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Bio
Blake Potolicchio, Co-Chief Investment Officer
More than a dozen years of experience in real estate acquisitions, dispositions, financing, asset management, and leasing. Prior to Open Industrial Blake spent 15 years spearheading a local private equity real estate fund’s strategic direction focused on acquisitions, entitlement, leasing and asset management.
Show Notes
- Introduction and Welcome (00:04:30)
- Blake is welcomed to the show and expresses gratitude for the invitation.
- Blake’s Role and Responsibilities (00:04:40)
- Blake describes his role as co-chief investment officer at Open Industrial.
- Investment Strategy Overview (00:04:50)
- Discussion on acquiring heavy industrial zoned land for outdoor storage and its significance.
- Average Deal Size (00:05:15)
- Blake shares insights on the average deal size and the strategy of high volume, small check sizes.
- Impact of COVID-19 (00:05:50)
- The importance of their tenants during COVID-19 and the supply chain disruptions experienced.
- Challenges in Finding Suitable Sites (00:06:15)
- Blake discusses the difficulties in finding sites that meet zoning and user requirements.
- Motivation Behind Founding Open Industrial (00:06:45)
- Personal motivations and the market conditions that led to the establishment of Open Industrial.
- Identifying Market Opportunities (00:07:30)
- Blake explains how zoning and limited availability create market opportunities for outdoor storage.
- Economic Viability and Investment Perspective (00:08:15)
- Discussion on the economic aspects and long-term viability of their investment strategy.
- Acquisition Strategy and Market Focus (00:10:30)
- Blake outlines the geographic focus and strategy of the acquisitions team at Open Industrial.
- Background and Education (00:11:15)
- Blake shares his upbringing, education, and the importance of learning in his early years.
- Family Background (00:12:00)
- Details about Blake’s family, including his mother’s real estate career and father’s medical profession.
- College Experience (00:12:15)
- Blake discusses his college experience at the College of the Holy Cross and his athletic involvement.
- Career Aspirations Post-College (00:14:00)
- Blake reflects on his uncertainty about career paths after college and his initial interest in medicine.
- Internship Experience (00:15:30)
- Blake describes his internship at JLL and the various aspects of real estate he explored.
- Interest in Real Estate (00:16:15)
- Discussion on what sparked Blake’s interest in the real estate industry.
- Early Career at Rock Creek Property Group (00:17:45)
- Blake explains his entry into Rock Creek Property Group and his initial roles.
- Learning from Tenant Representation (00:18:00)
- Insights on the importance of understanding tenant needs from his experience in tenant representation.
- Market Analysis and Reporting (00:20:00)
- Blake discusses his experience with market data analysis and reporting during his early career.
- Starting as a Deal Analyst (00:20:30)
- Blake explains his transition to sourcing deals and the focus on value during the GFC.
- Challenges in Deal-Making (00:22:00)
- Blake reflects on the complexities and unique challenges of real estate deals he encountered.
- Embassy Deals and Unique Experiences (00:22:30)
- Discussion on the unique nature of embassy deals and the intricacies involved.
- Length of Tenure at Rock Creek (00:24:45)
- Blake summarizes his 13 years at Rock Creek and the evolution of the firm during that time.
- Opportunistic Deals Strategy (00:25:30)
- Discussion on starting with opportunistic middle market deals, avoiding larger firms.
- Diverse Product Types (00:26:00)
- Insights on the benefits of investing in multiple product types for broader perspectives.
- Geographical Focus (00:26:15)
- Blake explains the importance of focusing on the Washington DC metro area for investments.
- Portfolio Growth at Rock Creek (00:27:00)
- Overview of the portfolio size and diversity of deals during Blake’s tenure at Rock Creek.
- Fund Management Experience (00:27:30)
- Blake reflects on his involvement in fund management and the challenges of fundraising.
- Investor Relations Importance (00:28:00)
- The necessity of strong investor relations for business success in real estate.
- Family Office vs. Limited Partnerships (00:28:30)
- Comparison of family office structures to limited partnerships in real estate investments.
- Initial Strategy and Fund Formation (00:29:30)
- Blake discusses the initial strategy and the decision to create a fund for efficiency.
- Education on Financing (00:30:30)
- Ongoing education efforts regarding financing structures for their investment strategy.
- Lease Duration and Market Dynamics (00:32:00)
- Impact of market conditions on lease terms and the need for longer leases.
- Data Transparency in Outdoor Storage (00:34:30)
- Importance of accurate data for institutionalizing the outdoor storage market.
- Proprietary Software Development (00:34:50)
- Introduction of a proprietary software tool to aggregate data for acquisitions.
- Understanding Tenant Costs (00:36:45)
- Blake explains reverse engineering tenant costs to determine feasible rent structures.
- Creating Value for Tenants (00:39:30)
- Strategies for providing value to tenants and minimizing business interruptions.
- Market Consolidation Trends (00:41:15)
- Observation of tenant growth and consolidation trends in the outdoor storage sector.
- Integration of Technology in Operations (00:42:23)
- Discussion on how technology enhances operations and decision-making processes at Open Industrial.
- Company Structure and Growth (00:44:45)
- Blake discusses the team composition at Open Industrial and the focus on acquisitions.
- Office Locations and Expansion (00:46:30)
- The conversation shifts to Open Industrial’s office locations and plans for expansion.
- Market Analysis for Outdoor Industrial (00:47:30)
- Blake explains why Las Vegas is targeted over other major cities based on market analysis.
- Displacement Characteristics in Northern Virginia (00:48:30)
- Discussion on the impact of data centers displacing tenants in Northern Virginia’s outdoor industrial market.
- Opportunities with Data Centers (00:50:15)
- Blake explores potential partnerships with data center businesses for outdoor storage needs.
- Challenges in Northern Virginia (00:51:00)
- The conversation addresses rising land costs due to competition from data center developers.
- Interim Uses for Sites (00:51:30)
- Blake suggests interim uses for land to address power access issues and site management.
- Peripheral Land Value in Malls (00:52:00)
- Discussion on the profitability of peripheral land versus main retail spaces in regional malls.
- Interaction with Gross Industrial Market (00:53:45)
- Blake talks about the significance of ports in the outdoor storage market.
- Impact of Container Business (00:54:15)
- The discussion highlights how containerization has transformed logistics and storage needs.
- Macroeconomic Factors Affecting Demand (00:54:45)
- Blake explains how tariffs and port developments influence the industrial real estate market.
- Lease Leaseback Business Concept (00:56:30)
- The idea of leasing land from companies for temporary storage solutions is introduced.
- Zoning Complications in Development (00:57:30)
- Challenges related to zoning and environmental impact for potential projects are discussed.
- Temporary Uses for Underutilized Land (00:58:30)
- Exploring how temporarily utilizing vacant land can generate revenue and community value.
- Opportunities Around Military Bases (01:01:00)
- Blake shares insights on the potential for outdoor storage near military installations.
- Challenges in Industrial Real Estate (01:02:45)
- Blake outlines the educational challenges in the industrial real estate sector.
- Comparison to Self Storage Market (01:04:15)
- Discussion on how the outdoor storage niche could evolve similarly to the self-storage market.
- User Market and Tenant Relationships (01:05:00)
- Blake explains the importance of tenant relationships in finding suitable sites.
- Institutionalization of the Business (01:06:45)
- The conversation emphasizes the need for public relations to promote Open Industrial’s services.
- Market Size and Tenant Insights (01:07:15)
- Blake discusses the vast market for trucking franchises and equipment rentals, estimating its size between $200 to $300 billion.
- Franchise Fairs and Brand Awareness (01:08:15)
- The conversation shifts to the importance of attending franchise fairs for building brand awareness and attracting users.
- Impacts of Tariffs on Supply Chains (01:09:15)
- Discussion on potential tariffs’ effects on supply chains and how Open Industrial may navigate these challenges.
- Reshoring and Labor Concerns (01:10:15)
- Blake highlights the trend of reshoring manufacturing and the associated labor shortages impacting the industry.
- Silver Tsunami in Industry Succession (01:11:10)
- The conversation touches on the aging workforce and its implications for business succession in blue-collar industries.
- Market Focus Amid Tariff Discussions (01:11:06)
- Blake explains Open Industrial’s strategy of focusing on long-term markets despite tariff uncertainties.
- Manufacturing and Tariff Implications (01:13:00)
- Discussion on the potential penalties for companies that offshored manufacturing and the challenges of bringing it back.
- Capital Markets and Financing Strategies (01:14:30)
- Exploration of Open Industrial’s innovative financing strategies and relationships with regional banks for portfolio growth.
- Volatility and Tenant Management (01:15:30)
- Blake addresses the volatility of tenants and the minimal carry costs associated with their real estate investments.
- Scaling and Institutional Relationships (01:17:00)
- Discussion on the importance of scale and institutional relationships in enhancing Open Industrial’s growth strategy.
- AI and Operational Efficiency (01:19:40)
- The potential of AI to streamline operations and improve efficiency in managing their real estate portfolio is explored.
- Fragmented Outdoor Storage Market (01:20:45)
- Blake reflects on the fragmented outdoor storage market and the need for strategic portfolio organization.
- Exit Strategy Considerations (01:23:00)
- Discussion on the strategic question of exit strategies and whether to focus regionally or universally.
- Land Use as a Key Focus (01:26:00)
- Blake emphasizes the importance of land use and zoning in driving Open Industrial’s investment decisions.
- Career Reflections and Learning from Crises (01:27:15)
- Blake reflects on pivotal moments in his career, particularly learning from the Global Financial Crisis (GFC).
- The Evolution of Financing (01:29:15)
- Discussion on the historical challenges of financing real estate in the early 1990s.
- Market Dynamics and Opportunities (01:31:30)
- Insights on current market conditions and potential investment opportunities in distressed properties.
- Open Industrial’s Aspirations (01:32:15)
- Blake shares the company’s goal to be a leading operator in outdoor storage.
- Core Values and Company Culture (01:32:34)
- Hungry to Learn
- Grit
- Always to the Right Thing
- Brutal Honesty
- Networking Strategies (01:35:45)
- Advice on effective networking through active listening and meaningful connections.
- Negotiation Techniques (01:37:00)
- Exploration of negotiation strategies, including the importance of silence and timing.
- Influential Mentorship (01:41:45)
- Blake reflects on a mentor’s impact on his approach to leadership and attention to detail.
- Balancing Work and Community Involvement (01:44:15)
- Blake discusses his family’s commitment to community service and philanthropic activities.
- Advice for Future Generations (01:47:45)
- Blake emphasizes the importance of being bold and taking risks in life and business. “Be Bold”
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