Houman Mahboubi 0:00
Restaurants is another key component of the commercial real estate world that is very much striving and is very much in demand. People love to go out and eat and when you have good concepts and good restaurants, neighboring retailers want to be around that because they all feed off of each other, whether it’s destination retail, your traditional retail, but food and wellness are really the key points right now that are doing extremely, extremely well. And and fashion in general is really making a comeback. I’m very excited to see what’s happening. Growth expansion and the demand.
Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant we are here to learn from the experts.
J Darrin Gross 1:02
Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today, my guest is Houman Mahboubi. He is a leading authority on commercial real estate sales, purchases, management and leasing with JLL in Los Angeles, California. And in just a minute, we’re going to speak with Houman about the impact of COVID on the Los Angeles commercial real estate, and what’s going on down there.
But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment, we’d love to hear from our listeners. Also, if you’d like to see all hands of our guests are, be sure to check out our YouTube channel. And you can find this on YouTube at commercial real estate pro network. And while you’re there, please subscribe. With that, I want to welcome my guest Houman Welcome to CRE PN Radio.
Houman Mahboubi 2:20
Thank you very much for having me this morning. I’m very honored to be here and to participate in your show.
J Darrin Gross 2:26
Well, I’m I’m grateful you’re here and I’m looking forward to our conversation. Before we get started, if you could take just a minute and share with listeners a little bit about your background.
Houman Mahboubi 2:37
Yes, so I’m in the commercial real estate business. I work for JLL Jones Lang LaSalle. I’ve been there for the past six years, and starting my seventh year this year, I’ve always been in the real estate business. That’s what my family has always done. So I grew up learning the business from them from a very young age, in turning from high school, working during my college years, really starting the mailroom and gradually going up getting into management, funnily enough, leaving the business for 10 years and going to the entertainment business, which was a very big awakening for me to realize what I don’t want to do. And then coming back to my roots, which was real estate, but this time coming back as a deal maker and putting people together and really being a bridge between two groups of people who want to make a deal. And that started back in 2004. Till now, before coming to JLL. After working fears in the industry, I started my own firm, boutique commercial firm, and then eventually grow grew to a level where we wanted to have a global platform and have much more resources. And we joined JLL, which is the one of the greatest companies in the world, and the biggest real estate company in the world. And it’s been a very successful journey. Being there and collaborating together and making great things happen. I lead the urban high street retail team here in the Los Angeles market. I have a great team of people that I work with and truly love what I do every day. You know, it’s very exciting for me to be able to do what I do.
J Darrin Gross 4:33
Awesome. Well, I appreciate you sharing and taking us back from your start there. I’m curious, you said your family’s in real estate. Are they in commercial real estate or what would
Houman Mahboubi 4:45
Commercial Real Estate. They’re commercial real estate mainly retail?
J Darrin Gross 4:50
Houman Mahboubi 4:50
and that’s what I specialize in. So, I had the best teachers in the world, having you know, been in a family that specialize in the commercial real estate market.
J Darrin Gross 5:03
Yeah, no, that’s that’s awesome to have the firsthand multi generational commercial real estate experience. Was this something that that your your parents initiated? Or is it go back multiple generations?
Houman Mahboubi 5:18
No, my father and uncles when they immigrated here from Iran, they had some businesses here, but their main business was in Iran. They owned a chewing gum factory. But as things started to get a little tough before the revolution occurred in 1979, my father, my father’s brothers, two of them lived in America, going to school growing up, they decided they were going to stay here anyway. So in regards to, you know, having hedging our bags and having money in other places around the world, other than Iran, we decided to make a few investments here with my uncle’s, in the Los Angeles market, Beverly Hills market specifically. And that turned out to be one of the best decisions we made. Because the revolution occurred, and we didn’t get anything we had to run for our lives. So it was a true blessing that they were here. And we invested some monies in real estate, and it really grew from there. To what happened 2030 years later, 40 years later, I should say,
J Darrin Gross 6:30
I love the the immigrant story and and, you know, I love that you guys were able to come here and and he and literally said running for your lives. Come here and, you know, make it and thrive. In the real estate. They’re in Los Angeles, where your where your other family members that were already in the US for the down in Los Angeles.
Houman Mahboubi 6:56
Yes, they lived here in Bel Air and Beverly Hills. So that’s where we I basically grew up from a very young age share of around six. We were coming here every summer anyway for vacation because my grandmother, and my dad’s brothers lived here. So this was our vacation place anyway, every summer. But in the summer of 1978, unbeknownst to us, it became a permanent vacation. Right, we never went back due to the risk of what was happening and the revolution taking place.
J Darrin Gross 7:33
Well, that’s great. So you mentioned, you know, the the immigration stuff. And just, you know, one of the things that I kind of read and kind of be curious to get your, your sense of is, you know, a lot of real estate is her the success or the opportunity in real estate is predicated on growing population. And I know that, you know, in the in the headlines, the news of California losing population, and I think in the latest census, there’s even like a house representative that was lost. Are you seeing that in in the areas that you deal in? Is there anything that that speaks to you that that, you know, the LA basin is, is losing population?
Houman Mahboubi 8:24
That’s a great question. I can tell you that I’ve noticed in the past six months to a year, a lot of people have left, not just Los Angeles, but California as a whole and have moved to states like Texas and Florida, and the Midwest. For many reasons, you know, I’m not going to get political. That’s a very sensitive subject. But a lot of people have moved out now in terms of people investing in the Los Angeles market, there’s still a lot of demand for that. So people cannot live here, but one investor, which is very often that happens. But in terms of living, a lot of people have really moved out of Los Angeles and California as a whole
J Darrin Gross 9:13
Gotcha. And even with the the outward migration. With retail, specifically what you you focus on are you seeing are there a lot of vacancies or, or as
Houman Mahboubi 9:26
Things have gotten much better, much, much better now that COVID is more of an endemic rather than a pandemic, and become a part of life. It’s much different than what occurred two years ago, two years ago, no one knew what this was. No one knew the severity of this virus, and how dangerous it can be or cannot be. But as we progress with time and have seen what has happened, it’s not become part of everyone’s life. So instead of abstinence or, you know, not taking any action or activity in your daily life and Just being completely, you know, in a, let’s say, a tunnel of swords, people are now saying this is part of our life. And we have to live with it and transform as a result. And be caution, we will take caution everything that we do, but not let it in any way impede us from going on with our lives. And the continued growth that we have to make both individually and collectively. And as a result, you see that in the real estate arena, things have vastly improved on many fronts. And the economy with the exception of inflation has been doing fairly well.
J Darrin Gross 10:43
Right. No, I was kind of curious in you know, I’ve heard and I’ve talked to people all across the country I know that tell you to multifamily continues to be hot just based on housing demands. But no like the office and retail more a question of where are we going kind of thing is in like you you mentioned that now we’ve gone past quote pandemic to endemic it is what it is we’ve got to move on and and people are are accepting that you is far as in retail. Is there a particular segment of retail? I mean, is it strip mall? Big Box experience specialty? Is there any particular flavor? Or? Or? You
Houman Mahboubi 11:29
Well you know, it’s a great question you ask there, there are different answers to different areas or aspects of real estate, for example, the big box such as like grocery anchors or Home Depot’s of the world targets of the world. They’ve been doing very, very well. They were striving during the pandemic, actually. And they continue to be very much in demand for people who are looking to buy shopping centers or strip malls that have those anchor tenants because they know that they’re pandemic proof and really recession proof in many ways, because there’s our needs that one has. And whatever neighboring tenants that go hand in hand with that type of retail will also survive. For the most part, that’s not the kind of retail that I focus in. But that is something that’s very successful, and very much in demand. And as such, you’re not finding too much inventory in buying properties such as that, because there’s so much demand for it. But I would tell you that retail in general fashion, the ultra luxury market is definitely back. Or coming back to where it was pre COVID periods, specific markets like Beverly Hills and Rodeo Drive. That is really the epicenter of high street retail Los Angeles is at its highest point, there’s practically no vacancies on Rodeo Drive, but also affordable, affordable luxury, approachable luxury, mid range, luxury, these are things that are not ultra luxury, they’re also continuing to grow and strive and expand. One of the things that you’re going to be seeing more of his preventive medicine, that is functional things called Wellness, med spas. We’re in a world now that people are becoming much more conscious of their well being and wanting to have a healthy long life. And I understand that the best way to do that is to take preventive measures and not get to a place that you get sick and then you have to turn to conventional because once you go that route, your problems for the long run will probably continue. And preventive medicine is the way to go to have a healthy lifestyle to increase longevity based on how you think your consciousness which is first and foremost than how you live your life, what you put in your body, and also what you do outside of your body. How do you treat people? How do you live your life? What’s your stress level? How do you look at the world? You know? So it’s a number of things. It’s not one thing. But going back I don’t want to get off track. I get a little excited when it gets to metaphysics. But in terms of the commercial real estate world wellness is a huge, huge demand right now and a huge desire for not just consumers but merchants and people who really want to share that wisdom and insight and helping people have a healthy lifestyle. Because at the end of the day, no matter how much success you have, or health is everything you know,
J Darrin Gross 14:59
Amen to that. If you don’t have any, if you have all the money and no health, what’s the point?
Houman Mahboubi 15:04
Exactly. And restaurants is another key component of the commercial real estate world that is very much striving and is very much in demand. People love to go out and eat. And when you have good concepts and good restaurants, neighboring retailers want to be around that because they all feed off of each other, whether its destination retail, your traditional retail, but food and wellness are really the key points right now that are doing extremely, extremely well. And fashion in general is really making a comeback. I’m very excited to see what’s happening. The growth expansion and the demand and the demand for vacant, the vacancies are becoming less and less. In some areas, they’re getting back to the normal state, they were pre COVID. In other areas, they’re improving. And I think that this will be the year that things will really start to get back to pre pandemic states. And interest rates rising to really contain inflation, which is has been a problem or is becoming a problem will really balance things out and allow things to go smoothly for the most part.
J Darrin Gross 16:26
Yeah, I wanted to ask you, pre COVID versus now going forward, since we’ve kind of been working through the pandemic and all the the issues that that’s or the hurdles it’s created. Are you seeing any change of the use of space? For the retailers that you’re dealing with?
Houman Mahboubi 16:49
That’s a great question. So it’s funny, because you’re getting financial institution, real estate companies, various offices services, they’re now intrigued and having ground floor glad ground floor retail space. Rather than being an office buildings, they like the exposure, they want to have spaces that were typically used for retail, for service where people can walk in, they can see, you know, the window display, see what they’re offering. So that’s one of the things that has happened, that’s become more common. Another is you’re seeing more pop ups in terms of people saying, you know, something, pop ups usually, you know, was more defined as like a one month, three month or six month and then you’re gone. But the new way of pop up is, you know, businesses come in and say, You know what, I’m going to try this for one year, or maybe 18 months, and see how it goes. If it goes well, I’m gonna go into long term tenancy. So there have been shifts made. And again, wellness centers and rat one it’s not medical, but wellness, right, that wanted to be in buildings are now more interested in having ground floor retail space as well.
J Darrin Gross 18:07
No, that’s great. And in the the wellness arena, you mentioned kind of the the I mean, preventive issues. Are there any particular I mean, are they are they franchises or are they you know, sole practitioners that are opening these are Can you can you speak?
Houman Mahboubi 18:33
You know, they’re they’re basically, they’re not franchises yet, like foods, like foods and other QSR concepts or fashion is because it’s really in the infancy stage, if you want to call it a lot of people have not reached the franchise level, eventually it will like everything else does due to his popularity. But you know, when people can really work on meditative things, or physically speaking, have IVs and vitamins and go into specific equipment like dry saunas, or, you know, facial things, you know, different uses that involve, you know, knowing what foods you should eat, what foods you shouldn’t eat, having a balance of yourself as a whole. These are things that are being offered or you know, there’s something called I think stretch lab where you go in there and instead of having to go to the gym, you literally don’t have to go there you go in there and do stretching exercises for your body to relieve stress. There’s something called facial massage where you go in there. It’s not really a facial like your typical facial that you think about with needles and stuff when people go in there. They work on different things. areas of the face. So there’s so many things out there that are now available that involve the mind and body and the combination of the two coming together that are being offered. And of course, you have your traditional yoga and pilates and the combination of the two, somatic healing, there’s so many of these kinds of stuff out there, you’re going to see more and more of them being exposed and being introduced to the masses.
J Darrin Gross 20:32
You know, all of these are things that are more of like an experience, something you can’t necessarily do online to get the, the, you know, the experience, I mean, like, you can go online and click a, you know, an icon or a widget or a picture or whatever, and, and put in a quantity and put in your credit card and get something. But that’s not the experience of whether it be a retail shopping, or, like what you’re saying these, these medical or Med Spa experiences where you can go and actually, you know, experience that the, you know, have the experience,
Houman Mahboubi 21:11
Yeah, physically participate, which having services such as this available, will then help other retailers. You know, when you do that you go come and stop by and shop at this store, for example, I’m going to go look around and, you know, browse physically or, you know, go to different, you know, stores that offer different things, whether it’s shopping or services, or things that you would never typically do online. Now you’re doing good. By being out there. That’s why it is so important to have brick and mortar because you don’t want people to forget your brands, right? You want people to physically participate. Not only is it important for the companies, so people don’t forget them. But also, it’s very euphoric for a human being to be out there. And taking action and participating and gives makes them happy. You know?
J Darrin Gross 22:14
Yeah. So when you’re working with a landlord, to lease space, for a retail or medicine bar, or what have you, can you describe some of the of the things that the landlord looks for in a potential tenant?
Houman Mahboubi 22:36
J Darrin Gross 22:36
to be a tenant?
Houman Mahboubi 22:37
So the concept, obviously, is very important, you know, especially if they have other real estate, they want to make sure that the type of tenant they bring can help the other neighboring tenants that they’re planning to bring. But even if they don’t have neighboring real estate, the most important thing is for a tenant to be strong financially and can Can, can fulfill their lease obligation, by having a strong guarantee, that’s very important, because you don’t want to bring a tenant into a space, and then have them default and not be able to fulfill their obligation. So who the guarantor is and how strong their financials are, is one of the key components to a landlord, really protecting themselves. And also ensuring that the tenant is doing their due diligence in knowing that they basically have a good idea if the business is going to succeed or not, because they’re not going to put their financial careers on the line or obligation on the line. And not, and not have a successful business. So it’s very important when a landlord knows that the tenant is all in and the tenant knows that, in order for them to get a space, they have to be on that take every measure possible to make sure that they’re doing the right thing. Or at least give it their best, you know, they’re committed at that point, it doesn’t mean you’re always going to be successful. But it’s the intention behind it. That that one has to have to make sure they’re making the right decision. But that’s the number one thing that a landlord looks for, is how strong are they financially? And How capable are they to meet the lease obligation?
J Darrin Gross 24:27
Got it. I’m curious with with the the COVID experience, are you seeing any of them look for any kind of an online presence that the potential tenant has? Or is that part of the, their their concept plan that they have to have so that people can find him in case there’s a new wave of COVID or something to where they can continue?
Houman Mahboubi 24:50
So I think everyone these days, who has a physical presence also has an online presence. It now goes hand in hand. But you’re absolutely correct. It didn’t used to be like that at all right? It didn’t use like that it was an afterthought. But I think Amazon really changed that world. And that’s why you see now every retailer, in addition to having brick and mortar also has an online presence as well, it’s almost a must. Yeah, not really, because it will really secure your business. So things like pandemics to happen, you can still have your business up and running. And people can still be able to make purchases from you or use your services.
J Darrin Gross 25:36
Right, right now, it’s interesting, just how reliant we are now even just make an appointment and I used to be a kid, just go wait for a haircut. Now you got to make an appointment to pick an haircut or, you know, however that may be.
Houman Mahboubi 25:48
Thats right. Even if you want to go shopping, there’s lions outside of doors, because they only around a certain number of people in our store. Right? Right. People are being very cautious. And it’s getting better and better. But you still see lines outside to get in into retail stores. Which who would have ever thought about that? Ever thought about that? A few years back? It was inconceivable.
J Darrin Gross 26:10
Right? Right? What about, you know, one of the things that you’re blessed with in Southern California is just a sunshine and warm weather? Do you find that that is lend itself to more opportunities, given kind of the nature of what we’ve learned about the pandemic, and fresh air and all that I mean.
Houman Mahboubi 26:34
Most definitely, because people love to be outdoors. People love the experience. And when the weather is nice and sunny, like it is here, it inspires you to get out there more and you want to get out there more, you’re happier, you’re more motivated. So that does in fact help tremendously. cities that have the kind of weather that Los Angeles has really lends itself to a bigger opportunity in these businesses succeeding.
J Darrin Gross 27:05
And with that, I guess, I’m kind of curious on the space, if people been configuring the space any differently so that they can I guess open, make it more, you know, airy, more open, or
Houman Mahboubi 27:20
Yeah, especially when it comes to food. That is one of the things that’s has changed dramatically, or drastically where they have an indoor outdoor, the windows open up, there’s a lot more outdoor seating or patio seating. That’s a must now for a lot of these restaurants. So things have changed, not retail, not as much because there’s only so much outdoor, you really can’t outdoor for retail. But you know, you can have for people coming in and walking around. But in terms of your inventory, it’s you have to be careful about that. But more so in restaurants and physical activity to kind of stuff. You’re gonna see more of that layout changing, it is changing, it has changed.
J Darrin Gross 28:07
Got it? I’m curious, you know, you mentioned that the kind of the real estate, the markets strong, or mean, it’s improving? Is it primarily just a matter of that people are resigned to this as what we’re dealing with? Or can you point to any other things is, I mean, talking about the economy, you know, quote unquote, is good. And it sounds like a lot of the things you’re you’re or we’ve talked about are more like a luxury brand. Are they less sensitive to economic dips? Or? Or how do you? Can you speak to that at all?
Houman Mahboubi 28:45
Yes, so I’m, I’m I apologize. I’m trying to better understand the question.
J Darrin Gross 28:49
Well, I just, I guess it was a poor poorly worded question. But But I was thinking about just on on more of the how the the vacancies are decreasing. Is that do you feel like most of that is is driven based on just people are resigned to what is and? And these people are? are moving around again? Or is also yeah, there’s nothing else that feeds into that with like interest rates? Or? No, no,
Houman Mahboubi 29:18
I just think that everyone is really I tell you what the what the pandemic did, it made people really appreciate what they had, and how simple things were and how liberating everything was in the freedom that they had. So I think it has given them so much more gratitude and appreciation and not take things for granted. And as a result, you’re seeing more opportunity out there people wanting to be more active people wanting to take action if they were either way as hesitant, or were less risk averse. Now they’re saying you know something? Life is about living life is about you know, we control so little we think we control so much but the truth is we can so little. But what we can do is take action, you know, and then let the universe play things out and do what it has to do. And in doing that, a lot of people are now more active, you know, they are going out there leasing spaces, starting new businesses. And you know, the old saying, If you build it calm, if you don’t build a normal ever know what you are going to do anyway, you can have all the talent in the world. But if you don’t really put it out there, you’ll never be discovered in any way. But it’s our job as human beings. Regardless of what the result is, or what we’re putting in our minds, to really have more faith and sooner something, I believe in myself, I believe in my business, I’m going to do my part, and let the rest unfold naturally and organically. But I’m going to give it my all, I’m going to give everything I have.
J Darrin Gross 31:00
Well, it’s great. If we could, I’d like to shift gears here for a second. By day, I’m an insurance broker, and work with my clients to assess risk and determine what to do with the risk. And there’s a few strategies we typically consider when we’re we’re trying to assess the risk, first look to see if there’s a way we can avoid the risk. If that’s not an option, then we look to see if there’s a way we can minimize the risk. And when we can either avoid or minimize the risk, then we look to see if we can transfer the risk. And that’s what an insurance policy is. It’s a risk transfer vehicle. And as such, I like to ask my guests, if they can look at their own situation could be their clients, investors, tenants, the market, the economy, municipalities, however you choose to frame the situation, and identify what you consider to be the biggest risk. And for clarification, while I am an insurance broker, I’m not necessarily looking for an insurance related answer. And so if you’re willing, I’d like to ask you Houman Mahboubi, what is the biggest risk?
Houman Mahboubi 32:15
I think that biggest, biggest risk is to take on more than you think you can handle? You know, because you don’t want to put self inflicted pressure on yourself. There already is daily pressure on the work that you do. I call it good cholesterol versus bad cholesterol, right? So stick to the good cholesterol take on as much as you can handle. Understand, what is the worst case scenario? If your business does fail, you know, are you going to be homeless? Are you going to be fractured and level that you can’t function anymore. So as much as it’s important to be all in and take every effort or measure to be successful in your endeavor, just make sure that if for whatever reason, like the pandemic Thomas, we think we can troll so much. But on a, you know, molecular level, we’re all the same, and we’re all equal. And when it comes to things like that we’re all you know, one, believe it or not, just know that any endeavor you pursue makes, make sure that if it doesn’t go well, you’ll still be okay, you know that it’s not going to any way change your life for the worse. So don’t take on more than you can handle and try to be a hero or let your ego get in the way to say I’m here to do what I meant to do whatever my capacity is, and I will let the universe guide me in that unfolding and for me to do what I need to do. But that’s a very good question. Because the risk factor, you don’t want it to completely turn your life around where you can function anymore. And I think that goes for investments as well, you know, don’t be over leveraged, how much debt are you taking on? You know, what if the picture looks incredibly clear, and there’s no way there’s maybe one in a million chance that, you know, this thing’s gonna fail, but that one in a million, it’s one of the decks in the card, one of the cards in the deck that can account make it happen like someone winning a lottery. So don’t ever be overleveraged don’t ever be a pessimist be an optimist, but just know that if all else fails, are you going to be okay, tomorrow? Are things going to be fine? And if the answer is an implicit Yes, then you know you’re on the right track. If it isn’t, and you are going to cause damage to yourself and the loved ones, then most definitely, it’s not a smart risk to take on.
J Darrin Gross 34:45
Well, that’s great. Houman, where can listeners go if they’d like to learn more connect with you?
Houman Mahboubi 34:52
J Darrin Gross 34:55
All right, we’ll put that in the show notes. Houman I can’t say thanks enough. for taking the time to talk today, I have thoroughly enjoyed it. I’ve learned a lot, and I look forward to doing it again soon.
Houman Mahboubi 35:07
And thank you very much. I can’t say how grateful and appreciative I am to have been a guest on your show, and to share my knowledge. And thank you very much for having me today.
J Darrin Gross 35:21
Now you’re quite welcome. And thank you. For our listeners. If you liked this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow? That’s all we’ve got this week. Until next time, thanks for listening to Commercial Real Estate Pro Networks. CRE PN Radio.
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