Pyscho Bunny in Tysons, VA with Drew Schaul
Guest: Drew Schaul
Topics: Brokerage, tenant representation
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. Welcome to retail retold everyone. Today I’m joined by Drew shawl. Drew is a Senior Vice President at CBRE out of Miami, Florida. He has been in the commercial real estate business for over 19 years. He’s got a lot of insights on the industry and a cool story to tell. I’m excited for him to be here. Welcome to the show.
Drew Schaul 0:41
Thanks for having me.
So Drew, tell us a little bit about you and who you are.
So I’m originally from Cleveland, Ohio. I grew up as the son of a retail real estate broker, which is an interesting upbringing to say the least. And went to the University of Wisconsin. They have a real estate program and undergraduate real estate program that I spent a lot of time in. And after college, I moved back home to Cleveland and worked with my father for three years and decided that Northeast Ohio wasn’t necessarily the best retail real estate environment to build a brokerage business, the way there was more opportunity and other markets in the country and I had you know, been to South Florida a couple of times on vacation over the years and liked the lifestyle, the weather, etc. and decided to make a move to Miami in 2005 and took a job with CBRE and was with CBRE from 2005 until 2011 When I was recruited to open up a Miami office for a New York based brokerage company called RKf and ran our Miami office from 2011 until 2018 When I decided to come back to CBRE that’s what they say the CV stands for and CBRE to come back. I came back in 2018 when Robert Futterman, the chairman of RKf, decided to sell to Newmark and part of his reasoning was he felt like he needed a bigger platform than just retail. On the services side, the brokerage services side and I thought, you know, I was, you know, pretty familiar with CBRs platform since I had been there previously, and decided to take an opportunity to come back and I’ve been back for three years since this past April.
So cool story. Growing up the son of a retail real estate broker. I always think that’s interesting, right? If there’s steak on the table, you know, it was a good month made some deals and if there’s, you know, soup on the table, maybe some deals deals took a little longer to close. So
you I knew what a commission agreement was when I was six years old.
There you go. So what what do you specialize in as it relates to the retail brokerage.
So I have two parts to my day to day business. One is tenant representation and the other is landlord agency work. And although I grew up in the big box, retail leasing world, and even part part took in that business in when I first moved to Miami in it CB while I was call it, you know, in my fourth year down here, I started to focus a little more on High Street retail. So the Lincoln roads design district when woods of the world more street retail than grocery anchored or power center, retail and as the industry has evolved, I’ve actually in the past couple of years, gotten a little bit back into suburban, retail when it comes to tenant representation and agency work just because the high street segment of the industry has slowed down a little bit. But an example would be we represent XFINITY in their corporate experience stores which are four to 5000 square feet, and those are primarily suburban based share. Order. LensCrafters is an example.
Very cool. So I want to go to a segment we call clear the air and get to know drew a little bit more or are you ready? I got three questions for you. Yeah, I’m ready. All right. Question one. What is one skill you don’t possess but you wish you did.
As it relates to work, or in general, as a religion? I wish I knew a little bit more about construction costs. There you go. I feel like you know, and we talked a little bit offline about that. I’ve never fully been able to put my arms around what the real cost of is, is of construction. I don’t have a contracting background, etc.
Yeah, understood. I think everybody wants to get better at construction costs might be a gating issue in the future. So I hear you there. All right. What is one thing most people agree with, but you do not.
The Cleveland is the mistake by the lake.
I love that. There’s going to be some championships to Cleveland some time, hopefully not 160
years. But you know, I think if you grow up there, you have an appreciation for it. But if you do not grow up there, you you can’t understand why anybody would live there.
I hear yet. But I think one of the things that’s that’s interesting about towns that people talk about, like this are just, you know, Cleveland’s got a really strong sense of community. And that’s hard to break apart. And no matter what the weather’s like, what the economy is, like, a strong sense of community is something that is hard to compete with against another city. It might be cool in Austin and some of these towns but I think a strong sense of community is really something that, you know, when people think about why would someone live there, or anywhere, I think a strong sense of community is something that people just all too often don’t think about. And I think that it really, really matters.
Mike was so last there. Baker Mayfield jersey, just for the hell of it.
There you go. All right. Last one, when is the last time you tried something for the first time?
That’s that’s easy. I went skiing about a month ago with the family.
Oh my god. Where’d you go?
We went out to Colorado. Amazing. It was 60 degrees, which I wasn’t expecting. But it was beautiful. It was a great vacation to get out of Miami. And I’ve never been a skier I’ve been more of a golfer. Especially, you know, as an adult, but never, never a big skier.
So Golf is a skill. I’ve been talking about golf for eons. So my family loves golf, my friends love golf. Everyone in our industry Goffs. Right, I played golf twice for the first time last summer. I’ve got lessons coming. signed up. So it’s something I want to get into. But I’ve always, I’ve always had this, like, how am I going to get away for four hours on a regular basis. But I am, it’s just been too long of me putting it off. So I’m gonna try to at least be respectable on a golf course so that I don’t hold up everyone that I’m playing with and the people behind me so
right. Well, you could you could buy a boat and go fishing for six hours and wake up at 530 in the morning as well. There you go. A lot of businesses done on the golf course. But it’s it’s four hours of undivided attention with whoever you’re playing with. Whether they like it or you like it or not, you’re with them. And it’s a judge of there’s like a moral compass surrounding you on a golf course, sometimes.
Totally. All right. So what I wanted to talk about before we got into clear the air was you do a lot of high street retail and some pretty prolific markets in South Florida, such as Lincoln Road, and now Winwood and the design district are all you know, blowing up down there. We’ve all heard that South Florida is on a tear, not withstanding the pandemic, we’ve got this huge migration happening. How’s it looking from a commercial real estate perspective down in South Florida right now?
You know, it’s it’s pretty rosy. It’s it’s, you know, I think Warren Buffett said when when others are greedy, it’s time to panic and when others are panicking, maybe it’s time to get greedy. Something to that effect, but everybody’s very bullish. The one difference between this this kind of boom compared to the last several cycles here in South Florida. As you know, a lot of the migration is permanent in the event that people are moving here for tax advantages, and if you’re going to take advantage of the favorable tax situation, you have to live here for six months in a day, you can’t just live here for three weeks, you can’t live here for three months, four months. And that my understanding is they watch that pretty closely. The pandemic I think, really helped some of the markets that needed to mature a little bit actually mature a little bit faster. So the design district, I think, going into the pandemic, although it’s saw a lot more foot traffic, month, month over month, generally speaking, since space two opened, I think what the pandemic did, it allowed it to mature in what would have maybe taken three or four years in mature that it matured that much in 12 months. And it’s because the locals really started to engage the outdoor environment of the design district coupled with the fact that there were more restaurants that were now open, versus just a pure ultra luxury play that really caters to the tourists and the international tourists. Got
it. That’s interesting, hadn’t hadn’t thought of the prospect of potentially markets maturing a little better. That’s really interesting. One of the things we’re seeing in other markets around the country, is this move from urban to suburban. Yeah. And I guess my question is, are you seeing that in Miami? Are you seeing people go even though you have migration, but some of the suburbs really, you know, booming a little bit more than the city?
Yeah, I think that we’ve seen very strong sub markets, whether it’s Durandal, or Aventura, or Boca Raton really see a surge in population. And, again, some of the cities, or some of the more urban streets like the like Lincoln Road, for example, really was struggling because a lot of those retailers, there were the credit worthy retailers that could pay the rent, that a lot of these newer landlords with newer acquisitions needed in order to to agree to a deal, they needed the credit worthiness. They started to struggle, whether it’s, you know, J Crew, Banana Republic gap made well, and it priced out a lot of the restaurants. And as a result, there was no reason to go to Lincoln Road, when the restaurants weren’t there in all the retailers could also be found in suburbia. And it’s just much easier to kind of, you know, stay closer to home, for your shopping patterns, especially, you know, with with the traffic, you know, it’s very hard to get around at times, we have a ton of traffic here in South Florida. But what that does is it enables some of these markets to better define themselves.
Yeah, really interesting. And I am biased we own in suburban markets. So but I’m feeling pretty bullish long term about suburban lifestyle, especially, you know, when you look out in the distant future, if we see things like self driving cars, where you can live a little further out lower cost of living, and commute to the city less, or commute to the city in a you know, and be on your conference call and phone and on your laptop because someone’s driving you and then even come in a little a little closer to home. In a remote work environment. I don’t know pick a market if you’re in Chicago and your offices in Chicago. But now you only have to be in the office to three days a week. Maybe I can live 25 minutes further than I thought because I can handle the tough commute a couple of days versus right versus every single day of the grind. So I think that’s gonna play an impact on suburbia.
I think that makes sense. When you look at Chicago, I think Oak Brook center in the Brookfield portfolio might be their top performing center. And as we all know, you know, you know, the urban parts of Chicago, downtown Chicago had really been hit hard, but I think yes, people like, you know, in this day and age, you know, they’re spending more and more time at home, and they’re enjoying their home more. So Oh, they want to be at home a little bit more. If they’ve just redone their outdoor their backyard patio, they got new furniture, we’ve seen the home decor segment really take off during the pandemic. And I think that bodes well for not wanting to be away from home for too too long. I’m in my home office right now.
Totally Same here. I just have this branded virtual background. Right? So let’s say, Okay, well, that was really good context and helpful. I want to move into the story and you have a story about a cool retailer called Psycho Bunny, what location? Where are we going? What’s the market?
So that I had I had posted on Instagram that we had finally opened the store at Tysons Corner center in the metro DC market. Yep. And I said in my post that, you know, one day I could write a book on this transaction, and maybe it would be a guaranteed best seller.
Got it? And
that intrigued me because this, this show is about the stories behind the deal. And how, if you look at the corner, how that store ended up being your neighborhood, so right, so my name is good, but it’s McLean. Virginia’s neighborhood. Yes. And the tenant, who I’ve been doing work with since store, one, the first store was we landed at Aventura mall in South Florida. But we’ve been expanding, and or they’ve been expanding. And I’ve been helping them with that. We had been talking about Washington DC for quite some time. And they tend to grow based on where their e commerce business is strongest. And the DC market was always showing strong numbers for Psycho Bunny on the E commerce side. So we had gone back and forth with Mesa rich prior to the pandemic, and we were just very far apart when it came to what they were looking to achieve from a rent and allowance and other terms, delivery condition, etc in the deal. And then the pandemic hit. And I would always get calls from the leasing representative from Mesa rich about psycho buddy, because we were we really wanted to be in Tyson’s Corner center. But we just couldn’t get a deal together. And they kept saying I said they would say where are you? What are your thoughts? Are you ready to? Are you ready to look at it look at a space and they would send us a space and the terms would be, you know, still way out of whack. So we, we finally said, Look, this is where we need to be in order to get a deal approved, and it was an ugly deal. And they kept saying, Well, you know, we only have this space that we could give to you. And the I would present it to Psycho Bunny. And they would say we don’t like that space. It didn’t have enough frontage. And then maybe I would convey that message to Mr. Rich and they would come back. And they would say, Well, what about this space. And we would say that’s, you know, that’s not the right code tenancy within the mall, or that’s not the level of the mall that we want to be on, etc. Or there’s a big redevelopment within the mall taking place across the corridor. And that went back and forth to the point where and Mesa rich may get upset at this. But I think we went through six or seven locations when we were told initially that there was only one location that was potentially available for us. So psycho buddy’s digesting this and they’re saying wait a second, how many of these locations could they potentially recapture? So it wasn’t that the spaces were technically vacant? It was just either that, you know, there was a COVID clause that they could extend that retailer, they gave them rent relief, or they gave them some other concession but in exchange for that they got the right to recapture the space. So we just went back and forth. And we finally agreed on a location and then we agreed on a tenant allowance. And then they decided to cut the short box this space. And it made the economics of the deal easier for the landlord to approve if they could convert the back of the space to storage and give us smaller space that way, the tenant allowance wasn’t as significant and aggressive deal structure for the first couple of years, wasn’t as big of a hit for the landlord. Assuming that cycle bunny Did, did the numbers that they thought they were going to do. And it was just it took I’d say it took seven months of negotiations, the lease, we were told the lease was coming, and the lease never came. We were waiting for the capital partner to approve the deal. They never would approve the deal. And it was our understanding that, you know, Mesa Ridge was having this issue with several other retailers. And it was just a minor miracle that the deal came to fruition because there was a lot of emotion in the conference calls and at that time, Zoom calls that we were having, where we were being offered space that the landlord didn’t necessarily control, but they thought they could control it. And it was just, it was a crazy show, for lack of a better term. I wish it was more sad story. But so if I write the book, maybe, maybe I can say some things that I’m not divulging here.
All good. I think this is really good. So let’s back up for one second, give the audience a little bit more about Psycho Bunny, who are they? And what do they do?
So Psycho Bunny is a menswear retailer that is based in Montreal, the parent company, it was founded in New York, I believe, in 2006 by two gentlemen in New York, and it was primarily a wholesale business, they had a couple licensees in South America and Asia, that opened licensed stores. But at the end of the day, it was really a wholesale business that was carried through department stores and multi branded multi branded retailers throughout the country and throughout the globe. And they met this gentleman, the CEO, who’s based in Montreal, who I think was trying to get some of the distribution, I should know this a little better than I do. But in Canada, and it turned out that, you know, he kind of fell in love with the brand as he as he learned more about it. And he had the wherewithal to really grow it to the next level that I believe the founders, it’s not that they didn’t have the wherewithal, I didn’t think they wanted to, they didn’t want to do the dirty work to take it to the next level or assume some of that risk. I don’t know the whole story, to be honest. But they came to me through a broker friend of mine in 2018, in early 2018, and they said that, you know, Miami was their number one e commerce market. And it’s because, in my opinion, you know, they have most of their product is pima cotton. It’s casual athleisure wear for men and boys, and they have bright colors, they have high quality product at a decent price. And I think that resonates very well with this culturally diverse population that we have here in South Florida. It can be seen as crappy. It can be seen as you know, relatively speaking conservative, even though the logo is a bunny and skull bones, crossbones, but it could be an besides a logo, you wouldn’t know if that was a Brooks Brothers shirt, a Lacoste shirt or a polo shirt or an unbranded shirt, but then they have big plays on the logo and bright pink colors, etc. So it caters to you know, the rebels out there they kids, you see a lot of fathers and kids wearing the same outfit here. Some people think that’s cheesy, but you see that a lot here in Miami. And it caters to somebody who wants to have a little bit of an edge that’s different than a Lacoste, or call it the old guard like a Brooks Brothers who also happens to be a client of mine.
And so how many stores do they have now?
So they have about nine stores open and operating? And they will have about 21 stores open by the end of 21.
That’s incredible. And what gave them the conviction or the desire to want to open up stores. When did they decide you know what, we need to have stores too because they were they were they were just ecommerce before that.
Yeah, um, you know, I know that they monitor their business with their department store partners. But I think Even the CEO surrounded himself. He’s a very smart individual himself. But he also surrounded himself with very smart people in the retail business that, that they weren’t necessarily as savvy as him on the wholesale side. But definitely savvy on their on the retail side. And they said the best way to grow your brand is through brick and mortar. Got it? And I think the most cost effective way to grow your brand,
it’s definitely the most cost effective way. Yeah. So they have a wholesale business, they have a DTC e commerce business. And then they have brick and mortar stores. So they’re covering multiple channels, which is great.
And they have a phenomenal team. They are syphilis when it comes to store design. And, you know, a quick funny story about the CEO, we took a trip to South Southern California, and he wanted to be the one that rented the car. And we literally looked at 10 options at the rental car agency, and nine of them had too many miles. And he finally settled on the 10th car that we saw, because he’s a car fanatic. And we finally got a car that didn’t have too many miles for us to drive literally from call it Costa Mesa to Los Angeles. So we’re not talking about a big trip here. He just was adamant that he had a card that had less than 1000 miles on it.
That is great. That’s funny story. One of the things taking back to the deal at Tyson’s that, you know, really resonated with me was just the continued perseverance by both sides to try to make a deal. Was there ever a time where you went back and like, we’re never gonna have a store? Tyson’s?
No, I didn’t believe that. But I think that the Psycho Bunny team felt that way. And I judge that just based on the communication in the outreach, and you can get a sense, I think after doing this for enough time, whether a deal is dead or not, I don’t know if you know whether the deal is going to come to fruition or not. But you certainly can tell whether it’s dead or not. And it didn’t seem it never seen dead. To me.
That is a great distinction. The difference between whether a deal is going to come to fruition versus whether a deal is dead or not. There are two different things. And I think that’s a powerful distinction, right, that it’s a good point. Was there a part of you all that said, Hey, we were working on this pre pandemic. But now is the time we got to strike now because we’re in the pandemic, and it might be opportunistic for us to make a deal now versus when the dust settles, I
talked about that often, just because people have asked me about growth. And this this retailer, specifically this client of mine, I’ve been with them since day one. So I’ve been able to see how it’s evolved. And one of the things that we talked about quite a bit was that, you know, if the mall environment doesn’t come back, they’re screwed. Because they’re not going to have a business. But let’s just say that the mall environment does come back, which we all kind of felt that it would it’s just a matter of time and geography. You may as well try and get some deals done now because you’re never going to have more leverage as a retailer that has three stores open than you do today. And there was a benefit to them only having three stores because they didn’t have a ton of leases where they were paying rent and the mall was closed. There weren’t a ton of workouts to do. They were very well situated in that they only had three stores or four stores and those stores were Aventura mall that was still performing well, for some shops which got clobbered by the pandemic, but it’s actually up to pre pandemic levels again, and Lenox square which also fared pretty well during the pandemic. And then they had opened a store at the Hollywood Hard Rock Hotel and Casino here in Hollywood, Florida. That just happened to be a listing of mine and we were able to put a deal together and that store performed quite well as well. But we talked about you know if it does come back, you’re going to be well situated, if we can get our terms or if they can get their terms that gives them downside protection, whether it’s a termination right, whether it’s a percentage rent heavy deal for the first couple of years, etc, etc.
understood the location that you ended up in? Was it the first location that you ended up wanting? Or was it something totally different?
It was the first location that we ended up wanting, which is funny that you say that
interesting. So you went through one location, you went through six iterations. And you, you finally ended up back at square one.
And what was interesting was, as every day went on another retailer was filing bankruptcy. So it wasn’t a good story that was being told for the landlord when, you know, all of a sudden, this tenant is no longer in existence, and then this tenant is no longer in existence. And that’s it in a plus mall with a lot of small shop GLA. And you can imagine some of these tenants were, you know, closing or potentially closing with a bankruptcy or trying to downsize.
Got it? All right. Well, that was cool. I haven’t been to a Psycho Bunny. Is there one in New York yet? In the city? Garden State Plaza, yet? It’s closer to me?
I’ll have to check it out. You should I
nominally Well, it’s exceeded expectations in its first month of operation.
It’s been open a month. Yeah. What wing and Garden State Plaza. It isn’t
because it’s on a second level across from Amazon. Forestar.
Got it. Very cool. Well, Drew, that was an amazing story. I really appreciate you telling it. I want to take us to the last part of the show. I call retail wisdom. I got three fun questions. Are you ready? Yeah. All right, man. Question one. What extinct retailer Do you wish would come back from the dead?
I think FAO Schwarz it’s a good one man fun store for three young kids. And I don’t think the stores I don’t think the toy store environment is so spectacular out there.
But if you have three young kids, and I have to you buy a lot of toys. That’s one of the things I’ve learned.
That’s true. But I feel like that was a special retail. It was a special trip. And we don’t have that for kids. I mean, they have the iPad and Amazon and all of those things, but they don’t have that in store experience that I think is incomparable.
Yeah. Okay, question two. What is the last item? Over $20 that you purchased in a store?
I bought an iPhone. I bought a 10 foot long iPhone charger yesterday.
Ah, 10 feet. Yeah.
So that I can stretch it in my home office to my desk, my kids, take them from me and put them in their room and I’m tired of looking for him. So I basically got one for myself.
So I like that one. And it’s variety. We get a lot of when I asked that a lot of the answers are tequila. So that’s, that’s a different answer. That’s good. Okay, I let other people buy
me my tequila. And if I pay $20 for tequila, I’m in big trouble.
All right, last question. If you and I were shopping and Target and I lost you. What aisle would I find you it?
You would find me in the snack section. I’m a big fruit roll up man. I still eat fruit roll ups by the box.
Oh my god. That’s a great little tidbit about you. fruit roll ups. Good to know. Well that was great.
Chris, thank you for having me.
Thank you so much, man. This is great. Thank you for listening to retail retold. If you want to share a story about a retail real estate deal that you are 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.