JF2621: Current Commercial Real Estate Trends with Eli Randel

Growing up in real estate, Eli Randel has always been engulfed in the industry. Now, he’s the Chief Strategy Officer for the industry’s fastest-growing marketplace. Today, Eli is talking with us about short- and long-term strategy, current commercial real estate trends, and how to determine your next investment strategy. 

 

Eli Randel Real Estate Background: 

  • Chief Strategy Officer at Crexi, the commercial real estate industry’s fastest-growing marketplace, data, and technology platform
  • 10+ years experience in residential and commercial real estate at Blackstone and other top networks
  • Based in Raleigh, North Carolina
  • Say hi to him at: https://www.crexi.com/ 
  • Best Ever Book: Shoe Dog: A Memoir by the Creator of Nike

 

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TRANSCRIPTION

Ash Patel: Hello, Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel, and I’m with today’s guest, Eli Randel. Eli is joining us from Raleigh, North Carolina. He’s the chief strategy officer at Crexi, the commercial real estate industry’s fastest-growing marketplace. Eli also has over 10 years of experience as a commercial real estate practitioner with great companies like Blackstone.

Eli, thanks for joining us, and how are you today?

Eli Randel: Good, Ash. How are you?

Ash Patel: Wonderful. Thanks for joining us. Eli, before we get started, can you give the Best Ever listeners a little bit more about your background, and what you’re focused on now?

Eli Randel: I’ll do my best. I grew up in commercial real estate. My father is an entrepreneur, investor, real estate attorney, so I’ve really been in the industry my whole life; I began my career for all intents and purposes at CBRE, based in Miami. When the market fell out, I was at ground zero at the time, and decided to wait out the storm at grad school. So I went and got my MBA at University of Florida. That led me to a company called L&R Partners, which is now an entity of Starwood Property Trust. Startwood launched a JV with auction.com, and I helped represent them and their interest, and then after some time, I went to go in financial, which was a group that was raising LP equity and corresponding debt for developers and investors. That led me to invitation homes, as you referenced, Blackstone single-family rental group. And then during that time I got approached by former colleagues who are forming Crexi and asked if I’d be a part of the ride, and here I am, almost six years later.

Ash Patel: That is incredible, and I love Crexi. It’s just like a giant shopping mall for commercial real estate investors. So were you there at the beginning of Crexi, at the initial launch?

Eli Randel: I joined about two months after launch, when we had 200 properties give or take for sale on our marketplace. Just for some perspective, we now have 150,000 + properties for sale, and probably about an equal magnitude for lease as well. So not quite the beginning, beginning, beginning, but maybe [unintelligible [00:02:45].18]

Ash Patel: And, Eli, with Crexi, what is the strategy? You are the chief strategy officer. What’s your short and long-term strategy?

Eli Randel: Great question. I probably should have had a prepared answer for it, but short-term strategy is where we continue to execute. We think we’ve designed a great business, with really good, stable, reoccurring revenue, and also ways in certain months to capture opportunistic fee revenue, which really leads to this nice combination of the two. So we want to continue to execute on those businesses near term.

Long-term, we really have this mission to digitize the commercial real estate ecosystem, and there’s so many pain points and different angles to tackle it from. I won’t bore you by listening to them, but I think you and the audience likely knows what some of those look like. It’s continuing to bring our industry into the 21st Century, digitize antiquated processes and workflows, and really modernize the industry, and make it faster, more liquid.

Ash Patel: And what voids did you see in the industry that led to the forming of Crexi?

Eli Randel: Well, there’s a really long list. The founder had seen technology occurring so many other areas of his life. Really simple things that were leading to so many time savings, and just increased velocity of activities and speed and workflow, and there were so many pain points to tackle, but largely, it was bringing the industry not just into the future, but into the present. At the time I joined, 2016, and we’d formed the year prior, it wasn’t a matter of trying to revolutionize or make futuristic to commercial real estate industry. It was really just trying to bring it up to speed with all the technological advances that had occurred over the last 15 years or so. I mean, in my mind, commercial real estate technology hadn’t changed much from 2000 to 2015 or so, when us and a couple other companies began to really attack all these basic pain points. So it was really a matter of just bringing current so many of these processes and workflows.

Ash Patel: How are you different than LoopNet?

Eli Randel: In a lot of ways. I would say in many ways, we have a different business model. One could say their product is very similar to what it’s been for several years. We have a very innovative mindset. We believe in constantly iterating and making better our product, whereas LoopNet, which was a tool I had used in a prior life, doesn’t look too much different than it did 20 years ago or so. And in many ways, in my opinion, it’s very much so a two-dimensional billboard, with a picture of a property and a phone number. It was important to us to have really interactive workflows between buyers and sellers, or as we sometimes put it, demand and supply on our marketplace – now, tenants and landlords – and let them interact. Let them get data to inform their decisions, and make offers online among each other, and let the supply side users (which is often brokers) do the reporting and the marketing, all with clicks of the mouse, instead of dialing a fax machine.

Ash Patel: Eli, there’s so much emphasis today on data… What is Crexi going to do to help investors like us attain the data that we need?

Eli Randel: Yes, data is a really important milestone we’re targeting, and for us, I think it’s important to integrate it into the activities that are already occurring on our platform. So, if I’m looking at a property – what a captivating time to understand what it previously traded for, or what the zoning is. So it’s not just what we can provide to users. It’s how we provide it, and integrate that data with the activities already performing. In terms of what data we can provide, I think there’s a temptation to provide too much data; for traffic, on what side of the street, during what time of the day, etc. I’ve seen some really nifty platforms come along, but maybe lacking in utility. We want highly actionable data that informs buyer, tenant, seller, landlord decision-making processes. I should also have a lender or appraiser or a title company. We want that data to be actionable, curated, and among the forested data, it’s important for us to help select the trees that are really important to the user, and not just dump all of it at them at once.

Break: [07:38] to [08:15]

Ash Patel: Today, there’s a huge emphasis on everything social. What is Crexi doing to ride that wave?

Eli Randel: We very much so integrate with social platforms. That’s important. We are also building out social functionality within our product, so brokers can feature themselves with pages, bragging about deals and transactions they’ve done, and we do our best to fact-check that information, and users can also flag it if it appears inaccurate.

So social is very important, but I don’t want to overstate that, because we still are a very old school industry. So yes, there’s a new generation of users who may be accustomed to social media platforms, but again, avoiding the temptation to play too much into that, I think it’s important.

So we want to integrate with social. We want to bring more eyeballs to properties that are being marketed, we want to provide users with access to more properties to either acquire or occupy… And we can use social to do all that, but I don’t want to overstate it as if we’re trying to build Facebook for commercial real estate, because we probably [unintelligible [00:09:27].28].

Ash Patel: Yeah, I get what you’re saying. I just think it would be cool to connect with other investors, or even brokers on your site in a social manner, versus just transactional. So, I get it. You can go in a lot of different ways and get scope creep.

Eli Randel: That’s absolutely on our road map. We do see the need to integrate some social functionality within our platform. We think there’s a lot of opportunities there to find like-minded investors to partner with, to find opportunities to JV on things… That does exist today in version one. It’ll continue to iterate and grow, but again, we’re not trying to be a cutesy social media platform where people are showing pictures of their dinner plate at a closing dinner, although that might be a cool idea and kind of fun. We want to still be purist to the industry as well.

Ash Patel: Yeah, I get it. Just a crazy thought, though… What if you have a particular search pattern? So, let’s say there’s an individual that searches for properties between $1 million and $2 million in Cincinnati, Ohio, that are warehouse specific, and maybe suggest a colleague request or something for a similar type of person that does those searches, maybe on the West Coast or whatever… But yeah, I can see how you can get carried away.

Eli Randel: Yeah, I’m not saying we aren’t doing that today. So, if you’re looking for a certain property or machine learning functionality, we’ll start steering you to other similar properties. Additionally, you can request a broker to work with. So there are ways to interact and engage with the community, which one could call social media, but I don’t want to repeat it too often. We’re trying to show restraint and not overdoing that.

Ash Patel: Yeah… A question for you, though. So you think Zillow, who’s trying to radically change the realtor model… Is that in Crexi’s future, where you combine buyers and sellers and not have a broker in the middle?

Eli Randel: No is the short answer. Many of us are former brokers, including myself, we really were built by brokers and their feedback. In the early days, they were in our office constantly telling us what their pain points were, and how we could solve them. And an analogy I like to use – it’s been a while, so I might butcher it is, “Medical technology didn’t replace doctors. It made them better.” So great tools for imaging or X-rays or things along those lines didn’t replace a doctor. It made them more effective, it made them able to diagnose and solve problems faster, and maybe see more patients in a day. So that’s our mindset. We want to be an allied at the brokers. We’re not interested in building a brokerage, although we love and admire that business… But we think that there’s enough activities which we can help solve for them, and really be a tool for brokers, among other audiences.

Ash Patel: Eli, you’re surrounded by great deals all day long. What are you investing in, and what have you invested in in the past?

Eli Randel: So, I currently am investing in no commercial real estate, which may make me not the best guess, although we’ll get into some things I do think people should be doing. However, it’s hard to deny multifamily feels very stable right now. I know certain markets are poised for very high rental rate appreciation. I think that feels like a safe, stable, no-brainer play, depending on the market, depending on the property and the property type. I really think there are a lot of strategies right now one can employ, and I think we’ll get into that some. So maybe I’ll reserve my thoughts.

Ash Patel: Let’s hear it. What should people be doing?

Eli Randel: Well, I thought this question would come up, so I’ve been pondering it a little bit… And I don’t think there’s a one size fits all answer. That’s not to cop out with an answer of any kind, but I think what they should be doing is – and this assumes that they’re kind of mom-and-pop entrepreneurial investor, not the institution… They should be determining what they’re hoping to accomplish by investing. Is it a capital creation play? …in which case, maybe they should be looking at value-add or development projects. Is it a cash flow play? Are they looking to generate passive cash flow? …in which case, I still believe Triple Net is strong, for many circumstances. Is it a wealth preservation play? …in which case, maybe they’re looking at participating in trophy properties, which aren’t going to decrease in value, but still generate a very small yield. I don’t think there’s a one size fits all answer. So I guess my answer would be, what are you trying to accomplish, and let’s back into it from there.

Ash Patel: What trends are you seeing right now with commercial real estate, different asset classes?

Eli Randel: Great question. A general sweeping trend – it’s kind of a non-answer – is the resiliency of commercial real estate. I think our industry, during times people thought it was going to really be in peril – and that’s not to say some markets didn’t soften – it’s really showing tremendous resiliency. And I think there’s an undersupply of most product types in many markets because development last cycle was moderate…

So I don’t know if I’d say general trends, because I think for every potential weaknesses and opportunity. For instance, a friend I was seeing for a long time, and I can memorialize it predating COVID, is a flight to what I call minor league baseball markets; your Nashvilles, Raleighs, Phoenix, and some of those might have professional teams. So don’t quote me on it, but some of these less major markets, we certainly saw that exacerbated during COVID. So that would lend someone to believe that core markets maybe saw a flight away from it, but I think opportunities were presented, and capital came and backfilled in those markets as well. So, I am mostly bullish across the board.

Break: [15:42] to [16:56]

Ash Patel: What will Crexi do to help educate investors? On this show, our goal is literally to try to add as much value and knowledge to our listeners… So I would love to see Crexi — maybe if somebody is an investor in multifamily, how do you educate them enough to help make decisions on investing in retail, or industrial, or warehouse?

Eli Randel: Great question. So in addition to a lot of our insights, we have a blog, and we also have a white paper we’ve released quarterly with a lot of our trends and analytics, which I really hope are helpful to people… Going back to a previous question, I believe we can provide really highly actionable, well-curated data to democratize the industry and get people smart quickly. Historically, there’s a very large learning curve to participating in commercial real estate as an investor or a broker, and I think that’s becoming a smaller learning curve, and more accelerated learning curve. So, I believe with our data product, we can quickly get investors, participants smart on different markets, different product types. A lot of data points which were historically very opaque and well kept, I believe we can open up to the average investor.

Ash Patel: Even more reason to do the social aspect. Get your audience to learn from each other.

Eli Randel: I agree. You’re onto something. We’d love your feedback further.

Ash Patel: Awesome. What’s your best real estate investing advice ever?

Eli Randel: Oh, great question. I don’t have an answer to that, so I’m going to shoot from the hip… I do have some thoughts on advice for today, because I thought that would come up, but just holistically speaking – God, I hope it’s not too straightforward and reckless, but I would say get some skin in the game. I think a lot of people try to market-time commercial real estate, and yes, you shouldn’t buy when it doesn’t feel prudent, but I think once you get in the game, you realize over an extended timeline, unless you bought at a really bad place, you’re going to have opportunities to add value, you’re going to have benefits from a tax perspective, you’re going to be able to lever that opportunity in those learnings into other property types… I’ve known people for years fascinated by commercial real estate, but they’ve never jumped in and put skin in the game. I think participating in an investment is a really valuable way to learn.

Ash Patel: Very well, agreed. Eli, are you ready for the Best Ever lightning round?

Eli Randel: Man, I am. For a long time, my colleagues would make fun of me, because when I interview candidates, I try to come up with my own lightning round. So you’ve got me captivated as to what this entails, but let’s do it.

Ash Patel: This is not part of the lightning round, but what’s your favorite question when you interview people?

Eli Randel: Oh, man. I wrote a blog on it once, so I ought to go back in there… I don’t know, I’ll get back to you, but… Often, I would ask open-ended, squishy questions there weren’t a right or wrong answer to, so I could watch them process, and really try to strip away any pretense or facade they maybe thought they needed for the interview. So, I don’t know. I’ll get back to you on that. I’ll send you that blog one of these days.

Ash Patel: Awesome. Eli, what is the best ever book you recently read?

Eli Randel: Oh, man. I used to be a voracious reader, but oddly, I loved fiction, and I found, in a weird way, I learned more so. I used to love this book two years ago called, “Kiss Me, Judas”. It turned into a trilogy. It was very kind of dark crime noir… It just jumped in my head now. I really liked that book. It’s not a secret, but I’ll give you one little more current — Shoe Dog, I think is really a great book, if people want to understand the trials and tribulations of building a business and a company.

Ash Patel: Eli, what’s the best ever way you like to give back?

Eli Randel: Best way I like to give back. Well, I admittedly wish I was doing more. I think I have a lot of room to do that, but I believe in touching people at a personal and local level, which sometimes sounds like a cop-out for not donating to charity, that you say, “Well, I’d like to impact people locally.” I do, in fact, donate to charity, but not as much as maybe I should. I don’t know… Trying to be a good person, helping people and individuals; letting them know you have good intentions, I think they can tend to reflect that, and reciprocate when appropriate. So again, not my best answer, but I guess my answer is helping people you can see and touch and shake their hand, I think [unintelligible [00:21:51].18] impactful that can be to some people.

Ash Patel: Eli, how can the Best Ever listeners reach out to you?

Eli Randel: Well, anybody’s free to call me, and I’ll give you my phone number if you want to share it… They’re also free to email me, which is eli@crexi.com. I admittedly am hyper-responsive, and it’s something I’m trying to learn, which is, I don’t have to respond to everyone. I always feel as if it’s the polite thing to do, but if I can smell early that I’m going to be wasting their time, maybe it’s not so polite to take a call with people and lead them on. So you’ve got to strike that balance. But email, phone, LinkedIn, wherever. I’m super responsive, and as a guy who’s cold-called many people and really appreciate when they call me back, I do my best to do just that.

Ash Patel: Awesome. Eli, thank you so much for being on the show today and sharing the story of Crexi, and what you guys are going to be doing in the future. We appreciate your time.

Eli Randel: Yeah, likewise. Thanks for having me, and I’m here for you and your audience in any way I can help, and I look forward to learning more about what you guys do, and pleasure being here.

Ash Patel: Awesome. Best Ever listeners, thank you for joining us, and as always, have a best ever day.

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