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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Nick Jones, founder and CEO of Alakai Capital. They discuss Nick’s approach to real estate development, focusing on ground-up projects and value-add renovations. Nick shares insights on investor partnerships, deal structuring, and the importance of building relationships in the industry. He emphasizes the significance of risk management and negotiation strategies in achieving business growth. The conversation also touches on market opportunities and the future outlook for real estate investments.
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NIck Jones (00:00)
So when it comes to looking at projects and deals, I’d say one of the biggest keys that I’ve seen is negotiating win-win solutions. And what I mean by that is generally most of the people that we’re negotiating against, ⁓ or tenants, or lenders, or property owners, sellers, ⁓ they have an objective they’re trying to get to, which is different than ours.most of the time they know it, but a lot of times they don’t even know what they’re looking for.
Michelle Kesil (02:04)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Nick Jones, the founder, CEO, and director of acquisitions of Alakai Capital. So excited to have you here today, Nick.NIck Jones (02:22)
Thank you for having me, Michelle. I’m looking forward to our conversation.Michelle Kesil (02:25)
Yeah, absolutely. think the listeners are going to take a lot away from how you’re approaching development and the real estate industry. So let’s dive in.NIck Jones (02:36)
Let’s do it.Michelle Kesil (02:38)
First off, for those not familiar with you and your world yet, can you share what your main focus is?NIck Jones (02:44)
Sure, absolutely. So Alakai Capital is a development and investment company. We specialize in ground up. So ground up QSRs, single tenant net lease type projects. So think about it, Dutch Brothers, Chipotle, Chase Bank, preschools. We also do value add strip center renovations. So we’ll go in and we’ll take a, you know, 1980s vintage strip center with a tired facade, but it’s in a great location and we’ll renovate it.We’ll reposition the property, bring in new tenants, and then we do small bay industrial value-add investment.
generally more infill type product with space is about 5,000 square feet, give or take. And we’ll come in and provide a little love to the property, clean it up a bit, and then it’s more of a long-term hold for us.
Michelle Kesil (03:32)
Awesome. And what markets are you operating in?NIck Jones (03:36)
We have historically focused in the Southeast, mainly Florida. We’ve had a lot of success in Florida. That’s a high growth state. It’s tax friendly. There’s just a lot of activity going on throughout the state and it’s geographically very large. Over the last few years, we’ve expanded out to Texas, California, up in Seattle, Washington. And now we’re doing a rollout plan with a few of our tenants across the Southwest.Michelle Kesil (04:01)
Amazing. And so when you’re working on these development projects, like is your job basically like from the ground up everything or yeah, can you kind of walk me through like the process?NIck Jones (04:18)
Yeah, so we started off only doing redevelopments where we take an existing building and we’d renovate it to whatever new tenant we were bringing in, you know, for that use. And we did that because we thought that on a redevelopment, there’d be lower risk because you’re already starting with a structure. And our whole philosophy has been having the least amount of steps from point A to B in order to get to where it’s a cash flowing income producing property that is stable with the tenant making money.Because the second you have a tenant in there, you know, making sales, making money, the probability of your rent coming in every single month increases substantially. And so, you know, we really focused on existing products for that reason. Over the years, we started to understand risk a little different and be a little more, ⁓ you know, intelligent about underwriting the risk profiles and seeing, you know, which variables we can mitigate and which ones we really have to focus on.
And that led us into ground up development as well.
because most of the buildings we build are the standard prototypes of the buildings we work with or the tenants we work with. So when I’m building a Starbucks, maybe I can change the color of the brick, but that’s just about it. mean, all the Starbucks you see across country are generally the same. They’re one of their three prototypes. Same with Chipotle, Dutch Brothers, Chase Bank, a lot of these large tenants. And so when you don’t really have much risk in the building design,
then you really have to just look at the site contracting work. And that’s where the utilities are coming into the site. If you need to fill dirt, if there’s any sort of waste buried under the ground. And if that’s the only risk you’re looking at, it’s just a different type of profile, but it allowed us to expand into ground-up development as well, while still ensuring positive results for ourselves and our investors.
Michelle Kesil (06:56)
Awesome. And so when you’re working with investors, what does that partnership look like?NIck Jones (07:04)
Yeah. So our investors are LPs, kind of the standard format where we will put the deal in our contract. We’ll, underwrite it. We’ll go through our due diligence process. Generally, you know, we’re anywhere from $50,000 to $350,000 into a deal before we send it out to our investor base. And at that point we already have the tenants leases signed, you know, generally have the idea of what the development or redevelopment looks like, the costs of it.the timeline of it. And we put it into a nice package. So by the time they see it, you know, they can clearly see, okay, well, here’s the opportunity. Here’s why they invested in it. Here’s what our returns look like our hold period looks like. And we do each deal on a syndicated basis. So one by one. So it’s also nice because our investors get a pick, you know, what deals they want to do. And we do about 10 to 15 a year. So for them, it’s almost like a menu, you know, if they want to do a development deal, they’ll wait until a development deal comes along and they’ll look at it and decide if they want to invest.
If they like, you one of our industrial deals, one of those pops up, they can look at it and invest. So it makes it really easy for the investors to come in. And the majority of them, you know, aren’t real estate professionals, although we do have some in the space, but they’re just, you know, business owners, entrepreneurs, people who have found a way to be successful on their own, who don’t have commercial real estate exposure. And they look at us as, you know, their real estate investment arm to have allocation into the industry.
Michelle Kesil (08:29)
Yeah, amazing. That’s exciting for those people to be able to get in the door that way.NIck Jones (08:35)
Yeah, they’ve had a lot of successes. It’s been fun to grow with them and see their wealth grow now that we’ve been doing it for close to 10 years.Michelle Kesil (08:42)
Yeah, definitely. And so when you guys are working on these deals, how do you find like what the best leads and the right deals are for your specific business?NIck Jones (09:01)
So when we underwrite a deal, we generally try to look at it high level, which a lot of people will say, you the back of the napkin underwriting. So we’ve closed on about 75 deals. We’ve closed on or developed about 75 projects since I founded the company and we’ve underwrote thousands of deals. And you can spend a lot of time underwriting bad deals. So what we’ve started to do is we put together a set of initial questions that we’ll ask when we first see a deal.And we’ll go through those questions. And if it’s interesting, then we’ll graduate to the next layer of underwriting. As we dive deeper and deeper into the deal, we’ll continue to look at these different variables to see how we’re mitigating our risk, how we’re optimizing our return, what type of tenants may be interested, if our tenant relationships are interested in the deal. And as we keep on getting yes answers, we’ll dig further and further in. And the second we get a no answer, we’ll generally try to pull out as quick as possible. So we spend more of our time getting to yeses.
than going down deals and getting a nose and realizing that we just burnt a few days on a deal we can’t do.
Michelle Kesil (10:43)
Yeah, absolutely. And so you mentioned like a lot of the commercial buildings or tenants that you have are these maybe like larger corporations. Is that kind of like the main audience that you’re looking to create the developments for?NIck Jones (11:02)
So the ground up definitely. Yeah. I mean, these larger organizations, they, you know, lot of them are publicly traded. They have agendas where they have to grow or wall street, you know, penalizes them for not growing. So what they’re looking for are development partners that reduce the friction of growth. And that’s really all that we are. So if, know, Chipotle wants to be in a market, if we can do that easy for them, you know, we deliver the building on time per budget. We negotiate the lease easy for them. You know, that’s the kind of partner that they want.So we really try to make it streamlined so that, you know, it’s easy for them to open the locations. They want to work with us. That’s for most of our ground up development on our small bay industrial deals. A lot of times it’s more regional or local tenants and we’ve had a lot of success with them because, you know, you’ll, you’ll meet the, the, the, the tenant, you know, the owner of it, the principle of the, of the space. And so when you get to know them, you build that relationship.
And so in times during COVID, we had a lot of tenants that were forced to close down. And a lot of our local tenants would call us and they’d say, we understand that we have to be closed, but we’re still gonna pay rent on time. We’re gonna work through this. We don’t wanna leave you stranded. So the human relationships that we build through our property management division and our asset management division really ⁓ hold us together with lot of the local tenants also.
Michelle Kesil (12:27)
Yeah, definitely. That’s awesome that you’re also working in those local smaller tenants. Yeah.NIck Jones (12:34)
Yeah, I mean, it’s the backbone of America. there’s a lot ofit’s fun to see them grow. And we’ve seen some grow from, you know, a thousand square feet, one of our properties up to 20,000 square feet. It’s really cool.
Michelle Kesil (12:44)
Wow, yeah, that is exciting. And so what do you feel are some of the main keys that make the biggest difference in allowing your business to be able to grow and run smoothly?NIck Jones (13:00)
So when it comes to looking at projects and deals, I’d say one of the biggest keys that I’ve seen is negotiating win-win solutions. And what I mean by that is generally most of the people that we’re negotiating against, ⁓ or tenants, or lenders, or property owners, sellers, ⁓ they have an objective they’re trying to get to, which is different than ours.most of the time they know it, but a lot of times they don’t even know what they’re looking
And through, you know, the conversations, the discovery, you can start to determine, you know, what they really need and try to cater to them for that while we’re getting what we need. So that’s allowed us to, you know, get better loan terms on deals that really make sense per our underwriting, you know, working out different sales contracts where, you know, we may get the price we need, but they need a little more time because they’re doing a 1031.
or they want the reoccurring revenue, so we’ll do seller financing so that they can still get that income stream without the risk of having to manage the property. That’s been a key ingredient for myself and our acquisitions team in getting deals across the finish line that other people may struggle or fall on. As far as the company, I’d say the biggest thing that has kept us together is we’ve grown.
You know, our head counts and our breadth of deals we’re doing is creating systems for each one of the individuals within each department to follow. And it sounds simple, right? I mean, everyone talks about systems and there’s a lot of low hanging fruit when it comes to making systems. But the ones that really mattered are in the areas that we didn’t realize that we needed systems. And even at times, I was blinded by the things I was doing repetitively.
And so, you we have teammates looking over each other’s shoulder as far as, I know that on the last project you did this or, monthly, we’re kind of doing this process. You know, let’s not think of it as like an art. Let’s think of it more as like something that we can, you know, create more systems around. And it’s helped us with, you know, every aspect of keeping things, you know, moving forward without, you know, reducing errors.
Michelle Kesil (15:58)
Yeah, absolutely. Those are definitely important components in order to scale to the next level.NIck Jones (16:06)
Yeah, it’s harder to do than it is to talk about it. I’ll say that much.Michelle Kesil (16:09)
Sure, most things are.NIck Jones (16:12)
Yeah.Michelle Kesil (16:14)
Awesome. And so what are you most focusing on solving or scaling to next?NIck Jones (16:23)
So we’ve, we spent a lot of our time in our first five to eight years on smaller property sizes. So, you one to $10 million properties. And there’s a lot of meat on the bone on those deals because a lot of times your sellers are non-institutional. And so there’s just aspects of the deal that you can unlock that a larger, more sophisticated seller may not notice.the last few years, we’ve started to focus on, you know, the 10 to $20 million deals. And what we’ve noticed is that, you know, the sellers are more sophisticated, but when the project’s larger, it just gives you more opportunities to add value. And so, you know, we’ll have, you know, five variables that we can go after, whether it be, you know, carving out out parcels, renegotiate with tenants, adding square footage on a building. And when you have those many opportunities to add value, you know, we’re getting to the same results.
as we were on some of the smaller deals, but we have less risk because we have a diversity of incomes from different tenants. And so, part of our objective over the last few years has been to be more focused on those 20 to $30 million projects because we’ve noticed that we have different areas that we can create value while reducing risk for our investors. And that’s really what it’s all about for us is helping our investors grow their wealth while mitigating the downside.
Michelle Kesil (17:49)
Yeah, definitely. And would you say that there are sometimes like scenarios where there is ⁓ that higher chance of risk?NIck Jones (18:01)
Yeah, there always is. We try to understand all the risk ahead of time. There’s kind of really two types. There’s the risks that you can quantify and understand, and then there’s the unknown risk, which is really where the challenges present themselves. So we’ve surrounded ourselves with our team with some really high quality real estate professionals. Some risks you’ll never mitigate. That’s why it’s investment. But when those come up, we’ve noticed that makingthe right decisions quickly. ⁓ We can change the course of something going sideways earlier on and then hope to reduce any sort of exposure that we have. but mean, you’re always gonna have to deal with it, unfortunately, ⁓ one way or another.
Michelle Kesil (18:51)
Yeah, definitely. It’s just part of the real estate industry.NIck Jones (18:56)
It is, so just trying to minimize it and then it’s about picking the right team to move forward through it.Michelle Kesil (19:02)
Yeah, absolutely. And I know that you mentioned you are looking to negotiate and create more of these win-win scenarios. What does that look like for you?NIck Jones (19:18)
Well, for us recently, it’s been doing more programmatic developments with ⁓ tenants that we’ve built relationships with. So, it’s great to do a one-off project with someone, but when you build that relationship and you know that they want to expand, ⁓ it’s going to different cities, different states, different markets, and continue to provide that service forSo that’s what we’re really excited about is pushing that agenda forward.
Michelle Kesil (19:44)
Yes.Yeah, does that look like creating relationships and then bringing them into different markets?
NIck Jones (19:56)
Yeah, I it’s all about relationships, right? I mean, at end of the day, our business is relationship based. know, people say that your network’s your net worth. And I mean, there’s some accuracy to that. I think it’s more about, you know, when you build a certain skill set, then you can unlock your network. And so, you know, with us and most other, you know, of our competitors, you know, when you get to a certain level of sophistication on the projects you’re doing, then you can really start to, you know, tap intoyour relationships you’ve made throughout your career, ⁓ leverage your reputation and start to get a little more scale.
Michelle Kesil (20:35)
Yeah, definitely. how, like, are there any strategies that you use to build your network or how do you make these connections?NIck Jones (20:45)
I wouldn’t say there’s ⁓ one strategy. ⁓ I could definitely say that when you’re trying to grow your network, a lot of it comes down to quality. And so it’s where you put yourself. And so if you’re down at the local bar building your network, that may not be as beneficial as if you’re building it at one of the real estate conferences, industry events.your alumni network. So I think it’s just really being conscious and intentional about, you know, where you’re placing yourself and then being open-minded to, you know, conversing with people that, you know, may not have anything to offer right away. But it’s really about building those personal connections because, you when you’re networking, it’s just so shallow. You don’t really get to know the person and see, you know, how you guys can, you know, either work together on a professional level or just, you know, share advice, opinions, whatever it may be. So it really just comes down to quality.
and creating those filters to find the highest quality people to work with and to get to know.
Michelle Kesil (21:50)
Yeah, absolutely. Those quality relationships are everything in this space.NIck Jones (21:56)
Exactly.Michelle Kesil (21:58)
Awesome. And so what are you like most looking forward to for this year? I know that you mentioned that there’s some positive shifts that you’re seeing in the market. Are there any opportunities and not that you’re getting excited for?NIck Jones (22:15)
You know, we saw a lot of people step off the sideline with the last Fed fund rate change in December. And I’d say the biggest opportunity we’re excited about is just liquidity being somewhat back. We’ve had more properties that we’re selling go under contract since the start of the year than we did in all of 2025. You know, we’re seeing a lot more activity. And so it’s when the velocity of money starts to slow down and whether it be,Tenants not expanding, investors not wanting to go into deals or investors not wanting to buy our end product. It just slows kind of all the wheels in the system. And it seems right now, things are starting to loosen back up and push forward. And so just creates a lot more opportunity for us and everyone else to continue to ⁓ expand and grow and do new projects.
Michelle Kesil (23:08)
Definitely. Awesome. That is exciting.NIck Jones (23:13)
Yeah, we’re definitely excited about it. I think a lot of my competitors I talk to as well, they’re seeing the same thing.Michelle Kesil (23:18)
Mm-hmm, awesome. Well, before we wrap up here, if someone wants to reach out, connect, learn more about everything that you’re up to. Where can people find you and connect with you?NIck Jones (23:30)
So I can be reached on LinkedIn. My username is my name Nick Jones. And if you search Nick Jones, Alakai Capital, you’ll find myself. You’ll find our company page. I’m pretty active in the space talking about the types of things that I’m seeing in my deals. I’m talking to other people, sharing the things I’m learning from them as well. And we like to talk about, as I mentioned before, ⁓ different systems we’re creating to mitigate risk. So.We have a full underwriting package we’ve put together of how we look at deals that I know a lot of people like to look at as they’re underwriting their own deals. And then you can also go to just our website, is alakai, which is A-L-A-K-A-I-capital.com. And there’s numerous links on there to connect with us to either talk about deals or if you have interest in investing with us, jump on a call with myself or anyone in our IR department. Those are probably the two best places.
Michelle Kesil (24:25)
Perfect. Well, I appreciate your time and your story. Thank you for being here.NIck Jones (24:30)
Yes, thank you for having me. It’s been fun.Michelle Kesil (24:33)
course. And for those tuning into the show, if you got value, make sure that you have subscribed. We have more conversations with operators like Nick who are building real businesses and we’ll see you on our next episode.
