Somera Road Inc. will open a second headquarters in mid-July in Nashville, a move that comes as the New York-based commercial real estate firm continues to gain a presence throughout Music City
A release does note the location of the future office.
Somera Road’s primary headquarters will remain in New York City. However, two key senior team members of the company — Jonathon Reeser, vice president of acquisitions and Joe LeMense, vice president of construction — will relocate to Nashville to co-head the office. The two will soon be hiring additional employees to bolster the local presence.
Somera Road’s Nashville portfolio includes the Voorhees/Downtown Antique Mall site on Eighth Avenue South in The Gulch (read here), WeHo Crossing (read here) in Wedgewood-Houston, 501 Great Circle Road in MetroCenter (home to Nashville-based JumpCrew; read here) and PINS Mechanical Co. in the North Gulch. The company plans to soon announce future projects for Wedgewood-Houston, Germantown and East Nashville.
“Nashville is a perfect second headquarters as we continue to grow our foothold and development pipeline in [the city],” Ian Ross, Somera Road managing principal, said in the release. “Nashville’s proximity to other focal markets with active projects such as Memphis, Louisville, Kansas City and Indianapolis is an added perk.
“The markets we invest in offer an unparalleled value proposition to both employees and employers, offering a lower cost of living and a higher quality of life in forward-thinking, hyper-connected live-work-play environments,” Ross (pictured) added. “Nashville was a natural choice for our HQ2, as it simply reinforces our firm’s primary investment thesis over the past five years.”
Somera Road garnered headlines in mid-March when it announced it had offered a $17 million property purchase and leaseback package as an alternative to the Watkins College of Art and Belmont University merger announced in late January (read here). That effort did not materialize.
The announcement of the future Nashville co-headquarters follows Somera Road’s launch of a division focused on ground-up development. Andrew Donchez, formerly with Boca Raton, Florida-based Mill Creek Residential, will oversee the division as vice president, head of development. Donchez is expected to spend some time in Nashville given Somera Road’s multiple projects in the city.
Jul 1, 2020, 12:35pm CDT
A real estate developer from New York is so smitten with Nashville that it’s opening a permanent office in mid-July — and tipping its hand about where its next projects will occur.
Somera Road Inc. announced that three employees will move from New York to Nashville, to elevate what had been a part-time office into a full-time operation. Two of those three transplants will jointly lead the Nashville office: Joe LeMense, the company’s vice president of construction, and Jonathon Reeser, vice president of acquisitions. Somera Road will look to hire three additional employees in Nashville, for what it’s dubbing a “second headquarters.”
Somera Road illustrates how quickly so many out-of-state developers have become smitten with the city’s growth, prospects and vibe. Somera Road joins a growing group going as far as opening an office in the city.
Somera Road sealed its debut investment less than three years ago, buying a former Gibson Guitar warehouse in the Gulch. Today, it’s home to two entertainment concepts, Pins Mechanical Co. and 16-Bit Bar+Arcade. Somera Road’s other developments include revitalizing an industrial building in Wedgewood-Houston, spending $18 million to buy an office building in MetroCenter, and paying $30 million at the end of 2019 for 2.6 acres of land near the Gulch on Eighth Avenue South, including the Voorhees Building.
Ian Ross, founder and managing principal of Somera Road, said Nashville sits in the “pole position” of all the markets the company invests in (referring to the most favorable spot to begin a car race).
“Nashville’s proximity to other focal markets with active projects, such as Memphis, Louisville, Kansas City and Indianapolis, is an added perk,” Ross said in a statement. “These cities allow for increased productivity, improved retention and a happier and more fulfilled workforce – allowing people to embrace some of the American Dream elements that have become out of reach in high-cost gateway cities.”
Somera Road said new projects will “be announced shortly across Wedgewood-Houston, Germantown and East Nashville.”
“In addition to being a thriving city with a diversified employment base, Nashville’s location is ideal for us as we continue to expand our platform, located within a two-hour drive or flight to the majority of our portfolio,” Ross said. “And most importantly, our team and our families have fallen in love with the city.”
The Somera Road team is excited to welcome Andrew Donchez to our ranks. Andrew will serve as Vice President of Development, overseeing all aspects of Somera Road’s ground up multi-family & mixed-use development platform. Andrew will lead the acquisition, underwriting, design, entitlement, construction and operations of ground up development projects for Somera Road.
Prior to joining Somera Road, Andrew worked for Mill Creek Residential Trust, where he served as VP of Development, overseeing all development activities in the Northeast. At Mill Creek, he was involved in and led the development of a diverse pipeline of development projects, totaling over 1,400 residential units and exceeding $600MM of total development value throughout New Jersey and New York.
Andrew brings over 15 years of experience developing ground up, residential, commercial and mixed-use projects. Prior to joining Mill Creek, Andrew was a Development Executive for RXR Realty where he helped build the residential development platform and oversaw the development of 1,453 residential multifamily apartments with total development values of over $700 million. Andrew helped lead the team that reshaped the downtowns of suburban Westchester County, New York through innovative transit-oriented projects and a pioneering public/private partnership with the City of New Rochelle. The innovative Master Development partnership entitled over 10 million square feet of by-right development potential and secured the acquisition of parcels entitled for over 4 million square feet of development potential.
Prior to his tenure at RXR, Andrew was a Senior Project Manager for Toll Brothers, Inc. in Westchester, New York and began his career as a Development Associate at Ashley Development in the Lehigh Valley, Pennsylvania.
Somera Road is also excited to announce the hiring of Sam Schifman as an Associate supporting Acquisitions and Asset Management. Sam joins Somera Road from Equus Capital Partners where he most recently supported the asset management and disposition of their suburban office product.
Please join us in welcoming Andrew and Sam to the Somera Road team.
To see the whole team please visit Somera Road .
Despite the pandemic, one national retailer is making plans to expand in St. Louis.
Dollar Tree (NASDAQ: DLTR), which has more than 60 locations throughout the region, has signed a long-term lease for roughly 11,000 square feet at Village Square in Hazelwood, the once-defunct shopping center that New York-based Somera Road Inc. bought in late 2018. Terms of the Dollar Tree lease were not disclosed, but the retailer is expected to open this summer.
“Dollar Tree is a recession proof business. Their low price point attracts a variety of shoppers, and they are positioned to excel in both good and challenging economic times,” said Michael Ervolina, senior associate at Somera Road.
In addition to Dollar Tree, Axes Physical Therapy and civil construction firm Millstone Weber, which is working on the Interstate 270 project, also signed new leases at Village Square. Concentra urgent care also signed a long-term extension of its lease at Village Square. The leases follow the more than $1 million Somera Road has invested in facade improvements to the property at Lindbergh Boulevard and Interstate 270.
Ian Silberman of Location CRE and Rob Goltermann of DCM Group represented Somera Road in the leases.
Although the pandemic hasn’t impacted the center’s leasing, it has led to Somera Road to pause its grant program that would have given free rent and startup capital for small businesses and entrepreneurs. Over 200 applicants applied but the final “Shark Tank” event that would have determined the winners has been postponed until it is safe to hold the event publicly, Ervolina said.
Retail space in north St. Louis County leases for $10.87 per square foot on average, the lowest across the St. Louis metro area, according to the latest available data from Newmark Grubb Zimmer.
Somera Road acquired the property from special servicer LNR Partners in late December 2018 for $2.3 million according to data from Reonomy. At the time, Village Square was appraised for $4.2 million but owed more than $18 million on its mortgage.
By Steph Kukuljan – Reporter, St. Louis Business Journal
Apr 27, 2020, 2:15pm CDT
“One in 4 jobs are retail related. If you want to save the U.S. economy, you need to focus on the retail industry,” said one analyst.
With hundreds of thousands of stores closed nationwide, the coronavirus pandemic is accelerating dramatic changes across the retail industry that had been underway well before the viral outbreak hit the U.S., according to analysts.
“Retail has been on life support,” said Ian Ross, principal of the commercial real estate investment firm Somera Road. “Dozens of these companies were on the verge of financial collapse, and I have a hard time believing they’re not going to collapse because of this.”
Over the last few weeks, dozens of retailers have announced furloughs. Macy’s put the majority of its roughly 130,000 workers on furlough. Kohl’s, JCPenney and Nordstrom temporarily closed all of their stores and put their workers on furlough, about 300,000 people.
Mall operators Simon Property Group, Westfield and Taubman Centers have announced temporary closures in response to state-mandated shutdowns of nonessential businesses.
Even digitally savvy companies have buckled. The online beauty shop Glossier closed its retail stores, Rent the Runway laid off all its retail employees and the fashion company Everlane laid off or furloughed about 200 of its workers.
“Nobody wants to cut people out of their company,” said Allen Questrom, the former CEO of Macy’s, Neiman Marcus, Barneys New York and JCPenney. “The key is to stay alive so the company can come back into business.”
However, in a highly competitive business with slim margins, the impact of the virus is broadening the gap between which companies may be viable after the pandemic is contained and which may not survive, said Linda Tsai, a real estate investment trust, or REIT, analyst who covers retail with Jefferies Financial Group.
Companies that have gone through bankruptcy proceedings, such as Sears, are clearly on the shakiest ground, while stores in higher-income areas and retailers with low debt will likely bounce back faster from the impact of the virus and any potential recession, Tsai said.
Over the last few years, the retail industry has been rocked by a wave of bankruptcies as retailers rush to right-size their businesses. Most recently, Forever 21 and Barneys New York filed for bankruptcy, along with retail chains like Payless ShoeSource and Modell’s Sporting Goods.
“Big companies with the ability to weather a storm like this can go on for a while without income and can come back strong,” said James Cook, director of retail research for the commercial real estate service firm JLL. “A lot of retailers who have gone through private equity and mergers or acquisitions that have saddled them with a lot of debt can’t coast for very long without some kind of restructuring.”
Mall operators that house the retailers are also scrambling to preserve cash. The mall owner Macerich cut its dividend by 33 percent. Westfield cut its dividend in half. Weingarten, which operates open-air shopping centers with mainly grocery and essentials tenants, drew down a $482 million line of credit, citing an immediate need for liquidity.
“It may take time for damage to unfold,” said Anna Lai, a REIT analyst with S&P Global Ratings.
Some mall operators and retailers had already been short on cash and high on debt before the pandemic hit, according to S&P Market Intelligence reports. Mall-based companies, including Belk, Neiman Marcus and J.Crew, are on the S&P’s watch list for default, with triple-C credit ratings. That could create major challenges for malls after the virus is contained, according to the company.
“I think the malls will face near-term pressure, but longer term, they could face pressure to lower rent but also occupancy pressure if some of these retailers do not survive,” Lai said.
At this moment of crisis, all options are on the table, said David French, senior vice president of government relations for the National Retail Federation. Retailers are discussing their lease terms with their landlords to find temporary relief on rent and are asking their lenders to ease their debts, he said.
The mall operator Taubman recently told its retail tenants that it expects all of its tenants to meet their lease obligations but that it is willing to discuss any financial challenges and help them with a type of payment plan.
“Liquidity is a massive issue, and there is no one silver bullet,” French said. “If you’re not making sales, you’re running out of cash.”
The retail and shopping mall industries have joined the melee of hamstrung sectors to plead for financial relief from the Trump administration as it rolls out a $2 trillion stimulus program.
The National Retail Federation asked the administration in a letter last month to consider offering retailers government-backed loans and relief from certain tax obligations. The International Council of Shopping Centers, a trade association representing malls, including Simon Property and Kimco Realty, argued in a letter to the Trump administration last month that shopping malls could crumble without business interruption coverage for retailers, restaurants and landlords. The organization argues that without ensuring the stability of its tenant base’s roughly $1 trillion in secured and unsecured debt, the shopping center industry will be at risk.
“One in 4 jobs are retail related,” said Tom McGee, CEO of the International Council of Shopping Centers. “If you want to save the U.S. economy, you need to focus on the retail industry. It’s foundational to the economy and foundational to the community.”
As retailers resort to furloughs and close stores to manage costs, retail workers are left without incomes.
Nayeli, a former JCPenney employee in Santa Ana, California, who asked that her last name not be used, has been unemployed for about a month. She considered a job at Costco to continue to help her parents make rent and buy groceries, but her dad said he’d rather pick up extra shifts at his job manufacturing airplane parts than risk her being exposed to the coronavirus.
“I was concerned because I helped my parents with rent and groceries, and I was like, ‘What am I going to do?'” she said. “Although JCPenney isn’t doing well as a company, they should offer some sort of pay. Imagine people who just rely on that paycheck. How are they going to pay the bills, you know?”
The Somera Road team is proud to announce our newly acquired controlling interest in SouthSide Works – Pittsburgh, PA, a mixed-used development located on Pittsburgh’s South Side Neighborhood. As the new owner and operator we are excited to reintroduce the project with a renewed vision, plans for re-development and plans for new development. In total, Somera Road will invest over $37 million in capital improvements including an adaptive-reuse conversion of a former cinema into a modern 77K sf, open floor plate, creative office space called, “The Box Office”.
We are also deep in planning of the construction of a new multifamily development which includes 230 Class-A apartments on developable waterfront land controlled by the venture. Somera Road’s SouthSide Works will be a wholistic re-envisioning of what a modern live-work-play community should look like along the riverfront of one of America’s fastest growing, most exciting cities. Our goal is to integrate the best that Pittsburgh already has to offer with Somera Road’s specialty – adding new thinking, an entrepreneurial approach, and creative innovation.PBT - Somera Road introduces $100 million revision in strategy for the SouthSide Works
We are excited to share that Somera Road was honored at last night’s Memphis Business Journal’s Best Real Estate Deals (BRED) 2020 Award Ceremony, for Best Deal of the Year – Office Category and Best Deal of the Year – Overall. The BRED awards acknowledge and celebrate the largest and most impactful commercial real estate transactions negotiated and closed by the Memphis area’s commercial real estate professionals, property owners, and lessees that occurred in 2019.
Somera Road’s winning deal was the signing of FedEx Logistics’ 15-year lease and Headquarters move to downtown Memphis’ former Gibson Guitar Factory.
When Gibson Brands, Inc. announced their intent to vacate the 140,000-square-foot building in 2017, Memphis was facing a large, unsightly vacancy in the heart of its Downtown. That is until early 2019, when Somera Road and FedEx Logistics announced plans to make the space the latter’s new headquarters. The move will fill the building, which is located across the street from the FedEx Forum and one block from Beale Street, with nearly 700 FedEx Logistics team members—a number that is expected to grow. More than 350 jobs were created within FedEx Logistics as a result of this business decision.
Per FedEx Logistics,
“This new FedEx Logistics HQ will be a landmark site within the FedEx family of notable company locations. By combining offices into a dynamic campus, the space became economically attractive to provide this fantastic environment for team members. It will be a great space for collaboration among the different aspects of our business and a true home as we attract new talent for the future of FedEx Logistics. Team members from around the world can take enormous pride in working in — and visiting — our global headquarters, which will combine elements of our company history and world-class office amenities. Immersing ourselves in the heart of Downtown Memphis will benefit the company and the city. With hundreds of team members commuting to work in Downtown Memphis, the benefit to area businesses, restaurants and the local economy will be astounding.”
Somera Road is proud of the outcome achieved to date on the FedEx Logistics’ Headquarters deal and is honored to be recognized so publicly for its positive impacts on the Memphis area.
Thank you always for your support.
Celebrating Mid-South dealmakers at 2020 BRED Awards
FedEx Logistics HQ won Deal of the Year at the 2020 BRED Awards.
While the finished product often garners the accolades, the road to completion is both vital and under-appreciated.
Because of that, the Memphis Business Journal created the Best Real Estate Deals (BRED). The awards recognize the developers, landlords, real estate brokers, attorneys, bankers, government entities — all the people who come together to execute a plan for a commercial real estate asset to become something more.
MBJ celebrated those dealmakers and their projects at its second-annual BRED event Tuesday, March 3, at The Cadre Downtown.
“Three of my counterparts in other markets called in the past two weeks to say, ‘I am coming to Memphis. Where are some cool places to stay? Where are some cool places to eat? What should we do while we are there?’ That didn’t happen a decade ago,” Joanna Crangle, market president and publisher for the MBJ, said during Tuesday’s event. “That is really, really exciting.”
Finalists were recognized across Hotel, Industrial, Mixed-Use, Office, Residential, and Restaurants/Retail categories, and a winner was named in each. An overall Deal of the Year was also awarded. Finalists and winners were selected by MBJ’s editorial staff. The complexity of the deal as well as its potential for positive impact on the community were weighed in the decision process.
Doug McGowen, COO for the City of Memphis, congratulated the finalists for their vision and for investing not only in the core of Downtown but in some of the area’s most disinvested neighborhoods. He called the work happening in Frayser, Raleigh, Binghampton, South Memphis, and South City “catalytic.”
“I’d like to congratulate all the dealmakers, all the closers, all the risk-takers, and all the true believers who know that not only do we have momentum, not only are we investable — but, truly — Memphis is a city where anything can be made to happen,” McGowen said.
MBJ lead reporter Jacob Steimer, who covers commercial real estate and economic development, also took to the stage.
Steimer told attendees it was his goal to help the city grow by learning the things known by the few and disseminating that information to the many.
“A basic tenant of economic theory is that more value is created when there is perfect information,” Steimer said. “When both sides of a deal know what the other side knows. When information becomes too concentrated that can lead to things like monopolies, which raise inequality and slow down growth.”
That growth will be on full display in a special BRED edition of the MBJ out Friday, March 6.
2020 BRED awards winners:
Hotel – City gets Loews hotel
Industrial – Hyosung makes electric buy
Mixed-Use – Intrator hits Pinch with $1.1B plan
Office – FedEx Logistics ships HQ Downtown
Residential – City and partners appreciate Binghampton project
Restaurants/Retail – Shelby Farms goes Coastal
Deal of the Year – FedEx Logistics
Meagan Nichols – Managing Editor, Memphis Business Journal
Mar 4, 2020
A New York real estate developer paid $30 million on Dec. 16 to gain another Nashville development for its portfolio.
Somera Road Inc. now owns about 2.6 acres on Eighth Avenue South, near the Gulch and restaurants such as Arnold’s Country Kitchen and Party Fowl. The developer will turn two existing buildings into about 81,000 square feet of commercial space — mostly office space, with some retail as well. Renovations will begin after Christmas and be ready for tenants in the third quarter of 2020, said Charlie Gibson, a broker with Cushman & Wakefield who represented Somera Road in its purchase.
The most noticeable building on-site is the Voorhees Building, at 700 Eighth Ave. S. Somera Road plans to add a penthouse level to the four-story brick building that could be office space or a restaurant/bar, as depicted in the promotional video below.
Somera Road also will preserve the building at 606 Eighth Ave. S., which abuts the train tracks that run through the Gulch. That building, currently known as the Downtown Antique Mall, will be turned into office space and retail.
Low-rise buildings between and behind those two buildings will be demolished to create parking for future tenants.
There’s been a flurry of deals along Eighth Avenue South just in the past couple of months. Another New York-based investor bought the Cannery Row complex of music venues in October, on the other side of the train tracks from one end of Somera’s new property. Dallas developer Lincoln Property Co. bought a site just up the road, at the roundabout with Korean Veterans Boulevard. Construction is underway on Lea Avenue of an apartment skyscraper.
Somera Road is developing a mixed-use project in Wedgewood-Houston and paid $18 million earlier this year for a MetroCenter office building. Somera Road also this fall debuted a revitalized building in the Gulch with two entertainment venues: 16-Bit Bar + Arcade, and Pins Mechanical Co.
In its newest purchase, Somera Road paid about $265 per square foot of land — an indicator of how Nashville property values keep rising, years into the “It City” surge of growth.
Somera Road bought the land from Harmolio LLC, a New York-based entity whose managing member is Arthur Friedman, according to Davidson County public records. There were six properties in the purchase: 606-620 Eighth Ave. S., as well as 700 Eighth Ave. S., 701 Seventh Ave. S. and 708 Fogg St.
Loomis Cos., of Euclid, Ohio, is handling construction, according to Metro permits.
By Adam Sichko – Senior Reporter, Nashville Business Journal
Dec 17, 2019, 11:25am CST