Shopping Center Business
May 2010
Chris Maguire returns to the helm at SRS Real Estate Partners.
Interview by Randall Shearin
Chris Maguire has long been associated with Roger Staubach’s family of companies. Originally hired in 1986 to run Staubach Retail, he launched Cypress Equities, the development arm of The Staubach Company, in 1995. For many years, he ran both companies. When Staubach was sold to Jones Lang LaSalle in 2008, Staubach Retail Services remained separate and in 2009, evolved into SRS Real Estate Partners. Earlier this year, it was announced Maguire would assume the role of CEO of SRS Real Estate Partners, still retaining his role as CEO of Cypress Equities. Shopping Center Business recently talked to Maguire about this transition, and how he will handle the dual role.
SCB: Tell us about this transition to SRS.
Maguire: I helped create Staubach Retail in 1986 and then, in 1995, as a result of our clients’ needs, Cypress Equities was formed. We are very focused on solving problems for our clients, and we have always started service lines based on their needs. As we grew Cypress Equities alongside Staubach Retail, we grew our organization, but we always had our offices together and had some individuals who were managers of both companies. As Cypress Equities got larger in the 2000s – when we had several billion dollars under development – I really shifted more of my day-to-day focus to Cypress Equities and we named a CEO of SRS while I remained chairman. This year, the board asked me to step back in as CEO, which I’m happy to do. Cypress Equities is in a different phase now, as we are developing fewer projects.
SCB: How is the Cypress Equities portfolio doing?
Maguire: We have a great portfolio of projects. Like a lot of development companies, we had construction financing in place, and those loans have needed to be extended. Our lenders have been very good at working with us to extend those debt maturities. If you have good real estate, all you need is time. We are managing a portfolio that is about 6 million square feet. We are starting second phases on four of our existing projects and engaging on a few select new developments. Cypress is also focused on new opportunities to acquire retail, through our affiliate, Arrow Retail. We also formed a managed services group, a joint venture between Cypress Equities and SRS, that will allow us to do third-party asset management for owners, whether they are institutional, special servicers, banks or third-party owners. We are rebuilding the business in light of the marketplace that we live in today.
SCB: What are the challenges at SRS Real Estate Partners?
Maguire: As all companies do, when times are extremely robust, you might lose a little focus because things are so good: revenues are great and almost all of the brokers are doing well. All of a sudden you fall off a cliff like we all did in September 2008. You wake up the next morning and go ‘Wow! What happened?’ Retailers stopped their new store opening plans. The credit markets were in turmoil. Companies were going bankrupt. We looked at that and realized that the nice thing about the brokerage business is that it is a service business. We don’t have a lot of capital at risk day-to-day and product to worry about. We are a service company. As long as there are transactions, we are going to be ok. Since the number of transactions is down, we have to increase our market share. The natural way to do that is to add professionals to our company. We faced a similar situation after the real estate bust in the late 1980s. A lot of brokers went and found a new line of business to work in. So, what are we doing here? We have a great national platform with 18 offices and great professionals coast-to-coast. Our management team is the same management, for the most part, that has been here for a number of years. We have people who started right after I did 24 years ago who are still with the company. We have a great culture and a long-term, loyal client base.
SCB: What are you focusing on in your new role?
Maguire: We always had the reputation as the best retail tenant representation firm in the country. We were the only national, exclusively retail-based, tenant rep firm doing business coast-to-coast. We are focused on that national platform. It is a big differentiator for us in the local markets. All we do is retail. Our business has revolved around the retailer. As retailers are now starting to expand again we want to help them with all our capabilities – new site selection, excess store disposition, lease administration, etc. We are going to use our national platform combined with our local market focus. We have great employees in the markets and we can execute these transactions on behalf of our retail clients. We are building our property listing business and investment sales business. Our goal is to have a full range of services in all our offices. We are working through some other strategies to come, but, I’ve only been back on the job for a couple weeks!
SCB: What excites you about this opportunity?
Maguire: We’ve got a great group of people who have been doing this together for a long time. We have an incredible foundation that we’ve built over the last 24 years. We have an opportunity in a brokerage market that is really weak right now. Everyone has been stung by what’s happened. Some of our competitors cut commission splits back on their brokers; that creates an opportunity for us to recruit, because we haven’t done that. We focused heavily on the local markets in the last few years, and now it’s time to refocus on the national platform that we have because that is such a differentiator.
SCB: How do you see the industry? Is it coming back?
Maguire: We feel good about it. In my career, I’ve never seen so many retailers shut the faucets tight and not open any stores. When they do that, they really hurt their pipeline – not in 3 months or 6 months, but 12 or 18 months down the road depending on the category. When that happened and the pipelines were shut off for a year or more, it created a big void in the market. Here in April 2010, we are looking at a market with 5 months of economic growth. Word on the street is that the consumer is feeling better and we are out of the recession. As a retailer, especially if you are a public company, you have to open stores or acquire to get earnings. If you waited to turn on the faucet again until now, the best case is that you are going to be opening stores in 2011 or 2012. I think we will all be in pretty good shape by mid-2011 or 2012, and for that reason, we have seen some of our clients scrambling to figure out how to get stores open later this year and in 2011.The interesting thing is that there is going to be relatively no new supply coming online over the next few years. The best centers are all ready filled up. When I drive around to the better retail areas of Dallas, like Highland Park Village, Preston Center and NorthPark, there aren’t a lot of “For Lease” signs in the windows. Some of the problems are out in the fringes. No one is going to lease some of that space for a long time, unfortunately.
SCB: Will retailers who are looking to quickly expand when there is no new space settle for second or third generation space?
Maguire: Absolutely. We represent Dick’s Sporting Goods on the West Coast. Most of their growth was new build, with freestanding stores or in power centers. There’s nothing like that being developed. What are they doing? We are putting them in a former Circuit City store. Most Circuit City boxes were 30,000 square feet; Dick’s is used to 50,000 square feet. They are adjusting to take advantage of the market and to adapt to the market. Those empty big boxes will get converted. A 30,000-square-foot box like Circuit City – the possible tenants for that might have been Ross or Bed Bath & Beyond – no one thought about Dick’s taking a 30,000-square-foot store. Now they are doing it. The market for the 30,000-square-foot box has been expanded. More of those good locations are going to get taken. Then, where do you go? How do you grow without new development?
SCB: What other trends are you watching?
Maguire: We don’t represent a lot of mall tenants, but it will be helpful to the malls that there is going to be no incremental retail supply for the next few years. Where did a lot of the mall tenants go over the last 5 years? To lifestyle centers. Those aren’t getting built for the next few years. While a number of traditional mall tenants have had success in lifestyle centers, I have a feeling that there are a lot of retailers out there who got out of the mall and into the lifestyle centers who are thinking they should get back into the malls. There are a bunch of lifestyle centers out there that are in trouble. Overall, it will be an interesting period for us over the next 2 to 3 years.