Commercial Jackpot

A residential broker revamps a shopping center without giving up his day job.

March 1, 2000

Investment strategy: Found a retail property that was underperforming and turned it around by changing its tenant mix.
The deal: Westfield Square, Lake City, Fla.
The price: $825,000
Additional investment: $200,000 for leasehold improvements, rent concessions
Turnaround time: 24 months

Sometimes it all comes down to timing. In the early 1990s, Charlie Sparks, a salesperson for the Daniel Crapps Agency in Lake City, Fla., was looking for some outside investment opportunities.

Like many practitioners, he had dabbled in real estate investing in the past: At one time he owned a half dozen rental properties. “It was the typical path most people in the real estate business follow--you buy a few houses or fourplexes and sit back and collect the rent,” he says.

That strategy, however, became “more hassle than it was worth” because of changes in the tax laws.

Besides, he felt ready to take on a more complicated and risky project.

One day he and a partner heard about a shopping center, Interstate Commerce Factory Outlet, on Interstate 75 just south of the city; it had been tangled up in the S&L debacle and was now coming up for auction.

“There were several buildings, with a total of 62,000 square feet of retail space and about 30 acres of land,” he says. “It was nice looking. The buildings had been put up in the eighties and were brick.”

The downside was that the center was about 80 percent vacant and located in a part of town still reeling from the late 1980s collapse of the real estate market.

Still, Sparks saw an opportunity, at least if the price was right. “We offered $825,000--an incredibly low price for that property--and the owners accepted.”

What followed was the kind of turnaround that’s part skill and part luck.

“We immediately recognized that the outlet concept didn’t work,” says Sparks. “We decided to give it more of a local identity and brought in some mom-and-pop stores, a TCBY Yogurt, a fitness center, and some other non-outlet-type stores.”

The luck came in the form of a new regional hospital that was constructed two blocks from Sparks’ investment.

“The hospital took 11,000 square feet of our space for an ancillary medical office,” he says. “It became our largest tenant.”

Today the center--renamed Westfield Square--is about half retail and half office space, with an overall occupancy rate of 85 percent.

Meanwhile, Sparks and his partner have tried their hand at several other projects. “Our goal is to assemble a portfolio of commercial properties we can manage on a part-time basis,” Sparks says.

The key word is part-time. Sparks and his partner have no offices other than their home offices, no staff, and no formal business hours. Sparks remains a full-time salesperson for Daniel Crapps, where his 1999 volume was $12 million.

Becoming a developer and landlord has had a positive effect on his day job. “For most of my career, I’ve been a residential guy,” he says. “But developing projects has given me a greater comfort level with customers who want to buy or sell commercial properties. I now know how commercial works.”

Robert Sharoff is an architectural writer for The New York Times, Washington Post, Chicago Tribune, and Chicago Magazine. With photographer William Zbaren, he has produced books highlighting the architecture of Detroit and St. Louis. He is a former senior editor with REALTOR® Magazine.

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