Q&A: NEOO Partners’ ‘chief risk taker’ takes on big challenges

D’Angelos Svenkeson’s official title at NEOO Partners Inc., a St. Paul-based real estate consulting firm, is chief executive officer. Informally, he’s known as “chief risk taker,” a nod to his willingness to take on big challenges in the local real estate landscape.

“My team affectionately calls me ‘chief risk taker’ because I will say yes to most opportunities that have hair on them. They’re complicated. They’re nuanced. They have a racial tinge to it to where people have very hard conversations to have. And I’m like, so what? We’re here to solve hard problems,” said Svenkeson, whose resume includes nearly $500 million of project leadership experience.

Svenkeson’s road to becoming a professional problem solver started at St. Cloud State University, where he earned a bachelor’s degree in planning and community development. He went on to get a master’s in urban and regional planning from Jackson State University in Jackson, Mississippi.

In 2018, he co-founded NEOO Partners, which has blossomed from a two-person startup to a company with 20-plus employees. With a special focus on Black-owned businesses, NEOO Partners offers “creative commercial real estate development and planning” services for public- and private-sector clients, according to its website.

Before founding NEOO Partners, Svenkeson was an acquisition and development associate for Full Spectrum of NY, associate planner for the Metropolitan Council, development project manager for Seward Redesign Inc., and vice president of development for Thor Construction.

In the following interview, Svenkeson talks about his real estate journey, as well as challenges and opportunities in the larger Minneapolis-St. Paul real estate market. The interview has been edited for length and clarity.

Q: Tell us a little bit about NEOO Partners Inc. and its mission.

A: We started the company in December of 2018, with a focus on primarily serving Black small businesses in the commercial real estate space. Denetrick Powers, who’s my co-founder, and I recognize that small businesses, particularly diverse small businesses, typically don’t get access to high-quality commercial real estate services, so they end up negotiating leases and purchase agreements between themselves and more sophisticated landlords or sellers. And oftentimes, that puts them in a predatory or harmful situation.

We really have three focus areas: commercial real estate, development, finance, and all the things that come with that. Urban planning, things that come with municipal support, fiscal analysis, comprehensive plan work and, in the last two years, really ramping up transit station area planning, both here in the Twin Cities and in other markets.

And then lastly, we have a real strong passion for connecting people to projects. That’s one of the things that we recognize as a huge gap in this area. A lot of projects are still very sanitized when it comes to having conversations in community, especially tough conversations that have some real significant trade-offs. And so, we built a service line and business that focuses exclusively on engagement and outreach and connecting people who typically aren’t connected back into the real estate and infrastructure building process.

Q: So, a small business with real estate needs can go to you and say, “Here’s what I need, here’s what I’m looking to achieve. Can you help me find a place? Can you represent me in the marketplace?”A: Absolutely. It’s not only finding space, but typically, small businesses who come to us are ones that don’t have huge balance sheets. They’re really just either emerging as a business or they are someone who has worked tirelessly in the community renting space for decades. And they’re making kind of a declaration of wealth creation for their family of, “We want to go from renting to owning.” We get a lot of people along that spectrum.Q: I understand you’re called the “chief risk taker.” How did that come about?

A: Typically, there’s a lot of people who view risk as harmful, or potentially harmful, or detrimental. I really came to grips with risk finishing up at graduate school at Jackson State. And so, I really took to heart the work of behavioral economist Daniel Kahneman around how we perceive risk, how risk is measured, and how we overreact to what’s perceived as risk versus playing out the probability and statistics of the outcomes.

I started writing a book called “At Risk” that really deals with, from a culturally sensitive lens, how risk is perceived in different communities. The thesis is, you are no more at risk taking opportunities that will improve your life than you are by not taking those opportunities: employment, entrepreneurship, a grant, a new promotion. We overestimate the influence of risk, versus our ability to get things done.

And so, my team affectionately calls me “chief risk taker” because I will say yes to most opportunities that have hair on them. They’re complicated. They’re nuanced. They have a racial tinge to it to where people have very hard conversations to have. And I’m like, so what? We’re here to solve hard problems. We’re here to make our world and country and our neighborhoods better. Who better than us to go take on the hard problems? I take on take on the hardest of the hardest.

Q: Sometimes playing it safe or settling for the status quo can be the riskiest course of action.

A: We often talk about the unsophisticated way in which we measure new costs, but we don’t measure the cost in society of doing the status quo as well. We talk about the outcomes. And so, the things we see around climate, the things we see around our economic disparities — there’s a cost for doing things the way that we continue to do them. Every day we’re making decisions that cost us to maintain the status quo. And so, the cost to do something different when put into context of the cost to do the same, there really isn’t that much of a difference. And it’s more so about what we see as a philosophy for our future, and what it ought to be, versus what it is now.

Q: What’s your read on the overall Twin Cities real estate market?

A: I don’t profess to be an economist; I don’t profess to know all the inner workings. But it looks like there’s a lot of trouble ahead of us. The flight-to-quality that everyone talks about is happening. We see it, that’s great. That means there are going to be some winners in this future market that won’t feel the pain. But there will be a lot of potential losers. And those losers have recourse loans, and only a few of them have non-recourse loans.

When you start to see multiple properties in multiple submarkets and in central business districts revert back to banks who are notoriously bad at getting those redeveloped in a healthy way, you’ll see a secondary market of out-of-town scalpers, who just buy properties on the cheap, and potentially let them sit there as they try to figure out what to do with it. Put lipstick on some buildings that probably need to get torn down. They’ve lived their useful life. And they’re not great for repositioning. And so that prolongs a bad building that isn’t being utilized in downtowns, in stronger neighborhood submarkets.

We see from a macro system standpoint, there will be some challenges. We see the credit tightening happening in the coastal markets, which is an early indicator for what’s going to probably be happening here in the next six to 12 months. I think it’s the necessary cycle that we have to go through that’s a bit painful, but some of our projects and properties are overpriced. The assets that some sellers are having to sell for because of the existing loans don’t make financial sense in this new post-pandemic environment. And so, some folks are going to lose and that’s the name of the capitalist game that we signed up for. Some losers have to happen in order for things to be rebirthed.

And I think we are on the verge of a roaring portion of our macro Twin Cities market. But we do have a lot of dead weight that has to get taken care of. There’s no polite way to take care of it, but it has to get dealt with. And we only hope that it stays contained into real estate. But typically, things reverberate across industries. And I think that’s where we see some potential pain points around forthcoming recessions tied to finance and insurance having some significant issues.

Where we see the brightest spots, that flight to quality is one thing. But there is significant infrastructure investment planned throughout the country and in our Twin Cities market. We’re working on bus rapid transit right now, and light rail transit. And so, at the same time that we see turnover in ownership and valuations, we are seeing significant investment go alongside it. And so those who have the ability to withstand the early pressures of the market will see that investment coming to fruition.

And then you will also see some neighborhoods probably look better, because you’ll have more localized ownership, and localized ownership is the thing that kind of ignores the macro trends, it’s the thing that continues to operate the grocery store or the small retailer with some operating loss for the short term, but it keeps a service in the community. And that’s what you need to withstand it. And then as those things reemerge, those businesses come back stronger.

We think neighborhoods are going to be very strong over the next three to five years as people look to localize their investments. But I think our downtowns do have three to five years of significant turnover that’s good for it, but it just sucks being in the middle of it. We read throughout history that it happens all the time and we kind of dismiss it. It is painful for some folks, but that is kind of how we have to go about it.

https://finance-commerce.com/2023/08/qa-neoo-partners-chief-risk-taker-takes-on-big-challenges/