CVS in Hamden, CT with Andrew Callahan
Guest: Andrew Callahan
Topics: CVS, Venture Retail Partners
Transcript:
Chris Ressa 0:01
This is retail retold the story of how that store ended up in your neighborhood. I’m your host, Chris Ressa. And I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC management.
I’d like to thank one of our sponsors, retail openings and closings.com. In today’s dynamic retail landscape, tracking openings and closings before they take place has never been more important. Having this intelligence is an undeniable competitive advantage, retail openings and closings.com also known as Rock Tracks, future openings and future closings, comprehensive, accurate and reliable. The rock is your crystal ball and the key to making well informed decisions with confidence in today’s evolving retail climate. Welcome to retail retold. Today we have Andrew Callahan from Venture retail partners out of Boston. Andrew has been in the commercial real estate business for the last 16 years and started his own company with his partner six years ago. And we did a deal with Andrew in Hamden, Connecticut recently, although the deal took a long time. And but we’re excited that the tenant opened. And I’ve known Andrew for probably the entire 16 years, so I’m excited to have him on the show. Welcome to the show, Andrew.
Andrew Callahan 1:30
Hey, Chris. Thanks for having me. Appreciate it.
Ressa 1:33
Yeah, man. So Andrew, why don’t you tell a little bit about who you are, what you guys do and what you’re up to and all that good stuff. Sure.
Callahan 1:40
Thanks. So my name is Andrew Kalyan. I’m co owner with Trevor mcnevin of boutique brokerage shop based in downtown Boston called Venture retail partners we focus much like DLC in predominantly retail real estate. Most of our business is tenant representation. So we represent Starbucks, Chipotle flooring decor, planet, fitness, CVS, to name a few. We also work with landlords, both regional, national and local, on the other side of the transaction, working to fill vacant space. So like Chris said, I’ve been at this for last 16 years and our shop is about six years old. That’s a quick quick summary of who we are.
Ressa 2:31
And what percentage is for you guys’s tenant rep versus landlord.
Callahan 2:36
I’d say 70%, tenant rep. cetera. All right. And
Ressa 2:45
so you’ve been at this 16 years. Obviously, we’re in unique times you were in the great recession. And now we’re where we are today. What are you seeing in the market today? You represent tenants for a variety of different uses pretty large geography in New England. Yeah. What do you what are you seeing today? What’s going on in the market? Yeah.
Callahan 3:05
So we work New England, and we do some work in upstate New York. So we’re licensed in six states and transacting in all of them pretty regularly. We do a fair amount of work in downtown Boston to with some local restaurant groups and consulting stuff like that, as well. So, you know, there’s definitely been, you know, an obvious slowdown across the board. Downtown Boston, because of just lack of workers right now. Is very slow. We have some landlord projects in around the financial district and Back Bay. And without that employee base, being here. Most retailers, banks, restaurants, what have you are really hesitant to pull the trigger on anything right now. estimates that I’m getting from some big office landlords is that it is, you know, five 6% of the employees are actually using the offices regularly right now, with a lot of big companies targeting, you know, early 2021 to start getting their staff back in. So it’s pretty quiet downtown Boston.
Ressa 4:20
What about in the areas where
in downtown Boston where people live?
Callahan 4:25
Yeah. So you have you know, you look at the the neighborhoods, Back Bay, South Boston, East Boston, you know, it’s better than the financial district, but overall, the amount of tenants we’re seeing active in the market has shrunk quite a bit. A lot of local or regional tenants or maybe it’s someone that owns two restaurants in is going to open a third. All of that is kind of gone on the back burner as far as we can tell. The only growth and action we’re seeing are a lot of it is from from now. Rational credit groups, whether it’s bank, trying to finish deals, to Starbucks that Chipotle is of the world, you know, bigger restaurant groups with 100 units that have the cash flow in the wherewithal to look down the line a couple of years to get, you know, their pipeline
full. One of the
Ressa 5:18
things we are seeing and being a landlord in multiple markets is we’re actually seeing this, what I would call pickup in activity in the suburbs. And we’re still seeing some challenge in the, you know, in the CBD and the main metro cities. Are you seeing better activity in suburban America, suburban New England.
Callahan 5:43
We are, you know, a lot of our tenants are all still pretty active. We’ve been working on deals with our, you know, our major clients, really throughout the whole endemics since March. But the burbs where you know, a couple of our tenants are drive thru tenants like Starbucks and Chipotle where their sales are done well throughout this whole thing. But yeah, we are definitely seeing a bit of an uptick in in the burbs, especially closer to Boston, where you have kind of an affluent population base, when you push out to, you know, some of those, you know, more more to serves three outer markets, it seems to be pretty slow.
And you mentioned that the 10 inch,
Ressa 6:31
you know, that you guys represent whether that’s Starbucks flooring, decor, CVS, and you represent one of the dollar stores, right, or
Callahan 6:39
not anymore. We used to do dollar generals work up until a couple years ago, and then step back from it. We’re doing seven elevens work now to for the city and for convenience stores. So they’ve been one of our active tenants in Boston. And we’re doing the gas convenience store work for them. In the rest of Massachusetts,
Ressa 7:01
and are are you seeing the you know, the spikes in the slowdowns? Is it more about the types of uses? Is it more about the geographies? What’s driving, who’s active who’s not?
Callahan 7:14
I think it’s the types of uses. Mostly it’s groups that
have been able to remain open and drive strong sales. You look at Florida core, for example, which is, you know, 80 90,000 square foot big box. They were deemed an essential retailer and most states. And because of that they saw sales bump nationally. And, you know, the stores were all open throughout the last few months and performed quite well. Because you got the end of the day, a whole lot of people sitting at home looking at whatever Do It Yourself renovation project you want to do?
Are you
Ressa 7:56
doing anything different? At you know, now, how do you see as a boutique brokerage firm? How do you see yourself, you know, operating in a post COVID World anything you guys are changing, or you think you have to pivot on? Because business has just changed?
Callahan 8:13
Yeah, I mean, what we’ve done and been able to do is kind of twofold we best focused all our energy on or most of our energy on, you know, our, or our active clients. You know, we’re still working our landlord projects, of course, but a lot of stuff where, you know, you could have before gotten pulled in too many different directions, or maybe had too many projects going on, we’ve really been able to narrow the focus and, you know, deliver the best service possible to the groups that are actually active we work with. Secondly, you know, were out talking to landlords, were looking at, you know, long term opportunities, calling on all sorts of sites to, you know, bring to our developer clients, and maybe we work, you know, as a landlord broker. You know, whether it’s kind of a local restaurant that might have a good piece of real estate, where we’re pursuing opportunities that way too.
And do you see
Ressa 9:14
a change? Is this going to change the brokerage industry? Or at least the CRE brokerage industry? Let me clarify in the in particular retail, I’m talking about the stock market, but the care brokerage industry, is there. Is there going to be less tenant reps, is there going to be you know, if there’s, you know, a change in tenancy is there what is there anything unique you think you see on the horizon?
Callahan 9:39
I think, I think like any economic setback, it’ll tend to hurt a little bit. And people with, you know, the strongest relationships and work ethic will definitely be able to prosper on the backside of this and if there’s gonna be a lot of opportunity. You just got to kind of get out there. So I think it will kind of separate, you know, stronger brokers from from not so much. Will there be as many tenant reps? Probably, I think I think tenants will, for next few years anyway have the upper hand to some degree, just because there’s less tenants active right now. You know, we’ve always prided ourselves as a company, on being able to do the urban Boston work as well as the suburban work. So we’ve really kind of straddled both. So in an event like this, which, you know, no one could see coming, we were able to just really pivot to more suburban real estate work in downtown stuff.
That makes sense. And that’s an interesting pivot.
Ressa 10:49
A lot of firms are very focused on, you know, they’re either suburban guys or city guys, and having that being able to do both clearly is going to be advantageous for you. Your business requires you to travel or you’re traveling now.
Callahan 11:05
I’ve toured with clients. So we’re not, we’re traveling within New England, but it’s, you know, kind of a caravan. We’re actually really fortunate where a handful of our retailers who work with have in market representatives, were able to look at real estate deals pretty easily. So we’ve done some downtown city tours, we’re walking around the mask on and done, you know, a bunch of tours where, you know, one car falls the other you get out at the site to talk about the market and put it on speakerphone, it works. It’s not as good as being in the car together, but it’s fine. Makes sense? Yeah,
Ressa 11:41
I haven’t been on a plane yet. But I suspect at some point soon, I’m gonna have to get on a plane for, you know, work, although, you know, we’ve been able to really do a lot virtually where we couldn’t before, right?
Callahan 11:53
Yeah, I mean, we have we also have clients that are based all over the country that, you know, work for publicly traded companies and HR isn’t letting them fly in.
Yeah,
Ressa 12:04
to tender those, or is that slowing deals down? Are they willing to do things virtually?
Callahan 12:10
It’s probably slowing some new, like brand new deals down? It’s just the size of the investment. It’s hard to not see it on the ground.
Sure. You can push a lot along virtually. Yeah, you can. All right.
Ressa 12:28
Well, you know, we’ve known each other a long time. And we, our companies, ended up putting a CVS deal together in Hamden, Connecticut. And I think it’s an interesting deal. It’s it was a good one for I think everybody and let’s talk about that. Tell us the story about it was I landed CVS in Hamden, Connecticut, it was it’s a
Callahan 12:50
long time coming. So they opened a couple months ago now. But I had to actually check my notes before we did this. And the first letter of intent we submitted to you was August 2015. So five years ago, almost to the day. But so I worked in parallel with a CVS developer, I still work with them. So they go around and bilan and permanent on CVS as behalf and I had initially reached out to your team, I think, early 2015, which tell everyone how long some of these deals can take, to see of developer by that nice corner piece in Hamden, Connecticut. And the answer was a pretty quick No. And from there turned into a ground lease from CVS, but it was maybe a year back and forth and figuring out the plan and you guys had to move tenants and build a new building, right?
Yeah, we
Ressa 13:48
had to this was an ground up building, we had to terminate some tenants move some tenants, knocked down a building, then prep, prep the pad for CVS and get them ready to for them to build their building. So a lot of moving pieces to make that happen for sure.
Callahan 14:08
The lease I think, got signed 2017. And then a few years of permitting and year of construction. And here we are. There’s a couple of
Ressa 14:21
interesting things. I think one of the challenges we had was, you know, the property kind of was changing as we were working on this opportunity. We had a vacant grocery store that ended up turning into a trade school, which which ended up you know, loosening up some of the back and forth negotiation on the restriction side, which was definitely a hang up I know between our teams for a long time on what CVS wanted to protect and what we wanted as the landlord to be able to not be a excluded from doing and, you know, I think that happens. And I think that’s interesting on a go forward, the, you know, tenants and protecting uses and landlords and having flexibility and able to redevelop centers is, is going to get interesting in a post COVID world?
Callahan 15:18
Absolutely. You’re going to need, I think, as a landlord as much latitude as possible on unused going forward, because it’s, I think you’re gonna see more storage, more medical, more
technical schools popping up for some of these big boxes. Yeah,
Ressa 15:40
I think that’s, that’s true. And so, you know, for the listener out there who doesn’t understand we got to we got a store open in 2020, where you first identified the site in 2015. I think that’s not ideal for anyone, right, ya know, everyone’s trying to do things faster. But I think
Callahan 16:02
one of the things that’s
Ressa 16:05
clear is that real estate development takes a while to get done, especially when you’re knocking down buildings and moving tenants around. So it brings me to a couple of things. One, you know, CVS clearly had the site they wanted identified, they wanted that specific corner. And, you know, they, they hung around the hoop, and they weren’t going to, you know, sacrifice their the real estate in order to move quicker, which I think tenants do a lot, or, or operators do, and in any use, and I think the other thing is just sometimes, you know, the whole process to get it permitted, approved all that. I think to those out there who think things, you got to have a lot of things in the hopper, because things take a long time. Even if you’ve got the best of teams working as fast as possible. There’s some uncontrollables that you can’t you can’t move
Callahan 17:08
faster sometimes. Yeah, absolutely. You know, there’s
some challenges I remember what the site in the city Hamden with layout and how they wanted the building to be positioned and a lot of stuff to work through that. Yes,
Ressa 17:25
we had a park next, there was a city owned park next door, and we had have tried to position the building so it wasn’t on the park. And because of their square footage, they wanted to be on that. They thought we might need that park and we had drive thru considerations. And I had to get consents from other tenants to do it at a move tenants, I had to knock down a building these things I think somebody who drives down the street and looks at something and goes, Why don’t they just do this over there really needs an education on all the things that really go into a real estate development happening, right, you know, we needed first we needed to come to terms. And once we come to terms, we got to get design figured out for how this is going to really lay out gotta get the city on board. We need a tenant consents, we had to move tenants. And when you put all these pieces together, a lot of things that happen. Anyone out there can imagine a lot of those things take time.
Callahan 18:30
When you’re dealing with the municipality, you know, you go in for a meeting presents and then they make changes and then you can’t go back for a couple months or a month or what have you make more changes. So you’re you’re inevitably spending a ton of time and energy and money trying to get the plan right before you even put a shovel in the ground.
Ressa 18:52
Yeah, yeah, it’s, it’s definitely a time factor that
I wish we can move faster. I think the world is trying to figure out ways to move faster, I think in a post COVID world where we’re going to have to everybody’s going to have to be more creative, both tenants, landlords, brokers, municipalities, architects, engineers, I think the real estate world needs a level of creativity that it hasn’t had before in order to move things along. Because I think if things at scale, take five years, it’s going to be problematic for everybody.
Callahan 19:30
I think so too. And I think a lot of not all but a lot of municipalities will work to fast track projects to start bringing back some of the revenue base. Yeah,
Ressa 19:42
yeah, that’s a that’s a that’s a great point. I think that’s going to be important in municipalities on a go forward or a sales tax revenue that happens because of retail in particular, you know, offsetting a lot of the the other costs and with some vacancy that’s occurring, right? Now that that revenue is clearly potentially compromised in places
Callahan 20:04
agree, and I think we’re starting to see it a little bit with some of the people we work with that, especially with drive throughs I think they’re gonna start looking at it a little differently now that you know, our home doesn’t want to go into a location. So you know, a lot of towns, especially in Greater Boston are have drive throughs prohibited and their zoning code and some of the conversation we’ve stations we’ve had with local municipalities where they’ve been more open to special permit for zoning amendment for a drive thru. I think you’ll see that more and more now to
Ressa 20:44
Yeah, there are some municipalities that have been very strident in putting moratoriums on Drive. throughs. So,
you know, in this deal that, from first loi to store opening, took a long time with anything you would have done differently.
Callahan 20:59
To tough on,
Ressa 21:04
don’t like to ask easy ones.
Callahan 21:06
And And now, you know, everyone did work pretty well together. There was just so many moving pieces that to get it done and open. Took a long time. I don’t know if there’s much that could have been done differently, you know, saved a year, you know, time off the negotiation. Yeah, that
would have been great. But,
you know, the permanent kind of is what it is, and the site plan has to work. And it all has to work. And it did at the end of the day. It took a whole bunch of persistence from everybody. And I’m glad you guys hung in there. And I’m glad we did.
Yeah, I think that’s something
Ressa 21:49
that that’s important is, is there has to be when you’re doing like major redevelopment like this, there has to be an expectation on both parties have some reality that, you know, if someone’s looking to get it done in 90 days, and they have unrealistic expectations, you probably go nowhere real fast, there has to be, you know, as an X an understanding of how this is going to work and how it’s going to play out.
Callahan 22:22
In in order
Ressa 22:24
for it to happen, I’ll give you one, we had a tenant in a different deal. That what they did was
Callahan 22:32
from loi,
Ressa 22:36
down to store opening before like in that process. They gave us a this was a while ago, and something I’ve been thinking about implementing, they gave us a while ago, this is going to be the process. In one week, you’re going to respond to this. Two weeks later, we’re going to respond. This is when someone’s going to go and do this. This is when the lease is going to go out. This is who’s gonna say, Oh, Bob and Mary have a vacation on this week. And so that’s something that’s was interesting to me, is that it really put that work. It’s a great question. Are they able to stick to
Callahan 23:12
something? Yeah,
Ressa 23:13
I think I think in general, it worked. I think, quite candidly, it was pretty new to us. Sure. And so it’s something to think about on deals going forward if everyone’s committed. And oftentimes, in the LOI phase, there’s this negotiation, and someone doesn’t want to, you know, tip their hat, and therefore, that might give things away. But if everyone’s committed to try to make it work, to get to the finish line faster, really setting that out, is probably prudent to do for both parties. You know,
Callahan 23:50
it’s an interesting approach. Yeah. It’s what is a common sense approach to
Yeah. Yeah. And I think the part that you can’t account for are the uncontrollables. You know, we we had a, one of the tenant, we had a tenant who we were
Ressa 24:10
working out a termination deal with, they were a franchisee, they were going to have a major tax problem for terminating, although they didn’t want to be in the center anymore. So we had to solve for that. We had to wait for
Callahan 24:20
one lease to roll. And then, you know, we had to go get
Ressa 24:25
consent because we were building a new building and changing the site plan from other tenants. And so all those things where you you’re the way my legal team tells me all the time is like every deal is no longer one deal, right? We just talked about that right? The CVS deal in hand and connect it really wasn’t that there’s a million deals there’s a deal with the the tenant consents there was a deal with the terminations there was a deal with the siebler Yes, there’s like five deals. Yeah. Right. There’s a lot of one deal is really like six deals. And so in
Callahan 24:58
all your future dealings with the senator Oh, yeah.
Ressa 25:01
So I think that is something that people need to consider when they’re when they think they’re doing one deal and be prepared for all the things that really have to get done. At a minimum, I think it is really complicated real estate development deal like that one. I think, you know,
both parties were pretty sophisticated, who had done real estate deals like this before, which really helps, right? You had CVS, who’s done a million You had us who’s done a lot of these types of deals.
So knowing where the,
you know, that traps might be ahead, is really helpful so that you can plan accordingly if, if you have unexpected traps that derails real estate
Callahan 25:47
development, right. So
Ressa 25:51
anything else about a CVS in Hamden, Connecticut, we didn’t talk about that we should talk
Callahan 25:56
about? Not that I can remember. It took a long
Ressa 26:00
time, that’s for sure.
Callahan 26:02
It was happy to see it open. It opened in the middle of, you know, pandemic two, which is great, and just an essential retailer. And it just goes to show you how important in strong some of these credit retailers can be right now to keeping you know, some level of activity in the in the shopping center.
Keep totally, totally agree. We’ve had a few
of our clients open stores in the last couple of months. So it’s been nice to say
yes to so.
Ressa 26:38
It’s we’ve had tenants opening and we’re continuing to sign leases now. So all right, well, listen, this brings us to the last part of the show retail wisdom. Okay.
Callahan 26:49
Um, at this point,
Ressa 26:50
I got three questions for you ready?
Callahan 26:53
I’m ready. Question one. What is your best piece of commercial real estate advice? Be persistent.
Be persistent. Be persistent, when you are representing a tenant. And you know, they want to be in a certain market or certain corner.
Don’t give up on it until you have answers. You know, make sure
you flush every opportunity out and just be persistent. Stay on top of people because you never know when someone’s timing is going to change, or someone’s situation is going to change where they’re going to be ready to make a
deal. Yeah, that was definitely the case here.
So it bugged you guys for a while.
Ressa 27:40
Yeah. The second question? What extinct retailer Do
you wish would come back from the dead?
Callahan 27:50
That’s a good question. Ames. Ames
Ames old school. I think it was 2003 when they went out of business and somewhat nostalgic for me because there was one right down the street from where I went to college, where we used to buy all our stuff.
There are our apartment. Where do you go to school?
St. Michael’s and Winooski Vermont.
It’s now a Lowe’s. Ah, got it?
It was it was one of those stories when you were younger in college and had everything you needed.
Ressa 28:22
Totally My parents just taking the Ames and James way all the time. So. So
Callahan 28:26
one that’s on the brink right now that I hope doesn’t go away as the Angelo’s just because
I like their food.
Ressa 28:34
Are they you know, I haven’t kept up Are they close? Are they are they on the bubble here?
Callahan 28:38
Yeah, they’re on the bubble. I think they filed.
Oh, did they? Yeah, they closed they closed a fair amount of them. Got it. Last question. So I need a new garden hose.
Ressa 28:56
I am on Home Depot’s website looking at the HDX 15 foot remnant garden hose 15 foot not that long.
Callahan 29:04
You know what is the 15
Ressa 29:09
foot revenant garden hose by HDX retail for
Callahan 29:15
boy 2199 948 But thank you for playing. Yeah,
I lived in a condo for a lot of years so
Ressa 29:28
well listen,
Andrew, this has been awesome. Thanks for coming on. I appreciate you telling the story man and this will go out soon.
Callahan 29:38
All right. Sounds good. Appreciate your time.
Ressa 29:41
Thank you for listening to retail retold. If you want to share a story about a retail real estate deal that you were a part of on our show. Please reach out to us at retail retold at DLC mgmt.com This show highlights the stories behind the deals from all perspectives so it doesn’t matter if you are a retailer broker entrepreneur architect or an attorney Also don’t forget to subscribe to retail retold so you don’t miss out on next Thursday’s episode