Photo courtesy of Horvath & Tremblay
Robert Horvath
Executive vice president, Horvath & Tremblay
Industry experience: 33 years
Age: 51
Founded by a pair of former Marcus & Millichap executives, Lynnfield-based Horvath & Tremblay has expanded to 18 offices and 150 brokers across the U.S. as it scales its brokerage platform. The Lynnfield-based company specializes in deals in the under $25 million range including retail, multifamily, industrial and mixed-use properties, along with 1031 exchanges. To augment its brokerage services, it’s building out an appraisal platform nationally. Robert Horvath focuses on retail transactions, having executed more than 100 deals, while overseeing the company’s strategy and growth plans.
Q: Is Greater Boston still under-retailed on a per-capita basis?
A: The demand is here. In Massachusetts specifically, when we have a net-leased asset – multifamily or retail – there is always demand for the product. And the one thing I can say about Massachusetts in general: There are a lot of headwinds occurring from a political standpoint, with rent control that’s having implications. It’s very similar to Manhattan right now. Manhattan is going through a real struggle with transaction volume because of policies, and in Massachusetts a lot of people are nervous about rent control.
So, some of the normal transactions may not happen on the multifamily side, and that impacts capital flows into retail and net-leased properties as well. Investors are, more and more, wanting and demanding to put capital into red states. Massachusetts has a problem, for some, with taxes. The wealthier families in Massachusetts are our clients. They are really nervous about holding assets in Massachusetts because of the tax growth.
Q: How much have family offices grown as an investor class?
A: It certainly has grown, no doubt about it. We’ve seen family offices start to form at $50 million today, whereas before you didn’t. It used to be a lot higher, but there are a lot of shared family offices now, instead of a single family office. There’re multigenerational family offices wrapped into one group. One is managing money for six families, and each has $40 million to invest. More and more families are allocating a higher percentage into real estate, and that will continue. In market turmoil, there is a flight into hard assets. In 2008 when Lehman Brothers went down, there was a lot of capital coming in.
Q: How are cap rates trending for retail investment sales?
A: It really depends. They have held their own. For some of the single tenants, we’ve seen as low as a 4 percent [cap rate] for Chik-fil-A and McDonald’s. But for a non-credit center, it could be in the 8s. It depends upon the asset. The best place to buy assets is the Seacoast area of New Hampshire. There’s so much development and wealth going up there because of the policies of New Hampshire, and it is under-retailed. Cap rates are holding and there is definitely a lot of market momentum in southern New Hampshire, no matter what the asset class.
Q: Which chains are in growth mode and driving retail leasing?
A: Some of the retailers that are growing are 7 Brew, Chipotle, Chick-Fil-A and Raising Canes, and Chase Bank is looking for freestanding locations. For new construction, we’ve seen rents north of $85 per square foot, depending upon the credit of the tenant.
Q: Are use restrictions delaying leasing activity?
A: Use restrictions are a major problem. I’m dealing with it at a property in Saugus. If you’re a loan owner or buyer, you want complete flexibility because you don’t know what the future of retail brings. When you exclude uses, you limit your tenanting of the property. It’s good for the retailers, but it’s not good for the investors. We’ve seen a lot of expansion with trampoline parks, but what does that business look like in five or 10 years? Sometimes investors are nervous bringing that use in, with the future in mind. You’re taking a little more risk there.
Q: What are the prospects for new development?
A: Developers in general are going wider from a territory standpoint, and they are moving between asset classes fluidly. Whereas 10 years ago people were developing retail, today that’s not the case. They are doing all of the major food groups. We are also seeing some recycled product. Rite Aid is out [after declaring bankruptcy and liquidating its assets in 2025], so a lot of those boxes are going to be converted into other types of retail. The same thing with Walgreens. New England has high barriers to entry and there’s not a lot of growth.
Horvath’s Five Favorite Podcasts:
- “How I Built This”
- “Acquired”
- “Masters of Scale”
- “My First Million”
- “TBPN”
