CIRE : WITH NO SHORTAGE OF DEALS IN YOUR CAREER , DOES A PROJECT OR TRANSACTION STAND OUT TO YOU ?
LARSEN : In 1996 , we bought a monumental failure of a 109,000-sf shopping center in a great location in Tucson . It was a bank REO that was 50 percent vacant . Don Baker and I had barely survived the recession of 1989 to 1994 . We were used to buying small REO cast-off retail and office buildings at $ 20- $ 35 / sf . ( Buildings really sold at those prices in the early ‘ 90s . Our record low was a 22,000-sf medical office building — we paid $ 12 / sf for it !) This one was priced at over $ 100 / sf . Some tenants hadn ’ t paid rent for two years . The REO bank owner had no tenant files . Loan brokers were quoting our financing at an 8 percent interest rate .
I almost chickened out the day before the drop-dead date — too risky , too expensive . Don was a strong go , and Don prevailed . We bought the shopping center , and we still own The Plaza at Williams Centre . We refi it every 10 years . The original 8 percent loan became a 6 percent loan and then a 4 percent loan . Now , 25 years later , The Plaza is worth almost three times what we paid for it .
Not that you expected me to tell you about one of our mistakes .
CIRE : ARIZONA IS ONE OF THE HOTTEST MARKETS IN THE COUNTRY . ( APOLOGIES FOR THE BAD , IF APPROPRIATE , PUN .) WHAT HAS HELPED YOUR STATE BECOME SUCH AN APPEALING LOCATION FOR COMMERCIAL REAL ESTATE ?
LARSEN : California . We know a lot of Californians who say , “ Gee , I ’ m enjoying the crime and high taxes in California , but it ’ s just not hot enough !” So , despite the tragedy of an occasional dog that self-combusts on a Scottsdale street in July , Arizona and similar Sun Belt states have benefited from the dysfunction of California .
Also , Arizona has relatively low housing costs , unobtrusive regulation , right to work , and a young workforce . And Arizona is uncrowded by coastal standards . When I got out of the Army in 1969 and moved here from Chicago , the entire population in Arizona was about equal to the population of just the South Side of Chicago ! I ’ ve never left Arizona . When I make a real estate mistake here , I just wait a few years .
CIRE : HOW HAS THE CCIM DESIGNATION PLAYED A ROLE IN YOUR STORIED CAREER ? COULD YOU GUESS HOW DIFFERENT THINGS WOULD ’ VE BEEN WITHOUT IT ?
LARSEN : It didn ’ t just play a role — it was the key to my success . With the CCIM education , I had the analytic skills and the confidence to uncover deals that others overlooked . Without the CCIM education and really great employees and partners , my life ’ s work in CRE would have been different and not nearly so rewarding right now . I would probably be working in a red vest that says , “ May I help you ?”
CIRE : FINALLY , WHAT ADVICE DO YOU HAVE FOR CCIMS WHO ARE LOOKING FOR LONG , SUCCESSFUL CAREERS IN CRE ? WHAT ’ S BEEN THE BIGGEST CONTRIBU- TOR TO YOUR LONGEVITY ?
LARSEN : I think success comes from a combination of strong business relationships , industry knowledge , and work ethic . The only one of these that can be partially bought is knowledge . Buy it from CCIM Institute . Also , keep this success thing in perspective . Remember : Money can ’ t buy happiness , but it can buy you a yacht big enough to pull up right next to it .
Nicholas Leider
Senior content editor of Commercial Investment Real Estate Contact him at nleider @ ccim . com .
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CIREMAGAZINE . COM COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE 19