Pfister comes out of semi-retirement to do deals

FORT COLLINS – Proving that opportunities abound in a down market, one of Fort Collins’ most prolific real estate men is jumping out of retirement.

Steve Pfister is trading his winters in Mexico for a return to the market via the Fort Collins office of national brokerage Marcus & Millichap Real Estate Investment Services. He will team up with broker Jason Ortiz to head the retail and land development-focused team.

Pfister and Ortiz sat down with the Business Report to discuss the addition, the market and more.

NCBR: When did you decide to come back to the business?

Pfister: I’ve continued to work part-time over the last three or four years since I’ve retired, or semi-retired, whichever it was. My clients basically kept nudging me in the direction of a national company with national connections. As a market grows up, it becomes more specialized. Firms in Northern Colorado tend to not be that specialized and their client base tends to be local. As a market gets more specialized and the client base expands beyond the region, the need is for a nationally connected firm. That’s what got me here, initially.

NCBR: So you narrowed your decision to national firms, and then what?

Pfister: I did talk to a couple of the national firms about opening an office here in Fort Collins, but given the general credit crunch and the state of the national economy they just aren’t in an expansion mode. That also showed me that I would be better coming to Marcus and Millichap because it is in expansion mode. They’ve continued to open offices in the last five years, hiring really good people, expanding particularly up and down the East Coast, and expanding their business and product lines. The trend I saw was Marcus and Millichap is growing, expanding and getting better while the others were just stagnant. Back in the late ’70s and ’80s, I started a commercial brokerage firm and hired 50 commercial brokers and the firm did really well. When I met Jason and saw what he was doing and looked at how we would be able to blend together and compliment each other, that just solidified it. I think our ability to work together as a team will be superior.

NCBR: It sounds like Marcus and Millichap takes a pretty specialized approach.

Ortiz: I think that it’s a mistake to try to do everything. We have significant efficiencies since we specialize. Our daily activities are talking to investors – whether they’re looking to buy or sell or trying to decide what they need to be doing.

NCBR: So you are able to focus on strategy?

Ortiz: Not just us, but all 1,400 agents in our firm. It’s no surprise that this is the largest and top investment firm in the country. It’s the only firm of its size that just does investments. Steve and I as a team are able to pull down a couple of focuses – all types of land for investment, development as well as retail investments. As we do work with office, industrial and other users, we can pull in other members of our team to really magnify and be focused on every case that comes up. Just the fact that Marcus and Millichap is here in Northern Colorado is really big news. We did $21 billion in investment property sales in 2007; in 2008 we did over $13 billion. Our next closest competitor does half the amount of deals we do. Now, we’ve got Steve coming on board. It’s staggering.

NCBR: What does Steve bring to the firm?

Ortiz:. What Steve brings to the table is quite a bit. He’s very humble – he doesn’t brag about himself, but I’m excited too. He started very driven, has a bachelor’s degree in architecture and economics and went on to get a Juris Doctorate. He worked for CB Richard Ellis as their real estate attorney. Steve was the guy that a very prestigious company would go to when something went wrong. When he left, they had to hire three attorneys to replace him.

He went on from that to work in development here locally with Everitt (Cos.). He was instrumental with the development of the mall, Anheuser Busch, some of the real major projects we’re familiar with here in town.

After working for Everitt, he went on to work for Nash Philips/Copus (in Austin), one of the largest investors of the era. He did malls that were double the size of Centerra and retail throughout the entire United States. He really, I think, helped that company look outside of Texas. He later came back to town and decided to try his hand at brokerage, which he had really had been doing all along.

NCBR: Steve, what keeps bringing you back to Northern Colorado?

Pfister: I’ve always enjoyed Fort Collins. When I came back in 1991, people were asking me why I wasn’t in some large city on the East Coast or West Coast. Quite simply, it’s the quality of life. At the time that we first came here, we had two daughters and this is where we wanted to raise them. I want to enjoy the place that I live and the community I live in. Those are the primary reasons.

Most brokerage firms think of their people as brokers. Marcus and Millichap thinks of its people as advisers. They promote them that way, they educate them that way, they work with their clients that way. I think that a vast majority of clients I’ve worked with over the years would say that what I did was advise them. A lot of brokers just run from deal to deal. My life has not been that way. There are projects I’ve worked on for eight years – from the time we started it until we finally completed it.

NCBR: What were some of the more challenging projects in this area you’ve worked on?

Pfister: Oakridge was a long-term project. I began working on Oakridge from the acquisition stage, through the entitlement stage, to the infrastructure stage, to bringing on the joint-venture partners. When I came back (from Copus), I went onto the broker stage, finding the end users for office, hotel, executive suites and retirement facilities. I’ve been with the Oakridge project for 30 years.

NCBR: You’ve been in this business through several downturns. How does this one compare?

Pfister: It’s similar, but in some ways this downturn is not as bad as the downturn that occurred between 1987 and 1991. That downturn had much more severe overbuilding and a greater percentage of vacancy. We’d talk about see-through buildings. There were buildings that were a year old, two years old, three years old, with no tenants.

NCBR: Does the downturn have anything to do with the timing of your return to the market?

Pfister: A Frenchman 200 years ago talked about how the time to get in is when there is blood in the streets. Borrowing on that perspective, there does appear to be a lot of blood in the streets. If you look at what’s happening to the larger businesses around the country, they are faring better now than they were six months or 12 months ago. The trends are looking good in commercial real estate – the major problem is financing. There are a lot of solutions out there. I personally think it will come from the private sector this time.

There are a number of projects out there that I personally worked on in the time period of 2003 to 2005 where we would sell land and the seller would have an amount of cash to invest in an income-producing property. We actually looked at a number of deals that just weren’t looking that good. The cap rates were really low, the returns weren’t that great and everything was looking overpriced. A lot of those people held back and decided not to invest. Those people who held onto their cash are just in an excellent position right now. A lot of the money is getting ready to come back into the market.

NCBR: Having worked here for decades, what’s the biggest change you see in the market?

Pfister: Twenty years ago the office market was small, concentrated downtown with a little around the mall. Now we have office corridors all over the area. Retail was predominantly the mall with a few other small centers. Now we have community centers and power centers region-wide.

Probably the biggest shift has taken place politically. After Anheuser Busch there was a strong shift to limit development. The net result of that was for the city government to promote and codify highly restrictive guidelines that made it extremely difficult, time-consuming and expensive to build anything in Fort Collins. Their goal was to bring back more density, stop urban sprawl and generally slow down growth and control it better.

However, it didn’t turn out that way. A lot of the tax base that would have normally come to Fort Collins has ended up in Loveland, Windsor and Timnath. They gave away control when what they wanted was to have very tight control. Instead of stopping sprawl and having control, they gave it away to other municipalities and promoted sprawl. There are a lot more vehicle miles driven now as a result. America’s all about choice and they limited the choice in Fort Collins. So if you wanted a little bit more land or a larger lot you were more or less forced to go to Windsor or Loveland.

NCBR: Has that policy impacted the Foothills Mall?

Pfister: Definitely. I think they opened the last expansion in 1990, and it was soon after that it went into a prolonged decline – probably by ’94 or ’95. We saw the dispersion of retail to other communities. JCPenney is a good example. Mervyn’s was just a causality. Sears has been looking at a number of deals, so it wouldn’t surprise me to see them leave the mall. I’ve been involved with Macy’s. They would consider leaving the mall if there was a viable alternative for them to relocate. Mike Freeman (Fort Collins CFO) recognizes what’s happened as do others at the city and they feel its time to come up with a redevelopment plan at the mall, which they’re in the midst of.

NCBR: Do you think it’s too late for the mall?

Pfister: I think the mall will undergo a total change, not just bringing in some new stores and a new anchor. I’m not ready to say they are just going to bulldoze the whole mall, but I would expect a substantial part of the mall to be torn down and replaced with different uses, different designs, different layouts. I think it would be beneficial to Fort Collins to keep Macy’s in place and maybe have one more anchor. What’s been talked about mostly amongst the people looking at the alternatives is to reduce the amount of retail down to a half or a third. That would mean that the other half or two-thirds of the mall would become mixed-use, more entertainment oriented than it is now. They would introduce office. They would introduce cultural-type facilities. There would be some housing. This is the kind of thinking and direction it’s going.

on Facebook on LinkedIn