A Random Walk Down Main & Main with a Commercial Real Estate Old Timer

George Larsen
Co-Founder of Larsen Baker


The Journal interviewed George Larsen, CCIM. George is the Co-Founder of Larsen Baker, the largest commercial real estate owner/developer in Tucson. While the company is now run by a team of younger executives headed by President Melissa Lal, CCIM, George at 78 is still active in commercial real estate in Tucson.

George says he now functions, if at all, as a consigliere to the company executives. He consented to this interview so long as he could be a smart aleck.

Q: Thanks for consenting to this interview, but we’re wondering why, at your age, you still go to work every day?

There’s an old Mexican saying …. “The garbage and the husband must leave the house every morning.” Besides, at my age it’s either commercial real estate or being a greeter at Wal-Mart. Close call.

Q: Okay but at your age, what insight can you provide our readers about commercial real estate?

I admit I’m past my “sell through” date. That’s a disadvantage in tennis or drinking with Marty DeRito at Palma. But my seniority perhaps gives me a certain perspective on Arizona CRE. I’m glad to share that perspective, if the Journal will feed me soft ball questions.

Q: We’ve had 10+ great years for commercial real estate in Arizona. Will the Feds put a stop to it by increasing interest rates?


Q: Will that be the end of the known world?

No. Let’s go down memory lane. How many of your readers remember:

Stagflation in the 1970’s?
Price controls and gas lines in the 1980’s?
“Extend and pretend” in the 1990’s?
The stock market crash in the 2000’s?

In 2009, CBRE’s investment sales were off by 90% from the sales rate of the previous year. In 2006, land sales in Arizona topped $1 billion. By 2009, they were 87% less ($113 million), and 29% of those sales were REO’s! As Fat Clemenza said …. “These things gotta happen every 10 years or so.”

Q: Come on! How bad do you think it will be?

Like the old days …. “Will the last one to leave Peoria please turn out the lights?” It’s hard to handicap recessions, but there’s some history that’s promising on the good side.

Did you know that in the decade 1950-1960, Arizona ranked 4th in the country for population growth? And, in every decade since them, Arizona has never ranked less than 3rd in the country in population growth?

We’ll get through the next recession in better shape than most of the country.

Q: Larsen Baker is known as a retail owner/developer in Tucson. Didn’t Warren Buffet proclaim the “Death of Retail” in 2018?

Yes, but what does that old coot know!?! I try to assure my Amazon two timing wife and our investors and lenders that the retail sky is not falling and I’m not ready to pawn my Rolex for a bag of Chicken McNuggets.

No question, there is disruption in the retail market. Department stores and enclosed malls (other than the “fortress malls” in Phoenix) are experiencing challenges. The era of power centers is waning. But change has always been part of this business. Remember Jewelcor, Gemco, ABCO, Phar Mor and every savings & loan building in Phoenix?!

When I got into retail, Sears was the world’s #1 retailer. K-Mart was #2. Montgomery Ward was #4.

Here’s an observation: Retail space can be used to sell products or to provide experiences. Selling consumer products is time vs. convenience vs. price. That’s vulnerable to e-commerce. But experiential retail is restaurants and schools and fitness centers and offices and salons and spas. We’ve been able to keep our retail centers at ±95% occupancy by attracting the all-important ax throwing/lash lounging/ doggie daycare market segments.

Q: What about the industrial market?

It’s perfect. Don’t mess with it. Although …. Phoenix is certainly building a boat load of it!

Q: What about the office market?

One report said 80% of employees want to work remotely at least 3 days per week. That poses a problem for the office market. We recently had an 85,000 sq.ft. med tech office user ask to downsize to 26,000 sq.ft. because their employees wanted the flexibility of remote work.

It is likely that Class A office locations will do well with the financial/securities tenants, but Class B and Class C offices will struggle with occupancy rates.

It’s a shame, because efficiency is not the only purpose of a company. Successful companies need employees’ collaboration, some type of cross pollination between disciplines, talent identification, executive mentoring and culturalization. These intangible benefits of an office are equally important. The jury is still out on the question of whether the “work from home” movement will permanently disrupt the office market.

Q: What technologies do you utilize to keep up with social media and better position your Larsen Baker brand in the internet age?

One of my biggest regrets, other than being the Zodiac Killer, is that I never advanced much beyond the HP 12-C and a legal pad. But then again, I wonder why it is okay to use some objects that have been around forever …. but not others!? Like, no one ever asks me …. “You still using a frying pan, you pathetic loser!?”

At Larsen Baker, we have an investment rule: If we can’t figure a deal out on the reverse side of a Denny’s placemat, it’s too complicated for us! I’ll be impressed with technology when you can show me how to download a robust Pinot Noir.

Q: Okay George, you’re rambling, and I think the Prozac is wearing off. So, in conclusion …. what is your secret to success in commercial real estate?

Personal loan guarantees. Nothing so focuses a developer’s mind, and engenders hard work so much as owing an obscene amount of money to your “friendly” banker! Especially if they mention their all-time favorite movie was Scarface.

That, and also optimism. Real estate developers have to be optimistic. It’s an attitude that is as necessary to a developer as it is historically suspect.

The good news: At 78 years old, I’m quite sure the next recession will be my last. The bad news: …. the next recession will be my last. Thanks Journal …. nap time at Larsen Baker!