The Power Of Ultra-Specialized Expertise
March 14, 2016 – Chris Sands of Sands Investment Group talks about the company’s ultra-specialized approach to the net-lease sector and how it has lead to rapid success in this EXCLUSIVE interview.
LOS ANGELES—Chris Sands, founder of Sands Investment Group, launched his net-leased brokerage firm in late 2009, after the onset of one of the worst recessions in history. Six years later, the firm has four offices, 20 brokers and has closed more than 600 transactions in 45 states. It seems unlikely that success would come so rapidly to a new firm, but especially unlikely during such a dire economic climate; however, a few minutes with the brokerage wunderkind, and it is clear that he has a unique approach to the industry. Sands’ winning strategy is knowledge based, and not just general market knowledge but in-depth knowledge of a specific product subset within the net-lease market, which he calls sub-product-type specialization. To find out about his distinctive approach to brokerage and how that has translated into such rapid success, we sat down with Sands for an exclusive interview.
GlobeSt.com: You started your firm a little more than six years ago. Why did you choose to focus on net lease?
Chris Sands: As we were all recovering from the recession, it was glaring that there was a lack of viable options for people to invest in. The stock market was too volatile, and the banking world, government bonds and CD’s were giving you less than 1% on your money. Net lease investments were a natural solution that would allow you to invest safely. They typically have a long-term lease; they are tangible assets; and they have a steady and consistent income stream. To me, from an ownership standpoint and from the standpoint of running a company, I saw the biggest path of growth in the net lease market place. Of all the asset classes, I felt it was going to have the biggest growth trajectory, and that was really the impetus behind us focusing on one product type.
GlobeSt.com: You have a very specialized expertise and market knowledge. Why is having a focused and specialized expertise important, even when focusing on a single asset class?
Sands: Out of the gates, we knew that we weren’t the biggest fish in town and we had not been doing it for 30 or 40 years like some of these other companies. The only way that we were going to get the attention of a seller is if we had market knowledge and if we knew exactly what we were talking about on a very focused level. That was the reason why we got hyper focused in net lease. We decided we needed to take it one step further than our competition and we created sub-product-type specializations. The net lease market is a big market, and there are a lot of general net lease brokers. But, there are a lot of tenants on a more micro level. If you look at retail, for example, there are several different sub-product types within this space: dollar stores, banks, grocery, drug stores, convenience stores, fast food and casual dining, automotive, junior and big box. In today’s market you need to be a much more sophisticated and educated broker to really deliver the results that a client is looking for. We had each of our brokers pick a certain subsector and they spent 12-18 months dedicated to that product type. The byproduct of that is that our brokers then had market knowledge that other brokers took four or five years to build up by focusing on one niche. In a very short period of time, we were able to go pound-for-pound with a company that had a huge track record, and ultimately, that started winning us a lot of listings. Over the course of the last six years, that has translated into the sale of 692 properties in 45 states totaling approximately $3 billion in sales.
GlobeSt.com: Why is specialized product knowledge a better strategy than one focused on increasing the volume of your transactions?
Sands: From a tactical standpoint, our strategy of sub-product-type specialization has worked to the betterment of our agents as well as for our clients. The typical broker will point to the number of transactions and total volume sold as to why a seller or buyer should work with them. Then when you start to ask them detailed questions about the market, the conversation usually leads to the lowest cap rate they’ve achieved and how big their database is. Our guys really have valuable market knowledge in terms of who the most active buyers are in a specific product type; where cap rates are trading in different markets; who the tenants are that are expanding and downsizing; when a tenant will typically extend or not extend their lease; and how to get actual information about a store’s performance. The value that we bring to the client is multifaceted. It is not only helping them get the highest price when they want to sell, but finding opportunities for them to buy and also handling their properties when they have issues or lease renewals. It is more than just saying, ‘you should list with me because I have sold this many properties.’ Our strategy of product specialization gives our brokers a very focused game plan on how to get from zero to something. The guys that really adhere to this program generate new business quickly and get deals closed significantly faster than those who don’t. The success rate of our agents is at a much faster speed than I have seen or even than I experienced when I first got into this business.
GlobeSt.com: Does this program help to keep competition down within the firm?
Sands:Yes, our guys are so team driven; it is incredible. We don’t force people to join a team or create teams, but it organically happens. If we have two guys that realize they are talking to the same client, without question, they team up and work with the client together. Our mindset is if we work together and collaborate, we can take a much bigger bite of the market share. We are better off making 50% or even 25% of something than we are making 100% of nothing. We are passionate about maintaining a culture of teamwork and leadership, and everything that we do comes back to that.
GlobeSt.com: How has your strategy evolved as the firm has grown?
Sands: From a larger standpoint, I still see a big demand for net lease product and I think it is going to continue to grow. We are evolving as a firm and getting more creative in how we add value to our clients. For example, we have a big presence in the sale-leaseback market and are doing more creative structuring in working with operators that are looking to expand. We are focused on putting all of the pieces of the puzzle together by finding the developers, finding the equity and finding the tenants. We are putting together start-to-finish opportunities in the marketplace and then selling it to the investors that want to buy that type of product with a steady income stream. We are committed to being a much more holistic firm in terms of what we offer. I am proud of our brokers for taking the time to learn how to assemble a deal from start to finish and how to really evaluate a deal like investors and developers do. I believe it brings a lot to the table and the feedback from our clients has been tremendous.
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