Poe & Cronk Real Estate Group, a locally owned firm that’s been operating in the Roanoke region for more than 30 years, named Matt Huff its new president in January.
Huff, 35, who previously served as executive vice president and chief operating officer, has been with the commercial real estate company since 2008. He succeeds co-founder Dennis Cronk, 68, who will serve as the company’s chairman and CEO.
The two sat down with The Roanoke Times to discuss their positions and trends in commercial real estate. This interview has been edited for length and clarity.
Tell me about what prompted the leadership changes and what that means for the company.
Dennis Cronk: My goal was to bring somebody in here so the company would be around here for a long time whenever I decided to leave and build the company to take on new challenges. Roanoke was growing, our relationships were growing, opportunities were there. And this was a great opportunity. Matt and I were partners on a number of transactions, and I think he really caught on to the business very quickly. We kind of fed off each other. Every time we worked on something, it got to the point after about four or five years, I would say something and he would say it at the same time, or he’d say, “I know exactly what you’re saying because it’s exactly what I would say.” So we kind of fed off each other and had some successful years.
He’s played a real role in building the company and expanding us in other areas that we hadn’t been in before and expanding the relationships that I had built over the last 40 years, and working with them and everybody. He’s done a great job in bringing in new business and new people into the firm. It was time, I think, for him to take on an even stronger role. We’re going to continue to work together building the strategy, and I’ll be here for support and I’ll be here continuing to work to try to bring business into the company. But my goal is to mentor the younger people and have them be successful in the business.
Matt Huff: Dennis is a rainmaker, and that is something that is very valuable and it’s something that’s hard to come across, it feels like, in today’s age and in our market. So we want that here for as long as we can have it. Like he said, he’s built relationships for 40-plus years now in our market, inside this office and outside the office, and that is what’s irreplaceable.
What trends do you see on the horizon for commercial real estate in 2020?
MH: I have the privilege of serving on some boards around town, one of which is Member One Federal Credit Union. So we’re always looking economically down the road, what’s coming. One of the things we keep hearing about, and it applies to our business so much, is that the fundamentals still look strong for 2020. In Roanoke, those fundamentals are being driven by solid job creation and job growth. I look at the expansion and the economic growth that we’ve had here and I think back to my experience in the mid-2000s. I was coming out of Virginia Tech around 2008 when everything fell off the cliff. And I said, “What’s different about this now than it was then?”
I see a couple things. I see, first of all, still low unemployment. Jobs are still coming — Virginia Tech, Carilion, manufacturing. Botetourt County is bringing in good jobs as fast as they can. So I think job fundamentals are good. I think leverage is still low. We don’t see a lot of over-leverage like we did in the early- to mid-2000s. We don’t see a lot of spec building; there’s not a lot of speculative investments going on. For the most part, the deals and investments we see still have solid, good fundamentals.
As we look forward into 2020, we see interest rates staying probably relatively low, which will help continue to grow the economy.
Macro, nationwide, the economy looks good across the entire country still. Roanoke is what we call a tertiary market, or third-tier market, so we sort of tend to trend behind what’s going on across the country. So I think as we continue to see the country continue to do well in 2020, Roanoke will follow that.
DC: Of course, you can’t overstate what’s taken place in the last three or four years. What’s going on between Virginia Tech and Carilion coming together, the medical school and the biotech center and obviously the things that are on the horizon that are really big coming down, the cancer center, the hospital. The new businesses that come to Roanoke, the excitement about downtown Roanoke. I forget what the number is, but 10 or 15 years ago, there was one or two people living downtown. There’s probably 2,500 to 3,000 [today]. Of course, I’ve said for the last seven or eight years, it’s easier to get a parking space mid-day than it is at midnight, which I think says a lot about downtown Roanoke. It used to be that we would find office tenants wanting to go out to the suburbs and not necessarily be downtown because of parking and so forth. Now they want to be downtown because their employees want to be downtown.
MH: From 2019 to 2020, occupancy remained pretty strong [for office space] in the Roanoke Valley, but where we’re seeing growth is downtown, which probably has not happened in quite a while. The other thing that’s helping downtown and our economy into 2020 is the amount of outside investment Roanoke is getting. It has sort of blown us away, how investors from other markets — Richmond, D.C., Charlotte — they look at Roanoke and they can see what’s about to happen. Sometimes it’s hard when you’re here every day to see the forest through the trees. Sometimes we see individual small movements. But outside people looking at Roanoke, they see what’s coming with the Virginia Tech-Carilion partnership. Dennis and I, and another agent in our office, sold the First Federal office building where Pinnacle Bank was last year. That was outside investment coming into Roanoke.
DC: We actually had three buyers at one time competing to buy the property. All three of them are located out of the market. One was in New York, one was in Northern Virginia and one was in Richmond. The one that ended up getting the property was from another market. It’s interesting.
I’ve been through five recessions over time, and I’ve seen this last one as a very tough one. But I’ve seen us come out better this time and quicker and a bigger horizon. Roanoke has been sort of slow in growth as compared to some of our competitors like Charlotte, Northern Virginia and Richmond and so forth. But we’re driving our own train now. Our market is fairly large. Matt just did a big investment deal down in Lynchburg. We’ve got a big transaction we’ve put together in Lexington. The Wytheville buyer of the building you were in yesterday [the Mack Trucks building in Roanoke County], Matt’s deal, he sold that for $6.5 million to a buyer out of Wytheville. So our market is sort of that circle. That’s allowed us to expand the company.
The company at one time 33 years ago when we opened up was just commercial sales primarily and maybe a few leasing. We really got into leasing and started managing properties — we manage a lot of office buildings downtown, shopping centers, industrial properties throughout the market. The firm has grown from about five employees to now about 28, which may not sound big, but for a real estate company in this market, that’s pretty big.
A number of hotels are coming to downtown Roanoke, and Poe & Cronk handled the sale of some of those buildings. Why do you think that is an area of increased interest in our market?
DC: I remember the days when the Hotel [Roanoke] was very vibrant and bringing in conventions from everywhere, and then all of a sudden they shut down for five years and then came back to life. But one of the problems was you really didn’t have enough rooms downtown. Build it and they will come is kind of a concept you don’t want to do. That’s not a way to do something is to build it because you think they will come, even if your research is showing it. So you’ve got to be careful. But people saw the vision that the hotel could not grow without more rooms downtown. They looked at putting additional rooms onto the hotel out there, made some studies and everything, the city did, and those didn’t go anywhere. So then the first hotel happened and all of a sudden the hotel has larger conventions, they have more business. So I think if you look at how the business has grown in downtown Roanoke, it’s because of the additional rooms they can supply down here.
MH: I also think that Roanoke has done an outstanding job of branding itself as a destination location. I’ll admit I was skeptical at first because I always look at economics first. But in this case, Roanoke branding itself with this outside identity — now we’ve got GoFest, we’ve got the Blue Ridge Marathon, we’ve got the Ironman coming here this year and the Amtrak station came here — Roanoke’s a cool destination now. And I use the word “cool” specifically, because for a long time it was, “Let’s go to Asheville because it’s cool.” Now I think Roanoke’s cool. When I talk to other young professionals looking at what they’re going to do after school or if they’re single or newly married or whatever, Roanoke has a cool vibe to it and they like being here now.
What do you think is next in the redevelopment of downtown, and can it continue at the pace that it has been?
MH: I think it can, for the near term or the foreseeable future. Actually the issue we’re running into now is we don’t have buildings to redevelop. They’ve all gotten redeveloped. We saw a lot of the, I’ll call them Class C buildings, [redeveloped because] tax credits just made it economically feasible to do that. So now sort of the issue is you’ve got to go find a building you can redevelop because a lot of them have been redone already. So again, as long as interest rates remain low and the federal and state governments provide the tax credit incentive program for redevelopment, I think we’ll see growth continue south along the Jefferson Street corridor toward Virginia Tech Carilion and Riverside, which is now the technology corridor. And then I think it’s got to go west. South and west are the only two ways that really development can keep going. So we’re sort of looking in those directions for what’s going to happen in the future of downtown.
DC: One thing that’s made downtown successful that’s kind of unique is the fact that we have natural barriers almost, so it makes everything have to develop from within instead of spreading out. Think of Dallas, Texas, as an example. Dallas, Texas, is huge, it’s spread out, there’s no excitement. Everybody’s 10 miles apart from each other, yet both of them are downtown. But here you’ve got the interstate, you’ve got the river, the railroad tracks — you’ve got natural barriers that have prohibited us to really expand beyond those barriers for years until what’s happened over there with Riverside. That’s kind of broken it loose.
I have to admit when they redid the zoning in ’08 and they moved the downtown zoning district five or six blocks over across the railroad tracks and they moved it over to Riverside, I thought, “Downtown? That’s not downtown.” But you know, it kind of grew into that because ultimately in order to expand and develop and build the facilities they need, it went that way. But in the meantime, that’s why you had the synergy downtown because everything was being developed in one place. It was kind of neat. There are certain street corners that you know are really the center of downtown.
MH: One of the things I think Roanoke got right was to build residential downtown first. There’s always a question about, Do you build retail and hope people come and then build residential? Or do you build residential, hope people will come and then build retail? It just so happened that I think Roanoke got it right, we built residential first. So we got people back living downtown, we brought life back downtown and then the retailers wanted to follow it and grow, and now the office users want to follow it and grow.