Connect 3 Q&A: Fred B. Cordova, III – Turning Asset Pain Into Investor Gain

By Chris Egger

The close of 2020 has Connect Media looking to catch up with some of the legends of commercial real estate. Fred B. Cordova, III, founder of Corion Capital Partners, definitely qualifies for that distinction with more than 35 years of successful private and institutional capital investment experience across more than $7 billion of transactions. With tenures prior to starting his own platform at such noted industry leaders as Kennedy Wilson, Marcus & Millichap, Colliers Seeley, Cushman Realty Corporation, Homestead Village, Koo Koo Roo, Santa Anita Realty Corporation, Kaufman & Broad, Cordova Chase Company and Investment Building Group, his resume is indeed extensive.

Connect Media had the pleasure to catch up with Fred at the recent Connect Westside conference held December 4 at the Luxe Hotel where he shared an update on his most current endeavor, Corion Enterprises. It’s a “six-sigma” continuous improvement style platform focused on optimizing and revitalizing relevant but aging office assets on a fee basis for owner clients. Here is the ensuing Connect 3Q&A follow up to get into the details.

Q: Why did you start Corion Enterprises?

A: I’ve been focused on optimizing asset performance across multiple products over the past 35 years of my career. It’s always been my purpose and passion. I started Corion Enterprises because I want to make an impact by modernizing existing office buildings to become more purposeful and lifestyle-oriented to attract and retain talent. We are no longer in the business of selling spaces. We are selling experiences. That means looking at every aspect of the building and curating the tenant experience with better connectivity to the functional elements of the property as well as providing educational classes, quality F&B options, seminars, yoga classes and other health and wellness activities to promote community and interaction among the people in the building.

When my direct investment platform Corion Capital is looking to acquire assets but cannot agree on a sales price, we offer to turn the owner’s “pain into gain” and generate greater value for the owner than a direct sale by executing our modernization plan on a fee basis through the Corion Enterprises services platform. We recently targeted a suburban 1980’s mid-rise, 80,000 sf office building in a historically challenged but improving submarket, that was empty but had a solid credit tenant paying rent for three more years. It was going to need $6-$7 MM in cap ex to get the building up to competitive standards. We created a modernization plan to transform the building from Class B to Class A, with onsite F&B, shared meeting rooms, outdoor working and relaxation areas, a health facility, co-working areas, modern façade and entry, security and wi-fi throughout, and an innovative transportation program incorporating automated parking, shared vehicle use, new circulation and re-striping to improve efficiency.

So at Corion Enterprises, we focus on the pain impacting a property and look for ways to turn that pain into gain. Examples include: updating and modernizing the physical appearance and infrastructure including façade, entry, lobby, elevators, restrooms, HVAC systems, under-parked assets and alternative/creative parking solutions, smart Tech- lighting, heating/cooling/security, improving infrastructure to match modern working/living needs, BMS- software/Internet solutions for controlling energy, water, waste and comfort for building occupants, Reduced maintenance costs with proactive monitoring systems, curated tenant experiences focusing on health and wellness, and healthy food & beverage options with 24 hour access.

Q: What major transformative trends do you see for 2020 and beyond?

A: I see the biggest transformative trends in skilled labor, impact, technology, and ESG. Let me break that down for you. Skilled labor continues to be the most important competitive distinction for Media, Entertainment, Technology and Advertising (“META”) companies, hence there is a battle for talent that plays out in the built world by mandating curated environments delivering exceptional experiences to attract and retain talent. Impact means that today’s tenants care not only about their direct experience in the present, but also the impact beyond their surroundings. Initiatives related to the environment and social causes which can now be measured in terms of lower energy costs and lower carbon footprint are very important. Technology, and importantly, new technologies are transforming commercial real estate from being about spaces to places that deliver customizable experiences for the user down to the individual level and better manage operations to minimize user friction and reduce operational and energy costs. Environment, Social Responsibility and Governance, or “ESG” have become a major consideration for capital as it looks to invest in places where it can have an impact on the built world carbon footprint which is the largest contributor to global warming in the world.

Q: How will these trends affect go forward strategies for commercial real estate asset management?

A: In my opinion, these trends will affect business opportunities and strategies in a positive way. Co-working will change in the way it’s being experienced, curated, and delivered ; co-living will require specific layout and amenities; assisted living will require more urban locations to provide housing for an aging baby boomer population; there will be an even greater need for last-mile solutions and more distribution centers to service that; design and construction methods will evolve to reduce costs, waste and achieve sustainability objectives both during construction and for ongoing operations; retail will shift to deliver an experience that’s comfortable, accessible, safe and engaging; common area spaces need to be thought of as more than just a pass-through space but more as a curated space to enhance the tenants lifestyle and inspire the community; the amenities war will only get more competitive with tenant programming, fitness suites, wellness offerings, and food and beverage options.

For comments, questions or concerns, please contact Dennis Kaiser