18 minute read
Women in Real Estate: Kelly Diehl
Kelly Diehl: Nearly three decades later, industry veteran remains a leader in St. Louis’ CRE market
By Dan Rafter, Editor
Kelly Diehl has worked in commercial real estate for nearly three decades. And all those minutes in the business? Diehl says she’s loved each one.
Today, Diehl is managing principal with the St. Louis office of Cushman & Wakefield. She’s a leader in her market and her company. That, unfortunately, makes her a rarity: The percentage of women in leadership roles in commercial real estate remains low.
Diehl, though, is an example of a woman who overcame the hurdles in this business and thrived. In honor of International Women’s Day, held on March 8 this year, Midwest Real Estate News spoke with Diehl about her career and the challenges she faced as a woman in a still male-dominated industry.
How did you get started in commercial real estate?
Kelly Diehl: I fell into it. My father was a real estate appraiser and developer of commercial property. In college, I worked for him. I learned the terminology of commercial real estate. I became familiar with real estate. And I enjoyed it. I moved to St. Louis, the closest major MSA near my hometown in Southern Illinois and looked for work in this field. I interviewed with a company that would eventually become part of Cushman & Wakefield. That was almost 30 years ago. Two hours after that interview started, I had a job. I’ve been involved in real estate ever since. It’s been a natural fit. I’ve loved every minute of it.
What has kept you in this business for so long? What do you enjoy about it?
Diehl: I have had the ability to evolve over time in my career, and I never have to worry about doing the same thing every day. I started in this business in property management. That was rewarding because you are involved in multiple facets of real estate. You get to work with owners and help them realize their goals. You work with them on the strategies they have for their properties. You work on how to meet certain key metrics. Not doing the same thing every day, then, has always been a very appealing part of this field to me. I think people in real estate also have a competitiveness in their DNA. It’s a healthy competitiveness. I always enjoyed getting that win. Whatever it is that I have accomplished, I feel that when you win, you feel good. And after that win? I’m ready to move on to the next one.
Then there’s the way my career has evolved over the years. That has been interesting and enjoyable. I have learned so, so much in the real estate industry.
Kelly Diehl at work.
I know you just mentioned that every day is different, but what is a typical day like for you?
Diehl: In my current position as managing principal, one of the greatest rewards is when our team wins business. Whether it is through management getting a large construction job or whether it is winning a listing or completing a large tenant-rep deal with any of our teams, the best feeling we can get is seeing our team win and have success.
My current position is a unique one. I’m like the quarterback of the team. I work with the brokerage team and I’m responsible for the overall performance of our team in our market in St. Louis. I spend a lot of time making sure our teams have what they need to be able to succeed. I do spend a lot of time on that.
Culture is a large focus of mine. This is a collaborative business. It’s important that we make sure our team members work well together and treat each other with respect. We want team members to come with their whole selves to the office, wanting to contribute. We want to put the right people in the right seats. That is something that I look at constantly.
I also spend a lot of time coaching and mentoring our team. If you look at the real estate industry, there is a need to focus on that next generation of leaders. That is very much the other area I am focused in on, making sure we develop our team so that they can be those future leaders of our organization. the entry-level position I was in. I always strived to improve myself. I always tried to step outside my comfort zone. I am a quiet, shy person. I don’t enjoy public speaking. So I pushed myself to do public speaking. I developed an awareness of what my strengths and weaknesses are. I focused on those weaknesses. I don’t know if public speaking will ever be one of my top strengths. But I do focus on making improvements and strides in that area.
I also surround myself with successful people. I like to have people around me who are smarter than I am. I don’t feel like I have to be the smartest person in the room. I want to surround myself with strong, talented people who move projects to the goal line. I no longer feel like I have to constantly prove myself. If you are surrounded by others who can do, it will benefit you in the process.
How have you managed to build such a successful career in CRE?
Diehl: When I first started in the business, I was very shy. I was probably one of the most introverted individuals you can be. But I knew I didn’t want to stay in
Did you face challenges in this business because you are a woman?
Diehl: This business has definitely changed in the last 30 years. Back then, it was very common to be the only woman in the room. That did add to some of my insecurities. I couldn’t contribute to some of the conversations that the men in the room were having. They did not apply to a woman. I had to learn to shift those conversations.
But I never looked at it as me being the only woman in that room. I knew that I was in that room for what I brought to the table. It’s important to have enough confidence to feel that way. You have to know that you bring something important to the table.
What has to happen to encourage more women to enter the commercial real estate business?
Diehl: When you look at the asset services side, that is where you have the largest female presence. In that trade, about 71% of the individuals in the office are women. But when you look at it from the construction or brokerage sides of the business, there are not nearly as many women. There is a huge opportunity for women to step into those roles.
It is challenging, though, to find women who want to move into commercial real estate. There is a lack of awareness of the opportunities in this business. We are as an industry trying to show women that there are opportunities and ways to be truly successful in this industry. We are going to colleges and universities to speak to women about this profession.
There are challenges, though. Take brokerage, as an example. You need that personality and drive, that motivation to grind day in and day out. It can take years before you see the fruits of your labor. But with the right drive, this can be a very lucrative career, and there are many female brokers in the St. Louis market who are immensely successful. Others are just getting started.
The message we want to share is that people don’t want to walk into a room where everyone looks the same. It’s important to bring some diversity and a variety of opinions to the table. We need more awareness of the benefits of that.
How important have mentors been to your success?
Diehl: Mentors have been very important. There are different forms of mentors. You might have a formal mentor but also some mentor relationships that are more informal. It might be people you are watching to learn how they command respect, how they treat people and how they build their stature within an organization.
There are individuals who have a lot of life experience. It’s important to find those people and take advantage of the knowledge they can share.
How do you spend your time when you are not working?
Diehl: I recently took up horseback riding. I plan on getting my own horse someday. I also enjoy taking walks with my dogs. I read quite a bit. We spend a lot of time out west in Utah. I enjoy being outside, hiking and skiing.
Women in Construction Week: Kraus-Anderson Construction’s Morgan Seopa By Dan Rafter, Editor
March 6 through 12 marks this year’s Women in Construction Week, an event that takes place during the first full week in March each year. In honor of this, REjournals is running profiles of several Midwest women who have chosen the construction field as their career.
Morgan Seopa is a project engineer with Kraus-Anderson Construction in Minneapolis. Here’s a look at why Seopa chose a career in construction, what she enjoys about the industry and the steps she’s taken to thrive in this career.
Tell us about your background. Where did you grow up and where did you go to school?
I grew up on a lake in northern Minnesota in a little area called Side Lake, about 20 miles north of Hibbing. I still live there now. I graduated from Hibbing High School in 2018 and graduated from Bemidji State University in December 2021 with a degree in project management, with an emphasis on construction and facilities management.
How did you get your start in the industry?
As my time in high school was coming to end, I knew I wanted to be a part of the building process but didn’t know where I fit in. Then I learned about project management. I spent my junior and senior years of high school going to Hibbing Community College, where I received my Associates of Arts degree in May of 2018, a month before graduating from high school. With two years of college under my belt at the age of 18 and not a concrete idea of exactly what I wanted to do, I decided to take a gap year. During that time, I took off to Guatemala to volunteer doing manual construction and renovation labor in a village near Antigua. That experience solidified that I did want to continue in the construction field but didn’t want to be the one with the hammer in my hand. When I returned home, I applied to Bemidji State University to complete my degree in project management.
Megan Seopa enjoying demo day at the job site with fellow Kraus-Anderson workers Joe Hurd and Pete Auvinen.
Did you have a mentor who helped you get on your feet, or is there someone you turn to now for support?
My family and friends have always been my biggest supporters. To say I’m fortunate is an understatement. At work, my mentor is Senior Project Manager Patrick Gallagher. He has believed in me from the start and continues to push me out of my comfort zone, making me achieve things I never thought possible. In addition, the entire Kraus-Anderson Duluth team – including all of the project managers, project coordinators and superintendents -- have always been there to help and support me in every step of in my career.
What does an average day at work look like?
Today I am a project engineer and work in northern Minnesota on Rock Ridge Public School District projects, including Rock Ridge Career Academy High School, Laurentian Elementary, North Star Elementary and on the district’s existing demolition projects. I’ve been lucky enough to spend the majority of my time on project sites. Most of my days are filled working in coordination with my team and our contractors. As a project engineer, I enjoy the variety of work on the job site. One day I may spend time reviewing project plans and coordinating them with contractors; and the next day I may be in my office contacting contractors about their bids they submitted for a specific project. I also have had the opportunity to work with the Rock Ridge Public School District’s Career Mentorship Program that serves students in all career fields by connecting contractors with students. It’s been a fulfilling experience exposing students to the different trades and careers available in the construction industry.
What do you like most about your job?
In addition to the variety of responsibilities, part of the reason this career keeps me so engaged and makes my job enjoyable, is because each day is different. There is never a dull day in this industry. No matter the task, each day we are working toward the same goal -- a successful project and a happy owner. But what I love most about my job is helping communities grow and improve with each project that we complete. I’m fortunate enough to be working on projects on the Iron Range, which is the corner of the world where I grew up and take pride in. And the team I work with is the cherry on top. They’re an exceptional group of professionals that create a welcoming place to begin my career, and a great place to grow my career. I think that speaks volumes about the culture at Kraus-Anderson.
Looking to the future, what do you hope to achieve/work on that you have not already?
I have really enjoyed working in the K-12 sector and look forward to gaining additional experience in other building sectors, which will help me be a versatile asset to my company. My main goal is to continue to learn and grow as a female in the construction industry, while building relationships along the way. This is just the beginning and I’m eager to see where this career path takes me.
How do you spend your time away from the office?
My time spent away from the office is mainly spent enjoying the outdoors with my 1 1/2 year old son and my boyfriend, along with family and friends. We like to hunt, fish, and ride our snowmobiles and side-by-side, and spend days on the lake. We’re lucky to live in area where we get to enjoy all that Minnesota has to offer.
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hand in memory. While 2020 did prove to be a difficult year for brick-and-mortar retail, the sector bounced back with a vengeance in 2021 and in doing so, once again proved its long-term staying power.
Where Goes the Consumer Goes Retail
Like the broader economy, the health of retail is dependent upon the health of the American Consumer. Fiscal support provided by the U.S. government throughout the pandemic provided consumers with trillions of dollars, while a tightening labor market and record number of job openings supported robust wage growth, especially at the lower end of the income ladder. With additional funds at their disposal, American consumers pushed brickand-mortar retail sales to record levels in 2021. The rising sales tide lifted most retailer boats, as the number of retailers that filed for bankruptcy declined to a five-year low, while store openings outpaced closures for the first time since 2014.
Demand for Retail Space Back on the Upswing
Underpinning the resurgent retail sales environment has been a return to stores by many consumers as vaccination rates have risen and operations have normalized. Shopper foot traffic has returned to pre-pandemic levels at many centers around the Midwest, and the growing popularity of BOPIS (buy online pickup in store) has pulled even more consumers back to the store.
With sales and foot traffic accelerating, retailers selectively returned to expansion mode in 2021. Nationally, over 258 million square feet of retail leases were signed in 2021, a more than 40% increase from 2020, though still 13% below the average seen during the fiveyear period preceding the pandemic. In the Midwest, slightly more than 32 million square feet of retail space was signed for in 2021, a 16% increase from 2020, but still 11% below the same prior five-year period.
Leasing activity in 2021 continued to be dominated by discounters, off-price retailers, and grocers, though a few specialty stores expanded significantly throughout the Midwest as well, including Floor & Décor, which signed for over 300,000 SF of new space during the year. Other retailers that signed for significant chunks of new space in 2021 include Dollar Tree Management, Hobby Lobby, Dick’s Sporting Goods, Big Lots, Dollar General, Planet Fitness, and TJX.
From a geographic perspective, national retailers have concentrated their Midwestern footprints in the largest cities across the region. Nine of the ten largest cities in the Midwest recorded positive demand formation (net absorption) over the past year. The one exception was Minneapolis, which was the worst-performing metro in the Midwest, losing nearly 550,000 square feet of retail demand. The best performing Midwestern metros for retail demand formation were Chicago and Detroit at 3 and 2.1 million square feet, respectively. In total, the top 10 largest Midwestern markets recorded positive net absorption of 9.5 million SF in 2021 compared to -3.9 million square feet in 2020 and 3.8 million square feet in 2019.
Bifurcation in Demand Creates Winners and Losers
While the story surrounding retail is certainly more positive today, retailers continue to reorient their footprints and store layouts, which is driving bifurcation in demand based upon geography, box size, and center type.
National retailers have grown more selective on locations, leaving secondary and tertiary corridors with older assets in the process. As retailers have generally targeted the same well-trafficked locations in middle to high-income areas of larger MSA’s, property-level performance has depended significantly on the surrounding demographic profile. For example, shopping center properties with an average income greater than $100,000 within a 3-mile radius are reporting vacancy rates that are nearly a third lower than those with average incomes lower than $50,000.
At the same time, urban and central business districts across the Midwest have not yet bounced back to pre-pandemic health due to still stunted levels of foot traffic from office workers and tourists. Many suburban areas on the other hand, especially those with growing and relatively affluent populations, have seen demand for space increase significantly since the depths of the pandemic. Suburban retail properties across the Midwest have recorded 11.7 million square feet of positive net absorption over the past year, while properties located in urban areas and central business districts have not yet seen the same recovery.
In addition to repositioning physical locations in response to changes in demographic trends, many retailers have shifted the size and layout of their stores and by extension, their space needs. Numerous large national retailers have been opening smaller format stores, while larger department and apparel retailers have been closing mall-based stores while opening new locations in neighborhood and community centers. As such, vacancy rates in malls across the Midwest continue to hover well-above pre-pandemic levels at over 10%, while average vacancy rates in Midwestern neighborhood and community centers have fallen back to pre-pandemic lows just under 8%. On the opposite side of the spectrum, freestanding retail properties are almost completely occupied across the Midwest, with vacancy sitting at just 2%.
Retail Transactions Hit Record High as Investors Target Stability
As consumers returned to stores, so too have investors, as growing confidence in the retail sector and ultra-low interest rates have fueled record levels of transaction activity. Over $18 billion of retail property traded hands in the Midwest in 2021, a 36% increase from 2020 and $3.4 billion more than the prior annual record of $14.6 billion set in 2016. Helping support the record level of transaction volume in 2021 was significant appetite for single-tenant net lease deals, as investors increasingly targeted, and were willing to pay up for properties subject to long-term leases with credit tenants. Over $9.1 billion of single-tenant assets traded across the Midwest in 2021, a fact which contributed to the record average pricing for retail assets during the year. While the average price for all retail assets traded during the year hit a new record of $114 per square foot, the average price paid for a single-tenant asset was over $150 per square foot.
Retail Outlook Grows Cloudy
Given still significant excess savings and an extraordinarily tight labor market, American consumers should have enough firepower to continue propelling the retail market forward in the months ahead. However, headwinds are growing. Inflation is sitting at a multi-decade high, in part due to skyrocketing energy costs, while the Fed has begun raising interest rates. Thus, with consumers, retailers, and investors all facing higher costs in the year ahead, the probability of a pullback appears to be growing.
