Baceline’s Niche Focus Pays Dividends:
The financial and operational benefits of doing one thing really, really well.
by Dusty Batsell
For over 20 years, Baceline Group has been an active commercial real estate investor and manager. Throughout our tenure, we have experimented with almost every asset type within the commercial real estate sector, including office, industrial, retail, single-tenant, and mixed-use properties. This experience exposed us to the opportunities and challenges within each sector. It ultimately directed our focus to what we discovered to be the most resilient, consistent, and dependable product of them all: unanchored Neighborhood Shopping Centers.
Traditionally located in dense, well-trafficked areas, these essential centers offer convenient access and benefit from excellent visibility. This combination of features makes them extremely attractive landing spots for various businesses that place a premium on being easily accessible to as many customers as possible – from coffee shops to dance studios, from nail salons to doctors’ offices, and everything in between!
Generally, there are numerous benefits to investing in commercial real estate. Many groups elect to spread their investments across a broad range of asset classes, but what we have discovered is that by focusing all of our organizational efforts and resources on a particular product type (in our case, Neighborhood Shopping Centers), we have been able to unlock even more value for our investment partners and key stakeholders. This value is derived because concentrating on a niche product type leads to the development of several key characteristics critical to success, a few of which include:
Industry Expertise
When you do one thing repeatedly, every day, for more than ten years, it’s hard notto get good at it. When you obsess over that same thing for more than ten years, you tend to get really, really good at it. We have been obsessing over Neighborhood Shopping Centers for more than a decade, and this obsession has helped us acquire an unparalleled understanding of this product type. Becoming an expert on a specific product type makes it easier to identify new opportunities, recognize potential challenges, and avoid catastrophic pitfalls.
Operational Efficiency
Specializing in a single niche reduces risk because operational variability is minimized – fundamentally, operating a Neighborhood Shopping Center in Dallas is not much different from operating a Neighborhood Shopping Center in Raleigh. While specific details may vary by market (i.e., having a snow removal contract in place is very important in Chicago but not quite as critical in Phoenix), the core components of managing a Neighborhood Shopping Center remain the same. Developing a consistent management platform has allowed us to streamline operations, helping to reduce costs. Reducing costs makes us more competitive in the marketplace, translating into better occupancy and higher revenues.
Continuous Innovation
Focusing on one product type makes it much easier to identify market gaps and develop innovative solutions to create value. For us, this can mean unearthing a property that has been historically undermanaged, identifying an owner that has failed to capitalize on improving market dynamics to drive rent growth, or recognizing that current or potential tenants might benefit from marketing initiatives designed to help grow their businesses.
Brand Recognition
Committing to a niche product type makes it easier to develop a more consistent marketing message to explain your objective clearly. Extrapolating that same niche focus and marketing message over an extended period makes it much easier for people to remember who you are and what you do. Experts say that, on average, a memory takes between six and twelve exposures over time to take root. Within the commercial real estate industry, focusing on a single asset type unwaveringly for years means that when people hear your name or that of your company, they immediately know what you’re about.
Deeper Relationships
When you get down to it, the commercial real estate sector is a small community. Focusing on a single product type within the sector makes that community even smaller. And since most real estate professionals spend their entire career in the field, often gaining experiences in several different functions along the way (from broker to owner to developer and back to owner or broker), paths tend to cross very frequently. Each encounter represents an opportunity to make a positive impression, deliver a concise marketing message, and strengthen a relationship. Over the last twenty years, we are grateful to have developed such an incredible breadth and depth of relationships with brokers, owners, bankers, investors, and many other professionals within the industry.
Better Returns
Ultimately, devoting to a niche focus improves profitability. Developing and expanding specific expertise makes identifying opportunities in the marketplace easier. Focusing on a single product type introduces operational efficiencies that can be scaled more successfully and creates an opportunity to develop more innovative solutions to challenges that arise. Succeeding in these endeavors consistently helps develop a strong reputation in the marketplace, improving brand awareness and leading to additional opportunities. Wash, rinse, repeat!
Baceline Group is singularly focused on assembling an institutional-grade portfolio of stabilized Neighborhood Shopping Centers in geographically diverse markets nationwide. We are confident that concentrating on Neighborhood Shopping Centers has helped us expand our understanding of this niche product type and will allow us to leverage our industry expertise into continued growth in the future.
ABOUT THE AUTHOR
Dusty is the EVP of Real Estate for Baceline and has spent nearly two decades in commercial real estate…he is also a self-proclaimed “nerd” when it comes to Neighborhood Shopping Centers.
