By David Gill
The commercial real estate sector may be thriving, but it’s also graying. Andy Merin knows it well, with a career that includes more than 35 years with Cushman & Wakefield.
“You know, it’s not like my father’s generation, when people retired when they are 60 or 65,” said Merin, an executive vice chairman who heads the firm’s investment sales group in New Jersey. “People today are working longer and longer.”
Fortunately, the longtime broker is taking part in a program that seeks to bridge the generational gap in New Jersey’s commercial real estate industry. The program, Development 360, is an initiative by the Urban Land Institute of Northern New Jersey, which connects industry veterans with young professionals through a series of seminars.
Merin was among two featured speakers at ULI’s most recent Development 360 event, which focused on dispositions, at the West Orange headquarters of the law firm Chiesa Shahinian & Giantomasi PC. He joined Lynn DeCastro, an executive director of PGIM Real Estate, and CSG attorney Tom Trautner, the session’s moderator, for an interactive program with more than two dozen aspiring industry leaders.
“Utilizing an intimate and conversational setting for these sessions, we are able to offer young professionals the opportunity to hear from and ask question to well-regarded pros like Andy Merin and Lynn DeCastro about why and how things happen in the real estate development process,” Trautner said. “Through gaining a better understanding of the complex interactions between each stage of these the development process, we are providing these young professionals with invaluable lessons they can carry through their careers.”
The session occurred in one of CSG’s conference rooms and was conducted conversationally, with Merin and DeCastro seated at a conference table with the young practitioners. Instead of allowing for a separate question-and-answer period, the attendees were allowed to pose questions in the middle of Merin’s and DeCastro’s presentations.
DeCastro described how PGIM conducts its business, which revolves around dispositions and which she characterized as “very transactional, and when they are transactional, you have to be very quick and proactive. You have to respond quickly” to every situation that presents itself in a disposition, she said.
“When the company wants to sell a property,” DeCastro said, “they have their asset manager contact (the PGIM disposition department) and we help them through the entire dispositions process from start to finish. We talk to our team, figure out who the right broker would be, then help them prepare (the operating memorandum, a kind of property brochure), and then get the property ready for sale.”
In detailing his work for Cushman & Wakefield, Merin told the attendees that many of the properties the company deals with aren’t owned by major firms.
“We are seeing a lot of individuals and estates, doing a lot of work with partnerships when one partner wants out and the other doesn’t,” he said. “A lot of our clients are people in their 60s, 70s or 80s who are worried about succession. These are families also with siblings to consider.”
Case studies played a huge role in both DeCastro’s and Merin’s presentations. DeCastro’s case study — one that in fact involved both PGIM and C&W — described an apartment complex at 10 Lafayette Ave. in Morristown, across the street from an NJ Transit train station.
PGIM began work on the complex in 2006.
“The surrounding area was kind of run down,” DeCastro said, “but because it was by the train station, that would be a stabilizing factor for the location.”
When construction was completed in 2010, it numbered 217 apartments. It also included retail space on its ground floor. Today, its retail tenants are Godfather Pizza and Cambridge Wines, and it has outdoor seating.
PGIM sold the property in 2019. Explaining C&W’s role in the sale, DeCastro said, “Cushman performed before-and-after renderings for improvements and did a market analysis on how much (the improved) units could be sold for.” The company also handled the bidding process, which was somewhat complicated because a couple of the bidders backed out after their bids were accepted.
In detailing his case studies, Merin painted a picture of how Cushman & Wakefield conducts its asset sales business.
“We like to furnish our clients with a marketing report and usually we have a scheduled call once a week that keeps our client informed and our feet to the fire that we are doing the work,” he said. “We send a report to tell them how many people we’ve contacted, how many (confidentiality agreements) have been signed and who signed them, what the schedule is and where we are in the schedule.”
In addition, “we give the bidders permission to tour the property,” he added. “Once the bids come in, we compare the bids for the clients and analyze them in a variety of ways, and put them in a little book that includes the actual bids themselves. We help (the clients) decide if there should be a second round of bidding.”
From the reactions of attendees of the session, the ULI mission of reducing the “gray” element of the real estate industry is on its way to success. Ravenne Gillett, founder and CEO of development firm RMG, said, “I thought the event was great. It provided great insight on how Cushman & Wakefield worked with PGIM on larger projects.”
Gillett’s firm is currently involved in affordable housing projects, industrial space conversions and mixed-use spaces. The session “gave me an understanding of what PGIM would be looking for from an institutional perspective, what (DeCastro) thought was a great investment in urban settings, how those buildings can be acquired.” Mixed-use spaces, such as the one DeCastro described in Morristown, are where the future is for much of real estate, Gillett said.
“People want to live, work and play in these places, in one general vicinity,” she said.
For Patrick Carino, director of acquisitions for RMS Companies, the session was his first ULI event in New Jersey. He has attended other ULI sessions in Connecticut, near RMS’ home base.
“That event was similar to other ULI events, which I have found very valuable,” said Carino, whose firm develops multifamily projects and hotels, mostly in Connecticut, and is near to closing on its first New Jersey development. The project is similar to the Morristown property DeCastro described, Carino said, noting that his firm is looking to expand its business to northern New Jersey.
Past Development 360 events dealt with site selection and acquisitions, construction and engineering, entitlements and the development process. The fact that Merin was one of the presenters drew Carino to attend the West Orange session.
“I’m hoping to apply some of Andy’s strategies with buyers,” he said.