HomeGoods, Harbor Freight Tools, Sierra in Keene, NH with Chris Ressa
Topics: Homegoods, future retail trends
Chris Ressa 0:07
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.
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A non typical retail magazine article,
newspaper, public publication that reports on retail openings to me is always interesting whoever that might be in this case, it was NPR. That means it’s starting to get widespread that something that most people don’t talk about a lot is front and center to everybody. And that being retailers are opening stores at a rapid pace. I think the next question that comes from that is what stores are opening. And so I have five categories. And I’ll put a bonus six that I think you’re going to see open over the next few years. And I’m going to give you why I think those are the stores that are going to continue to open. So let’s start from the top. Number one.
Value stores value value value after the Great Recession in 2008. The amount of consumers that were craving value hit record numbers, probably the most since the Great Depression, and that never waned. Consumers are continuing to crave value. And as I’ve said before, the most affordable way for retailers to provide value to the American consumer is through a brick and mortar store. And I believe you’re going to continue to see retailers open stores that are providing a value proposition to the American consumer. Number two, specialty retail. This sector obviously exploded online. It’s continuing to grow online, but is extremely busy online. Their pre pandemic, it was reported that there were approximately 1.8 million online stores as high as over 2 million today just in the United States. It is hard to get seen online. It’s costly to get seen online. Online will still grow. But specialty retailers have a distinct advantage with a brick and mortar store. They provide a compelling reason for a consumer to come to that store, a differentiated product a unique Offering our service. And the commodity business is tough. You look at Walmart, Target, Amazon, this race to the bottom and price and this race to the bottom and speed of how fast can I get the product to the consumer, it leaves a huge opportunity for specialty retailers. specialty retailers are those retailers, many different product segments, but typically they have depth of product. They have variety and product, variety and brand. And many products that you might not see on Walmart, Amazon target. And those retailers probably don’t necessarily want to get into some of those specialty products. I believe that creates a huge opportunity for brick and mortar stores. And you’re going to continue to see those types of retailers, open stores in American shopping centers. I think this is great for the consumer, we are about to see more unique products than we’ve ever seen. Things that can help our lives make our lives easier, more fashionable, more fun. And I’m excited to see that number three, service, whether that’s the personal care, industry, health and wellness, we are going to see service uses continue to open up. They are more technology resistant, potentially. And there’s a lot of new services that continue to open ideate. And I think that when you look at shopping centers across America, Americans continue to need more unique, different, interesting services. And it doesn’t seem there’s an end in sight. For more services that continue to open up. They make the shopping experience more interesting. They make our lives better. And I think you’re going to continue to see services continue to open up fourth, food and beverage, there were many restaurants that have closed shop in the last 18 months. And while grocers have continued to grow, and I’m very bullish on grocers, there’s still market share for the American consumer that wants to dine out. And we’re going to see more and more food and beverage operators, open doors, it might look different, you might have drive throughs, you might have just walk up pick up. But it we are going to see many new restaurant concepts open. And I’m excited for that as well. Five experience stores that create this unique experience is going to be something that continues to expand. Clearly Americans have said that they want to get out of the house. And I think that’s going to be a trend that stays and does not wane. And then the bonus would be convenience. This isn’t new. But then I don’t just mean convenience stores as many might think about them. But stores that are very focused on convenience where customer can get in and out quickly. But have that instant gratification and on demand. Product I think we’re going to see continued to grow. So I see articles being written about record pacing stores opening. I think that continues. Those are some categories that I think really are going to be the ones you see open many, many stores. Okay, I want to move us to clear the air. For those who don’t know, this is a segment I ask every guest that comes on the show, ask them three questions. Those three questions are what is one skill you don’t possess what we should did? Two, when’s the last time you tried something for the first time? And three? What is one thing most people agree with? But you do not. So let’s get started. Question one. What is one skill you don’t possess but what you did? For me? That’s photographic memory. I have pretty good memory. But man the concept of walking into a room or not having to schedule anything on my Outlook calendar because I remember every single meeting, man doesn’t sound good. Well, every year I choose one interesting skill that I want to improve that last year was copywriting. I hired a copywriting coach. This year. I hired a voice coach. And I’ve worked with her took a little hiatus and getting back on that I thought about hiring a memory coach. I actually connected with the US memory a former US Memory Champion. Yes, there are memory championship competitions and there’s a national champion. But when I connected with was Chester Santos,
he has a class. He does private lessons. And I’ve been doing some homework, still in discovery mode. But who knows? Maybe in 2022. I will hire a memory coach. Okay. Question two. When is the last time you tried something for the first time? Well, that one is simple for me. This week, I’ve been on vacation in Maine. And I went on lobstering hold, big family event in Maine. My in laws, my brother in law, my sister in law, her boyfriend, my kids, my wife, we went on a lobster boat caught 35 lobsters. Pretty cool. So last time, I did something for the first time this week going out on a lobster boat catching lobsters. Last question. What is one thing most people agree with, but you do not. For me, that’s simple. Work smarter, not harder. Of course, I believe that. Being more efficient, working smart is important. No doubt. I just don’t love the phrase. It gives the connotation that working hard is not important. And everyone I know who’s been super successful has worked really hard. If you put your mind to a goal, you make the appropriate sacrifices. You stay laser focused. You have this passion and are diligent in pursuit. It makes attaining the biggest goals achievable. And, you know, I kind of grew up with this driven and me work ethic that, to me, having strong work ethic is important. I’ve attained a lot of goals by just grinding through and working hard. Of course, I would have liked to have work smarter. Of course, I love learning techniques to work more efficiently. It’s just not a substitute for working hard. It should be work smart and hard. Okay, so let’s clear the air for Chris ReSSA. Let’s talk about a story. Let’s go to Keene New Hampshire, Keene New Hampshire, we own two properties, Hero Plaza and Riverside Plaza. They’re across street from each other. Riverside Plaza is home to Walmart, it’s a division one Walmart, which means it’s a general merchandise store. It’s not a super center I’ll be at they do sell some grocery items. Adjacent to that was a Shaw’s grocery store, a major new england grocery store chain. And Shaw’s decided to go dark, they closed a bunch of stores, this being one of them. Yet, they still had about seven or eight years more lease term. So they were still paying rent. Which is interesting. Because as an investor, the center is now more vacant, less foot traffic, but at the moment cashflow still the same. And to replace that cashflow with either improved, or similar cash flow would cost millions of dollars meaning to return in that box 65,000 square foot former grocery store with someone who is multimillion dollar endeavor. So to spend millions of dollars and get the same rent is a tough thing to do. And terminate shows that having another tenant doesn’t make financial sense. And most lenders would not let the borrower do that. They’ve got a strong credit worthy tenant on a lease supporting the collateral. So it makes it a little bit of a conundrum to figure out how to reinvent this property. The first step for us was, let’s just see what the demand is. We’re looking for users both for the entire space and for portions of the space. First tenant that showed some interest was home goods. The center across the street that we own has TJ Maxx, same parent company owns TJ Maxx and home goods. We started working on a deal with home goods, but that wouldn’t have been enough to allow us to turn a Shaw’s. So we had to keep HomeGoods moving yet have them understand that we’re still working through Shaw’s and that it might be a little bit of time so we had to keep them there and now they’re interested in the market. They want to be in the market. So a little bit of risk that could go somewhere else. But we had the top anchor in Walmart and good position in the marketplace yet. Not certain when I could actually get possession of the space. What really would dictate that as other tenants. So we continue to take the box tomorrow. Get basing the future plans that were going to have home goods. And we were able to drum up interest from Harbor Freight tools. And the combination of the two was enough cash flow and occupancy to start the conversation with shots, which was not a short endeavor was a long endeavor to try to figure out a termination with them. All the while keeping them harmed them being Harbor Freight tools and home goods. Moving along and saying part of this, the redevelopment Well, we kept talking to TJ X. And lo and behold, we’re able to turn up another opportunity with them, which was to bring Sierra Trading to the property. And Sierra is like an off price Rei. It is another chain owned by the parent company that owns TJ Maxx and home goods. And they were going to take the third box adjacent to Harbor Freight tools, which is addition to home goods, which would lease approximately 59,000 of the 64,000 fee. And that was enough to be able to terminate Shaw’s satisfy a lender and redevelop this property. And we ended up making all three and I’m proud of it because the car was signed just before the pandemic and they opened in 2021, completing the redevelopment of that box. And, to me, it’s just a culmination of a lot of hard work. A lot of finesse with keeping all three tenants engaged. But yet patient while in the background, were negotiating determination with some major grocery store chain, who was, you know, trying to do the best for their organization as well. And making sure we did things so that the lender would be satisfied with what we were doing. And we had the ability to execute on all this. And that’s to do something like that is a total team effort. And I brought it up because it kind of brings me back to the beginning of this conversation today. Which is there all value retailers. There all specialty retailers, tools, outdoor and workwear home furnishings, they all are increasing traffic to the center. Now, it looks great. They’re convenient, you can drive right up, hop in one store hop out with the home goods and car and the off price model and the treasure hunt. There’s this experiential shopping that goes on there. So they’re really on trend. And it was a way for us to really fortify the property. We now have long term leases with those three tenants, we renewed Walmart on a long term. So this is anchored by credit worthy tenants diversified credit mix, strong credit, great brands, generating a lot of traffic, great for the investment. Great for the community, and great for the ancillary retail all around. So that’s why I brought that one up today. You’ll be hearing more from me and some more stories. But if you get the opportunity, go to our website, VLC mgmt.com and check out that site plan and the property because I think it’s a really good story. All right, everyone. Thanks for checking in. Really appreciate it. Keep listening. We got a lot more common on this podcast for the balance of the year. Take care everyone.
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