Andrew Segall Stays Ahead of the Retail Revolution

By Sanyu Kyeyune

As a law student at the University of Baltimore, Andrew Segall considered pursuing a career in diplomacy. Instead, he chose to apply his sharp analytical skills and gift for relationship-building to a different kind of challenge. During 25 years of advising retail real estate clients, Segall has forged a vibrant entrepreneurial career amid recessions and rapid change. He has made a mark in the Mid-Atlantic region, most recently as the leader of the namesake brokerage firm he started amid the financial crisis in 2008.

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In the decade since, Segall Group has leased or sold more than 32.5 million square feet of retail space to tenants ranging from fast-casual restaurants and fitness to dry cleaning and dental care. In addition, the firm has overseen the repositioning and re-tenanting of numerous properties. The cornerstone of Segall Group’s success is its founder’s deep understanding of the changing needs of retail tenants and landlords, as well as the accelerated disruption occurring within the sector. That market savvy enables the firm’s 15 professionals to match vibrant retail concepts with attractive locations.

After returning from a semester in Spain during his sophomore year at the University of Texas at Austin, Segall set his sights on a career in international relations. “I’d originally wanted to be a diplomat,” he recalled, and after traveling to Spain for a second time after his first year of law school, he planned to take the Foreign Service exam and work overseas.

But as his legal coursework wore on, Segall’s interest in the field started to wane. “(Law) felt confining,” he explained. Real estate, by contrast, “seemed like a way to be a little more creative, use my imagination, get out of the office and have a different day every day.”

Segall came by his interest in the business naturally. His father, Mark Segall, had worked in real estate since the late 1960s, and was among the first brokers in the Mid-Atlantic to specialize in tenant representation for regional retailers, then an uncommon practice. “In the early 1970s, my father helped retailers expand in Northern Virginia, Maryland and Delaware—wherever he could travel to and from within a day,” Segall said. “He realized that the retailers could do more business in that region than in the Baltimore area.”

Unsure of his next move after law school, Segall graduated cum laude in 1991 and passed the bar. Soon after, he recalled, “my dad said, ‘Why don’t you give real estate a try?’” Despite having grown up around the industry, Segall disclosed, “I didn’t think it was what I’d end up doing, but I’ve been doing it ever since.”

Making tracks

Segall made his debut in real estate as a retail leasing broker for Trout, Segall & Doyle LLC, his father’s brokerage and development firm. During the recession of the early 1990s, his division found success representing landlords in leasing big-box, department store, strip center and mall spaces, primarily through repeated transactions with the same tenants.

Recounting a lesson he gleaned at the outset of his career, Segall describes that repeat business as one of the most rewarding parts of retail brokerage. “I’ve had clients since I started in this business, some of whom are now on their fourth or fifth company, because the fast-growing firms recruit from the ones that reached saturation or became less relevant,” he noted. “This is very common in retail, and the most adept brokers follow those relationships.”

One such connection dates back to 1993, when Segall first met Concept Consulting Inc. (CCI) Principal Michael Pacini at a meeting of the International Council of Shopping Centers in New York City. At the time, Pacini represented Kenny Rogers Roasters, a Ft. Lauderdale-based restaurant chain that was kicking off its nationwide expansion. This initial encounter led to casual discussions over the following year, ultimately resulting in Segall’s firm handling the Mid-Atlantic expansion of Baja Fresh, First Watch and Cheddar’s, all CCI clients. Citing Segall’s knack for making inroads with institutional landlords and developers, Pacini said, “These relationships have allowed restaurant concepts that CCI represents to get the best locations, (usually) when the space comes on the market or new developments are announced.”

According to Pacini, Segall’s transparency and integrity led the two to become not only professional associates but also friends. “In the site selection process, you spend inordinate amounts of time together doing property tours, and over the years you can begin to understand the depth of passion Andy has for brokerage and development,” Pacini averred.

While overseeing the Mid-Atlantic rollout of such clients as Cold Stone Creamery in the early 2000s, Segall began to notice that the restaurant segment was becoming more fragmented—and in his view, more interesting: “There was an in-between niche called ‘fast casual’ emerging between fine dining retailers, which typically took larger spaces in urban areas, and those in the fast-food segment, with fairly predictable expansion patterns.”

Around this time, Greg Ferrante, who was handling Cold Stone’s Mid-Atlantic expansion, recognized Segall’s capacity to anticipate market shifts. “All of the brokers I interviewed had the same market knowledge,” Ferrante, now a senior vice president with JLL, said of the pair’s first meeting. “But the sense I got from Andy is that he would always tell me the truth, and that continues to be the case.”

After the turn of the century, Segall found that tenants’ preferences were beginning to change and that the niche on which he’d cut this teeth had become saturated. Based on property performance alone, Segall recalled, “it became clear by the early 2000s that you couldn’t make a living strictly on big-box retail deals.”

In 2008, the changing retail tides led him to launch Segall Group in partnership with Arik Jacob, the firm’s principal & CFO. Mark Segall, who remains active in leasing and development after more than 40 years in the business, serves as the firm’s chairman. Segall Group’s first years coincided with the depths of the Great Recession. “In many ways, it was a tough time to start a business,” Segall recollected. “But it was also a good time because we could attract people that we probably would not have been able to afford had times been better.”

Targeting fast-casual retailers led Segall to score his firm’s first major client, Chipotle Mexican Grill, which has signed more than 50 leases to date with the company’s assistance. “That’s when I knew that those types of restaurants were what people would want,” he noted, “and that developers would want to include them in their properties.”

Another of Segall’s seemingly recession-resistant tenants is TD Bank. An active lender throughout the downturn, the financial institution had not been involved in subprime lending and had also adopted a high-touch approach to customer service that Segall quickly noticed. “TD Bank almost had the mentality of a retailer or restaurant,” he observed. “We understood this, and we knew what would be hot before others did.”

From his vantage point as the leader of a small, independent company, Segall noted: “The personal connection is more important than being affiliated with a nationally recognized firm. The relationships speak to the quality of service we provide.” Segall chairs Realty Resources, a nationwide network of independently owned commercial real estate brokerage companies that share contacts, ideas and best practices.

Diving into the district

Since Segall Group’s inception, the firm has expanded in concert with the accelerated growth of Washington, D.C.’s vibrant emploument market. Today, the capital’s job engine extends beyond the federal government. “Lobbying groups, nonprofits, technology and pharmaceutical companies are all growing in D.C., which has become a more popular headquarters location. As a result, these firms are attracting talent from all over the world, while the city’s employment prospects continue to diversify.”

Segall named the region’s universities as additional drivers of the growth that has been essential to his firm’s success. “Colleges such as George Washington University and Georgetown University have also become more selective, so now there are more graduates that have a job waiting for them in D.C., without them having to relocate,” he said. “All of this lends itself to creative opportunities for retail development.”

In 2015, the company moved its headquarters from Northwest Baltimore to an office building that it purchased in the Harbor East section downtown. That milestone followed the addition of two new principals, Joe Fleischmann and Jose Santana. For the appointment, Fleischmann relocated from Baltimore to head the firm’s Washington-area office in the Rosslyn neighborhood of Arlington, Va., where much of the company’s business is concentrated, as it was for Segall’s father more than four decades ago.

Segall’s approach begins with gaining a thorough understanding of a client’s expansion plan. “I look for retail concepts that are viable and active, so that I’m able to accomplish the client’s growth objectives,” he said. “We strive to represent the concept that does the most volume or provides the best service within a given category. It’s a mark of prestige for our brand, too.”

Staying on your toes

“Part of the appeal of retail is that it’s always changing,” Segall remarked. “You’re always having to think about what the next trend is going to be.” In keeping with the growing demand for repurposing struggling malls, for instance, Segall Group is currently advising a Philadelphia-based client in redevelopment and repositioning of The Centre at Glen Burnie in Glen Burnie, Md.

The rise of e-commerce is another trend that Segall watches closely, and he has adjusted his mindset in response to the growth of online shopping. “As a retail broker, you have to think about which categories will appeal to consumers because they offer something that can’t be received the same way online,” he noted. “The retail experience complements the Internet experience: A showroom lets people see and touch the product and provides a service component.”

The enduring appeal of brick-and-mortar retail has been a boon for Segall Development Associates (SDA), Segall’s construction services affiliate. Among SDA’s recent projects is McGinnis Green, located on 3.5 acres in Cheswold, Del. The firm acquired the site in 2016 and completed the entitlement process for a 22,000-square-foot, multi-tenant retail building, which had originally been planned for a 2008 delivery. SDA completed construction in 2017, and several tenants are on track for a spring 2018 opening.

Also on the way is an 8,700-square-foot clinic for Aspen Dental, part of the Shoppes at Elkton, a small multi-tenant development on US 40/Pulaski Highway in Elkton, Md. Among other tasks, SDA secured entitlements for access improvements from the Maryland Department of Transportation.

Attuned to the risks impacting the retail sector, Segall has made sure to hedge against declining performance in any one category by creating a diverse tenant roster ranging from pet grooming centers and nail salons to boxing gyms. “It’s like an insurance policy,” he added. “If tomorrow a tenant is acquired and stops doing deals or decides to focus on a different market, we have other tenant business we can lean on to compensate for that.”

Despite being decades removed from law school, Segall still draws on skills from his legal training that bolster his business today. “His expertise in law gives him that extra edge when he’s negotiating deals,” explained Matthew France, Chipotle’s director of business development and a 20-year colleague of Segall’s. “A lot of dealmakers out there—brokers, landlord representatives, tenants—will negotiate business terms and step away from the transaction, whereas Andy can keep in step with the entire lease and understand every aspect of the process.”

You’ll find more on this topic in the April 2018 issue of CPE.