Supply Chain Now Radio Episode 161
Supply Chain Now Radio, Episode 161
“Supply Chain Real Estate Series: Successfully Renewing a Lease”
The Supply Chain Real Estate Series
Exclusively on Supply Chain Now Radio
Prefer to watch the podcast in action rather than just listen? Watch Scott as he interviews Ward Richmond for SCNR Episode 161 in the Vector Global Logistics Studio.
Ward Richmond is an Executive Vice President and shareholder at Colliers International (NASDAQ: CIGI). His team within Colliers specializes in working with C-level executives and operational specialists to develop and execute corporate real estate strategies on a local and global basis in an effort to maximize operational efficiencies and value. Ward’s primary focus is representing dominant logistics companies in the acquisition and disposition of “supply chain real estate”: distribution centers, truck terminals, last mile hubs, manufacturing facilities and industrial land. With over 12 years of experience, Ward has developed an unparalleled understanding of Supply Chain Real Estate strategy via negotiating 500+ transactions, globally, in 50+ cities while generating millions in value for his customers. Ward enjoys reading, writing and speaking about eCommerce and the logistics industry. He’s been featured on podcasts like the GaryVee Audio Experience and interviewed by multiple publications including The Wall Street Journal. Ward has also been a featured speaker at multiple real estate and logistics conferences around the globe. Ward currently serves on the steering committee for the Colliers International Logistics & Transportation Solutions Group and is an active member of IWLA, IAMC, and the semi-legendary, Texas Warehouse Association. Be sure to check out Ward’s blog at: https://supplychainrealestate.com/ and learn more about Colliers International here: https://www2.colliers.com/en
Scott W. Luton is the founder of Supply Chain Now Radio. He has worked extensively in the end-to-end Supply Chain industry for more than 15 years, appearing in publications such as The Wall Street Journal, Dice and Quality Progress Magazine. Scott was recently named a 2019 Pro to Know in Supply Chain by Supply & Demand Executive. He founded the 2019 Atlanta Supply Chain Awards and also served on the 2018 Georgia Logistics Summit Executive Committee. He is a certified Lean Six Sigma Green Belt and holds the APICS Certified Supply Chain Professional (CSCP) credential. A Veteran of the United States Air Force, Scott volunteers on the Business Pillar for VETLANTA and serves on the advisory board for the Georgia Manufacturing Alliance. He also serves as an advisor with TalentStream, a leading recruiting & staffing firm based in the Southeast. Connect with Scott Luton on LinkedIn and follow him on Twitter at @ScottWLuton.
Scott Luton welcomes Ward Richmond, EVP and shareholder at Colliers International as they discuss the steps for ensuring a successful supply chain real estate lease renewal.
[00:00:00] It’s time for Supply Chain Now Radio Broadcasting Live. Supply chain Capital of the country. Atlanta, Georgia. Supply Chain Now Radio spotlights the best in all things supply chain the people, the technologies, the best practices and the critical issues of the day. And now here are your hosts.
[00:00:29] Hey, good afternoon. Scott Luton here with you live on Supply Chain Now Radio. Welcome back to the show. We are coming to you today from Vector Global Logistics, a company that’s providing world class Logistics services all while deeply investing into the communities that they serve, based right here in Atlanta. But with an international reach, this company is on the move. You can learn more at vector geo dot com. So today we continue one of our newest series, all about supply chain real estate. And we’re going to be featuring, once again, a titan in the space Ward Richman of Colliers International and Supply chain real estate dot com. So stay tuned for insiders information, insights and advice on a quick programming note. Like all of our series on Supply Chain Now Radio, you can find our replays on a variety of channels Apple podcasts, SoundCloud, Spotify Heart Radio, you name it, and wherever else you find your podcasts. As always, we’d love to have you subscribe Singleton. Anything. Supply Chain Now Radio is also brought to you by a variety of sponsors, including the Effective syndicate Talentstream Verusen, pro purchaser, dot com and several leading organizations. Be sure to check out the show notes to learn more about our valuable sponsors.
[00:01:36] So let’s welcome in our featured guest once again. Ward Richman, executive vice president and shareholder at Colliers International. Ward. How you doing? Hey, Scott, I’m doing great. It’s good to be back. It is great to have you back. We had a great conversation in the kickoff episode just a few weeks back. And it’s also just so you know, it’s resonated really well with our audience as in top 10, ranking with our audience. Certainly I had not. Did you, though, all the numbers that we’ll do that maybe after the show. But I think it’s I think I don’t think Supply chain real estate is is is talked about enough and the insights aren’t shared enough across and in Supply chain. I agree. So we are glad to have you share a lot of your insider information with our audience. And it’s good to see the consumption numbers being what they are. We also should give a shout out off camera here to your colleague, Zach Rutland, who is part of the team, Kyra’s team, that is in Atlanta, making things happen, closing and big deals, I’m sure, helping people.
[00:02:32] Most importantly, it actually Zach is from our Dallas office. So he’s just out here traveling with me. And he said a couple meetings for us. And we’re we’re heading there after this.
[00:02:42] So and we’re going to have to get Zach Owen to talk. What was the what was going to be his subject matter expertise?
[00:02:49] I think it would be very valuable for Zach to get on and just tell what it’s like to start out in the field of Supply chain real estate and what brought him to it. And then he he’s it’s a little fresher to him the how the beginning of that career looks. And I keep I’m 13 years in now. So the year one, it feels like it was yesterday, but at the same time, it was a long time ago. Yeah.
[00:03:14] Well, you know, lots of stories in those 13 years. And that’s so we’re going to talk about us right here today. So for any of our four, our listeners, you may have missed our kickoff episode, which is supply chain. And now radio episode 141. Check that out. We’re going to be building a landing page, which will make it much easier to find HD episodes. And of course, you can always find a lot of these resources. Can we talking about today at Supply chain real estate dot com as well. But before aside from all that, let’s for those folks that may miss that first episode, ward. Tell us about yourself.
[00:03:49] So, um, Ward Richmond, I’m with Colliers International. We are a global commercial real estate firm that covers all sectors of the commercial real estate industry. And our team is based in Dallas and we specialize in Supply chain real estate and primarily we specialize in representing the occupiers of Supply chain real estate. So a lot of times I talked to people, I mean the real estate business, they go, what property is rebuilding or selling or it’s not? And it’s that we’re not in the business of developing properties and sell and leasing them out and doing that. We’re representing tenants, occupiers of commercial real estate. In doing so, I’ve learned to that in order to generate a lot of value for our clients. It’s been important to understand this supply chain industry, if not more important. Understanding my client’s business than the actual real estate business. And that led to me heading to Georgia Tech to participate in the executive certificate program and Supply chain and Logistics. So I started really honing in. On the Logistics industry in 2009 and that it is really our team’s focus and the bulk of our business is representing transportation and Logistics companies.
[00:05:09] So you’re a specialist. Yes, sir. Yeah. And there are so many advantages and not just for the real estate, but I think a lot of the trusted advisors that are out there, you really want to deal with a specialist that really, to your point, understands how Supply chain happens. Right. That’s right. Yeah.
[00:05:26] Something pretty funny about that that I was discussing at breakfast today with one of my friends who’s here, Chris Cummings. He’s with Colliers out of Atlanta and he specializes in the cold chain. So I was telling you before this episode, I I really want to get Chris on here. But over breakfast, we were talking about how I’ve really dedicated my career to working with three peoples and transportation companies.
[00:05:51] And he focusing on the cold chain and just how really focusing in and specializing on a certain niche actually opens up so many other windows of opportunity in the world for you.
[00:06:05] And so we’re not just it really gets you out of that box where maybe I’m just thinking about lease expiration dates or getting a certain property listed in instead. It’s very important for us to be able to create value for our customers to understand the industry as a whole. And then that’s just created lots of opportunity just to meet some incredible people from all different walks of life.
[00:06:30] And you can dive deep rather than stay shallow across the world of real estate needs. You’re diving deep in these areas of specialization, which I really can appreciate.
[00:06:41] One more thing about who Ward is, which when we got a lot of feedback from the first episode I really found fascinating is your rock and roll background. I got I got to talk about that little bit more of this episode to tell us that a lot of people may not know about Ward Richman.
[00:06:57] So, yeah.
[00:06:57] When I started playing, I got my I got a I saw a buddy’s band play in high school when I was a junior in high school and they were just your garage rock band. And I was over at my friend’s house and saw them play and just said, man, I want to do that. So for my 17th birthday, I believe my parents got me a bass guitar. That’s what I wanted to play. It only has four strings on it. So it seemed it would be the easiest to figure out. And I taught myself how to play by watching VHS videotapes of a bass player.
[00:07:31] And do you the YouTube of our era, right. Of that era.
[00:07:33] Yeah. So I learned on the electric bass, but I really loved rockabilly music. I mentioned Buddy Holly’s one of my heroes, a fellow Texan, and he had the upright bass player playing rockabilly music. So I really wanted the upright. And I wound up getting upright when I was about 19 years old.
[00:07:52] And then I got a VHS tape and this guy named Kevin Smith and another guy named Mark Rubin both created this instructional video on how to play the upright bass, rockabilly style.
[00:08:04] And now Kevin Smith is Willie Nelson’s bass player. Wow. Which is really cool. If you can play upright bass, going to play for women. Martin Oh, I just think, like, if there’s one band that I’d like to play with that I could choose to play with, it would probably be Willie Nelson’s family band.
[00:08:22] And I’ve seen if I’m picturing if I got the right image and we’ll get into a state where the audience would get into Supply chain real estate. But if I am I image I’m thinking of Buddy Holly and bands of that day where the upright bass player is really it’s like the rhythm.
[00:08:40] And he starts dancin. Oh, yeah. With that upright bass. Right. Mike, is that the right image?
[00:08:45] Yeah. So you spin it around. I guess I could do a trick where I would lay down on my back and I would hold the bass up in the air upside down with my feet and play it upside down. And I have photos of this I’ll have to send. Yeah. So, you know, if put it in the Shona and we toured Europe and looking back, I’m all about simplifying life this stage of life. But back then I really was about playing the upright bass. So you have to get a flight case for it if you travel overseas or in an airplane and it looks like a refrigerator shaped like a bass. And so we toured Europe. And there is one point where we took the train from London to Paris and then we stayed at one of my buddy’s houses in Paris. So ups, it was like a little flat in Paris. So I was walking down the streets of Paris carrying this refrigerator, bass shaped refrigerator on wheels and illegal. I track it. Red wine. Yeah. And it was. And then carried it up like five flights of tiny little stairs there, like the stairway here, the podcast studio. And it was an X, you know, an experience, that’s for sure. And, you know, you’ve got to share pictures that that is that is incredible.
[00:09:59] I don’t really rub elbows with many rock and roll stars like you. Well, when you talk about that makes make it makes us feel important. I’m not. I was never a star. So, you know, simpletons, if you play rock and roll, you’re a star. Yes, I. That’s right. Specially with your global shows, Tom. All right. So let’s keep on trucking here.
[00:10:20] So you were here three, four weeks ago? Lu, I think when we did episode one of the Supply chain real estate series here on Supply Chain Now Radio. What’s what’s been happening since then? I mean, you stay really busy. I mean, you’re closing deals. You’re making things happen. You’re serving as a resource for Lu, folks. What’s happened since you were back here?
[00:10:38] Well, one thing really cool that we just implemented that our team implemented. That’s not really.
[00:10:44] Supply chain related, but it is sales related, and I think that applies to everything in the world. And we’ve started doing a daily sales meeting with our team Monday through Thursday.
[00:10:58] We don’t I don’t make him do it on Fridays just to respect the Friday afternoons. And but we’re doing a daily sales meeting now. And on top of that, we’ve invested in a corporate sales training program through Grant Cardone, who is one of my business coaches I work with. And Grant Cardone is out of Miami. He’s a self-made billionaire and he’s been an incredible mentor to me. And he has this great training program. So each day, all team members, including myself, we are required to complete 15 minutes of sales training. That’s all the video training program. And then every afternoon at 4 p.m., we have a sales meeting for about 30 to 45 minutes. And I’ve found the traction that we’ve created in the last month has just been incredible. And we all set our year and goals of what what do we want to accomplish by the end of the year.
[00:11:52] And, you know, a lot of my teammates came up with some financial revenue goals to hit, which is fairly typical and normally how I’d be operating.
[00:12:03] My only goal for the end of the year is to be sure that all team members complete sales training every morning and that I am there and running the meeting, whether I’m in Atlanta or at home or wherever or in the office. Every Monday through Thursday at 4 p.m. And the discipline of putting that into place, I think that that will lead to great success for our team and I’m really excited about it.
[00:12:30] You know, to your point, sales is universal. I mean, there’s lots of selling. An effective selling and ineffective selling takes place in Supply chain. So it’s how things happen. So. So these basically these debt daily huddles, which is fueling seems like what I’m hearing effective and successful communication. It probably helps all the all the tradeoffs that are that take place when you’re not just when you’re selling, but when you’re delivering and executing. And especially in a team based environment where you’re trying that as something.
[00:12:59] I know there’s a mantra to you where you’re bringing more value than anyone to expect. Anyone expects.
[00:13:06] Cool. So many Thursday, basically 50 50. You’re training constantly developing. And then you’re you’re have a team huddle for 30 to 45 minutes and you’ve seen that really move the needle. Oh, yeah. Okay.
[00:13:18] And that does, to your point, takes a lot of discipline. I mean, I’ve certainly been a part of teams where, you know, daily whiteboard huddles or for that matter, just keeping a standing weekly call at times. Yeah. That takes discipline, as silly as that sounds.
[00:13:33] And then after to even doing it for four weeks, then it becomes habitual. And it’s like specializing in something like we’re talking about earlier or any that requires discipline, of course at first. But then all it does is simplify things.
[00:13:48] So now it’s not not really that big of a deal because we’ve been doing it four days a week for the last four weeks. So it’s becoming a habit. Yeah. Okay.
[00:13:58] So today the main thing with the center, the plate item is all about successfully renewing a lease, which goes on a ton and lots of obviously lots of leases involved and from warehouses, distribution centers, three PEO facilities, transportation, but all of Mark’s successful. And so we’re gonna be able pick Ward’s brain on how you can make that process to be far more successful than your average, your act, your average supply chain practitioner or leader takes. So you’ve got you wrote a article, a blog article not too long ago that was very well received and popular. Gardner Yeah, a lot of feedback on it that really boil down to five key steps, right? That’s right. And that’s kind of what we’re gonna talk to today. Yes, sir. So let’s take away who’s baton lead off in this five step process.
[00:14:48] Okay. Let me go through seven steps.
[00:14:53] I’m sure of that. Oh, okay. These are good. Okay. Yeah. These are I think that’s important. And our team has five core values, which I’m not gonna discuss today. We’ll save that for another episode. And we have seven core operating principles now in our sales meeting each day. We start every meeting off with going through the five core values and then the seven core operating principles. And the core operating principles really drive the process behind all of our business. But it’s especially pertinent to executing a successful lease renewal. So no one always bring in an expert number to be proactive, not reactive. Number three, operate with urgency.
[00:15:37] Now, the first to kind of speak for themselves, operate with urgency. That means we move fast. If you text, you know how I am. If you’re texting or email or back, then you are too. I mean, the thing that’s why we have a good partnership going here. Absolutely. And that’s important to us. How we operate and be aggressive. Be be aggressive. And that’s very important. It’s a it’s just a nice reminder to have that we need to always be aggressive when representing the interests of our clients.
[00:16:06] And number five, execute with certainty. This is extremely important. I may say this on every episode that we record, and that is when you sign an agreement of any kind, you want to be certain there is nothing worse than agreeing to something when you’re questioning and what you’re agreeing to. And there’s ambiguities involved.
[00:16:27] And that is my number one job is to remove ambiguities. Number six. Be easy to do business with. That pretty much speaks for itself.
[00:16:39] We want love that one that might be my favorite one out of all of them. It seems like even in this day and age, in this in this Amazon era, in this e-commerce era, where so many companies have figured out how. You don’t have to. You don’t have to make the consumer go through twelve clicks. You can make him go through one or two. That’s right. And however, there’s plenty companies that has not hit them yet, and they’re just difficult to do business with. And and so that has always been and that really speaks volumes because it’s not just about your your transactional approach, but it’s about your approach to problem solving. So it’s about approaching. You know, we’re gonna hit every relationship, every partnership. There’s gonna be a problem that the parties have have to jump on together. And if you’re difficult when that when that problem comes up, it makes life horrible and much more difficult for the customer that you’re supposed to be servants.
[00:17:32] So that that’s my favorite one. A lot of good stuff here. But that’s not to be easy to work with.
[00:17:37] That’s right. And then the final core operating principle for our team is constant and never ending improvement. So that is just always be ready to level up. And there were I think I think we’d all get bored and and really, you know, live in unfulfilled life if we weren’t constantly trying to get to the next level. I think you hear that from a lot of very successful people out there that I like to follow on social media and read their books, that it’s not a you can set goals for yourself in this life and you can go achieve those goals. But once you get there, it’s not. Life’s not going to be perfect and you’re going to need to keep leveling up. You’re going to need to get a new set of goals. If you win the lottery, you’re not going to that’s not and make you happy.
[00:18:25] You might be happy for a few weeks, but then you better you better figure out the next step. Yeah, and you’re probably not. I win the lottery again. So it’s are.
[00:18:34] Hey, when you said constant and never ending improvement, do you watch stranger things? Yes. Did you watch stranger things three? Yes. And that famous scene where they begin singing the never ending story thing. Yes. The ultimate 80s moment. Yeah. What a great, great series. All right. So that leaves that kind of lays the framework for how you’re going to now dab into kind of more targeted with Lisa Rinna. All right. Right. OK.
[00:19:02] Then you’ll find, you know, as we continue to get to know each other. I like to do things in steps. So and I like the numbers 5 and 7. So I’m either going to have five steps or seven steps. Most of the time.
[00:19:14] So as we get into the lease renewal strategy here, we have a simple five steps. So we’ll we’ll take it with number one, which is also our number one core operating principle, which is bring in an expert. Right. And in my blog, I say call me, but I saw a veteran call veteran Cold War. And in and of course, there are other incredible real estate executives out there that can you can perform just as well as I can, if not. And sometimes better, I’m sure. But I can tell you, I’ve been doing this for a long time. We’ve negotiated over 500 transactions in over 50 cities throughout North America. It’s important to call somebody that gets this business and has mastered it.
[00:20:05] And so whatever. So the lesson to be learned there, diagnostic lesson is don’t try to do these things yourself. If you’ve got if you don’t have the expertise and find not just find a advisor, but find a good one that knows what they’re doing and that that’s a specialist.
[00:20:23] Right. Right. Somebody that specializes in doing. If you’re we’re talking about Supply chain real estate, specializes in representing companies that occupy supply chain real estate with lease renewals. And this is something that is drastically overlooked by companies all over the world.
[00:20:45] And it’s a lot of times they will enlist a real estate broker to help them find their facility when they they need to open up a new facility or get rid of the facility. But when it comes time to renew, if they don’t have a real reason to renew, it becomes a check in the box, exercise, a renewal option.
[00:21:04] If you have a good lease in place, you’re probably going to have some renewal options and they may have fixed rates that are already pre negotiated, by the way.
[00:21:15] Five to 10 years before the actual lease expires. So you’re talking about rates that were negotiated in a market that was a completely different we’re living in today. So that’s a pre negotiated rate or a lot of times they’re pre negotiated to have a renewal options at a market rate. OK. So a lot of companies, they don’t. Want to. They’re focused on whatever business they’re and they’re not focused on this, and so it’s easy to exercise renewal option and keep humming along if there’s no obvious reason to downsize or upsize or move to a different location.
[00:21:52] So one thing that I’ve noticed is a lot of companies just will handle this themselves. And they have also developed a relationship with their landlord over time. And the end that that’s great.
[00:22:06] And I know there’s nothing better than a great relationship with your landlord or your property manager. And this can seem like a very simple step to renew with someone that you’ve gotten to know and that you trust.
[00:22:18] But it seems like you’re implying and maybe what you’re seeing and correct me if I’m wrong, is you’re seeing that it is great to have that. But if it impacts leverage and fracture ability to negotiate the best rates for your business, then it kind of is a double edged sword.
[00:22:32] It’s all about where does the food you seri responsibility lie? And for the landlord. It’s to the landlord and to the landlords, investors and to the stakeholders in that property. And their job is to generate as much revenue as possible for their organization that owns the building and that makes perfect sense. So in a lot of times they’re represented by a broker as well that’s looking out for their interests and the majority of the time they are. So I think it’s important for tenants to have their own partner. That’s an expert in whatever the product type may be.
[00:23:14] Let’s just say Industrial real estate in Dallas, Texas, or wherever it may be. You you want to have that expert and you want to partner with them and they’re going to be your trusted advisor. And they if they know what they’re doing, they’re going to have the process in place. So that’s going to lead to step two, which is develop a strategic plan that sit down with your adviser that you’ve engaged to help you with this and sit and go over your needs analysis. So this is going to you may think, actually, that the facility is perfect for you, that the economics are great and there’s no reason to move. But a lot of times a thorough analysis doesn’t get done. It’s it’s a lot of it’s happening through gut instinct. Right.
[00:24:00] This we’re not at capacity and everything’s fine focused on watching, focusing probably often on what you know versus what you don’t know, the blind spots, which is if you think about it in the in the H.R. world or call it the 360 degree analysis or where you’re getting evaluated, you know, all around the full circle, up and down the proverbial totem pole, uncovering blind spots that inevitably are there. Well, when I look when I hear you talk about this needs analysis in this first step, you know, really bringing in an outsider that’s going to help, you know, your blind spots, right? That’s right. Opportunities.
[00:24:39] So it’s it. Analyze your location, analyze the size of your space. Take a look at your labor. Take a look at if there might be a better labor pool in another part of town that might be in a better location that could reduce your transportation cost. Take a look at your clear height. You might be in a twenty four foot clear warehouse that’s been working great. But then you might realize you can downsize. Fifty thousand square feet if you move to a 32 foot clear warehouse.
[00:25:06] Do you ever see folks there?
[00:25:09] Is it ever been successful where folks may bring in someone just to help them conduct the needs analysis and then get that outside perspective and then try to handle negotiation on their own? Is that dangerous?
[00:25:23] I think everything is you know, there’s all types of consultants out there and for sure and there there are consultants that specialize in just network optimization analysis. That’s another important one.
[00:25:35] And now I saw on that note, I want to say that I saw that. Yes, maybe at a conference together or.
[00:25:45] You’ve got someone internally, right, collars that that does some of that network optimization, right? That’s right.
[00:25:51] We have a team. We have a team of Supply chain consultants at Colliers that we bring in to help our clients with that piece of the puzzle. Gotcha. Now a lot of a lot of our customers. Let’s use a FedEx, for example. They have hundreds of supply chain experts internally that are determining where to go and what the facilities are going to be like. But there might be other companies that don’t have the capacity to hire on a team of hundreds of supply chain experts and they they outsource. So there’s all types of different methods for that. But we just started this group a few years ago after just hearing from our customers that it’s service they’d like to have. So, I mean, the number one supply chain cost is transportation. So that’s really step one of any needs analysis is where do you need to be to have the optimal transportation cost and to get product to your customers in the in the most efficient way possible.
[00:26:53] And that needs analysis is is one component of that strategic plan of attack.
[00:26:58] Yes. And I’m not gonna go through the whole needs analysis because it is extremely comprehensive. But to touch on a few things, it’s going to have to do with the operations of the facility itself, taking a deep dive into it, not just a quick conversation with the branch manager to say, how’s everything going? It’s going great. And let’s renew an exercise renewal option. It take some time to think this through. It’s a little bit of time investment that creates a ton of value. So we run this process once we develop the strategic plan. Then when I’m engaged to do this for a customer, then I will build the team that we’re going to put together on our side to go execute. Now step 3, that’s 7 3. Assemble the team in there. I will not work.
[00:27:48] If we do a deal in Dallas for a lease renewal, I’m not going to be working on that by myself.
[00:27:55] Even though I’ve lived in Dallas for 40 years, I have a team on every single thing I work on, and that may be as simple as bringing in a submarket specialist in Dallas to help support me on a lease renewal. But in other cases, I might bring in Greg Healey with our Supply chain Consulting Group, who I saw that to us. Yeah. Greg Healey. He used to be a V.P. at Honda Logistics. Yeah, that’s his background. And I mean, he’s a supply chain guy. He’s not he doesn’t even I don’t think he has a real estate license, although I’m trying to talk him into getting one.
[00:28:23] Well, I mean, what does he not know? I want to say he spoke somewhere or keynote or somewhere, which is where you hit my radar just the last few days. But nevertheless, it only gets you off topic. So assembling that team of experts is really critical.
[00:28:35] So let’s touch on some other experts, examples of experts, labor analytic specialists. This is becoming hugely important economic incentives from the government. There might be an opportunity to relocate to a different city and and go get incentives. If you’re if you’re moving there and generate savings that make it worth your while to relocate. We want to analyze every angle, build the right team. I might call my buddy Chris come into Atlanta if it’s a cold storage opportunity, because that is so specific. That becomes a specific product type. We just did a project in Chicago for a customer and they had a regional headquarter office combined in a warehouse of like 50000 feet of office space and one hundred and fifty thousand feet of warehouse space. That’s so we and we brought in an office expert and we wound up doing one office deal for the office team in an office building and then moving the warehouse to a warehouse building instead of keeping them combined.
[00:29:39] So for our listeners, that may not be familiar with cold chain, you know, folks that maybe, maybe they’re in Supply chain programs and they have early identified some of the different sectors out there. Some of the aspects, cold chain. You’re talking food, you’re talking flowers, you’re talking what?
[00:29:55] Temperature controlled storage. So dry storage is a little less complex. It’s a lot less complex of a real estate deal because you’re talking about concrete box. And when you’re talking about the cold chain freezer cooler space, you’re talking about a making it food grade. And there’s also dry food grade distribution, which is a whole nother thing. But when I’m talking cold chain, I’m talking temperature controlled. And that requires incredibly sophisticated in very expensive infrastructure and of very limited pool of contractors and developers that truly understand it.
[00:30:38] When you’re talking about level of just in general beyond even real estate, when you think about cold chain. And we’ve had folks. Come on. And that we’re really familiar with the Flowers industry. Oh, yeah.
[00:30:48] And you think about it and I promise I was thinking about this that industry until that episode and I think I’m like many consumers. They’ve got to be picked at the right time when that when they’re, you know, just a right point that Mother Nature is ready. And then you got get him into the market all the way to the consumers.
[00:31:06] Oh, by the way, it can’t get beat up or anything because no one wants a beat up flower or they’re gonna buy roses. You’re gonna spend a couple of bucks on. And it is amazing how fast all that works. And in a perfect synchronicity. And that is really I mean, in my mind, that is like a great example of just how complex, how extra complex the cold chain component is within Supply chain. That’s right. All right. So. So in that end, when you’re simply the team making sure you’ve got the right folks in the proverbial have the right people. Right. Seats in the box or something like that, you know what? Let’s say I’m looking right here. In this case, we’re talking right players on the field. You’re right. Players are built like that better. So that was step three. Right.
[00:31:49] That’s step three. And then step four is we’re on the process. So we develop customized processes for our customers. And when once we have the team together and the plan together, then we execute the process. And that starts with a comprehensive market study, which can also include the. When I say market study that can go into supply chain and labor analytics and economic incentives, we want to thoroughly analyze the market, whatever needs to be analyzed based upon the needs analysis, then coordinate property tours, coordinate the proposal process. When we do the proposal process, we’re creating comprehensive RFP is that are customized for our clients. We meet with their legal team to understand legal points that are very important to them. Everybody’s a little bit different. And then combine that with other things that we’ve learned and create a customized RFP and then we go through the proposal process, then we go through financial analysis process. This is customized based upon how the CFO is her V.P. of finance like to look at numbers so we can go look at your average rate across the term, how a lot of people like to look at it or the net present value of the deal. People like this, different discount rates.
[00:33:06] I mean, you need to supply chain expert share just forth. He’s customized all I can. I can imagine how big these contracts are that you are at and the different components.
[00:33:15] Oh, yeah. And I mean, Elise, even the lease amendment to renew a lease with some landlords can be 10 pages. And I mean, a typical lease is like 30 pages. And a lot of times also when you’re renewing, it might be you acquired a company that signed that didn’t have a sophisticated legal team negotiating the initial lease in place. And when you’re renewing, you want to go back to that original lease and go go through it and make sure that you’re covered everywhere you want to be covered, because there’s one time to renegotiate and it’s when you’re doing the renewal. So this is and it’s concerned you even though I have a simple five step process here, you can get into the weeds and it gets complex. But that’s why you bring in an expert, because this to us, we’ve developed processes so that it’s process driven. And while it may sound complicated, the first time you’re hearing all this to us, we can be working on 50 of these at the same time in 30 different cities and not blink an eye. And that’s the point.
[00:34:19] And here’s the so what I mean by end of the day. At the end of the day. Bottom line, whatever. What say you want to use if it’s a two million dollar renewal or if it’s a 20 minute renewal of air, if it’s a 200 million dollar renewal, you don’t want to be called living 10 percent on the table even or in some cases looks like you dealt with six areas where they could have been leaving before yours work and before the value are brought to the table. Some companies may leave as much as 30 35 percent on the table as a ton ton of moolah.
[00:34:53] Yeah, yeah. And yet rent is typically 4 percent of the supply chain costs. So if you think about that, it’s in it. It does.
[00:35:06] It’s not the number one thing on the CFO radar. A lot of the times, especially the larger an organization gets and the more lease renewals they have to negotiate, some of them become more of a problem of dotting the I. I mean, just getting it off the desk and getting paperwork off the desk and getting it done. You’re talking about 4 percent of the cost, not the big 50 percent. Take it. The transportation is and they’re not in the real estate business. But our goal is to make that 4 percent of the cost become 3 percent of the cost. And it just it’s it becomes it’s incremental in the big picture. But when you’re focused on. You want to bring in an expert in every penny saved is gonna count absolute, especially in this day and age with the margins that our customers are working on and the competitive ness of the marketplace out there, especially when it’s a ton of pennies.
[00:36:00] All right. So let’s break out story time, because there is one example that we that I’ve been learning about that illustrates really the opportunity here when it comes to lease renewal and illustrate some of some of what you’ve seen in a very single good way. So tell us about this company that wanted one hundred twenty thousand square foot a renewal of space. I’m not sure what type of space, but tell us about the store.
[00:36:26] So I’m going to leave the company name out of it just for for the sake of keeping them anonymous. But this is a true story. So a new customer of ours. We we were in the process of getting hired to take on their real estate portfolio and start executing these plans of attacks that we’ve been talking about on renewals and site selection and excess property dispositions. The full service of transactional work that we do for our customers. And one of the first projects that popped on my radar before we were officially engaged was a pending lease renewal for about one hundred and twenty thousand square feet of distribution space.
[00:37:07] So this proposal was sent by the landlord to the CFO of the company, and it detailed out the five year renewal proposal with some tenant improvement dollars to refurbish the space. And it was noted that there will be no broker fee included. And just said, if you if you do this without a broker involved, we’re we’re cutting you a good deal. And here’s how to do it. And thankfully, the CFO forwarded me the email. This happens a lot.
[00:37:40] Ward, what do you think? Well, and a there there have been times when I get asked a question like that and if there’s no value to be had, I’m going to tell you, a, this is a good deal. Run with it. You in there, it’s going to happen there.
[00:37:55] And it’s not like every landlord. Some landlords are doing the same thing. They don’t want to hire a broker. And they’re charging three dollars a foot when they should be charging six dollars a foot. And when I see one of those, I say, sign it.
[00:38:07] I don’t I don’t want to get paid. I’m not going to do anything. I want to get paid, but I don’t deserve to get paid. So in this case, it was the opposite. And it was above market rent. This was in Atlanta, Georgia. OK. Supply chain city we go. OK. I like that. I live in Dallas, Texas. What do you have? Faux lives in Dallas, Texas. So we’re talking. And what? What do you think? I did call then called my partner in Atlanta. And I said, what do you think about this? I don’t know what the Lana rates are at that point in time.
[00:38:46] Just it’s impossible to spend your illustrating an additional level of a specialist. Right.
[00:38:54] That’s right. So I’m I’m bringing in another expert to help me. Tell me. Answered this question quickly. This happens with a sense of urgency.
[00:39:05] Stayed in our core operating principles. So I can get this email and then I can go hop on a quick cell phone call with the whichever Atlanta team member I may be using that specializes. This particular deal is in Kennesaw. So we’ve got a group that specializes in the Kennesaw area and I get them on the horn. They know every single thing that’s going on in Kennesaw. And they said, hey, there’s some value here. So we ran a process. We we created a code name. We went into the market. Nobody knew who who the client was that was out in the market. We got three other proposals for three other facilities that could work as potential relocation elevens. We created competitive environment and then.
[00:39:50] We went back to the land war and and we’re not out here to try to go screw landlords out of money, right.
[00:39:58] We’re here to ensure that our tenant clients are paying a market rate. And that’s all we did. And we and when we go out and analyze the market and you can still net out the cost to relocate and the cost to set up new operations in a new warehouse and all of that. And then you do an analysis and you see what’s the deal and what’s a net delta? And then we go try to negotiate it. Some landlords, the smart ones. I think we’ll agree to it and say, you’re right. This is the market. And then you get a renewal done if the renewal makes sense.
[00:40:29] But sometimes they’re stubborn and they don’t. And we don’t like to bluff. We like to have a viable relocation plan A, plan B in place at all times. And I think that’s absolutely critical. And create a competitive environment and know that at the end of the day, once this whole process is done, though, in the lease amendments negotiated, that that CFO, if he gets asked by the CEO, why are we paying this rent in Kennesaw?
[00:41:06] He’s going to be able to back it up and say, actually, we did a comprehensive study and evaluated three different relocation options and we have three proposals. And here’s the financial analysis. And if you look at the net present value compared and you net out the cost of relocating, we have an incredible deal. If we stay in in that particular deal, on that particular deal, we didn’t negotiate 35 percent in savings, which on a five year. Hundred and twenty thousand square foot deal was about a million bucks.
[00:41:35] And who wouldn’t want to have that? Hi. I’ll take it all day long. Oh, boy.
[00:41:41] All right. So let me ask you one question that we didn’t chat about, as we are kind of moving into the kickoff of the podcast today. So my hunch is that folks, that business leaders, supply chain professionals, you name it, like all of us, we would make certain assumptions around certain transactions. And I’m sure plenty of assumptions are made about the lease renewal process. When you think about that, what is what is one thing that you think that your average business leader, the average folks that are responsible for executing on these lease renewal lease renewals? What’s the one thing you think is a it’s just a false assumption that a lot of folks with the market really embraces that really limits their their ability to negotiate.
[00:42:30] Well, I think the thing is that it’s something I heard on another podcast this morning while I was working out around downtown Atlanta was going for a run and it’s unconscious incompetence. And I mean, you know, I don’t mean to offend anybody by throwing out the term incompetence, but it’s unconscious incompetence. It’s it’s that you don’t know what you don’t know. And how could you? In a lot of times, I think people feel like they have a good sense of what the market is and what’s going on out there.
[00:43:06] And they feel like they have a great relationship. And they they know it. But I mean, at the end of the day, if you’re not negotiating, let’s say I think we on average negotiate about 20 to 30 lease renewals per year all over North America. So if I’m doing that there, I can guarantee you that we know what we’re doing. And if you’re negotiating lease renewals in Atlanta and you think you know what’s going on there? I mean, how. I just don’t know how it’s possible without engaging a team of experts. I can’t even do it. And I’m doing 30 a year. I have to bring in my own set of experts on our side. And one other point on the million dollars and save. Yes. The landlord also pays our fee, which he wasn’t going to pay to begin with. And so it’s just we’re not gonna go take it. I think a lot of people also have this preconceived notion that a commercial real estate fee is going to be involved to their broker and they can save on that fee and negotiate a deal. And. I’m pretty much in the business of if I’m not creating value and the deals are gonna get better because of my involvement in on top of that, I get paid first. I would not be living a fulfilled life doing this. It would not. I would not be passionately doing a podcast on supply chain real estate. I can guarantee you that. And I put my money where my mouth is all the time. And we just worked on a project in Dallas that the same thing. It was a large project and there was concern about the large brokerage fee that would be involved. And it was. They tried to handle it with a consultant from not even in the United States, and it was a deal in Texas. And we got involved in that project. And the amount of savings that we generated through our involvement led to a new revised lease proposal with 20 million dollars in savings and a commission.
[00:45:13] Those are big numbers. Let’s get let’s go back to something. This unconscious incompetence you meant you made it maybe didn’t jot down the name of the podcast, but I still termed all the time. I’d like to kind of give a high five to where that came from, what podcast was so that it’s Ed, my Let’s podcast.
[00:45:32] And I’m recently joined a group called The Artist Syndicate and it’s a mastermind group and it’s led by Ed My. He’s an entrepreneur and Andy for Sela and they both have their own podcast. Ed, my lad, I think it’s the ed my let’s show em why l ATDC and then Andy for Sela. He has a podcast called the M FCO Project.
[00:45:58] I’ve heard all I’ve heard about that one said. So I check. I’ll check it out. Ed Edis ny l e t t dot.com looks like where you can check out his podcast. I like this unconscious incompetence. I have been guilty as charged. Plenty tops my career with not knowing what you don’t know.
[00:46:16] Me and you both. Yeah, or bite us. I think it was maybe three years ago I first heard about labor analytics and it just wasn’t on my radar. I don’t. I’ve thought about real estate. I didn’t think about labor. I knew a little. And then, you know, before that, I didn’t think about how transportation costs are 50 percent. So then you start really thinking, hey, you can actually be in a different city and pay twice as much rent. And it’s a better deal. Yeah, but it’s just a holistic approach in there. And just as there’s no place that that’s more evident than working in the supply chain realm. Yep, I think. Great point.
[00:46:59] All the more reason to have a have that team of assembled experts that can bring different values, different angles, different and different areas of specialization to the table so that you really have that well-rounded view when you’re making these big decisions.
[00:47:13] So unread. My Let’s podcast today. He’s he’s the whole episode was about how to change her identity. And that can be. If you want to just pretend it’s about learning how to renew a lease, that that would be pretty appropriate for today. So is step one is unconscious incompetence? You don’t know what you don’t know. Step 2 in changing your identity. And if you want to change your identity to a renewal negotiator, negotiating expert to conscious and confidence. That’s when you recognize, huh? Maybe. I don’t know everything that I think I know. Step three, conscious competence. That’s when you’ve learned. Here’s how you do a lease renewal. I got the five step program down. OK. You might be a little mechanical about it at first. You might not be doing 30 a year, but you got it. And then step 4, unconscious competence.
[00:48:10] That’s that’s where you start rolling and that’s where you’re not thinking about it. It’s process driven and you’re doing it all day long. And then step five is unconscious mastery. And that’s where you want to be. And you can really apply these five steps to based upon his podcast. I think this is coming from another book, which unfortunately, I don’t remember the author of that book.
[00:48:31] But if you go listen to his podcast, you can figure it out and maybe we can put it in the show notes. I can track that down for you and give credit where credit’s due. But yeah. And then unconscious mastery is the end. You can apply this to if you want to lose weight or you want to work it out, as do yoga or play bass for strings. And I mean, for anything you want to do to change your identity, whether it’s a lease renewal or playing base, these five steps you can apply. Universal. And I just learned that this morning. How cool is that? A constant and never ending improvement. Yes.
[00:49:10] And applying what you learned directly, I mean. I think that some. That’s what I heard and learned from some of the largest, most successful, most rapidly growing organizations is that they’re learning something and they’re applying it. The next day I put it to work. Yeah, but it work. That’s right. All right. So what we’ve covered a lot of ground on this second episode. And I think you’ve got a big meeting coming up as you continue to track more deals and help more or clientele. Coast to coast. But how can folks. What’s the best way of folks getting in touch with you if they’ve heard anything they’ve liked? They want check out some of the resources that you mentioned. Is it. Is it the euro?
[00:49:48] Yeah, I think the euro has all my contact info. And I’m sure if you’re listening to the podcast, you can go to the landing page or wherever. And I mean, you call me on the cell phone. Text me. Email me and we’ll we’ll be right back. In touch. To just sit down and see what is going on, see what your needs are. And, uh, and it’s not I don’t solve all problems in the real estate world, but I can point you in the right direction, that’s for sure. And we’re we’re here to help and generate massive value.
[00:50:22] And clearly, you bring a lot of passion and expertise to the table, which I admire. So Supplychainrealestate.com is the best clearinghouse really for all the content formation that Ward mentioned, but also a lot of resources. He’s got a great blog, really active social, which I’ve appreciated. And you’re constantly traveling. So you learn so much by jumping in different markets, talking to different people, talking and learning from different professionals involved in different aspects of Indian supply chain. And that’s why you’re good at what you do. I appreciate that, Scott. You best for this opportunity. You bet. So check out Supplychainrealestate.com. We’ve been sitting here interviewing Ward Richmond, executive vice president and shareholder with Colliers International as we’ve continued our Supply chain real estate series right here on Supply Chain Now Radio. Stay tuned. We’ll plenty more stories to come from Ward. I can’t wait to have a couple. I think we’re gonna similar band maybe for this next episode.
[00:51:20] Maybe. All right.
[00:51:22] Aw, thanks so much. All right. We’re gonna wrap up on a couple of quick announcements here. Really enjoyed our time once again with Ward Richman. But come check us out in person. We’re going to be across the country. Supply Chain Now Radio is going to be at automotive conferences in North Charleston on September 12th and 13th, which is just around the corner is part of the AIG and the SCC, which is Automotive Industry Action Group in the South Carolina Automotive Council.
[00:51:47] In its year 2019, Supply chain and Quality Conference focused on the World Automotive ME.
[00:51:54] They’re broadcasting last sponsored by our friends at the Effective syndicate. Really cool announcement here. So the following month, just October 9th, the Georgia Manufacturing Summit is going to take place. About thousand folks from all aspects of manufacturing can be at the Cobb Galleria in the Georgia Manufacturing Summit, which is put on by the great folks over the Georgia manufacturing alliance Jason Maas, CEO. The GM has just announced today that he’s given away 50 free seats with no strings attached to veterans, which is really the. So, you know, Ford as a veteran, it transition out of active duty when most folks and most veterans transition. They don’t have a private sector network. Right. Any ATDC. So you don’t have people you can lean on to find jobs and find, you know, transition advice, all the stuff that you really need even in a war for talent era to to find the right job. So events like this are great ones to get out, meet people, pickup market intelligence, whether you’re transitioning or not. Transitioning is a great way for our veterans to add to their private sector understanding and network related to the world manufacturing. This is a great opportunity. So it the opportunity is active. Now you can go to Georgia Manufacturing Summit dot com. If you’re a veteran, you can use the Code USA vet Beatty and get a free seat up to the first 50 that respond. You’ve reached out to our friends at Vetlanta to help get word out. And this can be a great all day event with keynotes from PSG and Keith, which is turning out the cards anyway.
[00:53:27] Claudia. Yeah. Really is. So check that out. And again, for general information about the GMAT, you can go to Georgia manufacturing alliance dot com and then we can be in Texas and November. We’re gonna be at the 2013 Logistics CIO forum. I know we’re big, big fans and advocates of EMT. Oh yeah. Does great work transport? Yep. Under the car. Your team, a sponsor, some of their events. I think that’s where we met, where we back in June. But we’re gonna be there November 7th and 8th at their Logistics CEO forum excited about Lu learning talk, talking all things supply chain tech. Freight tech, Logistics tech. I mean, it’s a it’s a huge white hot segment of supply chain these days, whereas technology not, you know, incredibly relevant aspect of industry. But check that out. You can. You can learn more about the event. If t dot com or you can check out our events page at Supply Chain Now Radio dot com to learn more and then you flip the calendar next year. Already working on a couple of things. But we’re already going to be out in Vegas with the reverse Logistics Association Conference and Expo in February. And then, of course, mode X back here in Atlanta, where you can be at Mode X 2020. What’s the date on that? That is the week of March 9th. Nine, ten, eleven. Twelve.
[00:54:43] Okay. It’s too far out for me to plan right now, but we’ll see. I was trying to luck. Yeah. From my friends at all. Right.
[00:54:50] I’m kidding. But they are. That’s one of the largest supply chain trade shows in North America. They’re expected. Thirty five thousand people. We’re gonna be broadcasting live there. But better yet, we’re gonna be hosting our second annual Vetlanta Supply chain Awards program there. They’re at Mode X hosts about Mode X, which is really cool. That is cool. But you can learn more and it’s free to attend even better. Free to attend Mode X so you can learn more at mode X and though D X show dot com and we’re gonna have a member of their leadership team on the show just in a week or two to learn more about the keynote lineup and what you know, what what’s the value prop for going out and spend your valuable time, which we all know there is no shortage of things asking for time from us and supply chain, right? That’s right. All right. So you can learn more about these opportunities at our events. Tab Supply Chain Now Radio dot com. If you can’t finance looking for shoot us note to connect at Supply Chain Now Radio dot com and we will do our best to serve as a resource for you. Big thanks to one of our favorite guests here, Ward Richman, executive vice president and shareholder at Colliers International. Also, check out his Web site, supply chain real estate dot com. Look, look for our next episode of the Supply chain real estate series, which we’ll be publishing just soon or not just like this. And we with this part within just a few weeks of each other. Right. Episode 1 in episode 2. But you’re in demand. You get that little wonder, Alan. Yeah. We’ve got it. You got to protect that.
[00:56:15] Now tell me I’m top ten. You tell me. I thought 10 if I’m number one. That’s all. Another thing we got to. We’re going to we need to tease a little bit. I’ll show you some right after the show.
[00:56:24] But to our audience, be sure to check out other upcoming events, replays of our interviews, other resources at Supply Chain Now Radio dot com. You can find us on Apple podcasts, SoundCloud, all of leading sites where podcasts can be found. Be sure to subscribe. Still missing thing on behalf of the entire Supply Chain Now Radio team. This is Scott Luton wishing you a wonderful week ahead and we will see you next time on Supply Chain Now Radio. Thanks, everybody.
Upcoming Events & Resources Mentioned in this Episode
Connect with Ward on LinkedIn: https://www.linkedin.com/in/wardrichmond/
Connect with Scott on LinkedIn: https://www.linkedin.com/in/scottwindonluton/
Check out more industry real estate news: https://supplychainrealestate.com/
2019 AIAG/SCAC Supply Chain & Quality Conference: https://myscma.com/scac-events/2019-supply-chain-quality/
Georgia Manufacturing Summit on October 9th: https://www.georgiamanufacturingalliance.com/annual-summit
eft Logistics CIO Forum in Austin, TX: https://tinyurl.com/y5po7tvw
Reverse Logistics Association Conference & Expo: https://rla.org/calendar/1
SCNR to Broadcast Live at MODEX 2020: https://www.modexshow.com/
SCNR on YouTube: https://tinyurl.com/scnr-youtube
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