President’s Message: Our Defining Moment
As we begin the process of reentry into our offices and slowly getting our properties and tenants reopened (under various phases and restrictions), I wanted to send out a heartfelt THANK YOU to everyone involved in this unprecedented—and ongoing!—journey over the past few months.
I’ve been in the commercial real estate industry for quite some time now. We’ve certainly seen our ups and downs over the years, but I don’t think any of us could have ever seen this coming. The COVID-19 pandemic has impacted businesses, industries and individuals across the spectrum and around the world.
But through the barrage of unknowns and worries over the last few months, I have taken great comfort in knowing that we have a great team in place, who have gone above and beyond to help us weather this storm. As I’ve said before, we can’t choose our team after we go to war, we fight with the team we have—and I’m proud to have this one.
Thank you, Team Stirling, for your hard work and dedication during this extraordinary and defining moment for our company. People from every department, every office pitched in and pulled together to keep us going as best as possible:
- We were able to get everyone working remotely and equipped with the hardware and software needed to be productive and efficient
- Consistent internal and external communication, which is essential in difficult times; the various, (and sometimes, multiple) daily Zoom meetings were a significant contributor to keeping us in touch and on track
- Our property, tenant, legal and lender teams assisting with countless issues, like the barrage of rental abatement and deferment requests on a property by property basis; working with lenders on forbearances; and the building engineers who came to work every single day
- After wading through the confusing and changing guidelines and having to submit applications 6 times, we were successful in getting the much helpful loan via the PPP
- Our Reopen, Reentry & Recovery Task Force for helping to prepare us for reopening our office and retail properties, as well as our Stirling offices
- Our brokerage team for keeping up with tenants, clients and colleagues from your back porches, kitchen tables and peculiar home offices
- Our external work with lobbying efforts on both a local and national level, as well as the various task forces and coalitions on which we have served
- Our Stewardship Committee’s Feed the Frontlines efforts in delivering roughly 360 meals, snacks and notes of appreciation for our healthcare heroes across the Gulf South region
- I also want to thank our clients, vendors, lenders and partners for your patience, support and understanding through this difficult situation, and for continuing to work with us moving forward
Through all this, I’m reminded of how strong our company culture is at Stirling Properties, how committed we are to our team and our work. This will be a defining moment for our company, and it’s going to show our true character in how we move forward. When times are the most challenging and difficult, the resilient people rise to the top. Resilient people reinvent. Resilient people learn and become stronger.
Our company has weathered many storms before, economic instability, oil crashes, Hurricane Katrina. Each time we’re knocked down. But, we evolve, we change and we get better. Because that’s the thing with defining moments, you can either rise to the challenge or you can diminish. With our Stirling Properties’ team, I’m confident we have the capabilities and the right people and talent in place to succeed.
We surely aren’t out of the woods yet with the COVID-19 crises. Recovery of our industry and businesses will be long, uneven and painful. But I believe, even in the dark days ahead, opportunities will present themselves. And, we will overcome more challenges and have even more successes in which to be proud.
I look forward to the time when we can all come together to celebrate our collective accomplishments (at a socially acceptable distance, of course).
Marty
Now, Next & Beyond: The path forward for reentry into the office space
As the COVID-19 pandemic continues to rewrite the rules of daily life, both personally and professionally, every business must deal with the unprecedented challenges that few of us ever expected. We in commercial real estate need no reminder of the extraordinary times we are currently experiencing. The retail real estate sector remains the most immediately and directly affected economically by the coronavirus pandemic, with April rent collections down on average of 35% – 45%. Compare that with multifamily, industrial and office tenants, where rent collections are around 90%. However, regardless of the sector or market, the future remains uncertain.
Unlike other disruptions where we can point to a specific cause and implement a plan of action, the challenging nature of this new coronavirus, along with its systemic impact on almost everything we do, makes near-term planning a crapshoot. Hence the difficulty in not only containment but in planning just what our “new normal” will look like—particularly for the office environment.
As areas begin to stabilize and stay-at-home restrictions are lifted, businesses will start the process of reopening, reentering and recovery. The path forward for office landlords and occupants can be viewed in three phases: now, next and beyond.
Now
The “now” is what businesses are currently experiencing and how they are reacting to the situation at hand. A recent Gartner, Inc. survey of HR executives found that 88% of organizations have encouraged or required their employees to work from home. Additionally, daily usage of the Zoom meeting platform has increased more than 300% from before the pandemic. Companies are doing whatever it takes to keep their workforce productive and find creative ways to serve their clients and customers. The place and pace in which employees work may have changed, but if you are the CEO, leader or stakeholder of a company, your mind is centered on subsequent steps—what’s next? The social investments we have made and continue to make will determine how long we stay in the “now.”
Next
“Next” as it concerns the reopening of companies is what landlords and employers are focusing on—the “reentry” phase. As we begin to bring workers back into the office, the physical space and social dynamic of the workplace will undoubtedly change. Employers will first have to find a balance between those who don’t yet feel comfortable returning to the office and those who welcome a return.
What near-term solutions will employers and building landlords be required to put in place for the office environment as we transition through the phases of reopening the economy over the next few months? Obviously, the health and wellness of people will be paramount. Staggering schedules of the workforce coming back into the office, so there are fewer employees present at one time, and coming up with creative wayfinding around common areas and office amenities will be needed to address how we meet social distancing guidelines. Reduced touchpoints, cleaning procedures and sanitizing must be enhanced. New guidelines that change how we interact person-to-person with our coworkers and clients, like controlled access and visitor policies, will need to be determined.
Flexibility is going to be a critical factor once we start emerging from uncertainty over the next few weeks. If all goes well, distancing measures will technically be relaxed, but how many of the near-term policies and procedures will become long-term changes to how and where we interact with each other?
Beyond
“Beyond” is an extension of “next.” As “next” is considered near-term, “beyond” is long-term. It is believed that it takes approximately 66 days for a new behavior to become a habit. How many of the near-term policies will become permanent in the office ecosystem? Real estate owners and operators across every asset class are considering the long-term impacts of the coronavirus outbreak and required modifications that these shifts are likely to bring.
For example, the recent trend toward densification of the workspace may change, but the need for social interaction and professional collaboration—in a safe environment—will certainly keep us in the office. This could result in the reintroduction of hard separations between desks or staggered workspaces, plexiglass dividers or cough shields between coworkers, widened corridors, the continued use of Zoom and other teleconference platforms within the office for team meetings, the list goes on as far as space planners and social engineers can imagine.
Various data show that anywhere from 5% – 20% of the workforce that previously operated from company offices will become permanent work-from-home employees, potentially reducing the need for office space. Then again, as distancing and safety become part of our social psyche, and public health codes place occupancy limits on space planning, the employee-per-square-foot ratio will likely increase, producing an uptick in demand for office real estate. The obvious question is, will one offset the other?
Long-term corporate real estate decision-making will likely be put on hold for some time as we reenter the workplace. Fewer organizations are going to feel comfortable signing a 3- or 5-year lease for office space because of the need to maintain as much flexibility as possible. As tenants and landlords shake out how best to accommodate their mutual needs, the opportunity will lie in rethinking office space to make it more accommodating for employees, whether that means more or less square footage.
On the landlord side, owners with patience and enough working capital to endure the short-term volatility and initial stress of the post-pandemic lease-up will emerge the winners. They will maintain a strong presence in urban centers, with updated spaces that meet the “new normal” tenants will seek.
We don’t know what’s going to happen over the next weeks and months; the situation remains fluid and continually evolving. But as more businesses face various phases of now, next and beyond, the need for professional guidance and best practices and protocols will grow. Please contact us to learn more about how we can help you during these next critical steps. Stirling Properties’ advisors are experienced in all aspects of commercial real estate, including retail, office, industrial, healthcare and multifamily sectors.
Stay safe and healthy.
President’s Message: Your urgent help is needed
We are all experiencing the unprecedented ramifications of the COVID-19 pandemic. While the safety and well-being of our people are our highest concerns, many are also struggling with their businesses and livelihoods.
We are just at the beginning stages of difficult times for the retail real estate industry, especially for many of our retailers. Countless restaurants and stores have been forced to close, and others have voluntarily closed, or sales have been greatly diminished. It’s important to note that 1 out of 4 U.S. jobs is related to retail—this will affect you, your friends and family.
We need your help. Congress is currently debating relief efforts for businesses and individuals affected by the COVID-19 crisis. Please contact your elected officials and urge them to provide federal assistance.
ICSC has made it very simple to contact your Congress members and legislators through an easy to use portal – HERE—or copy this url and paste in your web browser: https://p2a.co/65LiaWv. It’s essential to act quickly.
If you have not had a chance to reach out, please take a minute to do so. This legislation is crucial to the retail real estate industry and our companies. The long-term strength of the shopping center industry is critical to the economic, civic and social viability of communities across the country.
Please feel free to share this message with friends, family and like-minded colleagues, and on your social media channels.
ICSC is reporting that our efforts are working…Congress hears us! We need to keep the momentum going. Every voice counts in helping retailers and small businesses get through this crisis.
Thank you,
Marty Mayer
Studer Community Institute (SCI) Building Awarded NAIOP 2019 Rehab/Repurpose Development of the Year
Stirling Properties serves as Property Manager & Broker for the iconic office tower in Pensacola, FL.
The Northwest Florida Chapter of NAIOP, the Commercial Real Estate Development Association, recently presented its 2019 Rehab/Repurpose Development of the Year Award to the Studer Community Institute (SCI) Building in downtown Pensacola, Florida. Home of Studer Community Institute, the SCI Building has completed a dynamic renovation project that includes an upgraded exterior, enhanced common areas, and the addition of a café. Stirling Properties, which provides third-party property management and brokerage services at SCI, submitted the entry on behalf of the owner.
The award-winning project was the redevelopment of the former SunTrust Tower, an iconic 10-story, 96,300-square-foot office building. Having managed and leased the property since 2006, Stirling Properties helped facilitate the sale of the building in 2017 to Quint and Rishy Studer and continued management and leasing assignments under the new ownership.
Built in 1974, the tower’s geometrically shaped structure, outdated building systems and location on the periphery of Pensacola’s CBD presented leasing challenges (nearly 50% vacancy) for the new owners against the changing dynamics of the office market.
Over the course of the 14-month renovation, critical building systems such as HVAC, life safety, elevators and electrical were replaced, as well as upgrades to the roof, common areas, corridors and restrooms. While most of the building remained a multi-tenant office tower, the goal was to build on the uniqueness of the architecture by repurposing the 1st floor and outdoor plaza into a shared community space. These plans centered around the owner’s intent to convert the building into a community center focused on creating dialogue, hosting speaking engagements and events, and creating an open public space for citizens to meet and enjoy downtown Pensacola.
All existing tenants remained in place during construction. To cause as little business disruption as possible, the Property Manager and the General Contractor had to coordinate work on a case by case basis around tenant meeting schedules.
The new SCI Building provides tenants (both former and new) with an enhanced sense of place and ample added amenities. The redevelopment project also fills a niche in the local office product type. It has become a sort of incubator, opening the door for other planned mixed-use projects in the area.
The transformation of the property, along with Stirling Properties’ combined property management and leasing efforts have resulted in improved tenant satisfaction—all tenants have remained, with most having renewed their leases. The building is now at 95% occupancy.
Over the past several months, the University of West Florida’s Center for Cybersecurity has moved from its campus location into 9,948 square feet (SF) of office space at the SCI Building, and Pen Air Federal Credit Union occupied another 3,828 SF in the Atrium. The global engineering firm of Mott MacDonald has renewed its lease and expanded its footprint by 4,364 SF for a total of 21,617 SF. SunTrust Bank’s (now Truist after a merger with BB&T) commercial lending group has occupied 4,406 SF. Most recently, we welcomed the law offices of Morgan & Morgan, which leased 9,432 SF of space on the top floor, and Berkeley Research Group, a global corporate consulting firm, recently signed a lease on 2,305 SF. Stirling Properties’ commercial advisor, Jason Scott, represented the landlord in these lease transactions.
With a full tenant roster, there is little doubt that the building is not only an upgraded version of itself but is now a place where the community can gather—where ideas are formed and implemented.
Congratulations to the Studer Community Institute for this esteemed honor and your leadership and vision in the Pensacola community and surrounding region.
For more information on Stirling Properties’ leasing and property management services, contact Jason Scott at jscott@stirlingprop.com or (850) 418-6792.
Dana Inc. Celebrates Grand Opening of New Service & Assembly Center in Slidell, Louisiana
Marks another major milestone in the evolution of Stirling Properties’ development portfolio.
Dana Incorporated (NYSE: DAN) announced that it has opened the doors to its nearly 32,000-square-foot industrial facility at Fremaux Park in Slidell, Louisiana, for the repair, service, and assembly of industrial gearboxes, including the ability to custom-make gears up to 6.5 feet (2 meters).
St. Tammany Parish President Mike Cooper, Slidell Mayor Greg Cromer, Stirling Properties and St. Tammany Parish community leaders joined in the celebration with an official ribbon-cutting ceremony, followed by guided tours of the new facility.
Located in the Fremaux mixed-use development, the new service and assembly center replaces Dana’s current operations in Slidell, offering a larger footprint to meet the growing demand for industrial gearbox service, repair, and refurbishment. The company has also invested in gear grinding and hobbing equipment and skilled personnel to increase the ability to quickly turn-around gearboxes for customers.
“The additional square footage in this new facility combined with the increased ability to rapidly make gears gives Dana the capacity we need to further support our industrial gearbox customers who come to us for custom, highly engineered solutions,” said Aziz Aghili, president of Dana’s Off-Highway Drive and Motion Technologies. “Dana’s service and assembly centers provide critical support for our global customers throughout the lifecycle of their machinery, whether they’re building something completely new for a one-off application or maintaining current equipment to ensure maximum performance and uptime.”
“Just over a year ago, we broke ground on this project. It’s incredible that we’ve got a world-class manufacturing and assembly operation that has invested this amount of time, money and energy into the Slidell community. Dana has the capacity to double its workforce in the next year or so and double the size of this facility in the next 4-5 years! The world is their oyster, and we’re opening our world to them—welcome. Thank you for choosing to be a part of Slidell, investing in our community and helping to make our city the best that it can be,” said Slidell Mayor Cromer.
“On behalf of St. Tammany Parish, we welcome Dana to your new home here in Slidell. When you moved to our area, you may not have known you would grow so fast in such a short time. With an opportunity to move and expand, we’re glad you chose to stay in Slidell,” said Parish President Cooper. “I’d also like to thank the commitment of Stirling Properties and the Levis Family, for your vision of this development—Fremaux Park will help us attract not only companies like Dana but other corporate entities to our community.”
Stirling Properties served as the developer of the new Slidell facility. This project marks the company’s first ground-up industrial development, as well as the beginning of industrial expansion efforts for the Fremaux mixed-use property. Stirling Properties’ commercial advisor, Bradley Cook, also worked with Dana to identify and secure the location at the corner of Town Center Parkway and Old Spanish Trail.
“Stirling Properties is thrilled to officially welcome Dana to Fremaux Park and celebrate the grand opening of this remarkable facility,” said Townsend Underhill, President of Development with Stirling Properties. “This is a huge economic win for Slidell and the surrounding greater New Orleans region, and we are proud to have been a part of it. This new service and assembly center will be a unique operation nationally—and the property was laid out with ample opportunities to allow for future expansion. We look forward to working with Dana and having them as an anchor tenant in the Fremaux Park development.”
In addition to the Slidell facility, Dana has 26 service and assembly centers around the world that provide custom solutions for gearboxes used in a variety of applications such as mining, steel and metal, pulp and paper, power generation, food processing, marine, cement, wind power, water treatment and much more. The company employs more than 36,000 people in 33 countries across six continents.
Fremaux Park is part of the roughly 350-acre regional mixed-use development located at the southwest corner of Interstate 10 and Fremaux Avenue in Slidell, Louisiana. It includes Retreat at Fremaux Town Center luxury residential apartments, Springhill Suites by Marriott (under construction), Waypoint apartment community (under construction), Saltgrass Steak House and Dana Inc. Service & Assembly Center. The adjoining Fremaux Town Center, anchored by Dillard’s, Dick’s Sporting Goods, Kohl’s and Best Buy, includes more than 650,000 square feet of retail and restaurant options. Additional phases are forthcoming with added residential, retail, industrial and office park. Stirling Properties developed Fremaux Park and Fremaux Town Center and handles management and leasing of the property.
For leasing or sales information, contact Ryan Pécot at 337.572.0246 / rpecot@stirlingprop.com or Bradley Cook at 985.246.3720 / bcook@stirlingprop.com.
Ownership Change for Froogel’s Cost+Foods at Westland Plaza in Jackson, Mississippi
Stirling Properties announces the ownership change for Froogel’s Cost+Foods at Westland Plaza retail center in Jackson, Mississippi. Robert’s Company, Inc., a grocery operator headquartered in Hattiesburg, Mississippi, has acquired the grocery store, as well as 3 other McDade’s/Froogel’s in the Jackson Metro area. The ownership change was effective January 27, 2020. Froogel’s will close for approximately two weeks in order to change out equipment and re-tag inventory, with all current employees being involved in the transition. The store will also be rebranded to Grocery Depot.
Robert’s Company, Inc. owns 16 stores in south Central Mississippi, including Grocery Depot, a discount grocer, Sunflower, and Corner Market.
“Stirling Properties is excited to welcome Robert’s Company as the new grocery operator at Westland Plaza, and to the west Jackson community,” said Donna Smith, Executive Vice President with Stirling Properties. “Westland Plaza has always had a grocery store to serve the local community, and we look forward to working with Robert’s Company during this transition—and what we are confident will be a successful location for them. This community has and will continue to support the merchants of Westland Plaza, and takes pride in its unique mix of retailers that fulfill the needs of those in the area.”
Westland Plaza, anchored by Froogel’s Cost+Foods and Walgreens, is a 221,500-square-foot retail center located at the intersection of Ellis Avenue and Robinson Road in Jackson, Mississippi, the largest metro area in the state. Originally constructed in the late 1950s and renovated in 2009, Westland Plaza remains at the heart of west Jackson and continues to serve the shopping needs of the community as a truly convenient location. Its diverse mix of local, regional and national retailers and service operators include Planet Fitness, United States Post Office, Kool Smiles, Aaron’s, Cato-It’s Fashion Metro, Rainbow, Family Dollar, City Gear, Hibbett Sports, Rent-A-Center, Goldstar Beauty Supply, Chopsticks Buffet, Trustmark Bank, Baskin-Robbins, MetroPCS, Boost Mobile, and many more! Stirling Properties serves as the Asset Manager of the property and handles day-to-day management.
For leasing information at Westland Plaza, contact Allen Carr with Overby Commercial at 601-366-8511.
