January 28, 2020

JF1974: How To Fill Vacancies In Shopping Centers with Beth Azor

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Beth Azor has found an interesting way to use social media to help her prospect when needing to fill commercial spaces. From knocking on doors to handing out fliers, Beth also teaches the importance of face to face interactions to win new tenants. 

Best Ever Tweet:

“Listening to your instincts and really being focused on a specific sub-market are my two pieces of advice that have best served me.” – Beth Azor

Beth Azor Real Estate Background:

  • 34 year veteran of the commercial real estate industry
  • Owns and manages a portfolio of $80,000,000 in commercial retail properties
  • Based in Ft. Lauderdale, Florida 
  • Say hi to her at www.bethazor.com 
  • Best Ever Resource: TripIt Trip Planner

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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, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Beth Azor. How are you doing, Beth?

Beth Azor: I’m doing great, Joe. How are you? Thanks for having me.

Joe Fairless: Well, I’m doing well as well. You’re welcome, and I’m grateful that you’re on the show. Beth is a 34-year veteran of the commercial real estate industry. She owns and manages a portfolio of $80 million in commercial, retail properties, based in Fort Lauderdale, Florida area. So with that being said, Beth, do you want to get the Best Ever listeners a little bit more about your background and your current focus?

Beth Azor: Absolutely. So I’ve been in the shopping center industry for, like you said, 34 years. I got my real estate license when I was 18. My parents were in real estate and residential. I started with a firm down in Miami, grew my way through. I started as a rookie leasing agent, helping mom-and-pops open stores in shopping centers. Then I had the opportunity to start buying in as a passive investor. I was at that company for 18 years, left and started my own company in ’04. I’ve built my own portfolio, raising family and friends’ money, finding the deals, leasing the space, collecting the rent, all that jazz. That takes about 70% to 80% of my time. The rest of the time, I travel the country teaching leasing agents how to fill vacancies in shopping centers, because we all know, we have our fair share these days.

Joe Fairless: Yeah. Well, that sounds like a fun topic to talk about. When you present to the leasing agents, what do you talk about exactly for how to fill vacancies in shopping centers?

Beth Azor: Well, it’s just good old knocking on doors, cold calling, canvassing. Now, there’s a lot of great results with Facebook and Instagram prospecting. They do need to create relationships with the national corporate tenants like Starbucks and Panera Bread and Home Depot and those guys, and we have the ability that we have conferences where we can meet those directors face to face. But usually, 15% to 20% of our shopping centers are filled with mom-and-pops and entrepreneurs. Those are best found and relationships built by literally knocking on doors, cold calling or using social media. The social media works because the gatekeeper’s removed. So an entrepreneur, let’s say, has three restaurants in Albuquerque.

They have a Facebook page or an Instagram page and the leasing agent can directly reach out via those tools. There’s no gatekeeper involved, so you’re getting right to the owner. With Facebook, there’s this guy, Mark Zuckerberg – I know we’ve all heard of him – and he actually pings the recipient on a text message and says, “Hey, one of your customers has reached out to you. If you want your algorithms to continue to rise, please respond.” So for every ten texts on Facebook or Instagram, the average response is about 40%. Of the four responses, maybe three say, “No, thanks. I’m not interested.” But one says, “Yeah, tell me more. Where is your shopping center?” That 10%, within 24 hours, in my 34 years of doing business, it’s the highest return of a prospecting effort ever.

Joe Fairless: Wow. Sending messages on Facebook through the Facebook pages is the highest return on time?

Beth Azor: Highest return ever in 34 years.

Joe Fairless: So you pretty much doubled down on that.

Beth Azor: Doubled down. And you’re capped out, because Facebook figures out what you’re doing. So you’re allowed to do about 10 to 12 in the morning, and then about 10 to 12 in the afternoon. So in our shop, I have a very small team. I have a leasing agent that works with me, but she does about 20 to 25 a day. We’ve done in the last year seven deals. An average leasing agent with a portfolio of my size – we’re doing about 12 to 15 deals a year, and we’ve done seven deals with Facebook and Instagram in the last 18 months.

Joe Fairless: So let’s talk about a specific example. Maybe a recent property where you had some vacancies, and then your team reached out to a bunch of people via Facebook, and then you got some tenants. Will you just walk us through one of those examples?

Beth Azor: Sure. I’ll actually tell you the first example, is my junior leasing agent comes to me one day, I’m not on any social media at the time, and she says, “I think we should prospect on Facebook” and I literally said, “Well, I think that’s the most stupidest idea in the world.” I thought Facebook was just a joke. But as a teacher, I heard myself say that and I said, thinking to myself, “Shame on you, Beth.” So I said, “Mackenzie, you go ahead, honey. Maybe something will pan out.” Again, very condescending, terrible. So she reaches out to a chocolate store that was in Fort Lauderdale for 49 years. So absolutely with my veteran hat on, I’m thinking, “There’s no way this guy’s doing another location.” He’s been in this one location for 49 years. If he wanted to expand, he would have done it.

We had prospected them, we had gone to see them, we had dropped off flyers, we cold called… We probably had reached out to him about nine times; nothing. She Facebook prospects him and that night, at two in the morning– because it’s amazing, these mom-and-pop entrepreneurs are looking at their social media, we usually get our responses between [9:00] and [3:00] in the nighttime. So he responds and he goes, “Funny you should reach out. We’ve been looking for another location in your area. When can we see the space?” And we signed the lease about seven weeks later.

Joe Fairless: Wow. So it was an additional location?

Beth Azor: Yes, it was a second location. That has happened six more times with us in the last 18 months.

Joe Fairless: So if you have a team of four people, can each of the four people do it 10 to 12 times?

Beth Azor: Yes, because you do it on your personal Facebook page. You’re not allowed to do it on your business Facebook page, because that would be spamming. So Facebook allows you to do it on your personal business page. So sometimes I’ll encounter a student or a client who says, “Oh, well, I don’t want to do that from my personal Facebook page.” I’m like, “Okay, I understand.” So what some people I know have done is create an additional personal Facebook page, and feed it with pictures of you standing in front of your properties or your shopping centers or doing videos, “Hey, I’m here at my vacancy.” But it’s still a personal page… So that when that Facebook recipient receives it and they go back to check your page, they’re like, “Oh yeah, this guy, they definitely lease shopping center. Let me respond.”

Joe Fairless: Which could limit what I was going to ask, but now it makes sense why you can’t hire a team overseas to do this, but then I get it. Their credibility of “Well, they’re in the Philippines, is this legit?” So when you go to speak to leasing agents about how to fill vacancies in shopping centers, you tell them about this messaging, because it’s the highest return of time in all the years that you’ve been in the industry for getting leases. I’m assuming that the conversation is longer than the time we’ve had on this call… So what else are you telling them? Because it sounds like that’s all they need to know.

Beth Azor: No, because that takes about 15 minutes in the morning and 15 minutes in the afternoon. So I’ve been doing this for 34 years. I own six shopping centers, I’m out knocking on doors once a week. A typical leasing agent should be out knocking on doors four times a week, because face-to-face, in the end, is really the winning combination. Walking in, seeing the restaurant, seeing if it’s busy, seeing a retailer, seeing the merchandise is what you want in your shopping center. Exposure. If they don’t know you, they can’t do business with you. So handing out 30 to 50 flyers a day on your property… So I teach them why it’s still important to do hand-to-hand combat and I talk to them about their flyers.

So instead of just having a generic flyer, “ABC shopping center, this is the location,” if they have a space that used to be an urgent care for a family doctor, or if they have a space that used to be a restaurant that has a hood and a grease trap. I teach them to create their marketing materials to make it easier for the prospect, so that when they drop off the flyer, and the entrepreneur is extremely busy running his business, and has had some ideas, “Well, maybe I want to open a third or fourth”, but they don’t have a lot of time to leave their businesses and run around looking in vacant storefront windows… So I teach the leasing agents to create marketing materials that makes it easier like, “There’s a hood and the hood is this size. There’s a grease trap and it’s this size. There’s an outdoor patio that keeps so many people”, with pictures. So that’s another thing.

Another thing that I talk about is having a plan. So instead of just taking sign calls, where nine times out of ten they are businesses like vape stores– every vape store in the world wants to be spaced in shopping centers today… Having a plan of what is the income demographic around your shopping center? What’s the population? What’s the education? And what are the vacancy store sizes? So if you have a 7000 sq ft. vacancy, you’re not putting an H&R Block in there who wants a 1,000 sq ft. So creating a plan of “That 7,000 sq ft. maybe I want a bike store, or I want a leather furniture store, or I want a gym” and having a plan and creating what’s called a tenant mix plan…  I teach them about that and how to assign uses to demographics. If you have a high-end market with 150k in household income, you’re not going to want to try to lease to a coin laundry. You probably will want to lease to a tutoring facility, because the parents in that high-end market are going to want to send their kids to tutoring versus if you were in a lower-income market, you wouldn’t be targeting tutoring, you probably might be targeting coin laundry. So there’s the science piece to retail leasing.

Joe Fairless: Let’s talk about your six shopping centers. We would love to learn more about that. Which one’s your favorite?

Beth Azor: The strip club that became the strip center.

Joe Fairless: Okay, what a wonderful topic on a podcast, too. Thank you for that. So tell us about it.

Beth Azor: So there was a strip club called Eden’s Nightclub in a market where I own two other shopping centers. I was at the local commission meeting. I was there for my charity, trying to raise money. The city gave funds to local charities and I was in the audience to do a presentation for my charity. The commission decided at that meeting they were going to outlaw strip clubs in the municipality by the end of 24 months.

Joe Fairless: Where is this at?

Beth Azor: This is in Davie, Florida, which is a suburb of Fort Lauderdale. So my thought immediately goes to the Eden’s Nightclub, which is down the street from two shopping centers I own. So the next morning, I’m reading– I think right then and there, I’m on my phone looking at the tax rules, trying to find out who owns Eden’s strip club. I called the people the next day. They live four hours north of me in Jacksonville, 87-year-old couple. I said, “So I wanted to let you know that you’re going to have a vacant strip club in 24 months.” They didn’t really believe me. I sent them the minutes of the meeting, and I started an 18 months dialogue with them, and a relationship.

I went up to Jacksonville where they lived, I had tea in their living room, and I really wanted to get this property under contract because no one else really knew about the whole strip club thing. I knew that the minute the strip club closed, all my competition, which at the time I thought would be smarter, more experienced and richer than me, would descend on this asset, because it was a phenomenal piece of land. It was located on a main and main intersection and it was located next to it a vacant Kmart, which we all knew at one point would be something pretty spectacular, because it was in a very good high-income demographic.

So I worked it, worked it, worked it, and I made them an offer. They said, “It’s not high enough.” I go, “Well, what’s the number?” “Well, just give us more.” So it just wasn’t going anywhere. I ended up trying to put it under contract; didn’t put into it. The place closes and sure enough, now I’ve got five competitors trying to get these people to sell to them. So the couple gets sick. First, the husband gets sick and then the wife gets sick. So they decide that they’re going to hand over the decision-making to their son, who had just graduated from West Point. So he’s 24, and he calls me up and he goes, “Hi, you’re one of the candidates we’re looking to sell our building to. I’m coming down. Can I meet with you? I’m going to meet with four other people.” And I’m like, “Sure. But I’d like to be the last meeting.” He said, “Yeah, no problem.” So we meet. But that was actually going to be three weeks from that point.

So I have this one partner who I work with, and he said, “What’s the number one thing that will be important to them?” and I said, “Time.” The minute they pick their purchaser, they’re going to want to close fast. He goes, “Okay, call them back and tell them that if they will let us go on the property to do the environmental in title, we’ll do it at our own expense. So that if and when they pick us, we can close in two days.” So I call the son and I explain the situation. I said, “I know your mom and dad. Once you’ve make a decision on who you want to go with, you’re gonna want to close fast. So if you let me do this, we’ll be in position to close in 24 hours.” So he said, “Sure, we’ll give you permission. You’ll get insurance.”

So we went into the environmental and the title and the survey, and everything was clear. We did it in three weeks. We have the meeting, he meets with the other four people– again, smarter, richer, more experienced people than me. Then I meet with them. So we’re doing just some chit-chatting and I said, “So what are you going to do, Michael, now that you graduated from West Point?” And he says, “Well, I wanted to get a job in Washington, DC doing consulting.” I said, “Oh, do you have any leads?” He goes, “No, I’m starting from scratch.” And I said, “Well, I don’t really know the ranks in the military, but what’s the highest rank?” and he goes, “General, or whatever.” I said, “Okay, that’s not it. What’s the next rank?” He goes, “Admiral.” I go, “Oh, yeah, Admiral. I know a guy who’s an Admiral. He was an admiral in the Navy.” He goes, “Really?” “Yeah. He does consulting in Washington DC.” He goes, “Really?” I go, “Yeah. Let me call him right now.”

I pick up my phone and I call him. It was a voicemail. I said, “Gordon, I’m with a young man, just graduated from West Point. He is coming to Washington DC, would like to meet some people to look at opportunities in the area. If you could call me back so I can connect you guys, that would be great.” Hangs up. This is a guy that served on my alumni board with me. While we’re still sitting meeting, Gordon calls me back. I hand the phone over and they set up an appointment for the next week.

Joe Fairless: Wonderful. Wonderful for everybody involved.

Beth Azor: Exactly. So he leaves. He calls me the next day and he goes, “Beth, my parents really love you. They really appreciate you’ve been working the deal for 18 months. All the rest of these people just came once the building closed. If you agree to pay $3.4 million for these two acres, it’s yours.” I said, “Done”. So we signed the contract; we closed in 48 hours.

Two of the people I saw at a conference the next week, and they both said, “You’re crazy. You spent 300 grand too much. You shouldn’t spend any more than 3.1.” Literally, my heart went to my stomach and I’m thinking, “I hope they’re wrong.” Because we literally had no plan for the deal. We just knew that it was a great piece of real estate. So it turns out though, the Kmart became a Whole Foods. Everyone thought we knew that, which we didn’t. We ended up building an 11,000 sq ft. strip center, and the NOI, Joe, is 722.

Joe Fairless: Wow.

Beth Azor: So it was a home run. So the strip club that became a strip center– and there was just so many pieces of it – doing that survey and environmental in advance, having connections to help him with his career, spending the 18 months working the sellers and going to them and having tea in their living room. There were so many pieces of it that all of us in real estate employ at one point or another in a deal, having the Whole Foods ending up leasing there so that my rental rates were much higher than everyone thought they would be.

Joe Fairless: What’s the cap rate in that area?

Beth Azor: So I made a big mistake… We wanted to build it and flip it, and it was going to be a big home run for us. But we stupidly put on a CMBS loan. It takes nine months to assume securitized backed loans. So we still own it. If we had a traditional loan on it that was assumable, we could sell it for about a 5.25 cap rate.

Joe Fairless: And that’s a little under $14 million bucks, right?

Beth Azor: Yeah, exactly. We have Starbucks, we have Select Comfort, which is a high-end mattress store. We have Blaze Pizza, which my franchisee is LeBron James. We have a Verizon corporate store, and then we have one local tenant, a little ice-cream guy. It’s a huge home run and we’re blessed to have it.

Joe Fairless: What were you offering during those 18 months?

Beth Azor: I just kept calling them giving them market information saying, “I’m still here. I would love to– ”

Joe Fairless: I mean, what price were you offering?

Beth Azor: I had offered 2.9. They said, “Go up.” I said, “Well, how much?” “We don’t know. Just go up.” I’m like, “I’m not going to negotiate with myself.” Then I learned that a broker in town had a relationship with them, so I called him and I said, “I’ll pay you if you can get me in there.” We put in an offer at 3.15 with his tutelage, and then they got sick. So the 3.15 is where we ended at, then they got sick, everything went stale. That’s when the strip club closed, that’s when everyone else got involved, and that’s when the son got involved. So we’re very happy that we own it and paid 3.4.

What I also knew, that my competitors didn’t know – because I own two shopping centers nearby, I knew the market better than anyone. So I knew that an AT&T corporate store had renewed across the street from this deal at $50 triple net, and it was blocked by a Chipotle. So it didn’t even have visibility and exposure. So I underwrote the 11,000 sq ft. at 50, because I knew I could get that. I ended up getting in the mid-60s. But conservatively, I said, “I know I can get as much as AT&T paid,” because they were 5,000 sq ft, my stores are going to be smaller than that and I have better visibility and exposure. My competitors didn’t have the connections and the market data that I did, so that’s why I was comfortable with the 3.4. But let me tell you, I did take a pause when they all told me I was crazy, because they owned hundreds of shopping centers, not just– at the time, I had four.

Joe Fairless: Did you go back to– was it city council meetings? Do you ever go back to those meetings and hope to catch lightning in a bottle on one of those pieces of intel again?

Beth Azor: Yeah, I’m in those meetings all the time, because I have this charity… And I tell my students these stories in my workshops, and I say, “How many other real estate people do you think were in that council meeting?” You have to read the newspaper and be involved in your community. All my six shopping centers are within ten minutes of my house. So I live and breathe my market. The more you know about your market, the faster you can move because you have the knowledge that someone else coming in from outside isn’t as up-to-date. So being involved in the commission– and that has helped me too, as I’ve gone on to do renovations or tried to get additional parking… I did a Panera and I needed to get five more parking spaces. Because I knocked out a strip club, let me tell you, that gave me a lot of kudos with the city.

Joe Fairless: Yep. Well, taking a step back, what is your best real estate investing advice ever?

Beth Azor: One, go with your instinct. Because I’ve lost eight deals in my past when I had an instinct, but listened to naysayers, and again didn’t trust my own instincts. I said, “Oh, well, they own more than I do. They know more than I do. They must be right.” So listen to your instinct and explore it. You can always drop a contract if it ends up that they’re right and you’re wrong. But I’ve lost eight deals where other people have gone in and bought them and did what I thought, because I was scared. So listen to your instinct.

Then the market knowledge piece. Because I have a friend who has 28 townhomes in Wichita. Why she’s so successful is because her market knowledge is better by thousands of percent over her competition, because she’s the biggest buyer and owner in that sub-market, so she can move faster and she has more knowledge. So I think focusing on a specific area makes you an expert, and then that gives you the leg up. So listening to your instinct, and really being focused on a specific submarket are my two pieces of advice that have best served me.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever lightning round?

Beth Azor: Yes.

Joe Fairless: Let’s do it. First, a quick word from our Best Ever partners.

Break: [00:22:56].07] to [00:23:31].12]

Joe Fairless: Alright, what’s the best ever resource that you use for your business that you couldn’t live without?

Beth Azor: TripIt. TripIt is an online travel app on my phone. I travel a lot in my teaching, and it’s just phenomenal. It will tell me when I’m on the airplane, how many minutes till I land, what’s the gate I need to go to, where’s the baggage claim. All my trips I can look at, versus just looking at my calendar, which is filled with so many other things; it just has all my trips for 2020. I can just zip through it and go, “Okay, well, I can’t plan.” It’s just phenomenal. I love it. TripIt.

Joe Fairless: Alright. What’s a deal you’ve lost the most money on?

Beth Azor: A Winn-Dixie anchored shopping center during the recession. We had a balloon note. I was partnered with BlackRock. We bought the Winn-Dixie out of auction. We had done a $20 a square foot staples deal in an adjacent space. We thought we could replace the $5 Winn-Dixie rent with, let’s say $15, and the recession hit, and no one was expanding. My partners, BlackRock, lost 6 million, and I lost half a million.

Joe Fairless: What’s the best ever way you like to give back to the community? You’ve mentioned your charity.

Beth Azor: Yes, I own a charity called Hope Outreach. We help families that are marginalized, that need help. Maybe they work two jobs each, their kid ends up in the hospital, one of the parents doesn’t go to work, they’re in the hospital with the child. They pay all their bills, but now because they live paycheck-to-paycheck, they’re literally a paycheck away from being on the streets, and they don’t have a month to apply for aid. We are an emergency situation where we can help with the utilities, the rent, food… So we help the people before they end up on the streets when it’s really just like one paycheck away.

Joe Fairless: What’s the best way the Best Ever listeners can learn more about what you’re doing and get in touch with you?

Beth Azor: Bethazor.com is my website, and then Beth Azor on all social media, especially LinkedIn.

Joe Fairless: Beth, thank you so much for being on the show and talking about your experience, talking about how to lease up shopping centers, using social media tactics, getting specific there. Also, other tactics that we talked about or that you talked about.

And then the strip club to strip center case study, and some things where you put yourself in a position to be lucky, and then you acted on it and then capitalized on, and then some, by connecting the dots with the son, by reaching out to the owners and developing that relationship… And then ultimately – what I really love about it is starting the due diligence process before anyone else. Because in the mind of the seller, you’re already this far along, and you were, because you could close within one or two days. So it assumes a closing in their mind. So you’re already like, “Okay, well, we have to go through all this other stuff. But with this group, they’ve already done their due diligence, and they’re ready to go.” I mean, it’s very smart, so thank you for sharing that. I really enjoyed our conversation. I hope you have a best ever day, and we’ll talk to you again soon.

Beth Azor: Thanks, Joe.

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