.
- [35:42]
B
Yeah.
- [35:43]
A
Anti business friendly. We just had Tracy park here. Council member CD11 is trying to reinvigorate business in LA. Are you seeing that demographic shift in your data? Are people moving out of California in the numbers that, that at least we're perceiving?
- [36:06]
B
Yeah. No. People are living in California and the peer group of ours that is leaving California is the one California. The ones that California appears to be chasing are the ones that we need the most, which are people who have resources and are prepared to invest back in the community. And look, I, you know, I, I, I've lived my whole life in California and it saddens me to say that I never before had to think about should I leave California. Now I probably wouldn't because I have my, my kids here and my grandkids here, my mom here and all that kind of thing. And I do love California and I'd like to be part of the solution, but, and by the way, we get a lot involved in people in the State House and trying to, you know, we, as a, as an industry, we weigh under, invest in people in the State House. I mean, I mean, my experience with people who are, you know, are in the assembly or the State Senate, these are not bad people and they have good intentions, but they just don't know what we do and they don't know how to tell the story. And I learned that during COVID But to answer your direct question, yeah, we're losing, we're losing a fair amount of people. But, yeah, I mean, it makes a difference in a big way how public policy views those that invest in their communities. And the soak the rich mentality, there's absolutely too wide a divide between rich and poor. And I totally get that. But there's got to be better solutions. And they're counterproductive because people say they want more housing and they want cheaper and more affordability and everything else, and then they raise the cost and everything and make it harder to build more housing. So. Yeah.
- [37:44]
A
So in our remaining moments, I want to pivot the conversation.
- [37:47]
B
Okay.
- [37:48]
A
I think there's about 8 billion people on this planet.
- [37:52]
B
Yeah.
- [37:52]
A
And for every single one of them, there's 24 hours in a day.
- [37:57]
B
Right.
- [37:57]
A
Except for you, Sandy.
- [37:59]
B
Yeah.
- [38:00]
A
You are involved in more things than any human being that I know. And so I'm wondering, how were you able to create more than 24 hours in a day from being obviously Chair of Newmark Merrill to running charities camp Max Strauss, Jewish brothers, big sisters. By the way, it's all in my head.
- [38:20]
B
Yeah.
- [38:21]
A
Head of multiple YPO chapters in YPO form in the several, many networks. You're traveling the globe constantly. How do you have time to do it all?
- [38:34]
B
Yeah. Are you sure you're not talking to one of my avatars?
- [38:37]
A
I may be.
- [38:38]
B
I don't even know if we have.
- [38:39]
A
The real Sandy Siegel here.
- [38:40]
B
Yeah, yeah. Look, I mean, here's where I can say I started in the computer business. And in computer business, you worked late into the night and sometimes multiple days. So I'm blessed. I don't need a huge amount of sleep. If I sleep five hours a day, that's perfectly great by me. And two, you know, you got to focus on what's important. And, you know, I'm not. You know, I try to divide my days into very intentional places where I want to apply my time. And, you know, look, if I'm traveling, as, you know, I was in London for a month. You know, we found you find time to work, and you pack that time in, and you have time to have time with your family, and you pack that in. You got to be very focused in this world. You got to be super focused on what's important to you. And for me, what's important to me is the people and communities that we take care of through our business, the communities that, you know, we can give to and support and through charity and investment in public good. And my family and my friends and I've been blessed, you know, like, you. You and I've been friends forever. I've been blessed to have deep personal relationships with people who are super important. I don't need to know a hundred thousand people. I need, like, a hundred of the best people, which you're in that group.
- [39:51]
A
And like, around 97, 98, or you're.
- [39:55]
B
Definitely in the top 100ish. And no, you're definitely there. But, you know, and then with those people, you build deep relationships, and. And then from that, you get a. We're only in the plan so long. Right. So you got to make the most of it. I tell people all the time I have plenty of time to sleep, like, you know, very.
- [40:09]
A
Permanently.
- [40:10]
B
Yeah, permanently. And so, you know, make the most of it. And I. And I love what I do, so. And I love the people I'm surrounded with. So if you love what you do and you love the people you're surrounded with, you know, why. Why sleep through that?
- [40:23]
A
I love that.
- [40:24]
B
Yeah.
- [40:25]
A
Are you ready for the world famous Real Talk lightning round set of questions?
- [40:30]
B
I don't know if I'm ready, but I'm not gonna leave. So here we go.
- [40:33]
A
So the only thing, the only preparation I have is on this piece of paper. Everything else is up in my noggin here. For this. I need my notes.
- [40:44]
B
Okay, good.
- [40:46]
A
Given the fact that you are so busy, you may not have time for pop culture and watching shows and binging television, but if you do, what is the best show that you are currently. You currently watching or just finished watching?
- [40:59]
B
No, that's. That's a great question. I watched the Jerry Jones story about the Dallas Cowboys and I thought that was fantastic. I'm watching Pluriphus right now. I'm not quite sure if I get it, but the, the. Those. And obviously Landman, which is fantastic.
- [41:15]
A
That is fantastic. I just finished the new Claire Gain show, the Beast in Me. I think the Beast in Me.
- [41:22]
B
Wow.
- [41:22]
A
Highly recommend it.
- [41:24]
B
Wow.
- [41:24]
A
Very good.
- [41:25]
B
Okay, fantastic. I'll do that.
- [41:26]
A
Yeah. And that. They didn't pay me to say that.
- [41:28]
B
Okay. That's surprising. Okay. I didn't know you said anything without being paid, so that's fantastic. Oh, wow.
- [41:34]
A
How about that? How about your favorite podcast besides Real Talk with Andrew Kirsch?
- [41:42]
B
You know, I don't really listen to podcasts because I read books more than I listen.
- [41:46]
A
Okay, how about your favorite book over the last few months?
- [41:49]
B
Yeah, so there's a great book called AI for Leaders. AI for Leaders, which I think is fantastic. I'm reading a great book on Ronald Reagan right now. There's a new book and another one I'm reading on Margaret Thatcher. I tend to read half nonfiction and fiction at the same time. And on the fiction side, I'm reading an incredible book about a Holocaust survivor who was in Italy and escaped through the Italian Alps.
- [42:26]
A
Oh, wow.
- [42:26]
B
Yeah. And that's a fantastic story.
- [42:29]
A
Yeah, sounds great. Have to check that out. Not on my list. But you mentioned AI. We talked about that earlier. Where are we going to be in 12 to 18 months with AI in crazy spot?
- [42:41]
B
I mean, it's, you know, the convergence of AI is amazing. So, you know, the ability to talk to AI in real time in this kind of environment and have it interact with you, I think is certainly an 18 to 24 month kind of thing. Robots are probably a little farther out. 36, but. But, you know, you couldn't have smart robots without AI so AI is a precursor. You know, the robotic physical integration world is going to be the biggest thing that's probably Three, maybe five years, not too far.
- [43:14]
A
Wow.
- [43:15]
B
Yeah.
- [43:16]
A
YPO events. Best YPO event you've been part of.
- [43:20]
B
Well, you know, look, I'm partial. I've been, I've been to a lot of YPO events, so I'll tell, I'll tell you two, maybe three. Yeah. The best one I was ever part of was we had an incredible team and we did a global business summit in Dubai last November. We had 1200 people and we did something like, you know, some $7 billion in business in a three day period and had the minister of AI, which Dubai has a minister of AI to tell you how important the kins are. AI who was there and spoke to us. And we closed with Mr. Wonderful from Shark Tank, who judged three. We picked out of 100 deals, three winners. They all got funded by sovereign wealth funds. So that was one. The second best one I ever did was a very provocative one, which was about religious intolerance. And it was at the, it was at the Museum of Tolerance here. And I brought in the son of Hamas. So the guy whose father founded Hamas, I brought in a Muslim cleric, I brought in a Protestant minister, and I brought in a rabbi. And they all.
- [44:25]
A
This isn't deleting into a joke.
- [44:27]
B
No, no. They all got on a boat and the shark starts anyway. And then we talked about intolerance. And while everyone likes to point at the other religion for intolerance, but the stories of intolerance and the irony of that event was how many people couldn't hear certain things from other clerics and were doubting the sincerity of others. And it really illustrated, you know, that religious intolerance is something that isn't limited to one or another. You can't blame, you know, you know, extremists here. We've all had extremists. We all, we're all, you know, everywhere we look, every point of view has an extreme view. And that, that. So that those were probably two of my favorites. But I've had so many that I thought were just life changing.
- [45:12]
A
Yeah, no, I mean, look, we have gone to so many YPO events together and just an amazing organization to, to be part of.
- [45:19]
B
Yeah.
- [45:20]
A
Couple more questions.
- [45:21]
B
Good. Fire away.
- [45:22]
A
How about under the radar neighborhood location that you think over the next five years is just going to be booming?
- [45:32]
B
Are you talking state or very local?
- [45:35]
A
Go both.
- [45:36]
B
Go both. You know, I'm a big fan and believer in Chicago.
- [45:42]
A
Wow. You know, I went to Northwestern.
- [45:43]
B
Yeah. Yeah. Okay. And look what it looks proof of it. My son went to University of Chicago. I'M a big believer. The density, the strong ethnic pull there and how, how neighborhoods and communities work. The city of Chicago has some LA size problems, but. And public safety is an issue and they have their own fiscal issues. But I believe in it. I think for a risk adjusted perspective, I think it's good. I happen to like Sacramento, not the state House, but the city out here quite a bit. But you know, for me, when you get micro specific, I think there's certain towns here in every state there's a town or many in California, many, some places less. Where the combination of great governance, great population and opportunity come together. And I would not underestimate, we're very fixated on the national and the state plan. I would not lose track of what happening at cities all over because most problems get solved at a local level.
- [46:53]
A
All politics is local.
- [46:54]
B
All politics local.
- [46:57]
A
If you were not in the real estate business, what would you be doing?
- [47:02]
B
Yeah, probably not male modeling.
- [47:06]
A
Well, you gave up that career.
- [47:07]
B
Yeah, I did and the demand, you know, was high, but I didn't want, I didn't want to just be a piece of meat. So the, you know, look, politics was always interesting to me and community involvement was always good. It was always something that felt very important. And I really thought that's where I would end up. I really thought that I would. The way this journey would be was I would end up contributing more at, you know, at the state or even local level. I've been on homeowners associations, I've done all that kind of stuff. But I felt over the long run that now I'm much better. I'm in 100 communities. I can do that through my, I can do through my centers in a real active way and I can make a difference locally. So probably that would be it. I always wanted to be in the Air Force. That was something else. I always wanted to work for Disney. I mean, I had a lot of things that I had in my mind, but I guess this is where I, you know, settled in it.
- [48:00]
A
Yeah. Well, not too bad.
- [48:02]
B
Yeah.
- [48:02]
A
All right, last question.
- [48:03]
B
Yeah.
- [48:04]
A
A 22 year old college grad comes into your office, Mr. Siegel. Better not call you Sandy. Mr. Siegel.
- [48:10]
B
Yeah.
- [48:11]
A
What advice do you have for me? I want to be in the real estate business. I don't know what I should do.
- [48:18]
B
Yeah, yeah, look, and I look, that happens every week or sometimes several times a week with kids nowadays because, you know, kids feel disconnected and it's difficult. So look, I think the short answer is this. First of all, get out of your head. The world's not waiting for you, right? You got to prove what your unique selling proposition is. What is unique about you that will make a difference. And if you want to get into a field, especially real estate, but there's a bunch of them that are kind of that high end kind of business. You got to have a passion. You got to explain your passion. You have to have a story. What, What, What? Real estate. Why? Why you want to be in the business? You ask people, I want to get in real estate. And you say, why do you want to get real estate? The answer is, because I hear you can make a lot of money. That's not. That's a terrible answer, right? Okay. If you ever, you know, if you say, hey, I'm artistic and I grew up and this is. That's what draws me to it. Much better answer. And then two, I'm willing to work harder than anybody else. I'm gonna outwork everybody, and I'm willing to get paid nothing to prove my worth. That's what it's gonna take. We all live in a crowded world, and we have to explain why we're different. And I got to tell you the truth, Andrew, most kids today flunk that test, and you have to sit and you have to coach them. And I'm always happy to coach people. So this is an open call for, you know, send me your kids and I'll. I'll talk to them. Because I was once that kid. And luckily, you know, my answer at the time was unique, which is I could computerize accounting departments, you know, but, you know, first of all, this is not unique anymore. And two, you know, that's not, you know, you gotta be a little beyond that today.
- [49:57]
A
Well, I'll tell you what, what is unique about you is how much you care. And so from the first moment, which I started our podcast. Gosh, now 15 years ago when we met, to anytime I pick up the phone, I know you're there. But despite where you are in the world, despite how busy you are, you always pick up the phone and say, you know, how can I help? And so I want to thank you for years of friendship for coming over the hill. Not that you are over the hill.
- [50:25]
B
But you drove over there. Thanks for making that distinction.
- [50:27]
A
Yes. To come into my studio. And for that, I have a special designed sawtelle hat with a Sklar kirsch logo for you, Mr. Sandy Siegel. I hope you wear it proudly.
- [50:41]
B
Wow.
- [50:41]
A
Thank you.
- [50:42]
B
Well, thank you, Andrew. You've been a great friend and a great connector of people and you have, you have an infectious spirit. And I, and I, you know, I should have said if I had one other thing I could come back as it would be you. Oh. But, but thank you for that. I, I'm honored to receive this hat. Although I noticed you gave away about 40 in the other room.
- [50:59]
A
There were some extras.
- [51:02]
B
But hey, I'll, I'll take it.
- [51:04]
A
I bought them for you and they happened to be here so I gave them the extras.
- [51:08]
B
Yes. Okay.
- [51:10]
A
In all seriousness, thank you for coming on. Thank you for being a great friend. And that is another episode of Real Talk.
- [51:17]
B
You've been listening to Real Talk real.
- [51:19]
A
Estate discussions with Andrew Kirsch. You can catch prior episodes@skalarkirch.com and on YouTube, LinkedIn, Apple Podcasts, Spotify, Google podcasts and more. Thank you for your positive reviews, comments and for sharing this show with others.