Essays by John McNellis

A Vaccine for Retail?

Retail has the virus. Just as with people, different retailers are reacting to this infection very differently. Ailing merchants with comorbidities are suffering — or dying — while those without long-term illnesses are asymptomatic, even healthy. Excess capacity — too many stores — has been American…

Plagued Retail and the View from the Trenches

I have two options that are non-negotiable. I’m going bankrupt (chapter 7). COVID happened, and I cannot survive. I’d rather not go through bankruptcy, because it ruins my credit, but if I have no choice, I won’t think twice. The second option is to let you keep my deposit and take what I have in the…

The Post Plague Office

Real Estate in the Plague Year Last week, Mark Zuckerberg said he believes that half of Facebook’s employees will be working from home over the next 10 years. To that point, Facebook released the results of an internal employee poll: 50 percent plus want to get back to the office, while 40 percent would…

Death of the Elevator

Real Estate in the Plague Year Without the elevator…there could be no downtown skyscrapers or residential high-rises, and city life as we know it would be impossible…the elevator’s role in American history has been no less profound or transformative than that of the automobile…“If we didn’t have elevators…we…

Working the Recession

Recession: a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. GDP dropped 4.8 percent in the first quarter of this year—the biggest contraction since 2008—a fall that will resemble an infant’s…

Solving our Housing Crisis One Garage at a Time

To shelter-in-office (yes, mostly alone), I now walk through a couple miles’ worth of pleasant, leafy neighborhoods in Atherton, Menlo Park and Palo Alto. These post-war neighborhoods vary a bit in quality and density but have common attributes: Their prices are ridiculous and the houses all have…

Our Retail Marshall Plan

Because we’ve been in the neighborhood shopping center business for decades, not only our tenants but also our competitors have begun asking us what, if anything, we’re going to do to help our small businesses in this plague year. As of today, March 17th, all of our tenants in the greater…

Your Real Estate Empire-Build it or Buy it?

What’s your strategy in allocating capital between buying finished projects and doing development deals, what percentage of each do you buy, someone asked me at a ULI conference. Flustered, I had to admit that not only didn’t we have a strategy, but we’d also given it so little thought…

Understating Your Net Worth

If you’re in real estate, if you’re developing or simply investing in property, you’re in the business of borrowing money. And if you’re a serial borrower, you have a chore to do every January: You must prepare your personal financial statement for your bankers. Unlike the reporting…

How to Keep Friends and Influence No One

“80 percent of friendship is kindness.” We all want friends. We all want to be liked. Most of us wish we were better liked. Over the holidays, I finally read a book about making friends that I’d been putting off for fifty years: How to Win Friends and Influence People by Dale Carnegie.…

Meals on Broken Wheels

What do DoorDash, GrubHub, Postmates and Uber Eats have in common with Lassie? Nothing. They’re dogs; Lassie’s a superstar. What do they have in common with each other? Everything. They take the world’s second oldest profession—Babylonia had delivery boys—sprinkle it with…

Is Tesla a Climate Change Bystander?

(EDITOR’S NOTE: While The Registry does not usually weigh into making changes to opinion articles, it is worth pointing out that some statements below should be qualified. Coal was the source of around 27 percent of electricity generated in the United States in 2018, according to U.S. Energy Information…

Is it a Wee Downturn?

After all, paraphrasing that famous philosopher, Yogi Berra: “Ninety percent of a recession is half mental.” It is a well-established law of cartoon physics that characters may walk on air as long they are unaware of doing so. Once Bugs Bunny realizes he’s airborne, however, gravity…

Oh, Say Can U.C.

Last week the city of Berkeley sued the University of California over its proposed redevelopment of the worn-out Upper Hearst parking garage at the campus’s northeast corner, citing the usual suspect: an inadequate environmental impact report (EIR). This story—development gets sued over…

Game of Phones

The International Council of Shopping Centers, far better known as the ICSC, gathers this weekend for its annual meeting in Las Vegas. Retail’s leading trade organization, the ICSC counts as members the tenants, developers, contractors and brokers who have built almost every shopping center in…

Retail’s Existential Threat is Private Equity

A “bust out” is a fraud tactic, commonly used in the organized crime world, wherein a business’ assets and lines of credit are exploited and exhausted to the point of bankruptcy. Wikipedia Bleeding badly, Debenhams, a 200 year old British department store chain, died last week. The…

Whole Foods’ Existential Threat?

“Amazon’s plunge into the $800 billion US grocery industry posed an existential threat to rivals.” CNN August 2018 A couple questions remained in the wake of Whole Foods’ announcement last week that it was dropping prices on over five hundred items by twenty percent. Is this…

Death by Power Point

With speaking season just around the corner, with the conferences, conventions and even lowly breakfast panels backing up like rusting jets at O’Hare, the National Power Point Association (NPPA) is out in full force, urging its 27,000,000 members to whip out their presentations and fire away. …

WeWorking a New Angle

With major announcements almost daily, WeWork is stealing so many headlines it’s annoying the president. The latest is its name-change to WeCompany, the old name being simply too restrictive for a company bent on global domination. Among its new divisions are WeLive, WeGrow and even WeBank is…

Winter is Coming

As of last Friday, the S&P 500 was down 2.33 percent for the year. Like a dead rat in the basement, everyone can smell the next recession, everyone knows it’s coming, but no one knows when. Nobody. The clever pundits give its commencement the same wide berth they would accord that moldering…

Mattress Firm’s Moral Bankruptcy

Mattress Firm, the nation’s largest mattress retailer, filed Chapter 11 bankruptcy last month. Why did it go bankrupt? Simple. The company had far more stores, more than 3,600 nationwide at its 2016 peak, than could ever possibly be profitable. The intriguing question is how did MF end up with…

Amazon’s Clicking into Bricks

In May 2017, The Real Deal ran a cover story entitled, “Retail is F*cked.” While snarkier than its mainstream competitors, it encapsulated the prevailing sentiment of the day, that all that remained for traditional bricks & mortar retail was for the doctor to call its time of death,…

A Broken Compass?

Does outspending your competition buy you the best talent? Of course. Does it guarantee you the World Series championship? Not so much. Just ask last year’s Los Angeles Dodgers. Compass Inc., a residential brokerage company that parachuted onto the scene in New York City in 2012, swiped the spend-it-all…

Could California Flame Out?

The phone rang early yesterday. “Well, our center’s still standing,” my partner said. “Whoa.” “The fire’s only a couple blocks from us, the whole town of Lakeport’s been evacuated. I think we’ll be ok, but it’s out of control.” That fire…

Uber’s Johnny Cab Future

While Uber isn’t exactly driving straight to the bank, it may get there yet. The company has ripped through $10 billion to date, but its latest report (Q1 2018) is sufficiently rosy for investors to buy into a $62 billion valuation. How rosy? Uber is losing lots of money, but only half as much…

Screwed: Brokers Tell-All

“Business is the polar opposite of a high school dance—you can always find someone to screw you.” “Dear John: I think you should write about how everyone is a stand-up guy until money’s on the table. Over the past decade, I’ve been screwed by countless so-called stand-up…

Many Happier Returns

Solving E-Commerce’s Challenge to Traditional Retail Comes in Small Packages Before the Wall Street Journal pontificates again about retail’s demise, about all those tumbling bricks, it might do well to consider e-commerce’s Achilles high-heel: returns. 40 percent of all soft goods—shoes,…

Does WeWork at All?

Company discloses $1 billion losses in bond offering Wall Street’s biggest houses just hawked $702 million in junk bonds for WeWork. The junk pays 7.875 percent interest and is due in 7 years. With 10-year treasuries hovering almost a full 5 percent less, this offering sounded better to the bond-buying…

Seeing the Forest for the Trees

If you are an entrepreneur, you are an optimist. You have to be. And, Pollyanna aside, it is no simple trick remaining optimistic, and it grows harder by the day, particularly if you focus on the daily news instead of much longer-term events, if you focus on history’s weather rather than its climate.…

Density and California’s Senate Bill 827

Give Scott Weiner a medal. While not a complete solution, the state senator’s proposed bill, SB 827, directly addresses California’s two most pressing issues—our housing shortage and traffic woes—by densifying housing near transit stops. In broad brush, SB 827 would allow residential…

Is the 1031 Exchange Panacea or Placebo?

Upon selling a supermarket last week, we deposited our proceeds into a 1031 exchange account. Call this maneuver the triumph of hope over experience, because we have had precious little luck exchanging properties over the past ten years, pulling off just one trade from among a half dozen attempted.…

The Hell of Regulatory Interpretation

One truth that bears learning is this: News is very seldom as good—or as bad—as it first appears. Even when it comes out of Washington, D.C. If you exult over making a fistful of money, you will soon recall that half goes to the government; when you lose your shirt, your accountant…

Investing in Accidental Assets

Casting about in the cluttered basement the night before our firm’s annual Christmas lunch, I happened across a couple bottles of wine, survivors from a purchase made more than 30 years ago. The wine was a French Bordeaux from the fabled harvest of 1982, more specifically, a Grand Vin de Leoville…

Murder on the Retail Express?

Putting the black in Black Friday, the Wall Street Journal found almost no pulse in traditional retail last Friday, declaring that shoppers were instead flocking to the malls within their phones. That no one at the Journal trued this conclusion against its own article (same edition) about UPS squeezing…

California’s Housing Crisis is a High Class Problem

There are problems and then there are high-class problems. Being unemployed is a problem. Getting hit with a huge tax bill is a high-class problem. Not qualifying for food stamps is a problem while discovering your favorite bistro is fully booked is a high-class problem. Being chased by debt collectors…

Housing Crisis Band-Aids

Governor Jerry Brown just signed fifteen affordable-housing bills into law. A few might do a little good. Two senate bills will raise a bit of money. Senate Bill 2 will charge you a recording fee of up to $225 on any transaction not already subject to a transfer tax (e.g. a mortgage refinance) and Senate…

Leaving Retail

I received an invitation to attend a cocktail party in Los Angeles at next week’s International Council of Shopping Center (ICSC) meeting. In declining, I explained that we would not be attending the ICSC, our first absence in decades. Somewhat forlornly, our host replied he was hearing…

Hollowing out the Museum

“A full-fledged housing crisis has gripped California…” New York Times 17 July 2017 Yes, our housing crisis is so critical those envious bastards at the Times are proclaiming it on their front page. So critical that a local politician here is more likely to come out against world…

Marching Into Madness?

“Cocaine’s for horses, it ain’t for men They say it’ll kill you, but they won’t say when” Cocaine Blues When it comes to business cycles, predicting when is the great temptation, one that pundits—for fear of being spun off the publicity carousel—seldom…

There's No Place Like Home

If idle hands are the Devil’s work shop—they are—idle money is surely his pied-a-terre. When left with little to do, small boys play with matches, older ones play with hearts and truly old boys start wars. Money is no different. When ignored, when left alone to pile up, when shackled…

Groceries Falling Through the Net?

In hindsight, yesterday’s common wisdom is often so wrong we wonder how we ever thought it true. In fact, some of us—the clever—occasionally deny having embraced discarded wisdom. We say we knew all along that Trump would win or that butter was good or that flossing was a waste of…

So This is Christmas

We all need to believe.Whether hard-wired into our genome or learned from our first breath, this universal hunger manifests itself in different ways, but at heart it’s always the same: we believe in something incapable of proof, sometimes going all-in on beliefs that border on the absurd. Scratch…

Is Retail’s Middle Earth Flat?

We own and develop suburban neighborhood shopping centers within about a two-hour drive of San Francisco. We both build new projects and manage a portfolio of centers that we have developed over the past thirty three years. We thus have leasing opportunities almost weekly. Unfortunately, our opportunity…

Outward Bound, Now More Than Ever

Thanksgiving at home is the traditional time and place for contemplating not only your good fortune—and sharing a bit of it—but your kindness in general. Worthy thoughts for a wonderful day, but, unlike checking your home furnace, ones that need not occur just annually.Last summer, I went…

The “NTM”

Making it in Real Estate (Part Sixteen): The “NTM” Properly constructed, primers should be sequenced in terms of importance, the first chapter containing the writer’s best advice, the next, his second best and so on. Turning this time-honored rule upside down, we arrive at my best…

McNellis on Authoring His Book

Real Estate Entrepreneur, Founder and Author of “MAKING IT IN REAL ESTATE: Starting as a Developer” John McNellis is the founder of McNellis Partners, which specializes in developing supermarket-anchored shopping centers. His partnership has grown on its strategy of developing only about…

No Partners, No Problems

Making it in Real Estate (Part Fifteen): No Partners, No Problems In the beginning, we all need financial partners. The wealthy may use their families and the rest of us our friends, but we start with someone else’s money. As a novice, you have financial partners by necessity. Should you have…

Trumped Real Estate Industry

I have been a real estate developer and landlord since the early 80’s. Even then, Donald Trump had a reputation within our industry as an empty suit, a blowhard with a knack for front-page publicity. Even then, he was giving us a black eye.Already the second-most reviled occupation in the country…

Rent Control Behind the Curtains

Rent control measures are sweeping the San Francisco Bay Area. For good reason. To pay no more than 25 percent of your pretax income—the yardstick for apartment affordability—you must earn $170,000 a year for an average two bedroom apartment in Mountain View. With even the techies doubling…

The Back of a Napkin

Making it in Real Estate (Part Fourteen): The Back of a Napkin If you begin analyzing sales packages, you will soon encounter properties with numbers so flat, returns so anemic and projections of future values so clownishly optimistic that you may despair of ever finding a decent deal.Don’t. A…

Selling vs. Holding

Making it in Real Estate (Part Twelve): Selling vs. Holding Some decisions in life are easier than others. Deciding whether you want fries with that is a piece of cake. Deciding to tell a remorseful friend the truth about his new tattoo is considerably harder. Among the hardest in real estate is determining…

A Little Help From my Friends

Making it in Real Estate (Part Twelve): Selling vs. Holding Some decisions in life are easier than others. Deciding whether you want fries with that is a piece of cake. Deciding to tell a remorseful friend the truth about his new tattoo is considerably harder. Among the hardest in real estate is determining…

Buying it Right

Making it in Real Estate (Part Eleven): Buying it Right In Anna Karenina, Tolstoy begins: “All happy families are alike: Each unhappy family is unhappy in its own way.” This is true of real estate as well; all happy deals are alike—they start with a motivated seller. Young developers…

For the Class of 2016

It appears my invitation to address Stanford’s graduating class was rejected by my spam filter. It also blocked commencement speech invitations from an underwater welding school and Antelope Valley Community College. Happily, my filter—God’s gift to the internet—has left me free…

Airbnb’s Air Quality Control

(This is a follow-up to last month’s article, Airbnb: Hoods in Hoodies) Of the sharing companies, Airbnb may be the best. Uber works well for its riders, better for itself and terribly for its drivers. The company recently announced a compensation plan for “power drivers.” Refreshingly…

Airbnb’s Hoods in Hoodies

In the immortal words of Holden Caulfield, it’s time to cut the crap. Despite its airy prose, Airbnb is not about “belonging anywhere.” It is not about hipsters having someone crash on their couch for beer money or granny letting out her sewing room to traveling nuns. No. Airbnb and…

Sharing Time in Hell

You can be in real estate and still possibly do some good in the world. The easy way is to build low-income housing or rehab blighted neighborhoods. But to really do the Lord’s work, consider instead preaching against the perils of owning a time-share. This is not easy. Like a street-corner fundamentalist…

Decked by City Hall?

Making it in Real Estate (Part Ten): Decked by City Hall? “If you can’t eat their food, drink their booze, screw their women, take their money and then vote against them you’ve got no business being up here.” The late Jesse Unruh’s admonishment to his brethren in the California…

The Politics of it All

Making it in Real Estate (Part Nine): The Politics of it All Rents and occupancy rates are tumbling today in North Dakota because shale oil is mud in a $35 dollar a barrel world. Once the hottest real estate market in America, a Northerly is now blowing across the prairies, and landlords are scarcely…

Your New Year’s Obituary

If you haven’t made a New Year’s resolution yet, you might consider another way of possibly improving yourself. Rather than resolving to lose ten pounds, drink less or read a new book every week, you might take the long view and ponder your own obituary. It’s been said before, but…

Thanks for Giving?

Started three years ago, “Giving Tuesday” is becoming to the non-profit world what Black Friday is to retail. Set five days after Thanksgiving—this year December 1st—Giving Tuesday is opening day for the charitable season: The harvest is in, taxes set aside and the Christmas…

The Stadium Tab

Winning power through public largesse was old when the Sphinx arose from the bulrushes. In 100 AD, the Roman poet Juvenal satirized the ruling elite’s strategy of buying off the proletariat, labeling it “panem et circenses”, bread and games. Give the mob their wheat and gladiators…

Autographing the Deal

Making it in Real Estate (Part Eight): Autographing the Deal It seems we all lie. Depending on which lying study you choose to believe, we tell somewhere between a couple and a couple hundred lies a day. The lower number is found among monks who have taken a vow of silence while the higher counts days…

Back to School

Real Estate Jargon Demystified Whether a lawyer, architect, engineer or broker, a young professional in real estate often hears expressions—some slang, others simply arcane—that neither the finest education nor the thickest dictionary is likely to illuminate. And the professional must solemnly…

Flatten the Code

When even the crooked developers think the polls-leader gives real estate a bad name, you know Washington has problems. A short-term phenomenon—the ever braying Donald Trump will soon enough become a quaint footnote—yet his surprisingly successful candidacy has already served its purpose,…

WeWork Until WeDon’t

When was irrational exuberance upgraded to the first class lounge? When did delusional insanity take over the valuations of start-up companies? For WeWork Companies, Inc., the old-fashioned executive suites concept reimagined as the coolest place to have your office ever, it happened on June 24th when…

In Praise of Inefficiency

A lender on one of our projects wrote last week, demanding we post an $800,000 letter of credit to further secure its loan because the credit rating of our principal tenant—Safeway—had fallen to near junk bond status. This ratings plunge happened the Wall Street way: A private equity firm,…

Big City Dreaming

Mixed Use, Mixed Results It’s the “Thou Shall Not” that dooms religion in America. If ecclesiasticals would content themselves with the positive, with instructing us on what to do—to be compassionate, charitable, do good works and so on—rather than forbidding behavior as…

Let Them Commute

“The rich are different from you and me.” F. Scott Fitzgerald Rich cities are different, too, but—like rich people—they have their own seemingly insoluble problems. It’s just that their problems are different. At first blush, less fortunate municipalities would beg for…

Fickle Shades of Green

Making it in Real Estate (Part Seven): Fickle Shades of Green “Friendship is constant in all other things save in the office and affairs of love.” Shakespeare had it right. And money is less constant than love. Even if your project is profitable, the money that loved you when you first put…

Size Matters

Making it in Real Estate (Part Six): Size Matters In the opening scene of Rosencrantz and Guildenstern are Dead, Rosencrantz correctly calls heads ninety-two times in a row in a coin-tossing game. While such luck is theoretically possible, Stoppard’s play is considered absurdist for an excellent…

Bromancing the Deal

Making it in Real Estate (Part Five): Bromancing the Deal “I always act as our broker when we buy properties. That way I take the commission we save as my fee and it doesn’t cost my investors anything.” Except seeing good deals. In a dead heat with drunk-texting, this is among the…

The Bears of Crowdfunding

You don’t remember the name Timothy Treadwell, but you remember him. He was the free spirit who went to live among the grizzly bears in Alaska every summer for thirteen years. Despite countless warnings, Treadwell frolicked with these massive omnivores while foregoing precautions even the mildly…

Join the Crowd?

Revisiting Crowd Funding and Its Opportunities The crowd funded real estate (CFRE) industry is now a rush-hour subway car. Almost too numerous to list, the competitors in this nascent business appear as alike as bees in a hive. This won’t, however, be a long-term problem; just as there were over…

Specialize or Die

Making it in Real Estate Part Four: Specialize or Die A recent college graduate wrote, asking for advice. Mentioning how thrilled he was to be accepted into Marcus & Millichap’s training program, he wanted to know which area he should specialize in: land, apartments or industrial. I told him…

Liquid Assets

I always wanted to make the front page of the Wall Street Journal…until I did. Today’s WSJ shows our Healdsburg shopping center doing an excellent imitation of McCovey Cove during a Giants game, replete with canoers and kayakers. This picturesque scene of course made the happy-talk news…

Disrupting Charity?

“The poor you will always have with you, but you will not always have me.”  Matthew 26:11 Once upon a time I thought the difference between philanthropy and charity was that between the Episcopalians and Catholics:  zeros on the balance sheet. A million dollar bequest was philanthropy,…

When it’s Good for Everybody

The magnificent PBS series, The Roosevelts, aired about the same time as the release of yet another Federal Reserve report. Considered together, the two prove one thing: Franklin Roosevelt couldn’t get elected hall monitor today. FDR’s New Deal is impossibly left in today’s world of…

Playing Small Ball

Making it in Real Estate Part Three: Playing Small Ball “I hit big or I miss big. I like to live as big as I can.” A winning formula for the greatest baseball player ever, but unless you’re determined to become real estate’s Babe Ruth, you might consider following in someone…

Goodbye Yellow Cab Road

If you’re a nostalgia fan, nail a selfie in front of a Yellow Cab because in a few years the only place you’ll find one is Guatemala City. I took Uber to SFO this week. Including the tip, it cost $41. The driver, a young Korean woman studying at [San Francisco] State, spoke excellent English…

Doing it on the Side

Making it in Real Estate Part Two: Doing it on the Side Are we in the wrong business? On the “Best Jobs in America” lists, a career in real estate rates lower than carjacking. In fact, commercial real estate doesn’t rate at all on these ubiquitous lists. The closest we come is “real…

Making it in Real Estate

Full version of this video can be seen HERE. Part One: Quit your Job? Over a beer last week, a young friend recounted his progress with a retail development firm. I was surprised to hear how much he had learned and how much responsibility he already had. When he explained his lead role on a mixed-use…

House of Tax Breaks

Urban myth says the family of a condemned man in China must pay for the bullet that executes him. In America, we actually do buy the bullets for executions. Through tax breaks and a lack of regulation, we are handing Tech the golden bullets it needs to assassinate bricks & mortar business. Three…

McNellis on Crimeless Victims & Tyranny in Palo Alto

In this month’s McCutcheon case, a compassionate Supreme Court restored the civil rights of the wealthiest 1,000 political donors in America, namely their First Amendment right to buy elections. In a split decision, the 5 republican-appointed justices sided with the conservative appellant (and…

Don’t Cry for Argentina

Confucius has been mistranslated for 2500 years. The master didn’t really say, “When prosperity comes, do not use all of it.” The correct translation is, “Never buy a second home.” Either way, his wisdom has been forgotten by the modern world. People mortgage their prosperity…

ePup

Time to throw the internet a bone. And maybe a handful of Kibble. In recent months, this column has questioned the use of crowdsourcing for home delivery of groceries and dismissed outright the concept of crowdfunding real estate deals. Rather than chart another example of the internet’s figurative…

A Great Year to Unload Crap

There are bad ideas—say, ordering spaghetti on a first date. And there are worse ideas, like telling someone what you really think of his fiancée. And then there are truly terrible ideas, like oh say, budget skydiving. Yet the idea of investing in real estate through crowdfunding is in…

McNellis on Amazon’s Global Designs

John Goodman pitched his new series, Alpha House, on The Daily Show last week. Ordinarily, a talk show guest selling his wares is about as newsworthy as government incompetence. But this had a twist. Alpha House is Amazon’s latest venture—original content for the Web. In the actor’s…

Bankrupt Values

Fresh & Easy, a supermarket chain of 200 stores, filed for bankruptcy last week. Unlike most bankrupts, F&E has no third party debts, no fraying lines of credit and neither hounding banks nor outraged bond holders. Why? Because F&E is a division of the world’s third largest—and…

McNellis Shines Sunlight on Solar

Solar power and fishing share the same sparkle: Like fish in the sea, sunlight is free. But just as a handful of “free” salmon caught outside the Golden Gate might easily cost $200 a fish to actually catch, converting sunlight to power remains about as economic as fishing from an aircraft…

Lawyers’ Labors Lost

Lawyers are losing ground, perhaps faster than many of us realize. According to CBRE Group Inc.’s most recent San Francisco office leasing survey, law firms gave up 50,000 square feet in the first half of 2013. This is not the only canary in the legal coal mine. Parts of the story are well known:…

Partying Like It’s 1999

Instacart, a San Francisco start-up, announced it had received $8.5 million in institutional funding last week. The company is a same-day home-delivery service for groceries. Given that delivery boys represent perhaps the world’s third-oldest profession, why would anyone invest in such a decidedly…

Pounded by Junk

Retailer Restoration Hardware sent me a glossy, shrink-wrapped brochure—junk mail—so heavy I had to weigh it. Addressed to “Occupant,” my postal nickname, the package tipped the scales at six-and-a-half pounds. Gym rats do exercises with less than that; newborns can weigh less…

Real Estate Safe As Milk

Two old guys are sunning themselves on a Miami park bench, the first bragging about the $5 million his insurance company paid him after his building burned. In reply, the second retiree mentions the $15 million he was paid after a flood destroyed his building. The first man purses his lips, is quiet…

Desperately Chasing Yield

To paraphrase a vulgar aphorism, self-delusions are like opinions—everybody has one. Some have many. Self-delusions are sometimes tragic—consider the starving anorexic who considers herself fat. Occasionally they are merely sad—picture the badly aging athlete certain he is good for…

A Delight of Developers

One of the more amusing ways the Brits keep their societal distinctions crisp is through the upper class’s use of outlandishly imaginative group names for the animal kingdom. Describe a bunch of cawing black birds as anything other than a “murder of crows,” and bang, you’re either…

Rosy Predictions for the New Year

Just as there are few atheists in foxholes, true pessimists are rare among developers. A portrait of a famous developer next to the phrase “irrational exuberance” in the dictionary would surprise no one. Given that this is a developer-written column, bear this in mind when considering the…

Abusing Power

Just as historians still question the precise date the Romans became the Italians, developers are by no means in agreement as to exactly when every pothole or ditch that could hold rainwater for a week became a protected “wetland.” While grading on our latest project finally started last…

On Private Equity and Real Estate

“Behind every great fortune lies a great crime,” Honore de Balzac, the French novelist, supposedly claimed. While this may be true in France, (besides the tactical retreat, what French innovation has withstood the test of time?) America is surely different. Many of its great fortunes are…

The Chapter After Eleven

Put Mervyns, Blockbuster and Lassie together, and what do you have? Two dogs and a money-maker. If you own retail property, what did you have with Chevys Fresh Mex, Z Gallerie, Eddie Bauer, Avenue and Gottschalks? One project-sapping bankruptcy after the next. Before the mid-19th century, debtors unable…

To Everything There is a Season

The Bible’s book of Ecclesiastes tells of a time to every purpose under heaven. A time to rend and a time to sew. A time to kill and a time to heal. A time to scatter stones and a time to gather them together—a time for each endeavor in its turn. Ecclesiastes nailed this one for believers:…

Do As I Say, Not As I Do

Our last column ended with questions: Why would a seller ever permit a listing broker to keep 100 percent of a sales commission? Why let a broker eliminate a whole class of potential buyers: those who would never consider a property unless a trusted outside agent had been pitched it? Is it not possible…

Sex, Lies and Off-Market Deals

Jesus spent 40 days in the desert, eating nothing and resisting the devil’s temptations. Along a similar, if less biblical parallel, the Internal Revenue Service permits one 45 days to wander the wilderness in search of a 1031 exchange, all the while battling brokers’ blandishments.…

Hazardous to Whom?

Trying to find an exchange property over the last 30 days has had us tire-kicking a passel of old shopping centers, a few worth the renovation. Each older center we examined more closely has a contamination issue, often surmountable, sometimes not. If you ever wonder why a great infill site remains…

Abandon All Hope

By John McNellis Hollywood has it wrong. Lawsuits very seldom right wrongs and, as often as not, taking a case to trial can nearly bankrupt one emotionally as well as financially. I was reminded of this enduring truth yet again when an old friend stopped by my office recently to discuss a lawsuit that…

McNellis on Developers and Contractors: General Relativity

With major construction about to blossom all over the Bay Area—campuses for Salesforce, Google and Apple, the Transbay Transit Center and an armada of other projects—this may be just the moment to consider the general contractor and the contractor’s role in real estate. Few professions…

Lords of the Pipeline

The worst is over and recovery begins. At last. September’s ICSC Western States Conference in San Diego was more upbeat than beat-up; it had more site plans than job seekers. In fact, your correspondent—in yet another unreliable, anecdotal survey—encountered only two truly unemployed.…

McNellis on Governance: Rescue Our Horse

The annual meeting of America’s foremost real estate organization, the Urban Land Institute, took place last week in Los Angeles. Its mood was as somber as an Irish wake where the host forgot the booze. Why? Because our national economy continues to sputter. In fact, it is sputtering so badly…

A Sod Roof Too Far

November 1, 2011 In addition to sounding tres sophistiques, the word triage embodies a very reasonable concept. If you’re running out of blood transfusions, give them to those who still have a heartbeat. In an emergency context—say a plane crash—everyone agrees this is the only…

Working Without a Net Worth

Cash flow is real estate’s real value. Franklin D. Roosevelt’s first vice president, John Nance “Cactus Jack” Garner, is remembered for having observed that the vice presidency isn’t worth a bucket of warm spit. Except he didn’t say spit. The difference between the…

Lies, Damn Lies and the IRR

Outright fraud in sales packages is about as rare as total amnesia. However negligently prepared offerings may be, they seldom contain jaw-dropping lies. If one says a property’s current gross income is $1 million, it usually is. And simple offerings—say a flyer pasted together by a residential…

Da to Kapital

Retail landlord finds hope amidst the rubble. July 1, 2011 In Red Square, Russia stages day-long parades to display its military might; troops, tanks and world-ending rockets endlessly rumble past somber dignitaries. In capitalism’s Red Square—the Las Vegas Convention Center—the…

Brokers with Principals

Give a little to get a lot. Before examining a few mistakes this undervalued profession makes so often, it’s worth noting that practically everyone is a broker. That is to say, everyone is using someone else’s money, and everyone has to sell. Whether you’re a baby-faced runner at CBRE…

Monogamy and Its Downside

Bankers like exclusivity, but developers should be less enamored. In an issue devoted to infrastructure—yes, sadly, it’s all falling apart and, yes, we all need to do something about it—it may seem off-menu to devote a column to bankers. But human infrastructure is every bit as important…

Let Us Now Praise Famous Architects

And let us remind not-so-famous developers to seek business counsel elsewhere. The Registry is devoting this issue to design—to celebrating Northern California’s premier architects and designers, their creations and ideas. Your correspondent endorses these richly deserved acknowledgments;…

Through a Glass Darkly

Views of the skeptical optimist. Attended a couple more posh conferences where it seemed nearly every panelist was the smartest guy in the room. This column can’t do justice to the hours of views, advice and opinions on all things real estate one heard at these gatherings. But—on the other…

A Deal Runs Through It

Fishing for deals proves to be a popular sport across the country. Remember Brad Pitt fly-fishing in that breathtaking Missoula river? Gracefully casting his rod back and forth, back and forth, and then splashing his fly in the exact spot where the trout lazed? Well, with the spring thaw, every property…

March Madness

Monterey, March 2010 – While St. Patrick may have driven the snakes out of Ireland all by himself, it took a team effort—a global economic collapse actually—to clear out the ICSC’s annual retail conference here on St. Patrick’s Day. With the snakes gone, the survivors…

McNellis on Spring Rituals: A Full Accounting

February 1, 2012 Like daffodils, if not quite as lovely, accountants are among the earliest signs of spring. When ours called the other day to ask for details about a new partnership, I noticed the days were indeed growing longer.

The Only Free Cheese is in a Mouse Trap

August 8, 2017 The only free cheese is in a mouse trap. Learning to recognize the trap of easy upside without breaking any fingers is part of the tuition one must pay to become proficient in real estate.

Over-Storing America

June 24, 2017 That retail is overbuilt is obvious to anyone who has ever driven twenty miles in any direction in America. Less obvious is the why of over-building. This is worth considering.

Is Macy's Amazon's Next Target?

June 23, 2017 A month ago, we asked how long it would take Amazon to become the country’s biggest bricks & mortar retailer.

For the Class of 2017

May 31, 2017 Rather than focus on practical advice in this year’s remarks, I offer instead a simple observation: I have yet to meet a self-made, wealthy man who has stopped working.

The Death of Retail?

May 9, 2017 Some genius has said last rites over retail’s empty storefront every day this year, causing even its faithful to wonder if they are fiddling in the Titanic’s quartet.

Oh, Lucky Man

April 11, 2017 As the red-staters in Congress gather yet again this week to disembowel the Affordable Care Act, it may be worth considering why it is that so many congressmen care so little about so many.


News

Council adds more commercial space to Alma Plaza

Developer John McNellis agrees to swap another house for more commercial footage and larger grocery store.

A Convenience Center in an Inconvenient Spot

John writes a guest opinion column about The Alma Plaza project.

A Growing Tradition

An article from Reed College's newletter about the increase in Parent Giving.

Alma Plaza Razed

An article about John McNellis's search for a grocer and home builder.

Working lunch with Beth Walter

Comstock’s Magazine Feature April 2011

McNellis supports local non-profit

A September 2012 article about the Downtown Streets Team in The Palo Alto Weekly

Its All About the Deal: John McNellis Gives Insight to Development Success

An article from the ULI San Francisco Blog about John McNellis' unique perspective on starting a development company

McNellis Wins Rebuilding Together Volunteer of the Year Award

The Wollenberg Award is presented annually to those who provided extraordinary resources and leadership to Rebuilding Together Peninsula. The 2013-2014 award is proudly presented to Martin Screen Shop and John E. McNellis.