Jim Patton has been a part of the NewMark Merrill team since its very inception, helping launch what would become the lucrative and cutting-edge business it is today.
In those wild start-up days, Jim’s USC/Penn State education and advertising industry experience proved invaluable in his first role as Marketing Director—creating fun and unique advertising campaigns that helped put NewMark Merrill on the map.
Today, Jim serves as the company’s Senior Vice President, Acquisitions, where he is responsible for acquiring existing shopping centers, securing management contracts and sourcing raw land for development.
To celebrate the recent acquisition of Corbin & Parthenia, Jim saw down for a Q&A to provide some insights:
In the announcement release for NewMark’s recent acquisition of the Corbin & Parthenia shopping center in Northridge, Sandy was quoted as saying that “We identified this community center approximately two years ago, saw its potential and have been working to acquire it ever since.” Is that timeline typical, and how does NewMark Merrill identify and pursue those opportunities?
No, that time frame is in fact an exceptionally long time for an acquisition to take place. It would rank as one of the longest escrows we’ve ever had, certainly for an existing shopping center. When acquiring raw land, you may find yourself dealing with issues such as environmental impact and you have to work through them with various groups. When the center is built, the typical escrow period is 60 days, give or take.
When NewMark Merrill is evaluating potential acquisition targets, is there a preference for emerging vs. established markets? How do you weigh opportunity vs. risk when making those evaluations?
We almost entirely pursue properties in existing, established areas. We are a “density” buyer, meaning that we seek out centers that sit in the heart of a well-established and populated neighborhood. And then we strive to have it be THE retail center for that community’s needs. We take great care to cultivate shopper loyalty after we complete the acquisition and the people that reside in that 1-, 2- or even 3-mile radius around the center are your captive audience. You can be a very successful shopping center owner, and your tenants can also be very successful if you capture the hearts of those people that live within walking distance to the center.
What are the challenges and opportunities when acquiring a closed or underperforming retail center vs. acquiring an undeveloped piece of property? How do current macroeconomic conditions (and the resulting impact on the cost of financing and construction) affect that calculus?
The initial challenge is educating, or re-educating, the tenants on how a professional shopping center owner operates and what our expectations are. It’s very likely that they’ve not had a professional management company overseeing the center so they don’t know who to call or where to ask questions.
Another challenge we continually face is changing the perception of the center in the minds of the surrounding neighborhood which has seen the center deteriorate over time. To the point where it’s almost overlooked and forgotten about. One really has to work hard to change that perception. Perception is reality, after all. All it takes is one bad experience to sour someone on your center. It takes several positive experiences to change that back. Getting someone back to shop that first time is the toughest part but we are very good at it.
We do more than just talk about becoming members of the community. We actually live it. It becomes apparent over time that we are making things better.
Are you able to be more specific about the types of planned investments and upgrades to the property that are in the works, and how NewMark is aiming to “improve the customer experience?”
I think this center is in need of some beautification such as upgraded landscaping, signage, new paint, etc. We will also be looking into some more additive components like tower elements and other architectural articulation. It’s a tremendous location in a great neighborhood with one of the strongest local restaurant operators in Bent’s Deli so we have a lot to build on. We are looking forward to it.
What presents the biggest logistical challenges when acquiring/developing raw land: entitlements and zoning, restrictive lease terms, or civic/community outreach/communication?
All of those issues present challenges to a buyer. We want to be sensitive to the community’s needs and wants, realizing that change can be scary, but we also don’t want to just repeat the neglect of the previous ownership group. It’s a balance you have to achieve. And you can do that by communication.
One of the first things we did when we were buying Corbin & Parthenia was to reach out to the local community group which was very active. We wanted to assure them that we would be good partners in the community and would be very accessible to them. They were very appreciative of that and I think they will like what they see from us. Restrictive lease terms are always a challenge because there are few tougher things to accomplish than to convince a major tenant to alter their lease. Luckily at Corbin & Parthenia, we are free from any overly onerous lease restrictions. Doesn’t happen often.
Contact Jim by emailing him a [email protected] or connecting with him on LinkedIn.
When NewMark Merrill announced the newest addition to our retail center portfolio, it was the culmination of a two-year process that was well worth the wait.
The project is Corbin & Parthenia, an 83,668-square-foot community retail center in Northridge, California. And this exciting new addition is one that, as our own President and CEO Sandy Sigal explains, we identified “approximately two years ago, saw its potential and have been working to acquire it ever since. Through the financial challenges, we were able to identify, secure financing, and arrange the closing on a property that we believe is a key center in the area.”
NewMark Merrill’s familiarity with the San Fernando Valley and Conejo Valley region and the Northridge market was an important ingredient in the Corbin & Parthenia acquisition. Corbin & Parthenia is now the eighth shopping center NewMark Merrill owns and/or manages in the San Fernando Valley and adjoining Conejo Valley in Los Angeles. The project is located in one of the region’s most densely populated and busiest retail hubs, with proximity to the CA-101, CA-118, and I-405 freeways.
There are big things in store for Corbin & Parthenia, beginning with much-needed work to upgrade the property and making telling improvements in the customer experience. In addition to upgrading the property, NewMark Merrill intends to implement a higher level of local promotion of tenants—including a series of events aimed at reaching out to local neighborhood residents.