POWERS Podcast #393 – Alex Nyhan, CEO @ First Washington Realty: “How Neighborhood Centers Became the Most Resilient Asset in Real Estate”

Date: September 16, 2025
Host: Chris Powers
Guest: Alex Nyhan
Length: ~65 minutes

Episode Overview

This episode dives deep with Alex Nyhan, CEO of First Washington Realty (FWR), a company that owns and manages a $9B portfolio of grocery-anchored shopping centers. The conversation explores the evolution of retail real estate, the resilience and strategic advantages of neighborhood shopping centers, lessons from complex public-private real estate projects, the importance of community in retail, investment philosophy, and the current state of the U.S. consumer. The discussion is filled with anecdotes, hard-earned industry insight, and timeless principles, making it a must-listen for anyone interested in commercial real estate, retail, or long-term business resilience.

Key Discussion Points & Insights

1. Alex’s Background & Early Career

[04:47–06:25]

• Alex began his career working for Washington D.C.’s mayor, tackling complex public-private real estate projects, then spent 8+ years at Forest City Enterprises, leading mixed-use, multi-phase redevelopments (including international work in Brazil).
• Complicated Cap Stacks: Described a 42-acre redevelopment (“The Yards”) involving historic preservation, environmental remediation, tax credits, and creative financial structuring.
  • Memorable Story: “I had to go back to the state historic preservation office...we really need this hole [in a historic wall].” – Alex Nyhan [08:05]
  • Unexploded Ordinance Incident: “We found these unexploded bombs...the Army guys just rolled up...threw it over their shoulder...’You’re good. Get back to work.’” – Alex [10:23]

2. Structuring & Executing Complex Public-Private Projects

[11:31–22:10]

• Alex detailed the negotiation and land assembly for a major D.C. convention center hotel, involving RFPs, land swaps (with multigenerational families and unions), intricate capital stacks, and balancing public/private incentives.
• Quote: “It was one of those deals where everybody was better off for having done it...” – Alex Nyhan [23:24]
• Emphasized the critical (and often non-replicable) role of public sector involvement in breaking land deadlocks and leveraging legislation.

3. First Washington Realty’s Model & Philosophy

[23:40–26:05]

• FWR: $9B AUM, 22M sq ft across 143 shopping centers, privately owned, vertically integrated (leasing, development, property management).
  • Six regional offices; strategy focused on discipline, not scale for scale’s sake.
• “We’re not into scale for scale’s sake...It just so happens that in our pursuit of trying to find the right real estate, we’ve happened to grow.” – Alex [24:54]

Investment Strategy

[25:34–29:21]

• Looks at 100 deals for every one chosen.
• Central principle: “intellectual modesty.” FWR focuses on downside protection, aiming to own “real estate we’ll be comfortable with in a downside scenario.” [26:33]
• Prefers top trade area, grocery-anchored sites in affluent, college-educated neighborhoods with high barriers to entry.
• Emphasizes off-market deals and value creation through targeted repositioning.

Notable Case Study

• Example: A Long Island center was acquired off-market, repositioned, and increased in value by 50% after strategic leasing and tenant repositioning. [27:10]

4. Why Neighborhood Retail is So Resilient

[32:33–36:57]

• The “retail apocalypse” narrative was only half-right: malls suffered, but neighborhood shopping centers thrived.
  • “Malls are enclosed...1% of retail in the U.S...they occupy a larger share of the conversation.” – Alex [33:24]
• E-commerce pressured malls but drove tenants into neighborhood centers. Industrial rent growth also improved the appeal of in-store fulfillment in open-air centers.
• Supply constraints critical: “Retail sales in the U.S. have expanded at 12.5x retail supply since the GFC...” [35:15]
• Neighborhood retail now exhibits lower volatility and tighter risk/return profiles than other commercial asset classes (except perhaps data centers).

5. Winning Deals in Competitive Markets

[37:04–41:05]

• Buying centers is highly competitive. FWR wins not only on price, but by offering reliability, flexibility, and a reputation for “upholding commitments.”
• “Our culture is— we’re obsessed with upholding commitments. And I think that comes through when we can point to seller after seller who’s been willing to give us the chance, and we’ve upheld the commitment. It works.” – Alex [38:26]

COVID-Era Deal Structures

• Used innovative “risk management devices” (performance escrows, true-up payments) to bridge gaps in uncertain times, leveraging their proprietary dataset on rent collections. [40:03]

6. The Power of Tenant Relationships & the Value of Community

[41:38–44:42]

• With 3,700 tenants, relationships are both a moat and an advantage, but the business remains “person-to-person.”
  • “These are human relationships, first and foremost. It’s people that you see at events. Maybe you went to their wedding, maybe you went on a canoe trip.” – Alex [42:19]
• Trusted relationships offer operational insight, underwriting precision, and problem-solving agility not available to new market entrants or brokers.
• Emotional connection & community: Long-standing centers become the “center of a community,” bringing loyalty and repeat visitation. Example: Resisting community pushback on changing awnings at a historic Kansas City center. [56:09]

7. Tenant Mix, Underwriting, and Mom-and-Pop Dynamics

[44:43–48:46]

• Small-shop units include both chains and independent “mom-and-pop” tenants. FWR balances credit stability (grocery/anchor tenants) with NOI growth and vibrancy from dynamic smaller retailers.
• While chains offer predictability, mom-and-pops often deliver “intense commitment to customer service” and authentic connection.
• “Nobody wants to go to a shopping center with the same boring five tenants everywhere...There’s only so much you can do to underwrite [mom-and-pops]...a lot is judgment and portfolio balancing.” – Alex [45:30]

8. Location Selection: Demographics & “Education as a Hedge”

[50:01–52:38]

• FWR prioritizes markets with high numbers of college-educated residents because their incomes have consistently outpaced inflation.
  • “If you want to have a customer that’s got spending power when the economy is in a bad place, you need to have a lot of college degrees. It’s just that simple.” – Alex [50:55]
• Freedom as a private company: “We can invest coastal, Sun Belt, the Midwest...some of our best investments have been in the Midwest.” [51:37]

9. Government & Regulatory Environment

[52:44–54:32]

• Complex public-private deals (TIFs, land-use incentives) are sometimes essential, but government interventions/requirements can hinder performance if they’re too prescriptive.
• Retail generally favored over multifamily due to its tax base and minimal public service load.

The State of the Consumer & Market Dynamics

[56:58–61:50]

• FWR’s core customers (top quintile) remain robust, but the “middle and down” consumer segment is under increasing strain—higher defaults, reliance on ‘buy now, pay later’ for essentials.
  • “25% of people who use buy now/pay later for groceries are doing it because they have to buy groceries on installment. Which is just awful to think about...” – Alex [58:15]
• Tariffs have raised construction/materials costs, but thus far, tenant interest and sales have withstood inflation at FWR centers.
• On interest rate cuts: “It just makes me so nervous to hear that...for me, the credibility of our monetary policy is like the foundation that sits underneath asset pricing...the main thing is, I just want to make sure that the Fed focuses...on price stability, on fighting inflation.” [60:42–61:50]

Leadership, Human Connection, and Timeless Principles

[61:59–64:20]

• Alex highlights a growing awareness among landlords that neighborhood centers can play a vital role in alleviating loneliness and creating places for real-life connection, which translates into higher foot traffic and sales.
  • “People are lonely in this country...the more human interaction that we can promote at our centers, the more likely we’ll be to get foot traffic.” [61:59]
• He advocates for rational, experience-based decision-making in real estate and society: “If I’m gonna go get a heart operation, I want someone who knows how to fix hearts...maybe done a couple of them before would be sweet.” [64:04]

Notable Quotes & Memorable Moments

• On creative problem solving:
  “The projects were just impossible...but you just keep grinding and that does.” – Alex [07:55]
• On winning in competitive markets:
  “We’re obsessed with upholding commitments...There’s just a level of mom-and-apple-pie quotient — the seller feels like these guys are going to do me right.” – Alex [38:26, 38:44]
• On the “retail apocalypse” myth:
  “Malls are 1% of retail in the U.S...they occupy a larger share of the conversation.” – Alex [33:24]
• On supply constraints:
  “Retail sales...expanded at 12.5x retail supply since the GFC…supply growth [in open air retail] is basically nothing.” – Alex [35:15–35:44]
• On education & inflation:
  “People with college degrees...incomes demonstrably have outpaced inflation...So if you want to have a customer that’s got spending power...you need to have a lot of college degrees.” – Alex [50:13]
• On community:
  “If a neighborhood center feels like the center of a community...there’s a greater loyalty.” – Alex [55:38]
• On meaning in retail:
  “People are lonely…if we can promote human interaction at our centers, we’re more likely to get foot traffic, sales, and value growth.” – Alex [61:59]

Key Timestamps for Important Segments

• [04:47] – Alex’s origin story & apprenticeship in D.C. government
• [07:55] – Example of complex public-private capital stack (“The Yards”)
• [10:23] – The “unexploded ordnance” construction anecdote
• [23:40] – First Washington Realty today: size, integration, and philosophy
• [26:04] – How FWR selects investments and their “intellectual modesty”
• [32:33] – Evolution of neighborhood retail’s performance vs. malls
• [35:15] – Effect of supply constraints and investor demand
• [37:04] – Winning deals by “upholding commitments” and reliability
• [41:38] – Importance of tenant relationships and local community
• [44:43] – Balancing credit tenants and mom-and-pops
• [50:01] – How demographics and education underpin long-term value
• [56:58] – What FWR sees in real-time from the U.S. consumer
• [61:59] – Human connection, loneliness, and developing community centers
• [64:04] – Final comments on reason, expertise, and sound decision-making

Conclusion

This episode provides an unvarnished, nuanced look into the strategic thinking, operational reality, and leadership behind one of the nation’s major private retail landlords. Through stories, market data, and timeless wisdom, Alex Nyhan demonstrates how neighborhood centers have proven remarkably resilient, why demographics and community drive value, and how sound judgment—with a personal touch—outperforms in real estate. Whether you’re a seasoned investor or new to retail, the takeaways here echo beyond property lines into universal business principles.