Originally created 05/01/00

Markets, technology drive real estate



Staff Writer Frank Witsil sat down with Mike Graybill, president of Graybill & Associates Inc., in his new Lincoln Navigator to discuss commercial development and how the developer uses technology to close a deal. Mr. Graybill says he works primarily out of his car and has outfitted it with an onboard, satellite navigation system; backseat monitor and VCR; and laptop computer so he can remain in constant touch with his office and clients.

Q: How did you get into the real estate business?

A: I had no intention of making that a career. I got a master's degree in finance and investments, came back to Augusta and went to work for a local venture capital firm. They focused primarily on real estate, and I got a lot of training and insight on venture capital financing and those sort of things. When interest rates went up -- it must have been up to 21 percent -- venture capital kind of faded, and I was looking for something I could do that would allow me to get paid based on production. The venture capital firm was offering me a job back in Washington, D.C., and I didn't want to leave Augusta, Ga., so I decided to go into commission real estate.

Q: Why did you come back to Augusta?

A: Because it's home.

Q: What is the greatest challenge in the work you do?

A: Well, it's incremental challenges. You start from one side or the other; either you're identifying the property or you're identifying the prospective user, and once either you've identified with one or the other the challenge becomes gathering the information necessary to make an intelligent decision. That might be traffic count, demographics, topography. You know we do work in eastern Tennessee, and what on a tax map might look like a wonderful site, you might have to blast half a mountain away to make it flat.

In every regard from financing to development, to site promotion, to negotiating the sale, in many cases you're dealing with a homeowner who has an emotional attachment to their property and growth has caught up with them and they are being offered more money than their home would ever bring. And so from an economic point of view, it's a great opportunity for them. But from an emotional point of view, it's home. And they are looking at the decision to sell it.

Q: What does it feel like to drive by something that you had a hand in creating? You may not have done the construction, but you had something to do with the deal. For example, the Wal-Mart on Deans Bridge Road.

A: Well, you feel pretty good when you go by and it's new and you know you had a part of it. But I've been told the average life of a Wal-Mart is seven years. So you don't get complacent and smile too long. You start looking for the next site. (Laugh).

But dreams don't always work out. There are occasions when we'll sell the same property four, five, six times because someone had a dream. The first person had a dream. The first person maybe had a dream that, "I'm going to buy this property and do something to it and make it more valuable and sell it for a profit." Hooray, we do that. The next person comes in and puts in a business and the business doesn't make it, so we sell it to the next person. And sometimes we end up selling the property four, five, six times.

Q: How many hours do you work a week?

A: I've been accused of working 80 hours a week. It's interesting in my business, for instance, even when the family goes on vacation we have a lot of fun because my family enjoys my business, too. We can be at the coast or we can be in the mountains and as we drive, we are looking at sites for opportunities. And when we get through, we get through having fun -- let's ... come back and see if a drug store will fit on this site. So I'm probably 60 or 80 hours a week.

Q: What does your wife think of this?

A: I'm able to integrate my family into my business. For instance, if we're doing -- any number of occasions, I've been to Knoxville, Tenn. Well, it's nearly a four- or five-hour drive up there, and I'll take family members up there with me. We'll go in there. We'll meet with property owners and talk about acquiring a site. When the day is over, we'll go with family to Pigeon Forge or to the cabin or wherever.

Q: Is the real estate business hot right now? The whole economy is. How long will that last?

A: I think you have to separate residential real estate from commercial real estate. Residential real estate is usually a leading economic indicator, primarily because people have to build houses and if you go back to the basics and principles of demographics -- first you get the people, then you get people with spendable income, then comes the retail -- so residential is usually an indicator. Their market usually gets hot before ours. Ours follows, but ours generally stays up longer than theirs because they're the lead. When the housing stops, we're still trying to catch up. And often when we catch up, if the housing market has been down, they've been down for a while. They might be down for six months to a year before ours will ever come down.

I think what you see here in this car, and what we've talked about -- the technology and the electronics -- is going to make a lot of changes in America. I think the next big wave of opportunity is going to be in warehouse distribution in cities that are major hubs.

I think we still have several years or more of an up economy. I'm not afraid that the bubble's going to burst in commercial real estate.

Q: I noticed you are fascinated by high-tech things. Where does this come from?

A: It's not so much a fascination. It's a recognition of what our clients want. Once a town or city or area is identified, that client wants to get in there and make sure he is the first man in. He wants to identify his competition ... a site. He wants it now. He wants to know everything else about it. It may not have been in any news yesterday, but once the decision is made to look in that area it's all the news. It's anything he wants to look at.

Q: Talk about some of the changes in the real estate business.

A: When I started, the cell phone was more of a two-way radio. There was not any cellular phone technology. Basically, you could get local two-way radio service in the community and you had the typewriter, which was the IBM ball that spun around and popped and that was the extent of the technology.

You didn't get too far from the local community because you have to use the pay phone and a lot of quarters or a telephone credit card. The number of sites that a client would develop in a year was simply restricted by his ability to produce. They developed a lot less sites in any given year because commercial Realtors were not able to respond to their needs.

The primary interest used to be in the local market and the primary interest used to be in real estate signage, and almost all representation was of the seller. Now, it is not unusual to be the buyer's rep. If it's a site you want, you go knock on the door and ask if they are willing to sell.

On the technological side, it is the instant access and being able to show property to a client with a digital camera and a computer that sends it out over e-mail while you're in your car and you can show him while he's sitting in his office. We can link up and pull down a satellite photo and show him traffic patterns and road grids. The satellite photo is a bird's-eye view. That's what he wants.

Q: Where is development headed in Augusta?

A: Well, I think Augusta is still doing well with commercial development. I think there is still some room. I think we need to do some things to attract industry. Aiken, Columbia and Richmond counties are doing things.

South Augusta is a very good market. But I still think it is not recognized. South Augusta has enjoyed some phenomenal growth. There are a lot of new houses out there and a lot of new businesses. The demographics of south Augusta are great.

Q: The Augusta Exchange. I know you did not develop that shopping center. But I know you had something to do with brokering that property. What do you think about that deal. Do you wish you had developed it yourself?

A: If I had to guess how much money was invested out there I'd have to say somewhere at $50 or $60 million dollars. There were two local firms involved in putting that deal together, Blanchard & Calhoun Commercial and my firm. We thought about developing that, but quite frankly at the time, we were intimidated by the size and scope of what would take place there. Since then, we learned a lot more about it. I don't think I'd be intimidated by it today. I think I'd be more receptive to undertaking that kind of development. Because I understand how it works. At the time, a $50 or $60 million project on one shopping center scared me to death.