1
00:00:10,840 --> 00:00:14,320
Speaker 1: Hello, and welcome to another episode of the Odd Thoughts Podcast.

2
00:00:14,400 --> 00:00:17,520
Speaker 1: I'm Tracy Alloway and I'm Jill wysn't Thal Joe, do

3
00:00:17,520 --> 00:00:21,920
Speaker 1: you remember our conversation with Ali Webb, the founder of Drybar.

4
00:00:22,520 --> 00:00:25,560
Speaker 2: Yes, that was a really great conversation, and you know,

5
00:00:25,600 --> 00:00:28,920
Speaker 2: we talked a little bit about how she selected optimal

6
00:00:29,000 --> 00:00:31,600
Speaker 2: Drybar locations, and I think both of our interests were

7
00:00:31,640 --> 00:00:35,559
Speaker 2: peaked at that exact moment about the art of location selection.

8
00:00:35,920 --> 00:00:38,760
Speaker 1: Yeah, it was sort of a light bulb moment for

9
00:00:38,840 --> 00:00:42,080
Speaker 1: me because obviously you think, yes, if you're a business,

10
00:00:42,200 --> 00:00:45,760
Speaker 1: you're putting a lot of thought into where you're opening

11
00:00:45,920 --> 00:00:48,559
Speaker 1: up a store, and presumably you want to find a

12
00:00:48,600 --> 00:00:51,760
Speaker 1: location with lots of traffic and try to sell as

13
00:00:51,840 --> 00:00:54,240
Speaker 1: much as you possibly can. But there were all these

14
00:00:54,640 --> 00:00:59,520
Speaker 1: new and intriguing factors that were sort of lurking behind

15
00:00:59,520 --> 00:01:02,600
Speaker 1: the scenes. So I remember Ali was talking about how

16
00:01:02,880 --> 00:01:05,600
Speaker 1: for dry Bar, it's really important that you select a

17
00:01:05,640 --> 00:01:10,559
Speaker 1: location where you can effectively slot into a customer's sort

18
00:01:10,560 --> 00:01:13,760
Speaker 1: of day to data routine, right next to a grocery

19
00:01:13,800 --> 00:01:16,640
Speaker 1: store or on the outside of a shopping mall so

20
00:01:16,680 --> 00:01:19,480
Speaker 1: that there's easy access. But there were also things that

21
00:01:19,520 --> 00:01:22,080
Speaker 1: I had never considered, like, if you are in a

22
00:01:22,120 --> 00:01:26,960
Speaker 1: shopping mall, does the shopping mall owner actually allow more

23
00:01:27,000 --> 00:01:29,160
Speaker 1: than one hair salon in that space?

24
00:01:29,800 --> 00:01:33,080
Speaker 2: Speaking of shopping centers, you know, there's this location that

25
00:01:33,200 --> 00:01:36,800
Speaker 2: I drive sometimes when I'm on the Long Island Expressway

26
00:01:36,800 --> 00:01:39,000
Speaker 2: that I always passed, and in this like one shopping

27
00:01:39,080 --> 00:01:41,200
Speaker 2: center that I always see from the highway, there is

28
00:01:41,240 --> 00:01:46,120
Speaker 2: like a dry bar, a soul cycle, and something else,

29
00:01:46,120 --> 00:01:50,280
Speaker 2: and I just imagine that's perfect. Yes, the person, most

30
00:01:50,320 --> 00:01:52,360
Speaker 2: likely a woman in this case, who's like, for yes,

31
00:01:52,400 --> 00:01:55,240
Speaker 2: this shopping center basically like knocks out three of the

32
00:01:55,240 --> 00:01:57,880
Speaker 2: things that they have to get taken care of during

33
00:01:57,960 --> 00:02:00,520
Speaker 2: some like you know, two hour block of time that

34
00:02:00,560 --> 00:02:00,800
Speaker 2: they have.

35
00:02:01,080 --> 00:02:03,680
Speaker 1: Man, that is a that is a lifestyle.

36
00:02:03,280 --> 00:02:05,960
Speaker 2: Yes, it's a lifestyle location for sure.

37
00:02:06,280 --> 00:02:09,040
Speaker 1: But the point is there are all these sort of

38
00:02:09,080 --> 00:02:14,079
Speaker 1: like hidden things happening behind brick and mortar site location,

39
00:02:14,240 --> 00:02:16,080
Speaker 1: and I feel like we should get a better sense

40
00:02:16,080 --> 00:02:19,400
Speaker 1: of them, particularly in the context of what's happening with

41
00:02:19,480 --> 00:02:23,280
Speaker 1: commercial real estate. We've done a couple episodes on cre

42
00:02:23,600 --> 00:02:27,160
Speaker 1: and offices, but also on shopping malls, and again, there

43
00:02:27,160 --> 00:02:29,680
Speaker 1: are things in the shopping mall world that I have

44
00:02:29,800 --> 00:02:33,960
Speaker 1: never considered before, such as the maintenance or how important

45
00:02:34,000 --> 00:02:37,240
Speaker 1: are holiday decorations and how that can feed into values

46
00:02:37,280 --> 00:02:39,960
Speaker 1: and things. So I'm curious if you're a business, if

47
00:02:40,000 --> 00:02:42,280
Speaker 1: you're thinking about, well, I want I want to open

48
00:02:42,280 --> 00:02:44,680
Speaker 1: a store in this particular strip mall because they have

49
00:02:44,760 --> 00:02:47,240
Speaker 1: really nice Christmas decorations or something like.

50
00:02:47,200 --> 00:02:51,760
Speaker 2: That totally or where in the store or where in

51
00:02:51,800 --> 00:02:54,400
Speaker 2: the mall or the strip mall the store physically is

52
00:02:55,000 --> 00:02:57,679
Speaker 2: the types of turns that you have to take could matter,

53
00:02:57,800 --> 00:03:00,000
Speaker 2: like all kinds of things. That's like, yes, we all

54
00:03:00,120 --> 00:03:03,760
Speaker 2: no location matters, but it's like they're real professionals and

55
00:03:04,080 --> 00:03:06,080
Speaker 2: true location optimization and.

56
00:03:06,280 --> 00:03:09,040
Speaker 1: The secret art of choosing shop sites.

57
00:03:09,200 --> 00:03:12,920
Speaker 2: Yeah, and so we should. I'm eager to learn more.

58
00:03:13,200 --> 00:03:16,080
Speaker 1: Okay, So this is actually a two part episode that

59
00:03:16,200 --> 00:03:18,800
Speaker 1: means we have two perfect guests for you. To begin with,

60
00:03:18,880 --> 00:03:21,680
Speaker 1: we're going to be speaking a bit broadly about this

61
00:03:21,800 --> 00:03:24,880
Speaker 1: whole idea of site location. We are going to talk

62
00:03:25,080 --> 00:03:29,400
Speaker 1: with Tom McGee. He is the CEO of something I

63
00:03:29,400 --> 00:03:35,560
Speaker 1: didn't know existed, the International Council of Shopping Centers, the ICSC,

64
00:03:35,960 --> 00:03:38,640
Speaker 1: which is a trade association for shops. We're going to

65
00:03:38,720 --> 00:03:43,120
Speaker 1: talk to him generally about how businesses choose where to

66
00:03:43,240 --> 00:03:45,520
Speaker 1: set up shop. But then we have a second guest.

67
00:03:45,600 --> 00:03:48,840
Speaker 1: We're going to drill down into even more detailed joke.

68
00:03:49,080 --> 00:03:51,840
Speaker 2: That's right after our conversation with Tom, we are speaking

69
00:03:51,880 --> 00:03:56,720
Speaker 2: with Chris Hatch of Forza Development. His actual real expertise

70
00:03:57,120 --> 00:04:00,920
Speaker 2: happened to be in drive through location and so things

71
00:04:00,920 --> 00:04:03,760
Speaker 2: like Starbucks drive throughs and in and out drive throughs,

72
00:04:03,800 --> 00:04:06,880
Speaker 2: and so after our sort of general conversation with Tom,

73
00:04:06,960 --> 00:04:09,240
Speaker 2: we're going to be speaking with a specialist in one

74
00:04:09,280 --> 00:04:13,119
Speaker 2: area about how a national chain figures out the optimal

75
00:04:13,200 --> 00:04:15,920
Speaker 2: spot to put in a drive through location.

76
00:04:16,560 --> 00:04:19,880
Speaker 1: All right, Here is our conversation with Tom McGee, the

77
00:04:20,160 --> 00:04:24,200
Speaker 1: CEO of the International Council of Shopping Centers. Tom, what

78
00:04:24,360 --> 00:04:26,840
Speaker 1: is the International Council of Shopping Centers?

79
00:04:26,880 --> 00:04:30,080
Speaker 3: Well, the International Council of Shopping Centers, which we go

80
00:04:30,120 --> 00:04:34,280
Speaker 3: by the term ICSE, is a trade association. We represent

81
00:04:34,600 --> 00:04:42,240
Speaker 3: about fifty five thousand members landlords, owner developers, tenants, service providers,

82
00:04:42,320 --> 00:04:47,000
Speaker 3: your brokers, accountants, attorneys, everyone that serves the retail industry

83
00:04:47,000 --> 00:04:49,200
Speaker 3: with a particular focus upon physical retail.

84
00:04:49,839 --> 00:04:54,039
Speaker 2: So big picture, some sort of national chain, you know,

85
00:04:54,120 --> 00:04:57,240
Speaker 2: like a tractor supply or a Starbucks. So you know

86
00:04:57,279 --> 00:04:59,960
Speaker 2: they're like, okay, we want to expand in a new area.

87
00:05:00,120 --> 00:05:03,400
Speaker 2: What is the process generally by which they'd go out?

88
00:05:03,480 --> 00:05:06,520
Speaker 2: Do companies have like in house real estate teams? Is

89
00:05:06,520 --> 00:05:07,200
Speaker 2: it brokers?

90
00:05:07,240 --> 00:05:07,320
Speaker 4: Like?

91
00:05:07,400 --> 00:05:11,480
Speaker 2: Walk through the process by which a commercial landlord and

92
00:05:11,640 --> 00:05:13,240
Speaker 2: some sort of retailer will connect.

93
00:05:14,200 --> 00:05:15,800
Speaker 3: Well, you touched upon a couple things, and those are

94
00:05:15,800 --> 00:05:21,000
Speaker 3: two very different brands. But first, most big national retailers

95
00:05:21,000 --> 00:05:23,440
Speaker 3: will have an in house real estate team. That does

96
00:05:23,480 --> 00:05:26,640
Speaker 3: not mean that they won't use brokers for assistance. And

97
00:05:26,680 --> 00:05:31,839
Speaker 3: certainly all national owner developers will have an in house

98
00:05:31,920 --> 00:05:35,440
Speaker 3: leasing team, people that work with tenants to help them

99
00:05:35,440 --> 00:05:39,239
Speaker 3: find space and negotiate terms. But big picture, the CEO

100
00:05:39,360 --> 00:05:42,160
Speaker 3: will start and say, we have growth objectives. You know,

101
00:05:42,200 --> 00:05:44,400
Speaker 3: we want to open up a certain number of stores

102
00:05:44,440 --> 00:05:48,400
Speaker 3: this year to help meet those objectives. And or we

103
00:05:48,480 --> 00:05:51,760
Speaker 3: have a number of leases that are coming due, and

104
00:05:51,880 --> 00:05:54,479
Speaker 3: we may want to renew those leases or look for

105
00:05:54,520 --> 00:05:57,799
Speaker 3: alternative sites. And so what they'll start with is based

106
00:05:57,839 --> 00:06:00,440
Speaker 3: upon those two broad objectives. Say, okay, first of all,

107
00:06:00,440 --> 00:06:03,000
Speaker 3: who's our core customer? You know, particularly if you're an

108
00:06:03,080 --> 00:06:05,080
Speaker 3: established retail you have a pretty good sense to who

109
00:06:05,120 --> 00:06:07,719
Speaker 3: your core customer is and who you want to serve

110
00:06:07,760 --> 00:06:10,479
Speaker 3: and who you want to establish, and so demographics, you know,

111
00:06:10,520 --> 00:06:13,159
Speaker 3: are very very important. You look at different trade areas

112
00:06:13,360 --> 00:06:16,560
Speaker 3: and you say, Okay, does this particular trade area have

113
00:06:17,160 --> 00:06:20,280
Speaker 3: the demographics the type of customer that we're looking to serve.

114
00:06:20,720 --> 00:06:23,320
Speaker 3: If you are a tractor supply, you have a certain

115
00:06:23,400 --> 00:06:26,479
Speaker 3: demographic that's probably interested in the type of products that

116
00:06:26,520 --> 00:06:28,880
Speaker 3: you serve. If you have a Tiffany's, you have a

117
00:06:28,880 --> 00:06:31,520
Speaker 3: certain demographics and the type of property, a type of

118
00:06:31,680 --> 00:06:33,360
Speaker 3: customer that you're trying to serve, and you're looking for

119
00:06:33,360 --> 00:06:37,400
Speaker 3: those different types of locations or areas that fit your

120
00:06:37,400 --> 00:06:40,800
Speaker 3: customer needs. And then you start looking at, okay, what

121
00:06:40,960 --> 00:06:44,120
Speaker 3: other retailers are there, what are the properties that are

122
00:06:44,200 --> 00:06:48,000
Speaker 3: available that I might want to situate in. And generally,

123
00:06:48,080 --> 00:06:50,880
Speaker 3: the vast majority of retail in the United States, New

124
00:06:50,960 --> 00:06:53,120
Speaker 3: York being you know, an obvious exception, where there's a

125
00:06:53,160 --> 00:06:56,359
Speaker 3: lot of street retail and so forth, are domiciled in

126
00:06:56,440 --> 00:07:01,000
Speaker 3: shopping centers, whether that's big regional malls or local open

127
00:07:01,040 --> 00:07:04,160
Speaker 3: air shopping centers and everything in between. And then they'll

128
00:07:04,160 --> 00:07:06,360
Speaker 3: start looking at the tipperate types of properties that they

129
00:07:06,480 --> 00:07:10,280
Speaker 3: want to locate their space in and begin to talk

130
00:07:10,320 --> 00:07:12,840
Speaker 3: to landlords and begin to understand who are the other

131
00:07:12,880 --> 00:07:16,240
Speaker 3: tenants within that space, etcetera. They may use a broker

132
00:07:16,680 --> 00:07:19,600
Speaker 3: to help them with that, they may not. A landlord

133
00:07:19,600 --> 00:07:21,880
Speaker 3: may use a broker to help them, they may not.

134
00:07:22,160 --> 00:07:25,520
Speaker 3: The larger they are, generally, the more in house it is.

135
00:07:25,600 --> 00:07:28,800
Speaker 3: The smaller they are generally, the more they might use

136
00:07:28,840 --> 00:07:32,520
Speaker 3: an outside service providers. But even large national chains and

137
00:07:32,600 --> 00:07:36,320
Speaker 3: large national landlords, we'll often use service providers to supplement

138
00:07:36,360 --> 00:07:36,800
Speaker 3: their team.

139
00:07:37,240 --> 00:07:40,880
Speaker 1: What kind of due diligence goes into identifying locations? So

140
00:07:41,080 --> 00:07:43,120
Speaker 1: let's say I don't know, I have a small business

141
00:07:43,160 --> 00:07:46,640
Speaker 1: and there's a nice strip mall and there's a vacant space,

142
00:07:46,720 --> 00:07:50,000
Speaker 1: and I think this looks like a really good possibility

143
00:07:50,040 --> 00:07:53,400
Speaker 1: for us to set up shop. What are the sort

144
00:07:53,400 --> 00:07:56,800
Speaker 1: of factors or things that we would be looking out for, Like,

145
00:07:56,840 --> 00:07:59,480
Speaker 1: for instance, would we be standing outside the shop, like

146
00:07:59,640 --> 00:08:01,640
Speaker 1: measure ring, footfall or something like that.

147
00:08:02,200 --> 00:08:05,720
Speaker 3: You would certainly stand outside the shopping center and want

148
00:08:05,720 --> 00:08:08,680
Speaker 3: to observe it and make sure that it's of a

149
00:08:08,680 --> 00:08:12,320
Speaker 3: stature and a quality that's representative of your brand. I mean,

150
00:08:12,360 --> 00:08:15,560
Speaker 3: you start out that big demographics and looking at your customers.

151
00:08:15,600 --> 00:08:18,120
Speaker 3: But then you start drilling down and you might have

152
00:08:18,160 --> 00:08:20,280
Speaker 3: a shopping center on both sides of the street, right,

153
00:08:20,320 --> 00:08:21,600
Speaker 3: and you might say, well, why do I pick this

154
00:08:21,640 --> 00:08:25,600
Speaker 3: one versus a different one? And you might do research

155
00:08:25,680 --> 00:08:28,520
Speaker 3: on social media and see what the local community says.

156
00:08:28,600 --> 00:08:30,720
Speaker 3: You certainly are going to look at the upkeep of

157
00:08:30,800 --> 00:08:34,640
Speaker 3: the shopping center. Is it visually appealing, is it is

158
00:08:34,679 --> 00:08:38,120
Speaker 3: it well maintained? Who are the other tenants. That's a

159
00:08:38,200 --> 00:08:42,480
Speaker 3: really big deal for retailers because not only are they

160
00:08:42,480 --> 00:08:44,920
Speaker 3: going to want to make sure that there's not, you know,

161
00:08:44,960 --> 00:08:47,880
Speaker 3: a natural competitor that's in that space that they might

162
00:08:47,920 --> 00:08:51,440
Speaker 3: cannibalize each other, but you are who the company you keep, right,

163
00:08:51,520 --> 00:08:53,200
Speaker 3: so you're going to want to make sure that the

164
00:08:53,200 --> 00:08:56,480
Speaker 3: folks that are in that center are consistent with your brand.

165
00:08:56,559 --> 00:09:00,280
Speaker 3: You're not going to generally have a Walmart, which is

166
00:09:00,320 --> 00:09:04,920
Speaker 3: a large mass merchant retailer, next to Ralph Lauren or

167
00:09:04,960 --> 00:09:07,520
Speaker 3: something like Louis Vauton, which is a high end luxury,

168
00:09:07,520 --> 00:09:09,520
Speaker 3: So you want to make sure that there's a consistency

169
00:09:09,559 --> 00:09:11,640
Speaker 3: to the type of retailer that's in that Look.

170
00:09:11,800 --> 00:09:15,719
Speaker 2: Well, I was going to say conversely, from the perspective

171
00:09:15,840 --> 00:09:19,560
Speaker 2: of the shopping center. How much do they think like, Okay,

172
00:09:20,120 --> 00:09:22,959
Speaker 2: here's a vape shop, here's.

173
00:09:22,920 --> 00:09:24,960
Speaker 1: A Spencer's Gifts.

174
00:09:25,040 --> 00:09:26,880
Speaker 2: Yeah, you're right, imagine.

175
00:09:26,480 --> 00:09:30,040
Speaker 1: They're co located next to vape shops if they still exist.

176
00:09:30,760 --> 00:09:33,839
Speaker 2: Yeah, Like how much did they think about like mix optimization?

177
00:09:34,280 --> 00:09:38,280
Speaker 3: Yeah, you absolutely think about that because first and foremost,

178
00:09:38,520 --> 00:09:41,480
Speaker 3: the traffic that's in the shopping center, right, is going

179
00:09:41,559 --> 00:09:43,520
Speaker 3: to be driven by the tenants that are in the

180
00:09:43,559 --> 00:09:46,640
Speaker 3: shopping center. So you want to have a consistency. That's

181
00:09:46,679 --> 00:09:49,680
Speaker 3: why you often see certain retailers that are in the

182
00:09:49,679 --> 00:09:52,439
Speaker 3: same shopping center. You might see, you know, certain discount

183
00:09:52,520 --> 00:09:56,839
Speaker 3: retailers and certain service providers that are often in the

184
00:09:56,880 --> 00:09:59,280
Speaker 3: same shopping center at Alta and a Target and so forth,

185
00:09:59,320 --> 00:10:02,840
Speaker 3: because they have a similar type of consumer. So in

186
00:10:02,880 --> 00:10:05,560
Speaker 3: your example, you probably if you have a vape shop,

187
00:10:05,679 --> 00:10:08,800
Speaker 3: you're probably not going to see certain retailers in there

188
00:10:08,800 --> 00:10:12,080
Speaker 3: because that's not necessarily consistent with the demographics that they're

189
00:10:12,080 --> 00:10:16,439
Speaker 3: looking for. Conversely, the shopping center owner themselves, it's really

190
00:10:16,520 --> 00:10:20,720
Speaker 3: important to them as well to curate the mix appropriately right,

191
00:10:20,760 --> 00:10:24,120
Speaker 3: because that's going to generate traffic. If you have a

192
00:10:24,200 --> 00:10:27,120
Speaker 3: hodgepodge of stuff, you know, mixed in that don't have

193
00:10:27,240 --> 00:10:31,320
Speaker 3: any synergy. That definitely isn't good for traffic, right, and

194
00:10:31,360 --> 00:10:33,600
Speaker 3: it's not good for your brand, and ultimately it is

195
00:10:33,640 --> 00:10:36,160
Speaker 3: not good for your ability to attract the next retailer

196
00:10:36,480 --> 00:10:40,280
Speaker 3: and the next retailer. Because this particular industry retail real

197
00:10:40,400 --> 00:10:44,000
Speaker 3: estate more than any other form of real estate, it

198
00:10:44,080 --> 00:10:47,960
Speaker 3: is very relationship driven, and it's very much people are concerned.

199
00:10:48,000 --> 00:10:50,720
Speaker 3: For example, in an office, a law firm might be

200
00:10:50,720 --> 00:10:52,800
Speaker 3: on the fifth floor and a construction company might be

201
00:10:52,840 --> 00:10:57,520
Speaker 3: on the sixth floor. It doesn't really matter. But in

202
00:10:57,600 --> 00:11:00,720
Speaker 3: a shopping center, whether it's a big reaon mall or

203
00:11:00,720 --> 00:11:03,600
Speaker 3: it's a local shopping center, it does matter who's next

204
00:11:03,600 --> 00:11:06,840
Speaker 3: door to you because there's a synergy and a relationship

205
00:11:06,880 --> 00:11:10,200
Speaker 3: both from brand identity and also foot traffic. That's very,

206
00:11:10,320 --> 00:11:11,000
Speaker 3: very important.

207
00:11:11,720 --> 00:11:15,600
Speaker 1: So let's say we've identified a likely location and we're

208
00:11:15,600 --> 00:11:19,520
Speaker 1: now negotiating with the landlord about setting up a lease

209
00:11:19,520 --> 00:11:23,920
Speaker 1: of some sort. What would go into those negotiations and

210
00:11:23,960 --> 00:11:26,840
Speaker 1: what are the typical sticking points that you observe.

211
00:11:27,480 --> 00:11:29,559
Speaker 3: Well, the most important one of the most obvious ones

212
00:11:29,640 --> 00:11:34,240
Speaker 3: right term and price. So those are often quite frankly

213
00:11:34,280 --> 00:11:36,560
Speaker 3: the most important. They're in the most important points and

214
00:11:36,600 --> 00:11:39,240
Speaker 3: often the sticky point right the sticking points because both

215
00:11:39,280 --> 00:11:42,040
Speaker 3: sides have a mutuality of interest to make sure they're

216
00:11:42,200 --> 00:11:44,559
Speaker 3: being competitive. But outside of that, you're going to look

217
00:11:44,559 --> 00:11:46,280
Speaker 3: at things like co tenancy. You know who else is

218
00:11:46,320 --> 00:11:48,720
Speaker 3: in the shopping center and is there somebody that has

219
00:11:48,760 --> 00:11:50,840
Speaker 3: a clause in there that says I can't you can't

220
00:11:50,880 --> 00:11:52,840
Speaker 3: have a similar type of apparel retailer.

221
00:11:52,920 --> 00:11:56,280
Speaker 1: Could I demand a co tendency clause? Like if for

222
00:11:56,440 --> 00:11:58,520
Speaker 1: my business, could I say I don't want any other

223
00:11:58,559 --> 00:12:01,280
Speaker 1: competitors in this area if I take up the space.

224
00:12:01,520 --> 00:12:03,800
Speaker 3: Yeah, you could have co tennancy clauses as a as

225
00:12:03,840 --> 00:12:06,360
Speaker 3: a tenant and you that would be a negotiating point.

226
00:12:06,760 --> 00:12:08,679
Speaker 3: You're not necessarily going to get it, but you can

227
00:12:08,679 --> 00:12:13,960
Speaker 3: certainly request it. And your prominence, your leverage is the

228
00:12:13,960 --> 00:12:16,760
Speaker 3: bigger you are, and the more traffic you're going to drive,

229
00:12:16,880 --> 00:12:19,679
Speaker 3: the more leverage you're going to have. Now, those tennancy

230
00:12:19,720 --> 00:12:22,800
Speaker 3: clauses can often get renegotiated. So you have a co

231
00:12:22,880 --> 00:12:26,640
Speaker 3: tenancy clause and the landlord might identify a you know,

232
00:12:26,679 --> 00:12:29,720
Speaker 3: a tenant that they want in that shopping center and

233
00:12:29,760 --> 00:12:31,840
Speaker 3: they may go to that other tenant that has a

234
00:12:31,840 --> 00:12:33,640
Speaker 3: co tenancy clause and say, hey, we got this great

235
00:12:33,679 --> 00:12:36,880
Speaker 3: retailer we want to bring in or great concept. You

236
00:12:36,920 --> 00:12:40,600
Speaker 3: have a co tennancy clause that prohibits it less negotiate,

237
00:12:40,880 --> 00:12:43,560
Speaker 3: and you know, that may be a negotiation. They might say, hey,

238
00:12:43,559 --> 00:12:46,000
Speaker 3: that's great. There might be no consideration that needs to

239
00:12:46,040 --> 00:12:47,520
Speaker 3: be because they might look at it and say that's

240
00:12:47,520 --> 00:12:50,280
Speaker 3: going to drive more traffic, or they might ei there

241
00:12:50,320 --> 00:12:53,000
Speaker 3: is no financial consideration, you know, or a free rent

242
00:12:53,040 --> 00:12:56,400
Speaker 3: period or some type of negotiation that might take place

243
00:12:57,040 --> 00:12:58,640
Speaker 3: to adjust that co tenancy clause.

244
00:12:58,960 --> 00:13:01,880
Speaker 2: So drawing to on further, you know, we talked to

245
00:13:02,120 --> 00:13:04,760
Speaker 2: Ali Webb, the founder of dry Bar, and the other

246
00:13:04,840 --> 00:13:07,360
Speaker 2: point that she made that I think was really sort

247
00:13:07,360 --> 00:13:08,599
Speaker 2: of like hit a light bulb. But it's like, you

248
00:13:08,640 --> 00:13:11,680
Speaker 2: can identify a great region or a great area, a

249
00:13:11,679 --> 00:13:15,160
Speaker 2: great town or demographic, you can identify the right shopping center,

250
00:13:15,520 --> 00:13:19,400
Speaker 2: but depending on the nature of your what you're selling,

251
00:13:19,679 --> 00:13:22,160
Speaker 2: location in that center is important. So she pointed out

252
00:13:22,200 --> 00:13:24,520
Speaker 2: that for a blow dry bar, where you might want

253
00:13:24,559 --> 00:13:25,880
Speaker 2: to you know, it's all about the in and out

254
00:13:25,880 --> 00:13:27,440
Speaker 2: and quick. If you're in a mall, you don't want

255
00:13:27,480 --> 00:13:29,439
Speaker 2: to be deep in the mall, and that that's problematic.

256
00:13:29,640 --> 00:13:32,400
Speaker 2: You're not targeting people who plan to spend a lot

257
00:13:32,440 --> 00:13:34,040
Speaker 2: of time in the mall. You want to be on

258
00:13:34,080 --> 00:13:37,200
Speaker 2: the perimeter. What are some other you know, okay, after

259
00:13:37,240 --> 00:13:39,200
Speaker 2: you identify the shopping center, et cetera, what are the

260
00:13:39,240 --> 00:13:41,960
Speaker 2: other types of things that you see retailers thinking about

261
00:13:42,000 --> 00:13:43,960
Speaker 2: with within space, within the air.

262
00:13:43,960 --> 00:13:46,160
Speaker 3: Well, that's a particularly important one, right, if you are

263
00:13:46,200 --> 00:13:49,400
Speaker 3: a convenience type of retailer, you definitely want to be

264
00:13:49,480 --> 00:13:51,600
Speaker 3: a place that's convenient, right, so you want to make

265
00:13:51,640 --> 00:13:53,800
Speaker 3: sure you're on the end. You want to make it

266
00:13:53,840 --> 00:13:56,160
Speaker 3: as easy and frictional lists as possible for your customer.

267
00:13:56,200 --> 00:13:59,640
Speaker 3: Another big one because of the nature of how a

268
00:13:59,679 --> 00:14:03,840
Speaker 3: physical retail is used today, which isn't just for traditional shopping.

269
00:14:04,120 --> 00:14:06,720
Speaker 3: And so we all picture that people go into retailers

270
00:14:06,800 --> 00:14:09,160
Speaker 3: and shop and you know, walk around the aisles and

271
00:14:09,200 --> 00:14:12,280
Speaker 3: so forth, which in fact they obviously do a lot of.

272
00:14:13,080 --> 00:14:15,880
Speaker 3: But think about what happened during COVID. You have this

273
00:14:15,960 --> 00:14:18,800
Speaker 3: whole convergence between the physical and digital world taking you

274
00:14:18,840 --> 00:14:21,800
Speaker 3: have things like curbside pickup and click and collect and

275
00:14:21,840 --> 00:14:25,320
Speaker 3: so forth. So now the actual parking lot and the

276
00:14:25,840 --> 00:14:29,240
Speaker 3: flow of traffic is really really important if you're a

277
00:14:29,280 --> 00:14:32,600
Speaker 3: retailer that really wants to and this is a whole

278
00:14:32,640 --> 00:14:34,800
Speaker 3: other topic, but if you're a retailer that really wants

279
00:14:34,800 --> 00:14:36,920
Speaker 3: to drive as many people as possible to your store.

280
00:14:37,200 --> 00:14:39,440
Speaker 3: It's while you and I all believe it's a constitutional

281
00:14:39,520 --> 00:14:44,280
Speaker 3: right to get free shipping, somebody actually is paying for that,

282
00:14:44,480 --> 00:14:47,400
Speaker 3: and it's the retailer. And so if they can drive

283
00:14:47,560 --> 00:14:51,720
Speaker 3: someone to go to their store to pick up that

284
00:14:51,880 --> 00:14:56,000
Speaker 3: good that they ordered online, that's a big whim because

285
00:14:56,080 --> 00:14:58,440
Speaker 3: they preserve that margin. But you're going to want to

286
00:14:58,480 --> 00:15:01,120
Speaker 3: make sure that experience is very frictionless. And so if

287
00:15:01,160 --> 00:15:03,800
Speaker 3: I'm driving up and I did a click and collected,

288
00:15:03,840 --> 00:15:05,680
Speaker 3: it's curbs I pick up, Well, I wanted to have

289
00:15:05,760 --> 00:15:07,880
Speaker 3: the ability to somebody actually put it in my trunk

290
00:15:08,000 --> 00:15:11,040
Speaker 3: very easily and I drive away. And or I'm going

291
00:15:11,120 --> 00:15:12,720
Speaker 3: to want to set up the store in such a

292
00:15:12,720 --> 00:15:14,800
Speaker 3: way if somebody's going to go do a click, collect

293
00:15:14,840 --> 00:15:16,320
Speaker 3: and actually walk in the store, that they can do

294
00:15:16,360 --> 00:15:19,000
Speaker 3: that in a very convenient way. So location matters. It

295
00:15:19,000 --> 00:15:21,000
Speaker 3: depends upon what your strategy is and how you're going

296
00:15:21,040 --> 00:15:21,760
Speaker 3: to use that store.

297
00:15:37,560 --> 00:15:41,840
Speaker 1: How scalable are these types of tendency agreements. Like if

298
00:15:41,880 --> 00:15:45,360
Speaker 1: I am a national chain, could I strike some sort

299
00:15:45,400 --> 00:15:49,440
Speaker 1: of deal with a major shopping mall operator or a

300
00:15:49,520 --> 00:15:52,800
Speaker 1: major landlord of some sort to set up shops in

301
00:15:52,840 --> 00:15:56,080
Speaker 1: like ten different states at multiple locations.

302
00:15:56,520 --> 00:15:58,520
Speaker 3: You could, but it tends to be much more property

303
00:15:58,560 --> 00:16:02,080
Speaker 3: specific than that because it goes back to kind of

304
00:16:02,120 --> 00:16:04,920
Speaker 3: the basics of location. You really want to think about

305
00:16:05,560 --> 00:16:08,560
Speaker 3: the demographics of that area, the community that you're serving,

306
00:16:08,600 --> 00:16:11,760
Speaker 3: and so forth. So, yes, you could strike a large

307
00:16:11,760 --> 00:16:15,280
Speaker 3: deal like that, but it's generally, particularly on large national

308
00:16:16,200 --> 00:16:19,640
Speaker 3: retailers who already have an established footprint, they're going to

309
00:16:19,680 --> 00:16:21,239
Speaker 3: be much more location specific.

310
00:16:21,760 --> 00:16:25,720
Speaker 1: So the International Council of Shopping Centers, you actually run

311
00:16:25,800 --> 00:16:29,640
Speaker 1: one of the big deal making conferences for this space

312
00:16:30,040 --> 00:16:30,320
Speaker 1: we do.

313
00:16:30,400 --> 00:16:33,680
Speaker 3: It goes back to this industry being very relationship based,

314
00:16:33,800 --> 00:16:38,160
Speaker 3: and so we host about one hundred different events annually.

315
00:16:38,920 --> 00:16:41,960
Speaker 3: We have one exceptionally large event which is in Las

316
00:16:42,000 --> 00:16:44,240
Speaker 3: Vegas in the third week of May every year. We

317
00:16:44,280 --> 00:16:47,680
Speaker 3: call it ICC Las Vegas. We'll have about thirty thousand

318
00:16:47,760 --> 00:16:51,000
Speaker 3: people come to that event, and they come to that

319
00:16:51,080 --> 00:16:54,440
Speaker 3: event for one reason, to do deals. They come to

320
00:16:54,480 --> 00:16:56,760
Speaker 3: that event. Yes, we have content and a whole bunch

321
00:16:56,840 --> 00:16:59,880
Speaker 3: of other aspects to it, but the core reason they're

322
00:17:00,080 --> 00:17:04,160
Speaker 3: there is to network and talk transactions. So if you're

323
00:17:04,200 --> 00:17:09,679
Speaker 3: a major or quite frankly, even a regional landlord owner developer,

324
00:17:10,119 --> 00:17:13,639
Speaker 3: and you're a national regional or a or an emerging

325
00:17:13,680 --> 00:17:16,840
Speaker 3: retailer that's looking to open up locations, you will very

326
00:17:16,960 --> 00:17:19,159
Speaker 3: likely go to that event or one of our other

327
00:17:19,160 --> 00:17:23,600
Speaker 3: one hundred events to build relationships and talk about expansion

328
00:17:23,800 --> 00:17:27,119
Speaker 3: and talk about locations, and landlords will look at that

329
00:17:27,160 --> 00:17:30,040
Speaker 3: as an opportunity to both nurture or existing relationships but

330
00:17:30,080 --> 00:17:33,119
Speaker 3: also attract those new tenants into their spaces.

331
00:17:33,600 --> 00:17:36,560
Speaker 2: I know these conferences are really just about meeting people

332
00:17:36,560 --> 00:17:39,600
Speaker 2: and deals, but I get I assumes in Vegas and

333
00:17:39,640 --> 00:17:41,399
Speaker 2: being in Las Vegas, which is why I would like

334
00:17:41,440 --> 00:17:44,520
Speaker 2: to come have you. Yeah, we'll come out, But you know,

335
00:17:44,560 --> 00:17:47,280
Speaker 2: I assume that there's a program and panels and stuff

336
00:17:47,320 --> 00:17:49,280
Speaker 2: like that. What are going to be the big themes

337
00:17:49,359 --> 00:17:52,119
Speaker 2: right now in spring twenty twenty four in terms of

338
00:17:52,359 --> 00:17:53,600
Speaker 2: location identification?

339
00:17:54,320 --> 00:17:57,280
Speaker 3: Yeah, I mean the biggest challenge the industry has right now,

340
00:17:57,320 --> 00:17:59,080
Speaker 3: and this is going to surprise you, but it is

341
00:17:59,119 --> 00:18:04,000
Speaker 3: really supply so oh spa of space and so particularly

342
00:18:04,040 --> 00:18:07,400
Speaker 3: in suburban real estate is kind of on fire right now,

343
00:18:07,520 --> 00:18:12,720
Speaker 3: particularly suburban open air. Why well, first and foremost because

344
00:18:12,760 --> 00:18:15,560
Speaker 3: of think about what happened in the pandemic. So many

345
00:18:15,560 --> 00:18:18,240
Speaker 3: people move back to the suburbs, and they're working from home.

346
00:18:18,280 --> 00:18:22,000
Speaker 3: They're not necessarily coming into midtown Manhattan every day, so

347
00:18:22,040 --> 00:18:24,000
Speaker 3: they have a lot more time, and so they're using

348
00:18:24,040 --> 00:18:29,199
Speaker 3: those local retail outlets. Retailers are using their stores for

349
00:18:29,320 --> 00:18:33,120
Speaker 3: multiple purposes, like fulfilling online orders, and so you see

350
00:18:33,160 --> 00:18:36,159
Speaker 3: this whole synergy between the physical and digital world. And

351
00:18:36,240 --> 00:18:40,199
Speaker 3: so while you have this increasing demand for space because

352
00:18:40,200 --> 00:18:44,080
Speaker 3: of this multiple purposes, you have really had almost no

353
00:18:44,320 --> 00:18:47,480
Speaker 3: new supply net new supply, and there's individual markets where

354
00:18:47,520 --> 00:18:50,560
Speaker 3: there's been obviously retail construction. But if you look broadly

355
00:18:50,600 --> 00:18:54,000
Speaker 3: over the United States, retail sales since the Great Financial

356
00:18:54,040 --> 00:18:57,480
Speaker 3: Crisis have almost doubled, you know, they're eighty five eighty

357
00:18:57,520 --> 00:19:00,520
Speaker 3: six percent increase since that period of time. Us GDP

358
00:19:00,600 --> 00:19:02,760
Speaker 3: has gone up by thirty percent, population has gone up

359
00:19:02,760 --> 00:19:05,439
Speaker 3: by almost ten percent. Retail square footage has caught up

360
00:19:05,440 --> 00:19:08,680
Speaker 3: almost nothing during that period of time. So the industry

361
00:19:08,720 --> 00:19:12,200
Speaker 3: has kind of done a very good job of growing

362
00:19:12,520 --> 00:19:16,480
Speaker 3: out of the financial crisis, but has not built a

363
00:19:16,480 --> 00:19:19,320
Speaker 3: whole lot of new supply, and quite frankly, there's probably

364
00:19:19,320 --> 00:19:20,960
Speaker 3: not a lot of new supply that's going to be

365
00:19:21,000 --> 00:19:23,480
Speaker 3: built over the course of the next couple of years.

366
00:19:23,880 --> 00:19:25,600
Speaker 3: One it takes a long time. Even if you could

367
00:19:25,640 --> 00:19:28,400
Speaker 3: start today and see I'm going to commit to build

368
00:19:28,440 --> 00:19:31,360
Speaker 3: a whole lot of new retail square footage, it would

369
00:19:31,400 --> 00:19:33,480
Speaker 3: take a number of years for that to come on site.

370
00:19:33,600 --> 00:19:35,280
Speaker 3: And of course we had, you know, the cost of

371
00:19:35,280 --> 00:19:37,520
Speaker 3: capitalism significantly over the course of the.

372
00:19:37,480 --> 00:19:41,280
Speaker 2: Last Once again we see how higher rates actually impair

373
00:19:41,400 --> 00:19:44,359
Speaker 2: the supply side. This casetail so supplying to man so

374
00:19:44,440 --> 00:19:48,119
Speaker 2: occupancy in particularly in the open air space is that

375
00:19:48,280 --> 00:19:49,399
Speaker 2: historical highs.

376
00:19:50,240 --> 00:19:52,800
Speaker 3: Vacancy is exceptionally low. And when you hear of these,

377
00:19:53,800 --> 00:19:56,040
Speaker 3: you know, large retailers that are that have filed for

378
00:19:56,080 --> 00:19:58,560
Speaker 3: bankruptcy and they're closing locations like a bed bath and

379
00:19:58,640 --> 00:20:01,439
Speaker 3: beyond and so forth. There's typical multiple bidders for that

380
00:20:01,560 --> 00:20:05,120
Speaker 3: space almost on the day it becomes available, because it's

381
00:20:05,160 --> 00:20:08,760
Speaker 3: well located and because there's this demand for physical space,

382
00:20:08,800 --> 00:20:11,760
Speaker 3: and whether it's filled by one retailer or multiple, they'll

383
00:20:12,040 --> 00:20:15,199
Speaker 3: the owner developer. May you know reconfigure the space if

384
00:20:15,240 --> 00:20:18,040
Speaker 3: they have multiple possible tenants for it.

385
00:20:18,240 --> 00:20:20,480
Speaker 1: I feel like we need a moment of silence for bed,

386
00:20:20,480 --> 00:20:23,600
Speaker 1: bath and beyond the place where I think probably eighty

387
00:20:23,680 --> 00:20:27,240
Speaker 1: percent of people in America have bought like the essentials

388
00:20:27,280 --> 00:20:29,639
Speaker 1: for their first apartment or house.

389
00:20:30,119 --> 00:20:30,439
Speaker 3: Tom.

390
00:20:30,520 --> 00:20:33,800
Speaker 1: You know, you mentioned the space restrictions there. How much

391
00:20:33,840 --> 00:20:38,360
Speaker 1: of that is the higher cost of funding the PTSD

392
00:20:38,680 --> 00:20:43,800
Speaker 1: from the pandemic versus people writing off physical retail for

393
00:20:43,960 --> 00:20:47,040
Speaker 1: years now. I mean this was a story even in

394
00:20:47,080 --> 00:20:50,520
Speaker 1: the early to mid twenty tens, the idea that well,

395
00:20:50,640 --> 00:20:53,520
Speaker 1: people just aren't going to go to shopping malls. Everything's

396
00:20:53,520 --> 00:20:55,640
Speaker 1: going to be superseded by online shopping.

397
00:20:56,480 --> 00:21:00,479
Speaker 3: Well, the biggest factor in the challenge around supply is

398
00:21:00,560 --> 00:21:02,960
Speaker 3: just the lack of construction. And the lack of construction

399
00:21:03,119 --> 00:21:06,040
Speaker 3: really was, you know, I think a byproduct of the

400
00:21:06,080 --> 00:21:11,640
Speaker 3: Great Financial Crisis, owner developers, you know, being resistant to building,

401
00:21:11,800 --> 00:21:14,760
Speaker 3: you know, having gone through that, obviously, lenders being resistant

402
00:21:14,760 --> 00:21:17,920
Speaker 3: to the construction of new retail space during that period

403
00:21:17,920 --> 00:21:20,240
Speaker 3: of time. So I think the market kind of dictated

404
00:21:20,320 --> 00:21:23,040
Speaker 3: that we had enough retail square footage and we're not

405
00:21:23,040 --> 00:21:25,159
Speaker 3: going to build a whole lot more unless you're building

406
00:21:25,200 --> 00:21:28,040
Speaker 3: new housing developments and so forth, and growing parts of

407
00:21:28,080 --> 00:21:29,880
Speaker 3: the United States. Obviously there's been a lot of new

408
00:21:29,880 --> 00:21:33,679
Speaker 3: retail in Texas and Florida and places where the market's growing.

409
00:21:34,119 --> 00:21:37,600
Speaker 3: So to that extent, the narrative around the demise of

410
00:21:37,640 --> 00:21:41,280
Speaker 3: physical retail influenced how much construction there was over the

411
00:21:41,359 --> 00:21:45,000
Speaker 3: last fifteen years. Today, I think if you talk to

412
00:21:45,119 --> 00:21:47,879
Speaker 3: most people in the space, and those most people that

413
00:21:48,000 --> 00:21:51,360
Speaker 3: are investors in the space or possible sources of capital,

414
00:21:51,840 --> 00:21:55,879
Speaker 3: commercial retail real estate is actually a fairly favored sector

415
00:21:56,000 --> 00:21:58,800
Speaker 3: right now, which is historically where it's always been except

416
00:21:58,840 --> 00:22:02,919
Speaker 3: for the fifteen years ago, because it's emerged from the

417
00:22:02,920 --> 00:22:04,640
Speaker 3: pandemic in such a strong.

418
00:22:04,359 --> 00:22:08,160
Speaker 1: Positions, also on a relative basis to office space right well,

419
00:22:08,400 --> 00:22:09,000
Speaker 1: but there's.

420
00:22:08,840 --> 00:22:09,560
Speaker 5: Also other forum.

421
00:22:09,600 --> 00:22:13,000
Speaker 3: I mean, there's logistics in industrial and healthcare. I mean,

422
00:22:13,000 --> 00:22:15,240
Speaker 3: there's lots of different types of commercial real estate. So

423
00:22:15,240 --> 00:22:17,639
Speaker 3: I think it's gone back to a space where people

424
00:22:17,720 --> 00:22:21,159
Speaker 3: view it in a favored way. It's stable statistics and

425
00:22:21,240 --> 00:22:23,800
Speaker 3: data around it. Back to this supply and demand or

426
00:22:23,840 --> 00:22:27,119
Speaker 3: such that it suggests that there's a stability around it

427
00:22:27,200 --> 00:22:29,159
Speaker 3: and there's an unlikelihood that you're going to have a

428
00:22:29,160 --> 00:22:32,840
Speaker 3: whole bunch of new supply coming on the market anytime soon.

429
00:22:32,960 --> 00:22:35,680
Speaker 3: So I think most investors look at retail real estate

430
00:22:35,760 --> 00:22:39,240
Speaker 3: quite favorably right now. Clearly there's some challenges in the space.

431
00:22:39,240 --> 00:22:42,159
Speaker 3: I mean it depends upon there's you know, centers that

432
00:22:42,240 --> 00:22:45,159
Speaker 3: haven't done as well, but that's just competition and the

433
00:22:45,160 --> 00:22:49,199
Speaker 3: mall sector. There are exceptionally well performing malls, particularly in

434
00:22:49,200 --> 00:22:52,479
Speaker 3: the high end sector. There are some challenge malls. But

435
00:22:53,119 --> 00:22:55,720
Speaker 3: you know, if you look at the mall sector gets

436
00:22:55,800 --> 00:22:59,000
Speaker 3: such a disproportionate amount of attention. You know, there's over

437
00:22:59,040 --> 00:23:02,840
Speaker 3: one hundred thousand shopping centers in the United States, about

438
00:23:02,880 --> 00:23:06,399
Speaker 3: a thousand of them are malls. But because they're so

439
00:23:06,800 --> 00:23:09,600
Speaker 3: iconic and they take up a lot of square footage,

440
00:23:10,240 --> 00:23:12,440
Speaker 3: they do get a lot of attention. But all malls

441
00:23:12,440 --> 00:23:15,960
Speaker 3: aren't created equal, and some are doing exceptionally well and

442
00:23:16,040 --> 00:23:17,040
Speaker 3: some are more challenged.

443
00:23:17,560 --> 00:23:21,000
Speaker 2: Are there cursed locations because you always, you know, you

444
00:23:21,119 --> 00:23:24,000
Speaker 2: drive through your town and a new restaurant or something

445
00:23:24,040 --> 00:23:26,000
Speaker 2: isn't that it's like, oh, it's the fifth one in

446
00:23:26,040 --> 00:23:28,199
Speaker 2: that spot, and it's just something you just sort of

447
00:23:28,400 --> 00:23:29,800
Speaker 2: this must be a cursed spot.

448
00:23:30,040 --> 00:23:32,719
Speaker 1: Or even in New York there's real estate that stays

449
00:23:32,760 --> 00:23:35,880
Speaker 1: empty for years and you think what's going on there?

450
00:23:36,080 --> 00:23:38,080
Speaker 2: And like, a, is that a real phenomenon? Or is

451
00:23:38,119 --> 00:23:40,040
Speaker 2: that just something we create in our brains? But then

452
00:23:40,080 --> 00:23:42,600
Speaker 2: the other question is if I have a store and

453
00:23:42,640 --> 00:23:45,239
Speaker 2: I'm looking, would I get unnerved? It's like, man, I'm

454
00:23:45,280 --> 00:23:48,760
Speaker 2: the last five tenants in this location. They each only

455
00:23:48,840 --> 00:23:52,280
Speaker 2: lasted eighteen months. It looks good on paper, but for

456
00:23:52,320 --> 00:23:55,399
Speaker 2: some reason, whoever occupies this space? Like, is that a

457
00:23:55,400 --> 00:23:58,240
Speaker 2: real phenomenon? And is that something that a prospective tenant

458
00:23:58,240 --> 00:23:59,280
Speaker 2: would take into account?

459
00:23:59,480 --> 00:24:02,520
Speaker 3: Well, certainly something of perspective tenant should take into it, okay, Right,

460
00:24:02,560 --> 00:24:04,800
Speaker 3: you should look at you know, the location and say,

461
00:24:04,800 --> 00:24:07,080
Speaker 3: what's the history of somebody that's been in that location.

462
00:24:07,160 --> 00:24:09,840
Speaker 3: And if you have a series of failed tenants in

463
00:24:09,880 --> 00:24:12,000
Speaker 3: a location, it may be because they had a bad

464
00:24:12,040 --> 00:24:15,399
Speaker 3: concept or it maybe the location has something to do

465
00:24:15,480 --> 00:24:17,199
Speaker 3: with it. So you should clearly look at it. And

466
00:24:17,240 --> 00:24:19,360
Speaker 3: sometimes it's as simple as is it a right turn

467
00:24:19,440 --> 00:24:21,280
Speaker 3: or a left turn? You know what's the traffic flow?

468
00:24:21,840 --> 00:24:25,160
Speaker 3: And that does matter. Look, time's limited. There's stressed for time.

469
00:24:25,480 --> 00:24:27,960
Speaker 3: If you have a young family and you got away

470
00:24:28,000 --> 00:24:28,800
Speaker 3: five minutes.

471
00:24:28,560 --> 00:24:30,879
Speaker 2: Time, I drive with my family, and that is a

472
00:24:30,880 --> 00:24:32,800
Speaker 2: big factor. Oh, it's on the other side.

473
00:24:32,640 --> 00:24:35,040
Speaker 1: Of the road, you can only turn left.

474
00:24:35,359 --> 00:24:37,680
Speaker 2: No, it's just more like you're thinking about like where

475
00:24:37,720 --> 00:24:40,800
Speaker 2: to stop on a drive and you're like, oh, do

476
00:24:40,840 --> 00:24:42,760
Speaker 2: I really want to have to do a left turn

477
00:24:42,800 --> 00:24:44,560
Speaker 2: in or a left turn out? Maybe I'll go to

478
00:24:44,600 --> 00:24:45,440
Speaker 2: the one where you know.

479
00:24:45,600 --> 00:24:49,160
Speaker 3: Like those things matter absolutely so, So I do think

480
00:24:49,240 --> 00:24:52,159
Speaker 3: perspective tenants should look at the history of who's in

481
00:24:52,160 --> 00:24:55,720
Speaker 3: a space. Generally, if it's a quote cursed location, honestly,

482
00:24:55,800 --> 00:24:58,200
Speaker 3: it has to do more with take a step back

483
00:24:58,240 --> 00:25:01,240
Speaker 3: and look at that location or that shopping center. It

484
00:25:01,440 --> 00:25:05,119
Speaker 3: probably is one that either there's a really strong center

485
00:25:05,240 --> 00:25:08,280
Speaker 3: right next door to it and that strong center and

486
00:25:08,480 --> 00:25:11,320
Speaker 3: or the one that's quote cursed just isn't getting the

487
00:25:11,400 --> 00:25:14,399
Speaker 3: kind of care and attention and investment that is needed.

488
00:25:14,440 --> 00:25:17,640
Speaker 3: People want to shop someplace where it's clean and it's

489
00:25:17,640 --> 00:25:21,080
Speaker 3: well capped and it's well maintained, and they want to

490
00:25:21,119 --> 00:25:24,400
Speaker 3: shop where. Quite frankly, while we all don't like crowds,

491
00:25:24,480 --> 00:25:26,680
Speaker 3: we kind of like crowds because if there's a crowd

492
00:25:26,720 --> 00:25:28,879
Speaker 3: there that attracts us to go there, there must be

493
00:25:28,880 --> 00:25:32,080
Speaker 3: something to it. So often it has to do with

494
00:25:32,200 --> 00:25:34,600
Speaker 3: investment and just care and feeding of the center.

495
00:25:34,960 --> 00:25:36,440
Speaker 2: To that great Thank you so much.

496
00:25:36,520 --> 00:25:37,120
Speaker 1: That was fantastic.

497
00:25:37,160 --> 00:25:39,199
Speaker 2: I gave you what your Yeah, it was fun. That

498
00:25:39,359 --> 00:25:42,880
Speaker 2: was our conversation with Tom McGee, CEO of the International

499
00:25:42,920 --> 00:25:46,160
Speaker 2: Council of Shopping Centers. And now let's talk to Chris

500
00:25:46,200 --> 00:25:49,560
Speaker 2: Hatch of Force the Development on the art of drive

501
00:25:49,680 --> 00:25:53,359
Speaker 2: through site selection. What does a Force the Development do.

502
00:25:53,960 --> 00:25:55,879
Speaker 4: We are a retail developer and we're based out of

503
00:25:55,920 --> 00:25:59,639
Speaker 4: Salt Lake City and we build retail throughout the United States.

504
00:26:00,080 --> 00:26:01,680
Speaker 1: Kind of retail any specific names.

505
00:26:01,720 --> 00:26:01,920
Speaker 3: Yeah.

506
00:26:02,040 --> 00:26:04,000
Speaker 4: Currently we're doing a lot of work for Dutch Bros.

507
00:26:04,520 --> 00:26:07,760
Speaker 4: Throughout their expansion going, and then we are also doing

508
00:26:07,800 --> 00:26:11,240
Speaker 4: some Starbucks have an in and out deal going, Jack.

509
00:26:11,080 --> 00:26:12,280
Speaker 5: In the Box, et cetera.

510
00:26:12,440 --> 00:26:16,080
Speaker 2: So are you, like, are you a domain expert for

511
00:26:16,400 --> 00:26:19,919
Speaker 2: drive through type concepts of coffee shops and restaurants.

512
00:26:20,040 --> 00:26:22,600
Speaker 4: If you really like to nerd out and think through

513
00:26:22,720 --> 00:26:25,200
Speaker 4: through put through a drive through, then I am your person.

514
00:26:25,480 --> 00:26:28,240
Speaker 2: Yes, I have a feeling that odd Laws listeners are

515
00:26:28,400 --> 00:26:31,040
Speaker 2: really into the idea of nerding out on drive through

516
00:26:31,200 --> 00:26:31,720
Speaker 2: through put.

517
00:26:32,040 --> 00:26:32,639
Speaker 5: Yeah.

518
00:26:32,680 --> 00:26:36,880
Speaker 1: Wait, so are there specific considerations for drive through though?

519
00:26:36,880 --> 00:26:39,960
Speaker 1: Because when I think about a Starbucks. I primarily I

520
00:26:40,000 --> 00:26:43,600
Speaker 1: mean this may be an offshoot of living in large

521
00:26:43,640 --> 00:26:45,520
Speaker 1: cities for a long time, but I primarily think of

522
00:26:45,560 --> 00:26:49,240
Speaker 1: walking into a Starbucks, ordering my coffee and then probably

523
00:26:49,240 --> 00:26:50,000
Speaker 1: not staying.

524
00:26:49,760 --> 00:26:52,639
Speaker 2: Shows walking out How out of touch city dwellers we

525
00:26:52,720 --> 00:26:55,840
Speaker 2: are that we mostly associate Starbucks with the place you walk.

526
00:26:55,680 --> 00:26:57,520
Speaker 1: In, But they have both. I mean, even in the

527
00:26:57,560 --> 00:27:00,840
Speaker 1: suburbs there's both. So when you're thinking about developing a site,

528
00:27:00,880 --> 00:27:04,359
Speaker 1: are you thinking specifically about the drive through potential or

529
00:27:04,440 --> 00:27:06,880
Speaker 1: about the retail opportunity overall?

530
00:27:07,160 --> 00:27:08,439
Speaker 5: Yeah, that's an excellent question.

531
00:27:08,720 --> 00:27:10,720
Speaker 4: I would say, either you're out of touch or that's

532
00:27:10,720 --> 00:27:14,119
Speaker 4: the natchan charm of living in a city life.

533
00:27:14,200 --> 00:27:15,200
Speaker 1: So might be both.

534
00:27:15,359 --> 00:27:18,320
Speaker 4: Yeah, right, So, as far as the Dutch Bros goes,

535
00:27:18,480 --> 00:27:20,280
Speaker 4: a Dutch Bros Is a nine hundred and fifty square

536
00:27:20,320 --> 00:27:23,000
Speaker 4: foot building. The vast majority, in fact, with the exception

537
00:27:23,040 --> 00:27:25,879
Speaker 4: of only maybe a few units, have no interior seating.

538
00:27:25,960 --> 00:27:29,000
Speaker 4: There's no interior dining. Sometimes they'll have a patio and

539
00:27:29,040 --> 00:27:31,359
Speaker 4: a walk up counter is typical, you know, for a

540
00:27:31,400 --> 00:27:35,680
Speaker 4: walk up pedestrian traffic. However, ninety five percent plus of

541
00:27:35,720 --> 00:27:38,440
Speaker 4: their drive through traffic is their customer pattern.

542
00:27:38,520 --> 00:27:40,160
Speaker 2: For what about like for a Starbucks. So you said

543
00:27:40,200 --> 00:27:42,600
Speaker 2: you've done Starbucks as well, and I know that like

544
00:27:42,800 --> 00:27:46,320
Speaker 2: their drive through, pickup, et cetera. That's I think that's

545
00:27:46,320 --> 00:27:48,560
Speaker 2: like a booming part of their business overall. But like,

546
00:27:49,000 --> 00:27:51,320
Speaker 2: how do you think about, say, like balancing that. I

547
00:27:51,359 --> 00:27:53,440
Speaker 2: was actually just at a Starbucks that had both a

548
00:27:53,560 --> 00:27:57,000
Speaker 2: drive through and a walk in, So how would a

549
00:27:57,040 --> 00:28:00,840
Speaker 2: Starbucks or you think about balancing those two different modes.

550
00:28:01,119 --> 00:28:03,440
Speaker 4: So I'm currently building my ninth and ten Starbucks that

551
00:28:03,440 --> 00:28:05,880
Speaker 4: I've developed for them. We have done one of those

552
00:28:05,920 --> 00:28:08,000
Speaker 4: as a drive through only concept, which is sort of

553
00:28:08,000 --> 00:28:10,399
Speaker 4: similar to that Dutch Bro's footprint, about nine hundred and

554
00:28:10,400 --> 00:28:13,840
Speaker 4: fifty scare feet, no interior dining, and has a pedestrian

555
00:28:13,880 --> 00:28:17,120
Speaker 4: walk up window. The other nine of all been cafe stores,

556
00:28:17,200 --> 00:28:19,080
Speaker 4: and the average size on those has been about twenty

557
00:28:19,080 --> 00:28:21,720
Speaker 4: four hundred square feet. It typically allows for about eighty

558
00:28:21,720 --> 00:28:25,879
Speaker 4: customers to sit down inside of the restaurant or Starbucks cafe,

559
00:28:26,200 --> 00:28:28,000
Speaker 4: and then the rest of the traffic to go through

560
00:28:28,000 --> 00:28:30,720
Speaker 4: the drive through. I think they're typically experiencing about fifty

561
00:28:30,720 --> 00:28:33,080
Speaker 4: percent of their traffic and sales going through the drive through.

562
00:28:33,200 --> 00:28:33,520
Speaker 3: Wow.

563
00:28:33,640 --> 00:28:35,160
Speaker 5: So massively important for them.

564
00:28:35,240 --> 00:28:38,320
Speaker 1: Okay, here's another step back question. What is the allure

565
00:28:38,640 --> 00:28:40,840
Speaker 1: of the drive through I don't get it because I

566
00:28:40,920 --> 00:28:43,120
Speaker 1: do see you know, Okay, not in New York. When

567
00:28:43,160 --> 00:28:45,560
Speaker 1: I'm in Connecticut. There is a local coffee shop that

568
00:28:45,600 --> 00:28:47,600
Speaker 1: I go to and it has a drive through window,

569
00:28:47,880 --> 00:28:51,719
Speaker 1: and there is every morning an incredibly long line, and

570
00:28:51,760 --> 00:28:54,920
Speaker 1: I will still get out of the car, go into

571
00:28:54,960 --> 00:28:57,360
Speaker 1: the store, order the coffee there, take it into the car,

572
00:28:57,440 --> 00:28:58,480
Speaker 1: and avoid the driver.

573
00:28:58,960 --> 00:29:01,880
Speaker 2: Can I answer this? Yeah, you don't have kids to

574
00:29:01,920 --> 00:29:04,320
Speaker 2: get out of car seats and buckle them back up.

575
00:29:04,640 --> 00:29:07,120
Speaker 1: Maybe that's it, And I think, well.

576
00:29:07,120 --> 00:29:09,640
Speaker 2: I'll let Chris answer. But my first impulse is I

577
00:29:09,640 --> 00:29:11,200
Speaker 2: can tell you exactly why I don't want to get

578
00:29:11,200 --> 00:29:12,160
Speaker 2: out of a car sometimes.

579
00:29:12,240 --> 00:29:12,720
Speaker 5: Yeah, you bet.

580
00:29:12,760 --> 00:29:14,840
Speaker 4: You were asking me about the weather when I sat down,

581
00:29:14,880 --> 00:29:17,040
Speaker 4: and I was telling you how Salt Lake is in

582
00:29:17,080 --> 00:29:18,680
Speaker 4: a little bit of a warm front right now, which

583
00:29:18,720 --> 00:29:22,040
Speaker 4: is high thirties and mid thirties for this time of year.

584
00:29:22,240 --> 00:29:25,720
Speaker 4: But imagine, for example, you're my wife who we have

585
00:29:25,800 --> 00:29:29,680
Speaker 4: five kids. I'm fifteen to six years old, and you've

586
00:29:29,680 --> 00:29:32,240
Speaker 4: got multiple kids buckled into seat belts and you're running

587
00:29:32,280 --> 00:29:36,120
Speaker 4: a dance or ice skating or soccer or whatever the

588
00:29:36,200 --> 00:29:38,800
Speaker 4: current exact activity is. At this moment, you're just trying

589
00:29:38,840 --> 00:29:41,280
Speaker 4: to hydrate yourself and the kids. It is just so

590
00:29:41,360 --> 00:29:43,720
Speaker 4: much more convenient to go through the drive through. Now,

591
00:29:43,760 --> 00:29:46,560
Speaker 4: what's wild about that is if you have the time

592
00:29:46,760 --> 00:29:49,800
Speaker 4: and energy and desire, it's so much faster typically to

593
00:29:49,840 --> 00:29:52,800
Speaker 4: walk into the restaurant, right and especially on these coffee things,

594
00:29:52,800 --> 00:29:55,520
Speaker 4: the way that most of these retailers have become very

595
00:29:55,520 --> 00:29:58,160
Speaker 4: smart with tech, and so you can typically make an

596
00:29:58,240 --> 00:30:00,560
Speaker 4: order in advance and it'll be prepared and and sitting

597
00:30:00,560 --> 00:30:02,080
Speaker 4: for you, so you just walk in, grab it, and

598
00:30:02,120 --> 00:30:02,560
Speaker 4: walk out.

599
00:30:03,320 --> 00:30:06,760
Speaker 2: Buckling and unbuckling car seats in particular is just like

600
00:30:06,840 --> 00:30:09,760
Speaker 2: one of those things that like it's not that hard

601
00:30:09,760 --> 00:30:11,560
Speaker 2: and it doesn't take time, but there is like there's

602
00:30:11,600 --> 00:30:14,840
Speaker 2: like mental elements like, oh man, who's going to do

603
00:30:14,880 --> 00:30:16,880
Speaker 2: the buckling in so I get It's like I like,

604
00:30:16,920 --> 00:30:19,680
Speaker 2: don't mind like spending several minutes in the theoretical drive

605
00:30:19,720 --> 00:30:23,240
Speaker 2: through to avoid the fifty eight seconds of the unbuckling

606
00:30:23,280 --> 00:30:28,280
Speaker 2: and buckling process. Let's get into site selection. So whether

607
00:30:28,400 --> 00:30:31,800
Speaker 2: it's a Dutch Bros. Or a Starbucks, you want to

608
00:30:31,840 --> 00:30:34,680
Speaker 2: find the optimal place for that person to come in,

609
00:30:35,080 --> 00:30:37,600
Speaker 2: swing their car and stand the line. What are the

610
00:30:37,640 --> 00:30:41,000
Speaker 2: first things that a site location must have to make

611
00:30:41,040 --> 00:30:42,880
Speaker 2: it applausible drive through location?

612
00:30:43,160 --> 00:30:44,800
Speaker 5: You bet, And for this I might switch brands.

613
00:30:44,840 --> 00:30:46,360
Speaker 4: Let's flip over to in and out Burger for a

614
00:30:47,400 --> 00:30:49,840
Speaker 4: So I'm working on my first in and out Burger location,

615
00:30:49,960 --> 00:30:52,080
Speaker 4: and it's actually located in the city of South Salt

616
00:30:52,160 --> 00:30:54,840
Speaker 4: Lake City, not Salt Lake City. Now, the reason I

617
00:30:54,840 --> 00:30:56,440
Speaker 4: bring that up is the very first thing you need

618
00:30:56,480 --> 00:30:58,560
Speaker 4: to pay attention to when you're selecting a site is

619
00:30:58,560 --> 00:31:01,320
Speaker 4: you've got a good corner, it's got good presence on

620
00:31:01,360 --> 00:31:04,040
Speaker 4: the street, it's got excellent ingress, so you can get

621
00:31:04,080 --> 00:31:06,080
Speaker 4: into the site very easy with a vehicle, which is

622
00:31:06,120 --> 00:31:07,880
Speaker 4: how most of the traffic is driven to these.

623
00:31:07,800 --> 00:31:08,640
Speaker 5: Types of concepts.

624
00:31:08,880 --> 00:31:11,280
Speaker 4: Then your next step is to determine if it actually

625
00:31:11,400 --> 00:31:14,800
Speaker 4: is large enough and if your targeted client can fit

626
00:31:14,880 --> 00:31:17,120
Speaker 4: and operate and run their mouse trap on the site.

627
00:31:17,800 --> 00:31:19,840
Speaker 4: And then the second part of that is to make

628
00:31:19,880 --> 00:31:22,400
Speaker 4: sure from a city perspective that you actually have zoning

629
00:31:22,440 --> 00:31:24,960
Speaker 4: in place and you have support from the local municipality

630
00:31:24,960 --> 00:31:26,680
Speaker 4: that you can put in a drive through that's going

631
00:31:26,720 --> 00:31:30,280
Speaker 4: to create the kind of traffic and trip generation that

632
00:31:30,480 --> 00:31:33,280
Speaker 4: one of these typical users is going to create. So

633
00:31:33,320 --> 00:31:35,840
Speaker 4: the reason this is a good example is originally In

634
00:31:35,920 --> 00:31:38,520
Speaker 4: and Out was actually trying to locate in Salt Lake City.

635
00:31:38,600 --> 00:31:42,200
Speaker 4: So they have rolled out just under a dozen restaurants

636
00:31:42,200 --> 00:31:44,280
Speaker 4: in the state of Utah, but they've actually never entered

637
00:31:44,280 --> 00:31:46,760
Speaker 4: the capital city of Salt Lake City. And part of

638
00:31:46,800 --> 00:31:48,880
Speaker 4: the reason they've never done that is that there's a

639
00:31:48,960 --> 00:31:51,920
Speaker 4: number of different zoning regulations that make it quite preventative

640
00:31:52,280 --> 00:31:57,000
Speaker 4: to build new retail in Salt Lake City, and because

641
00:31:57,000 --> 00:31:58,440
Speaker 4: of that, they've just never been able to get in.

642
00:31:58,480 --> 00:32:00,480
Speaker 4: So there was a closed Burger King and then burned

643
00:32:00,520 --> 00:32:04,400
Speaker 4: down Scone Cutter, which is a scone drive through business,

644
00:32:04,400 --> 00:32:06,240
Speaker 4: which is kind of Scone Cutters.

645
00:32:06,280 --> 00:32:07,320
Speaker 1: That's a great name.

646
00:32:07,400 --> 00:32:10,040
Speaker 4: Yes, love that. It's too bad it's gone by the

647
00:32:10,040 --> 00:32:12,400
Speaker 4: wayside a little bit here. But so there was a

648
00:32:12,480 --> 00:32:15,160
Speaker 4: burnedown restaurant, and then there was a former Burger King

649
00:32:15,160 --> 00:32:17,240
Speaker 4: that wasn't doing very much volume, maybe a million or

650
00:32:17,400 --> 00:32:20,280
Speaker 4: a million two or something, and In and Out wanted

651
00:32:20,280 --> 00:32:22,160
Speaker 4: to come in and place their unit there, and Salt

652
00:32:22,240 --> 00:32:24,880
Speaker 4: Lake City would not allow them to place a prototype

653
00:32:24,960 --> 00:32:29,000
Speaker 4: unit unless they had a maximum of five parking stalls. Well,

654
00:32:29,040 --> 00:32:30,160
Speaker 4: I don't know if you've been to an in and

655
00:32:30,160 --> 00:32:32,520
Speaker 4: out burger, but they need more than five parking stalls.

656
00:32:32,800 --> 00:32:35,240
Speaker 4: So that was a real problem. So it hit kind

657
00:32:35,240 --> 00:32:38,480
Speaker 4: of a stalemate. And what ended up happening is Jack

658
00:32:38,520 --> 00:32:40,800
Speaker 4: in the Box actually opened in the Burger King instead

659
00:32:40,800 --> 00:32:42,320
Speaker 4: of in and out, and so in and Out came

660
00:32:42,320 --> 00:32:44,959
Speaker 4: across the street to my site, which is located in

661
00:32:45,000 --> 00:32:48,040
Speaker 4: South Salt Lake City, where our city had open arms

662
00:32:48,080 --> 00:32:49,720
Speaker 4: as a municipality to welcome them in.

663
00:33:04,960 --> 00:33:08,920
Speaker 1: How much do safety considerations go into site selection for

664
00:33:09,000 --> 00:33:12,200
Speaker 1: a drive through? Because I imagine a normal shop front,

665
00:33:12,240 --> 00:33:14,960
Speaker 1: you just plunk it down in the correct zone and

666
00:33:15,240 --> 00:33:18,600
Speaker 1: there's probably not that many problems that are going to emerge.

667
00:33:18,640 --> 00:33:20,920
Speaker 1: But in something like a drive through, you do have

668
00:33:21,720 --> 00:33:24,600
Speaker 1: things that happen where, for instance, if it gets too crowded,

669
00:33:24,640 --> 00:33:26,960
Speaker 1: you start to have cars sort of coming out of

670
00:33:27,040 --> 00:33:30,880
Speaker 1: the space and maybe disrupting traffic and things like that.

671
00:33:30,920 --> 00:33:32,400
Speaker 1: How does that factor into it?

672
00:33:32,640 --> 00:33:34,680
Speaker 4: Yeah, Tracy, it's a good question. I get asked that

673
00:33:34,800 --> 00:33:38,600
Speaker 4: question so frequently, and it comes from a wide variety

674
00:33:38,640 --> 00:33:41,200
Speaker 4: of people asking that question. Most of the brands that

675
00:33:41,200 --> 00:33:44,360
Speaker 4: we work with are national retailers, their household names. You

676
00:33:44,400 --> 00:33:47,360
Speaker 4: typically can recognize them as they're rolling off my lips.

677
00:33:48,200 --> 00:33:50,040
Speaker 4: And the vast majority of them do a lot of

678
00:33:50,080 --> 00:33:53,680
Speaker 4: homework on these sites, and that includes engaging a traffic engineer.

679
00:33:54,160 --> 00:33:57,800
Speaker 4: That includes engaging a very talented civil engineer, and a

680
00:33:57,840 --> 00:34:00,760
Speaker 4: lot of time is spent figuring out what the traffic

681
00:34:00,760 --> 00:34:02,840
Speaker 4: demand is going to look like, what the trip count

682
00:34:02,880 --> 00:34:05,280
Speaker 4: is going to look like, and then making sure that

683
00:34:06,000 --> 00:34:08,440
Speaker 4: humans and vehicles are moving in and out of the

684
00:34:08,480 --> 00:34:12,360
Speaker 4: site in a safe manner and that is also very efficient,

685
00:34:13,000 --> 00:34:15,640
Speaker 4: and then also taking into concern how the pedestrians are

686
00:34:15,680 --> 00:34:17,920
Speaker 4: coming on and off a site and how bicyclists are

687
00:34:17,920 --> 00:34:20,600
Speaker 4: coming on and off a site. I would contend more

688
00:34:20,880 --> 00:34:23,040
Speaker 4: attention is paid how to work some of those issues

689
00:34:23,040 --> 00:34:26,439
Speaker 4: out than you may think. Now that isn't being said

690
00:34:26,440 --> 00:34:28,640
Speaker 4: that it always works out flawlessly, because as soon as

691
00:34:28,680 --> 00:34:31,200
Speaker 4: I say that, somebody could point out ten examples, you

692
00:34:31,280 --> 00:34:33,360
Speaker 4: know that they've driven by where it is not efficient

693
00:34:33,360 --> 00:34:36,040
Speaker 4: and it does not work well, and it does happen frequently.

694
00:34:36,160 --> 00:34:37,080
Speaker 5: This is unfortunate.

695
00:34:37,480 --> 00:34:39,120
Speaker 4: We try to spend a lot of our time at

696
00:34:39,160 --> 00:34:41,799
Speaker 4: FORZA making sure we have a very efficient site plan

697
00:34:41,880 --> 00:34:45,279
Speaker 4: so that we are is maximizing the real estate that

698
00:34:45,320 --> 00:34:47,960
Speaker 4: we have and maximizing how to get customers on and

699
00:34:48,000 --> 00:34:48,439
Speaker 4: off the site.

700
00:34:48,680 --> 00:34:51,360
Speaker 2: Stepping back for a second, Normally, when you hear about

701
00:34:51,480 --> 00:34:55,120
Speaker 2: zoning issues, I feel like local planners are talking about

702
00:34:55,280 --> 00:34:58,080
Speaker 2: minimum parking requirements. They're like, Okay, if you're going to

703
00:34:58,200 --> 00:35:01,320
Speaker 2: build something here, you have to provide minimum amount of parking.

704
00:35:01,320 --> 00:35:03,080
Speaker 2: I know there's a lot of fights about this, but

705
00:35:03,200 --> 00:35:05,640
Speaker 2: in the issue at Salt Lake City was a maximum

706
00:35:05,680 --> 00:35:09,279
Speaker 2: parking situation. They couldn't have more than five places. Why

707
00:35:09,480 --> 00:35:12,200
Speaker 2: was that And what are the sort of like others

708
00:35:12,280 --> 00:35:15,640
Speaker 2: zoning What are some generally zoning questions that come up

709
00:35:15,880 --> 00:35:17,200
Speaker 2: for the drive through concepts.

710
00:35:17,360 --> 00:35:20,960
Speaker 4: Yeah, there's a lot of wonderful markets throughout the western US,

711
00:35:21,200 --> 00:35:23,880
Speaker 4: and it certainly gets more challenged as you get closer

712
00:35:23,920 --> 00:35:26,239
Speaker 4: to the water. But there's a number of, you know,

713
00:35:26,320 --> 00:35:29,560
Speaker 4: California coastal communities that could definitely benefit from having a

714
00:35:29,640 --> 00:35:31,879
Speaker 4: Chick fil A or somebody else like that, or even

715
00:35:31,920 --> 00:35:34,799
Speaker 4: take one in my backyard, which is Park City. I'm

716
00:35:34,840 --> 00:35:36,560
Speaker 4: sure in and Out or Chick fil A would love

717
00:35:36,600 --> 00:35:39,080
Speaker 4: to land right in the middle of Park City. However,

718
00:35:39,200 --> 00:35:41,919
Speaker 4: the county has no desire to really approve a drive

719
00:35:41,960 --> 00:35:45,400
Speaker 4: through use at that intersection, and so sometimes it's just

720
00:35:45,480 --> 00:35:49,319
Speaker 4: for whatever reason, you know, certain councils feel certain way

721
00:35:49,520 --> 00:35:53,000
Speaker 4: about things. And even though it is definitely a continued

722
00:35:53,080 --> 00:35:55,920
Speaker 4: trend in America and has only been increasing over the

723
00:35:56,000 --> 00:35:59,600
Speaker 4: last twenty to thirty years, not decreasing, it doesn't seem

724
00:35:59,600 --> 00:36:02,880
Speaker 4: to really alter the way some of these councils are wired.

725
00:36:03,000 --> 00:36:06,520
Speaker 4: They typically sometimes they just don't want drive throughs. In

726
00:36:06,560 --> 00:36:08,239
Speaker 4: the case of Salt Lake City, that was a little

727
00:36:08,239 --> 00:36:10,799
Speaker 4: bit unique there. Salt Lake is really pushing for more

728
00:36:10,880 --> 00:36:13,880
Speaker 4: vertical growth than anything else, and one of the ways

729
00:36:13,920 --> 00:36:16,640
Speaker 4: that they're pushing for more vertical growth is by restricting

730
00:36:16,800 --> 00:36:19,640
Speaker 4: open parking lots. They do not want an open, unstructured

731
00:36:19,640 --> 00:36:22,040
Speaker 4: parking lot, and so part of what they're doing is

732
00:36:22,080 --> 00:36:27,120
Speaker 4: pushing people to build structured parking and that can work,

733
00:36:27,160 --> 00:36:30,839
Speaker 4: but some retailers they simply will not deal with a

734
00:36:30,880 --> 00:36:33,120
Speaker 4: mixed use scenario and it's just not the way their

735
00:36:33,120 --> 00:36:35,279
Speaker 4: mass trap works. And if they can't expand to Salt

736
00:36:35,320 --> 00:36:37,200
Speaker 4: Lake City, then they'll go on and build another one

737
00:36:37,200 --> 00:36:39,360
Speaker 4: in Dallas or wherever else they can get the zonning.

738
00:36:40,400 --> 00:36:44,400
Speaker 1: What does creativity look like in your business? And the

739
00:36:44,440 --> 00:36:46,520
Speaker 1: reason I ask is because I can imagine, you know,

740
00:36:47,320 --> 00:36:49,520
Speaker 1: Joe and I are in journalism, and being creative in

741
00:36:49,600 --> 00:36:52,880
Speaker 1: journalism is you know, maybe you write something in a

742
00:36:53,120 --> 00:36:56,399
Speaker 1: very innovative way, or you present information in a new way,

743
00:36:56,480 --> 00:36:59,120
Speaker 1: or you find a new way of telling a story.

744
00:36:59,160 --> 00:37:04,000
Speaker 1: But in sits like what would be a creative choice

745
00:37:04,239 --> 00:37:06,319
Speaker 1: When it comes to choosing a retail.

746
00:37:05,960 --> 00:37:10,120
Speaker 4: Location, sometimes it's just figuring out what would actually work

747
00:37:10,160 --> 00:37:14,120
Speaker 4: for a development opportunity. There are a lot of corridors

748
00:37:14,280 --> 00:37:17,239
Speaker 4: that are mature, and they're built out, and they're an

749
00:37:17,360 --> 00:37:20,799
Speaker 4: established retail trade area, and you go drive them, and

750
00:37:20,880 --> 00:37:23,560
Speaker 4: we might have two or three tenants that would like

751
00:37:23,600 --> 00:37:26,280
Speaker 4: to locate in that trade area, and there is no land,

752
00:37:26,640 --> 00:37:29,440
Speaker 4: for example, There's not like an easy, no brainer, just

753
00:37:29,480 --> 00:37:32,120
Speaker 4: piece of land sitting in front of a Walmart or Kroger.

754
00:37:33,360 --> 00:37:35,800
Speaker 4: And so sometimes the creativity is just trying to figure

755
00:37:35,800 --> 00:37:38,960
Speaker 4: out where could we actually land the retailer. Is there

756
00:37:39,040 --> 00:37:42,759
Speaker 4: a former Taco John's or subway or something else that's

757
00:37:42,840 --> 00:37:45,120
Speaker 4: run down that we need to go call the owner

758
00:37:45,640 --> 00:37:47,759
Speaker 4: of the property and say, hey, this is kind of

759
00:37:47,880 --> 00:37:50,200
Speaker 4: run down. How are rental payments coming in? Are you

760
00:37:50,280 --> 00:37:52,920
Speaker 4: getting regular rent? So we spend a lot of our

761
00:37:53,000 --> 00:37:57,360
Speaker 4: time working on lower performing restaurant locations that already have

762
00:37:57,400 --> 00:37:59,919
Speaker 4: a drive through use and sometimes already have a built

763
00:38:00,400 --> 00:38:02,640
Speaker 4: in which today's world that is much cheaper if it's

764
00:38:02,640 --> 00:38:05,000
Speaker 4: got a building most of the time, especially if we

765
00:38:05,000 --> 00:38:06,280
Speaker 4: can repurpose the building.

766
00:38:07,360 --> 00:38:10,879
Speaker 2: Big box retailers like a Walmart or a Costco, etc.

767
00:38:11,360 --> 00:38:13,239
Speaker 2: How much of when they think it's like, okay, we

768
00:38:13,280 --> 00:38:15,200
Speaker 2: all have our mind of like what does look like

769
00:38:15,239 --> 00:38:17,760
Speaker 2: there's like in the back, you know, there's a big building,

770
00:38:17,800 --> 00:38:19,920
Speaker 2: and then there's just things like seeming me sometimes like

771
00:38:20,200 --> 00:38:23,600
Speaker 2: acres of parking. How often do they think about like

772
00:38:24,000 --> 00:38:26,239
Speaker 2: do we want to allocate some of this stuff in

773
00:38:26,280 --> 00:38:28,919
Speaker 2: the middle of this parking lot to or drive through

774
00:38:29,200 --> 00:38:30,880
Speaker 2: versus just having that be more parking.

775
00:38:32,280 --> 00:38:35,440
Speaker 4: If it's in advance, then it's very intentional. And for

776
00:38:35,480 --> 00:38:37,560
Speaker 4: a long time, when Walmart was on their big US

777
00:38:37,680 --> 00:38:40,120
Speaker 4: groc bree, which was really kind of two thousand to

778
00:38:40,200 --> 00:38:43,879
Speaker 4: about twenty seventeen twenty eighteen, as they were growing, they

779
00:38:43,880 --> 00:38:45,920
Speaker 4: were typically going in and they would put in as

780
00:38:45,920 --> 00:38:48,640
Speaker 4: many out parcels as they could fit on to a parcel. So,

781
00:38:48,719 --> 00:38:52,000
Speaker 4: for example, a two hundred thousand foot Walmart's typically going

782
00:38:52,040 --> 00:38:54,120
Speaker 4: to need about twenty to twenty two acres to fit

783
00:38:54,200 --> 00:38:56,600
Speaker 4: on and have enough parking for its own needs in

784
00:38:56,640 --> 00:39:00,279
Speaker 4: its opinion, and then if they could buy another ten

785
00:39:00,320 --> 00:39:03,000
Speaker 4: acres that had pad frontage, then they would go buy

786
00:39:03,000 --> 00:39:05,360
Speaker 4: another ten acres and more or less what would happen

787
00:39:05,400 --> 00:39:07,760
Speaker 4: is they might have bought the entire site at seven

788
00:39:07,800 --> 00:39:10,719
Speaker 4: dollars to ten dollars per score foot, and then they

789
00:39:10,719 --> 00:39:12,840
Speaker 4: turn around and they charge people like me twenty to

790
00:39:12,880 --> 00:39:14,799
Speaker 4: thirty dollars per square foot to buy one of the

791
00:39:14,840 --> 00:39:18,640
Speaker 4: out parcels. And it wasn't uncommon for them to write

792
00:39:18,640 --> 00:39:21,279
Speaker 4: their basis and their landdown by maybe a third or

793
00:39:21,360 --> 00:39:23,400
Speaker 4: half of what they might have paid for it originally.

794
00:39:23,440 --> 00:39:25,759
Speaker 4: And so it really is a nice robust business plan

795
00:39:25,840 --> 00:39:29,479
Speaker 4: for them. Now, if it's an afterthought and you're going

796
00:39:29,520 --> 00:39:32,040
Speaker 4: in on an existing store and you're saying, hey, look,

797
00:39:32,080 --> 00:39:34,400
Speaker 4: this area of the parking field really.

798
00:39:34,160 --> 00:39:35,759
Speaker 5: Is not that well utilized.

799
00:39:36,520 --> 00:39:39,560
Speaker 4: That sounds really good if you're sitting in a boardroom

800
00:39:39,600 --> 00:39:42,480
Speaker 4: in Bentville, Arkansas, and you're sitting around trying to tell

801
00:39:42,520 --> 00:39:46,000
Speaker 4: your asset management boss, hey, I'm figuring out a way

802
00:39:46,040 --> 00:39:50,040
Speaker 4: to drive more revenue. In reality, it's a nightmare. You

803
00:39:50,120 --> 00:39:53,080
Speaker 4: have to get through operations. You have to There's just

804
00:39:53,200 --> 00:39:56,120
Speaker 4: so many layers, and there's so much corporate bureaucracy, and

805
00:39:56,160 --> 00:39:58,280
Speaker 4: it's not the way that the retailers are really geared

806
00:39:58,280 --> 00:39:59,960
Speaker 4: to figure out how to make money out of existing

807
00:40:00,080 --> 00:40:03,319
Speaker 4: real estate, and so it becomes very challenged to get

808
00:40:03,320 --> 00:40:05,360
Speaker 4: through that process. We've looked at a number of those,

809
00:40:05,480 --> 00:40:07,680
Speaker 4: We have done a few of them, but I would

810
00:40:07,680 --> 00:40:10,240
Speaker 4: tell you that you probably work three times as hard

811
00:40:10,400 --> 00:40:13,440
Speaker 4: on the site selection side as a normal piece of land.

812
00:40:14,800 --> 00:40:18,400
Speaker 1: Can shopping malls be converted into drive through centers? Like,

813
00:40:18,600 --> 00:40:20,640
Speaker 1: if you have a bunch of dead shopping malls in

814
00:40:20,680 --> 00:40:23,439
Speaker 1: the country, could we just get rid of the mall

815
00:40:23,600 --> 00:40:28,040
Speaker 1: and create I don't know, to McDonald's and five Starbucks

816
00:40:28,080 --> 00:40:29,800
Speaker 1: and three Taco Bells.

817
00:40:29,920 --> 00:40:32,439
Speaker 4: It's a great idea. A lot of them even have

818
00:40:32,600 --> 00:40:35,839
Speaker 4: prefery retail sitting around them. Now, what you're watching right

819
00:40:35,880 --> 00:40:38,040
Speaker 4: now is most of these mall reats have been off

820
00:40:38,040 --> 00:40:40,880
Speaker 4: on earnings for a couple of years here, and so

821
00:40:40,920 --> 00:40:43,120
Speaker 4: you're starting to watch a lot of these mallreads list

822
00:40:43,200 --> 00:40:45,959
Speaker 4: some of their assets for sale. Sometimes that's the entire mall.

823
00:40:46,160 --> 00:40:49,240
Speaker 4: Sometimes that's just the out parcels, but it is definitely

824
00:40:49,280 --> 00:40:50,800
Speaker 4: a way in which the reads are looking at this

825
00:40:50,960 --> 00:40:53,480
Speaker 4: saying we would like to create value. You have two

826
00:40:53,520 --> 00:40:56,719
Speaker 4: challenges when it comes to those. Typically, the first challenge

827
00:40:56,800 --> 00:40:59,279
Speaker 4: is what kind of redevelopment rights or what kind of

828
00:40:59,320 --> 00:41:02,040
Speaker 4: development rights do the anchor tenants have over the pads.

829
00:41:02,520 --> 00:41:05,320
Speaker 4: In other words, can a dealer's or can a sas

830
00:41:05,560 --> 00:41:08,399
Speaker 4: dictate a building cannot be more than twenty eight feet

831
00:41:08,400 --> 00:41:11,320
Speaker 4: in height with parapot walls and all the architectural features,

832
00:41:12,239 --> 00:41:13,800
Speaker 4: or can a building even be built.

833
00:41:13,640 --> 00:41:14,239
Speaker 5: There at all?

834
00:41:14,600 --> 00:41:16,520
Speaker 4: And so they may just have their hand out to

835
00:41:16,520 --> 00:41:19,440
Speaker 4: get paid. It may take a year to get that approval.

836
00:41:19,480 --> 00:41:22,120
Speaker 4: It's just you know, so that's kind of involved. The

837
00:41:22,160 --> 00:41:24,839
Speaker 4: second part of that just has to go with what

838
00:41:25,120 --> 00:41:27,280
Speaker 4: has to do with mall maintenance as far as running

839
00:41:27,280 --> 00:41:30,800
Speaker 4: the property long term, and then how that is untied

840
00:41:30,960 --> 00:41:34,200
Speaker 4: to the outparcels. Sometimes figuring out how to untie the

841
00:41:34,239 --> 00:41:37,680
Speaker 4: expenses becomes so problematic that the companies don't move forward.

842
00:41:38,160 --> 00:41:39,839
Speaker 1: You know, it'd be funny. I was just thinking if

843
00:41:39,880 --> 00:41:43,520
Speaker 1: we converted all the dead malls into massive drive throughs,

844
00:41:43,560 --> 00:41:45,880
Speaker 1: and then at some point all the drive throughs decide

845
00:41:45,920 --> 00:41:48,880
Speaker 1: we should just put a roof over the top of

846
00:41:48,880 --> 00:41:51,320
Speaker 1: all our stores to make it more convenient for people.

847
00:41:51,760 --> 00:41:52,880
Speaker 1: And then we're just back where.

848
00:41:52,760 --> 00:41:56,439
Speaker 2: We starting with a gigantic food court. Yeah, let's talk

849
00:41:56,480 --> 00:41:59,840
Speaker 2: about another thing that's come up in this conversation about

850
00:42:00,040 --> 00:42:03,400
Speaker 2: site selection, and that is proximity or lack of proximity

851
00:42:03,440 --> 00:42:06,080
Speaker 2: to competitors. And well, I mean, you know, it's funny

852
00:42:06,120 --> 00:42:08,959
Speaker 2: because at least for a time, I think they've thinned

853
00:42:09,000 --> 00:42:10,440
Speaker 2: them out a little bit. You know, like in New

854
00:42:10,520 --> 00:42:12,840
Speaker 2: York City, you could be sitting in a Starbucks or

855
00:42:12,840 --> 00:42:15,120
Speaker 2: to see another Starbucks. I think they've gotten rid of

856
00:42:15,160 --> 00:42:17,399
Speaker 2: some of the I think that's gotten rare. But whether

857
00:42:17,560 --> 00:42:21,960
Speaker 2: it's proximity to an existing location or a close competitor

858
00:42:22,640 --> 00:42:26,920
Speaker 2: or a modest competitor, how does that go into site selection?

859
00:42:28,280 --> 00:42:31,160
Speaker 4: Yeah, it just goes into the model. So a retailer

860
00:42:31,200 --> 00:42:34,200
Speaker 4: will typically have some kind of sales forecast as they

861
00:42:34,239 --> 00:42:36,879
Speaker 4: show up and look at a new site. There are

862
00:42:37,040 --> 00:42:39,239
Speaker 4: a number of different factors that go into what that

863
00:42:39,280 --> 00:42:41,920
Speaker 4: model looks like and what the output comes back as

864
00:42:41,960 --> 00:42:44,799
Speaker 4: an estimated for sheer sales volume and then typically a

865
00:42:44,840 --> 00:42:48,160
Speaker 4: two or three or four year stabilized sales volume. Some

866
00:42:48,320 --> 00:42:51,080
Speaker 4: industries have got this pin down much tighter than others.

867
00:42:51,120 --> 00:42:53,720
Speaker 4: For example, if you're looking at a grocery store location,

868
00:42:54,520 --> 00:42:56,719
Speaker 4: the grocery casing analysts.

869
00:42:56,200 --> 00:42:57,680
Speaker 5: Are very dialed in.

870
00:42:58,040 --> 00:43:01,040
Speaker 4: They typically can figure out within a very tight degree

871
00:43:01,040 --> 00:43:03,360
Speaker 4: of accuracy, what a grocery store is going to do

872
00:43:03,360 --> 00:43:07,000
Speaker 4: in its first full year of volume. So there's only

873
00:43:07,080 --> 00:43:09,440
Speaker 4: so many sales dollars in any given trade area, the

874
00:43:09,440 --> 00:43:11,319
Speaker 4: easiest way is to think of it as any like

875
00:43:11,440 --> 00:43:14,040
Speaker 4: ring city. So take like Dallas Fort Worth for example,

876
00:43:14,120 --> 00:43:16,319
Speaker 4: or even just Dallas. You have a ring around it,

877
00:43:16,400 --> 00:43:19,080
Speaker 4: and you know there's no geographical obstruction, So just put

878
00:43:19,160 --> 00:43:21,319
Speaker 4: say a one mile or two mile or three mile

879
00:43:21,400 --> 00:43:24,360
Speaker 4: ring around the center point of being the site. And

880
00:43:24,400 --> 00:43:26,840
Speaker 4: then basically you have to figure how many of the

881
00:43:26,920 --> 00:43:29,800
Speaker 4: customers that exist in there would normally be a shopper

882
00:43:29,840 --> 00:43:32,640
Speaker 4: for that concept, and then number two, how many of

883
00:43:32,680 --> 00:43:35,239
Speaker 4: those can then shop at a competitor where you might

884
00:43:35,400 --> 00:43:38,439
Speaker 4: lose those sales. And so once you kind of boil

885
00:43:38,440 --> 00:43:40,840
Speaker 4: it in, all of that goes into coming up with

886
00:43:40,880 --> 00:43:43,880
Speaker 4: an estimated sales volume for the retailer, and more or

887
00:43:43,960 --> 00:43:46,360
Speaker 4: less that's where our world lives, right. The higher the

888
00:43:46,400 --> 00:43:48,879
Speaker 4: sales volume for the retailer, the more they can pay

889
00:43:48,880 --> 00:43:51,799
Speaker 4: in rent, and so there's a direct correlation there. There's

890
00:43:51,800 --> 00:43:55,239
Speaker 4: an occupancy cost that each retailer can afford as a

891
00:43:55,280 --> 00:43:57,440
Speaker 4: percentage of their gross sales how much they can pay

892
00:43:57,440 --> 00:43:58,880
Speaker 4: in total operating expense.

893
00:43:59,520 --> 00:44:02,480
Speaker 2: So, in a given trade area, would the analyst or

894
00:44:02,520 --> 00:44:05,160
Speaker 2: the company or the modelers say, like, come up with

895
00:44:05,239 --> 00:44:08,920
Speaker 2: a total annual dollar volume that people in this area

896
00:44:09,000 --> 00:44:11,960
Speaker 2: might be expected to pay for takeout coffee?

897
00:44:12,280 --> 00:44:12,480
Speaker 5: Yes?

898
00:44:12,600 --> 00:44:15,440
Speaker 2: Year, Yeah, so you come up with that number first, yes,

899
00:44:15,560 --> 00:44:18,279
Speaker 2: and then they do the retailers do it. But then

900
00:44:18,360 --> 00:44:20,960
Speaker 2: like in terms of like, well, like how far away

901
00:44:21,000 --> 00:44:24,759
Speaker 2: do I want to be from a let's say jack

902
00:44:24,800 --> 00:44:27,879
Speaker 2: in the box versus in and out, which are kind

903
00:44:27,920 --> 00:44:30,160
Speaker 2: of substitutes. They're not exactly the same thing, but one

904
00:44:30,200 --> 00:44:32,160
Speaker 2: might choose one over the other on a given day,

905
00:44:32,440 --> 00:44:34,359
Speaker 2: Like how far would a jack in the box want

906
00:44:34,440 --> 00:44:36,719
Speaker 2: to be from the nearest in and out?

907
00:44:36,840 --> 00:44:38,759
Speaker 4: That's actually a great example. A jack in a box

908
00:44:38,800 --> 00:44:40,320
Speaker 4: can probably live with a mile and a quarter to

909
00:44:40,400 --> 00:44:41,240
Speaker 4: two mile spacing.

910
00:44:42,200 --> 00:44:43,960
Speaker 2: But how do you come up with that number? Just

911
00:44:43,960 --> 00:44:44,600
Speaker 2: talk to us about that.

912
00:44:44,680 --> 00:44:46,680
Speaker 4: Well, in part is if you look at their average

913
00:44:46,680 --> 00:44:49,799
Speaker 4: annual volume, I'll forget offhand, but if you check quick

914
00:44:49,800 --> 00:44:52,120
Speaker 4: service restaurant, which is typically the periodical to go to

915
00:44:52,200 --> 00:44:54,279
Speaker 4: for these kind of sales, I think they're at one

916
00:44:54,320 --> 00:44:57,399
Speaker 4: point four one point five national average Okay, million per

917
00:44:57,480 --> 00:44:59,840
Speaker 4: year per year. In and Out does not release numbers,

918
00:44:59,880 --> 00:45:02,480
Speaker 4: but they're widely thought to have a number over ten

919
00:45:02,520 --> 00:45:05,960
Speaker 4: million per year per unit, and so almost ten times.

920
00:45:06,560 --> 00:45:08,959
Speaker 4: Typically their draw is more like a three to six

921
00:45:09,040 --> 00:45:11,920
Speaker 4: mile draw, and a Jack in the Box is more

922
00:45:11,960 --> 00:45:14,560
Speaker 4: like a one to two mile draw. Chick fil A

923
00:45:14,640 --> 00:45:19,080
Speaker 4: has a wider draw than Wendy's, right, right, that makes sense.

924
00:45:19,520 --> 00:45:20,840
Speaker 4: You do have to think of this in terms of

925
00:45:20,840 --> 00:45:23,680
Speaker 4: suburbia though, Yeah, I mean it's got it back to

926
00:45:23,719 --> 00:45:25,759
Speaker 4: the soccer bombs driving suburbans.

927
00:45:25,760 --> 00:45:28,640
Speaker 1: And on that note, I have a sort of technical

928
00:45:28,840 --> 00:45:32,600
Speaker 1: drive through specific question how much do acoustics factor in

929
00:45:32,920 --> 00:45:35,960
Speaker 1: to site selection? Because things have changed a lot over

930
00:45:36,000 --> 00:45:38,520
Speaker 1: the years. I think the audio technology that people are

931
00:45:38,560 --> 00:45:41,640
Speaker 1: using to communicate if the drive through is vastly improved.

932
00:45:41,800 --> 00:45:44,840
Speaker 1: Most people nowadays are probably ordering on an app anyway.

933
00:45:45,200 --> 00:45:48,480
Speaker 1: But one of the big frustrations of prior years has

934
00:45:48,520 --> 00:45:51,640
Speaker 1: to be if you pull up to a McDonald's on

935
00:45:51,680 --> 00:45:53,680
Speaker 1: the side of a highway and you're trying to communicate

936
00:45:53,719 --> 00:45:55,960
Speaker 1: with the person inside and you're yelling at them that

937
00:45:56,000 --> 00:45:58,120
Speaker 1: you want a quarter pounder with cheese, and they just

938
00:45:58,320 --> 00:46:01,640
Speaker 1: cannot hear you at all. Is that a factor at

939
00:46:01,640 --> 00:46:05,560
Speaker 1: all anymore? Has that mostly been sort of improved through tech?

940
00:46:06,280 --> 00:46:09,480
Speaker 4: It has been improved, however, the amount of customers going

941
00:46:09,520 --> 00:46:13,040
Speaker 4: through the drive through has increased, So I think in

942
00:46:13,080 --> 00:46:15,400
Speaker 4: some of those cases where you have old equipment that

943
00:46:15,400 --> 00:46:18,200
Speaker 4: has not been reinvested into it for sure is still.

944
00:46:18,000 --> 00:46:19,440
Speaker 5: A problem on a lot of these units.

945
00:46:20,239 --> 00:46:24,200
Speaker 4: Some of the newer concepts have definitely made some massive

946
00:46:24,239 --> 00:46:27,080
Speaker 4: advances in that. And then you have other groups, like

947
00:46:27,520 --> 00:46:29,680
Speaker 4: to go back to Dutch Bros. For example, they don't

948
00:46:29,680 --> 00:46:32,320
Speaker 4: have a squawkbox. There is no ordering system. It's a

949
00:46:32,400 --> 00:46:33,279
Speaker 4: human that takes your order in.

950
00:46:33,360 --> 00:46:35,600
Speaker 1: But did they actually call it a squawk box like

951
00:46:35,640 --> 00:46:36,879
Speaker 1: in finance that's so cool?

952
00:46:36,960 --> 00:46:40,120
Speaker 4: The head of real estate does. Yeah, So they take

953
00:46:40,160 --> 00:46:42,319
Speaker 4: your order on an iPad and it's a human that

954
00:46:42,360 --> 00:46:45,440
Speaker 4: takes your order. There are massive advantages of ordering through

955
00:46:45,480 --> 00:46:48,160
Speaker 4: their app, for example. And then there's a whole slew

956
00:46:48,200 --> 00:46:51,600
Speaker 4: of other restaurants that are more of like a pickup service,

957
00:46:51,600 --> 00:46:54,000
Speaker 4: so it's meal, pickup back to the point of saving

958
00:46:54,040 --> 00:46:57,360
Speaker 4: time and not undoing buckles. Joe. Right, So think of

959
00:46:57,400 --> 00:47:01,760
Speaker 4: that as like a typical restaurant that you would normally

960
00:47:01,880 --> 00:47:03,839
Speaker 4: never really go into, like even a Panera, Like you

961
00:47:03,880 --> 00:47:07,080
Speaker 4: call ahead and then you basically as you queue into

962
00:47:07,080 --> 00:47:09,640
Speaker 4: the drive through, you hit on the app I'm here, right,

963
00:47:09,719 --> 00:47:11,520
Speaker 4: and then they run an order that's already kind of

964
00:47:11,560 --> 00:47:13,799
Speaker 4: pre ordered, pre put together out to your car.

965
00:47:14,160 --> 00:47:14,520
Speaker 5: All right.

966
00:47:14,680 --> 00:47:18,480
Speaker 2: Another factor that came up, and I'm thinking again to

967
00:47:18,600 --> 00:47:21,680
Speaker 2: a recent time I went to a Starbucks in my car,

968
00:47:22,360 --> 00:47:26,719
Speaker 2: minimization of left turns or other situations in which you're

969
00:47:26,719 --> 00:47:28,319
Speaker 2: going to have a longer wait, or it's like, oh,

970
00:47:28,320 --> 00:47:29,880
Speaker 2: when I get back on the street, am I going

971
00:47:29,960 --> 00:47:31,880
Speaker 2: to have to take a left turnout? And is there

972
00:47:31,920 --> 00:47:35,680
Speaker 2: a light Talk to us about traffic patterns around the location.

973
00:47:36,400 --> 00:47:38,440
Speaker 2: And I imagine it might be different for like a

974
00:47:38,480 --> 00:47:40,640
Speaker 2: sort of Starbucks, which I imagine is busier in the

975
00:47:40,640 --> 00:47:43,760
Speaker 2: morning and in one direction of the commute, versus maybe

976
00:47:43,880 --> 00:47:46,000
Speaker 2: a in and out which you might get on the

977
00:47:46,000 --> 00:47:47,880
Speaker 2: way home or something like that, and maybe the other

978
00:47:47,960 --> 00:47:49,640
Speaker 2: you're on the other side of the street. Talk to

979
00:47:49,680 --> 00:47:53,480
Speaker 2: us about traffic and turnamentimization and whatever else comes into

980
00:47:53,480 --> 00:47:53,919
Speaker 2: play there.

981
00:47:54,040 --> 00:47:57,120
Speaker 4: In regards to traffic, I've probably spent more time in

982
00:47:57,160 --> 00:48:00,760
Speaker 4: my life behind a windshield sitting at a corner counting cars,

983
00:48:00,800 --> 00:48:01,000
Speaker 4: then I.

984
00:48:01,000 --> 00:48:03,200
Speaker 5: Would like to admit SayMore.

985
00:48:03,480 --> 00:48:06,600
Speaker 4: Yeah, it's pretty easy to find where the am traffic

986
00:48:06,640 --> 00:48:09,399
Speaker 4: pattern strong am traffic pattern is versus PM. You sit

987
00:48:09,440 --> 00:48:11,680
Speaker 4: at an intersection and you watch traffic, and you do

988
00:48:11,760 --> 00:48:14,319
Speaker 4: that from like eight to ten AM, or you do

989
00:48:14,360 --> 00:48:16,280
Speaker 4: that at four to five pm, and then the inverse

990
00:48:16,320 --> 00:48:18,160
Speaker 4: logic is there, so if it's heavier at four or

991
00:48:18,200 --> 00:48:19,640
Speaker 4: five pm, you know that the other side of the

992
00:48:19,719 --> 00:48:22,160
Speaker 4: road is heavier in the morning. That's the easiest way

993
00:48:22,200 --> 00:48:23,920
Speaker 4: to find any coffee site is to sit at an

994
00:48:23,920 --> 00:48:26,920
Speaker 4: intersection and count cars if you're unfamiliar with that trade area.

995
00:48:28,000 --> 00:48:31,640
Speaker 4: With regard to as far as getting ingress and egress

996
00:48:31,719 --> 00:48:34,759
Speaker 4: on and off the site, most of these retailers are

997
00:48:34,760 --> 00:48:37,520
Speaker 4: going to care about ingress. Most probably eighty percent of

998
00:48:37,560 --> 00:48:39,520
Speaker 4: their weight is worried about how does a car get in.

999
00:48:40,200 --> 00:48:42,520
Speaker 4: You rarely want somebody to be making a left in

1000
00:48:42,680 --> 00:48:45,880
Speaker 4: unless it's a very safe left in at a traffic signal,

1001
00:48:46,400 --> 00:48:49,560
Speaker 4: a dedicated kind of left in. You you see those

1002
00:48:49,560 --> 00:48:52,520
Speaker 4: sometimes with like the raised medians Yeah, but a right in,

1003
00:48:53,160 --> 00:48:55,400
Speaker 4: right out is so preferred. And if you're sitting at

1004
00:48:55,400 --> 00:48:57,080
Speaker 4: an intersection where you can get a right and right

1005
00:48:57,120 --> 00:48:58,640
Speaker 4: out on one side of the site and a full

1006
00:48:58,680 --> 00:48:59,960
Speaker 4: movement on the other side, that's.

1007
00:48:59,840 --> 00:49:03,200
Speaker 2: The Chris Hatch, Thank you so much for coming on

1008
00:49:03,400 --> 00:49:04,920
Speaker 2: odd Lots. Now I feel like we have to talk

1009
00:49:04,920 --> 00:49:08,600
Speaker 2: to their traffic engineer and zonners.

1010
00:49:08,160 --> 00:49:10,480
Speaker 1: As soccer moms to Starbucks.

1011
00:49:11,040 --> 00:49:12,919
Speaker 2: Yeah, that was really fun. Thank you so much.

1012
00:49:13,000 --> 00:49:13,680
Speaker 5: Thanks for having me.

1013
00:49:13,680 --> 00:49:15,279
Speaker 4: It gave me an excuse to get steak freets in

1014
00:49:15,320 --> 00:49:16,440
Speaker 4: the city.

1015
00:49:16,640 --> 00:49:34,600
Speaker 2: It's perfect. Tracy, I loved this whole conversation. I'm trying

1016
00:49:34,600 --> 00:49:37,560
Speaker 2: to think, like where to begin. Okay, location matters, we

1017
00:49:37,680 --> 00:49:39,919
Speaker 2: all know that, but then you think like all these

1018
00:49:40,000 --> 00:49:43,279
Speaker 2: different types of retail concepts and the sort of specific

1019
00:49:43,400 --> 00:49:47,440
Speaker 2: things that matter to them, whether it's like what side

1020
00:49:47,560 --> 00:49:49,680
Speaker 2: of the road you're on, or who are the other

1021
00:49:50,040 --> 00:49:53,319
Speaker 2: entities or are you in some other companies parking lot.

1022
00:49:53,440 --> 00:49:56,279
Speaker 2: I just feel like there's an endless amount to learn

1023
00:49:56,320 --> 00:49:57,560
Speaker 2: in this area totally.

1024
00:49:57,640 --> 00:50:01,040
Speaker 1: I also thought that the sort of evolution of what

1025
00:50:01,080 --> 00:50:05,040
Speaker 1: you're looking for with a physical space is also interesting.

1026
00:50:05,120 --> 00:50:08,799
Speaker 1: I think Tom touched on this idea that Okay, post pandemic,

1027
00:50:09,200 --> 00:50:11,719
Speaker 1: things started to shift like it was much more of

1028
00:50:11,760 --> 00:50:15,520
Speaker 1: an almost warehouse effect or you know, you order something

1029
00:50:15,560 --> 00:50:17,879
Speaker 1: online and then you pick it up, which means that

1030
00:50:18,000 --> 00:50:21,920
Speaker 1: the demand for locations that are on the outer fringes

1031
00:50:22,040 --> 00:50:26,800
Speaker 1: of shopping malls are easily accessible, become even more important totally.

1032
00:50:27,000 --> 00:50:29,760
Speaker 2: It's also just sort of fascinating that, like as Tom

1033
00:50:29,920 --> 00:50:33,759
Speaker 2: was saying, the demand for space, according to him, is

1034
00:50:33,760 --> 00:50:36,680
Speaker 2: still enormous. Yeah, which is really interesting. And you know,

1035
00:50:36,719 --> 00:50:40,800
Speaker 2: we talk a lot about again Siri office, right, and Okay,

1036
00:50:40,840 --> 00:50:42,480
Speaker 2: we all know that that's troubled. But the other the

1037
00:50:42,480 --> 00:50:44,279
Speaker 2: fact that there's all this other kind of SIY and

1038
00:50:44,360 --> 00:50:45,720
Speaker 2: some of it is absolutely.

1039
00:50:45,360 --> 00:50:48,920
Speaker 1: Booming, absolutely, and there is that sort of bifurcation or

1040
00:50:48,960 --> 00:50:53,000
Speaker 1: segmentation in the market as well. Were you convinced at

1041
00:50:53,040 --> 00:50:55,640
Speaker 1: all to get out of the car to get your

1042
00:50:55,719 --> 00:50:58,560
Speaker 1: coffee to avoid the drive through or not? Are you

1043
00:50:58,600 --> 00:51:01,040
Speaker 1: even more dedicated to the coffee drive through now?

1044
00:51:01,080 --> 00:51:01,279
Speaker 3: No?

1045
00:51:01,480 --> 00:51:04,040
Speaker 2: I mean actually so the most recent time I went

1046
00:51:04,040 --> 00:51:06,280
Speaker 2: to a Starbucks, I did get out of the car.

1047
00:51:06,880 --> 00:51:09,560
Speaker 2: It really is conditional, Like part of it is like

1048
00:51:09,920 --> 00:51:12,759
Speaker 2: the weather. Part of it is how annoying my kids

1049
00:51:12,760 --> 00:51:15,160
Speaker 2: are being at any given time, like these are like

1050
00:51:15,480 --> 00:51:18,520
Speaker 2: the big factors that go in and like I swear,

1051
00:51:19,160 --> 00:51:21,279
Speaker 2: do I have to take a left turn to get it?

1052
00:51:21,400 --> 00:51:23,759
Speaker 2: This is like a big deal. Like I know it

1053
00:51:23,800 --> 00:51:25,359
Speaker 2: sounds silly.

1054
00:51:25,080 --> 00:51:27,840
Speaker 1: But well, now we should all feel better knowing that

1055
00:51:27,880 --> 00:51:30,480
Speaker 1: there are people out there who are taking this stuff

1056
00:51:30,520 --> 00:51:31,440
Speaker 1: into consideration.

1057
00:51:31,600 --> 00:51:34,759
Speaker 2: Yeah, right, Like as Chris was saying like that, he

1058
00:51:34,800 --> 00:51:37,120
Speaker 2: would sit there at a corner and just count the

1059
00:51:37,200 --> 00:51:39,919
Speaker 2: number of cars making various turns from eight to ten

1060
00:51:40,239 --> 00:51:42,160
Speaker 2: and then come back from four to six or whatever

1061
00:51:42,200 --> 00:51:44,040
Speaker 2: and count again, as like totally fascinating to me.

1062
00:51:44,280 --> 00:51:45,759
Speaker 1: Yep, shall we leave it there?

1063
00:51:45,920 --> 00:51:46,600
Speaker 2: Let's leave it there.

1064
00:51:46,680 --> 00:51:47,000
Speaker 4: Okay.

1065
00:51:47,200 --> 00:51:50,040
Speaker 1: This has been another episode of the All Thoughts Podcast.

1066
00:51:50,080 --> 00:51:53,279
Speaker 1: I'm Tracy Alloway. You can follow me at Tracy Alloway and.

1067
00:51:53,200 --> 00:51:56,000
Speaker 2: I'm Jill Wasenthal. You can follow me at the Stalwart.

1068
00:51:56,280 --> 00:52:00,000
Speaker 2: Follow our guests Tom McGee he's at Tom McGee's CEO.

1069
00:52:00,360 --> 00:52:04,840
Speaker 2: And Chris Hatch his handle is at n N Income.

1070
00:52:05,400 --> 00:52:09,080
Speaker 2: Follow our producers Carmen Rodriguez at Carman armand Dashel Bennett

1071
00:52:09,080 --> 00:52:12,359
Speaker 2: at Dashbot and Kelbrooks at Kelbrooks. Thank you to our

1072
00:52:12,400 --> 00:52:15,920
Speaker 2: producer Moses Ondam from our Oddlots content. Go to Bloomberg

1073
00:52:15,960 --> 00:52:18,280
Speaker 2: dot com slash odd Lots, where we have a blog,

1074
00:52:18,440 --> 00:52:22,160
Speaker 2: transcript and a newsletter, and check out the discord Discord

1075
00:52:22,200 --> 00:52:25,520
Speaker 2: dot gg slash odd Lots chat with fellow listeners twenty

1076
00:52:25,560 --> 00:52:27,480
Speaker 2: four to seven. It's one of my favorite places to

1077
00:52:27,520 --> 00:52:28,480
Speaker 2: hang out online.

1078
00:52:28,520 --> 00:52:31,400
Speaker 1: Go check it out and if you enjoy odd Lots,

1079
00:52:31,520 --> 00:52:34,480
Speaker 1: if you like it when we dig into site selection,

1080
00:52:34,640 --> 00:52:37,320
Speaker 1: then please leave us a positive review on your favorite

1081
00:52:37,360 --> 00:52:41,440
Speaker 1: podcast platform. And don't forget if you are a Bloomberg subscriber,

1082
00:52:41,480 --> 00:52:44,560
Speaker 1: you can listen to all our episodes ad free. Just

1083
00:52:44,640 --> 00:52:48,800
Speaker 1: connect your Bloomberg account to Apple Podcasts. Thanks for listening

1084
00:53:05,560 --> 00:53:05,600
Speaker 2: In