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Speaker 1: Toma David hearing things so much, David Gurr in Washington.
Speaker 1: I'm Tom Keenan New York. This is a treat we
Speaker 1: could literally go. It's like Howard Divinovan's, but calmer and
Speaker 1: more professional. Think of Howard Divinovo's at Harvard Business School.
Speaker 1: And that's sort of where you get Byron carlac is
Speaker 1: with us with p w C. Price Water. I'm sorry,
Speaker 1: it's Price Waterhouse Cooper's because that old t W seen
Speaker 1: in Byron has a Texas accent. That's what you do
Speaker 1: when you work with Tramwell Crow for a million years.
Speaker 1: I go to your old website and there are no
Speaker 1: males on that website. Even Crow Holdings is like almost
Speaker 1: embarrassed about malls. Are malls dead? You know? It's interesting.
Speaker 1: I don't think they are dead, but they're changing relevance.
Speaker 1: And so when you think about what's happening, there's a
Speaker 1: huge disruption in the middle. And there this comment that
Speaker 1: we keep caring. Mediocrity in the middle is dead. Experiences
Speaker 1: are actually pretty exciting. There's a lot going on in
Speaker 1: some of the better malls, and they're grading themselves A,
Speaker 1: B and C. The A malls are doing quite well,
Speaker 1: but everything is being disrupted by e commerce and relevance.
Speaker 1: Do they get bulldozed? The seam walls, the B malls
Speaker 1: get bulldozed. What becomes of those photos that we see
Speaker 1: in every article about the death of your world. Well,
Speaker 1: in real estate, it's called adaptive reuse. And once you
Speaker 1: see a developer take control of a site again, excuse me,
Speaker 1: adaptive reuses what we do with a coffee continue. So
Speaker 1: imagine that one anchor at one end being torn down
Speaker 1: and released to someone else, or becoming an apartment building
Speaker 1: or a hotel. If you think about when those malls
Speaker 1: were built, generally many of them were built because traffic
Speaker 1: counts were high in the location was good, and so
Speaker 1: you have great sites that can be redeveloped or repurposed.
Speaker 1: But the bottom line is we're over retailed in America
Speaker 1: twenty four feet per person twenty four gross rentabal square
Speaker 1: feet per person, more than double any other industrialized country
Speaker 1: in the world, and more than double any other con Yes, yes,
Speaker 1: I believe the next country is eleven square feet per person.
Speaker 1: He's looking at you, David, jump in here because Byron
Speaker 1: is looking at his numbers from BWC. Byron I was
Speaker 1: at I was at a wedding a couple of weekends
Speaker 1: back outside of Washy should have fifty miles outside of town,
Speaker 1: and we were. We were in what I think you
Speaker 1: could call them all. It felt like a created village. However,
Speaker 1: the notion of them all has changed, hasn't it what
Speaker 1: you what you'd find there and what it looks like,
Speaker 1: it really has. I mean, think about the different uses
Speaker 1: you see in them all today compared to what you
Speaker 1: did even five years ago. Where automotive companies are using
Speaker 1: them as showrooms. You see health, wellness and fitness taking
Speaker 1: the place of traditional apparel retailers. Uh. You see landlords
Speaker 1: introducing new concepts that inspire visitation with families and children.
Speaker 1: You see that um health health uses taking space in
Speaker 1: retail configurations, and so yes, the the uses are changing
Speaker 1: to become more relevant to the demographics. When you look
Speaker 1: ahead a year, five years, what's the what's the role
Speaker 1: of a brick and mortar retail establishment going to be
Speaker 1: what's gonna, what's gonna, what's gonna compel me to go
Speaker 1: to that place? Well, so remember you know nine of
Speaker 1: sales are still done in brick and mortar uh situations.
Speaker 1: So e commerce is growing at twenty a year, but
Speaker 1: it still represents only eight and a half to eleven.
Speaker 1: You guys always go to the revenue line down the
Speaker 1: income statement and given mall, as David was mentioning, it
Speaker 1: had given mall, where's the profit? Is it in the food,
Speaker 1: is it in clothes? Or is there just no profit? Well,
Speaker 1: so the branded, the igh end branded retailers still pay
Speaker 1: the highest rents. Rents in many mall settings this year
Speaker 1: were flat to down two. So the rental strength, the
Speaker 1: ability for landlords to control the rents in many retails
Speaker 1: situations has changed to their detriment. However, the relevance of
Speaker 1: brick and mortar is still very important to the retail
Speaker 1: shopping experience. Based on how much is still done in
Speaker 1: brick and mortar environments. Out of these out of these
Speaker 1: businesses set themselves apart. You broke in most recent note,
Speaker 1: there's no room for mediocrity. Well, what's the chief thing
Speaker 1: that that a retailer has to do it. At this point,
Speaker 1: we believe it's the experience if the product can't differentiate itself.
Speaker 1: And there are there are designers that are really trying
Speaker 1: to add whimsy and reason to come try on their
Speaker 1: new Spring lines. For example this Spring, whether it's a
Speaker 1: pop up shop that's selling hats for the Derby or Easter,
Speaker 1: or a store that treats you like a guest in
Speaker 1: a hospitality experience that makes your experience that much better
Speaker 1: than sitting in front of your computer. I think it's
Speaker 1: driven by product on one end and experience on the other.
Speaker 1: Can I go to the French elections? Now? We got
Speaker 1: to do that. Here's a here's a factory, folks fare
Speaker 1: right now. There are thirteen thousand, three hundred tons of
Speaker 1: steel in the Mall America. That's two Eiffel Towers. The
Speaker 1: Mall of American Minnesota is like the mother of all malls.
Speaker 1: What's its future? That's a great question for that for that,
Speaker 1: not for that particular mall especially, you wonder can they
Speaker 1: keep the experience relevant so when it opened and really
Speaker 1: still people go to Minneapolis for mall vacations, for that
Speaker 1: particular vacation. But inside. Can they keep it relevant with
Speaker 1: the rides of the family experiences, the hospitality experience in
Speaker 1: the hotels. It has to be worth that visitation, and
Speaker 1: the question is can the landlord keep it relevant in
Speaker 1: that regard. We would like to have you back again
Speaker 1: to do a longer treatment. This is really the Amazon
Speaker 1: and the death of bricks and mortars topic one for
Speaker 1: so many people. Byron Carlac with US with p WC
Speaker 1: their US real estate practice as well this morning, and
Speaker 1: folks point from the emails that David and I get
Speaker 1: this is just extraordinary interest is of course, David, you
Speaker 1: could shop near our Washington studios. I tweeted this out
Speaker 1: looking out at your favorite clothing blocks away. I hope
Speaker 1: you dark in the door and went for the little
Speaker 1: I'll give you the key, David Guray in Washington. I'm
Speaker 1: Tom keenan New York stay with US Worldwide Coast to coast.
Speaker 1: This is Bloomberg coming up here on bloomberghre Valance of
Speaker 1: conversation about fixed income with the Fixed Income ce IO
Speaker 1: at Franklin Templeton. That's Chris Blamphy. That's coming up here
Speaker 1: on Bloomberg. Surveillance from Bloomberg Radio David Day in Washington Today,
Speaker 1: Tom Keane in New York