Commercial Real Estate Relationships: Stuart Zall on Landlords, Tenants & Investing

SIGNET: Stuart, thank you for coming. I have so much to ask you. I want to introduce you as the broker and landlord in the Denver market, although you do brokerage and properties everywhere, including a deal in China. You have quite a lot of experience. Do you want to say a little bit about yourself or introduce yourself?

STUART ZALL:

• I am Stuart Zall, founder of The Zall Company, which I founded in 2000.
• I did not grow up expecting to go into real estate, and I did not come from a multigenerational real estate family.
• I studied accounting at the University of Denver, got my CPA, and started at Arthur Andersen, but I lasted only about a year.
• I moved into real estate almost by accident after helping Steve Gettleman with accounting on a strip center, then being asked to help lease it by calling people from the phone book.
• I learned by “dialing for dollars,” got results, and eventually moved through Lakeside Mall, Taubman, and outlet-mall projects around the country.
• Taubman taught me the art of leasing, merchandising, and building tenant relationships across multiple markets.
• In 2000, when my firm was bought, I chose to start my own business instead of moving, and the business grew from hired-gun leasing work into a brokerage company.
• Along the way, I started buying properties when opportunities came up, often through partnerships, because I believe successful brokers should have some investment exposure to commercial real estate.
• I eventually bought the Larimer building where we are now, partly because I needed space for my own company and could lease the rest to another tenant.
• Having a storefront and a sign on the street has changed the business because people now drive by, see the company, and call.

SIGNET: It is so interesting. I love this area. I have been here a few times and have been to the restaurants. I did not realize everything was right on this block, like Barcelona, Federales, and other places. It is a cool part of town. How did you know this was going to become that?

STUART ZALL:

• Sometimes you get lucky.
• A friend from New York, Stephanie Rubenstein, was representing a concept connected to the founder of Lululemon, and they wanted a gritty part of town for a millennial worker-focused concept.
• At that time, Larimer Street was very rough; Denver Central Market was not open, and there was very little there besides Ratio Brewery.
• My friend saw something in the area that reminded her of Brooklyn, and I trusted her perspective even though I did not fully see it myself at first.
• I made it a quest to find a building in that area, and we got what I believe is one of the best blocks on Larimer Street in RiNo.
• When I bought the building, I was nervous enough that I did not tell my wife exactly where it was at first.
• The area still has city challenges, but the building has worked out extremely well.
• My advice is not to overanalyze real estate; sometimes you have to find it, take the risk, and let time work for you.
• Real estate is scary because you are putting a lot at risk, but time can become your best friend if you take the chance.

SIGNET: You hit on so many points I want to talk about. Mentorship is one. First, can you talk about your mentors and the values you learned in your training with Taubman? You have also been a mentor for me in Denver, and I have met many people you have mentored who became incredibly successful. What qualities do you look for in people that lead them to success?

STUART ZALL:

• I think it starts with heart.
• If you have passion for what you do, then it does not feel like work.
• You need drive, passion, and the ability to dream.
• I think younger people are missing face-to-face communication because so much is done through texting, Instagram, and efficient digital communication.
• When I started, even sending someone a picture of a space took days, and that slower process created dialogue and relationship-building.
• Today, information can be sent instantly, but the relationship process can be lost.
• Networking begins with meeting people and building relationships.
• I try to create platforms, such as breakfasts, where people can meet others who may help advance their careers.
• If you want to make deals, you need to put yourself where decision-makers are, such as shopping-center conventions and industry events.
• You should not only spend time with people you already know; you should try to meet as many people as possible and then follow through.
• Many deals begin with a cup of coffee, a handshake, or simply bumping into someone.

SIGNET: I love the idea of networking outside your own category. Developers often network with developers, and brokers often network with brokers. I have looked at finance events and capital groups because you get exposure to different people and make different links. One thing I have heard you say is that you never know where a deal is going to come from, and it is about being there. Is that one of the ideas?

STUART ZALL:

• I learned something from doing business in China: if you are in a room where everyone speaks English, you are less valuable, but if you are the one person who speaks a language no one else speaks, you become extremely valuable.
• I apply that metaphor to real estate networking.
• If I am in a room full of brokers, everyone already understands leasing, so I am less differentiated.
• If I am in a room where no one understands what I do, then I may be able to provide something valuable.
• I like working with contractors, architects, finance people, and others connected to real estate but not doing the exact same thing.
• I see networking as collaboration, where different people can benefit from different parts of the same opportunity.
• I try to pay it forward by connecting general contractors or other professionals with people who may help them, without keeping a strict scorecard.
• Those relationships often come back in useful ways, even if not immediately.
• Mentoring people is not just telling them what to do; it is encouraging them to go out, network, socialize, talk to people, and learn from events.
• As an example, I paid to meet Danny Meyer at an event, got a signed book, introduced myself, and created a connection that later became useful.
• You cannot build those kinds of connections if you only sit in the audience; sometimes you need to go to the front and introduce yourself.

SIGNET: You talked about win-win situations. One thing you have said before, and I have seen you do, is that you want your tenants, your clients, and the people you represent to win. You have said that after the lease is signed and the commission is done, that is when you start to work by helping promote them, because if they expand, they are going to call you. What do you do after the lease is signed, since they still have so much to do?

STUART ZALL:

• You can go too far and become your client’s outsourced administrative staff, so you should not go looking for trouble.
• It is still important to check in and help when there are problems.
• I try to guide clients toward good people, such as reliable liquor-license attorneys, contractors, or other professionals.
• I prefer to give clients two or three strong referrals rather than just one, so they can do their own homework and choose.
• My role is to point them toward people who are tried and true, not to make every decision for them.
• Most of the help is needed between signing the lease and opening the store.
• After opening, I cannot solve every operational problem, such as labor or marketing, but I can pick up the phone and be available.
• Signing a lease can be a multimillion-dollar commitment, so I want the tenant to succeed.
• I once helped a restaurant franchisee renegotiate terms and work through problems even though I technically represented the landlord.
• A lot of salespeople disappear after they get paid, but we want continuity, repeat business, and clients who know we tried to help.
• At the core, I see our work as solving problems.

SIGNET: I love the way your brain thinks. You are very creative. Taking a wider-angle point of view, why commercial versus residential? I love commercial, but I am curious why you chose that path.

STUART ZALL:

• Triple-net leases are a major reason.
• I had experience with residential early on, including buying condos during a period when banks wanted properties off their books.
• At one point, I had about 50 condos with a partner.
• Residential was more management-intensive, especially before today’s technology made banking and administration easier.
• I do not have the patience for residential.
• Commercial is more interesting to me because I am fascinated by businesses, retail, and how those businesses operate.
• I moved most of my residential holdings into commercial projects over time.
• In commercial, if a store does not work out for an operator with many stores, it is usually not as emotionally catastrophic as something going wrong with someone’s home.
• Residential deals involve people’s shelter and can be more personal and stressful.

SIGNET: In commercial real estate, what trends are you looking out for? We have tariffs, the internet has been affecting retail for a while, and there are other forces in the market.

STUART ZALL:

• People have probably been worrying about the future of retail and commerce since ancient times.
• Humans will always need commerce in one form or another.
• There will be AI, headwinds, and other changes, and the key is to keep pivoting.
• If you sit back and do nothing, you are going to be dead.
• COVID was a major test for restaurants, and the smart operators quickly moved into patio seating, takeout, and alcohol-to-go where allowed.
• Apparel is changing because so much can be bought online, but people still shop when traveling or looking for experiences.
• Food still has to be made somewhere, even if DoorDash or another service delivers it.
• I think ghost kitchens have mostly been a bust because people still need to see, experience, and trust a restaurant.
• Food, entertainment, and apparel will remain, but models may change, stores may get smaller, and department stores need to reinvent themselves.

SIGNET: I am loving these public markets you see everywhere. I drove up and down the coast, and places like San Luis Obispo and Santa Barbara have public markets. Here there is The Hangar and Edgewater. I love those developments because they have synergy together if they are done well. Colorado Mills may have been an example of that 15 or 20 years ago.

STUART ZALL:

• Denver is often a poster child for jumping on trends harder than other cities.
• We probably overdid the public market and food hall concept.
• Some public markets and food halls are winners, but others do not work.
• It is not enough to build a food hall and assume people will show up.
• You still have to put real thought into the concept, location, tenant mix, and execution.
• Denver Central Market and Edgewater are strong examples.
• Some others have gone out of business, which shows the model is not automatically successful.
• If the concept is done right, it can work very well.

SIGNET: Your company has come such a long way. I think it is incredible that you started as an accountant, which uses a certain type of brain, and then went into such a relationship-heavy business. What qualities did you bring from accounting into your current work?

STUART ZALL:

• I can understand financial statements, accounts receivable, and the basic mechanics of a business.
• That is valuable because many brokers do not really understand the business side.
• I understand operating properties and mortgages.
• At the same time, I outsource almost everything that is not one of my strengths.
• I use an outsourced bookkeeper and outsourced graphic arts help.
• I know I need to work within my strengths.
• Running numbers and detailed accounting work are not where I perform best now, even though the background helps.

SIGNET: I have a personal question that I think applies well to the podcast. Hiring people and managing people is really a talent. There is a reason CEOs sometimes manage managers, and managers manage individuals. How do you develop the skills needed to manage people? If you do not do that right, your business suffers and you reach dead ends.

STUART ZALL:

• Managing people is a real challenge.
• I believe there may be some force or timing that helps you find what you need when you need it.
• About a year ago, I hit a wall because sales were down and I was struggling to motivate the team.
• Our leasing meetings were not productive, and people, including me, were distracted.
• I realized I needed a coach.
• I met Steve Benoit from Crafted Consultants through my son and later sat down with him for coffee.
• Steve explained a structured process for working with people, and I decided to try it even though it was not cheap.
• He has become a meaningful part of the team.
• We now have mandatory Monday meetings, with no cell phones, where each agent reviews what they said they would do and whether they got it done.
• We also have one-on-one status updates and KPIs.
• One KPI is getting one positive Google review per month from each person, which helps the company cast a wider net.
• We now track deals by quarter instead of just doing deals without tracking them.
• The coaching and structure have been important to our growth.

SIGNET: I asked that because I am managing a construction project in Pebble Beach right now, and you manage subs and contractors. Many people I have interviewed say their success is due to the people they hire. A lot of it is finding the right people with drive, quality, and pride in workmanship. It is hard to find those people because everyone wants to present themselves that way, but not everyone is that person.

STUART ZALL:

• A lot of hiring is trial and error.
• We now have an onboarding sheet and an interview sheet that lists what we are looking for.
• You can also overanalyze hiring.
• Right now, we are at capacity and do not have room for more people unless we build up or expand.
• I am willing to take a chance on a lot of people.
• Many people in the industry probably got their start with me.
• In the past, I may not have had the tools to mentor and coach people properly, so I probably lost some talented people.
• If you love what you do, it is not work.
• I work in some form seven days a week because I am always available and always thinking about how brokers can be more productive.
• I do not only think about their productivity in terms of my own income; I want them to succeed.
• People are giving me their time and part of their lives, especially when they are young.
• Even if someone only stays with me for a year, two years, or three years, I want them to leave with skills that help them succeed elsewhere.
• At Arthur Andersen, many good accountants eventually went to work for clients, and the firm saw that as creating a friend at that company.
• I see former employees similarly: if they leave and succeed, the relationship may help both of us later.
• I do not expect anyone to give me their entire life, but I want their time with us to be productive.

SIGNET: You said you are at capacity. Where do you want to go from here? What is really good now, and what do you want your legacy to be? That is a two-for-one question, but they are different intentions.

STUART ZALL:

• I am having a lot of fun and enjoying what is happening.
• We are working on projects with the Orlando Magic, which has been very cool.
• I have partners outside my company, including Dan Nelson and Neil Berkowitz, who help expand our bandwidth.
• I like the arena and sports district space and see it as an area for future growth.
• Many arenas are moving back into central business districts, which creates opportunities around live music, sports, restaurants, retail, and event traffic.
• Time is precious for people, so projects that combine sports, entertainment, food, and retail can create strong commercial environments.
• We do a lot of leasing downtown, in RiNo, and in Cherry Creek, and I want us to continue being a leader in those markets.
• Downtown Denver still has a lot of opportunity, despite lingering perceptions from COVID, crime, and 16th Street Mall disruption.
• When you lease space and bring in a store or restaurant, you can change a neighborhood for better or worse.
• A lease such as Mendocino Farms in Cherry Creek changes the everyday experience of a neighborhood by adding a useful commerce point.
• My legacy is not about ego; it is about improving the city or the commercial playground I work in.
• Early in my career, I was focused on getting paid, but over time I came to care more about the type of tenant and whether they improve the neighborhood.
• A street full of banks may pay rent, but it does not create the same neighborhood energy as coffee shops, restaurants, and places to shop.
• The goal is to help create neighborhoods where people feel commerce, culture, and activity.

SIGNET: The tenants really give a neighborhood its feel — the restaurants, bars, and different spots.

STUART ZALL:

• The right tenant mix creates a good environment.
• When neighborhoods improve through thoughtful retail and restaurant leasing, everyone benefits.

SIGNET: I was listening to another interview you did, and you said 2010 was a hard year after the Great Recession. How did you survive that, and what advice would you give to other people in future recessions?

STUART ZALL:

• Praying is real.
• If you have your health, you should not let your stock account or money account consume you.
• Do not listen to all the background noise.
• I do not watch much news because it can become distracting and negative.
• In our business, the recession showed up late because commissions often take six months to a year to come in.
• 2009 was still fine, but in 2010 nothing was coming in.
• I tried to get exposure by writing articles and appearing in trade magazines.
• A partner and I wrote an article about repositioning malls, and someone from China called asking whether we could do that work there.
• Our default answer was yes, even when we had to figure out how to execute afterward.
• We needed demographic and psychographic data in China, which was difficult to get, but a colleague connected us with someone who did data work in Asia and had gone to the University of Denver.
• We partnered with him, created a merchandising plan, and the client then asked whether we could lease the project.
• The project was in Xi’an, which was connected to the Terracotta Warriors and the Silk Road.
• I used my U.S. relationships with brands to find the right international contacts and started leasing the project.
• I worked between China and Denver, using a Wi-Fi phone line with a Denver number so clients did not know I was overseas.
• The project was ultimately scrapped because housing became more lucrative for the developer, but we had been paid in advance.
• By the time that project ended, the U.S. economy had improved.
• That experience helped us survive and led to work in places such as Puerto Rico and Hawaii.

SIGNET: I do residential in Europe, but it is interesting because that is another market. Even here, RiNo and Cherry Creek feel like different markets because the tenants are different. You deal with a lot of high-end, popular, and trendy tenants.

STUART ZALL:

• I would not call most of our work true luxury, like Gucci or Hermès, because Denver is not a very luxury-heavy market.
• We work more with upper-moderate and emerging brands.
• That includes brands like Lululemon, North Face, Birkenstock, and other better brands.
• I also love working with immigrants because many of them are fearless.
• Some people create businesses because they may not have the same access to conventional jobs, and they are willing to take chances.
• Those chances sometimes turn into great businesses.
• I have worked with clients from one store to very large store counts, and it is rewarding to watch a brand grow.
• It is interesting and fun to see a person or brand evolve from one location into something much larger.

SIGNET: That is part of their story. I think you did that with H&M, where you had the first one in Colorado.

STUART ZALL:

• We did the first H&M in Colorado.
• H&M has withstood the stress of downtown.
• We also brought Uniqlo to downtown Denver, although it unfortunately closed during COVID.
• Forever 21 was another example.
• No brand lasts forever, but if you can get 15 years or more out of a brand, that can still be meaningful.

SIGNET: Thinking about the 16th Street Mall, coming from Los Angeles, what is the secret? In LA, it is very hard to turn around cities, maybe because of bureaucracy or something else. Here, you have the Downtown Denver Partnership and developers working with political bodies. What is the secret to turning around a place like that?

STUART ZALL:

• Comparing Los Angeles and Denver is difficult because Los Angeles County is massive and harder to move.
• Denver is smaller and more nimble.
• Denver has a lot of downtown history.
• Union Station was critical to Denver’s growth and connects directly to the 16th Street Mall.
• The redevelopment of Union Station was a beautiful project.
• Historically, the railroad helped Denver grow because the rail route came through Denver instead of elsewhere.
• Larimer Street and downtown Denver developed around rail traffic, travelers, and the commerce they needed.
• Denver has historic assets, including Larimer Square and older buildings, that give it a character beyond steel, brick, and glass.
• The city has serious struggles, including high minimum wages and permitting timelines, but there are good people who believe in downtown.
• With the 16th Street Mall work completed or nearing completion, I expect to see more positive activity in the next couple of years.

SIGNET: It is a great area. I lived near Union Station and would jog through 16th Street. That area has completely changed, with Whole Foods, the train, and a safer environment.

STUART ZALL:

• During COVID, Denver dropped its guard and got hit on multiple levels.
• The trend is now improving.
• Some older office buildings may be converted to residential if conversion is feasible.
• There is still a need for housing, even if apartment rents are currently soft.
• I expect the need for apartments to continue as the city grows.

SIGNET: Prices have come up a lot since then too.

STUART ZALL:

• Prices have come up, and interest rates are another obstacle.
• Every generation has something that gets in the way.
• I often hear people say something is too expensive and that they will wait for prices to come down.
• In the long run, saving a relatively small amount on price may matter less when amortized over decades.

SIGNET: I once heard that it is not timing the market, it is time in the market. It is the same principle.

STUART ZALL:

• Jordan Perlmutter once told me that some real estate projects succeed because of timing.
• Even if you do not time it perfectly, real estate is a long game.
• It is like golf: people focus on individual shots, but real estate has waves.
• There are periods when you can make a lot of money quickly, but overall you need a long-term view.
• If you take the long view, you have a better chance of being successful.

SIGNET: It seems like that is also what you do with your investments. Originally, the name of this podcast was “The Long-Term Real Estate Investor,” because thinking long term removes some of the pressure around things like IRR calculations. If you have a 100-year business plan, it changes the mentality. I feel that in your investing and leasing, it is always long term, and there are also a lot of transaction costs in trying to flip.

STUART ZALL:

• In commercial real estate, long-term thinking is important.
• Because I did not come from a real estate family, I had to start by planting seeds myself.
• It would have been nice to walk into an existing forest, but I had to begin building it over time.

SIGNET: It is tricky too, because when you are starting out, how are you going to buy something without financing? A lot of times the long-term plan is to get rid of financing so you have more stability and the bumps in the road are not as dramatic. Let me ask you the wrap-up questions. What was the number-one deal that changed your career, taught you the most, or had the most impact on you?

STUART ZALL:

• The most important turning point was not really a deal; it was going to work for the Taubman Company.
• That job was transformational because it taught me how to lease not just to fill space, but to create neighborhoods.
• When I was about 27, I met a friend at a restaurant called Fresh Choice, saw a huge line, and asked about the owner.
• I had just taken a job involving two malls, and within about 30 days I made two deals with that restaurant operator.
• That happened because I asked a question when the opportunity was right in front of me.
• Sometimes you are on the one-yard line and only need to ask the question.
• Over my career, I did several deals with that operator, so that became an important relationship and an important early lesson.

SIGNET: What are your three key daily habits that have made you successful? I am always curious what time people wake up, whether they meditate, read a certain newspaper, or spend family time.

STUART ZALL:

• I do not read a newspaper.
• I get up early, usually around five.
• My most productive time is between about five and eight in the morning.
• I try to filter out negative noise because there is always a lot of it.
• I would tell people not to listen to all the noise that is designed to stop them.
• I try to stay positive.
• I meditate for about ten minutes almost every day.
• I use paper and pencil to write things down, even with all the CRMs and technology available.
• I try to be thankful.
• I remind myself that there are many opportunities available and that people do not need to stay stuck.
• I try to wake up with a smile and a mindset of taking on the world, even if some days are harder by the end.

SIGNET: Final question: what would you say to a young individual who wanted to start in the real estate business? They might not know whether they want to be a broker, investor, or what segment to focus on. How would they find their path?

STUART ZALL:

• I would tell them not to be afraid.
• If they need to live at their parents’ house or drive Uber while getting started, they should do what they need to do.
• They should absorb as much information as possible.
• There is so much information available now that they do not even have to subscribe to everything to learn.
• They should become an expert at something and become the go-to person in that area.
• They should not try to do everything.
• They should find one area and try to be the best at it.
• They need passion for the business.
• If they think of it only as a job, they are in the wrong business.
• It is always a good time to get into real estate, and bad times can actually be the best times to start.

SIGNET: Stuart, thank you so much. We could do round two another time. Thank you for joining the podcast, and hopefully we will grab dinner soon.

STUART ZALL:

• I hope so.

INTERVIEWER — SPEAKER UNCERTAIN: Bonus question: what are your thoughts about the new Burnham Yard deal and what it is going to do for downtown?

STUART ZALL:

• I do not know exactly how it will affect downtown, but I think it will be very positive for Burnham Yard.
• Burnham Yard feels like one of the last major pieces of Denver that has not really been developed.
• A key question is what happens to the area where the stadium is now if activity shifts.
• I think the project will not hurt downtown because people will still come downtown, and the distance may not be dramatically different.
• Large investments, such as a multibillion-dollar stadium, create a multiplier effect that benefits many people.
• I do worry about displacement, especially for people who currently live nearby and may have cheaper rent.
• Growth can be positive, but people still need places to live.
• Denver has done some work around affordable housing, but development can still affect neighborhoods.
• I think developers and stakeholders need to think carefully about who is affected.
• Overall, I think the project is good, but I hope there is thoughtful attention to housing and displacement.