JF1667: The Ins & Outs Of Commercial Real Estate From A Top 10 Commercial Broker with Bethany Babcock
We get to hear from a commercial broker today who is top 10 in both leasing and investment sales in San Antonio. Bethany founded and is the co-owner of a full service commercial firm. We’ll also hear from her on the importance of finding a good mentor to help your business. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“Integrity first and foremost, after that persistence” – Bethany Babcock on what separates a good broker from a great broker.
Bethany Babcock Real Estate Background:
- Founder and Co-Owner of Foresite Commercial Real Estate, a full service real estate firm in San Antonio
- Named one of the top 10 Brokers in San Antonio in the categories of both leasing and investment sales
- Based in San Antonio, TX
- Say hi to her at https://foresitecre.com/
- Best Ever Book: Secrets of Closing The Deal by Zig Ziglar
Sponsored by Stessa – Maximize tax deductions on your rental properties. Get your free tax guide from Stessa, the essential tool for rental property owners.
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
With us today, Bethany Babcock. How are you doing, Bethany?
Bethany Babcock: I’m doing well, thanks for having me.
Joe Fairless: Yeah, my pleasure. Nice to have you on the show. A little bit about Bethany – she is the founder and co-owner of Foresite Commercial Real Estate, which is a full-service real estate firm in San Antonio, Texas. Named one of the top ten brokers in San Antonio in the categories of leasing and investment sales. With that being said, Bethany, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Bethany Babcock: Sure, thanks for having me. We are a full-service firm based in San Antonio; we started about four years ago. I started my career in management and leasing, by going on the wrong job interview and kind of landed in commercial real estate.
Then I ended up going into investment sales, working at Marcus & Millichap for about five years. Then after that I decided to branch out and start a full-service brokerage firm here in San Antonio, [unintelligible [00:03:09].09]
Joe Fairless: A wrong interview… What happened?
Bethany Babcock: I was 18 years old, I got sent to a temp agency, and the temp agency said “Hey, we’ve got a job interview lined up for you.” I went to it; they told me it was an insurance firm, and I was gonna do something administrative. I ended up going to the interview and they said “No, they lined up the wrong candidate”, and it was actually a commercial real estate firm for an owner here in town, that owned a few office buildings and shopping centers. But I interviewed anyways, and got the job.
Joe Fairless: That’s awesome. [laughs] And with your five years at Marcus & Millichap in investment sales, I know that can be a lot of hard work, especially at Marcus & Millichap, with their process, with constantly following up with people… What were some takeaways you got from that experience?
Bethany Babcock: It was a really amazing experience. I really do recommend it for anybody that’s looking to get into commercial real estate, because they just kind of throw you in, and you’ve gotta think or swim. Really the success of the experience will hinge on whether or not you have a good mentor, which I did… And it’s really a phenomenal opportunity, because you get to talk to so many investors, and learn about all the different strategies that people have, and you get to see their successes and their failures, and learn from all of them… And it’s really an incredible opportunity to be able to see things from that perspective. It’s something you wouldn’t get in a classroom, or reading any books.
Joe Fairless: What made your mentor good?
Bethany Babcock: Time. He spent a lot of time with us, and a lot of time with the clients, but he’s very much a one-on-one person with different people that he’s mentoring; he doesn’t take a lot of mentees. And the thing that I admired the most about him was the fact that he put his clients first, and it was really clear, even during the recession when things were really tough and everyone was struggling to put food on their table – and we specialized in retail, so you can only imagine how much fun that was – he would consistently put the clients first, and say “Hey, you know what – we’re gonna wait on selling. [unintelligible [00:04:59].02]” Clients really respected him for that. I admired that a lot; he’s been a great mentor.
Joe Fairless: And how did you get connected with him?
Bethany Babcock: I actually went in and I was planning on doing office, because that’s kind of what I had done originally; they kind of make you choose the product type when you’re starting… I thought “I’ll focus on office.” And when I met him, I knew I needed a good mentor, and I thought “He’s the best of the best”, and so I thought “I’ll do retail, if that means I can be his mentee.” So I switched over to retail.
Joe Fairless: Oh, okay. And now with the firm that you founded, what is your focus?
Bethany Babcock: Probably 80% of what we do is retail. We have some office, a little bit of industrial as well; the vast majority is retail. And we have a really active property management and leasing division. As of last year, my mentor came over and joined us full-time, and he’s running our investment and sales division, and we have a very successful investment and sales team.
Joe Fairless: Oh, wow. Nice. It comes full circle.
Bethany Babcock: Yeah.
Joe Fairless: With retail, tell us more about that industry. We know what the headlines say, so what are you seeing?
Bethany Babcock: Well, I think it’s really actually an exciting time to be in retail. And yeah, there’s a lot of negativity and people focus on the big bucks. A lot of those concepts, in my opinion, are failing, because of poor business practice and a lot of debt. Really, when you’re looking at it, the smaller guys are thriving. Everything from the internet and social media is really actually leveling the playing field, in my opinion, and allowing a lot of the local guys the opportunity to thrive and show off their products, and be able to compete. And it’s really fun to see those guys do well, and exceed and excel in this environment. I think it’s an exciting time to be retail.
Yeah, it’s changing quite a bit. We’re not seeing the focus on anchors, we’re seeing the focus on experience, and the environment that a shopping center creates, but it’s all good change, and I’m excited.
Joe Fairless: What separates a good retail broker from a great retail broker?
Bethany Babcock: That’s a good question… I would say integrity first and foremost. After that, I would say persistence. Having someone be able to just stay on top of things is really the challenge when you have a lot of irons in the fire, and being able to focus… But persistence wins a lot of times, and that can make the difference.
Joe Fairless: Can you tell us a story of a time where in your role as retail broker you were needing to be persistent and it paid off?
Bethany Babcock: Sure. There was a time when I had first started the firm and I really wanted to be associated with nicer projects. Usually, when you’re starting, you have to just take whatever and prove your way, and kind of go up the food chain by taking higher-quality properties… And there was one particular project I really wanted to work on. It was a beautiful class A construction deal, and it was really visible. I was like, “If I can get associated with that, the firm will start off on a great foot.” So I told the owner, the developer, I said “Hire me, I’ll do it for free. I just wanna be associated with it.” He laughed at me and said “You have no idea what you are asking. This is going to take up every minute of your time, it’s going to consume your life for the next few years with this pre-leasing and unanchored center… And you have no idea what you’re asking.” I said, “I do, I do. Just give it to me. I’ll do it. I promise I’ll do a good job.”
He was right, I had no clue what I was offering… And he was gracious enough to not take me up on the offer to do it for free and ended up paying me, but… I decided to be consistently available on that project, and I had to be very proactive. That was a really fun opportunity because it was a great project… But because it was un-anchored, the only way to get it done was to go out and talk to tenants directly every day, all day long, for years. It finally got leased up, and it’s a very successful project; I’m really proud that I’ve been able to work on it… But I look back and I kind of shake my head; the owner was correct, I had no clue what I was offering to do at the time.
Joe Fairless: [laughs] Oh, wow… But you’re glad you did it.
Bethany Babcock: No doubt, yeah. Definitely. It showed that we were able to take on some high-quality projects, and I didn’t have to start off leasing warehouses in the sketchy parts of town.
Joe Fairless: What is involved? Please talk to us a little bit more about the work that’s involved when you take over a project for a client. Tell us about what you’re supposed to do, and what do you do?
Bethany Babcock: Sure. Well, it really depends on the project… If it’s something that’s already built or not built.
Joe Fairless: We’ll go with that one, that project specifically.
Bethany Babcock: Okay. So when it comes to something that’s not built yet, you’re selling a product that doesn’t exist, and you’re selling the vision, and you’re trying to explain to tenants and no one wants to be the first mover… Because their first question is gonna be “Well, who’s the anchor? Who’s the other tenant?” Someone has to be first, and you have to get someone on board and excited about it… So it’s a lot of selling the vision and trying to take an [unintelligible [00:09:34].06] and saying “Look, this is the potential for the area. This is the developer’s vision, this is how you fit into it”, and trying to get those pieces in place.
Once you get the first couple people in place, it really clicks in really quick, and it can get leased up if it’s the right project… But getting those first players in is really the hardest part.
Joe Fairless: I imagine those first players are also very important from a marketing standpoint, because if you pick the wrong first players, then you could sink the whole thing… Because then they’ll be like, “Well who’s in? Oh… A bookstore? A mom-and-pop bookstore? Hm… I don’t know about that.”
Bethany Babcock: Definitely. And we were really fortunate, because our developer who had that particular project – he had a great reputation in the market for being a good developer, and the tenants believed in the project, but there are a lot of people that are pre-leasing out there, and then they never build it. So a lot of people are like, “I’m not gonna mess with the lease negotiation if you’re not gonna be able to actually build it.” We have that problem a lot in our market… So you’re kind of fighting against that. But I had a good developer that I was working with on that one.
The other thing that made it really key was the tenants that we went to, just like you said – if we lease it to the wrong one, it can kill the project. So we looked a lot at reviews… And we didn’t just focus on the nationals, because we were only a mile away from a cluster of power centers where most of the nationals already were… So for this particular case we had to be really creative and go and find the local and regional chains that the reviews were off the charts, people were excited about it, and we had to approach them and be like “Are you guys ready for your second, third, or fourth location?” We had to take a little bit of a different approach, since we weren’t gonna get that one national.
Joe Fairless: How many businesses moved into this shopping center?
Bethany Babcock: Off the top of my head I’d say about 20.
Joe Fairless: About 20?
Bethany Babcock: Yes.
Joe Fairless: You did have your work cut out for you… [laughs] Who was the first one? I know you remember the first one.
Bethany Babcock: Yeah, the first one was a pizza chain here in San Antonio.
Joe Fairless: A pizza chain… A local pizza chain?
Bethany Babcock: Yeah, they had a couple of locations, but the reason that we approached them actually is I found them, believe it or not, on Yelp! Their reviews were off the charts, people loved them and got excited about them, and I thought “I’ve never seen this [unintelligible [00:11:35].19]” and I saw they were doing really well in a bad location… And I thought, “Well, if they can do well with no visibility, no traffic, nothing drawing them there, they will kill it if I can put them in the hard corner of one of the fastest-growing markets in San Antonio.” So I went to them about it.
It took about three or four times to finally get to the right point of contact, but then I phoned them and I was like, “Look, if you can do well here, imagine what your second or third location can do in these locations.” The developer was building two projects at the time, and he ended up going to both of them. He took the first spot, and then we ended up needing five tenants that we had to get in place before we were able to actually start turning dirt. And once the dirt started turning, people saw it and they realized it’s gonna be a fun place, with some good chains that were already established… It got done pretty quickly thereafter.
Joe Fairless: Was that your primary way of doing initial research, looking on Yelp?
Bethany Babcock: Well, not primary, but it was an important part of it. Sure, yeah, I like to look and see what people are excited about. You can have tenants that have great, fancy websites, and look really nice, and they’ve got all the branding, they can be in the really highly visible shopping centers, but if they’ve got two or three stars and bad reviews and people don’t like them, they’re not gonna be doing that great; they’re not gonna have the capital to grow into another location, and they’re probably not gonna survive in the end.
Joe Fairless: If you were mentoring a broker who’s entering the retail industry, what are some things you’d make sure to tell him or her?
Bethany Babcock: Focus on the relationship more than anything. It’s really easy to get caught up in the deal, and especially when you’re first starting… Like, “I’ve gotta make that book, I’ve gotta get that first deal done.” But plant the seeds for years three, four and five. A lot of the deals that I’m working on today were things that were planted five, six, seven years ago. You just have to be in it for the long run. It’s not a short-end deal.
The other thing I would say is keep your lifestyle in check. It doesn’t seem like real estate advice, but most of the failures I see in the industry really are because investors or agents have cashflow needs pertaining to their lifestyle more than anything.
Joe Fairless: Yup. Based on your experience as a real estate professional, what is your best real estate investing advice ever?
Bethany Babcock: I would go back to that – keep your lifestyle in check, really. If you have this lifestyle creep, it restrains your cash, and cash is king, and you’re not able to invest, you’re not able to stay in the business. It can take you out quicker than anything. And for some people I would say marry right, as well; you know, if you have a frugal spouse, it can really help extend your life in this field, as well.
Joe Fairless: So I’m guessing it’s gonna be this class A project that you volunteered for initially – you got paid, but you initially volunteered for. If it’s this one, then what’s the next one – what’s the most challenging project you’ve worked on?
Bethany Babcock: Let’s see… That would be the first one; it was probably key there. But other than that, when I first started in the business, when I was 18, 19 years old, I started as an admin and they quickly put me into leasing fortunately, because I was a horrible admin… But they let me go into leasing; it was a tough assignment, because it was a class B or B- office building with a bad reputation in town for not fixing things, and it was really a challenge to get it leased up. I had my work cut out for me, but eventually we were able to get it done… But it was an uphill battle.
Then after I got to prove myself through those ones, I got to be on better projects… But I had to kind of pay my dues with the more challenging properties in the beginning.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Bethany Babcock: Sure.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Joe Fairless: Best ever book you’ve recently read?
Bethany Babcock: I’m kind of a junkie for all business books, I love them all… I would say I love all the Zig Ziglar books, and John Maxwell books, Patrick Lencioni. It’s hard for me to narrow it down to just one; I just finished reading The Ideal Team Player. I thought that was great.
Joe Fairless: Who’s the third person you said? Patrick who?
Bethany Babcock: Lencioni. I hope I’m pronouncing his name right.
Joe Fairless: Okay… It’s a new name for me. I hadn’t come across him before. What’s the best ever transaction you’ve been a part of?
Bethany Babcock: That’s a good question… I was really fortunate to be not the primary agent [unintelligible [00:16:37].11] involved in a transaction where we were able to do a portfolio grocery store when I was at Marcus & Millichap. That was really exciting, because I think the buyer and the seller already knew each other, and the team was able to create a competitive environment to really drive the price up and get the best price for the owner. In the end, that deal — some of these deals can drag on for years, and that deal ended up closing in all-cash in ten days. It was really unusual, and really fun to be a part of.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Bethany Babcock: Where do I begin…? I made a lot of mistakes over the years… [laughs] I would say not acknowledging my shortcomings and bringing on partners. I know now that if I’m not the most skilled and I don’t know that particular product type, or I don’t really know that particular property, it’s in everybody’s best interest (including my own) to bring someone on that is, that can fill in those gaps… To be able to work within our strengths and weaknesses, I think that’s really important.
Joe Fairless: Best ever way you like to give back?
Bethany Babcock: I love serving on the board of Adult and Teen Challenge of Texas, and I’m really passionate about the work they do. They are a drug rehabilitation program. Aside from that, I love mentoring college-aged kids on how to avoid student loans and set up a career path and stay out of debt.
Joe Fairless: And how can the Best Ever listeners learn more about what you’ve got going on?
Bethany Babcock: They can visit our website at foresitecre.com. Our office number is 210-816-2734.
Joe Fairless: I loved hearing the story of the class A project where you found 20 tenants, and the challenges that came with that, and how you approached the solution, and just the idea of starting out strong with a nice product, and then just figuring out how to make it work, regardless of what you got paid… And fortunately you did get paid, but I’m sure you got paid more in the life experience than any commission you could have received… But I’m sure it was also nice to get the commission.
Bethany Babcock: Yeah, honestly, if I hadn’t gotten a dollar, I still would have gone back and done it. It was that worth it.
Joe Fairless: Well, thank you so much, Bethany, for being on the show. I really appreciate you spending some time with us and teaching us some things that you’ve come across. I hope you have e best ever day, and we’ll talk to you soon.
Bethany Babcock: Okay, great. Thank you so much for having me.