From Coffee Shops to Big-Box Anchors

Since the bottom fell out of the market in 2008, the seas have been choppy for those in retail construction, including N3 Retail Advisors, LLC, a Texas-based, “fully integrated” developer of stores and shopping centers. Navigating the storm hasn’t been easy, but by experimenting with bringing general contracting in-house and by transitioning from smaller-scale projects such as individual stores to larger-scale big-box-anchored retail developments and multifamily residential structures, the firm has once again found itself in calmer waters.

N3 was founded in 2004, and has owned, developed, sold,  managed, or constructed more than 388 projects in 23 different states. Its project track record reflects a company at once active, aggressive, and adaptable. “Everybody on all sides is more careful now than they were before the downturn,” executive vice president of development Harry Chapman says. “They’re not planning on a magical inflation of values to make projects work; our projects need to work on paper by day one, or they don’t get done.”

N3 drew its name from the three people who started the company, and their primary mission was at first to develop freestanding Starbucks stores, building and selling the properties to 1,031 buyers. After 2006, N3 expanded into other forms of retail development such as small shopping centers, and around the same time it created its own full-scale construction department. This is when Chapman, who had previously been working with N3 as an outside general contractor, joined the company, helping with the new department’s development. “Between January 2006 to 2008, N3 was mostly developing small retail projects and self-performed 75 percent of the work,” Chapman says.

In 2008, just before the economic crash, the firm’s original three partners sold ownership to a group of Dutch investors, who put more capital into the company to expand into larger projects, including multifamily residential developments. However, once the downturn struck, even though N3 survived, it had to operate on a much smaller scale than the new investors had predicted. The company stopped performing its own general-contracting work but continued to develop with its partners, and in 2011 it attracted new investors—this time from Canada. With its new infusion of capital, N3 is now, as Chapman says, “in full acquisition and development mode, building a large portfolio of both retail and multifamily projects.”

Included in these projects is a $51 million Target-anchored power retail center in Fresno, California, N3’s biggest project to date. “This number, $51 million, is our contribution to the project,” Chapman says. “Target is owning a big piece of this center, but we’re developing all of the junior boxes and pads on the rest of the site.” N3 is also working on a number of Winn-Dixie acquisitions, and this effort has led to the development of larger-scale Winn-Dixie-anchored retail centers, including the 246,039-square-foot rehabilitation of an existing shopping center in Algiers, Louisiana, just across the bridge from NOLA’s French Quarter.

Having survived the downturn and with the harshest of the weather behind it, N3 is looking forward to more acquisitions and increased diversification as it moves forward. According to Chapman, “We’re really ramping up our acquisition portfolio and actively seeking new opportunities, especially for larger-scale projects.”