The Klein Group
One of the ways our nation’s economy can get back on solid ground is by making sure we are making the best use of our real estate. Around the country, various parcels of land are not seeing the financial performance that should be expected, and The Klein Group is one of the companies looking to change that for the better.
“We own and manage retail assets, primarily in New Jersey but also in New York City,” President Jacob Klein says. “We’ve been doing this for about 15 years, and I used to be a retailer, which is where I developed my first-hand knowledge of how to assess the value of retail locations and assets.”
In fact, Klein has more than two decades of experience as a real estate investor and developer. His expertise runs from acquisition and development to property management.
Based in New Jersey, The Klein Group’s specialties lie in the acquisition, development and management of retail properties. Most of its properties are in New Jersey although it does have a presence in Manhattan, as well.
Historically, the company’s focus has been on the creation of first-class shopping centers, and acquiring and developing strategically positioned real estate. It does this based on an investment strategy of finding underutilized top-choice real estate and returning it to optimal performance. It is through the creation and implementation of full-scale repositioning plans that The Klein Group can manage and make physical improvements to properties while also aggressively marketing and leasing its acquisitions.
“First and foremost, we must love the real estate,” Klein says. “If we don’t love it, we will not pursue it. Once we acquire a property, we add significant value through better management, leasing, expansion and remodeling. Our properties are also very well-positioned with great locations, and that is a major piece of attracting better quality tenants.”
The Klein Group currently manages 16 properties and 600,000 square feet of prime retail space. Among the keys to the company’s success has been a commitment to enhance property value and reposition properties by creating efficiencies, reducing the cost of operation and enhancing tenant satisfaction.
“We try to keep an open mind and view every property in a way that we can determine its best possible use and what can be done to improve it,” according to Klein.
“Sometimes it just needs a facelift, but other times it requires major expansion and remodeling to attract the right tenants,” he adds. “It is critical to understand that you must maintain properties and keep them looking fresh because that appeals to tenants in this economy.”
The company has continued to build its portfolio in the last few years. In 2010, it celebrated the grand opening of the 62,000-square-foot Florham Park Plaza in Florham Park, N.J. The Klein Group acquired what had been known as Loehman’s Plaza and redeveloped it as Florham Park Plaza. The property counts Trader Joe’s, Walgreen’s, Sprint, Citibank, McDonald’s, Dunkin Donuts and Baskin Robbins among its tenants.
The plaza is about 97 percent leased. By renovating the center and creating a mixture of well-known retailers, boutique shops and dining options, it presented an opportunity to alter what was an underperforming property and make it into a lively destination retail center. Last year, the company improved the property’s financial positioning by securing a $21 million refinancing for Florham Park Plaza.
2011 also saw the company enhance its presence in New York City. In August, it acquired a retail condo at 200 West End Avenue in Manhattan from Clarion Partners for $30 million. Completed in 2008, the 25,000-square-foot retail property included a CVS in 15,000 square feet with 10,000 square feet available for lease that The Klein Group was able to fill quickly.
“Retail condominiums in Manhattan have been a major focus for us recently,” Klein says.
“We were fortunate with the West End property because it had a 5,000-square-foot basement, and we were able to find a tenant who needed the basement and would pay rent for it,” he adds.
The Klein Group followed that acquisition with a $20 million acquisition of four retail condominiums at the residential building the District, which is at 111 Fulton Street in the Financial District. The retail portion of the building includes 17,200 square feet of ground-floor space and 4,620 lower-level square feet. It includes 163 upscale residential units, as well. This acquisition allowed the company to control all the retail condos in the building, having previously purchased a smaller retail condo in the same building in 2010.
“The property is in the heart of the financial district,” Klein says. “It has some vacancy, but we’ve been in intense negotiations to lease it up in the last few months. Now we are actively looking for other retail condominium opportunities in Manhattan.”
Moving forward, Klein says the company will benefit from a recent upgrade to its internal systems. The Klein Group made an investment in Timberline Software that Klein says will pay off by giving the company easily accessible and extensive data on each of its properties and tenants.
Beyond that, the company’s success depends on its relatively small organization staying focused on its goals. Retail condos in Manhattan are the at the hub of the company’s strategic plan, although Klein says it is also actively looking for opportunities in New Jersey and Eastern Pennsylvania to be sure it is taking advantage of all the growth opportunities in the tri-state area.
“There is no great insight here, but the major challenge for us is to find good real estate without paying too much for it,” Klein says. “That is true now, and it has always been true. We must be disciplined and know when to pursue an opportunity that will get us the right price and afford us with the return that we need to achieve.”