Why Retail Real Estate Is Outperforming Other Asset Classes Right Now

Ivan Procko (00:00)
Yes, yes, yes, I would absolutely agree. We want to stay ahead of ahead of the curve. ⁓ You know, and I think the ones that get out ahead of things like, for example, in Los Angeles, a lot of the a lot of the apartment owners are struggling. But they but there’s an opportunity to, you know, to buy retail and buy some of these retail centers and

at a price that wasn’t available a few years ago. really, the clients that we’re working with that are smart, they’re getting out ahead of things, and they’re moving their money on now rather than waiting to see what happens.

Scott Bursey (02:19)
Welcome back to the Real Estate Pros Podcast powered by Investor Fuel. I’m your host Scott Bursey. And today we’re bringing you an episode packed with commercial real estate dynamite. Our guest is Ivan Procko of the powerhouse, Marcus and Millichap. And the feel he brings is the absolute unshakable confidence that comes from closing over $2.2 billion in transactions. That’s right pros, 2.2 billion.

Get ready to download some serious high octane wisdom on what it takes to perform at the highest level in commercial real estate brokerage. Ivan, welcome to the show.

Ivan Procko (03:00)
Thank you, Scott. Thank you very much for having me. It’s a pleasure being here.

Scott Bursey (03:02)
It is awesome having you here and for those of our

listeners who may not be familiar with your journey, please tell us how did your career begin and what is your main focus now?

Ivan Procko (03:11)
Yeah, my career originally began in New York in residential. So I started out in residential real estate in New York, learned the ropes that way. Also did some retail leasing and then started selling some smaller buildings to a developer that I worked with there that would do the, develop these cast iron buildings in Soho and Tribeca and then we’d eventually do the sellout.

Moved out to Los Angeles, got my degree at USC, master’s in real estate development degree there, and then transitioned into selling shopping centers. work at Marcus and MillaChap now. I’m on a team that, as you mentioned, as a team, me and Ara and Rubell, we’ve done $2.2 billion with the transactions across the country.

And that’s basically the start to where I’m at.

Scott Bursey (04:11)
That is such an incredible path, Ivan. What really caught my attention about you was the way that you’ve been able to maintain relentless focus and discipline on brokering institutional grade deals. know, consistently driving volume to achieve that astonishing 2.2 billion in closed transactions as a team. That’s not easy.

Ivan Procko (04:33)
No, no, that’s certainly not easy. It takes laser focus. You have to be extremely driven. You have to be ⁓ extremely organized. Yeah, it wasn’t easy, but we loved doing it.

Scott Bursey (04:50)
Ivan, let’s flow some fuel and dive into the market framework, specifically focused on the high stakes world of multi-billion dollar commercial real estate transactions. In your view, what is the greatest operational strength required to manage and close a high volume of transactions like yours annually?

Ivan Procko (05:59)
I think the, well there’s several things that come into play. think being well organized and really consistent ⁓ as far as, you know, there’s a lot of things coming at you all the time and whether it be managing complex escrows or.

You still have to stay on the phone, you still have to be talking to your markets, you still have to be talking to your clients. just really being organized as far as and consistent about your time and also having a strong team around you. We have a fantastic team, we have a dedicated marketing person, we have a

dedicated financial analysts. So, you know, really knowing how to work with your team and delegate is important as well. And yeah, just having a love for the business and I think loving people and investments and being curious certainly is important as well. I always want to know what’s out there on the market. I want to know what’s happening.

know, everything that’s happening in my market, now I can really dig in and create value for my clients. So those are a few of the traits. I would say being competitive too, it doesn’t hurt. So we always try to set up the competition. But yeah, those are a few things.

Scott Bursey (07:33)
That is exactly the fuel that gives you the competitive edge. Let’s shift gears. In

today’s climate, what’s one necessary resource or tool you find yourself consistently working around or trying to optimize?

Ivan Procko (07:41)
Let’s check here. In today’s climate, what is one necessary resource or tool you find yourself consistently working

One tool I feel we’re consistently trying to optimize, I would say, well, mean, recently it’s with our database and just fine tuning some different things and fine tuning.

the way that we’re getting in front of clients, I think has been ⁓ one recent thing that we’ve been focused on, ⁓ whether it be in-person meetings or just other ways to get to those decision makers. So that’s something we’ve certainly been focused on as of recent.

Yeah, yeah, sure. Yeah, I agree.

Scott Bursey (08:24)
And let me ask you this, what niche or sub-sector in commercial real estate brokerage is seeing

the largest, most underrated surge in deal volume right now?

Ivan Procko (08:32)
you

would say this last year, it’s been so me and my team specialize in retail. Marcus and Millichap, I’m sure as you know, we started out in apartments and we also do office and industrial. I think we do more transactions than anybody else in apartments as well as triple net and both the kind of retail. But this last year has been extremely.

extremely good for retail. Smaller box or smaller shops with local tenants that serve the area. Quick serve restaurants have been doing great. A lot of different sectors of retail. Some of the larger box centers, some of the drug stores, the RiteAids, they went through bankruptcy. A lot of those are with the balls, kind of a thing of the past.

Yeah, the shopping centers and the similar kind of retail fields have been doing fantastic. Unlike, as you know, in 2020, nobody wanted retail. And especially through COVID, they were having all kinds of challenges. But this last year, it’s been outperforming other asset types.

Scott Bursey (10:23)
You know, Ivan, the fastest returns are often found by the pros who spot the market shifts before the crowd does.

Ivan Procko (10:30)
Yes, yes, yes, I would absolutely agree. We want to stay ahead of ahead of the curve. ⁓ You know, and I think the ones that get out ahead of things like, for example, in Los Angeles, a lot of the a lot of the apartment owners are struggling. But they but there’s an opportunity to, you know, to buy retail and buy some of these retail centers and

at a price that wasn’t available a few years ago. really, the clients that we’re working with that are smart, they’re getting out ahead of things, and they’re moving their money on now rather than waiting to see what happens.

So yeah, that’s super important, and also, too, with interest rates, kind of similar.

anticipating what’s going to happen there and getting out in front of that and not waiting to capitalize on opportunities. It’s really important.

Scott Bursey (11:35)
you

mentioned staying ahead of the curve. That vision is really what separates the players from the legends.

Ivan Procko (11:38)
Yeah,

yeah, I would absolutely agree with that. The guys that stay out ahead of the curve and that are being proactive and being proactive with their clients.

Those are the guys that are going to be the legendary broker. I could name a few, but that are, Bob Nackle, for example. He’s one of those guys that way ahead of everybody else. I think I heard his staff that he was doing $30 million of close transaction revenue a year. It’s pretty incredible.

We have another guy on I-Marcus that’s similar, like 30 million, 35 million a year. And those guys, yeah, they work there. They’re the bond knuckle. He has his map room and knows every little corner of New York and what’s happening with every little corner. And similarly in every product type, I like to think that ⁓ with shopping centers and the Inland Empire.

We’re that team, I’m that agent that I know everything that’s happening in my marketplace and so I can help my clients anticipate those shifts and capitalize on it.

Scott Bursey (13:08)
Speaking of vision, what is some long-term strategy that your firm is employing?

Ivan Procko (13:10)
Speaking of it, what is the long-term strategy

Well, my company as a whole, there’s some things that we’ve done over the past years. I mean, we have an in-house capital markets team to help facilitate financing for our clients. We’re adding something that’s coming down the pipe. We were an investment sales team. We highly

investment sounds, but we are actually bringing in an in-house leasing team just to help facilitate that end of it. And we’re kind of still figuring out how to structure that effectively. You know, a lot of the things with what’s happening with the war and constantly updating our clients of what’s happening and how.

what’s happening in the market and what’s happening and what to expect with inflation and different legislation. We do have a dedicated research team that really helps our clients stay on top of all of that. we’re constantly pushing out information to help. I don’t know if that answers your question, but that’s ⁓ very nice way.

Scott Bursey (15:03)
very nicely. Absolutely. And

on that note, beyond a general recession, what macro factor even poses the largest surprise threat to closing high volume commercial deals?

Ivan Procko (15:07)
Absolutely, and on that note, beyond a general recession, what macro factor I impose as the largest surprise threat at

Well, I think now that with the war ⁓ and so

You know, as you know, the last three years was challenging with interest rates and the 10-year Treasury going up considerably since 2022. Kind of thought we were out of that. We hadn’t hoped. We were hopeful. But I think with the war and trickling up, inflation again, and the 10-year is on the rise again.

And other factors just with tariffs are kind of a lingering, you know, have their impact as well. So different things like that are certainly affecting what we do. So we’ll see how that all plays out, I think, this next year. I’ve been saying that for a couple of years now. It’s kind of like, okay, things are getting better and then they kind of…

going the other way. it’s a little tough to predict exactly what’s going to happen this next year. yeah, the war and inflation are certainly two important factors. ⁓

Scott Bursey (16:40)
After closing 2.2 billion, what is the single most important metric you analyze in a LOI negotiation to determine if

a buyer is truly qualified to close Ivan?

Ivan Procko (16:51)
Well,

I mean, there’s so many different things that you need to analyze to assess a buyer. ⁓ For example, I have a property up in Northern California right now that we’ve been, it’s tough deal, in a challenging location.

a couple of the major anchor tenants had vacated. It was a Rite Aid and Dollar Tree and we have the shops next to it. And we had several different off-roads, one of which was quite a bit higher than the others. But you just really have to assess, okay, higher offer, but are they really scheduled real estate?

how liquid are they, how, know, this particular client or this particular buyer was also, was also had like offshore accounts and stuff like that. So it’s like, okay, you know, it just, there’s a lot of different things that you have to assess, but liquidity. And then also another thing that you want to keep in mind, I don’t know if it necessarily may be LLI, but you know, for a lot of the centers that we’ve had,

we were selling and especially for this one where it’s in an area that’s a little bit more difficult and there’s some management challenges. Are those people local to that market? Do they understand that market?

You’ve got to pack the best horse to run with, You’ve to look at it from all angles.

Scott Bursey (18:27)
For a pro who wants to move beyond local markets and start competing for multimillion dollar institutional brokerage mandates, what is the single most critical strategy for building the level of credibility and trust needed to win those high stakes listings consistently?

Ivan Procko (18:28)
For all who want to move beyond the world of world of race and search for the meaning of all that we are is due to our origin and race. What is the single most critical strategy, corvillian law, or pedagogy, and philosophy needed for mental

health?

Well, I would say credibility and trust. So you need to build a track record. You want to start early. If you can, I would say start early. Do what you say you’re going to do. Build a reputation that you’re able to perform on these properties. And I’ll give you a quick example.

We have client right now that has built a portfolio of about $200 million in shopping centers. started with a, she was buying single tenant deals with little money down. And she, that.

Fortyplexes, things that you could get residential financing on. She started building that and then she was able to execute on that and roll it into apartment buildings and then do it again and roll that into shopping centers and now we’re helping them. We just sold the center of theirs in Colton that they…

You know, they bought, they added value. You know, we sold it for, ⁓ we had to get a little bit creative with that deal, but we sold it for about a million dollar gain. ⁓ They bought it in top of the market actually in 2022. We sold it for a million dollar gain this last year. And then moving that money into large scale prime shopping centers. But, you know, she was able to do that. Again, she started early and.

⁓ was able to build that reputation and then built as she was exchanging from those smaller properties into larger properties into larger properties, she was able to grow an immense amount of wealth ⁓ for her eventual retirement and more to give to her kids. So ⁓ yeah, I think that’s the key. Start early and build a solid reputation.

Scott Bursey (20:44)
That was a very

good example. Ivan, this has been explosive, pure high octane fuel, but we can’t let you go just yet. What additional advice could you leave with our listeners today?

Ivan Procko (20:46)
that is a very good example. Everyone, this event flows up near high-activity fuel. So if you can’t notice that, what additional advice

would you give other people today? Well, what additional advice could I give you? I would say, if you’re interested in real estate, I would encourage you, you know, it’s…

I think it’s a daunting task to get in. Maybe a lot of people don’t really know much about real estate. I know I didn’t when I started in real estate, but I would encourage you to jump in. You can jump in with smaller deals, like I mentioned, single family for rent,

fourplexes, what have you.

And just get in there, get active, learn the markets, learn as much as you can and absorb as much as you can. yeah, mean, can do it, I think. I think if you really have the confidence and go out there and you’re open to learning and learning from your mistakes, yeah.

I’m going to encourage you to do so.

Scott Bursey (21:58)
There it is listeners. Ivan, this has been amazing. For our listeners who want to follow your journey or collaborate with you, what’s the best way for them to reach you?

Ivan Procko (22:00)
now

I appreciate that, Scott. So you can always reach me on LinkedIn if you key in my name, Ivan Prochko I-V-A-N-P-R-O-C-H-K-O. You can also find me at Marcus and MillaChat. My email is Ivan, [email protected]

or call me. cell phone is 310-913-5921. ⁓

Scott Bursey (22:46)
Thank you so much for joining us today, Ivan.

Ivan Procko (22:49)
I really appreciate it

Scott Bursey (22:50)
And to our listeners, we appreciate

each and every one of you. If you got value from today’s episode, please subscribe. We’ve got a lineup of exceptional guests, just like Ivan Pochko, who are making huge moves in the market. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.