Mastering Commercial Real Estate Development with Robert Hill

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Show Summary

In this conversation, Robert Hill, a seasoned commercial real estate developer, shares insights into the complexities of retail development, tenant relationships, land acquisition, and the critical role of attorneys in the process. He emphasizes the importance of patience, attention to detail, and team building for success in the commercial real estate sector. Hill also offers advice for new developers and highlights the long-term nature of real estate investments.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Retail Sites, LLC Website
    • Retail Sites, LLC LinkedIn

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Robert Hill (00:00)
  100 % yeah, you really you know we we do our deals and we own them for very very very long periods I think in the 40 years I’ve been doing this 35 maybe I’ve sold five or six projects and I own probably I don’t know maybe 75 or so So we think of it very long term And I think when we look at it that way it reminds us to pay attention to those details

  Dylan Silver (01:59)
  Hey folks, welcome back to the show. Today’s guest, Robert Hill is a commercial real estate developer and investor of shopping centers and freestanding net lease commercial properties for 40 years. He works with tenants to help them expand their store footprint from Massachusetts to Virginia. Robert, welcome to the show.

  Robert Hill (02:20)
  Welcome. Hey, Dylan. Glad I could be here.

  Dylan Silver (02:23)
  Thanks for coming on today, Robert. And I always like to start off at the top of the show by asking folks how they got started in real estate. But when we talk about the commercial development world, that’s an interesting segment to jump into. How did you get into commercial development?

  Robert Hill (02:39)
  I was lucky enough, my father, I grew up in Northern Virginia, my father had a residential real estate brokerage firm. So was exposed to real estate early. I got my license as a freshman in college and sold for him one summer. But I was interested in more complex and larger transactions. So I actually went to the Wharton School at University of Pennsylvania to study real estate with the idea of being in commercial real estate.

  My first job was four or five years with an investment banking firm doing syndications, primarily of apartments and then also historical projects. And so I always liked the commercial side. I liked the long-term hold of it. I then spent about 25 years in partnership with my brother and some other gentlemen, and we developed a lot of projects together. And then I started this firm.

  retail sites in 2007 to focus doing the same thing with myself and another group of partners. So I’ve kind of always been interested in real estate. I like the ability to generate wealth and long-term income without having to be forced to do a deal every day, every month. You kind of have some, you have self-sustaining income.

  Dylan Silver (03:53)
  Right.

  When we talk about the commercial space and when we talk about corporate tenants and the like, I’ve had this conversation with other investors really about you know what it takes to have corporate tenants and then to even get a building ready for such a thing you know. If you have, for instance, you know uh multi-use ground floor retail and then you’ve got apartments on the remaining floors vertically,

  those tenants on the ground floor could be a bodega or they could be Chipotle or they could be frozen yogurt or they could be a GNC, a CVS. so Starbucks, right? And so each one is gonna have kind of a different standard for what they need prior to ⁓ taking over a lease. And so when you’re looking at tenants and when you’re looking at finding

  who’s gonna be the right fit for where. Is it very much, hey, I’m only gonna deal with corporate tenants or does it depend on the building in itself and the location?

  Robert Hill (05:51)
  We kind of come at it, well, let me back up. Commercial real estate, think, is a kind of a miss, it’s a misleading term because you have the commercial real estate can be apartments, it could be retail, it could be industrial, it could be office, and they’re all sort of separate silos. And you find, we tend to focus and stay focused on the retail side. Some people go across, some people just do industrial.

  You know, what we focus is on the retail and we really drive our business from the relationships with the tenants. So our business is representing tenants and finding, helping them find multiple locations. Sometimes that turns into a supermarket saying, go find me a site, or it could be a fast food guy, go find me a site. So we kind of start with the tenants. Occasionally we’ll start with the piece of ground.

  We’re typically building from the ground up, but we try to lead it from the tenant side. We’re a suburban operator. We don’t really operate in the city. It’s just kind of where our relationships have developed over the years. So again, it kind of starts with the tenant saying, where would you like to be? And then we go out and find the site. Now, sometimes it’s a tenant that says, hey, I just need one acre of ground. Find me that site. Build me that project. Sometimes it’s a supermarket.

  you know, that says, can you find me a site? So we’re working on a project now that’s a 23 acre site. It’s going to be 150,000 foot center. It started with our supermarket client saying, could you help me find a site in this area?

  Dylan Silver (07:33)
  When you’re working with you know different clients from a supermarket to smaller, you know, square footage-wise, these are different segments, right? So one I’m imagining is going to take slightly longer time, more intensive, but also, of course, the upside is there. For folks who are in this space, do they tend to focus on one specific niche within and

  Robert Hill (07:40)
  Okay.

  Dylan Silver (07:58)
  typically and throughout your history, have you focused on one side of it, for instance, supermarkets specifically, or because the need is there that folks are able to work with clients from maybe small or up until something like a supermarket.

  Robert Hill (08:13)
  I think you’re going to find people work with a variety because tenants go through growth cycles. The deals take a long time. So, you know, we could be working with a daycare operator on one deal, a fast food operator, another supermarket on another. So we’re always going to have three, four or five projects in the pipeline. And it could be a combination of things because you tenants just go through cycles of growth.

  Dylan Silver (08:43)
  Yeah.

  Robert Hill (08:43)
  And it takes

  a while. They could say, hey, look, I want to ⁓ do 10 sites in the Philadelphia area. Well, it could take me two years to find 10 sites. So.

  Dylan Silver (08:54)
  Now,

  when we talk specifically about acquisition of land, right, for the purpose of development, I know from speaking with investors throughout the East Coast and being from the East Coast, that of course it’s going to vary depending on where you’re at, but that this process can be very cumbersome, right? From cradle to the grave, from inception, hey, we’re getting this property under contract to the time where

  the building is up and ready to go. Is there a typical timeline or is it very wild?

  Robert Hill (09:28)
  It, I would say it probably runs anywhere from a year to four years, depending on the zoning of the parcel, the receptiveness of the town, the process in where you are, you know, in, New Jersey, Pennsylvania, New York, Massachusetts, they are all township based systems. So you have to go through.

  not only a township set of approvals, often county and then state, Delaware, Virginia, other places are a county based system, tends to be more administrative. but you know, I’ve had centers that have taken me three or four years to get approved and I’ve had freestanding net lease deals that have taken me six months to get approved. But I would say the norm is probably a year to three years to get the, from the time you get the parcel under agreement, which is always contingent on it.

  approvals, to getting the approvals, then you start construction. Construction can be, depending on how much work you’re doing, be anywhere from nine months to 18 months. If you do a ground lease, we may prepare the ground and the tenant bills. In a shopping center, we ⁓ could be doing $10 million worth of site work, road improvements, and then we build the building or they build the building. In a shopping center project,

  Dylan Silver (10:45)
  Yeah.

  Robert Hill (10:50)
  It’s often a combination of land leases. We build the building ⁓ from the ground up or we build a building and subdivide it. So it’s a very lengthy process.

  Dylan Silver (11:36)
  When we talk specifically about commercial development, there’s a couple things that come to mind that separate this space. Number one is just the scale of it and the scope of it. You mentioned everything from a daycare to you know commercial shopping centers and you know large grocery stores, right? But then also, you have to be knowledgeable really as someone who can acquire and broker these deals, and then you’ve got to have the knowledge as a builder as well. And these are like two separate spheres, right?

  For folks who who may be newer developers and may be getting into the space, what would be your feedback for folks who may be starting out or who may be going from single family into some type of development?

  Robert Hill (12:21)
  First, it’s going to take longer than you think. and so when you’re getting a piece of ground, you know, again, I’ll say start with a vacant piece of ground. It doesn’t have to be. Sometimes, you know, we’ve done a project where we bought an old supermarket, knocked it down and redeveloped it. But the process of, you know, getting an agreement takes time. The process of the approvals, you know, if someone tells you it’s going to take a year, you should figure it’s going to take you two because it would

  take you longer. And I think you have to pay attention to the details. have to know, you know, we see, you know, people who come from the brokerage world and want to be developers and the ones who pay attention to the details and are interested in the details and understand the financing or bring in appropriate, you’re like the conductor of an orchestra. You know, I’ve got to get the traffic engineers, the civil engineers, the architects, the tenants.

  the town, the financing, you’ve got to get all these people kind of marching down the road together and playing well together. you have to kind of like that, you have to want to be the leader of that band, I guess.

  Dylan Silver (13:34)
  Yeah, I mean, there’s a lot of spinning plates in the air, right? When we talk specifically about, you know, meshing together all of those pieces, you one of the things that comes to mind is something small, you know, can be overlooked and throw off, you know, have a chain reaction in the process. And part of it, I think that that becomes tricky then is that, you know, you could have great expertise in a number of those areas.

  But if one of those becomes a weak link or if it’s a new deal type and that becomes challenging, you really need to either get that knowledge or have a strategic partner in place who can then come in and take care of that. Otherwise, especially at this scale, it quickly becomes costly.

  Robert Hill (14:18)
  100 % yeah, you really you know we we do our deals and we own them for very very very long periods I think in the 40 years I’ve been doing this 35 maybe I’ve sold five or six projects and I own probably I don’t know maybe 75 or so So we think of it very long term And I think when we look at it that way it reminds us to pay attention to those details

  But ultimately, you can’t know everything. So it’s really, it’s team building. Bring a good land use attorney in, get a good engineer, get a good architect. It’s really assembling a team that can help you, particularly when you’re just starting out. And just ask a lot of questions.

  Dylan Silver (15:44)
  When we we talk specifically about the the intersection of law and real estate and development, right? I think a lot of people tend to, especially on the single family side, different ballgame, I know entirely, but especially on the single family side, tend to look at like attorneys as a backstop for when things go wrong. But then once you’re at this scale, I could of course see that it becomes more of a pivotal crucial role in all of this, right? There’s just more on the line. So you’re going to have

  attorneys involved earlier in the process. What’s the typical interaction on a deal with attorneys and how do attorneys play a role in this process?

  Robert Hill (16:20)
  Well, I’d say there’s probably three functions in one of our projects that attorneys involve. First would be in what I would say the real estate transactional side, helping us with the agreement of sale, helping us with the closing. The second legal side would be helping us with the approvals. And that tends to be kind of a subspecialty. I maybe use one firm for the transactional, another firm for the approvals. And then the third,

  One would be on the lease side. We don’t use attorneys as much on the lease side as we used to just because I’ve been doing it so long. And then you have the attorneys when you close the loan. Some of those can be intermixed, but typically those are your functions. Transactional, you know, buying, getting a piece under agreement, closing on it, doing your financing, the approval side of things.

  and then the leasing side of things. ⁓ And again, in our location, Pennsylvania, New Jersey, New York, since these approvals are granted primarily at a township level, they’re very, the attorneys tend to be more local. I could bring a Dallas attorney to help me with a lease or a Dallas attorney to help me with a loan closing. I can’t bring a Dallas attorney to help me getting approvals from

  you know, a town in New Jersey. They’re going to want to see that local person that they know and that has been in front of the township before. So those are the functions that we use as attorneys. And often we’ll have on a project, I may have three or four attorneys. I may have two land use attorneys in some cases.

  Dylan Silver (17:52)
  Right.

  Yeah, I mean, when we talk specifically about, you know, those relationships, you know, at the level of a township, right. And, you know, having someone who understands the relational dynamic of the parties involved beyond the deal itself, right, that’s invaluable. And oftentimes on a smaller scale when, you know, individual builders are dealing with, you know, towns for zoning and permitting.

  because they don’t have that relationship in place, that can be challenging. And again, different mindset. People aren’t reaching out to necessarily an attorney immediately because they think, okay, this is a smaller scale, I can handle it on my own. But then here, you know, the perspective at the scale where you’re at, of course, I’m seeing now, you know, connecting the dots that that attorney who’s got that pre existing relationship who understands the parties involved, that goes a long way beyond just their experience as

  you know, someone who understands the law, it’s also someone who understands these relationships.

  Robert Hill (19:02)
  Exactly, exactly. you go through a process and the towns can’t know everything, we can’t know everything. So they want to know that if a problem comes up, that the developer can be trusted to fix the problem. Because something will come up. Three things will come up that you can’t think about. And down the road, if a problem occurs, that the developer will fix it or they can call the attorney and the attorney will say, yeah, he’s

  He’s a good developer, a good owner, they’ll fix it. So it’s like anything else, you reputation builds trust, you know, reputation builds trust. the attorney is, and your engineer is, is, is very, you know, critical to that process. The engineers, we can tend to pull geographically a little bit more. Attorneys in our area, different, different states, much, a little more localized.

  Dylan Silver (19:56)
  Yeah, yeah, I can definitely see that being true. We are coming up on time here though, Robert. Where can our audience go? Where can folks go to reach out to you or reach out to your team? Any new projects that you’re working on? How can folks maybe get in contact with your team?

  Robert Hill (20:10)
  Yeah, so the

  name of our company is Retail Sites LLC. You can visit us at www.retailsites.net on the web. And if we could help anybody who’s thinking of getting into commercial, give us a call. Happy to help. We’re always looking for investors for our projects. So if you’re looking, if you’re an investor looking to invest in commercial real estate, you know give us a call. Happy to help people kind of.

  learn how to succeed in the real estate world. It’s been very good for us. I have my daughter working in the business with me. So if we can help somebody, we’re happy to.

  Dylan Silver (20:45)
  Robert, thanks for your time today. Thanks for coming on.

  Robert Hill (20:47)
  Thanks,

  Dylan. Have a great day.