Land-Strapped Industrial Developers Tearing Down Offices For Distribution Centers

Retailers were running scared in the spring of 2020.

The frightening spread of the coronavirus and confusion about how it was transmitted led some shoppers to wonder if they could catch the disease from handling in-store products. State and city governments responded by shuttering many nonessential retailers while worried customers stayed home and ordered goods online.

Brick-and-mortar retail had already been declining for years, and for at least several months that first pandemic spring, whether it would survive in a recognizable form seemed an open question. Landlords and lenders alike worried that tenants would not be able to pay rent, leading to mass foreclosures and the permanent loss of many outlets.

“Nobody knew how to value retail, because nobody knew who would be able to pay rent, or what the world was going to look like,” Flagship Capital Partners Director J.C. Clemens said. The Houston-based lender and equity investor supports neighborhood retail centers across Texas.

But most retailers survived. As mayors and governors instituted safety protocols such as social distancing and masks, stores found they could operate, bring in revenue and start paying rent. Even though there was a big jump in delinquent retail loans, the number of troubled borrowers has been on a steady decline.

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Commercial property managers navigated numerous obstacles over the past 18 months, balancing shutdowns, safety mandates and the trepidatious reopening of public space. With the arrival of the delta variant and renewed concern and confusion over new rules of safety and sharing space, it seems their work is suddenly in flux once again.

But in discussions with four property managers across the country and across residential and commercial property types, it appears that the delta variant hasn’t upset operations as much as thrown a new curve during a time when everyone has become used to change.

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Since he formed Little Giant Creative as a music-focused creative agency, Tayyib Smith has launched several different ventures and expanded into diverse forms of business with a level of confidence he calls both a blessing and a curse.

When that entrepreneurial drive led him to open a coworking space, Smith said his confidence entering commercial real estate presented almost as naiveté. But as he learned more about the industry and the barriers facing any person of color who wants to break into CRE, it only strengthened his resolve.

From that coworking space — Pipeline Philly at the Graham Building, a stone's throw from Philadelphia City Hall — Smith has co-founded development firm Smith & Roller and incubator for minority- and women-owned businesses If Lab. Most recently, he's helped launch The Collective, a combination private equity investment firm funding Black-led real estate development and nonprofit advocating for policies to redress legacies of redlining and other structural discrimination in real estate. 

The way Smith sees it, the disparity between the portion of Philadelphia's population that isn't White and the percentage of property and capital controlled by non-Whites amounts to "contemporary apartheid." By opening more doors (and wallets) to people of color in commercial real estate, Smith hopes to drag the industry more toward equity — without any illusions about how dire the situation is.

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