ORANGE COUNTY, CA—Last month, GlobeSt.com spoke with Bill Shopoff, CEO ofShopoff Realty Investments, about the strategiesnecessary for success with value-add assets and some importantadvice he has for investors in this space. More recently, we caughtup with Shopoff to discuss what research techniques his firm hasused to find out which amenities tenants reallywant in their space, which will inform how the firm adds value tothat space. We also asked him about the results of that researchand how Shopoff approaches research as a tool for strategicplanning in commercial real estate.

|

GlobeSt.com: What research have you done withtenants to find out their specific wants and needs with regard toamenities for value-add projects?

|

Shopoff: There are two or three wayswe go about it. It depends on how many tenants we arerepositioning. If there's little to no tenancy, it's a little moredifficult. If it's a largely occupied property, then it's astraightforward process: we go and talk to the tenants. Morefrequently, it's a high-touch process, a sit-down interview withthem. Sometimes it's a questionnaire, asking them what they like,what would they want in their space.

|

Another other method is to look in the market—not necessarilyour direct market, but markets that look like ours, and see whathas been successful. Innovation is great, but imitation workspretty well, too. We see what others have had success with insimilar markets.

|

Then, if we're going to try to do something a little moregroundbreaking, we will do focus groups. You identify who yourtarget audience is, refine a plan, define what you want to do anddecide what the best product will be. You can either buy for lessor deliver more. Sometimes you just have to deliver more in valueand hopefully that will translate into tenants signing leases forit.

|

GlobeSt.com: What have tenants told you when you'vedone this research?

|

Shopoff: It depends on the producttype, of course. In office, for example, we'reacquiring a vacant building right now, and the tenants wantedgeneral meeting space and they're contemplating a common kitchenrather than a kitchen/lunchroom in each suite—a central kitchen towhich all of the tenants in the building will have access. This isa common-area kitchen where people can use that space and not havea dedicated space they're only using for a few hours or minutes aday.

|

There's a retail project we're working on nowin the Phoenix metro area, and they asked for carport decks underwhich customers can park, so we're going to incorporate that.That's important in a market where the temperatures get sohigh.

|

Aside from that, we attack the basics: getting the property up,executing basic upgrades and modernizations to lighting, lobbiesand public spaces, and adding some socializationelement, which has become key. In multifamily,tenants want a recreation facility with pool decks—there issignificant space being dedicated to recreation in theseproperties. People want to get together and gather. In one buildingwe're working on in Southern California, there are two buildingsfacing each other with spectacular pool decks overlooking eachother and connected by a bridge structure. We're giving up 25 unitsto get that, but it has more value. In another project, we'remixing in the right retail and having the retail be more of anamenity for the residents than getting the highest value for thatretail. There's more of a focus on getting the best value for ourresidents and giving them the lifestyle they want. It's worth moreto us than getting another nickel a foot in rent.

|

GlobeSt.com: What is your strategy with research?How often do you do it, and how do you approachit?

|

Shopoff: As soon as we start doing duediligence, we interview our tenants. In an office park, we want totalk to everybody. We want to understand their expectations—whatthey'll tell you and what they won't. It takes man hours toaccomplish it, but you need to have great rapport with yourtenants—if you're going to raise rents, but for other things, too.If you give people value, they don't mind paying for it. For themost part, we have no problem meshing what the tenants want withwhat we can give them. We can't always give tenants everything theywant at the price they want, but we give them the highest value andmaximum number of things that equate with our economic plan andtheir economic wherewithal.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Carrie Rossenfeld

Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.