Ed Easton doesn’t see himself ever retiring from South Florida’s real estate game. His Doral-based eponymous commercial real estate firm runs smoothly, entering its 50th year of existence by keeping it all in the family. Easton’s adult kids, nephews and grandchildren have all been groomed to keep Easton Group in peak condition against multibillion-dollar national conglomerates in South Florida’s industrial market.
Easton and his kin hold their own against institutional giants such as Boston-based Longpoint Partners, San Francisco-based Prologis and New York-based Link Logistics, a subsidiary of Blackstone. He also dabbles in multifamily, office and retail assets. Easton Group recently dropped a combined $19.2 million for a former Sears store and a current JCPenney’s store at Miami International Mall in Doral. Easton Group is planning on redeveloping the ex-Sears building into a mixed-use project with up to 500 apartments.
But it’s in the industrial sector where Easton has carved a name for himself. In 1993, he was among the first developers to build industrial facilities in what is now known as Airport West, a consistently thriving industrial submarket in Miami-Dade County.
As South Florida’s industrial market became a magnet for much larger real estate firms, Easton and his family continued to successfully compete against their competitors. Last year, Easton Group acquired a distribution center leased to Frito-Lay for $16.8 million.
A Pittsburgh native who moved to Miami-Dade County in the 1960s, Easton, 80, recently spoke to The Real Deal about the current state of South Florida’s industrial market, how his firm goes toe-to-toe against competitors with deeper pockets, and what industrial landlords can expect in the coming months as the market begins to soften.
Can you describe the evolution of the South Florida industrial market in the past half century?
It cost me $7.68 a square foot to build my first warehouse. Today, it will cost you over $300 a square foot. But keep in mind, the rents were like 50 and 60 cents a square foot back then. And now they’re like $20 a square foot. It’s because of population growth. Miami-Dade County went from 700,000 people to 2.3 million residents [in a 50-year span]. Miami-Dade has become a strong industrial market because it has a really great airport, seaport and facilities to handle international trade.
Were you among the first industrial developers to build in the main submarkets of Airport West, Doral, Miami Lakes and West Broward?
Yes, especially in Doral and Miami Lakes. Nobody liked warehouses 50 years ago, right? It was like a nothing asset. Today, because of international trade, e-commerce and a number of different reasons, warehouses have become in vogue.
What did you see back then that made you want to focus on warehouses, and how do you see the market today with so many institutional investors jumping in?
I saw that it was the cheapest real estate out there. Industrial was selling dramatically cheaper than any other real estate asset. Three, four and five decades ago, shopping centers and office buildings were going for more than $50 a square foot, and warehouses were around $10 a square foot.
Are you a long-term holder, and what do you say to prospective buyers that try to convince you to sell?
We’re not at this stage of our lives. When I first started, I would have to sell one deal to buy the next deal because I didn’t have any money. Around 35 years ago, we started to hold on to our properties. But we’re not total idiots. If someone wants to overpay for a property, we might sell. But that’s not really our mission. Our goal is to add more income properties and continue doing what we are doing.
Does being a long-term holder and family run company give you an advantage in the market?
I would hate to compete against us. We have 10 to 12 sales people knocking on doors every day and about 10 million square feet of space. We have the capital, the debt and the equity to be able to perform, so I think that gives us an advantage.
How much new development has Easton Group completed in the last two years since the pandemic subsided?
We’ve built about 1.1 million square feet in the last couple years. They’re built already and finished. We are not looking to build right now because the prices have gotten so high for land and construction. We don’t want to be building at $325 a square foot, which is what it would cost today. We are looking at acquiring existing [sites] than building anything new right now.
Are you looking for new warehouses or older industrial buildings?
It doesn’t matter as long as the economics work for us. We’re not looking to buy dysfunctional real estate. We’re looking to buy practical real estate that works for us. But we’re looking at everything. We looked at, I think, 2,731 possible transactions last year. We made three. So we’re looking a lot.
What does it take for a deal to make sense for you?
Well, can we add value to the real estate? We’re not just buying for a 4 percent or 5 percent yield. We like to buy under-rented properties at a fair market price and take on the risk. And so far, that’s been a pretty good concept.
When it comes to pursuing tenants, how do you compete with companies like Longpoint, Prologis and Link Logistics?
There’s a lot of competition out there, but we think we have a leg up because we can rent space cheaper than anyone else and because our building costs are cheaper than anyone else. The other real advantage is that we can act very quickly. With those big companies, it can take them 30 days to get a decision. We can get a decision in 30 hours. That gives us a little bit of a competitive edge. And we find tenants that like to deal with a family operation.
How do you see the market right now?
Five years ago, when rents were around $5 a square foot, I predicted the rents would go to eight bucks [a square foot]. Everybody thought I was crazy. Today, rents have gone up to $16, $17 a square foot. I don’t see rents going to $30 a square foot in the foreseeable future. But I don’t think prices are going to fall out of bed either. The demand still exceeds construction. As long as that continues, you should get a little bit of rent growth.
Now can you tell me how you start and end your work day?
I’ve always been an early riser, so I get up around 6 in the morning. I do some sort of exercise. I go to 8 a.m. mass two or three times a week. And then I am working for three to four hours straight. I’ll play golf in the afternoon or go for a walk. My wife and I go out to dinner two times a week or so.
And do you take weekends off?
No, I always have my phone available to me. I don’t even feel like I’m working, to be honest with you. It’s kind of fun for me. Always has been. And I think that’s part of the magic of why our company has done okay. Everybody is always available.
And why do you enjoy doing what you do?
I’ve always loved real estate. My favorite thing is jumping in the car with one of my grandkids and going to look at a warehouse. Some people think that’s ridiculous, but that’s really fun for me. I love meeting new tenants. I love seeing new businesses that are in these warehouses and meeting the people that make it work. I love having my two sons in the business, as well as three of my grandchildren and my nephew. And so we always prided ourselves on making it feel like a family business.