Curt Fisher

How many Blue Earth Countians regularly drive a jet boat to work?

How many peddle a bike ten miles to work through ten-below weather? How many own a 1902 steam fire engine and a 1921 International truck? How many downright dominate commercial real estate sales, property management, and commercial development in Mankato? Only one character could fit the bill on all four questions: Curt Fisher.

He’s a bit unique. Unlike many business owners, the seed money that eventually grew into his current business crop ­ namely, Fisher & Lidstrom Commercial Realtors, Fisher Management, and Fisher Development ­ didn’t come from a Generous Dad jumpstart or through elbow grease. In 1971, while cruising his BSA motorcycle around Mankato, a car veered into him, they crashed, and Curt suffered significant facial injuries. With a moxie that would later become his trademark, he took on the errant driver’s insurance company and negotiated a settlement that would later finance the acquisition of some older apartment buildings. Literally by accident, Curt Fisher had found his earthly calling as a dealmaker and commercial Realtor.

But after opening up to this writer for well over an hour, another Curt Fisher emerged that suggested a second, more ethereal calling. He really appreciates things aesthetic and historic. You can see it in his fondness for antique fire engines and trucks, his awe of the raw beauty that surrounds the meandering Blue Earth River, and his passion for restoring Old Main Village and the downtown Railroad Depot. When he looks up from his desk, two Marian Anderson prints that make Mankato forever young rest on the wall directly in front of him.

If you want to take the splashy ride along with Curt, buckle yourself in and look up towards the steep tawny cliffs that frame the Blue Earth River. The jet boat ride towards Mankato might take a good while, and have a few bumps where the water remains low, but it’s an exciting adventure the whole way down nonetheless.

CONNECT: What are your main businesses?

FISHER: My main businesses are real estate sales and leasing through Fisher & Lidstrom Commercial Realtors, management of properties through Fisher Management Company, and development through Fisher Development Company. It’s really three different entities. Each company complements the other and provides services that involve the investment real estate spectrum. These companies are fortunate and unique in that we have established a very strong position in the Mankato marketplace and are able to assist a client with complete market information.

CONNECT: Any other businesses?

FISHER: I’m involved in a farming partnership with a few other individuals. It evolved out of a friendship with a fellow who we saw struggle during the ’80s farm crisis. We came together and started acquiring properties with his assistance. Now we have 3,000 acres and he’s farming it for us. It gave us joy to see him get back on the farm with his family after going through what he went through. It was very satisfying to me to give him this opportunity, which was also an opportunity for me. To help harvest, to jump in a combine, to plow, to dig, to work through the harvest in that spirit that’s going on through harvest ­ it is a special time.

Farming is interesting to me even though I grew up in the Cities. I’m drawn to the life-style of a farm family: its quality of life, principles, simplicity, the ideals that go with rural America.

Farming is also very difficult. I try to look at it as a business. It was always very interesting to me that we could get more attractive financing available for farm loans than for a new building with a long-term, triple-net lease with a credit tenant. That’s just part of the financial marketplace. It’s amazing with all the risks that are inherent in farming.

CONNECT: How many different ways do you travel to work?

FISHER: For years I biked almost year-round from my home near Rapidan on the Blue Earth River. It’s about ten miles. My wife would pack my suit in a bag and I’d put it onto the back of the bike. I drew the line when the temperature got down to about ten below. I’d put layers and layers of clothing on, but at ten below there were areas I just couldn’t keep warm. I’d come into the office all iced up. Biking was very enjoyable because it made me feel good physically.

Boating has been kind of a lazy way for me to get to work now. We have a jet boat on the Blue Earth River. To boat from our house down the Blue Earth River to Sibley, then take a right, tie up at the Depot, walk a couple of blocks to my office ­ it’s a fun and enjoyable way to start the day. But what’s amazing to me is how many people in Mankato have no idea of the beauty of our area rivers. We’ve taken many of our friends out on the river.

Blue Earth County has more rivers than any other county in the state. Whenever we take people out on our boat near the dam and down towards Mankato ­ especially the people who have lived here all their life ­ they are just amazed at what they see. The waterfalls. The high cliffs and rocks. It’s fun for us to show the locals.

CONNECT: Can what happen in the late ’80s in commercial real estate ­ a crash ­ happen again in the next couple of years?

FISHER: There were a number of factors involved in that crash. One factor was that in 1980 the prime rate was 21.5 percent. In 1983 it dropped to 11 percent. And it wasn’t until 1992 that it dropped to 6 percent. Interest rates were certainly a part of that crash. Interest rates also had a tremendous impact on businesses that were capital intensive ­ either equipment or inventory that were leveraged ­ or in businesses that were trying to do expansions. As those rates increased it made it very difficult for tenants, users and owners of the property.

Government regulation was a second factor. The Tax Reform Act of 1986 had a tremendous negative impact on real estate. I don’t want to say there wasn’t a need to change some things. There were abuses. In large metropolitan markets speculation building was exceeding demand. They were building what we refer to as “see-through” office buildings and were making them work on the tax benefits available. That truly was an abuse.

But in Mankato that abuse wasn’t occurring. We needed the benefits of the tax law more so than the larger markets. The Act was really unfair to risk takers because it changed the rules. Those who had already made investments were not grandfathered in. They had a phase-out period where the benefits went away. Not only did the rules immediately cause a drop in value for everybody, but it took away the benefits they had when they made the initial decision to invest. The drop in values was significant ­ easily a 20 to 30 percent reduction in values based on the tax law changes. That put banks in difficult situations with distressed loan portfolios. As a result banks failed and the Resolution Trust Corporation came around to deal with all the distressed properties.

With the Tax Reform Act of 1986, to a certain extent, the government shot itself in its own foot. It cost taxpayers a tremendous sum of money. Lawmakers didn’t understand the impact of that law and what it would trigger in the marketplace. Further it caused a tremendous supply of distressed property which hurt the marketplace. It also took risk takers right out of the market, which then made it more difficult for sellers to sell. It trapped a lot of investors in their investments.

A third issue was individual market dynamics, which is not as significant a concern as the first two issues. Public sector involvement can be disruptive and individual markets have their own unique circumstances which were involved during this time.

CONNECT: The conditions are different now, but could it happen again another way?

FISHER: Currently we are in a very exciting, opportunistic time. Rates are the lowest they’ve been in 20 years. Government regulation seems to be softening. The realization of the unfairness of the tax reform acts with real estate is causing a number of discussions. There have been some changes in capital gains. The Federal Reserve is a lot wiser in how it handles monetary policy. And our risk takers are back.

So in terms of whether I feel it could happen again in the next few years? I say, No. I feel very good about our economy. I feel very good about some of the protection mechanisms in place that are going to prevent such an ’80s-like change to occur.

The concern I have though, lies more with our younger executives who have come into the decision-making process. I have sensed with some that they feel there is a greater need to expand their company than those of the past who thought a little more cautiously about what would happen if interest rates changed or demand dropped. I think it comes from newer executives who have never experienced a significant downturn. You always need a back door ­ an escape route ­ if things change. A little ripple in interest rates could trigger downsizing, which could cause an oversupply to occur.

CONNECT: Has the demand for commercial real estate space in Mankato kept up with supply?

FISHER: Demand has not caught up with supply. Mankato is unique compared to St. Cloud, Rochester, Duluth and other cities, in that we have a very large oversupply. In 1997, I indicated to our city leaders a real concern. It was easy to identify 650,000 square feet of buildings in August, 1997, that were either under-utilized, not utilized or vacant. Further this wasn’t the whole market, but rather reflected knowledge of our office. Now we’re in the range of 430,000. This is a significant reduction, which has been fueled by the very active economy.

When I’ve been involved in other cities, such as Rochester, Duluth, and St. Cloud, where I’ve completed projects, I’ve found it very difficult to identify much vacant space. Mankato is unique in this way and our leaders need to understand. When you have this much vacancy, a lot of risk takers are having to support negative cash flow to pay bills, taxes, insurance and utilities on buildings that aren’t occupied. It’s a major problem we need to deal with. It would be a tremendous boost to the area if we could absorb a lot of this inventory and reuse these buildings. In some cases we could tear down the buildings and eliminate the vacant space from the marketplace.

CONNECT: Brian Fazio, formerly of Norwest Bank, was named executive director of Valley Industrial Development Corp. One of VIDC’s jobs is to fill industrial parks in Mankato and North Mankato. Do you look at them as a competitor?

FISHER: At one time, many years ago, we looked at them as a competitor. Today we do not. They weren’t a competitor years ago in the sense of doing deals as a dealmaker versus us doing deals as a dealmaker, but they were a competitor in that they controlled leads which deprived us, perhaps, of opportunities to work with different users.

Before VIDC was organized in Mankato we enjoyed a referral base from lenders, the Chamber, and businesses. When VIDC became involved in the market, its direction to its membership was to direct all leads to VIDC. It was a concern at that time. Today it is not a concern because our plate is full. We’ve grown and expanded, and redeveloped ways of getting leads.

I think VIDC felt it wasn’t able to share with us or give us access to their different clients because of confidentiality restrictions. It was difficult for us to understand that, in that we always work with clients’ confidential needs. It didn’t allow us to interact and utilize our expertise to help complete transactions.

If VIDC obtains leads and they control leads, they then have an obligation to perform on those leads. Closing on those leads takes expertise and a specific action plan that is sensitive to the feasibility of the project and limiting upfront costs. We try to define a critical path that generates the information that’s required for the user to make an intelligent decision. And we do it as quickly as we can.

It’s interesting to compare VIDC with other development corporations in other cities. Generally we find that those development corporations are structured as facilitators and are most interested in facilitating the transaction to meet the clients needs in the most expeditious manner possible. In the past, VIDC took on more of the role of controlling the client here than we’ve found in other cities.

VIDC has a very important role in facilitating economic development. I’m excited they have a new executive director. I think Brian Fazio understands the financial marketplace, and will have a sensitivity to feasibility and costs. We look forward to working with him.

If Brian can define goals and create an action plan that is acceptable to his board which allows VIDC to network with firms that can complete and help facilitate transactions ­ that will be an important accomplishment for him. By working together in the community, and with the right players, I believe efficiencies will evolve that will lead to successful business start-ups. It will be very important for Brian to work with the VIDC leadership to establish a direction, perhaps a new direction, that will make it as effective as it possibly can be. It will also be an opportunity for him to ask the communities and leaders what VIDC can do to be more effective in the future.

CONNECT: You manage Madison East now. Why did it nearly die? and how is it coming back?

FISHER: Madison East really had its own way for years. It was dominant as a regional mall. It had a waiting list of tenants and a strict, landlord-sided lease document.

When transportation changes occurred which relocated Highway 14 to the north and Highway 22 to the east, Madison East lost its regional traffic flow. Along with that, of course, came the new regional mall by General Growth. Madison East used to have all four directions at its doorstep. Today all four directions are really out at the interchange of 14 and 22. Therefore all the regional tenants migrated to the new regional setting. [Madison East] made a mistake initially by trying to compete by completing a major remodeling of the mall, with new landscaping, signage and lighting. But it really was not a very wise decision. It wasn’t viable as a regional mall.

In June, 1997, Madison East’s owners contracted with Fisher Lidstrom to lease the mall, and Fisher Management to manage it. At that time there was 148,000 square feet of vacant space and a 50% vacancy rate. Today, with the leases we are in the process of completing, we have just 54,000 square feet vacant and 80% occupancy.

What we did was create a new leasing plan, with a new mix of tenants that we thought would make Madison East viable. But making it viable meant making it viable for the tenants, not for the owners. Making it viable for the tenants meant making Madison East a facility that could meet the needs of many, many different kinds of uses, not just retail.

We laid out plans for office-type users and for retail users. Things have worked out pretty much on track. We have leased some of the more difficult spaces. We are finalizing leases where Sears used to be. They are retail users. That will bring traffic back into the mall and help us fill vacant space. It helped greatly when we brought Rosie Brunmeier into manage our satellite office at Madison East center.

CONNECT: Why have an exit off Highway 14 onto Madison Avenue near Madison East? What will it do?

FISHER: It’s really important for people to recognize the difficulty in selecting a convenient route when in the area of Madison Avenue and Victory Drive if your objective is to go west, north or south. In that area, if your objective is to go west, north or south, there is an inconvenient decision to make. If you want to get to Highway 169 or 14 West your choice is driving down the hill or driving all the way out into the congested area of River Hills Mall and up the ramp. A Highway 14 connection from Victory Drive will have a tremendous benefit, not only for the residents, but also for the business owners, the hospital, and the University. It’s a very logical connector that splits the city and allows another access point.

This connector, and then the Adams Street one as well, will open up retail land for more opportunities. It will bring regional traffic into the area. The connection will also help restore value to property that had been negatively impacted by the change in transportation patterns to this area. The market value for Madison East was over $10 million in 1992. In 1997, it was $3.8 million. Obviously it would be important if the connection restored values to some of the properties hurt by past changes. It would also be important for the connection to minimize destruction of existing buildings. We would be losing a lot of ground economically if we tore down Madison East to accommodate the connection, or if it negatively impacted Rasmussen College or Belle Mar Mall. Hopefully the planners will identify a way to minimize destruction.

CONNECT: About twenty years ago quite a few Mankatoans invested in a real estate venture that went sour. It was never made public. What happened? and what went wrong?

FISHER: It was a very interesting phenomenon to me at the time. Many of the investors involved with this company were what I would consider sophisticated investors. Many of them were bankers, attorneys, accountants and professors. The investments were recommended by many non-real estate professionals in the community. Hundreds of investors were involved.

To me the transactions never made economic sense. It was without regard for local marketplace conditions and rents. Investors were fueled by the success of unrealistic resales occurring within a large circle of investors. They lost track of the reality of the marketplace. It always seemed to be too good to be true. It obviously got to a point where even with the tax write-offs, the inflated prices couldn’t be supported. Once the reality of the distressed conditions of the properties became apparent, I became involved to try to assist some of the investors with an appropriate reaction to limit their losses. Unfortunately there really wasn’t any solution. It was especially distressing to see investors who had taken retirement income, life savings, and second mortgages to invest in these schemes. What was also distressing was that well-intended investors had been hurt when they really didn’t need to be.

These deals were predictable before they invested in them. They were predictably bad. They didn’t make sense. I’d indicated to any investors I was working with at the time to not invest. I was sad to see investors hurt. I think it removed risk takers from the local investment market for years because of the amount of negative impact.

CONNECT: What about the new Technology Plus Center in downtown Mankato? Will that spur even more growth in that area?

FISHER: The Technology Plus Center will be exciting for the area in creating new users and uses that otherwise wouldn’t likely be here. I believe the City’s goal is to create new uses that benefit from the special and supportive environment available for this facility. There is a term we use in the industry called “but for.” What it means is that “but for” the City’s support it wouldn’t happen. I think it’s very important that the technology center have uses that fit the “but for” requirement, so that it’s not disruptive to the private market. Hopefully, users won’t be robbed from existing buildings in order to fill a city-supported technology center.

CONNECT: How did you enter the commercial real estate business?

FISHER: Sometimes a lot of luck is involved in how you enter your niche in life. I came to college here in the ’60s and met my wife. I worked a couple of different jobs while going to school. During that time I had a motorcycle accident. A car turned in front of me. It wasn’t my fault. I received some significant facial injuries. I also received a small settlement that I had negotiated with an insurance company. I invested that money in some older apartment houses. In the process I met the late George Smith, with what was then Atwood Smith Realty. George stayed on with me until I started in real estate.

I began in commercial real estate in 1972. I liked the financial challenges, the analysis, and the creativity involved in transactions. I enjoyed taking risks and thought I could control those risks. What helped me most in the beginning of my career was achieving a designation: CCIM, which is a Certified Commercial Investment Member. Earning CCIM designation really brought the specific financial tools I needed to start developing. What has brought the greatest growth and success to the business are the talented people that have grown with me. I’ve enjoyed the development business. It gives me a lot of satisfaction to see new projects that maybe wouldn’t have been there had we not been able to create the opportunity.

I’m very grateful to this area, and feel humble because of the opportunities it has provided. I always remind myself of that.

©1997 Connect Business Magazine