The FORT Podcast: Andrew Segal Part 2

Andrew Segal joins Chris for his second appearance on The FORT. This time Andrew speaks on his experience contracting COVID-19, his thoughts on the future of retailers & restaurants as we continue to navigate this crisis, and much, much more.

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01:46 — Andrew’s Experience Contracting COVID-19
03:03 — The Last 90 Days From Andrew’s Point of View
06:41 — Where are you getting your information as it relates to what’s true and what’s not true?
08:03 — If even half of retailers and restaurants go out of business, how do we bring these asset classes back to life?
09:01 — Why do companies need to bring employees back into the office?
10:31 — What are the biggest factors contributing to the decline in productivity through the work-from-home model?
10:57 — How is co-working going to work when you have several different companies under one roof?
11:51 — What do you see happening with the struggling, yet massively funded co-working industry?
13:48 — What happens if WeWork goes out of business?
17:00 — Do some of these office buildings start to offer a live and sleep hybrid model?
17:53 — Is Class-A office headed towards a rough patch?
20:21 — What do you see for the future of super-dense cities like NYC and LA?
24:23 — How are your hotels doing?
25:00 — What do you look for before you start buying more hotels?
26:51 — Is it easy to become a buyer of debt as a buyer of real estate as we start to see these delinquent loans come in?
29:19 — Have you bought any deals yet or when will you go on your buying spree?
31:15 — Is it complicated to buy a CMBS note?
33:13  — What’s the typical transaction process when buying off of an auction website?
34:10 — What are you going to do with the golf course you purchased?
34:52 — How does your technology improve efficiency?
36:02 — What do the first 30 days after purchasing a building look like in order to get it up and running?
37:32 — Will Airbnb become even more successful in the long term?
38:32 — What is your opinion on the higher-education and sports worlds right now?
41:27 — Is there anything interesting coming out of COVID-19 that you’re seeing across different industries?
43:08 — What are you expecting to see in capital markets going forward?
45:39 — Are banks better capitalized than they were during past crises?
46:14 — Will states take a dive once stimuli & PPP run out or will the federal government keep providing money?
47:34 — Will states start using property taxes in order to keep themselves funded?
48:04 — Is there a relationship between the growth in tech and the lack of inflation?
49:08 — What is bad and good about inflation?
51:39 — Why isn’t there a Fannie Mae or Freddie Mac loan for commercial properties?
52:41 — Do you see any path to truly building affordable housing at scale?
53:55 — Is Houston positioned well coming out of this? Does anything excite or scare you?
54:47 — Do you think we are past the worst of COVID-19?

Episode Summary

Andrew Segal doesn’t merely possess experience; he’s witnessed the transformation of the industry firsthand. One of the pivotal shifts he’s observed is the evolution of tenant representation. Previously seen as a mere transaction, tenant representation has grown in complexity, requiring a deeper understanding of both the tenant’s and landlord’s perspectives. This holistic approach ensures that negotiations are not just about numbers but about genuine value.

Speaking of value, Segal emphasized the significance of the net present value (NPV) in real estate transactions. He nostalgically recalled its historical relevance and articulated its role in ascertaining the genuine value of a deal today. In essence, NPV is not just a financial tool but a lens through which the real worth of a deal is perceived, considering the time value of money.

The role of brokers, according to Segal, is at a crossroads. While their importance cannot be denied, technological advancements and direct owner-tenant communications are diminishing the traditional broker’s influence. The future, in Segal’s vision, might see brokers transition to a more consultative role, leveraging their industry insights over transactional expertise.

Flexibility is the future of office spaces, Segal posits. The pandemic, coupled with dynamic work trends, has made adaptable spaces not just a luxury but a necessity. Beyond mere square footage, the value proposition of buildings is increasingly tied to their amenities. In this new normal, a coffee shop or a daycare within the premises could be as crucial as the office space itself.

Leasing, a subject close to Segal’s heart, was also touched upon. He shed light on the intricate psychology behind it, emphasizing the factors influencing lease durations. Trust, according to him, is the bedrock of the landlord-tenant relationship. A sentiment that resonated when he highlighted the role of property managers, who often serve as the bridge between the two parties, ensuring smooth interactions and addressing concerns.

Urban allure, in Segal’s view, is here to stay. Cities, with their rich tapestry of cultural and recreational amenities, will continue to draw people. However, he also acknowledged the suburban surge, especially in the wake of recent global events, highlighting the delicate balance between urban charm and suburban tranquility.

On the technology front, property technology (PropTech) is the game-changer. Segal was optimistic about its potential to redefine multiple facets of the industry, from transactional processes to tenant experiences. However, he was candid about the challenges, primarily the integration hiccups that often accompany tech adoption.

The retail sector, always a hot topic, was not left out. Segal’s perspective was refreshingly optimistic. While acknowledging the challenges traditional retail faces, he was bullish about experiential retail. For him, the future of retail isn’t just about selling products but about offering unique experiences.

In wrapping up, the podcast gave listeners a peek into Segal’s illustrious career. Through anecdotes and insights, he underscored the importance of adaptability and the relentless pursuit of knowledge in an industry as dynamic as real estate.

The FORT with Chris Powers is produced by Straight Up Podcasts