When COVID-19 shook the commercial real estate world, firms had to rethink their business models. The world changed quickly as people started working from home, retail went even further online and uncertainty reigned.
Fortunately for DSW Commercial Real Estate, its two principals, Michael Sarabia and James Hardman, are constantly studying the market and anticipating trends. Their willingness to pivot has made the company an example of how to win as some competitors are losing.
They occasionally take chances, pull back when they must and always keep an eye on the horizon, even when the outlook is hazy.
“We love retail, but post-COVID, we’re looking at grocery-anchored centers,” Sarabia said. “They did well during the downturn. We like that space.”
Portfolio diversity is more important than ever. The DSW team believes retail has its place, but the company is being more selective in its pursuits. Forbes magazine reports that existing premium office space prices dropped an average of 13% last year.
Even as those markets have become unstable, new opportunities are popping up.
“Retail used to be the darling, but that has changed to industrial and multi-family,” Hardman said.
DSW has a team of eight employees, each hand-picked for their abilities to contribute to the company’s success and ensure that it thrives. Hardman, who is responsible for day-to-day operations, has seen the team mature in his 17 years with the company and believes everyone in the office has strengths that will help the company grow.
“Our team feels like a good family,” he said. “We have a good company culture and would like to build on that. It’s important to have the right people with good skill sets. We want them to be visionary and enjoy the business.
“We need people who have a passion for what they do. With the right team in place, the business could be perpetual.”
DSW manages more than 1 million square feet of property. The team has a number of priorities, including making smart acquisitions that help the bottom line and keeping current tenants happy through preventive maintenance and enhancements that increase curb appeal.
“Making sure we perform on the things we own is important,” Hardman said. “Some owners don’t put a lot into their properties. Normal maintenance is important to ensure that everything is the quality we want.”
Property management is an increasingly vital revenue stream for DSW. It manages well-performing spots in Tucson such as Wilmot Plaza and Skyline Esplanade. It also manages Mesa Grand Spectrum and other properties in the Phoenix metro area.
“Growing our third-party business is always important,” Hardman said. “Those opportunities will continue to present themselves.”
Hardman and Sarabia keep an eye on how companies react when the business atmosphere changes. Their studies include competitors and even worldwide conglomerates that have nothing to do with commercial real estate.
What have they learned? Being agile and open to change are vital to sustained success.
“We have always been students of the market, and we aren’t afraid to implement business strategies that have proven successful in other markets,” Sarabia said. “I always look back at the IBM example. They did it their way for many years and their competitors passed them.”
While the commercial real estate business will always have peaks and valleys, DSW has survived and thrived. Twenty years in, the team is looking years down the road.
“I am very proud of what Michael and James have built here at DSW and the many ways that we try to pay it forward in the Tucson community,” said Sandra Sarabia, Michael’s sister and a DSW property manager. “We are expanding into new markets, which will allow us to continue to be diverse and agile well into the future.”
Pictured above from left: James Hardman, Michael Sarabia, Mandy Verdugo, Chris Lundin, Sandra Sarabia and Lorraine Bentley