On this episode of The Boulos Beat, Greg Boulos sits down with George Cacoulidis, CEO of Grand Metro Properties, to discuss his journey from legal practice to leading the family business, founded by his father in 1985. George highlights the company's expansion in Maine and New York, its focus on stable properties, and the impact of COVID-19 on its portfolio. Greg and George discuss the importance of tenant relationships, conservative debt management, and adapting to market changes. George also shares insights on the challenges of running a family business, the potential of AI in real estate, and his succession plan. The conversation concludes with George's vision for Grand Metro's legacy.
Episode 78: Featuring George Cacoulidis, CEO, Grand Metro Properties
On this episode of The Boulos Beat, Greg Boulos sits down with George Cacoulidis, CEO of Grand Metro Properties, to discuss his journey from legal practice to leading the family business, founded by his father in 1985. George highlights the company's expansion in Maine and New York, its focus on stable properties, and the impact of COVID-19 on its portfolio. Greg and George discuss the importance of tenant relationships, conservative debt management, and adapting to market changes. George also shares insights on the challenges of running a family business, the potential of AI in real estate, and his succession plan. The conversation concludes with George's vision for Grand Metro's legacy.
Greg Boulos 00:00
I'd like to welcome our listeners to the Boulos Beat podcast. I'm your host, Greg Boulos. The Boulos Company is Northern New England's largest commercial real estate services firm, with offices in Portland, Maine, as well as Manchester and Portsmouth, New Hampshire. We've been selling and leasing real estate in Maine and New Hampshire since 1975. This podcast is designed to provide insight into means real estate movers and shakers. And speaking of real estate, I'd like to welcome George Cacoulidis, CEO of Grand Metro Properties, a real estate investment company, to the bowl of speed. George is the second generation CEO of Grand Metro Properties, which was founded by his father John in 1985. Over the decades, the company has built and operated a portfolio of commercial properties in New York and more recently in Portland, Maine. Having grown up in the business and built a successful career in the legal and corporate side of commercial real estate, George assumed leadership of Grand Metro in 2015. Since then, he has continued expanding the portfolio across Maine and New York, while guiding the firm to its next chapter. George, great to have you with us today on the Bowl of Speech.
George Cacoulidis 01:12
Thank you for having me,
Greg Boulos 01:15
George. You started your career at Grand Metro Builders, left there to build a 20-year corporate transactional law practice, and then came back as COO. What drew you back to the family business, and how has your legal background shaped the way you approach real estate?
George Cacoulidis 01:31
That is an interesting question, and one I will try to answer. When I grew up in the business, I was heavily involved in all aspects of the business, and my father was a hands-on developer, so he threw me into everything. He was a
Greg Boulos 01:56
builder too, right?
George Cacoulidis 01:57
He was a builder. He he enjoyed building quite a bit. That was his passion. He liked to build things, and he also was a very strict disciplinarian and ran a tight ship, tight-fisted control. He and I, at one point, as I got older, just were bumping heads quite a bit. I had a view of how things should be done. He had a view. I respected my father's view tremendously. I just saw things that I would like to have performed differently. He didn't see it that way, and so I felt it was time for me to leave and try something new. I was concerned that everything was as it should have been at the time, going through my father for all of his decisions, but it was leaving me to the side and affecting my growth, my knowledge base, my experience. So I left and I started a legal career, and what I had done, I had noticed when I broke out as a solo attorney that this was the early '90s. All of the legal work that I found in real estate that was exciting and stimulating to me, was going away and was going in house. If you could imagine, in the 1990s, a big real estate development firm, if they paid an in-house attorney $125,000 a year, they were looking at $100 an hour, so the math made sense for them to bring people in. And as they brought people in, I couldn't compete with that. And having a need and a desire to stimulate my mind and not just work on rote projects. I had been involved with motorcycles and bicycles all my life. Passions of mine:
Greg Boulos 04:31
motocross,
George Cacoulidis 04:32
motocross, and I raced, and I wrote a letter to a magazine, believe it was called Road Racing World, gentleman who owns it named John Ulrich, never had the chance to meet him in person and thank him. Unbeknownst to me, I had written a letter to him seeking his personal advice. How do I get? Involved in racing, it was a passion of mine. Please let me know what do you suggest I do. Unbeknownst to me, he printed my letter in a letter to the editor, and I got two phone calls. One was from a gentleman named Steve DeCamp, who owned the Hooters Suzuki motorcycle racing team, and another from Bob Mcclain, who owned Red Bull Yamaha, the top American team in Grand Prix racing in motorcycling, which is now Moto GP. Bob took me under his wing and taught me the business, and I got to meet a lot of exciting people. The sport I loved, I was there meeting everybody that I had loved. He brought me to a gentleman that brought me to a gentleman, Don Panos, Don Panos was an interesting guy. He created Mylan Laboratory, so the EpiPen and Elon Pharmaceutical transdermal medication, the the cigarette patch. Very interesting guy. He got heavily involved in building road cars, racing cars, and bought four race tracks. I got involved with him. He lifted me from my boot straps and taught me the business. I was heavily involved ultimately in the racing series called IMSA, and I represented him across a number of platforms. His private business, mostly his motorsport, and that luckily gave me the ability to assemble and learn how to assemble teams and deal with many different players. I was thankfully had become a trusted advisor to Don and other clients I had, and so they brought me into their other businesses outside of motorsport. It taught me how to develop a team, and learn how to work in the corporate environment and in multiple industries. Of course, I didn't do it all on my own. I had to put together teams, and so I went back to the business with my father because his health was waning. My mother and father were getting older, and that gave me the skill set I needed to come back and take over the business.
Greg Boulos 07:57
Do you think it was your father who influenced you the most in your life, or were these other gentlemen's that you mentioned in terms of those businesses who influenced you?
George Cacoulidis 08:07
Predominantly my father.
Greg Boulos 08:09
Yeah, I you know I knew your dad, and he had a very strong personality, colorful guy, and I actually enjoyed my my friendship with him, and and then he did get ill, pass. How long ago?
George Cacoulidis 08:25
2018. 28. He'd probably still be here with us, but unfortunately, he developed Parkinson's, and that beat the stuffing out of him. Unfortunately.
Greg Boulos 08:39
Yeah, that's a nasty disease, and it's progressive, and it's long-lasting, and has other side effects too. I've heard friends who have it. A
George Cacoulidis 08:47
gentleman like my father, it took away his essence because he was-I think you would agree-he was larger than life. He was a very big, prominent. He was small in stature physically, but he was very big and outsized as a thinker and a business person.
Greg Boulos 09:12
He was a presence.
George Cacoulidis 09:13
He was a presence.
Greg Boulos 09:14
And speaking of your dad and some stories, I I know that he renovated Yankee Stadium.
George Cacoulidis 09:22
He did
Greg Boulos 09:22
the the old Yankee Stadiums, I believe, in the 70s was it? And he told me a story, and you can tell it better. But he buried some equipment in the outfield, which is still there. Or what's that all about?
George Cacoulidis 09:38
Likely, it's still there. The story, what occurred, if you remember New York in the 1970s, this was right around the time you know the famous New York Post front page, Ford to New York dropped dead.
Greg Boulos 09:56
I remember that
George Cacoulidis 09:57
and. What occurred? We were in the midst of the Mayor Beam mayoral time in New York, and there were New York Yankee Stadium was being refurbished, and politically, it was starting. People were getting angry. We're spending so much money on Yankee Stadium. How could we be spending resources there and not elsewhere where we need it? And so, it was a political hot potato, and at the time, Mayor Beam decided, "I'm going to pay a visit to Yankee Stadium and take a look and decide whether we keep the project going. So, what my father had done is he knew visually he had to make it look as though we're right on the verge of finishing and completing this project. So what he had done, he had taken the entire infield, put the sod down. It looked like a baseball stadium, like it should have been. And Mayor Beam came and said, "We can't stop now. We're we're almost there, and we have to keep going, and so.
Greg Boulos 11:23
And what about the equipment? Is it because some other the subcontracts subcontractors didn't get the equipment out? That's all I remember him saying.
George Cacoulidis 11:31
He needed to move fast, and what I remember, I was a young boy at that time in early teens. There were so many competing interests, as you can imagine. Certainly, in the 1970s, with union labor, and it was a time different than what we have now. And as a as an aside, for as an example, they would put up light fixtures along the corridors. The unions, at the end of the night, the other unions would take sledgehammers and knock the light fixtures off. They wanted the job to keep going. The unions would only allow electricians to lay 20 feet of conduit, all these sorts of things going on. So in that backdrop, no one was cooperating with each other. There was a lot of backstabbing, a lot of competing. So my father just dug a hole and buried everything. Yeah,
Greg Boulos 12:39
great story.
George Cacoulidis 12:40
Yeah, and he-you had to be tough. I can tell you
Greg Boulos 12:45
that. He was tough. So I remember in the early '90s. I think that's when your dad came up. Yes, I met with him, and he was interested in what we now call Bug Light. It was 60 acres of land that Irving Oil owned, formerly owned by Al Glickman, who was a real estate developer, and long story made short, your father purchased the land and had a vision to put up two or 330-foot-tall buildings, and he wanted to connect those buildings by cable car to Fourth Street in in the old port or the Eastern Prom, somewhere along there, and I never knew if your dad was serious about that or was doing it to get a rise out of people because the public did not react well to that, and I think he enjoyed that. What's what's the backstory on that? Do you know?
George Cacoulidis 13:39
He was a visionary. He really did want to do it, and he had an ethos. I would describe, as they would say today, "Go big or go home, and that's how he conducted himself. But he had a vision, and if you remember, he wanted to build a convention center. And the problem was, he brought New York attitude, big attitude, to South Portland, Maine, Maine that wasn't ready for it, and he was talking about very big structures. He had bought. We had the property on Fourth Street. He was going to have the cable car go across. In the fullness of time, if you look at it now, imagine you know the market. If there was a convention center there, it actually, in my estimation, would have been successful. I think Portland would have been able to undersell Boston and New York. It is a travel and leisure location. Great restaurants. Who wouldn't want to do a convention there? But
Greg Boulos 15:07
and now, now more than ever, and we still don't have a convention center,
George Cacoulidis 15:10
right?
Greg Boulos 15:11
And it's really needed. The most, the biggest capacity I think in Portland is the Holiday Inn. We can fit maybe 600 to 600 to 650 people,
Speaker 1 15:21
right?
Greg Boulos 15:21
And that's not-I mean, a city of our size, in my opinion, needs a convention center.
George Cacoulidis 15:25
Yeah, I don't know that such a project is going to come along anytime soon, and in my estimation, not in this political climate. Yeah,
Greg Boulos 15:39
it's unfortunate. Your family originally-I first heard about your family when they purchased Hope Island out in Casco Bay, and that was their first introduction to Maine. Yes, probably your first introduction, right?
George Cacoulidis 15:54
Yes.
Greg Boulos 15:56
And then from there, they jumped. I think over to Bug Light, purchased that property.
George Cacoulidis 16:02
Yes, my father and mother wanted. My mother wanted to get back to her roots. She grew up on a farm, and my father was looking. And in those days, if you remember, Greg, you'd open up the New York Times, the Wall Street Journal, and there were ads for property. You know, there was no internet; didn't exist at the time, and or well, it existed, but it wasn't open up to commercial use. He found the island, and they had been looking in Virginia and Maryland for horse farms and so forth, but he couldn't pass up a deal. And he also couldn't. Million
Greg Boulos 16:52
7,
George Cacoulidis 16:53
million 3,000,003,
Greg Boulos 16:54
the
George Cacoulidis 16:54
million three. He for
Greg Boulos 16:55
8088 acres.
George Cacoulidis 16:57
Yeah, and he but he got that property. There was someone else competing for it, and he was able to get that property because the purchaser that was on it before him was demanding a lot of concessions. You need to do this and X, Y, and Z. And he said, "I'll take it as is. And that was because he was a builder, and he saw what he could do with it, and that became their joy. And my father, being my father, he started coming to Portland more often. He started saying, "I like that property. He started seeing things, and he saw opportunities.
Greg Boulos 17:38
And you, not to get off track here, but your mother flew a helicopter, right?
George Cacoulidis 17:42
She flew a helicopter. How do you fly back
Greg Boulos 17:43
and forth?
George Cacoulidis 17:44
She was a helicopter pilot and a fixed wing pilot, so she was dual rated. And they would they had their own plane, and they had a Piper Malibu, which is a nice high performance single prop plane, but could go to altitude of 32,000 feet, so it was a nice plane, like a Ferrari of little planes, and they would come up often.
Greg Boulos 18:11
And they put a landing pad, helicopter pad, out there.
George Cacoulidis 18:14
Yes,
Greg Boulos 18:15
I remember. Going back to to George, you. What was the first property you redeveloped or developed, either here or New York?
George Cacoulidis 18:26
Myself personally, I started when I took over the reins of the family business, not truly as redevelopment in a grand scale. I took the portfolio and I started analyzing its strengths, its weaknesses, and determined what should stay and what should go. At the time I took over the portfolio, what had happened? My Father had really gotten ill, and this was part of the downside of being the sole focus of the business and the sole decision maker. So a lot of things were going to the wayside, and I had to correct them, and I spent a lot of time correcting it. So there were buildings I invested in. In terms of certainly, this is music to your ears. I invested heavily in the brokers. I viewed the brokers as the lifeblood of my business, so I became very friendly with the brokers and encouraged them to come. I had to overcome my father's reputation, who thought differently of real estate brokers. He was-he
Greg Boulos 19:54
could be a little tough.
George Cacoulidis 19:55
He could be a little tough.
Speaker 2 19:57
Yeah.
Greg Boulos 19:58
What do you own for? Properties in general. I mean, like office buildings in Portland and also down in New York, or and is it New York City or is it Long Island or
George Cacoulidis 20:08
Long Island?
Greg Boulos 20:09
Okay,
George Cacoulidis 20:09
we had properties. So I would say over the years we had a lot of industrial property in Queens, New York. We've since sold that off. We now have three office properties on Long Island, and we have quite a number of office and industrial properties here in Maine. And I'm about to purchase next week an industrial property in North Carolina.
Greg Boulos 20:42
1031.
George Cacoulidis 20:44
1031.
Greg Boulos 20:44
You describe Grand Metro's focus as stable properties, lasting relationships, and workplaces tenants can depend on. How does that philosophy influence your day to day management decisions?
George Cacoulidis 20:58
That's my ethos. I think my business and the portfolio must be service-oriented. Service-oriented because without my tenants, I have no business. I am not in the business to own empty buildings. And today, today's tenants are unique, changing, and you have to adapt to it. And I think if you don't service those tenants well, you're in trouble.
Greg Boulos 21:36
They'll go elsewhere.
George Cacoulidis 21:37
They will go elsewhere. And today's costs, especially in office buildings, to replace such a tenant is prohibitive.
Greg Boulos 21:47
I mean, fit-up costs for an office space, say 10,000 square feet, is what 80 $100 a square foot.
George Cacoulidis 21:52
Yeah, yeah, easily. $60 is a bargain, and it used to be
Greg Boulos 22:00
20 bucks a foot.
George Cacoulidis 22:01
20 bucks a foot was the Taj Mahal.
Greg Boulos 22:03
Yes,
George Cacoulidis 22:04
and now, if I could get away with $20 a foot, I'd be I'd be happy.
Greg Boulos 22:12
What have you learned from running a family business? Because you've got siblings somehow involved with the business, right?
George Cacoulidis 22:19
My siblings are not involved, and I'm very thankful that they've put a great deal of trust in me. And I do not want to ever take for granted that trust. They've allowed me to run the business and make sure the portfolio is operating. I believe I have succeeded in that. Thankfully, they, you know, I will keep them up to speed on what's going on. But they're much older than I am, they're at a different phase of their lives, and this a portfolio and a family business portfolio is interesting because what you really need to operate it as a benevolent dictatorship, or every one of your family members best get along and cooperate very well.
Greg Boulos 23:33
Which one are you?
George Cacoulidis 23:34
I am the benevolent dictator, and not and truly benevolent. I don't like to take for granted the trust that my family has put in me. The problem you have when now I have seven-it's seven of us all together. So six other siblings-that's herding cats when you have different personalities, and in today's climate and economy, you can't be herding cats. You really need to have a cohesive and cooperative environment. And not that my family are the opposite of that. They they have different Experiences, different skill sets. They really never were involved in the business. I was the only one involved in real estate.
Greg Boulos 24:30
Plus, you need to be able to make decisions quickly.
George Cacoulidis 24:33
You need to be life on your feet.
Greg Boulos 24:35
Seven, forget it.
George Cacoulidis 24:36
Yeah, you need to be life on your feet, and that is you're correct. One of the the benefits of how I operate the portfolio, I am not a luxury liner that takes forever to turn. I'm more in the range of a speedboat that can move. And adapt quickly,
Greg Boulos 25:02
agile,
George Cacoulidis 25:02
agile.
Greg Boulos 25:04
You know, in 2017, you purchased an office building, 82 Running Hill Road, and at the time, it was occupied by I think Fairchild,
George Cacoulidis 25:14
correct,
Greg Boulos 25:14
just right on the main turnpike, right across from the mall. And from what I understand, that was a competitive situation in terms of bidding on it or trying to buy it. Several people interested in it. What did you see in that building that made you be the successful one to purchase it? So obviously you paid more than others might be willing to.
George Cacoulidis 25:35
Well, interestingly, I know your brother built that building. So as a compliment, I thought the building was a sound construction quality property. I liked it. It had a good look to it, a good good structure. As I said, I bought it from Dead River, and essentially I got a 13-year lease from them. So they
Greg Boulos 26:07
sold it and they they leased it back from you. They sold it
George Cacoulidis 26:09
and leased it back. And at that time, South Portland was and Portland was on the rise. Everything Business was-I don't want to say booming, but it was-it was a very good environment at that time, so it made perfect sense.
Greg Boulos 26:30
Yeah, just three years until COVID.
Speaker 3 26:32
Yeah,
Greg Boulos 26:33
which nobody saw coming. You know, if you look across your portfolio, is there one building that you are particularly proud of, or like better than the others, or is it like children, and you know you love them
George Cacoulidis 26:49
all? I'll answer it this way: Before my father passed away, he gave me one great piece of advice because you can get sentimental, you can be driven by ego. You have to be very careful. And he said to me, "Don't fall in love with the building. Fall in love with the money. How is cash flow? How is the cash flow? How is this asset Performing, and so I have let buildings go that had tremendous sentimental value. In Long Island, there were two buildings we had: 591 and 595 Stewart Avenue. I grew up in those buildings. I worked very hard in those buildings, and I let them go because they were underperforming. My father had sold them before I came back into the business, giving seller financing to a group of investors, and the properties were taken back in very bad condition, and we couldn't overcome some of those issues. So I had to let it go, and so now I think in rather than a building in particular, and I do really enjoy and like our buildings tremendously. I take a lot of pride in how I operate the buildings, but more so, I have pride in the way we service, the way we work with our tenants, with brokers, with our vendors, that ethos of being a good operator. Being a good operator to me is more important than the particular asset itself. If you're a good operator, then the asset's going to be a good asset.
Greg Boulos 28:58
You know, you mentioned you took a second mortgage. Sounds like that didn't work out for you on one of those buildings where you sold it but financed part of the sale.
George Cacoulidis 29:10
On the one I was just talking about, 591 and 595. My father had seller financed it, and the group just the market fell out from underneath them, what hurt them was the 2008 financial crisis. They, as you know, my father was a tough negotiator, and he could extract good numbers, and they couldn't keep up with it. So we had to take the property back.
Greg Boulos 29:46
Does that make you adverse to doing second mortgages? No,
George Cacoulidis 29:49
I would. There's opportunity in that. It you know you really have to war game the numbers and the data. And it also depends on who the person is and how much you watch that property. If you now the properties I was just mentioning, the 591 and 595, no one watched it, just collecting the income, while those buildings were in deplorable condition, so I'm not adverse to it. In certain instances, it could be a tremendous boost to cash flow versus what the market rates are for per foot for for a sale. But you have to be careful. Yeah. Who are you getting in bed with, so to speak?
Greg Boulos 30:44
Who you going to the dance with?
George Cacoulidis 30:45
Who you going to the dance with?
Greg Boulos 30:47
What's the worst real estate decision you ever made? And if you're like me, there have been many, but we all have them.
George Cacoulidis 30:58
Yeah. Well, some of my best decisions have been decisions I never executed. Glad I didn't execute them in the fullness of time. Looking at what's happened,
Greg Boulos 31:09
I mean, like the best deal you ever did was the one you didn't do. The
George Cacoulidis 31:12
one I didn't do. There was a series of properties I bought within the past five years, that it took me away from my ethos. My I allowed my ego to influence me, and it bit me. It bit me back. So, good learning lesson. Don't ever want to be back there again. Thankfully, very conservative, very conservative on debt and how we operate properties. So I was able to survive it, but it bit me.
Greg Boulos 31:57
And that's happened to all of us. Have there been deals that you've done or missed that you wish you had purchased.
George Cacoulidis 32:07
Yes, there was one deal on Long Island that because I missed that deal, I ended up doing the deal I was just mentioning
Greg Boulos 32:21
that you shouldn't have done
George Cacoulidis 32:22
that. I shouldn't have done. But what had happened? There was a very nice 250,000 square foot warehouse property on Long Island, right on the Long Island Expressway, out east in the in the exit 60 range, which is a very good location, Suffolk County, and we had we were agreeing on a $27 million purchase at the time, and the seller came back and they were tough guys, very good operators, and said no, 31 million, and I said, fellas, this is throwing my numbers off. Now, it threw my numbers off, so I I passed on it. What happened? Industrial went through the roof, and the value per square foot Almost doubled, so yeah, I regret that one.
Greg Boulos 33:25
Yeah, an industrial stayed flat for decades, pretty much, and then around COVID, right, went through the roof.
George Cacoulidis 33:33
That building was empty, and a pharmaceutical company came in and took over.
Greg Boulos 33:41
Was it Abbott Labs.
George Cacoulidis 33:43
No, no. This was a former Lauder Estee Lauder property, so very well constructed. Needed a new roof. So on top of that increase in purchase price, 250,000 square foot roof is pretty penny, but I wish I had bought it.
Greg Boulos 34:05
That was Leonard Lauter. That that same family.
George Cacoulidis 34:08
Yes.
Greg Boulos 34:09
Yes. You know he lived lived part time in Cape Elizabeth until his passing. Nice man. You know many of our listeners would love to get into real estate investing, but as we both know it's not easy. What advice would you give somebody who wants to build a successful real estate investment business?
George Cacoulidis 34:30
I'm going to joke and then I'll try to get serious. I'll like the Steve Martin joke: first, get a million dollars, then invest it. It's not easy. You either pool together investors and decide which asset class you want. It's very similar to the question that you asked me about my family. You've got to get an investor group that you can work with, because some investors are louder and more proactive than others, and more demanding. So it's not easy, but it can be done. It you have to ask yourself. The first question is, how hard do I want to work? How hungry am I for this? Because despite everything that we hear politically in the United States and so forth, it still comes down to how hard do you want to work. What people are not realizing is, and I've been guilty of it. I think everyone's been guilty. I've been like, well, I don't want to work that hard. Well, I look at my father, and he would say to me, and he did. He said, I when I came to this country, I was below zero, and he worked very hard. And in those years, he he built up. So I my advice is hard work, trying to put together a good business case, and looking at that asset or that asset class very closely. You have to have some experience coming into it with no experience. You're going to get hurt. You have to. You have to have started a career in real estate, or have some people you don't necessarily need formal training for it, you just
Greg Boulos 36:42
some knowledge,
George Cacoulidis 36:43
some knowledge in street smarts doesn't hurt.
Greg Boulos 36:47
You know, you talk about pooling or getting a group of investors together to buy a building, and I always find that when you do that, everybody's best friends, everybody's you know high fiving when the papers are signed, but you really don't know who a good partner is until there's a cash call. Am I right?
George Cacoulidis 37:04
Agreed. Agreed.
Greg Boulos 37:06
And when there's a cash call, that means cash has to go back into the property versus pulling out a monthly check. Then you see who's who's a good partner or not.
George Cacoulidis 37:16
Well, our portfolio has no partners. It's me, it's my family. That that's it, and that's the reason why. Because I, talking about the example you just gave, I am adamant that the properties must be properly maintained, and you have to be careful. You can overdo it. You can over maintain, you can over amenitize, you can overbuild, but you need to keep that asset as a quality asset. Yeah,
Greg Boulos 37:50
and the purpose of that is to keep it full.
George Cacoulidis 37:52
Keep it full, and if you have an investor on the other side contesting every postage stamp that you want to spend, you've got a problem.
Greg Boulos 38:02
Yeah, recipe for for disaster. How was your commercial real estate portfolio impacted in general by COVID?
George Cacoulidis 38:12
It hurt. Thankfully, we survived it. We survived it because of the ethos I've been talking about, and being conservative, so conservative in debt, but having to reinvest a lot of money over $10 million on one building in particular, and it hurt. We survived COVID as it was ongoing. Where we got hurt, and thankfully again survived it. Where we got hurt was the downsizing, the correcting afterwards. Here in Maine, hybrid hybrid work is here to stay. I embrace hybrid work. Whether a tenant is 30,000 feet or 3000 feet, it's a tenant. Tenants are not going away. Office is going through a lot of evolution and change, it's not entirely going away, but you have to adapt and grow with it. When we were hit with tenants, you know, 70,000 square foot tenants saying, "We're leaving, I had one tenant that was the Marshawn Eyewear Company, owner of many many eyeglass brands. Used to be owned by an individual, then was sold to private equity. Private equity said, "Hey, fellas, they happen to have just bought a Canadian company, which was very similar to Cohen's fashion optical or Lens Crafters. I think 1000 retail locations. So they just made this purchase. We're getting hit with COVID on that purchase because retail was lock solid, and so they said, "Okay, highfaluting corporate office with the CEO with a 2,000 square foot private office. You're moving into the warehouse we own, and so we had a deal.
Greg Boulos 40:44
Did that really happen?
George Cacoulidis 40:45
That really happened. Did he
Greg Boulos 40:47
stay with the company?
George Cacoulidis 40:48
He stayed with the company, but he's
Greg Boulos 40:52
probably was not very happy.
George Cacoulidis 40:53
He was not very happy, from what I understand.
Greg Boulos 40:58
You know, you folks have traditionally focused on office properties. Are you rethinking that strategy in this post-pandemic area? Era,
George Cacoulidis 41:08
I am. The problem I have with office right now is the continuing compression of our profits, continuing expansion of operating expense, you know, there are tenants out in the market. You know, tenants are evolving and changing. You and I have worked together now, so we know, and I know the quality, and I'm very happy to work with your group. You understand what's happening on my side of the equation. One of the problems I have with brokerage that doesn't understand my side of the equation-they come with unrealistic demands, or you know-they have a tenant that believes, hey, it's time to beat up the landlord, and we can get a, but they don't realize. Then you're not going to get a deal, or you're not going to get a quality property. But that has made me reanalyze. I love office. I grew up in office. It's my favorite form of ownership of asset class, but I can't have any sentimentality to it. So I'm in the midst of going back more to industrial. We'll look at retail quality assets, but to balance out cash flow, because office properties can be profitable if you run them well, but your cash flow constantly takes a hit. I can tell you there are times where you know every month I go through payables, and the payable list $14,000 for. for 100 horsepower motor just passed. VAV controller $9,000. You name it. Plumbing work. You know the new battery pack flushometers. Oh, we had to change out six of them and so forth, and the prices are going up and up and up, and so on. Any given, I have one building. I have to change the boiler plant. It's a $600,000 change. Okay, what is got
Greg Boulos 43:36
to do it?
George Cacoulidis 43:37
You got to do it. You've got to keep servicing the property. That's almost wiped out the net income for that year.
Greg Boulos 43:46
You know, sometimes I compare office buildings to apartment buildings, and you know, when a tenant comes and rents a an apartment, they don't come in and say, you know, I'll take the apartment, but you got to move this wall here, and I want a second bathroom, and you know, by the way, I want the entrance redone. That's typical in office space.
George Cacoulidis 44:05
Very
Greg Boulos 44:05
typical. So every five years, I call it rip and tear. Tenant leaves, you got to rip out everything, tear it out, and then rebuild it. It's very, very expensive.
George Cacoulidis 44:15
I think in years to come, that has to change. If prices keep growing the way they are, material prices keep growing, it has to change, or or the change in that landlord say tenant you do the work, or tenants get more realistic on what they need and how they want to use that space. I think that's occurring as we go, but yeah, it's it's a rough cycle. You every 10 years to plow millions back into because someone wants to re. Range the front lobby, you get tired of it. Yeah,
Greg Boulos 45:04
and it's very expensive, and the rents really haven't escalated all that much for office space, at least in this market in Portland.
George Cacoulidis 45:10
No, I don't think they've. You know, there certain key cities, New York City,
Greg Boulos 45:16
is doing well.
George Cacoulidis 45:16
Is doing well. The prices have escalated. Long Island, just outside of New York, we're seeing rents slightly higher than when I started in the in in the business. You know, as a young man in the early '80s. That's not growth.
Greg Boulos 45:38
That's not a good model.
George Cacoulidis 45:39
That's not a good model.
Greg Boulos 45:41
Low interest rates fueled acquisitions during COVID. Now that borrowing costs have increased dramatically, how has your company adjusted its acquisition and refinancing strategies?
George Cacoulidis 45:52
We are taking a close look at every deal because of it. We Are hopeful. In time, prices will adjust, so we can deal with the interest rate environment. Until then, it impacts the property I'm buying in North Carolina, as an example. I'm paying all cash. If I need to finance it at a later date or desire to do that at a later date, I'll do that. It's it's making that decision much more difficult.
Greg Boulos 46:33
When you do finance a property, do you try to lock in like 10 year term, 20 year amortization, or do you go for short a five-year, anticipating that the rates will come down?
George Cacoulidis 46:48
All of the above. I always look at the portfolio itself, and there's a few things that I think are very important to do. So you want your debt to come due all at staggered times. You don't want it all coming due at once, like a tsunami, like a tsunami putting pressure on the portfolio. The climate we're in right now today is a perfect example of that. By the way, the bane of my existence are so-called Wall Streeters getting on CNBC and other news programs and saying office is dead and no one wants to be involved in it. And what happens? The banks are listening to that, and some of these people are macro thinkers. They don't know the the nuts and bolts of our business, and so it's dissuaded banks to stay away from it. Like anything in life, now we have this big swing away from that asset class. They're starting to come back Slowly, but it makes a big difference and a big impact. So, my point is: now that that COVID did that to office, if had I had all of my office debt coming due at one time, I could be in serious trouble, right? Because who's going to lend to me? Right now, it's the institutions that are doing. And the only reason, thank goodness, I just finished a refinance, is because I like to. We're good operators. You know, the debt I put on this one property I just refinanced was 50% LTV. So we're safe. We're good operators. The building is filled. We put our money where our mouth is and keep the asset operating. But it's it's challenging.
Greg Boulos 48:58
So you mentioned that you're staggering your debt, and that's intentional. How else do you prepare for a downturn? Because they do come;
George Cacoulidis 49:08
they always come. I'm looking forward to the upswing, but I don't see it on the horizon just yet. You have to keep a close eye on on the market itself, and so I, for instance, why I like to talk to you, as an example, you're you're on the the front lines. How are tenants acting? What are They thinking how I always look at the economy because I may be doing well right now, but if my tenants aren't doing well, well, eventually it's going to come.
Greg Boulos 49:52
Flows right through.
George Cacoulidis 49:53
It's going to come for me. So I look at what's happening to our tenants and the economy. In general, it's the best I can.
Greg Boulos 50:04
And what markets and property types are you most bullish on today? Not office, right?
George Cacoulidis 50:10
I I really like office. There's select markets that still work. I think the economy Right now, has tamped down on where we could have been, and we are still in a state of flux. So I would never say no office, but right now I like industrial. I am looking at, you know, retail, medical office. Medical office, you need to be careful with because it's very expensive in terms of the build out. But the fundamentals never change: location, your tenant base, the economy, and is there growth where you're looking to buy that asset?
Greg Boulos 51:08
And the medical tenants tend to stay where they are. They obviously outgrow it or just can't stay there anymore because of because of growth. But you put a medical building next on hospital, it's probably going to do pretty well,
George Cacoulidis 51:23
right?
Greg Boulos 51:25
And George, what trends are you seeing that you think will have the greatest impact on commercial real estate over the next few years? Is AI influencing anything?
George Cacoulidis 51:37
I think it is. We use AI in our portfolio, I view AI as a very good tool, and I've been telling my team members: do not lose critical thinking. AI is not here to give you the answers. AI is here to enhance your ability to get to the answer. So I see it making us more productive, and I'll give a real-world example of that. Now, when we go out to price work in any of the buildings for motors, HVAC repairs, concrete repairs, whatever it is, we will put it through an AI search, and amazingly, in a rapid time frame, you will get good quality research, so you can tell whether the vendor that's offering you a price is within reason or not. So that AI is definitely going to be a big help. I think it's going to impact buildings as well. I think, like anything, it you have to adapt to the economy. You have to adapt to technology. So, back in the day when we started, there was no internet in buildings. You know, there were telephone lines. Telephone closets were large office. You know, 200, 400, 600 square feet in a building, right? Now it's a cable, and so you had to adapt to it. You had to make the buildings internet ready, and we're going to need to adapt to these things. But I think the investment in AI and AI technologies is going to help. I think it's going to help with utility cost and operations in terms of timing and looking at you know HVAC for your buildings, how operating times and looking at the weather. These things are evolving and just starting, but I think it's going to get better. But you have to embrace it and adopt to it.
Greg Boulos 54:11
George, you own several prominent properties around Greater Portland. Let me mention a few, and I'd love for you to tell us briefly something interesting about each one. Whatever comes to mind, the 120,000 square foot Two Monument Square downtown Portland office building. I sold that to you, Dad. By the way, one
George Cacoulidis 54:31
of my favorites. Yes, I know, I know, I know. One of my favorites. Very proud of that building. Proud of our tenant mix in that building. We have some prominent main businesses and funds and family businesses there. I'm very proud of the. Amenities we've put into that building. We put two golf simulators in, which thankfully our tenants love. We have a gym and an area. We're we're evolving with the change in the workplace. That building, to me, shows our adapting to the times and our service mindset.
Greg Boulos 55:30
Pick another one here: 82 Running Hill Road, which is 120,000 square foot office building in South Portland. We talked about this earlier. It's where Fairchild used to be yes. Anything come to mind on that? What sticks out in your mind?
George Cacoulidis 55:48
Love the building. Concerned over the market for tenants and the cost of construction, but adapting, we have been successful in retenanting or reupping some tenant leases, which bodes well for the building. I'm very happy about that. I think our reputation in the marketplace, I hope, and I believe, is that we're good operators. We'll keep tenants coming. I enjoy that building. I think it's a very good-looking building. I think it's well located, But COVID has hit that marketplace hard.
Greg Boulos 56:47
Certainly has. And out in that same general area, there's a building that you used to own, 300 Southborough Drive. I think that was like 120,000 square feet too.
George Cacoulidis 56:57
Correct.
Greg Boulos 56:58
And that was sold to Main Health. What what motivated that sale?
George Cacoulidis 57:04
That building, again, another building I loved, but could not be sentimental about. I believe that building was built by Unum, and it was designed as a single tenant building, and because of that, the layout was meant for a single tenant user. We lost the major tenant; they exercised their right to terminate, and we had a big bulk of space. COVID affected that market as well, and we were finding it very difficult to retenant the space. On top of that, we had complications with multi-tenanting the space required us to create new corridors, and so there was the perfect storm: unrealistic tenants in demanding. You know, we want a five-year term with the right to terminate after three years, and we'd like a $60 a foot build out. You can't. You the math just doesn't pencil out. And Maine Health had expressed an interest, and we came to an agreement that I I I could be happy with, and it made sense for them to buy that building.
Greg Boulos 58:49
And they are in it completely, all of it.
George Cacoulidis 58:51
They're in it complete. I believe there's one or two tenants left. There's an engineering firm in there, but I they are using it for, I think, their orthopedic division, and it's going to be an ambulatory surgery surgery center. From my understanding, they were the right buyer and user for the property. It's a good campus, and as a single tenant ownership and single tenant user, it made perfect sense.
Greg Boulos 59:28
So, what's next for Grand Metro properties? Are you looking at new markets, new asset classes, or are you going to double down on what you know best, which is office?
George Cacoulidis 59:42
Always evolving, always adapting. The short answer is all of the above. I have sold a number of properties in Portland. I, in the past, was pre-COVID was. Bullish on Portland and Maine. I still believe in Maine, but I'm trying to understand the market, how it's changed. I'm looking at other markets, looking for growth markets, but analyzing, trying to understand. I think the short answer is all of the above.
Greg Boulos 1:00:27
What is your feeling about Portland? Do you think it's more difficult to do business now than it was, or is it the homeless situation?
George Cacoulidis 1:00:37
That doesn't help
Greg Boulos 1:00:38
for downtown properties.
George Cacoulidis 1:00:39
That doesn't help. I don't know what to think of Portland. It concerns me. It concerns me because I do believe people should be helped. I have no problem with empathy. I think that is admirable, and I like to have empathy myself. But also, we're a complex society, right? So we we need to make things operate, and in saying that, I've watched over time. For instance, my own employees, you know, telling me and concerned of what's going on in downtown Portland. So, as an example, I don't know if you're aware. A week ago, I believe a homeless person just picked up a brick out of the sidewalk and smashed about $100,000 worth of glass on two office buildings.
Greg Boulos 1:01:55
One of yours?
George Cacoulidis 1:01:56
Not the the next door neighbor. One
Greg Boulos 1:01:59
1.1 Monument Square, One Monument Square,
George Cacoulidis 1:02:01
the Key Bank, and the other restaurant that was there, and I feel for them, you know, and I'm sure this person is back out on the street and not getting the help that they need. It's a complex answer, so I want to be careful not to criticize, you know, those in charge. But clearly, we have to look at other ways to to fix or to come to a solution, because you just can't have A climate where people are afraid to go to a restaurant just to walk out on the street-it it concerns me. I don't want to make it sound like it's completely dire, but I I I don't understand how we got here, I'm hopeful that I'm I'm I'm hopeful that those in power will will seek solutions that will be more helpful. But I, I don't want to criticize them 100% because it's not an easy answer. It's not an easy fix when you have such a yeah, just like the United States. If you have such competing interests, different people, it's not an easy answer, but something clearly has to be done. And sometimes empathy, too much empathy, and not allowing people to have the consequences of their actions or their choices can cause unintended consequences. That's a long answer. I'm I'm concerned and I'm hopeful that we can come to some solutions. I don't want to see people in dire need, but on the other hand, we have a business community. We have a safety issue. One of the buildings I was just mentioning. Thank goodness, knock wood, not one of our buildings. I know a security guard, young man was beaten, put in the hospital. You know, I don't know if it was inches to his life, but the poor young guy was hurt quite badly. We can't allow this to continue. It something has to be
Greg Boulos 1:04:55
done, George. What happens when you retire or? Or leave this earth. Who takes care? Who takes care of the properties?
George Cacoulidis 1:05:05
Well, I follow the advice of my estate counsel. Don't die. So I've been trying as hard as tax
Greg Boulos 1:05:12
advantages to die.
George Cacoulidis 1:05:13
It's it's been good advice so far, but it's not going to work.
Greg Boulos 1:05:18
Is this a succession plan? Or
George Cacoulidis 1:05:19
I do have a succession plan. I do. This is one of the things that was very, very important to me. Going back to the beginning of our discussion, when I came back into the business, my father did not have a succession plan. He did not anticipate what was going to happen to him physically, and fortunately, all those skills I had learned in my law practice gave me the ability to come in and start fixing these problems, and so that stuck with me. And I did not want to see that my daughter is the next generation. My family members. I want to see the business succeed into the next generations, knowing that family businesses usually after the third generation, typically going into the third generation, fall apart. We just hired last year Jackson Kaufman, good young man. He's got a finance degree, and he is in leading our finance and strategic development. He is an integral part of my succession plan. My team members, I am looking at succession very closely. With the idea being, I had seen this, and I, I, I think this statement is perfect. If the business can't operate if you leave, it's not a business; it's a career. If the business can operate when you're not there, it is a business. So I am making all the moves to make sure that if I am not there, the business goes on. Takes time. Takes the right team members. I live by the ethos. Also, a gentleman, I have to give him credit for it because he was near and dear to me. He was a wonderful thinker, Don Paynos, a really amazing businessman and an amazing person. And he always said, "Leave a place better than how you found it, and I thought that's the way to be, and that's what I want to do. So succession is very important, and we're taking those steps.
Greg Boulos 1:08:13
George, final question: What do you hope Grand Metro's legacy will be? Is it to leave your properties in? a better place than when you took them over.
George Cacoulidis 1:08:25
Yes, service, leaving it better than how I found it, and having trying as best as possible, always striving for a good reputation and being a good player in the locations where we are.
Greg Boulos 1:08:48
Well, I can tell you from the brokerage standpoint that you do have an excellent reputation with the brokers in the community.
George Cacoulidis 1:08:54
Thank you. That means a lot to me.
Greg Boulos 1:08:57
You can learn more about George Cacoulidis at Grand Metro Properties on their website, which is at grandmetro.com backslash LinkedIn at grand dash metro dash properties, and on Instagram at grandmetro dot properties. If you'd like to learn more about the Boulos Company, please be sure to visit us at Boulos.com. You can also find us at the Boulos Company on Facebook and LinkedIn, and at the Boulos Go on Instagram. And lastly, if you want to know the secret to owning real estate, it's pretty simple. Just be sure to outlive your debt.
Bio for Host – Greg Boulos
Greg Boulos joined The Boulos Company in 1983. He is a Senior Partner and involved in the sale and leasing of commercial property in the Greater Portland area. He is also a co-developer of over 1M square feet of commercial real estate. Greg has consistent commercial real estate brokerage sales and leasing transactions in excess of $50M per year. His area of specialization is the brokerage of investment properties and tenant representation.
Prior to joining The Boulos Company, Greg was the New England office leasing representative for the Boston-based NET Properties Management Company (now Heritage Realty Management, Inc.) from 1979 to 1980. He was Director of Office and Retail Leasing for Dickinson Development Corporation of Quincy, Massachusetts from 1980 to 1982.
Greg is the father of two children, Nick and Drew. While not working Greg can be found most winter weekends in North Conway, NH skiing, summer boating on Casco Bay in Portland, or sport fishing in Costa Rica and, on occasion, trekking to Kilimanjaro and Everest Base Camp.
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