Joseph Sitt defied conventional retailing wisdom in 1990 when he founded Ashley Stuart, an upscale ladies apparel chain targeting the urban African-American market. Now, Sitt is using that same marketing savvy to revitalize inner cities with unconventional real estate strategies as chairman and chief executive of Thor Equities, a privately held New York-based real estate development firm.
Over the past three years, Thor has acquired and redeveloped 4 million sq. ft. of urban retail space valued at $500 million. From high-profile retail property on Chicago's famed State Street to mixed-use property on New York City's Fifth Avenue, Thor is committed to urban revitalization and has invested more than $250 million to prove it. The company acquires properties in major metropolitan areas and retrofits them to meet the needs of urban consumers. NREI recently spoke with Joseph Sitt about the impact Thor Equities has had on the commercial real estate industry.
NREI: What is the strategy behind this urban redevelopment focus?
Sitt: These are phenomenal markets. They are underserved and the population is growing. The fastest growing populations in America are ethnic populations. You have to understand the marketplace. Most people are afraid. Crime is higher, and the cost of doing business is higher.
NREI: What is your motivation to help bring life back into America's inner cities?
Sitt: I grew up in a tough urban area in Brooklyn, so seeing my home market underserved was one driver, and as CEO of some of the largest urban retail chains in the country I saw the lack of quality alternative platforms for retailers. We are filling the void on the real estate side of the urban retail business.
NREI: During a period of declining retail sales, you took the risk to invest millions of redevelopment dollars in this sector. What factors influenced your decision?
Sitt: The void was so strong in urban markets that I didn't see the risk as being that great. In downtown Brooklyn alone the void is $1.7 billion, according to one study conducted by Robert B. Pauls LLC, a New York-based real estate and planning consultant.
NREI: How much weight do you give to retail analyst reports when making investment decisions about specific markets?
Sitt: We do our own research through Thor Retail Consulting Corp., which also represents major big-box retailers and specialty stores, so we know where these retailers are looking to grow in urban markets.
NREI: What is the biggest challenge for urban retail developers?
Sitt: Everything is a little harder for us. It can be a challenge to get institutional equity investors to understand the value of the urban marketplace. We have to educate them.
NREI: What are your short-term goals?
Sitt: We plan to continue investing at the same pace, and possibly even get more aggressive with our focus toward the ethnic urban marketplace. We plan to invest $300 to $400 million on about eight projects this year.