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Welcome to the West Side Investors Network, WIN, your community of investing knowledge for growth. This is the Real Estate Professionals Investing Podcast. For Real Estate Professionals by Real Estate Professionals. This show is focused on the next step in your career....... investing.
Welcome to the Westside Investors Network. Win, your community of investing knowledge for growth. This is the real estate professionals investing podcast for real estate professionals by real estate professionals. This show is focused on the next step in your career, investing. Thank you for listening.
Intro speaker:And please, if you like our content, rate us on your podcast provider. Just a quick disclaimer, the views and opinions expressed in this podcast are for educational purposes only and should not be construed as an offer to buy or sell any shares or securities, make or consider any investments, or take any other action.
Trent Werner:Welcome back to another episode of the Deal Deep Dive segment on the Westside Investors Network podcast. I'm your host, Trent Werner. In this segment, our featured guests will share their unique stories on a specific deal they've invested in. We will dive deep into finding the deal, financing the deal, writing an offer, and the due diligence. Do us a solid and smash that subscribe button, leave us a rating, and share this episode.
Trent Werner:And now, let's dive deep. Welcome back to the Westside Investors Network podcast. I'm your host, Trent Warner. On today's episode, we're joined by Joe Brady. Joe is a globally renowned commercial real estate strategist with over thirty years of experience.
Trent Werner:Today, Joe and I are gonna talk about his time being the head of real estate divisions for large corporations, as well as the managing director at JLL for over a decade. Joe's also gonna share his insights on where retail, industrial, and office space is and where it could be heading. We also covered Joe's book, WorkShop, which is linked in the show notes, and I highly recommend you check out. Now let's welcome Joe Brady. Alright.
Trent Werner:Joe Brady joining the Westside Investors Network podcast. Joe, I'm super excited to have you on today.
Joe Brady:Thanks, Trent. Good to be on the Westside. Yeah. And
Trent Werner:I guess we're you're calling in from the Eastside. Right?
Joe Brady:I am. Yeah. I've got the the other the other ocean. I'm in the I'm in the Jacksonville, Florida area, in Ponte Vedra Beach, which, is home to the PGA tour for those golf fans around. And, we've had fifteen days of or excuse me, 15 inches of rain, if you can believe it, in the last week.
Joe Brady:So something's happening.
Trent Werner:I'm in Oregon, and that's we haven't even come close to that. We will, but but not this time
Joe Brady:of year. Yeah. Exactly.
Trent Werner:Well, before we we dive in, just to let the audience know, Joe and I are gonna talk about his career. Obviously, it's very vast and has tons of different insights that we're gonna hear today. And one thing that we wanna focus on is Joe's expertise around commercial real estate. Joe, how long have you been doing it now?
Joe Brady:About thirty five years.
Trent Werner:Yeah. So you you've you've seen a couple of things in your career, and I'm excited to hear some of those insights. So before we, you know, get too crazy, where did your career start, and what have you focused on throughout your career?
Joe Brady:Yeah. Trent, I I, I came out of business school, UNC Chapel Hill, and went to work at First Chicago, which, was later acquired by JPMorgan. So I really went into real estate corporate finance. And in 1990, that was a an interesting time. Resolution Trust Corporation, you know, we were definitely going through, a trough, a cycle in the industry.
Joe Brady:So I got to see an op lot of workouts happening. I got to look at and study a lot of deals that went south and and understand why they went south. But I very quickly pivoted to the retail side of things and worked with a number of different retailers leading up through. In fact, I you know, you're in Oregon. Well, I worked for Hollywood Video, which is a company that doesn't exist anymore, but was based in Wilsonville.
Joe Brady:And, spent a lot of time actually, in in the Portland market. But joined that company when it was at a hundred stores and helped grow the chain in about four and a half years to 2,000 stores. So really had, a taste of the the high volume rollout, and so we were doing deals literally every corner of the country. I mean, I I even went to Minot, North Dakota in January. So I don't advise that, by the way.
Trent Werner:And and how did you how did you get into working with the retail space out of, you know, corporate real estate finance?
Joe Brady:Yeah. I, I wound up working, before Hollywood. I actually worked for Burger King Corporation and was managing all the real estate in the Midwest and took a took a hard left turn and became a franchisee. So I was, a multi unit Burger King franchisee as a, you know, kind of a 20 with a partner. And, you know, I think as a young person, it's really important to learn what you don't wanna do as much as what you do wanna do.
Joe Brady:And so after about the seventh double whopper with cheese thrown at my head, I decided I I was I was better at buying land, building buildings, kidding the whole thing out. And when it came time to turn the turn the lock and open it to the public the first time, I'm out. So I, I left operations at that point.
Trent Werner:Fair enough.
Joe Brady:And I really, really wanted to focus on real estate, and and that's when I actually hooked up with with Hollywood Video. We had that really extraordinary rollout. And by about February, the the home video business was starting to sputter, and I had some partners that I worked with at Hollywood Video, that in in around February, we started an outsourced retail real estate company. So we figured, hey. We just opened 2,000 of these things all around the country.
Joe Brady:We had brokers in every single market with great we had great relationships, and we really knew how to do this. So we decided to take our show on the road. And it's helpful to be smart. It's better to be hardworking. It's even it's even better to be lucky.
Joe Brady:And so one of our first clients was through a relationship at Hollywood Video, but with a company that was called VoiceStream Wireless out of out of Atlanta. And six months into our engagement, they were acquired by Deutsche Telecom to become T Mobile USA. So we wound up opening another almost 2,000 T Mobile stores around the country in addition to Starbucks and Texas Roadhouse and a handful of other food and beverage clients. And so we ultimately sold that business in 02/2008 to JLL and really created the retail platform at JLL at that time. So it was, it it was good timing, particularly since we closed again, being lucky, 01/03/2008, we closed with JLL.
Joe Brady:So it was really a good time to get out of being an entrepreneur and having a big corporate umbrella to get get us through the global financial crisis.
Trent Werner:And when you were operating that business, working in that business, what was your day to day, or what were you doing for these companies on the kind of on the show on the road side that you were talking about?
Joe Brady:The retailers need predictive analytics and revenue forecasting. They need a whole host of details and data, and we had a whole team that could provide that. And so we could build revenue forecasting models based on a company's underlying business, and it's vital to be able to say, you can pay this rent because we think you're gonna produce this level of of revenue. And our hit rate was good. So it it it really allowed us to be differentiated.
Joe Brady:So on one hand, we were helping with the strategy and the planning upfront, and then we took that into the next phase, which was site selection, deal negotiation, and then oversight through construction until opening. So really, you know, the full life cycle of a of a deal.
Trent Werner:So you were able to do what you enjoyed and what you were good at all the way through until operations.
Joe Brady:Exactly. Yes. No, no flying hamburgers. And, so I was I was at, I was at JLL for nine years, and that allowed me you know, it's kind of fun because with the previous company, which is called the Standard Group, I we had the the lower 48, and we were doing deals literally in every corner. Once we went to JLL, it became this global platform.
Joe Brady:So, again, in your neighborhood, Nike was one of our our clients, and, we were working to open we opened 16 stores in Brazil before both the Olympics and the World Cup. And so it was kind of fun orchestrating that, wound up rolling Nike out throughout Southeast Asia. And with JLL, it was great. Although, I I covered The Americas. I had colleagues that were able to take care of a lot of the business in Asia.
Joe Brady:So it was kinda cool to have, you know, an even bigger sandbox to play in. And, I wound up doing some other things with banking clients and leading the banking industry group, which is really interesting because clients like Goldman and JPMorgan and HSBC were going through pretty big changes during that time. So it was, you know, one of the one of the challenges with JPMorgan came during Brexit or even pre Brexit because JPMorgan has something like 25,000 employees in The UK. And when they saw this looming Brexit thing happen, they they they purposely said, okay. JLL, you need to go out and find us homes for these people because we have to go to Frankfurt, we have to go to Dublin, we have to go to Warsaw.
Joe Brady:And and so, again, just really interesting challenges to tackle.
Trent Werner:And how does I guess, I mean, you already talked about JLL being a more global scale compared to what you're doing prior. Were there any major differences aside from the, I guess, the size of what you were doing compared to what when you were operating your own shop?
Joe Brady:Yes. And I I think it was the the size and and legitimacy to actually play on a global basis or to even engage in The United States with some of the really big multinationals. So, there's there's a tendency to go to the big two, JLL or CBRE. I think, I think companies have found, particularly when it comes to outsourcing and and brokerage, that you you you tend to go with the the best team in a particular market. But when it comes to running an account globally, it's really tough to compete if you're, you know, if you're just a a small regional player.
Joe Brady:So, yeah, we we were able to get access to to bigger clients.
Trent Werner:And, obviously, you're talking a lot about opening brick and mortar shops every corner. Everyone knows that in the last, what, ten, fifteen years, things have kinda migrated away from that in some capacity even more in the last three or four years. What are your thoughts on going from all these brick and mortars, 2,000 locations for all these different companies to the online virtual world, and we hear all over the news all the time, all the square footage that's vacant in downtown, you know, urban cores. What are your thoughts on on this topic?
Joe Brady:Yeah. That's I mean, Trent, it's a really important top. In the last ten years, there's been 100,000,000 square feet of retail space taken out of the supply side of the equation. And why is that? Well, it's a combination of functionally and technically technologically obsolete retailers, who became irrelevant and and the subsequent malls that were supporting those those those retailers.
Joe Brady:So you think about a a b or a c mall. You know, many of those have been either reconstituted into corporate, you know, office campuses or a combination of flexible office space with gyms and apartments. You you've seen all sorts of adaptive reuse happening. You've also seen the likes of this, you know, the Sears and the j JC Penney's and some of these other bigger boxes that have just gone dark and, again, have been reconstituted into something else. So we're seeing a lot of creative destruction of of space.
Joe Brady:In other words, it's it's getting recycled. But net net, there's been a a hundred million square foot, reduction on the supply side. Now from my perspective, what we've seen is this dramatic acceleration of of technology. And you think about I mean, it's it hasn't even been twenty years since the iPhones come out. Right?
Joe Brady:02/2007. The power that that smartphone technology has given the consumer has been astounding. So now what we see is omni omni channel retail or ecommerce. Oftentimes, that that sort of element of of online is referred to as ecommerce. What we've seen is a steady, increase in the in the percentage in usage, and we definitely saw it spike during the pandemic.
Joe Brady:It it got up to almost 20% of of retail sales. Now retail sales in The US are $3,000,000,000,000 a year. It's now settling in at 15 to 16 trill, 15 or 16%, which again equates to, you know, $4,400 almost $500,000,000,000 in revenue happening online. Now there's another element that's that's really important to note, and I I sit on the board of ICSC, which is the trade group for retail real estate. And ICSC has done some research called the halo report, and we've we're now up to our third iteration.
Joe Brady:But in every iteration, we've we've taken credit card data from Mastercard and Visa. The the data points are up to 25,000 data points. And what it's shown is that when a retailer opens a brick and mortar store in a trade area, the online sales go up by six to 8%. Conversely, if a retailer closes a brick and mortar store in a in a trade area, online sales go down 12 to 14%. So there's a direct relationship.
Joe Brady:The consumer is speaking, and she's saying, I want agency, autonomy, and optionality in how I use your brand. So I may wanna go into the store today and have something delivered to my home. I may wanna sit at home and have it an order and go and pick it up in store, or I might just sit at home and have it delivered. Or if the boxes pile up at the front door and I wanna bring stuff back, I wanna be able to physically do that. And so we're seeing this this kind of this flywheel happening in retail, and it's essential to have that that balance between not only the physical presence, but your your online presence.
Joe Brady:And and, you know, the same stories that we're hearing about office right now are just remind me that I've seen this movie before. Right? It's the click bait. Like, no one's ever going back to an office. There's there's no, you you you know, all work can happen at home.
Joe Brady:It was the same thing about ten years ago. The the click bait was brick and mortar stores are dead, and that couldn't be farther from the truth. In fact, there's more CapEx going into the existing stores today than ever because the consumer doesn't just wanna come in, buy something, and leave. They wanna be a part of the meaning of the brand. So you think about Lululemon.
Joe Brady:You think about Nike and some of the brand stores they're opening. Think about Apple. Right? Now Apple emerged as sort of this technology company to be probably the highest per square foot revenue of any retail use out there. It's astounding.
Joe Brady:But people go to Apple because they wanna be associated with the brand. They wanna they wanna look and browse. They wanna go and have questions answered at the Genius Bar. They wanna go and study and learn through the classes that happened there. I mean, there's this whole movement that happens around it, and the successful retailers are able to harness that notion of of purpose and meaning, you know, to create better equity brand equity with their customers.
Trent Werner:So that's all really interesting that I didn't I didn't necessarily think about from a retail standpoint of being able to physically go. And I'm I was thinking about it myself. I'm guilty of it where I'm shopping at Target. I can go to one right down the street where I can buy something online. I was always under the assumption that for retail, everyone wants convenience now, and I guess that's not the case.
Trent Werner:Know, everyone shops on Amazon because it's convenient, comes right to your house. Target, Walmart, all those companies will ship things to your house. But the return aspect too and the the the brand loyalty or being a part of the brand makes perfect sense because, yeah, yeah, there's some days where I don't wanna wait a day to go get something when I can see online that they have it in the store, and I'm just gonna go get it. So that's, that's really interesting. It's something I never thought about.
Joe Brady:And with your Amazon orders, you know, probably, I don't know what percentage gets returned, but you can walk down to your local Whole Foods and just drop that off. Right? I mean, so there's simplicity in in that flywheel of how product, the there there's a a positive and a negative supply chain that's happening. When I was head of real estate at Walgreens, we we had a reverse supply chain location in Valparaiso, Indiana. And lit it was literally a deep dark hole where returns just went to.
Joe Brady:And I'm not sure whatever happened to things there, but they never they never emerged. They just disappeared.
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Trent Werner:Uptown syndication is now offering a syndication coaching program for you to take your real estate portfolio to the next level. This is your opportunity to have experienced syndicators, AJ and Chris Shepherd, coach you on your way to controlling your real estate investing future. Our coaching program will provide you with the tools and framework needed to begin syndicating real estate in your target market. Go to uptownsyndication.com today to learn more. So we were talking retail, and, obviously, you've you've shared a lot about retail.
Trent Werner:What about office? Because retail makes sense. Right? We we just covered retail. But in turn like, I hear of commercial real estate, my first thing is office space.
Trent Werner:No one's going in the office, but then you have places like Amazon, all these companies saying, we need you back in. We need you back in. But what about, you know, Downtown Portland or Seattle or or wherever the the people have these big the companies have these big office spaces. What's happening with those?
Joe Brady:What's happening is that in parts of the Central Business District that is predominantly focused on office, those areas, whether it's it's it's parts of of Seattle, parts of San Francisco, parts of Chicago, Downtown Portland, those areas are having the biggest problem right now because the central business districts rely on just work. And we know that better business districts where people want to be have live, work, and play. They're healthy ecosystems that have a a twenty four seven, three 60 five vibe going on, and you can look. And and it's and it's what's interesting is it tends to be cities that, that have significant suburban mass transit into, into those CBDs, probably less so for Portland. But, again, you have sections of Portland, which are which are demonstrably that monoculture or that kind of that monolithic office type of component.
Joe Brady:Then you have other really cool areas, Pearl District and whatnot, where there's a lot of action happening twenty four seven. That would tend to be a better business district. So what's what's happening? Well, during the pandemic, we saw the residential Internet infrastructure held up. We saw that whole companies not only didn't blow up or didn't have, you know, horrible cyberattacks aside from kind of what are happening from nation states out there.
Joe Brady:We actually kept things together, didn't we? In fact, you know, I would say a vast majority of people who worked from home would tell you they probably work longer hours, they probably work harder, and they were probably more effective. But there was a productivity paradox that happened between workers and the managers above them. Microsoft did a a research, study of 20,000 employees. And of the of the employees who were frontline workers, eighty percent said, hey.
Joe Brady:This this hybrid or work from home thing is really working. I'm getting more done. I'm working harder. I'm actually working almost too hard. The managers of those people, 80% of the managers said, we don't trust what those people are doing at home.
Joe Brady:We need to have them back in the office so that I can see that they're sitting in their seat at their cubicle, and therefore, they're being productive. Now both sides have to give a little. Right? And and I think what we've seen is, you know, a stark reminder that, again, technology is accelerating, and we're, for the most part, in this new collar economy. Right?
Joe Brady:Which means technology is enabling us to do our work, whether it's doing a a podcast here, we're on separate coasts, or having a sales meeting, or, you know, having, you know, any sort of marketing or creative activity. Now clearly, all of that's much better when you're together, but it's not impossible now to have it online. So so, you know, a number of things are happening around this future of work. There's a struggle, between the managers, you know, think Dilbert managers. They want their people back just because.
Joe Brady:And the employees who are saying, hey, wait a minute. I'm I'm actually getting my stuff done. And and so why do we work Monday through Friday, nine to five? You know, and it's almost a a a, industrial era construct. Isn't it?
Joe Brady:Right? I mean, that's why here that we went to factories because inputs would come in, we'd stand at our station, you know, we'd work a machine, and then there would be outputs. But, again, you know, in the keyboard economy where stuff that we're doing can happen in an office, or there could be days where you're totally focused and you're working at home, or you're working at a coffee shop, or you're working at a flex office space, we have to have a better dialogue about what it is that the company wants to achieve as opposed to the what and why of you being physically in an office. Now there's a lot of behavioral economics that comes into play here. Did you see the movie Moneyball or, read the book, Michael Lewis?
Joe Brady:Right? And and, there there's some really interesting stories about that, and I wrote about it in my book where Lewis, wrote this book about baseball. And the next thing you know, he knows he's getting a review by a University of Chicago economist. So not only is he an economist from the University of Chicago, he's a Nobel Laureate. And he's talking about how, you know, Lewis is channeling the behavioral economic works of Danny Kahneman and Amos Trzabowski.
Joe Brady:And it was so surprising to Lewis that he had no idea what this guy was talking about that he, in fact, started researching these two guys, Israeli psychologists, that came to, you know, came to be in the late fifties and sixties. And he wound up writing yet another book called The Undoing Project, which is phenomenally interesting. But these guys talked an awful a lot about biases and heuristics. Like, we we make decisions in a different way. We think we think fast and slow.
Joe Brady:You know, if if I said, Trent, what's two plus two? Our, you know, our fast brain goes, oh, yeah. I know that one. But, you know, 3,242 divided by pi, like, the fast brain doesn't process that. We have to, like, really work it.
Joe Brady:So why am I talking about behavioral economics? Because it's really important. Because we're talking about people now as to whether they should be in an office or not or how they behave around retail. And there's a couple of things happening. One is this notion of loss aversion.
Joe Brady:People for two and a half years or three years have had an inversion of work life balance. It's now actually life work balance. And if you don't have to commute an hour and a half each way, you actually might be able to see your kids in the morning, or see your partner, or maybe work out, or sleep an extra half an hour, or any of a host of other things. But when I lived in Chicago, and I worked at at Walgreens, it was 24 miles. It could take me 23 miles.
Joe Brady:Yes. I was exceed exceeding the speed limit, but it also could take me two hours each way. Right? And so it was just brutal. And so through the pandemic, people realize, hey, you know what?
Joe Brady:I probably don't hate my job. I hate my commute. So so there's this element of loss or version that's happening with, with people. And the other thing is a notion called reactance. In other words, if you tell somebody if I say, Trent, you need to be in the office five days a week, you're gonna viscerally react.
Joe Brady:Again, there's another element of loss aversion. I've lost my autonomy and agency in how I conduct my day, and people are have pushed back. Now the first time Amazon reported, that you you need to be in the office three three days a week, you have this extraordinary Slack response. There were 20,000 people on Slack saying, you know, not no, but hell no. And the same thing same thing is happening now, relative to this five day a week return coming up in in January.
Joe Brady:But another element of of a bias is this, you know, sunk cost fallacy. Right? There there is an element. If you're Amazon and you own $50,000,000,000 worth of real estate. Right?
Joe Brady:Not all of its office, but they have a massive office portfolio. You're gonna expect people to go back and use it. Otherwise, you have this asset that you've, you know, that you've invested in, but no one's using it. And so, there's a lot of push pull going on there. I I I think there's some lessons though that that corporate occupiers and investors and owners of office buildings could heed.
Joe Brady:And and that is that people want to engage in purposeful presence, not passive attendance. People want leaders helping them curate their experience as opposed to managers saying, come to your cubicle, sit there forty hours a week, and therefore, you're doing you're doing work. I mean, that that's kinda ridiculous in and of itself. Right? People are on, you know, fantasy football or they're online shopping or they're daydreaming or they're doing whatever.
Joe Brady:But and I also think there's an element of of metrics. What are we measuring? Everyone talks about, oh, increased productivity. Well, you know, if I'm working for you, Trent, and I call you up and say, hey, boss. I just sent out a hundred emails.
Joe Brady:Isn't that great? I was super productive today. That none of the if the none of those emails actually were sent to the right people or were the right thing to do, effective for the the overall company's initiative, the bottom line, moving the company forward? You know? And so I think there there's probably a need to have a greater focus on effectiveness of what people are doing as opposed to productivity, unless you run a call center or you work in a factory.
Joe Brady:But, again, in this new collar economy, the keyboard economy where we're trading in information and ideas and relationships, you know, why are we hamstrung with an industrial era construct of having to be in an office five days a week, forty hours, you know, forty hours a week?
Trent Werner:Well, and and you kinda touched on it already, but I I think of the reason I asked is because I was up in Seattle not too long ago and Microsoft dumped like 200,000 square feet or something in Bellevue, I wanna say. And so I was curious your thoughts, because from my opinion, it seems like some of these large corporations aren't gonna get rid of office or or their office space. They're just gonna shrink it a little bit. And then your point, Joe, maybe maybe there's gonna be more conversations of hybrid schedules and things like that. I know my mom works at Nike, and in the summertime, it's three days a week, you know, Tuesday, Wednesday, Thursday, most weeks, and they have a entire week off, you know, free of charge in the summertime and all that stuff.
Trent Werner:And so it seems like the corporations, if they want their employees to get back in the office three days a week, they're gonna have to, like you said, compromise in some capacity, whether it's hybrid schedules or or what whatever it may be. But I I can't imagine that office space is just gonna be gone. That's just that's that's not gonna happen. So I'm I'm I was curious to hear what you had to say about the hybrid schedule and and things of that nature. What are your what are your opinions on, I guess, industrial or warehouses because of this online presence and and ecommerce and and everything like that?
Trent Werner:You mentioned Amazon. I I know for a fact Amazon has plenty of warehouse space. And are there other companies that are gonna be spending their money, investing their money on warehouses versus building new office space for their employees?
Joe Brady:Yeah. I think it'll be that a balance. Right? The distribution centers that are have popped up throughout the world are humming at full capacity. The real interesting challenge is that last mile within the distribution network, that distribution node, you know, and we've seen drugstores serve as that as as that node.
Joe Brady:What's what's really interesting, and if you think about this massive platform shift we're going through in AI, that we're seeing this increased importance on data centers that that need to be filled with GPUs, those graphical processing units from NVIDIA and the like to help drive how fast AI is exploding. Right? So so as you're thinking about the industrial asset class, yes, we will continue to see strong performance out of distribution centers, but the data centers are really where it's at right now. And they're really expensive. It's very difficult to, you know, to fill a data center with NVIDIA chips.
Joe Brady:Companies like Andreessen Horowitz, who are, you know, a venture capital firm, are actually buying chips that they're making available to portfolio companies they're investing in. Right? I mean, that's never happened before. It's kind of a cool thing that's happening.
Trent Werner:Yeah. So, basically, to to summarize, retail's here to stay, office is here to stay. I guess, one one more question about office space. So we have all of this vacancy, right? I know, I mean, Portland is a, has a million square feet of vacant office space.
Trent Werner:I'm sure there's bigger metropolises that have plenty more square foot, square feet that are vacant. What's gonna happen with that? Do you think people start going back to the those offices, or do those get repurposed into something else?
Joe Brady:Yeah. And I and I think you have to look at the the design of the building, the age of the building. If anything we learned out of the pandemic, it's we need to be in healthy buildings, not sick buildings. And when you think about fresh air intake and and fresh air turnover in buildings, Some of these older buildings were designed to turn over air maybe twice an hour. Right?
Joe Brady:And we know and they didn't have any filtration. And we know now that because of airborne viruses and such that we wanna see, you know, every 15 turn up four times an hour. Right? Not once an hour. So you've got technological obsolescence you have to deal with.
Joe Brady:You have floor plates that you have to deal with. Oftentimes, if you get larger than 15 or 20,000 square feet per floor plate, it gets really, really difficult to convert that building into residential. So the stuff that's larger than that, that's the $64,000 question right now. What to do with those buildings? You you know, there's only so much self storage or vertical farms or brewpubs you can you can put in some of these obsolete buildings.
Joe Brady:In New York City, Seventy Five Percent of the office stock was built before the IBM mainframe, which, is that was sixty years ago. So you have a you know, and and the same thing that happened in retail is happening in office, which is b and c class assets are losing value and are becoming somewhat obsolete. And there will have to be, again, as I talked about that creative destruction. Will people come back? Of of course, they will.
Joe Brady:And and and I I often say that hybrid work and omnichannel retail or ecommerce are two sides of the same coin, and it's all driven by the consumer. And and so, you know, leaders who want people to come back will need to nudge them back and think about ways where it's worth the commute to come in. We've heard this term that on-site is the new off-site. So making sure that you're getting people together. If you want that collaboration to happen, you know, have everyone together.
Joe Brady:Maybe there's a guest speaker. Maybe there's, you know, a social hour. Maybe there's a host of other things. Maybe there's a all hands meeting and senior management's able to share some information. So, you know, I I don't think you have to be in an office five days a week to develop culture.
Joe Brady:I will tell you what will erode culture very quickly is if you mandate people back. And so this whole notion of culture and collaboration that you're trying to foster through this mandate absolutely just undermines the initiative because of the reactance of people. You know, you're hiring adults and then you're treating them like children. It's not gonna end well.
Trent Werner:Yeah. That's and coming from someone who works predominantly at home, I come to the office to because this is where all the equipment is for these, but I can do everything from my house or going and visiting the different assets that we manage. And so when I hear someone say, oh, I have to be in the office, no, you don't. As long as you can, you know, as long as you have a job that allows for that. But to your point, Joe, is if someone were to tell me I need to be here five days a week for eight hours each day, I I would tell them no.
Trent Werner:I'm not gonna do that. That's you know? So it's it's gonna come down. It'll be interesting to see how these companies and these and these corporations handle that and what, I guess, what comes of it. Again, Nike, I think, does a great job building that culture.
Trent Werner:Everyone that lives around here wants to work at Nike because they have great benefits and, you know, summertime, you get half day of Fridays and a whole, you know, wellness week during August or whenever it is. Those are the things that I think a lot of corporations are gonna have to look at and say, hey. How do we entice our employees and that want to come into the office, come to the the HQ, and be productive here? Because I think it's it's easy to tell that someone could be productive from their house as long as they're self driven enough to make that happen.
Joe Brady:And, you know, and and from an office perspective, you, you know, you could think about the hub and spoke model where you have the the HQ, and then you can have spokes either in a city or in a region. And now with flexible office space, we have the opportunity to set up locations and test and see how people use that space. Are they going to it? And if they're not going to it, then drop it. But if you have if you have a ton of people going there and congregating, then you have evidence that suggests, well, maybe I should do a five year lease.
Joe Brady:Part of the problem with the office asset class is that our businesses are changing at a frequency of weeks, months, and quarters. Right? You know, with technology changing, you know, you don't know what your business is gonna look like in five years. Yet if you go into a new office building, you have to sign a ten year lease. Now not a big deal if you're a CPA firm, consultant, or or a, an attorney.
Joe Brady:But if you're a tech company, you don't know how much space you're gonna need in two years, let alone ten. And so, you know, there has to be ways to test and set up space. There has to be ways for teams then to come together and maybe work for a month or two. And so it's really interesting now to have this this whole another layer of flexible office space that can be accessed by the hour, the day, week, and a series of months as well.
Trent Werner:Absolutely. Alright, Joe. I know I see your book behind you. Can you give us a quick, what's the title and and a and a quick synopsis of the book? That way people can go check it out.
Joe Brady:Sure. It's called workshop, and it's about, the consumer driven transformation of commercial real estate. Yeah. I talk an awful lot about the history of work, the history of technology, how that's changed consumer behavior, and the lessons that we've learned in in retail, and what could be applied to the world of work. Workshop is a play on the fact that twenty years ago, shop was literally a noun.
Joe Brady:It was a physical place. We had to go to a shop to spend our money. And then very quickly with technology, it became a verb. Right? So we now shop.
Joe Brady:We shop online or we shop in a store. And I maintain that work is going through that same thing. Before the pandemic, Trent, you and I, if we said, hey. We're going to work. That meant we're going to an office typically, right, for the most part.
Joe Brady:Since the pandemic, those two have been decoupled. So work has gone from a noun, a physical place, now to a thing that we do irrespective of place. And so that's the play on on workshop. And so your listeners can check it out on Amazon. You can go to my website, joebrady.ai.
Joe Brady:There's a link to Amazon and Barnes and Noble and other places to to buy the book. But it's been really fun to do. It's been fun to put my thoughts out there and, been getting some really interesting feedback.
Trent Werner:Very nice. We'll make sure that that gets linked. And is there any other place that you would like for people to connect with you aside from joebrady.ai?
Joe Brady:Yeah. So if you go to that joebrady.ai, my LinkedIn, is there. You can connect there, and then there's, all my contact information so you can reach out. I'll see the best landing place.
Trent Werner:Well, thank you for sharing all of your insights about the different asset classes that we cover today and, you know, where where we might be headed in the in the future with retail, industrial, as well as office space. Thank you, Joe.
Joe Brady:Thank you, Trent. Great being with you.
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