Ep 02: REI MBA - Economic and Real Estate Development Discussion During COVID-19
In this episode, Pete Reinke sits down with us for an interview to share valuable information and insight during COVID-19, from someone who has a tremendous amount of experience within economic and real estate development.
Pete Reinke has vast experience within Vice President Operations roles with a demonstrated history of working in the real estate industry. Skilled in Nonprofit Organizations, Business Planning, Analytical Skills, Urban Planning, and Event Management. He has in charge of regional economic development at the Lehigh Valley Economic Development Corporation, leasing and development at the Navy Yard in Philadelphia, PA and was recently with Ashley Development Corporation, a real estate development company.
Pete is a master networker and truly an amazing person. He runs a weekly Meet Up (now it is 100% virtual) called "Friends of Pete". You got to check it out!
To reach out and connect with Pete, you can send him an email at: phrjr1@gmail.com
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Interview Transcripts
Tejas Gosai: “Hello, ladies and gentlemen and welcome back to www.RealEstateInvestorMBA.com. I am joined with my co-host Jeremy Moyer. Jeremy - thanks for being here. And my name is Tejas Gosai and we have the honor of speaking with Pete Reinke? So Pete Reinke, who has been in the real estate development world for many many years and over the past few years he worked for a great company nearby called Ashley Development Corporation that has done a ton of projects in the community and Pete, what exactly was your position with that group?”
Pete Reinke: “So I was Vice President of Development for Lou and Lisa Pektor at Ashley.”
Tejas Gosai: “Which we'll talk about; could not have been an easy task and a lot of the variables that you've had to deal with but we are super excited. This is Real Estate Investor MBA where we are doing our best to share some insights about what's happening in the community and how some of the best experts in the community are adapting for the change with that Jeremy…let's get some stuff going.”
Jeremy Moyer: “Absolutely Pete. Thanks again for joining us. Can you just tell us a little bit more and fill in the gaps of Tejas’s intro and kind of like, you know, how you get started, where'd you come from, from the start of your career to kind of where you are at right now?”
Pete Reinke: “Sure, absolutely. So thanks for having me guys. So I grew up in Philadelphia. I first came to Lehigh Valley to go to college at Lafayette. And when I graduated from there in 1985, I went back to Philly and I started my real estate career with a company called the Seltzer organization and the Seltzer organization an interesting premise where they bought land at all of the exits of the Pennsylvania Turnpike surrounding Philadelphia. And so the really good models. He went from the Neshaminy to Willow Grove to Fort Washington to Valley Forge. And that's how I got started. I started out working for them as a courier and then morphed into doing Sales and Leasing for them for about five years. And then in 1990, I moved back here to Easton for good to actually to coach basketball, college basketball at my alma mater at Lafayette and after doing that for five years I slipped back into commercial real estate. Commercial real estate economic development is what I've been doing since 1995 in our Lehigh Valley Community.”
Jeremy Moyer: “That's tremendous. Wow, that's a lot of experience in the field, especially the commercial real estate field. So I saw that you were at The Economic Development Corporation Lehigh Valley for a few years. What did you do there?”
Pete Reinke: “Yes, I was there for 8 1/2 years and I was in charge of; was VP of Regional Development. And so basically my job there was to recruit businesses into our Lehigh Valley Community. And so it was a really rewarding job and I got to work with all of the local real estate players, all the local political players and I was kind of the point person to go out to conferences and to companies that were not from this region and locate them here. One of the highlights of that job was going over to Germany and Israel by myself to to recruit some international firms here. And so that's one of the things I would say over my career here that has been most gratifying as how the Lehigh Valley has grown as a place that not just national but international companies feel that this is a place to be, you know, we have a lower cost of living compared to New York and Philly but we're accessible to both those markets and have some really good corporate leaders here. So that's sort of the highlights when I say, I spent 8 1/2 years there. It's a fantastic organization. I think you both know now under Don Cunningham's leadership, LVEDC is one of the top 20 economic development organizations in the country; not top 20 mid-sized groups, not 20 East Coast groups, but top 20 national groups. And so Don and his team have been knocking out of the park and will continue to sort of grow this community.
Tejas Gosai: “Can I jump in and ask about that in those international efforts? What that, I mean, obviously it's to get some outside money over here; was there like EB-5 lending or any of that stuff?”
Pete Reinke: “It's interesting. It wasn't at that time. You know again, we were focused on both startup companies and some high-level companies piggybacking on what B Braun and others have done here. There's a company in New Smithfield; it's an Israeli company. So it was really just bringing those companies and their jobs here. The EB-5 thing is something that I think is really important. It's never I haven't seen a big hold in the Lehigh Valley it was you know, it's big in Philly and other big cities. It would be nice to take advantage of that more, I would think.”
Tejas Gosai: “Yeah for sure. Just for our viewers and listeners, EB-5 if you look it up, pretty easy to Google search. It is outside international investors invest X amount of dollars (I think it's a $1M) into the United States in a business that generates US employment and over time (I think its years), if they continue their investment, they're rewarded with a US citizenship, at some point. And so the US government came up with this years ago. So that's really cool that you got to do some of those things. I can't imagine being like a fly on the wall with some of those meetings and how intense it must have been.”
Pete Reinke: “Yeah, it really was. But again before I, interesting enough, before I joined LVEDC, I worked for the Governor's action team. I worked under Governor Rendell. And so doing a similar thing, bringing companies into the Commonwealth and those meetings were really interesting because if you guys remember your Governor Rendell, who again is still active in Philadelphia. He was a guy that was such a great salesman that you'd walk into a company and out-of-state or an international company and his presence just you know, brought people to say, I want to come to Pennsylvania. And so I had a 4 county region including Lehigh Valley and had some real good successes. We bought Olympus into the community and really started the whole drive of national industrial developers being here. If you look at this industry again, not everybody in this community loves the big box warehouses, but what it's done is it's gotten the probably the top 20 national developers all have a presence here and the companies that are here are wonderful high-level companies again. We'd like to see more manufacturing or office jobs, but you know, the warehouse distribution market is an important one and it employs many of our fellow Lehigh Valley folks.”
Jeremy Moyer: “Makes a lot of sense. So Pete, I want to kind of go on a new series of questioning. So, you know within the….a lot has happened over the last couple months right with everything with the pandemic and everything. Within commercial real estate, you know as a sector as a whole and I know there's a lot of sectors that make that up and everyone is….can be evaluated on a different level. But as a sector whole like what are you seeing, you know in the meetings that you're kind of in right now and the developmental stages with these companies, within commercial, like either Office, Health Care, you know Retail. Are they putting mitigation plans in place or are they you know preparing for a large downturn kind of, like what are…what's being done…what do the conversations look like?”
Pete Reinke: Yeah. I mean, I think it's, you know, it's a time of high anxiety for many people. I think the retail business is a real concern about, you know, with social distancing how that's going to come back again we have such a vibrant community here in the Lehigh Valley and so many, you know, local entrepreneurial restauranteurs. And I think that that will resolve that issue eventually long-term. The Office market is interesting because again so many people from working out a home now are finding they might not have to go to an office again. So, you know, I have some concern that the large office users won't have the need for the space anymore. And again when the spaces isn’t needed that's a concern for large real estate developers. And so I think that's something that we'll continue to be a concern. When it comes to the again the Warehouse Distribution market….this is an internationally known location. So I can only see that getting bigger and better. And again, I know you guys follow this but if you're dealing with the Chamber, LVEDC other developing leaders here, I think there's always a concern that as COVID continues to go that some people might leave our Lehigh Valley community and go to more rural parts of Pennsylvania or go down south and the Midwest. But my sense is that will be dwarfed by the number of people that come into this community from New York (see LV Market data page for article) and from New Jersey and all those other places that we already have social distancing here, you know, we could all leave our houses and go for a bike ride or run or swim so many of us within a mile or two from our home that you just don't get in Manhattan, Philadelphia or downtown Washington DC. So I think the Lehigh Valley market will still be a strong real estate in the market no matter what happens. And again as I touched on earlier, one of the key things is, you know, our world will always be international and getting supplies here and getting manufacturing here. And so as we saw with the COVID in needing masks and needing other equipment, that we had to get it from overseas, and that was very very hard, and you know could potentially be complicit in people losing their lives because it wasn't available equipment. And I think now we recognize that and we have so many generations of manufacturers that are from this community that now we can, I think that we'll see more of that in the Lehigh Valley and in Pennsylvania; manufacturing of some products that we need. It'll never be as inexpensive as it is overseas, but the need to get the product to the people, you know trumps everything. So that's an answer.”
Tejas Gosai: “Trumps everything :-). Haha.”
Pete Reinke: “I know, I did not intend that as a pun but you can take it that way.”
Jeremy Moyer: “That’s great. So what advice…. You know, we have a whole range of listeners, you know from the the novice investors who are getting started in, you know, looking at buying their first duplex or you know investors that already own thousands of units in the both residential commercial, you know, what advice would you have for investors, you know, t hat you're seeing or hearing on how to you know, either diversify or mitigate sort of risk in this, in this environment right now? Is it a good time to get started real estate investing, you know, kind of like, you know, words of wisdom would you, would you relay to them?”
Pete Reinke: “Yeah. I mean, I think it's always, you know, it's a good question. As I think people are always concerned. Obviously, this is something that none of us have ever have ever seen and people are concerned about, you know what to do and there's a nervousness and people are scared and things like that and one of the key things that again, I'm sure you all know is the pipeline in real estate is so important. So the last 3 or 4 months when everybody's been at home and those that are continuing to work and have discussions, I think are are going to come out ahead of time. Because if you take 3 months off, you don't necessarily see it in the real estate game as an immediate, but 9 months from now, 18 months from now, the things that should have started in spring and early summer of 2020, didn't start for many people; and so there's going to be a void there. So I think it's kind of that down the line issue is going to be a concern. When you bring up the local investors and things like that, something that I think again in our Lehigh Valley market that's critically important is the growth of our higher education. The colleges and universities and especially with Lafayette in Easton and Lehigh in Bethlehem, is student housing and employees and graduate students and things like that. And those are opportunities that a lot of smaller investors and larger investors have gotten into either build buildings or convert buildings. And so I'm really interested to know in the next 60 days, what's going to happen in terms of people coming back to school and how that'll affect investors. But I think you know during my career here in the old days there weren't a lot of outside investors. We now have outside investors and there's a stereotypical thing that people don't like, absentee landlords. I cannot stand absentee landlord; somebody that lets a property in Allentown, Bethlehem or Easton deteriorate, is a horrible thing. But in these days, outside money and outside developers and outside interest into this community is not a bad at all. And so there's some very positive things that can happen. So I think that there's you know continues to be opportunities. I think to diversify both product type and geography is probably a wise move.”
Tejas Gosai: “If I could just jump in real quick on that, I just pulled up the information for Lehigh University. I don't know if you guys heard but they're planning on reopening to some degree. This came out a couple of weeks ago and you know with everything that's happening. A lot of people are leaning on Lehigh to open up to see what happens. But also my wife works at Muhlenberg College and they're kind of dealing with what's going on with their students. And then my partner James, his wife works at Desales University. So we've got a really good pulse on you know, what's happening. We actually have a closing that took place this past Friday on Lehigh University student housing. That was extremely tumultuous over the past couple months getting to closing. But it did come through just to let you know, that inside of that, the parents, you know, they're responsible for the leases. And so there was no like misstep in payment and the new lease is going to take over for those couple international students. So I'm like in the weeds seeing that stuff and a lot of people are like, you know, they're worried about nationally or looking at different statistics and metrics. You know, I actually don't really watch the news that much. I try to stay in the Lehigh Valley bubble. This has not stopped. I mean our phones have been like Christmas. Everything's lighting up. Our inventory is moving pretty quickly. But to go back to your point, there are a lot of people afraid of what's going to happen in 2, 3, 4, 5 months and that's just where you know, we can't mitigate that risk. But there's people who are like so what you know. Seven to eight months ago, I couldn't have anticipated COVID and it was okay to solve it.”
Pete Reinke: “It's very interesting that you bring that up because one of the key things now again is we keep coming back to is like the social distancing aspect that's going on now, but now you might need to be going on for a long time. And you bring up DeSales (University) and one of the interesting things; one of the projects that I was working on with the Pektors, its now going forward is something that's called 3rd and Polk Street. And I think you guys probably remember the building where Molinari’s and Playa Bowls is right on East 3rd Street there. And what's happening now, is that the top two floors of that building that used to house St. Luke's corporate offices is being converted to student housing and the focus had been graduate students and international students from Lehigh. But what was really interesting is that Northampton Community College, Penn State Lehigh Valley and Desales and to some extent Moravian were also having students that even though, a couple of those campuses like DeSales, you know is a more, you know, a suburban, rural type campus the people wanted to be around other like-minded people, other young people, other international people. And so that was a really key market for the use of both that building and some others there is to get people around. And so now with having to keep your distance, I'm not sure how well that you know, how well that plays. My sense is because our Lehigh Valley is so unique, again, you walk a block away from 3rd Street and you're have the trail that goes through South Bethlehem. So I think you can keep your distance, but again, you still want to be around, you know, other human beings, other like-minded human beings. I think that's a really interesting, you know, point that you made. And again, I think our schools here have been really good with what they're doing officially on campus as institutions, but there's always that need for the private sector to do supplemental projects and I would see, both here locally and nationally that model could change. Maybe the colleges don't invest as much in projects and like let the the developers take the risk. We'll see but that could all open again. Lafayette is about to open a very large dorm right on the edge of campus and similar to Lehigh. So that's a little bit of that perspective.”
Jeremy Moyer: “What's your thoughts on, you know, I think Easton just opened a project for the co-working; there's a co-working building that was just opened. And I know there's some Allentown has some similar projects downtown. What's your take on that market or even the work from home professional? Like if there's opportunities there for development? What's your what's your take on those two markets?”
Pete Reinke: “It's been interesting because, for all the positives that have happened in the Lehigh Valley, one of the negatives that we haven't really had that co-working space. You know, J.B. Reily has tried to do it with all the work he's doing in downtown Allentown, but you know the project that you're referencing now, they're looking at doing one in Easton. They just they're opening one in South Bethlehem in the Bender's building where Zest is, right by the Lehigh. And I think again the new normal as is stereotypical as said, I'm not sure what that means but I believe very strongly of that interaction amongst other businesses. And so we need to have more of that co-working space both at my LVEDC days and again the last few years. We've tried to reach out to some of those national players to bring in the co-working space and they just weren't ready to come into the Lehigh Valley market yet. And so some more entrepreneurial folks are looking at doing that. But I think that's something that again even keeping our distance, I think you need interaction and again, even being able to do what we're doing now and and zooming; it's much better to come in and talk and do streamyard and do whatever. It’s much better, to me, to be able to see somebody even briefly for a cup of coffee. Just that touch is think about something as you're talking or you look over somebody's shoulder and say oh, by the way, I forgot to mention this. Whereas when we're here on our own places, you don't get that opportunity as much. But I think that needs to stick around and because people will be cutting back there their larger office footprints, the larger employers, I think there's a need for that co-working space. I really, I mean, again, I really, I really do. In Easton there's a really cool project that The Commodore that's coming up, a younger, a really good younger developer from New York, Garrett Vassel, is coming into and he's going to create a rooftop restaurant and some high-level apartments and then he wants to put some co-working space in there. And again Easton could really use that. Easton is such a great restaurant and small business town, but it's got some some opportunities to grow a little bit of that corporate office footprint.”
Tejas Gosai: “Well, let me jump in and ask you, like I'm in the weeds, I'm always like very subjective with the information. But I do look at the objective and I'm always like trying to figure out new resources and things like that. You clearly know a ton and have been here for quite a bit. What local resources do you rely on like, you know internet wise or newspapers or how do you get your info?”
Pete Reinke: “I mean, I think the key thing for information is always talking to as many other key players as you can. Again, this community has been blessed with some really good local and regional leadership. So again, you got the Chamber of Commerce and Tony Iannelli. You got Don Cunningham and LVEDC. But then resources that people don't realize as much as the Lehigh Valley Planning Commission led by Becky Bradley that deals with all of our 62 municipalities and they're on the cutting edge in terms of providing statistics and details and data that's critically needed. Justin Porembo and the Greater Lehigh Valley Association of Realtors…that's where all the Realtors are involved so working with them and then you've got interesting players like the Manufacturers Resource Center and Discover Lehigh Valley and Ben Franklin Technology Partners and the Workforce Investment Board. They all have their different niches in terms of providing information, providing connections, those types of things. And then I'm an old-fashioned guy again. One of my dear friends just lost his father who is 88 years old and in the old day, they said how he read 5 or 6 newspapers a day. I still try to read 3 or 4 hard copy newspapers, despite the fact that we can scroll through our phones and find stuff. So I think it's great to have that information. So there's just, you know, it's each person has their own different ways. My way always was to talk to as many people as I could talk, to not just bankers and brokers, but talk to my rivals. I'm always a guy that you talk to you know, why would you talk to your direct competitor. It's like first of all, they're good human beings and second of all, they're smarter than I am. So why would I not pick their brain, if I had a chance to. So there's a lot of that, that happened.”
Tejas Gosai: “One thing. I don't think you mentioned to, is I think you're active in the chambers and things like that rotary.”
Pete Reinke: “Yeah. I mean, it's funny. I've been a part of all those things. When you get to be 57 years old and been around all the time. You know, I was the President of the Easton Rotary at one point and then wasn't able to go to the meetings anymore. So haven’t done that anymore. You know, right now you thinking about boards and organizations. One that's really interesting, and for you guys and the listeners is also interesting is there's a group I've been part of called LINC. It was a group of nonprofit, was formed at Lehigh five years ago and what it does guys, is it helps our 16 largest employers, our 16 of our largest employers Lafayette and Lehigh, the 2 healthcare networks, and you know Lutron, Olympus, Air Products, players like that. What they do is when they recruit somebody not from the tri-state area in this community. What it does is when those organizations recruit people who are not from this area. What LINC does is works with the spouse and the children to find a job for your spouse or your partner, school district for the kids, a place to live. And it's a really, it's been a really wonderful thing for me because one of the key things about this Lehigh Valley community and I don't know if you two even know this, for years, I've had this group they called Friends of Pete. It's a big LinkedIn thing. And we would monthly have these happy hours and I'd get a 125 people a week. It's actually a group on LinkedIn now. And my point in telling you that, is people would come up and say the Lehigh Valley can be parochial and I said, well every community is parochial. But if you show up and go to chamber events and LVEDC events and come to this Friends of Pete thing and join LINC, it doesn't matter if you don't live or work in this community, as long as you show up, if you don't say I can't make it 8:00 a.m. meeting because I'm not here. I can make a 6 pm meeting because I'm not here. But the point is why LINC is so important is, when people are hired by those companies instead of living out of the region they want to live here because then they can run into people at church and at their kids practices and all these other kind of things and so it just continues to drive what's going on in this community; makes it a welcoming area. And so things like that people don't realize the impact that it has on the on the real estate community and the investment community, but it has a huge impact. So that's those are some groups that I think are really important in our under recognized or under known and again, it's why I always you know, love what you guys are doing in terms of getting the word out there people. You know, you don't know if they don't tell you and when you're able to share some of that information, I think it's extremely important and extremely helpful.”
Jeremy Moyer: “I have one last question of mine; I don't if Tejas, if you have any additional ones, but looking at just the Lehigh Valley. I think I told you, you know through email one of the main Missions and Visions why we have is podcast and what we're doing with it is, we are trying to take the Lehigh Valley as like a live Case Study, you know kind of like how business school case studies. You know, and how where it was, you know how it was going through the pandemic and how’s it going to blossom and continue growing. Would you say, you know in your assessment that you know, it is still thriving through the pandemic where I mean, maybe things needed to change here or change their; businesses obviously think to pivot with their business model, but do you see it slowing down at all over the next couple of years, do you see it steamrolling right through through this and coming out bigger and better?”
Pete Reinke: “Yeah. No, I mean I think again with what's going on now, it's been bad and you know again. In all the retailers that closed and the smaller businesses. Again one of the things that we touch on is the critical importance of small businesses, both the opportunity to start them and to let them grow into either community institutions or grow into larger businesses. So I absolutely believe in my heart that it's not a pipe dream that this community will continue to be a strong growing community. I don't know if you guys are in a big sports fans. I'm you know am a sports junkie and one of the analogies that I always use is, even though I love American sports, I'm a big fan of European soccer. And if you know anything about that it or anybody listening knows anything about that is one of the cool things about European soccer. Is that every year in the top leagues the bottom 3 teams get kicked into the sort of into the minor leagues in the best 3 come up. And that analogy works because of how successful the Phantoms and the Iron Pigs have been, but I use that analogy with real estate and sports where we're the community where you know, it's a stereotype, punching above your weight, but I mean, we are now over the last number of years and going forward we're comfortable playing the big leagues with LA and Chicago and DC and places like that, but we still know that we're a smaller thing. So, you know, the fans can actually know the players and actually have this engagement. But you know, when you look at you know, second-tier kind of markets, we've won that battle. I mean it's like, you know, we're there to stay and as I said in the real estate world when you talk about warehousing distribution and stuff like that, we're known as a national market. So people that are in large international corporations, when they look to put warehousing distribution the US. They go to the inland empire by LA they go to somewhere in Texas, they go to Chicago, Atlanta and Lehigh Valley And you know, yeah, it's eastern Pennsylvania, you know, it is us. And so we're a name-brand now and so in terms of developing investment strategies and having people learn, you know and have opportunities here in this market, it's great. And then the last thing I'll say is I'm a huge huge proponent of our 11 colleges and universities and we have so many smart people of the Lehigh Valley community who come here to go to school here, who could learn from people like you guys and others. It's like I'd love to be an investor and I want to do this, but we can teach them and get them started here in our area and either keep them or let them grow into a national players. So I think there's a lot of really good opportunities, but I'm very very optimistic about our long-term opportunities in the Lehigh Valley.”
Jeremy Moyer: “I love that. I love that analogy.”
Tejas Gosai: “That was awesome. You know, you're doing a really good job. I'm just pulling up like the universities and colleges nearby and how important they are. I'll want to say one thing and then have a fun question. So this has gone by too fast. You are very knowledgeable and kind of the best, like spokesperson I've heard in a while for the Valley. So we look forward to having you back on the show and just one fun thing. I like to get out there, like for you particularly. What what do you think is a good like restaurant or cigar bar or something to congregate when COVID is okay. Do you have a particular favorite in the Lehigh Valley, anything like that?”
Pete Reinke: “So I have, I won't sort of answer that question because I have a ton of favorites again when I said about this Friends of Pete we've been doing this for years using all of our restaurants, but because I'm over here in the Eastern area, I'm particular to Easton especially and I can't even pick a restaurant over there again when people are back out in downtown, like the mix between River Grill and Blue and 3rd and Ferry and Sette Luna and Pearly Baker’s and all these things that whatever type of different food you want. You have Troy Renard with Two Rivers Brewing, Juan Martinez who I think you guys know with Don Juan is now opening a new restaurant. So to me, it depends on time of day, the week, whatever, where I'd go. But there's a whole bunch of them, too numerous to mention again. Those are all the people I mentioned. It's not a name-dropping thing. It's like those are people that are of and from this community that do things. And as I said before on the terms of competition. It's like sure they compete for business but they all kind of have each other's back and that's one of the things that people do not realize about the Lehigh Valley, is like we have each other's back before we go after each other's business.”
Tejas Gosai: “That’s awesome. Well, I look forward to your next steps. And if you don't mind, this is my open invite. We like to have you back on in the month or two, but thank you so much for being here and sharing all of your knowledge. We're sharing Pete’s information below. If you want to get in touch with… Pete if somebody wanted to email you or something, can you share your info?”
Pete Reinke: “Yeah, I mean, absolutely. I mean I'm a big texter is one of the few things I do with technology. So people can actually call me if they want, (610) 442-9398, and then my email now is phrjr1@gmail.com, but happy to share that, happy to come back on the show anytime guys, and anybody else I can connect you to but, I appreciate you putting this together, you're doing great work, and I'm just trying to keep up with people like the two of you.”
Tejas Gosai: “Thank you. Awesome. So That's Jeremy Moyer and we have Pete Reinke. This is RealEstateInvestorMBA.com, check out our website and some of our previous guests. Thank you so much and we'll check you out next time. Cheers.”
