Matt Cochrane: West to east to EastGroup

Matt Cochrane is one smart dude.

We know this because although he majored in journalism and communications at the University of North Carolina at Chapel Hill, Cochrane got out of journalism after six months of writing sports.

The senior asset manager for the Charlotte division of EastGroup Properties is a sharp dresser, wearing a gray suit when On the Level met him at Steele Creek Commerce Park in the east quadrant of the Steele Creek Road intersection with Interstate 485, not far from the Charlotte Intermodal Facility.

And Cochrane is smart about schmoozing the press, redirecting the conversation, knowing to say he’s going off the record and then immediately saying something he oughtn’t before a reporter can protest, and always, always, selling his product.

One product is EastGroup Properties, a publicly traded real estate investment trust based in Jackson, Miss., that specializes in warehouse development and construction.

The other is Steele Creek Commerce Park, EastGroup’s first ground-up project in the Charlotte market. It is slated to have nearly 465,000 square feet of warehouse space when all six buildings in the first phase are completed. Two are up – one newly leased and the other soon to be half-occupied – and a third is already half-leased before the walls have gone up.

The REIT has about 23 million square feet under management, about 2.7 million of them in Charlotte. Despite the intervening recession, that’s up from about 1 million square feet when EastGroup entered the market in 2008 with Cochrane at the helm.

He drove OtL around in a smart white Lexus SUV, proudly showing off the landscaping (magnolias, oaks, redbuds and fescue, “not that awful Bermuda everybody uses); EastGroup’s signature exterior paint scheme (beige with bluish-gray trim); the reflective glazing (important, he explained because the first tenant does U.S. Customs-related work that is not for all eyes); and even a men’s room (the swankest OtL has ever seen in a warehouse, and one of the swankest public restrooms we have ever seen anywhere).

Oh, yeah, and he is proud of the warehouse park’s first group of tenants, a smorgasbord of Germanic multinational companies with plus signs instead of ampersands – the German Kuehne + Nagel and Hellmann Worldwide Logistics shipping firms (“FedEx on steroids,” Cochrane cracked), and Huber + Suhner, the Swiss electrical connections manufacturer.

We also learned a bit about Cochrane. He’s 34. He’s from south Charlotte. His father was an attorney-turned-general-contractor. He’s married to his college sweetheart, Meg, a lawyer in the Charlotte City Attorney’s office. And they are expecting their first child.

“And it’s scaring the living daylights out of me,” Cochrane said.

Like we said, he’s smart.

Nice warehouses. We don’t do warehouses. We do “premier business distribution centers.” That’s our tagline.

Ha. A year and a half ago, people wondered if we knew what we were doing, building spec. We had to fight to get the land, but now we have 150,000 square feet of our first 250,000 square feet under lease.

You said “fight to get the land.” The sellers were recalcitrant? They still had the dream of what it was zone for, a mixed-use retail-commercial-hotel – a company out of Baltimore, Atapco. We swooped in and bought it, 43 acres for $5.7 million. By fight I mean it was a long rezoning process. You would be doing me a huge favor if you let me thank the (Charlotte) City Council for their wisdom that this was the proper use. That’s because I’m going back to City Council; I’m looking at the land around us; we’re looking to expand the park.

You’re doing that well? You know how they say the market dictates? The market is dictating. Building 1 is fully leased. Building 2 is half-leased. We’ve just now finished the slab for building 3, which is already half-leased, and we know we’re going to build building 4. (Buildings) 5 and 6 will be longer-term plays.

To what do you attribute the success? We’re 1 mile from the intermodal and the first right off 485. And the new (Charlotte Premium) Outlet mall is cattycorner from us. We’re very well positioned for the market. There are two main submarkets in Charlotte, the north and the southwest, which is called the Westinghouse area. There are no available sites in the southwest; the only available opportunities are redevelopment: tearing down the old and building new. This area is a natural extension of that submarket. With the intermodal, it’s just a natural.

These premier business distribution centers – what kind of construction is that? It’s called tilt-up construction, and it is really cool.

Tilt-up? It’s amazing, you should come back out to see it when we are doing building 3. They pour the slab, like you saw on the site of building 3, then they basically lay down two-by-fours, only bigger than that, and pour concrete onto that, and then they just literally tilt those walls up. It’s something to see.

What’s the niche you’re after? We do 70,000 to 100,000 square feet buildings for multiple tenants, not 400,000 for a single tenant. We get a better rent premium that way. The vacancy rate is 8 or 9 percent, which is better than the bad times, when it was 10 percent. It’s the best now since 2001.

My colleague Payton Guion covers commercial development and he gave me a whole list of questions for you. Talk about the flex-space market. Flex space is really class-C office. Warehouse has strengths that outperform flex space. Flex tends to have low ceilings, very little in terms of warehouse, more office. And it is usually that all-sheet-metal construction, very flimsy, 3,000 to 5,000 square feet.

Here’s another one: What’s the impact of the intermodal on commercial development? The intermodal has not directly generated that much (business), but people are lining up property and leases in anticipation of future growth because of the intermodal. People are beginning to think, “Let’s be close to the intermodal.”

One more – and I really don’t understand this one, so I’m going to quote Payton: “Get him talking about the expansion of the Panama Canal and how that will impact Charlotte’s future.” Widening the canal will do nothing directly for Charlotte, but it potentially helps Charleston (S.C.), which helps Charlotte.

Explain that in more detail. The port of Miami is huge, the first stop coming out of the canal, and you pay a premium for that. When traffic increases, some shippers will choose to keep going up to Savannah and Charleston, and freight comes from there to Charlotte. We want Charleston to grow. Charlotte’s great advantage is that 60 percent of the people in the country are within a one-day 18-wheeler drive or a two-hour flight. We’re not where Atlanta is. But we’re getting there. The Charlotte airport is a great asset, and there’s a new synergy now with the intermodal.

A bachelor’s in journalism and communication? What were you thinking?
What did you wind up doing right after college? I went out west in 2002 after I graduated to take a job a professor set up for me, actually, in Los Angeles. I was an editor at Digital Domain, (film director) James Cameron’s visual-effects studio.

The guy who did “The Fifth Element”? Weirdo movie; great audio effects if you have a great home-theater rig. An editor at a visual-effects studio? I was editing scripts, basically; reading scripts, actually. Seeing what was worthwhile to pass along up the food chain. It was a really fun place to work. Bruce Willis’ flying taxi from that movie was hanging from the ceiling, stuff like that. But it didn’t pay. And my girlfriend had moved to New York City at the same time, so that was a bummer. I got a job for a while in San Francisco as a paralegal – I got to work on the Enron case a little bit – and lived in the Presidio with two friends from high school – before I moved back to North Carolina. I got back to Chapel Hill just in time to see Roy Williams’ first game back in Chapel Hill in 2003. That was something.

You came back to see a guy take over as head basketball coach for the Tar Heels? Yes. No, actually. I worked for a while as sportswriter, but I came back to go to law school, from 2004-08, to do a four-year joint law degree-MBA program. During the summers, I worked in development in Charlotte, for Crescent (Resources) and for Lauth (Property Group). My girlfriend came back to Carolina to get her law degree.

You wound up marrying her – that’s sweet. Yep.

You went into commercial real estate development right after school. Yep. EastGroup was looking for someone to open a division in Charlotte. I was freaking out a little bit because I could tell we were heading into a downturn. I was thinking, “I was the last hire; I’ll be the first fire.” But, fortunately, it is a very conservative company with a clean balance sheet – very little debt. It was a good place to be in a bad time, and a great place to be now that things are picking up.

I read somewhere that you played track and field as an undergraduate. What was your event? Look at me; I’m no runner. I did shot put and discus. It was my way of trying to walk onto the football team; this is when Carolina was terrible at football. But I shattered my fibula in a pickup game of basketball and that was the end of my football dreams.

Like your dad, you’re a lawyer and in real estate. Handy, I guess, to sue your subcontractors for failing to perform, or your tenants for breaking a lease. Ha. Actually, it’s handy when I go through sales agreements or negotiating a new lease. That’s when it really helps me. A lawyer is versed in just about everything, and that lets you negotiate with confidence. And it saves me a lot in legal fees. I can go through a contract or a lease, mark it up and take it to my attorney, who bills me for one hour instead of four or five. My attorney hates to see me coming.