Today we’d like to introduce you to Josh Ahlzadeh.
Hi Josh, please kick things off for us with an introduction to yourself and your story.
I grew up in a family of real estate entrepreneurs that goes back to my great grandfathers on the Ahlzadeh and Hoffman sides. Being Jewish immigrants, we have always looked for opportunities in Building and “Value Add Asset Acquisition,” and we have not been afraid to take calculated risks in our approach.
We continue to adhere to that same principle today and are constantly looking for new ways to add value to the properties and in each community we serve. Often, having a vision and plan that the previous operator did not see nor have the resources to execute.
Some people may think you can only score a good deal buying a property from an undercapitalized or unsophisticated owner, but that is not always the case. Many times, extremely sophisticated and savvy ownership groups of 10,20,30, or more properties may have several properties they are happy to trade out of. There can be several reasons an owner may be motivated to sell. For instance, they may want to get rid of their least favorite properties or try to trade out that specific property type altogether.
Many multi-generational asset management groups in Metro Atlanta that have gone on buying sprees in the last 30-70 years are currently working on restructuring their portfolios to focus on the specific asset class that works best for them. Many of these groups own a wide array of commercial real estate, including but not limited to:
- grocery-anchored centers
- power centers
- un-anchored neighborhood strip centers
- shadow centers
- iconic main & main jewels
- single tenant automotive
- multi-tenant shallow bay industrial parks
- single-tenant medical buildings
- and many other commercial real estate ventures
Now, they may find it beneficial to narrow in and focus on one or two asset types instead of five or six…or ten. Essentially, these groups are selling off their random assets that don’t fit the mold of what they are trying to focus on for the future. This presents a new opportunity for someone else who is interested in that asset class to acquire something new.
At the same time, many groups are “never-sellers” with a long-term multi-generational mindset. These are the groups that continue to aggressively acquire a wide range of assets with no real interest in ever divesting.
This is becoming increasingly prevalent and is strongly contributing to the ultra-competitive leasing environment we are in. This shift is forcing tenants and prospective tenants to become less picky, more creative, and optimistic when they attempt to secure space in prime markets with 98.3% occupancy levels and ultra-high demand.
We all face challenges, but looking back would you describe it as a relatively smooth road?
The road has been as smooth as one could expect, given the industry. The biggest struggles have come from trusting or giving opportunities to the wrong people. While I always try to give everyone the benefit of the doubt, I’ve unfortunately learned that not all tenants have the right qualifications or understand how to follow their lease agreement.
The retail—and, more specifically—the restaurant market is highly competitive and ever-changing. We continuously strive to work with unique concepts that may strengthen and provide new value to that immediate area, even if they are relatively newer.
We recently gave a golden opportunity to Plant Based Pizzeria to take a prime 5,000 sf end-cap sports bar/restaurant space in Sandy Springs. We had many more qualified groups that wanted to take the space, but Paul Jordan, the owner of Plant Based, made a compelling argument about how successful they would be, so we really wanted to give them a chance.
Plant Based Pizza is a gourmet counter-service Pizza pickup shop on Barnett Street, across from the Clermont Hotel and nearby Ponce City Market. While they had successfully served good pies as a quick service location the last few years, they had bigger plans and ambitions than an 1800 sf space.
They planned to re-design the space to become a vegan sports bar with their delicious pizza and a full bar with live music, sports, and ample seating. The idea sounded promising, and with proper execution and management, it had all the fixings to become a neighborhood favorite. We also thought it would be a fresh and hip new offering to the neighborhood.
As I reviewed his lease and compared his use to our other options, all of my closest confidantes told me NOT to sign a lease with him and that he was over his head with this idea and did NOT have the experience to execute this plan properly. Despite these warnings, I wanted to give him a chance and make this work. Unfortunately, I was wrong. What everyone told me would happen happened.
They did not properly file and receive building permits, they did not obtain a liquor license, and they did not understand the scope and cost of their undertaking.
They had breached many lease covenants and were eventually evicted for defaulting on their lease agreement and not paying their rent. They still have a substantial outstanding balance that they are refusing to pay. This problem would have been avoided if I had been more careful about who I leased to and took the “safer route.”
I share this story and the stories of any other problematic tenants with many other landlords /landlord reps all through Metro Atlanta, and I encourage all of them to do the same for me. It’s like our little “landlord-union.”
On the contrary, we have leased space to business owners who started their first Brick and Mortar location with us, such as “Grit Life Fitness” and “Get-A-Clue Escape Room” at Riverstone Mill in Canton, and they have gone on to become wildly successful.
This can also be said about the new personal training and group class studio, “Lit Fit Nutrition,” at River Springs Center in Sandy Springs, which opened during Covid. They have become a top-notch local business and first choice facility by many local residents. At this point, the vast majority of new tenants we work with have multiple locations or are a national brand.
Alright, so let’s switch gears a bit and talk business. What should we know?
We are an asset management and development company that looks at things from our unique contrarian perspective. Being a lean owner-operator, we can move swiftly and strategically to ensure long-term success for our tenants and properties. We are currently asset class agnostic, though our “big deals” criteria are typically B/C Class Value-Add Retail or Industrial properties within 60 miles of Atlanta MSA.
We also acquire (distressed) Class A Single and Multi-family assets in prime Atlanta neighborhoods such as Inman Park, Morningside, Garden Hills, Old Fourth Ward, Edgewood, Decatur, Kirkwood, Sandy Springs, Dunwoody, Marietta, and more.
We’d love to hear about how you think about risk taking?
I have fortunately taken enough risks in the past to allow me to not have to take as many in the future. I do not acquire any properties where I think there is a considerable risk factor, nor do I work with people or tenants who we believe may also pose a high risk.
In addition, you must have a bulletproof plan, multiple exit strategy options, and always have proper reserves for the unforeseen. But at the end of the day, the biggest risk is not taking any risks.
Contact Info:
- Website: www.delzaproperties.com
- Instagram: @delzaproperties
Image Credits
Aaron Levine
