Commercial Real Estate Today: Sandy Schmid On 5 Things You Need to Create a Highly Successful Career in the Commercial Real Estate Industry Today

An interview with Aron Weiner

Unwavering tenacity. The industry is dynamic, with its fair share of challenges and high points, and persistence is your ally. Early in my career, facing a deal that seemed insurmountable, perseverance led to a breakthrough negotiation that laid the foundation for future successes.

The commercial real estate industry is a dynamic and challenging landscape that offers enormous potential for success. However, it requires a unique blend of skills, knowledge, and aptitude to truly excel. How does one establish themselves in such a competitive field? What does it take to consistently rise to the top in commercial real estate? How does one rise above the headwinds that are challenging the commercial real estate industry today? In this interview series, we are talking to commercial real estate professionals, brokers, investors, leaders of Real Estate Firms and Real Estate Investment Trusts (REITs), as well as anyone who’s found significant success in this industry. As part of this series, we had the pleasure of interviewing Sandy Schmid.

Sandy Schmid oversees StarPoint Properties acquisition and development departments. With over 20 years of real estate experience as an acquisitions officer, developer, builder, and architect, he has sourced over $1B of development projects for residential units and has led entitlements on over $1B of development.

Thank you so much for joining us in this interview series! Before we dive in, our readers would like to learn a bit about your origin story. Can you share with us a bit about your childhood and how you grew up?

I grew up outside of Boston. My dad was an architect, and my mom was a public school teacher. On the weekends my dad would have us chop wood in the backyard and take us to historic houses across New England. I could look at a house, tell whether it was truly historic or a reproduction of an older style and date it within 20 years of its build date, which goes back about 3350 years in that part of the country. Certainly a unique skillset for a young child to have!

Can you share with us the ‘backstory’ of how you got into the real estate business?

I was very comfortable in the real estate and building industries because of my family. After college I worked as an architectural drafter, doing part-time construction for Habitat for Humanity, and taking night courses in architecture and construction. I’ve always felt that time is short, so I needed to maximize my efforts and figure out how I wanted to spend my time. I realized I wanted to be on the business planning end of real estate and that lead me to investment and development.

Can you tell us about your company and what makes it stand out?

StarPoint Properties distinguishes itself through an exceptional track record of delivering asymmetrical and notably high returns for our investors, in addition to our unique approach to Opportunity Zone investment strategy.

The firm’s 26% weighted average IRR provided to our investors over the past 25 years truly is uncanny. When it comes to Opportunity Zones, our firm’s success is rooted in a strategic approach that goes beyond conventional investment paradigms. Marked by a commitment to adding value to our OZ properties, StarPoint makes renovations, manages improvements, and operational enhancements to increase the value of the property. Then, we leverage the dividends into new properties prior to the 2026 capital gains tax kick-in and we reinvest those dividends into future Opportunity Zone developments — thereby creating a higher rate of appreciation for our investors.

Unlike a purely profit-driven perspective, our overall investment strategy prioritizes sustainable development and responsible investing, underscoring our dedication to creating positive impact alongside financial prosperity. Our unwavering commitment to excellence, coupled with our distinctive approach to real estate investment, positions StarPoint Properties as a leader in delivering exceptional returns and contributing meaningfully to the broader socio-economic landscape.

Can you tell our readers about the most exciting new projects you are working on now?

Currently, one of our most exciting endeavors is the development of Lotus Point: a 245-unit garden-style multifamily Opportunity Zone project situated in Mesa, AZ. With a total capitalization of $79.3 million and an equity raise of $27.3 million, this venture exemplifies our commitment to Opportunity Zone multifamily development. Recently, we celebrated the completion of stair towers and elevator cores for the development. Now we’re preparing the site for the slab foundation pour and are set to begin that process next week.

Our firm is also excited about The Clock Tower: a 207,000-square-foot office and retail tower nestled in the heart of Beverly Hills, CA, that’s home to our headquarters. We purchased the property for $193 million and raised $120 million in equity. Our primary strategy for The Clock Tower revolves around Core Plus Class-A Office space, distinguished by unique features such as curated art in the lobby, a distinctive signature scent, and coming after phase II of buildout on the backside of the property, community gathering spaces. This project seamlessly integrates personal and professional spheres, establishing an environment that transcends traditional office spaces and fosters community engagement. Both Lotus Point and The Clock Tower epitomize our commitment to innovative and impactful real estate development, each contributing uniquely to our diverse portfolio.

Ok, let’s now move to the main part of our interview about commercial real estate. What are the 3 things that most excite you about the industry now? Why?
At the moment, I’m particularly excited about the integration of new technologies, increased focus on sustainability, and the evolution of the corporate model with hybrid work and work from home.

The integration of advanced technologies like AI and data analytics is reshaping the way we analyze and predict market trends. It’s not just about bricks and mortar anymore; it’s about harnessing insights to make informed, strategic decisions, especially when building up equity. In addition, the increasing emphasis on sustainable and socially responsible developments is refreshing. The industry is recognizing its role in creating spaces that not only thrive economically but also contribute positively to communities and the environment, especially as the crises of global warming and climate change continue to evolve rapidly. Finally, the ongoing evolution of flexible workspaces and hybrid models in response to changing work dynamics from the COVID-19 pandemic stay-at-home era is intriguing. It has prompted us to reimagine how commercial spaces function and how we can bring that new approach to many of the industrial properties StarPoint is developing. Navigating these dynamic shifts keeps me, and our team at StarPoint Properties, inspired.

What are the 3 things that concern you about it? Why? What should be done to address and alleviate those concerns?

Certainly, as someone deeply entrenched in the realm of commercial real estate, a few concerns are currently on my radar.

First, the impact of recent interest rate hikes has raised and continues to raise a proverbial eyebrow. While they signal a broader economic landscape, the challenge lies in navigating potential increases in financing costs, which can certainly put pressure on project feasibility and potential investors willingness to support development projects. To address this, it’s imperative that all of us in the industry adopt meticulous financial planning and consider locking in favorable rates when possible.

Second, the global supply chain disruptions and escalating construction costs are tangible hurdles. Mitigating these concerns necessitates proactive engagement with reliable suppliers, exploring cost-effective construction methodologies, and maintaining flexibility in project timelines. Lastly, the regulatory landscape is ever evolving, posing compliance challenges. Vigilant monitoring and a proactive approach to adapting to regulatory shifts are crucial. At StarPoint Properties, we view these challenges as opportunities for innovation and strategic adaptation, reinforcing our commitment to agile, informed decision-making in this dynamic real estate landscape.

If you had the power to put in place 3 changes to improve or reform the industry, what would you suggest? Please share stories or examples, if possible.

Contemplating industry-wide improvements, three pivotal changes come to mind. First off, instituting standardized sustainability metrics across the sector could harmonize efforts towards environmentally responsible practices, providing a clear framework for developers and investors alike. Secondly, fostering a culture of innovation through incentives for technology adoption would catalyze efficiency gains and position the industry at the forefront of the digital age. Lastly, enhancing collaboration between public and private sectors, perhaps through streamlined regulatory processes, would expedite project timelines and amplify the positive impact of real estate developments on communities. These changes aren’t just theoretical tweaks; they’re pragmatic shifts that can elevate our industry’s collective trajectory. At StarPoint Properties, we believe that transformative changes lead not only to success in the balance sheet but also to a more sustainable, resilient, and collaborative real estate landscape.

How has technology changed the commercial real estate industry, and how do you foresee it shaping the future of the sector?

From my vantage point as, the transformative impact of technology on the commercial real estate industry has been profound. Technology has significantly streamlined processes, enhancing the efficiency of property management, data analysis, and communication. It’s also allowed for more equitable access to the commercial real estate investment market thanks to online crowdfunding platforms like RealtyMogul, CrowdStreet, etc.

The advent of sophisticated data analytics tools has revolutionized our approach to market research and decision-making, allowing for more informed investment strategies. Moreover, technology has facilitated remote collaboration and communication, especially pertinent in a post-pandemic landscape. Looking ahead, I foresee technology continuing to play a pivotal role in shaping the future of the sector, especially for investors and strategic property research. Advancements in artificial intelligence, machine learning, and virtual reality are poised to redefine property valuation, tenant experiences, and even the design and utilization of spaces. Embracing these technological innovations will be integral to maintaining a competitive edge in the evolving landscape of commercial real estate. As we move forward, it is imperative for industry stakeholders to harness technology strategically, ensuring that it not only enhances operational efficiency but also contributes to the creation of perpetually innovative and sustainable real estate solutions.

I am hearing the phrase “Stay alive until 2025” a lot. What is your plan to survive in the current market?

In navigating the dynamic landscape of the current market, my strategy at StarPoint Properties is anchored in a proactive and adaptive approach. Recognizing the challenges posed by external factors, our focus lies in fostering financial resilience, leveraging diversified investment portfolios, and maintaining a vigilant eye on emerging market trends. Embracing technology as a strategic enabler is paramount, enhancing our ability to make data-driven decisions, optimize operations, and stay ahead of industry shifts. Moreover, a commitment to agility and innovation underscores our response to the evolving market conditions, ensuring that we can swiftly adapt our investment strategies to capitalize on emerging opportunities. This involves a keen emphasis on sustainable and community-centric development, aligning our projects with the evolving needs of both investors and communities. Ultimately, our overarching plan is not merely to weather the current challenges but to thrive by strategically positioning ourselves for sustained success beyond 2025.

For a young person who would like to eventually make a career in commercial real estate, which skills and subjects do they need to learn?

Embarking on a career in commercial real estate necessitates — in my view — a strategic focus on financial literacy for nuanced analyses, a profound understanding of market dynamics, and adept negotiation capabilities. A solid foundation in real estate law and zoning regulations is also paramount. Effective communication skills, both written and verbal, are crucial for success in all areas of our lives, as we all know, but in a relationship-based industry the power of successful communications to build relationships cannot be understated. However, the linchpin to sustained success in this dynamic field lies in adaptability, ensuring that you remain agile as industry trends ebb and flow.

Do you have three things you would advise a new real estate professional to avoid?

First, avoid the allure of impatience; success in real estate often requires strategic, long-term thinking. Rushing into decisions without thorough due diligence can lead to costly pitfalls. Second, steer clear of underestimating the power of networking. This industry thrives on relationships, so I recommend actively cultivating a robust professional network to gain insights, share experiences, and find new opportunities. Third, don’t sideline the importance of adaptability. Real estate is ever evolving and the ability to pivot and embrace change is fundamental. Stay nimble, stay informed, and let resilience be your compass.

When evaluating deals or opportunities in real estate, what are the most important factors you look for and why? Can you provide some examples?

I look for properties that have faced challenges, need a new approach and there’s an owner looking to transact. That helps me know there’s a real seller. There are many property owners who list but aren’t willing to transact at a market-clearing price. For example, we picked up land in Southern California in August 2020. The prior buyer in escrow had dropped due to COVID-19. We felt like business and life would need to keep moving forward and the owners needed to close by year end for family tax reasons. We saw the circumstances that indicated it was the right property at the right time. It turned into one of our most profitable deals.

In assessing opportunities, my approach hinges on a holistic evaluation that balances astute financial analysis with a nuanced understanding of market dynamics. Pragmatic financial metrics, including cash flow projections, return on investment, and risk mitigation strategies, serve as the bedrock for my decision-making process and those on my team at StarPoint. However, equally vital is a keen awareness of the broader economic landscape and trends specific to each property’s local market.

I prioritize properties with intrinsic value and growth potential, given our focus on Opportunity Zones and value-add projects at StarPoint. Lastly, I put an emphasis on fostering collaborative relationships, ensuring that each transaction aligns with our overarching commitment to sustainable development and community engagement.

Can you share a story with us about the hardest deal you made, that ended successfully for you?

We put together an assemblage of land in Colorado and it took some patience and strategy. We had 3 separate parcels with 3 different owners and each owner had very different motivations and levels of sophistication. We put the first parcel under contract with a local family and that got us started. The third parcel was off market, but we went directly to the owners and put it under control. The second parcel was located between the others and was needed to make the whole thing work. It was under contract with a competing developer and their contingency period was coming up. We figured they would have to drop it because — while they wanted the properties we had under contract — we had more time in our escrow. After they dropped it we came in and worked with a very cantankerous seller. It was a single-family home on a small lot, and they didn’t understand the highest and best use was for commercial development land. We had to pay a bit over-market from a land pricing standpoint, but the lot was so small it didn’t affect the blended basis on the overall assemblage. This land is now under construction with a strong project moving successfully forward.

Ok, here is the main question of our interview. Based on your personal experience and success, can you please share “Five Things You Need To Create A Highly Successful Career In The Commercial Real Estate Industry”?

1. Unwavering tenacity. The industry is dynamic, with its fair share of challenges and high points, and persistence is your ally. Early in my career, facing a deal that seemed insurmountable, perseverance led to a breakthrough negotiation that laid the foundation for future successes.
2. Early in my career, there was a lot of trial and error. It was such a great teacher because when things don’t work you just get right back in the market and try again. The market presents unlimited opportunities to try different tactics, see how they work out, refine your approach, and then try again. Because of this process, the notion of perseverance is always a cornerstone to success. I remember a year when the company I was working for needed a deal to fill the business plan. First, there was a ton of effort, and we finally found the right opportunity. After that, we had a lot of haggling over the purchase price and conditions for closing. There were a lot of conversations with the seller which were needed to build trust. Once we established a relationship, it was easier to meet their price in return for the conditions that we really needed for the deal to be acceptable to us. The deal needed significant modifications to work. We got the time needed to make those modifications and that was a breakthrough. However, looking back it’s not the breakthrough negation, but what you learn from it that becomes the foundation for future success.
3. A comprehensive understanding of financial intricacies. Beyond textbook knowledge, I’ve found that the ability to continually discern the nuanced impact of financial data on real-world decisions is a game-changer.
4. Effective communication is non-negotiable. It not only facilitates deals but also builds enduring relationships which are the lifeblood of our industry. It’s somewhat of a no-brainer but it’s imperative to success across the board, whether that’s with acquiring properties, working with on-site development teams, or moving processes along internally.
5. Staying abreast of market trends. In our ever-evolving industry landscape, adaptability is key but an understanding of what’s driving the market is a must. With the rise of e-commerce, for instance, strategic shifts have been necessary in our property portfolio at StarPoint to ensure the firm’s continued relevance and profitability.
6. Networking. Cultivating a robust professional network has opened doors to valuable insights and collaborative opportunities for myself and my team. More importantly, it aids in keeping a pulse on the CRE industry and varying marketing that a firm is investing in.

In essence, blending tenacity, financial acumen, effective communication, market intelligence, and a robust network has been my recipe for success in the commercial real estate arena. It’s not just about navigating transactions; it’s about navigating a multifaceted, ever-changing landscape with skill, resilience, and a keen eye for opportunity.

What advice would you give to another real estate professional about improving the work culture, building team morale, and helping each employee thrive?

In fostering a thriving work culture and bolstering team morale within the realm of real estate, my advice is centered around three key ideals: transparency, collaboration, and continual professional development. Prioritizing open communication channels allows for a transparent exchange of ideas, fostering a sense of trust and unity among team members. Recognizing and celebrating individual and collective achievements cultivates a positive and motivating atmosphere. Moreover, investing in ongoing training and skill enhancement not only ensures that each team member remains at the forefront of industry trends but also communicates StarPoint’s commitment to their personal and professional growth.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.

I’ve heard about the help of micro-financing projects in the developing world. I would do “micro-education” across a broad scale of the population. Whatever you invest in education, you get back many times in productivity, creativity, and problem solving. Unfortunately, there’s a shortage of decent education in both developing markets and here in the US. Imagine the human potential you could unlock with better education for more people. We have no idea where the next great ideas will come cures for cancer, technological innovation, energy solutions. Human beings have incredible brains. They need the brain training to open up their possibilities.

How can our readers further follow your work online?

Connect with me on LinkedIn!

This was very inspiring. Thank you so much for joining us!