WEBVTT - How Businesses Decide Exactly Where to Set Up Shop 0:00:10.840 --> 0:00:14.320 Hello, and welcome to another episode of the Odd Thoughts Podcast. 0:00:14.400 --> 0:00:17.520 I'm Tracy Alloway and I'm Jill wysn't Thal Joe, do 0:00:17.520 --> 0:00:21.920 you remember our conversation with Ali Webb, the founder of Drybar. 0:00:22.520 --> 0:00:25.560 Yes, that was a really great conversation, and you know, 0:00:25.600 --> 0:00:28.920 we talked a little bit about how she selected optimal 0:00:29.000 --> 0:00:31.600 Drybar locations, and I think both of our interests were 0:00:31.640 --> 0:00:35.559 peaked at that exact moment about the art of location selection. 0:00:35.920 --> 0:00:38.760 Yeah, it was sort of a light bulb moment for 0:00:38.840 --> 0:00:42.080 me because obviously you think, yes, if you're a business, 0:00:42.200 --> 0:00:45.760 you're putting a lot of thought into where you're opening 0:00:45.920 --> 0:00:48.559 up a store, and presumably you want to find a 0:00:48.600 --> 0:00:51.760 location with lots of traffic and try to sell as 0:00:51.840 --> 0:00:54.240 much as you possibly can. But there were all these 0:00:54.640 --> 0:00:59.520 new and intriguing factors that were sort of lurking behind 0:00:59.520 --> 0:01:02.600 the scenes. So I remember Ali was talking about how 0:01:02.880 --> 0:01:05.600 for dry Bar, it's really important that you select a 0:01:05.640 --> 0:01:10.559 location where you can effectively slot into a customer's sort 0:01:10.560 --> 0:01:13.760 of day to data routine, right next to a grocery 0:01:13.800 --> 0:01:16.640 store or on the outside of a shopping mall so 0:01:16.680 --> 0:01:19.480 that there's easy access. But there were also things that 0:01:19.520 --> 0:01:22.080 I had never considered, like, if you are in a 0:01:22.120 --> 0:01:26.960 shopping mall, does the shopping mall owner actually allow more 0:01:27.000 --> 0:01:29.160 than one hair salon in that space? 0:01:29.800 --> 0:01:33.080 Speaking of shopping centers, you know, there's this location that 0:01:33.200 --> 0:01:36.800 I drive sometimes when I'm on the Long Island Expressway 0:01:36.800 --> 0:01:39.000 that I always passed, and in this like one shopping 0:01:39.080 --> 0:01:41.200 center that I always see from the highway, there is 0:01:41.240 --> 0:01:46.120 like a dry bar, a soul cycle, and something else, 0:01:46.120 --> 0:01:50.280 and I just imagine that's perfect. Yes, the person, most 0:01:50.320 --> 0:01:52.360 likely a woman in this case, who's like, for yes, 0:01:52.400 --> 0:01:55.240 this shopping center basically like knocks out three of the 0:01:55.240 --> 0:01:57.880 things that they have to get taken care of during 0:01:57.960 --> 0:02:00.520 some like you know, two hour block of time that 0:02:00.560 --> 0:02:00.800 they have. 0:02:01.080 --> 0:02:03.680 Man, that is a that is a lifestyle. 0:02:03.280 --> 0:02:05.960 Yes, it's a lifestyle location for sure. 0:02:06.280 --> 0:02:09.040 But the point is there are all these sort of 0:02:09.080 --> 0:02:14.079 like hidden things happening behind brick and mortar site location, 0:02:14.240 --> 0:02:16.080 and I feel like we should get a better sense 0:02:16.080 --> 0:02:19.400 of them, particularly in the context of what's happening with 0:02:19.480 --> 0:02:23.280 commercial real estate. We've done a couple episodes on cre 0:02:23.600 --> 0:02:27.160 and offices, but also on shopping malls, and again, there 0:02:27.160 --> 0:02:29.680 are things in the shopping mall world that I have 0:02:29.800 --> 0:02:33.960 never considered before, such as the maintenance or how important 0:02:34.000 --> 0:02:37.240 are holiday decorations and how that can feed into values 0:02:37.280 --> 0:02:39.960 and things. So I'm curious if you're a business, if 0:02:40.000 --> 0:02:42.280 you're thinking about, well, I want I want to open 0:02:42.280 --> 0:02:44.680 a store in this particular strip mall because they have 0:02:44.760 --> 0:02:47.240 really nice Christmas decorations or something like. 0:02:47.200 --> 0:02:51.760 That totally or where in the store or where in 0:02:51.800 --> 0:02:54.400 the mall or the strip mall the store physically is 0:02:55.000 --> 0:02:57.679 the types of turns that you have to take could matter, 0:02:57.800 --> 0:03:00.000 like all kinds of things. That's like, yes, we all 0:03:00.120 --> 0:03:03.760 no location matters, but it's like they're real professionals and 0:03:04.080 --> 0:03:06.080 true location optimization and. 0:03:06.280 --> 0:03:09.040 The secret art of choosing shop sites. 0:03:09.200 --> 0:03:12.920 Yeah, and so we should. I'm eager to learn more. 0:03:13.200 --> 0:03:16.080 Okay, So this is actually a two part episode that 0:03:16.200 --> 0:03:18.800 means we have two perfect guests for you. To begin with, 0:03:18.880 --> 0:03:21.680 we're going to be speaking a bit broadly about this 0:03:21.800 --> 0:03:24.880 whole idea of site location. We are going to talk 0:03:25.080 --> 0:03:29.400 with Tom McGee. He is the CEO of something I 0:03:29.400 --> 0:03:35.560 didn't know existed, the International Council of Shopping Centers, the ICSC, 0:03:35.960 --> 0:03:38.640 which is a trade association for shops. We're going to 0:03:38.720 --> 0:03:43.120 talk to him generally about how businesses choose where to 0:03:43.240 --> 0:03:45.520 set up shop. But then we have a second guest. 0:03:45.600 --> 0:03:48.840 We're going to drill down into even more detailed joke. 0:03:49.080 --> 0:03:51.840 That's right after our conversation with Tom, we are speaking 0:03:51.880 --> 0:03:56.720 with Chris Hatch of Forza Development. His actual real expertise 0:03:57.120 --> 0:04:00.920 happened to be in drive through location and so things 0:04:00.920 --> 0:04:03.760 like Starbucks drive throughs and in and out drive throughs, 0:04:03.800 --> 0:04:06.880 and so after our sort of general conversation with Tom, 0:04:06.960 --> 0:04:09.240 we're going to be speaking with a specialist in one 0:04:09.280 --> 0:04:13.119 area about how a national chain figures out the optimal 0:04:13.200 --> 0:04:15.920 spot to put in a drive through location. 0:04:16.560 --> 0:04:19.880 All right, Here is our conversation with Tom McGee, the 0:04:20.160 --> 0:04:24.200 CEO of the International Council of Shopping Centers. Tom, what 0:04:24.360 --> 0:04:26.840 is the International Council of Shopping Centers? 0:04:26.880 --> 0:04:30.080 Well, the International Council of Shopping Centers, which we go 0:04:30.120 --> 0:04:34.280 by the term ICSE, is a trade association. We represent 0:04:34.600 --> 0:04:42.240 about fifty five thousand members landlords, owner developers, tenants, service providers, 0:04:42.320 --> 0:04:47.000 your brokers, accountants, attorneys, everyone that serves the retail industry 0:04:47.000 --> 0:04:49.200 with a particular focus upon physical retail. 0:04:49.839 --> 0:04:54.039 So big picture, some sort of national chain, you know, 0:04:54.120 --> 0:04:57.240 like a tractor supply or a Starbucks. So you know 0:04:57.279 --> 0:04:59.960 they're like, okay, we want to expand in a new area. 0:05:00.120 --> 0:05:03.400 What is the process generally by which they'd go out? 0:05:03.480 --> 0:05:06.520 Do companies have like in house real estate teams? Is 0:05:06.520 --> 0:05:07.200 it brokers? 0:05:07.240 --> 0:05:07.320 Like? 0:05:07.400 --> 0:05:11.480 Walk through the process by which a commercial landlord and 0:05:11.640 --> 0:05:13.240 some sort of retailer will connect. 0:05:14.200 --> 0:05:15.800 Well, you touched upon a couple things, and those are 0:05:15.800 --> 0:05:21.000 two very different brands. But first, most big national retailers 0:05:21.000 --> 0:05:23.440 will have an in house real estate team. That does 0:05:23.480 --> 0:05:26.640 not mean that they won't use brokers for assistance. And 0:05:26.680 --> 0:05:31.839 certainly all national owner developers will have an in house 0:05:31.920 --> 0:05:35.440 leasing team, people that work with tenants to help them 0:05:35.440 --> 0:05:39.239 find space and negotiate terms. But big picture, the CEO 0:05:39.360 --> 0:05:42.160 will start and say, we have growth objectives. You know, 0:05:42.200 --> 0:05:44.400 we want to open up a certain number of stores 0:05:44.440 --> 0:05:48.400 this year to help meet those objectives. And or we 0:05:48.480 --> 0:05:51.760 have a number of leases that are coming due, and 0:05:51.880 --> 0:05:54.479 we may want to renew those leases or look for 0:05:54.520 --> 0:05:57.799 alternative sites. And so what they'll start with is based 0:05:57.839 --> 0:06:00.440 upon those two broad objectives. Say, okay, first of all, 0:06:00.440 --> 0:06:03.000 who's our core customer? You know, particularly if you're an 0:06:03.080 --> 0:06:05.080 established retail you have a pretty good sense to who 0:06:05.120 --> 0:06:07.719 your core customer is and who you want to serve 0:06:07.760 --> 0:06:10.479 and who you want to establish, and so demographics, you know, 0:06:10.520 --> 0:06:13.159 are very very important. You look at different trade areas 0:06:13.360 --> 0:06:16.560 and you say, Okay, does this particular trade area have 0:06:17.160 --> 0:06:20.280 the demographics the type of customer that we're looking to serve. 0:06:20.720 --> 0:06:23.320 If you are a tractor supply, you have a certain 0:06:23.400 --> 0:06:26.479 demographic that's probably interested in the type of products that 0:06:26.520 --> 0:06:28.880 you serve. If you have a Tiffany's, you have a 0:06:28.880 --> 0:06:31.520 certain demographics and the type of property, a type of 0:06:31.680 --> 0:06:33.360 customer that you're trying to serve, and you're looking for 0:06:33.360 --> 0:06:37.400 those different types of locations or areas that fit your 0:06:37.400 --> 0:06:40.800 customer needs. And then you start looking at, okay, what 0:06:40.960 --> 0:06:44.120 other retailers are there, what are the properties that are 0:06:44.200 --> 0:06:48.000 available that I might want to situate in. And generally, 0:06:48.080 --> 0:06:50.880 the vast majority of retail in the United States, New 0:06:50.960 --> 0:06:53.120 York being you know, an obvious exception, where there's a 0:06:53.160 --> 0:06:56.359 lot of street retail and so forth, are domiciled in 0:06:56.440 --> 0:07:01.000 shopping centers, whether that's big regional malls or local open 0:07:01.040 --> 0:07:04.160 air shopping centers and everything in between. And then they'll 0:07:04.160 --> 0:07:06.360 start looking at the tipperate types of properties that they 0:07:06.480 --> 0:07:10.280 want to locate their space in and begin to talk 0:07:10.320 --> 0:07:12.840 to landlords and begin to understand who are the other 0:07:12.880 --> 0:07:16.240 tenants within that space, etcetera. They may use a broker 0:07:16.680 --> 0:07:19.600 to help them with that, they may not. A landlord 0:07:19.600 --> 0:07:21.880 may use a broker to help them, they may not. 0:07:22.160 --> 0:07:25.520 The larger they are, generally, the more in house it is. 0:07:25.600 --> 0:07:28.800 The smaller they are generally, the more they might use 0:07:28.840 --> 0:07:32.520 an outside service providers. But even large national chains and 0:07:32.600 --> 0:07:36.320 large national landlords, we'll often use service providers to supplement 0:07:36.360 --> 0:07:36.800 their team. 0:07:37.240 --> 0:07:40.880 What kind of due diligence goes into identifying locations? So 0:07:41.080 --> 0:07:43.120 let's say I don't know, I have a small business 0:07:43.160 --> 0:07:46.640 and there's a nice strip mall and there's a vacant space, 0:07:46.720 --> 0:07:50.000 and I think this looks like a really good possibility 0:07:50.040 --> 0:07:53.400 for us to set up shop. What are the sort 0:07:53.400 --> 0:07:56.800 of factors or things that we would be looking out for, Like, 0:07:56.840 --> 0:07:59.480 for instance, would we be standing outside the shop, like 0:07:59.640 --> 0:08:01.640 measure ring, footfall or something like that. 0:08:02.200 --> 0:08:05.720 You would certainly stand outside the shopping center and want 0:08:05.720 --> 0:08:08.680 to observe it and make sure that it's of a 0:08:08.680 --> 0:08:12.320 stature and a quality that's representative of your brand. I mean, 0:08:12.360 --> 0:08:15.560 you start out that big demographics and looking at your customers. 0:08:15.600 --> 0:08:18.120 But then you start drilling down and you might have 0:08:18.160 --> 0:08:20.280 a shopping center on both sides of the street, right, 0:08:20.320 --> 0:08:21.600 and you might say, well, why do I pick this 0:08:21.640 --> 0:08:25.600 one versus a different one? And you might do research 0:08:25.680 --> 0:08:28.520 on social media and see what the local community says. 0:08:28.600 --> 0:08:30.720 You certainly are going to look at the upkeep of 0:08:30.800 --> 0:08:34.640 the shopping center. Is it visually appealing, is it is 0:08:34.679 --> 0:08:38.120 it well maintained? Who are the other tenants. That's a 0:08:38.200 --> 0:08:42.480 really big deal for retailers because not only are they 0:08:42.480 --> 0:08:44.920 going to want to make sure that there's not, you know, 0:08:44.960 --> 0:08:47.880 a natural competitor that's in that space that they might 0:08:47.920 --> 0:08:51.440 cannibalize each other, but you are who the company you keep, right, 0:08:51.520 --> 0:08:53.200 so you're going to want to make sure that the 0:08:53.200 --> 0:08:56.480 folks that are in that center are consistent with your brand. 0:08:56.559 --> 0:09:00.280 You're not going to generally have a Walmart, which is 0:09:00.320 --> 0:09:04.920 a large mass merchant retailer, next to Ralph Lauren or 0:09:04.960 --> 0:09:07.520 something like Louis Vauton, which is a high end luxury, 0:09:07.520 --> 0:09:09.520 So you want to make sure that there's a consistency 0:09:09.559 --> 0:09:11.640 to the type of retailer that's in that Look. 0:09:11.800 --> 0:09:15.719 Well, I was going to say conversely, from the perspective 0:09:15.840 --> 0:09:19.560 of the shopping center. How much do they think like, Okay, 0:09:20.120 --> 0:09:22.959 here's a vape shop, here's. 0:09:22.920 --> 0:09:24.960 A Spencer's Gifts. 0:09:25.040 --> 0:09:26.880 Yeah, you're right, imagine. 0:09:26.480 --> 0:09:30.040 They're co located next to vape shops if they still exist. 0:09:30.760 --> 0:09:33.839 Yeah, Like how much did they think about like mix optimization? 0:09:34.280 --> 0:09:38.280 Yeah, you absolutely think about that because first and foremost, 0:09:38.520 --> 0:09:41.480 the traffic that's in the shopping center, right, is going 0:09:41.559 --> 0:09:43.520 to be driven by the tenants that are in the 0:09:43.559 --> 0:09:46.640 shopping center. So you want to have a consistency. That's 0:09:46.679 --> 0:09:49.680 why you often see certain retailers that are in the 0:09:49.679 --> 0:09:52.439 same shopping center. You might see, you know, certain discount 0:09:52.520 --> 0:09:56.839 retailers and certain service providers that are often in the 0:09:56.880 --> 0:09:59.280 same shopping center at Alta and a Target and so forth, 0:09:59.320 --> 0:10:02.840 because they have a similar type of consumer. So in 0:10:02.880 --> 0:10:05.560 your example, you probably if you have a vape shop, 0:10:05.679 --> 0:10:08.800 you're probably not going to see certain retailers in there 0:10:08.800 --> 0:10:12.080 because that's not necessarily consistent with the demographics that they're 0:10:12.080 --> 0:10:16.439 looking for. Conversely, the shopping center owner themselves, it's really 0:10:16.520 --> 0:10:20.720 important to them as well to curate the mix appropriately right, 0:10:20.760 --> 0:10:24.120 because that's going to generate traffic. If you have a 0:10:24.200 --> 0:10:27.120 hodgepodge of stuff, you know, mixed in that don't have 0:10:27.240 --> 0:10:31.320 any synergy. That definitely isn't good for traffic, right, and 0:10:31.360 --> 0:10:33.600 it's not good for your brand, and ultimately it is 0:10:33.640 --> 0:10:36.160 not good for your ability to attract the next retailer 0:10:36.480 --> 0:10:40.280 and the next retailer. Because this particular industry retail real 0:10:40.400 --> 0:10:44.000 estate more than any other form of real estate, it 0:10:44.080 --> 0:10:47.960 is very relationship driven, and it's very much people are concerned. 0:10:48.000 --> 0:10:50.720 For example, in an office, a law firm might be 0:10:50.720 --> 0:10:52.800 on the fifth floor and a construction company might be 0:10:52.840 --> 0:10:57.520 on the sixth floor. It doesn't really matter. But in 0:10:57.600 --> 0:11:00.720 a shopping center, whether it's a big reaon mall or 0:11:00.720 --> 0:11:03.600 it's a local shopping center, it does matter who's next 0:11:03.600 --> 0:11:06.840 door to you because there's a synergy and a relationship 0:11:06.880 --> 0:11:10.200 both from brand identity and also foot traffic. That's very, 0:11:10.320 --> 0:11:11.000 very important. 0:11:11.720 --> 0:11:15.600 So let's say we've identified a likely location and we're 0:11:15.600 --> 0:11:19.520 now negotiating with the landlord about setting up a lease 0:11:19.520 --> 0:11:23.920 of some sort. What would go into those negotiations and 0:11:23.960 --> 0:11:26.840 what are the typical sticking points that you observe. 0:11:27.480 --> 0:11:29.559 Well, the most important one of the most obvious ones 0:11:29.640 --> 0:11:34.240 right term and price. So those are often quite frankly 0:11:34.280 --> 0:11:36.560 the most important. They're in the most important points and 0:11:36.600 --> 0:11:39.240 often the sticky point right the sticking points because both 0:11:39.280 --> 0:11:42.040 sides have a mutuality of interest to make sure they're 0:11:42.200 --> 0:11:44.559 being competitive. But outside of that, you're going to look 0:11:44.559 --> 0:11:46.280 at things like co tenancy. You know who else is 0:11:46.320 --> 0:11:48.720 in the shopping center and is there somebody that has 0:11:48.760 --> 0:11:50.840 a clause in there that says I can't you can't 0:11:50.880 --> 0:11:52.840 have a similar type of apparel retailer. 0:11:52.920 --> 0:11:56.280 Could I demand a co tendency clause? Like if for 0:11:56.440 --> 0:11:58.520 my business, could I say I don't want any other 0:11:58.559 --> 0:12:01.280 competitors in this area if I take up the space. 0:12:01.520 --> 0:12:03.800 Yeah, you could have co tennancy clauses as a as 0:12:03.840 --> 0:12:06.360 a tenant and you that would be a negotiating point. 0:12:06.760 --> 0:12:08.679 You're not necessarily going to get it, but you can 0:12:08.679 --> 0:12:13.960 certainly request it. And your prominence, your leverage is the 0:12:13.960 --> 0:12:16.760 bigger you are, and the more traffic you're going to drive, 0:12:16.880 --> 0:12:19.679 the more leverage you're going to have. Now, those tennancy 0:12:19.720 --> 0:12:22.800 clauses can often get renegotiated. So you have a co 0:12:22.880 --> 0:12:26.640 tenancy clause and the landlord might identify a you know, 0:12:26.679 --> 0:12:29.720 a tenant that they want in that shopping center and 0:12:29.760 --> 0:12:31.840 they may go to that other tenant that has a 0:12:31.840 --> 0:12:33.640 co tenancy clause and say, hey, we got this great 0:12:33.679 --> 0:12:36.880 retailer we want to bring in or great concept. You 0:12:36.920 --> 0:12:40.600 have a co tennancy clause that prohibits it less negotiate, 0:12:40.880 --> 0:12:43.560 and you know, that may be a negotiation. They might say, hey, 0:12:43.559 --> 0:12:46.000 that's great. There might be no consideration that needs to 0:12:46.040 --> 0:12:47.520 be because they might look at it and say that's 0:12:47.520 --> 0:12:50.280 going to drive more traffic, or they might ei there 0:12:50.320 --> 0:12:53.000 is no financial consideration, you know, or a free rent 0:12:53.040 --> 0:12:56.400 period or some type of negotiation that might take place 0:12:57.040 --> 0:12:58.640 to adjust that co tenancy clause. 0:12:58.960 --> 0:13:01.880 So drawing to on further, you know, we talked to 0:13:02.120 --> 0:13:04.760 Ali Webb, the founder of dry Bar, and the other 0:13:04.840 --> 0:13:07.360 point that she made that I think was really sort 0:13:07.360 --> 0:13:08.599 of like hit a light bulb. But it's like, you 0:13:08.640 --> 0:13:11.680 can identify a great region or a great area, a 0:13:11.679 --> 0:13:15.160 great town or demographic, you can identify the right shopping center, 0:13:15.520 --> 0:13:19.400 but depending on the nature of your what you're selling, 0:13:19.679 --> 0:13:22.160 location in that center is important. So she pointed out 0:13:22.200 --> 0:13:24.520 that for a blow dry bar, where you might want 0:13:24.559 --> 0:13:25.880 to you know, it's all about the in and out 0:13:25.880 --> 0:13:27.440 and quick. If you're in a mall, you don't want 0:13:27.480 --> 0:13:29.439 to be deep in the mall, and that that's problematic. 0:13:29.640 --> 0:13:32.400 You're not targeting people who plan to spend a lot 0:13:32.440 --> 0:13:34.040 of time in the mall. You want to be on 0:13:34.080 --> 0:13:37.200 the perimeter. What are some other you know, okay, after 0:13:37.240 --> 0:13:39.200 you identify the shopping center, et cetera, what are the 0:13:39.240 --> 0:13:41.960 other types of things that you see retailers thinking about 0:13:42.000 --> 0:13:43.960 with within space, within the air. 0:13:43.960 --> 0:13:46.160 Well, that's a particularly important one, right, if you are 0:13:46.200 --> 0:13:49.400 a convenience type of retailer, you definitely want to be 0:13:49.480 --> 0:13:51.600 a place that's convenient, right, so you want to make 0:13:51.640 --> 0:13:53.800 sure you're on the end. You want to make it 0:13:53.840 --> 0:13:56.160 as easy and frictional lists as possible for your customer. 0:13:56.200 --> 0:13:59.640 Another big one because of the nature of how a 0:13:59.679 --> 0:14:03.840 physical retail is used today, which isn't just for traditional shopping. 0:14:04.120 --> 0:14:06.720 And so we all picture that people go into retailers 0:14:06.800 --> 0:14:09.160 and shop and you know, walk around the aisles and 0:14:09.200 --> 0:14:12.280 so forth, which in fact they obviously do a lot of. 0:14:13.080 --> 0:14:15.880 But think about what happened during COVID. You have this 0:14:15.960 --> 0:14:18.800 whole convergence between the physical and digital world taking you 0:14:18.840 --> 0:14:21.800 have things like curbside pickup and click and collect and 0:14:21.840 --> 0:14:25.320 so forth. So now the actual parking lot and the 0:14:25.840 --> 0:14:29.240 flow of traffic is really really important if you're a 0:14:29.280 --> 0:14:32.600 retailer that really wants to and this is a whole 0:14:32.640 --> 0:14:34.800 other topic, but if you're a retailer that really wants 0:14:34.800 --> 0:14:36.920 to drive as many people as possible to your store. 0:14:37.200 --> 0:14:39.440 It's while you and I all believe it's a constitutional 0:14:39.520 --> 0:14:44.280 right to get free shipping, somebody actually is paying for that, 0:14:44.480 --> 0:14:47.400 and it's the retailer. And so if they can drive 0:14:47.560 --> 0:14:51.720 someone to go to their store to pick up that 0:14:51.880 --> 0:14:56.000 good that they ordered online, that's a big whim because 0:14:56.080 --> 0:14:58.440 they preserve that margin. But you're going to want to 0:14:58.480 --> 0:15:01.120 make sure that experience is very frictionless. And so if 0:15:01.160 --> 0:15:03.800 I'm driving up and I did a click and collected, 0:15:03.840 --> 0:15:05.680 it's curbs I pick up, Well, I wanted to have 0:15:05.760 --> 0:15:07.880 the ability to somebody actually put it in my trunk 0:15:08.000 --> 0:15:11.040 very easily and I drive away. And or I'm going 0:15:11.120 --> 0:15:12.720 to want to set up the store in such a 0:15:12.720 --> 0:15:14.800 way if somebody's going to go do a click, collect 0:15:14.840 --> 0:15:16.320 and actually walk in the store, that they can do 0:15:16.360 --> 0:15:19.000 that in a very convenient way. So location matters. It 0:15:19.000 --> 0:15:21.000 depends upon what your strategy is and how you're going 0:15:21.040 --> 0:15:21.760 to use that store. 0:15:37.560 --> 0:15:41.840 How scalable are these types of tendency agreements. Like if 0:15:41.880 --> 0:15:45.360 I am a national chain, could I strike some sort 0:15:45.400 --> 0:15:49.440 of deal with a major shopping mall operator or a 0:15:49.520 --> 0:15:52.800 major landlord of some sort to set up shops in 0:15:52.840 --> 0:15:56.080 like ten different states at multiple locations. 0:15:56.520 --> 0:15:58.520 You could, but it tends to be much more property 0:15:58.560 --> 0:16:02.080 specific than that because it goes back to kind of 0:16:02.120 --> 0:16:04.920 the basics of location. You really want to think about 0:16:05.560 --> 0:16:08.560 the demographics of that area, the community that you're serving, 0:16:08.600 --> 0:16:11.760 and so forth. So, yes, you could strike a large 0:16:11.760 --> 0:16:15.280 deal like that, but it's generally, particularly on large national 0:16:16.200 --> 0:16:19.640 retailers who already have an established footprint, they're going to 0:16:19.680 --> 0:16:21.239 be much more location specific. 0:16:21.760 --> 0:16:25.720 So the International Council of Shopping Centers, you actually run 0:16:25.800 --> 0:16:29.640 one of the big deal making conferences for this space 0:16:30.040 --> 0:16:30.320 we do. 0:16:30.400 --> 0:16:33.680 It goes back to this industry being very relationship based, 0:16:33.800 --> 0:16:38.160 and so we host about one hundred different events annually. 0:16:38.920 --> 0:16:41.960 We have one exceptionally large event which is in Las 0:16:42.000 --> 0:16:44.240 Vegas in the third week of May every year. We 0:16:44.280 --> 0:16:47.680 call it ICC Las Vegas. We'll have about thirty thousand 0:16:47.760 --> 0:16:51.000 people come to that event, and they come to that 0:16:51.080 --> 0:16:54.440 event for one reason, to do deals. They come to 0:16:54.480 --> 0:16:56.760 that event. Yes, we have content and a whole bunch 0:16:56.840 --> 0:16:59.880 of other aspects to it, but the core reason they're 0:17:00.080 --> 0:17:04.160 there is to network and talk transactions. So if you're 0:17:04.200 --> 0:17:09.679 a major or quite frankly, even a regional landlord owner developer, 0:17:10.119 --> 0:17:13.639 and you're a national regional or a or an emerging 0:17:13.680 --> 0:17:16.840 retailer that's looking to open up locations, you will very 0:17:16.960 --> 0:17:19.159 likely go to that event or one of our other 0:17:19.160 --> 0:17:23.600 one hundred events to build relationships and talk about expansion 0:17:23.800 --> 0:17:27.119 and talk about locations, and landlords will look at that 0:17:27.160 --> 0:17:30.040 as an opportunity to both nurture or existing relationships but 0:17:30.080 --> 0:17:33.119 also attract those new tenants into their spaces. 0:17:33.600 --> 0:17:36.560 I know these conferences are really just about meeting people 0:17:36.560 --> 0:17:39.600 and deals, but I get I assumes in Vegas and 0:17:39.640 --> 0:17:41.399 being in Las Vegas, which is why I would like 0:17:41.440 --> 0:17:44.520 to come have you. Yeah, we'll come out, But you know, 0:17:44.560 --> 0:17:47.280 I assume that there's a program and panels and stuff 0:17:47.320 --> 0:17:49.280 like that. What are going to be the big themes 0:17:49.359 --> 0:17:52.119 right now in spring twenty twenty four in terms of 0:17:52.359 --> 0:17:53.600 location identification? 0:17:54.320 --> 0:17:57.280 Yeah, I mean the biggest challenge the industry has right now, 0:17:57.320 --> 0:17:59.080 and this is going to surprise you, but it is 0:17:59.119 --> 0:18:04.000 really supply so oh spa of space and so particularly 0:18:04.040 --> 0:18:07.400 in suburban real estate is kind of on fire right now, 0:18:07.520 --> 0:18:12.720 particularly suburban open air. Why well, first and foremost because 0:18:12.760 --> 0:18:15.560 of think about what happened in the pandemic. So many 0:18:15.560 --> 0:18:18.240 people move back to the suburbs, and they're working from home. 0:18:18.280 --> 0:18:22.000 They're not necessarily coming into midtown Manhattan every day, so 0:18:22.040 --> 0:18:24.000 they have a lot more time, and so they're using 0:18:24.040 --> 0:18:29.199 those local retail outlets. Retailers are using their stores for 0:18:29.320 --> 0:18:33.120 multiple purposes, like fulfilling online orders, and so you see 0:18:33.160 --> 0:18:36.159 this whole synergy between the physical and digital world. And 0:18:36.240 --> 0:18:40.199 so while you have this increasing demand for space because 0:18:40.200 --> 0:18:44.080 of this multiple purposes, you have really had almost no 0:18:44.320 --> 0:18:47.480 new supply net new supply, and there's individual markets where 0:18:47.520 --> 0:18:50.560 there's been obviously retail construction. But if you look broadly 0:18:50.600 --> 0:18:54.000 over the United States, retail sales since the Great Financial 0:18:54.040 --> 0:18:57.480 Crisis have almost doubled, you know, they're eighty five eighty 0:18:57.520 --> 0:19:00.520 six percent increase since that period of time. Us GDP 0:19:00.600 --> 0:19:02.760 has gone up by thirty percent, population has gone up 0:19:02.760 --> 0:19:05.439 by almost ten percent. Retail square footage has caught up 0:19:05.440 --> 0:19:08.680 almost nothing during that period of time. So the industry 0:19:08.720 --> 0:19:12.200 has kind of done a very good job of growing 0:19:12.520 --> 0:19:16.480 out of the financial crisis, but has not built a 0:19:16.480 --> 0:19:19.320 whole lot of new supply, and quite frankly, there's probably 0:19:19.320 --> 0:19:20.960 not a lot of new supply that's going to be 0:19:21.000 --> 0:19:23.480 built over the course of the next couple of years. 0:19:23.880 --> 0:19:25.600 One it takes a long time. Even if you could 0:19:25.640 --> 0:19:28.400 start today and see I'm going to commit to build 0:19:28.440 --> 0:19:31.360 a whole lot of new retail square footage, it would 0:19:31.400 --> 0:19:33.480 take a number of years for that to come on site. 0:19:33.600 --> 0:19:35.280 And of course we had, you know, the cost of 0:19:35.280 --> 0:19:37.520 capitalism significantly over the course of the. 0:19:37.480 --> 0:19:41.280 Last Once again we see how higher rates actually impair 0:19:41.400 --> 0:19:44.359 the supply side. This casetail so supplying to man so 0:19:44.440 --> 0:19:48.119 occupancy in particularly in the open air space is that 0:19:48.280 --> 0:19:49.399 historical highs. 0:19:50.240 --> 0:19:52.800 Vacancy is exceptionally low. And when you hear of these, 0:19:53.800 --> 0:19:56.040 you know, large retailers that are that have filed for 0:19:56.080 --> 0:19:58.560 bankruptcy and they're closing locations like a bed bath and 0:19:58.640 --> 0:20:01.439 beyond and so forth. There's typical multiple bidders for that 0:20:01.560 --> 0:20:05.120 space almost on the day it becomes available, because it's 0:20:05.160 --> 0:20:08.760 well located and because there's this demand for physical space, 0:20:08.800 --> 0:20:11.760 and whether it's filled by one retailer or multiple, they'll 0:20:12.040 --> 0:20:15.199 the owner developer. May you know reconfigure the space if 0:20:15.240 --> 0:20:18.040 they have multiple possible tenants for it. 0:20:18.240 --> 0:20:20.480 I feel like we need a moment of silence for bed, 0:20:20.480 --> 0:20:23.600 bath and beyond the place where I think probably eighty 0:20:23.680 --> 0:20:27.240 percent of people in America have bought like the essentials 0:20:27.280 --> 0:20:29.639 for their first apartment or house. 0:20:30.119 --> 0:20:30.439 Tom. 0:20:30.520 --> 0:20:33.800 You know, you mentioned the space restrictions there. How much 0:20:33.840 --> 0:20:38.360 of that is the higher cost of funding the PTSD 0:20:38.680 --> 0:20:43.800 from the pandemic versus people writing off physical retail for 0:20:43.960 --> 0:20:47.040 years now. I mean this was a story even in 0:20:47.080 --> 0:20:50.520 the early to mid twenty tens, the idea that well, 0:20:50.640 --> 0:20:53.520 people just aren't going to go to shopping malls. Everything's 0:20:53.520 --> 0:20:55.640 going to be superseded by online shopping. 0:20:56.480 --> 0:21:00.479 Well, the biggest factor in the challenge around supply is 0:21:00.560 --> 0:21:02.960 just the lack of construction. And the lack of construction 0:21:03.119 --> 0:21:06.040 really was, you know, I think a byproduct of the 0:21:06.080 --> 0:21:11.640 Great Financial Crisis, owner developers, you know, being resistant to building, 0:21:11.800 --> 0:21:14.760