Dan Zelson
Principal and founder, Charter Realty and Zelco Properties & Development
Age: 58
Industry experience: 37 years
Westport-based Charter Realty is mapping out growth strategies in retail real estate from New England to Montana. Founded in 1988 by Dan Zelson, the company specializes in tenant and landlord brokerage representation. Its sibling company, Zelco Properties & Development, specializes in acquisitions and development of suburban grocery-anchored and mixed-use developments, including an expanding portfolio in Connecticut. In August, Zelco Properties teamed up with Bryn Mawr, Pennsylvania-based Haverford Retail Partners to buy Guilford Commons, a 129,000 square-foot open-air retail center anchored by The Fresh Market. On the brokerage side, Charter Realty represents both landlords and expanding retail chains scouting locations across the U.S., and recently hired the top retail specialist away from WS Development, the Boston development firm responsible for the city’s big, new mixed-use Seaport District precinct.
Q: What’s the history of Charter Realty and Zelco Properties?
A: We really started out as a brokerage, because we didn’t have any money, but we had really good relationships with tenants. We started morphing into a company that could develop and acquire. Charter Realty is our services arm. That’s our brokerage arm. We do quite a bit of tenant rep work. We’ve got 65 tenant rep accounts. Some are regional, some are national. We actually have a fairly large national business where we roll tenants out across the country through a network of other brokers. We do a lot of landlord rep work, for 8 or 9 million square feet of other peoples’ shopping centers. We have other services businesses within that Charter Realty arm, and that business shares offices with Zelco in Montana, Pennsylvania, Connecticut and Massachusetts.
Q: Why did you focus on Montana?
A: I spend a lot of time in Montana and built a house there about 20 years ago, and it’s my happy place. So my wife told me one day, “Why are you in Montana and not doing business out here?”
Q: How big is the current portfolio?
A: We own approximately 30 properties total right now. They are really spread across Connecticut, Massachusetts, New York, the Carolinas and Montana. We acquired a shopping center in Guilford, with Fresh Market and Michaels, and we put in Old Navy and T.J. Maxx. That’s sort of our magic. Because we are on the brokerage side as well, we have a pretty good knowledge of tenants and where they want to be. It’s always been our strength. When we go to buy and develop, we have a lot of answers about what tenants are missing. We are under contract right now for a commercial property in Massachusetts, very close to Boston. We have another under contract in Connecticut, and have several development deals in New England: ground-up supermarket-anchored projects as well. So we’re active and our development is very active right now.
Q: What demographics do you look for in a ground-up development?
A: We definitely look for stability and income growth, but to be honest with you, it’s so tenant driven. We don’t really say, ‘This is a great corner or a great 20 acres.’ To know that a supermarket is missing or a Walmart is undersized or a Target is missing. We establish our driver and then try to find the best site in the market that fits that bill. We’ve been doing a lot of mixed-use projects around the country. We master-planned a big project in Cheshire (The Shops at Stonebridge). And it was about a 107-acre project. We ended up master-planning and selling off different components, and ended up permitting a 300-unit residential development that we sold off to a group here in Connecticut. We got approved for a 140,000 square-foot shopping center, which we ended up selling to Regency to develop it. We put the whole package together. We’ve found that model really works for us. We’re doing large master-planned projects in Montana: Yellowstone Airport Plaza, and a 42-acre, 1 million square-foot tech park, in conjunction with Montana State University. We built about 250,000 square feet and we’re getting ready to start another couple hundred thousand feet. We won a [request for proposals] for that, and we have specific things we can and can’t do there. We can’t do student housing, we can’t really do retail. It’s really about tech.
Q: Who are some of the retailers you represent in your tenant brokerage?
A: We try to take companies that are on the small size, recognizing their ability to grow and grow with them. Restore Hyper Wellness is a company that we did one of their first stores five years ago, and took that company to about 250 stores around the country. We have a company called Birdcode, which is a hot chicken concept that started here in Connecticut, and they have franchise deals and expansion in Boston, Florida and New York City.
Q: What is the optimum mix of tenants by category for a typical shopping center?
A: That’s really different market-to-market and shopping center to shopping center. Our approach to all of this stuff is to think about it as if we own it ourselves. Because we’re owners, we’ll treat your property like we treat ours. It’s not just filling space. It’s actually filling space that we would fill in our own properties long-term. It’s about how you structure them to create long-term value for the project. Even how you negotiate a lease or set up a letter of intent is different. We try to bring that approach to everything we think about.
Q: How do you capitalize deals?
A: Some of our development deals are self-financed. Our acquisition deals, most we bring in outside partners. Our theory is we don’t really want to put investors’ money at risk on development, because you can go to zero.
Q: How are profit margins in retail real estate compared with before the pandemic?
A: There’s very little vacancy now in retail, so from that standpoint it’s a pretty good business. Interest rates are higher so that’s going to hurt your profit margin if you buy something. But from a safety standpoint, owning retail has been and probably for the foreseeable has been one of the better investments in commercial real estate.
Zelson’s Five Favorite Current TV Shows:
1 Poker Face
2 The Pitt
3 The Last of Us
4 Ransom Canyon
5 The Righteous Gemstones
To read online, click here
