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And today I’m joined by my co- host, Bob Payton from bobpayton. com, and our guest, John Merrill from Merrill Property Group, a division of KW Commercial. Welcome to the show, John. Thank you very much. Yeah. Thanks for coming. So tell us about you. How’d you get into commercial realty? Oh, my. That’s a long- winded question. Are you sure you want to go there? I started my career in public accounting. I did that for three and a half years and decided I didn’t really enjoy it, but I was good at numbers, and I went into that partly to figure out where I wanted to go. I decided I like tangible things, and I like to do things that are not repetitive. So real estate scratches both of those ditches.

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And I first worked for a small residential developer. He was bankrupt and didn’t know it, and at the age of 25, I got to tell him that. Then I went to a company called Duke Realty Investments, and that’s where my real estate career was launched. Okay. And you also worked for CBRE? Yeah. So I was at Duke Realty for eight and a half, nine years, including when we went public, and I joke about it with those that know the company. It was a great company. But that’s like dog years. And then I went to CBRE, which was at the time CB Commercial. I became an investment sale broker. I had no sale experience, but I knew numbers. And I did that for 15 years. My team was pretty dominant.

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We were very successful, and we sold probably 80% of the office buildings that sold during that time period. And then I had a personal health issue in my family. I lost my wife, and I’m very open about that. And I needed to do something different, and they needed new leadership at CBRE, so Iran the office for five years. I did not have a vision for the next five years, so I fired myself. I went to another company that is called HFF. At CBRE, you’re a player or you’re a And HFF, you could be a player and a So I co- ran the HFF office here, National Debt Intermediary and Investment Sales, which is what I did. then I left there in December of 2018, and they merged with Jones Lang LaSalle shortly after that.

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So I never worked at JLL, but I know a lot of people there. Right, yeah. Same here. Yeah, it’s a good company. So tell us about the real estate market in general, what’s going on in the space right now. Yeah, so, and then I went out on my own January 2020, so now I’m a small business owner, which is very different than working for those large firms. So in the market, Bob and I were talking briefly before, I would say there’s probably three major trends that I would talk about. One, there’s a national housing shortage, and that continues to be the case. So all the home builders are trying to get as much built, as much land, as much built as quickly as they can.

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Same on the multifamily side, although we’ve got a little bit, we’ve run into a bit of a bump with interest rates going up because normally those developers would build,stabilize and sell, and they’re not able to sell at the prices they underwrote. So we’ve had a little backlog right now, although it’s overall a very healthy market. So that’s one of the key trends. On the industrial side, we, and I’m the national industrial leader for Keller Williams Commercial, on the, it’s both locally and nationally, we got overbuilt in the really large box space. In 2021 and 2022, we built twice the historical average of space, both here and nationally. And in 2021, there was more space taken than was built, and it was pretty close in 2022.

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However, in 2023, as things have started to stabilize, we’re a bit overbuilt in that space. However, on the smaller tenant side, there’s a shortage of So smaller industrial is hard to find right now for our clients that need it. And I would say the other thing that’s a trend, you got to help me out, Bob. What was the other one? Oh, man. What about just traditional office space? Yeah, office was the other one. Yeah. So traditional office space. Yeah. Thank you for the save. So everybody paints a product type. First of all, real estate with a broad brush, and then office with the broad brush, et cetera, et Well, office is very similar. Historically, we had a drive that people wanted to be downtown. We have a great downtown here.

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I work regionally. All of the other cities try to emulate what’s happened here. I’m talking about Louisville, Cincinnati, Columbus, Cleveland. So we had a real drive to people wanting to be downtown. That was already starting to reverse. But with COVID and the violence that happened downtown, I have four millennials and one Gen Zer, but she thinks she’s a millennial. And they all called me and said, Dad, have you ever seen this before? And I said, no. Very isolated, but not here. Right. And so it’s kind of the roses off and down. The bloom is off of downtown right now. Hopefully, we recover from that. But also, people don’t want to go into buildings that have common areas. And the shift has happened in the employer- employee power dynamic. Yes, for sure.

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And so smaller, closer to home office spaces are still doing very well. That’s what I tend to own. And those are doing very well. However, the larger towers and CBD Central are struggling. The other thing that’s happening in the office market, I just came from a tenant build- out meeting. We did, even though we’re a small company, we did what would have been the largest office deal in Indianapolis last year. But we signed it on January the 3rd of 2024. So we got to wait and see if it’s the biggest one here. But anyway, it’s at this Stutz building. I’ll give them a little call out. And that’s a well- amenitized building that has all of the locational things, et cetera, that tenants are looking for.

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So even large tenants now, in order to attract employees, will gravitate to those spaces. So those spaces that are struggling are those that are either not as walkable or they haven’t been renovated as nice. The walkable is the hard thing to change if you don’t already have it. Right. Got it. So in your business, you’ve got two parts of the equation. One, acquiring listings, and the other, right, getting buyer representation. So how does that work for you? Well, yeah, we do primarily three things. We do a lot of – I got into doing a lot of land sales because I happened into it. A friend asked me to list a parcel, and it was in kind of my backyard. And I said, I don’t do land.

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But then I started asking him questions about – I won’t name the firm, but a big firm had it before. Have they been calling this group and this group and that group? And he said, And anyway, can we hire you? And I’m like, I don’t do land. About three months later, I called back and said, you know, I’m thinking about this. If not me, who? And I took over that listing three years ago, and they said, why didn’t we hire you five years ago? It’s been great. So we do a lot of development land. So we’re selling to industrial developers, apartment developers, retail. There’s still retail, you know, outlaw activity, a little bit of shopping center activity. Rents have gone up. Costs have gone up across the board.

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So rents have had to go up across the So we do that. We do tenant representation like we did for Calumet Specialty Services where we took them in the help them tour the market, negotiate their lease, et cetera. And then we do owner- occupants. We represent both buyers and sellers, and we also do investment sales. That’s been my fastball in a career, which is selling and leased up properties as investments. So there’s a lot of things we do. Been in the business long enough, I feel like we can do all those things exceptionally well. I don’t try to add a new opportunity or, you know, business line until we’re great at the one we’re doing. But I feel like we’re there. Oh, that’s awesome. Let’s talk about land a little bit.

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Let’s say that’s number four. We have the three. Just how would you paint the land situation? Because I’m a Boone County guy, so I see what’s happening around me, Leap District, et cetera. But, you know, kind of how would you picture the land situation? Well, yeah, so first of all, on the industrial side, there has not been a large land site sell closed since January 2023, the best of what I’ve been able to find. And I’ve talked to a few other land brokers about that. So until we get through that backlog of product, which never takes as long as it seems like it’s going to, and the market’s starting to pick up already. So. On the industrial side, it’s slow. We are putting a fair amount of retail and under contract right now for new development.

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The apartment builders still want land, but financing is a little bit tough to get right now. The single family home builders can’t get enough. So we’re trying to help help them. And we do a little bit of senior housing and we list the land and then go by the highest and best use for it and then find who those groups are. Awesome. So what’s on the horizon for you this year? What are some of the opportunities you’re looking forward to? Well, first of all, we’re really proud of the job we did for Calumet and we’d like to do more of that. And how they find you? Yeah, that’s a good question. And so a residential real estate agent who’s a long term friend of mine who is not with Keller Williams, by the way, he he called me and his operations person is the daughter in law of the the executive secretary.

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Oh, I love the stories like this is true. This is exactly what happened. And so they called him. He came in and he’s like, this isn’t what I do. But, John, John’s your guy. So I went in and I I pitched it against three to one one other small firm and two of the largest firms, one of which I used to work at. And and they wanted they wanted a customized they didn’t want to work with a big firm because I’d sold so many of the properties. I know who owns them, who operates them, how what their strategies are. And so we got we clicked. We got the assignment. That’s how we got it at the end of the day. And then.

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So in terms of what’s boy, we’re now working on probably the largest industrial requirement in the country. That’s a little harder to prove out here. But we’re working on an eight location, about 500000 feet per location deal all around the country right now. That came to me because one of our colleagues near Washington, D. C. it’s for a government contractor. You got invited to propose on it, said this is bigger than I want to. I really can handle who should we have help us. And they came to us and we. We got to do it all last fall. We did an exceptional job. They got the contract because then somebody sued me. Get to do it all again. But but it’s going really well. So that’s a huge opportunity for us.

00:12:08
That’s awesome. We’ve got a lot of other things on the horizon, too. So I tend to have a little bit Maybe, but people come with opportunities and they I’ll give you anexample So one of our one of the things I love about Keller Williams, it’s different than the big firms, which are all great. And I have friends there in national leadership positions, international leadership positions locally. They’re great organizations. But one of the things I really like when I was running the CB office, we struggled with diversity. We wanted to do it. But a lot of us pre- programmed into the women that they were should go in sales roles. They wanted to take a more comfortable route. And then when it comes to minorities, they didn’t tend to have people that they knew in the business.

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My daughter, my son worked with me. Right. They didn’t have those those those examples. Keller Williams commercial and Keller Williams in general. It’s a very diverse, super diverse. And and I love that. And it’s not only diverse in age, ethnicity, but also work experience. So one of the gentlemen I formed a partnership with and we’re we’re working on a national team to address the logistics space and the middle market logistics space. Well, he was with DHL and ran their international logistics operation, retired, decided he didn’t really like to be retired, got into real estate and decided, hey, let’s. I think there’s a void there with these middle market firms. So we’re we’re working on that. We’re hoping to launch in January or So that’s an example. Things come.

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You just got to pay attention, see where the other party can add value, where you can add value, figure out the the the gaps and go. So, right. Absolutely. That makes for an exciting year. Yeah. Lots of opportunity. Yes. There’s there’s a lot going on. And I’m glad you talked about the connection through your daughter. I mean, all those I mean, some people don’t pick those signals up. Oh, yeah. Right. They’ll just. Well, truthfully, my daughter, I didn’t think any of my kids would want to come into the business. I have I have four daughters and a son. And the two younger were bonus when I got remarried, but their dad’s deceased. Also, I’m their earthly father. And we’re very, very close. But but anyway, when my my second oldest daughter, my oldest daughter lives in L.

00:14:53
A. my second oldest daughter, she was underemployed. I looked at her. I’m like, you’re so much more talented. And they kept giving her where she was so much more responsibility, but no more pay. So when COVID hit, I’m like, why don’t you join us? Right. And she said, well, worst case is you’ll drive me crazy. And but I’ll learn something. And she saw herself as an operations and marketing person. She has really, you know, strengths that area. And I’m like, you got the personality to be a really good broker. And she didn’t see it. But now she does. And now she’s like commercial estates, my jam. Right. And then we’ve grown to the point my son is the natural salesman. He can relate to anyone. He joined us about a month ago.

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We got to the point where we have, by the way, we have three other people aren’t related to us. And we’ve got some we’re going to be growing the business. We have some other people are going to join us. It’s not just a family business. I tell my kids the bar is higher, not lower. And good for you. And they and they embrace that. That’s awesome. So let’s talk about you, the person. OK. Yeah. What drives you as a human being? If people were describing you, your your closest friends were a couple of things that they would. Well, they would probably jab me with a few, you know, things like my eyes are brown because I’m full of, you know, things of that nature. I’m very relationship driven.

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My wife and I are so good together because whatever I need, she puts before her own needs and I do the same. And when you do that in a relationship, that’s what makes it work long term. I had a client had a need yesterday and I had a relationship, but I told him I could help him with. And this was probably going to cost him fifty thousand dollars in impact fees. Right. And he called me and he’s like, my buddy’s going to do the construction, but he’s conflicted because he’s a he’s got a government role. And I don’t think he’s going to do what you told me where he would get out of this. And so I did that. I called a council member and I said, OK, we talked about this not being subject to an impact fee.

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And he got back to me. So I had a cocktail with that client about another matter. And he said, you know, you just did that for me and you didn’t make a And I said, no, I didn’t. But how many times have you recommended me to other clients and I don’t pay you for that? So very relationship driven, probably not as money driven as I should be. Most of my friends and clients are rich and I’m doing OK, but I’m just I’m very relationship driven. Yeah, that’s awesome. What do you like to do for fun? So my wife told me a few years ago, you need a hobby. I try to play golf. I’m a terrible golfer. I like to play, but I’m terrible. Right. And she said, you need a hobby.

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And I had met an ex IU football player who was pro for a while and he runs a bunch of McDonald’s. He’s he’s doing really well now. And he collected cars he couldn’t afford when he was a Oh, my God, I can’t afford that. But I love music. And so I bought my first high five, really nice stereo equipment when I was when I was 15 years old. And so I have started buying vintage stereo equipment, most of which you can’t buy anymore. And that people still collect. It’s really high quality, Now it’s it backfired on my wife because I have about eight systems and I only have places to play three of them. And she told me the other day, there’s 21 pieces of equipment in the garage that aren’t being utilized.

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And I said, well, compared to all of my other people, I know the collect that small. Right. She’s not buying it. She’s like a problem, a problem. Yeah. We we also like to travel. As I mentioned, my wife has a Class A motor home. It’s a little bit old. It’s pretty nice. And people say, does she ever drive? And I said, 80 percent of the time it’s hers. And she lets me ride in it. And I like going, you know, we go to Nashville. We’ve gone out to Denver to go to Red Rock. You know, she keeps thinking I can take two or three weeks off and I’m like, I can’t really do that. But we go up to Michigan. We just do kind of depends on gas prices and how busy we are.

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But, you know, we’d like to. It’s fun. It’s a it’s a different way of traveling. So who are some of your musical favorites? Well, I’m a big Leonard Skinner fan. I got to see Artemis Pyle. I could get I could go down the rabbit hole on that one. But I got to see him. He was the drummer that was he wasn’t the original drummer, but he was the drummer when they had the plane crash and they were at their peak. And so I got to meet him and actually talk to him. He played down in Nashville in Indiana here. So they’re probably up there. I love Tom Petty. John Fogarty, a friend of mine knows John Fogarty. And John married a Hoosier and some 35, 40 years ago.

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So I’m a classic rock guy. OK. Yeah. Mr. Drummer over here. I play in a cover band around town. Who do you cover? All kinds of things. Country to, you know, modern to. I mean, Chris Stapleton, Shania Twain to the Foo Fighters to Evanescence. You know, all good. I didn’t mention those. We do Leonard Skinner, ZZ Top. Well, you need to invite me. I’ll come. That’s my thing. Lately, we’ve been going to these more cover bands and in small venues and you can get in the second or third row. And it’s the same entertainment value for me. Yeah, I’ll be happy to send you the schedule. If you guys are in town, come check it out. OK, we’ll do that. We also like to travel internationally. We don’t do as much of that.

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We are going in a couple of weeks to Ireland for a week with the Prince. Oh, that’s cool. Yeah. What’s what’s the attraction to Ireland to sightsee or to. So I’ve lost my first wife to leukemia and I did a lot of fundraising for the Leukemia and Lymphoma Society, including I ran a marathon. That’s a stretch term. I finished the marathon in Dublin, Ireland, and my wife walked about half a And then we stayed for several days. But we were both too sore to really enjoy it. So we’ve always wanted to go through my my my grandmother on my father’s side. It’s Irish. So I got some Irish heritage. But and then a friend of mine was first generation American. He’s got a homestead in Ireland. And he said, hey, I’m organizing this trip.

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Would you like to come? So we’re on a bus trip with about 20 people, 10 of the couple. So it’s a combination, right? Friendship, heritage and adventure. Yeah. Make sure you visit the Guinness Brewery. And then there’s the oldest pub in Ireland across thestreet Yeah, I was there once. I won’t say how it ended, but it was actually really good. It was I tell people it was like drinking chocolate milk. Oh, I love Guinness. It’s so different than here. Really? Oh, yeah. Yeah. So like, I think I think it’s a direct tap across the street. Wow. Have you ever heard the real estate story behind behind Guinness? No. Oh, brilliant. Brilliant. This is a great topic. Really? Yeah. So I won’t do it complete justice, but I remember the gist of things and then the rest.

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You got to go Google. That’s what Google’s for. But so, yeah, Guinness was, I guess, a field brewery or something. I don’t know what’s more than a thousand. I mean, they signed a thousand year lease. Oh, my gosh. For one dollar. So they control all that real estate and they’ve had all that huge success. They pay a dollar a year for a thousand years. I don’t know what year they signed it, but they got some They got some turmoil. Wow. I haven’t heard that one. That’s one of the most brilliant real estate moves ever. Right. Unbelievable. And that’s really cool. Good for them as well. So are you a morning person or night owl? What’s kind of your routine daily? Well, my wife would tell you I’m a morning person because she doesn’t want to hear me talk.

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I wake up with energy. I don’t wake up super early, but I wake up with more energy than she does. But I also can go late when it’s, you know, kind of I can do either. But I guess I would be a little bit more of a morning person in terms of working out and other things. If I don’t do it in the morning, it’s not getting done. Right. And as far as your drink of choice, is it bourbon? Is it scotch? Is it vodka? Water? I like old fashions. I probably I like beer. I like I’m not a scotch drinker. I like pretty much everything else you mentioned. Right. But I went on a diet recently and so I’m only drinking bourbon or nothing. And I’ve lost 40 pounds.

00:24:13
But anyway, so I had a couple of bourbons last night. It’s fun. I sold a building in downtown Lowell. And if you read the marketing materials, it was way more about bourbon and the impact on the economy than it was about that particular building. The heritage and the history and the legacy of bourbon in Kentucky is huge. It is. And my wife will kill me for this, but maybe she’ll hear it. Let’s make sure she doesn’t hear that. No, it’s good. But she took me as a gift on a bourbon tour and she doesn’t like it. So I drank her share, too. Probably that wasn’t good. But so somebody asked the tour guide who invented bourbon. And he said he gave three theories, one of which is Daniel Boone’s brother, Squire Boone.

00:25:04
OK, my wife’s maiden name is Boone. She is a direct descendant of Daniel, but of Squire Boone. Interesting. Really? Yeah. And I must be true to that. I verified it. Yeah, I verified that. So, yeah. So anyway. The history of bourbon is interesting. I probably have a dozen bottles, which seems like a lot, but I got friends that have hundreds, you know. Cool. It’s awesome. Anything else you want to share with us? Yeah, I would say one thing, you know, I love people and I love young people. I love old people. I love everybody in between. And I, this isn’t political, but I just hope we can all start seeing that the similarities, not the differences. That’s what I like to do. I like to invest in the young people.

00:25:52
That’s why I really, quite frankly, if we’re growing our company, I’m probably, I don’t know if I’ll ever retire, but I’m, you know, in my early sixties, a lot of my friends are retiring, but I like to invest in the young people and I’m going to hand on the experience and the knowledge that I’ve gotten. And so I guess I’d just like to encourage everybody, just look for the similarities. I’m not running for Miss America here and asking for world peace, they’re just, yeah, our world’s broken right now and people do need to change their mindset. It’s just gotten way too divisive. Yeah, that’s awesome. So how do people find you? You know, LinkedIn, is that an easy place to find you? I’m on LinkedIn. We have a website, merrillpropertygroup. com.

00:26:39
Most people- And it’s two R’s and two L’s. Two R’s, two Just like Merrill Lynch, but I don’t get any royalties from that. But yeah, two R’s and two L’s and we got signs up on land and there’s plenty of place to find us. But we get most of our business from referrals, from about 25% from other residential real estate agents, Keller Williams or not, and the rest mostly from clients. So I’m trying to get into proactive marketing and business development mode, but we have more business than we can handle right now. I’d like to think from- That’s a good problem to have. I’d like to think from doing a really great job. Yeah, exactly. Well, it’s been nice getting to know you. Thanks for coming on. Well, it’s my pleasure. I really appreciate you having me. And again, I’m not running for Miss America, but let’s look for that little piece. That’s allright We agree, thanks. All right, thank you.