Brenna Wadleigh: Crunching the Numbers on New Development
Brenna Wadleigh stepped into real estate from the finance side. She earned a degree in finance from the University of Texas at Arlington and also is a CPA. So, it is no surprise that as CEO of N3 Real Estate she makes sure the math works on new development deals.
“Right now what we’re seeing is that our restaurant clients want us to build freestanding stores, but with the high land and construction costs, the rents don’t make sense for them,” says Wadleigh. N3 Real Estate is a fully integrated retail real estate investment and development firm based in Southlake, TX that develops net lease real estate for restaurant and retail clients nationwide.
However, N3 is working with operators to deliver cost-effective solutions that include end-cap spaces at existing centers, as well as developing small strip centers that include four to six tenants that offer a more affordable option due to shared building and land costs. “It’s just a lot harder to make a freestanding restaurant pencil out these days,” says Wadleigh. For example, rents on a newly built end cap location likely will range between $30 and $45 versus $45 to $65 per square foot triple net for a freestanding restaurant.
Wadleigh started out her career as an accountant, landing her first real estate job at Crescent Real Estate, which at the time was a publicly traded REIT. “Once I got there, they had a need for more financial analysis and strategic planning,” says Wadleigh. The company put her in charge of starting a strategic planning group, which she grew to a team of 13 in her 10 years with the company. Their job was to support senior management with any kind of financial analysis needed, as well as supporting financial analysis of the firm’s large commercial real estate portfolio.
When Crescent was sold and taken private in 2007, Wadleigh joined N3 to help shift the strategic focus of the firm from a “build and flip” developer into a developer/landlord that would hold its retail properties over the long term. Wadleigh was named CEO of N3 in 2015, which now owns and manages more than 85 single and multi-tenant retail projects with a total value of about $300 million.
One of the challenges Wadleigh faced at N3 was helping to guide the firm through the recession. “What we saw pre-recession is that tenants would pay any amount of rent to be on a site. This cycle I am really encouraged, because tenants are being much more judicious, and they realize their sales are not high enough to justify rents that are significantly over market,” says Wadleigh. “So, they are governing themselves to keep sales projections in line with reality, which is very healthy for the industry.”