For our latest interview in the Expert Insights series, we had the pleasure of chatting with Brenna Wadleigh, CEO and President of N3 Real Estate. Ms. Wadleigh is responsible for all aspects of the company’s investment strategy and operations.
Prior to joining N3, Ms. Wadleigh served as vice president of strategic planning for Crescent Real Estate Equities, a $6 billion REIT in Fort Worth, Texas. In this position she was responsible for strategic planning, forecasting earnings and cash flows, managing corporate mergers and acquisitions, as well as reporting and analysis for the Executive Management Team.
Q: Could you start by telling us a little bit about your background and why you chose a career in commercial real estate?
I started my career with a dual CPA license and BBA in Finance, which allowed me to work internally at public companies preparing their financial reports and SEC compliance documents. I was hired to do the same at a public REIT called Crescent Real Estate, where I was introduced to the commercial real estate industry and loved it. I was able to pair my financial underwriting and analysis skills with various sorts of real estate such as Class A office buildings, luxury resorts, golf communities, and high-end single-family and timeshare developments.
Q: What are your thoughts on the CRE market in the US today in terms of trends and challenges?
COVID-19 has hit the industry and consumers hard and fast. Before that, the market was on such an extended high that it was hard for anyone to predict what would have to happen for it to fall meaningfully – now we know. The bright side is that we’re not overbuilt, lenders and borrowers are in much better shape than before the Great Recession, and the entrepreneurship that emerged out of the previous recession really positioned us well for recovery from COVID-19. For landlords and developers who have liquidity and modest leverage ratios, there should be plenty of opportunity to acquire assets at great prices.
Q: What differentiates the commercial real estate market in Texas from other major markets in the United States?
We’re very fortunate in Texas to have above-average employment growth due to the quality of our workforce, moderate cost of living, and pro-business government. This has resulted in strong economies in all five of our major MSAs, which creates stable property values, rental streams, and consumer confidence.
Q: How have you seen the industry evolve in the past years you’ve been involved in it?
Significant evolution has occurred in the industry, most of which has been driven by new ideas and the business needs of our tenants. Technology, of course, has been a key factor: cellular mobility data, social media check-ins, and the ability to get immediate guest feedback are positive changes that benefit all retailers and restaurateurs.
Q: Where do you see it going in the future?
One of the silver linings of COVID-19 is the acceleration of change, meaning that changes that were in progress — such as increased food and grocery delivery, app ordering and payment, and ghost kitchens — are going to happen much quicker than natural adoption would have allowed. Similarly, it has forced consumers to fully adapt to those new technologies and habits faster than they were before. I’m excited about the acceleration of change and the benefits it can bring in the form of denser sites, reduced store sizes, reduced parking requirements, and new users to retail centers such as ghost kitchens, last-mile delivery logistics, medical retail, etc.
Q: Are there any lessons from the past few years that you would impart as an absolute must for those looking to get into the CRE industry?
A few lessons I encourage folks looking to get in the industry to put to work:
- Know your numbers and your particular craft deeply.
- Share your information and ideas publicly to generate credibility and reach.
- Take responsibility for everything in your world and realize that you always have at least some control in the matter by taking responsibility, doing the right thing and being a leader from any position you are in, personally and professionally.
Q: What is your general assessment for the commercial real estate market in 2020? Have you spotted some interesting market trends?
This is a timely question as COVID-19 changes everything. If we can’t get tests and vaccines that are widely-available ASAP, we’ll be forced to re-open the economy with limited seating in restaurants and theatres, reduced building capacities, one-way grocery aisles, etc. for a couple of years. This will cause a permanent reduction of sales, rents, and values that would be catastrophic to property owners, users, and lenders.
Q: How has the evolution of online marketing impacted the commercial real estate industry?
It has been fantastic. The ads targeted to my phone when I get close to a particular store or center, the ability to order online and return to the store, pop-up offers on my social media accounts have all increased my spending. The consumer has been spoiled by companies giving away amazing deals and services for free, just so they can gain market share. This means that even if a particular store or restaurant is not as profitable as desired within the four walls, companies will keep those stores open and pay the rent because they know you must have both online and physical store presence to survive these days.
Q: Any other insights that you’d like to share?
Thanks for allowing me to contribute to this forum.