After pursuing Whole Foods for nearly two years, Lynn Davis, principal and chief marketing officer at Fidelis Realty Partners, says her plan to land the grocery powerhouse for the Grand Lakes Marketplace development in the heart of the Cinco Ranch community in Katy, Texas, finally came to fruition. “One day they picked up the phone and said that if the land was still available, they wanted to look at it,” she says. Cinco Rancho, where Whole Foods now helps anchor 130,000 square feet of retail space, has been a wonderful success. When the store opened, Davis says the line was around the building, and there wasn’t a parking space available in the entire shopping center. “The mayor was there, and it was a really neat day,” she says.
Success stories such as this are common for Fidelis, which has been in the business for 10 years, and Davis and the firm’s other principal, Alan Hassenflu, bring an additional 15 years of experience in retail-property development and management from their time at Trammell Crow Company. “Alan did retail development, and I did retail leasing,” Davis says. “Then we decided to break off and form our own company.” Retail properties have always been their primary vision, and while they’ve taken on the occasional office building or multifamily project, Davis is quick to note that those aren’t their bread and butter. “Retail is what we focus on, and that’s what we like,” she says.
Davis stresses that retail is all about location, location, location, and when the recession hit, that saying was truer than ever. “At several of our developments, because of their locations, you wouldn’t have known there was a downturn,” Davis says. Fidelis was able to maintain its leases, and tenants continued to do well. In those properties where stores were more affected by the poor economy, Davis’ team worked with the tenants to maintain rental terms that allowed everyone to succeed. “Fortunately for us, a lot of our shopping centers are in areas that haven’t been hurt as bad,” she says.
Although Fidelis wasn’t doing as many new developments during the downturn, the team managed to maintain a strong portfolio. “Instead of developing new, we ended up buying existing assets,” Davis says. For example, they purchased a couple of shuttered Kmart properties—one in Humble, Texas, and the other in Lafayette, Louisiana—and redeveloped them. Davis also brought a number of existing small assets into the firm that were fully leased to add to the Fidelis portfolio, generating additional management fees to help run the company.
A major factor in Fidelis’ success during tough times is the company’s well-rounded, fully integrated set of capabilities. “We’ve got a construction team, a leasing team, a property-management team, a legal team, and an accounting team,” Davis says. “And then of course there are those of us who work on development. We can do everything from start to finish.”
According to Davis, many companies don’t have the right mix of staff to manage properties, so they sell them soon after they’re built. If a company doesn’t have assets to manage, there are probably fewer employees needed, too. “The management fees that come in every month make Fidelis a more stable environment for our employees,” Davis says. “They know they’re going to have a job because we have these assets.”