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(Real Talk Series #18) Spencer Levy and Melina Cordero

Episode #: 061
(Real Talk Series #18) Spencer Levy and Melina Cordero

Guest: Spencer Levy and Melina Cordero
Topics: CBRE, internet sales


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. I am excited today we have Spencer Levy and Melina Cordero. Spencer is the chairman of research for the Americas at CBRE and Melina is the head of retail capital markets at CBRE. There’s not many people more plugged into retail and real estate than the two of them. excited to have them. Welcome to the show. Spencer Molina,

Spencer Levy 0:45
thanks for having us.

Ressa 0:46
No problem pleasures mine, Spencer Melina, why don’t you both tell us a little bit more about yourselves and what you all do?

Melina Levy 0:54
Well as the chairman of research, I used to travel the world, talking about what’s happening from a macro to a micro basis. In our industry, I’m really more of a capital markets. Guy I was in capital markets for 20 years as a banker helped lead capital markets at CBRE. I was a lawyer in New York City for many years prior to that, too. So I have that background. But the bottom line is we’re trying to follow all of the most important trends throughout real estate and convey them to our clients in a what we call an actionable way not just to inform them but to influence their decision making by giving them the best information available.

Ressa 1:33
Awesome, well said. Melina, what are you up to?

Cordero 1:38
Oh, quarantining like the rest of us. I am from my home in Washington, DC leading our retail capital markets platform, as you mentioned, but prior to that, about a year and a half ago, I stepped into that role. And before that, I was actually working for Spencer, he hired me as CBRE back in I think, 2016 Spencer to lead retail research. So I spent several years doing that. Prior to that I worked in lots of different capacities around retail, always around retail, on the tech front with the early days of mass mobile data work and consumer research. So my view on everything that’s going on now is really kind of informed by all those different angles. And I really like to look holistically at retail, not just you know, what are cap rates, but what are the fundamental drivers, and especially across everything we’re seeing now, what are some of the shifts that I think are going to be long term and which are some of the ones that are really just short? So that’s my background?

Ressa 2:36
Awesome. Well, I want to kick this off. Because Spencer, you have a interesting take on the Internet and Internet sales, and you think we’re going to have negative Internet growth in 2021. So why don’t you talk about that?

Levy 2:52
Sure. So the and I was just speaking to some guys from Canada. So the word hockey stick in my mind, right? We are we are seeing hockey stick growth of internet penetration in 2020, aren’t we not just in the distribution of goods, but also things like food? And so people are saying, well, we need more cold storage? Well, I’ll give you a point that I spoke the other day to Fred bowler, the CEO of a miracle. He’s like, Well, I’m not sure we need more cold storage because people still eat three meals a day, they don’t need four. And it just shifted, demanded and actually expand the amount of demand. Which brings me to next year, did we actually expand the amount of demand the overall aggregate demand for goods and for food? What did we shift? And how much of it is durable? And so there is going to be some stickiness to some of that demand for goods and for food, there’s going to be some increase in the trend line from 2019, of where internet penetration was in 2021. But are we going to see it continue to grow at the level we saw in 2020? Not only will I say no, I think it will go negative next year in terms of its growth for 2021. Because people are going to get back to more than normal use patterns. Probably mid year next year, people are going to be back in the office, they’re going to be back on the road doing things and they’re going to be spending in a more normal way including in places like restaurants and going to the gym and other things like that. So I’m not suggesting that internet penetration is gonna go negative. I’m saying it’s growth pattern next year we’ll go negative from where it was in 2020 Because people are gonna get back to more normal use pattern.


Ressa 4:40
interesting and not a lot of people on the record saying that so I appreciate you being bold Spencer and backing it up with stats. I think one of the things that I do think is interesting about the hockey stick growth of E commerce sales is how much of that growth was actually fulfilled at a store And I haven’t seen the numbers. But um, I would go out in the limb and saying that a large portion of that was actually fulfilled at a physical store versus in some warehouse somewhere. And so what does that actually mean for the store? Right? We have this buy online pick up in store, right? Is that? Is that ecommerce growth? Or is that is that physical retail growth? And I think there’s a, you know,

some, I think I’m biased. I’m a landlord from a percentage, right? And I’m not even looking at it from that perspective, I’m looking at it from what is that? Is it really a, a physical purchase, or an E commerce purchase? And, you know, the census data? I don’t think it really matters. They’re just looking at, you know, the sale happened. And so, but I think as far as predicting trends and what’s going on, and do you know, the the impact of stores on the world, I think that trend does matter is, you know, you know, where where is that purchase really happening? So what’s your take on it? Molina?

Cordero 6:05
Yeah, I mean, I actually agree with Spencer, and you are hitting on a really important point, which is, how do you even count the sales? And the answer is that everyone’s counting it differently, right, there’s no set standard of how retailers are counting an online order. And as for pickup, you know, what we do know is based on some of the retailers that have reported those figures, which is quite rare, actually. But target, for example, said, you know, their, their ecommerce growth has skyrocketed during the past couple of months. But they’ve reported that 80% of those online purchases are picked up at the store. So that’s a really big indicator for us. And I also say I agree with Spencer on this, this hockey shape, you know, rebuttal because we saw this actually, in the data over June and July, when stores closed the Internet growth shot up. But when stores started to reopen in a lot of states that actually went down. So there’s your proof right there for what Spencer saying and for what I I believe that the consumer is trending back towards the store. And at the end of the day, retailers don’t want to be shipping to our doorstep that cost too much. So they’re going to be doing everything they can to get us to pick up in store and to use the store as a as a sort of efficient fulfillment location.

Ressa 7:23
Yeah, that’s another piece that I keep hitting home is the cost. I have a belief that potentially buy online pick up in store could be the the last mile and be the conundrum that everyone’s looking to solve. But I at some point, the E commerce sales, it’s either going to be profitable or sale or the retailer, despite consumer shopping habits is going to be forced to sell more physically because it’s just more profitable. The myth is that ecommerce is, is more profitable. I think the cost of entry to open up an E commerce platform is you know, Molina and Chris wanted to open up Millenium Christmas t shirt shop is cheaper, but to scale it’s much more expensive is the is the reality and to profit from it. And that brings me to you know, one of the retailers that that was interesting Burlington stores announced in pre pandemic that they was they were stopped, they were going to stop selling merchandise online and only focus on physical what what do you all think of that?

Levy 8:28
Well as I can give you three or four others that have made the same choice and I’ll name another Primark, Primark, a big European retailer, also offering discounted goods made the same decision they don’t sell on the internet, either. Why? Because of the not just the profitability factor, but the event factor. People go there to find deals. It’s fun. And it’s not, it’s not different than going to other things. That might sound like apples and oranges. Why do you go to a movie? Why do you go to the track? Why do you go to the you know, things like that you do, because it’s fun, in addition to the actual purchasing of the goods, and then you get into the profitability factor if your average sale price of goods and I think primeworks average sale price is 10 and 20 bucks, you can’t sell it on the internet profitably. And necessity is the mother of invention. Well, they didn’t invent experience retail, but they are in the process of perfecting it. Much like Burlington will and I think there’s a very strong case to be made. I just went to the outlets this weekend. Okay, I was with my kids. They loved it. There was a line out the door. And why because it’s still cool to go there. And it always will be. Yeah,

Ressa 9:39
I think if your average average basket size is $20 It’s hard to sell that to you online and make money you know, maybe target Walmart and Amazon 10 Because of scale and they’ve spent literally billions and billions to do that. But outside of those three it’s it’s it’s and a few others. It’s really challenging. So what else is going on in in the in retail in real estate? What else are you all seeing?

Levy 10:07
Well, let me let me start in Lean In. And I’d love to get your on the ground point of view from our national sales team. But what I’m tracking most closely are the capital markets. I’m trying to track the flow of money at the moment. And I think the most challenging area right now I know we’re here to talk about the positives, we can’t ignore the negatives. The biggest negative right now in retail are the Debt Capital Markets, that capital markets are almost completely closed, it’s very, very difficult to get any loan in real estate outside of multifamily and in office. And I would say, as you go down that scale up outside of multifamily and industrial, I should say, once you go down to offices, it’s gotten very challenging hotels and retail even more so. And the reason is not because retail is dead in the future, it means that the model is in question. And that people need to reassess what it means to be long term durable income in real estate overall, generally, but specifically in retail. So I’m following the evolution of the capital markets and how they’re going to change, not just in the short term to having more of a percentage rent structure and more of what I call the new rent, some internet sales and some physical sales. But also, I think that the capital markets are going through a change period, much like the retail space is going through a change period, and are and when we come out of this period, I think the capital markets will be vibrant again, not just on the equity side, but on the debt side for retail capital markets. But so that’s what I’m tracking right now. Because I think that we can, we are certainly going to talk a lot about the occupier side here and the retailer side, but I would suggest to you that the capital market side is really what is driving decisions or not today, and they need to heal quite a bit more. Molina.

Cordero 11:56
Yeah, and on that point around capital markets, you know, a lot of the the debt challenges too, are just fueled by the lack of transparency around rent rolls. I mean, that’s really what we need to see transaction activity, and no one on either side, buyer or seller is really comfortable or lender really is comfortable. Making a transaction in an environment where you don’t even know the noi, this year, or in three years of your assets. So we’re in a sort of waiting game at the moment around getting to that point where we have more stabilized view of vacancy of income of cost of all of that. So we definitely need that to see movement. And I mean, it’s been Stark, right. If you look at the second quarter, retail transaction volume for me, we were down 73%. Year over year, the US retail investment sales. And if you look just that retail sales, over 20 million, down 91%. So we’re seeing a big pullback at the same time. There’s a lot of underlying interest, right, there’s a lot of capital ready to go. There’s a lot of people who believe in retail, there are a lot of sellers ready to go. But that lack of availability of debt, as Spencer mentioned, is holding us back just from that transaction activity, but that’s going to pick up and that will carry for so that’s the positive news. And I think the other thing that that I spent a lot of time talking about, because it’s an important story is that retail isn’t dead. And they’re all the headlines about stores closing and bankruptcies and demise. But nobody’s talking about all the retail categories that are actually growing and expanding. And so I’m spending time looking at those and and trying to understand, you know, the opportunities there and everything from healthcare. We’re seeing a lot of growth there. We saw the CVS and Walgreens have been expanding their health care services. I think that’s an area of growth, everything related to pet. We’re seeing expansion there. And interestingly, I just saw a report this week. I don’t know if you’ve seen it, Chris, I’ll send it to you about banking and financial institutions. And that for the first time, we’re seeing that openings in that space. And so there is growth, I don’t know I call it green shoots. I mean, this is growth and and expansion, and nobody’s really talking about that. So although we’re in a phase, as Spencer mentioned, where we are on hold debt, capital markets, all of that, I mean, as soon as things are clear, again, there’s going to be a lot of activity, I can tell you that with confidence.

Ressa 14:37
How much of the the lack of transaction volume is availability of debt versus a bid ask issue, because at the end of the day, our buyers still looking for COVID pricing and sellers not really there to give COVID pricing and therefore that’s causing a challenge in the marketplace. Because I would think, you know, even though the debt markets are challenged right now, right, if you have a center that’s filled with essential retailers, which by the way, a new word, I’ve heard every retail word off price discount department store, and the government created this essential word that we all use today, but if you had, you know, a Walmart anchored with Dollar Tree, and, you know, essentials, I would believe that would, I think that it would be easier than if it was, you know, full price, apparel driven opportunity where rent rolls were challenged. So how much of it is really? You know, I think it’s two part question, how much of it is debt availability versus bid ask issues? People wanting COVID? Pricing and and what about the debt around essential?

Levy 15:52
Let me get that all answered. Big picture, then Molina, I’d love to get a great deal more color. From the actual transaction expert, which is you and your team? What what I’ve been talking about for the last several months, we’ve been been getting bombarded by capital sources, both institutional high net worth, and some foreign capital sources saying we’ve got a pile of distressed Capital One. And they said, Where are the deals? When are they coming? And my answer to them was a little funny. I didn’t the answer. My answer was it’s not necessarily when it’s if. And when I mean, why mean by if I mean by if because notwithstanding all the challenges that we’re all keenly aware of, as it relates to the lack of liquidity in the Debt Capital Markets. What you don’t see behind the scenes is that those borrowers that have bank lenders, or foreign bank lenders, many of them have gotten covenant relief, through the end of 2021. They’ve essentially mothballed a lot of the assets that were most troubled for the end of next year. Now, that doesn’t apply to the conduit assets and CMBS assets, which regrettably I am more pessimistic about today than I was three months ago. And that’s based upon my direct conversations with the government, there was a plan called the whole back that was going to bail out those CMBS loans. My probability on that a month and a half ago was 6040 is gonna happen. Now I’d say 5% probability of it happening, and that’s based on direct conversations with the government. Don’t think it’s gonna happen. So I do actually believe there will be distressed deals coming out in the CMBS space probably early next year. But back to your question isn’t bid ask spread? Is it debt liquidity, it’s really, all of the above, everybody wants a deal. But when we talk about the bid, ask spread, I want to talk about value, not cap rates, because actually, cap rates because of the massive amounts of equity, because of the massive amounts of debt that are out there outside of retail, we’re not seeing as much cap rate movement, as you might expect, in fact, we’re doing our cap rate survey right now. And for those assets, Chris, as you mentioned, that have these bulletproof essential assets, you’re not gonna see much cap rate movement on those at all. And sure, I could line up a truck full of money right now to buy all the essential retail in the United States. Well, guess what Mr. or Ms. Essential retail buyer and buyer, they’re probably gonna pay full price, because the cap rates haven’t moved and either has the NOI. And so what once you move one ring outside of that, to where the NOI is less certain, and the debt capital, real illiquid, that’s where the sellers are holding off. And many of the sellers are holding off, because they’ve been given the ability to hold off by the banks in the US or European banks. Molina.

Cordero 18:46
I actually think Spencer said most of it right there really succinctly, I mean, what we’re seeing trade is what you’ve Chris called essential, right? It’s single tenant, triple net essential retailers, or stable grocery anchored centers, and we have not seen pricing changes there, we have seen that hold. And we as a team have also been discussing around whether we think cap rates might compress for those two asset or product types, in particular, because we’re going to see huge concentration of I think institutional capital on on core core core. So this flight to quality may actually increase demand for that, and we may eventually see cap rate compression. For now from what we’ve seen in the past six months, no COVID discount if we can call it that on those assets, because there’s no reason to provide it. Now on anything that’s not a you know, essential and that is, as Spencer mentioned, is, you know, one ring outside of totally stable. This discussion of what’s the COVID discount or is there a COVID discount? I would say at this point, no one’s really willing to sort of see a an arbitrary discount here. Based on you What No, I might be in one or two or three years time. And so again, the center’s point what what sellers are doing, the sellers we’re working with and advising is holding back and saying, let’s wait until there’s clarity in the market as they should, because I don’t want to give an arbitrary 20% discount if in six months time, there’s no change in the value or in the price.

Ressa 20:24
Make sense? understood the you mentioned CMBS. And the distress that might come from that marketplace. I guess that that happens if CMBS. Market doesn’t, I guess change how they operate? Given the amount of distress? Do you see CMBS lenders may be taking a different view? Or are they really just gonna take back all these assets and sell them at a discount? That doesn’t seem? You know, it doesn’t seem like that, to me makes? You know, it would be prudent it would be you know, they I know they don’t have they they do things a little differently. But you would think that how could every market in the world pivot and change in that one not?

Levy 21:16
Well, unfortunately, and this is coming from a guy who was a lawyer, a former lawyer, the remix structure was created to create bonds. And to create a bond a publicly traded security, they created a structure around that that makes them almost completely inflexible, not completely, but largely inflexible when it comes to renegotiating with borrowers having to shift from the master servicer to the special servicer and what kind of accommodations you can give. And then the BPS buyers can come in and buy out of the pool. There’s all kinds of stuff in there that aren’t necessarily buyer or borrower friendly. And now why would it? Well, that well, that’s now what you’re talking about is CMBS 3.0, which does not exist yet. What we’re dealing with is the working out of those deals that are in the 2.0 structure, which is largely inflexible in the way that I’m suggesting. Now, look, why did the banks and the EFF through guidance from the FDIC in the US and European banks with guidance from the ECB give covenant relief through the end of next year, because they had greater flexibility. But they were also trying to do something which is completely rational, they were trying to maintain the value of their collateral. And by giving this relief, they were maintaining the value of their collateral. Now that in a in a world would say, well, let’s just be reasonable here, you will maintain the value of your collateral by keeping it in the hands of the borrower or giving them some kind of reduction in interest rates have some kind of covenant relief for the end of the year, it all makes rational sense. But a lot of that the incentives in these condo deals don’t allow the specials, servicers and the master servicers to do that. And, you know, again, this is I am an advocate for borrowers of CMBS debt. So this is not a knock on them in any way whatsoever. However, people went into conduit debts and they got lower interest rates, or rather, they got higher LTVs, and sometimes lower interest rates. And they knew they were getting into a more complicated structure. And that’s unfortunate. But that is, and I’m also more pessimistic about whether we’re gonna see a government bailout there.

Ressa 23:31
Outside of the capital sitting on the sidelines, Molina, anything you see, like in 2021, that is going to be different about the capital markets than we, you know, we saw in 2019, let’s say, Well, I

Cordero 23:45
think we were talking about this before, before the podcast, right is this idea of acceleration and this question of where we just have surprises or acceleration of pre existing trends, I actually think we’re gonna see more of an acceleration of what we saw in 19, than any sort of shocks to the system, right? Other than, obviously, this pullback from 2020 is going to have more capital flow I predict in 21. But generally, in terms of product type, you know, the winners and the challenge ones, I think that’s gonna stay the same, it’s going to accelerate. I think one of the big things we’ll see continue to see is big influx of private capital into the retail space, something like 70% of the retail volume trades in 2019. were bought by private capital. I think that’s going to continue, I think you may see some public and or institutional pullback from the retail space, which is going to, you know, make more space for that. So I think private is going to continue to grow. And in terms of where, you know, geographically speaking, there has been a lot of discussion about you know, the exodus from cities cities are dead and we’re going to the suburbs. I don’t believe in those headlines. I don’t believe that cities They’re dead. Yes, I think there’s going to be a short term challenge to overcome, especially on reopening density mass transit, they are they are going to face a harder recovery. But I think medium and long term, they’re absolutely fine. So I think we’ll see a continuation of what we saw before, which was demographic movements to the suburbs that was already happening because of millennials and affordability and growth in in secondary, urban market, that is actually just being accelerated by what I believe will be more flexible working and remote working environments. So I’m not saying everyone’s going to be working from home, I don’t believe that I’m sure Spencer doesn’t either. But the fact that now, opportunities are growing for, you know, jobs that maybe we’re only ever concentrated or Manhattan in San Francisco, that someone can actually now live in Denver, or Nashville or Austin. And we’re seeing that if you look at the retail transaction activity in the first half of the year, Denver saw something like 20 or 30%, year over year growth in transaction volumes is incredible. So that’s what I think we’ll see in 2021. So again, not not any shocks to the system. But I think an acceleration of the trends that I mentioned.

Ressa 26:18
As a as a landlord of suburban real estate, I hope there’s an acceleration of suburban demographic growth to the suburbs. So yeah, the Yeah, I yeah, I think there will be. But you know, I, so we’ll see how that plays out for sure.

Levy 26:37

Ressa 26:39
I guess the last thing, you know, what is? What is like the one or two things that are top of mind for you, I guess, between, you know, now, in the end of the year, I am hinting toward election, and how does that affect everything that we’re talking about?

Levy 27:00
Well, Chris, it was good talking to you.

Cordero 27:06
Well, I’m out.

Levy 27:08
So I’m going to answer this the same way. I entered the question back in October of 2016. I’m going to narrow my answer to commercial real estate. From a commercial real estate perspective. I am largely indifferent between the two major party candidates. And why is that? Because I think that the federal policy that we put into place matters less from a commercial real estate policy perspective than does the local politics, in the areas in which you are located. And the local politics that I am looking at, has to do with property taxes, they have to do with things like affordable housing laws, if you’re in the multifamily space, they have to do with zoning restrictions, because I think particularly in retail, one of the strategies that we didn’t talk about on today’s call, and I’m not necessarily saying we should do it for every all retail, but some we are is you got to change the use. Yeah, absolutely. And so if you’re going to change the use from an old mall to multifamily, which is or affordable housing, well, good luck getting through the local zoning board, right, they do not like suburban multifamily. And so the bottom line is it sounds good on paper, but the local politics matter more than a national and I will also say go one step further. We have studied this going back 50 years, and I could look at every major election, every major political event go back 50 years, and the political environment at the federal level matters a whole lot less than you think in terms of influencing job growth, in terms of influencing overall economic growth. Now, I will say if you are in certain sub areas that are politically sensitive industries, such as healthcare, such as the military, such as oil and gas, those are areas you should scrutinize those a bit more, but overall, look local, not federal, if you’re thinking about commercial real estate, oh, you know,

Ressa 29:01
well, since Spencer use some verbal judo to get around me there, Molina. I’ll go to you. But no, it’s a great answer. I’m just kidding. I’m teasing.

Cordero 29:14
That was good Judo Spencer. Well, practice. So I would say that the challenge with any election year no matter who’s the sitting president, no matter who are the candidates, is the uncertainty and business doesn’t like uncertainty, and the consumer doesn’t like uncertainty. So no matter what one of the biggest challenges with an election year is a pullback in spending a pullback in major investments a pullback in big decisions until post election. So I was having this conversation the other day is is like, as Spencer mentioned, it doesn’t matter who wins you need to get over the election up promote from a commercial real estate perspective. I’m not saying that, you know, the wider world. But that uncertainty happens now. I think that that uncertainty in this year is going to just mixing up with COVID and pullback and debt and all the things we talked about the tsunami, it’s pronounced, but we just need to move through that. On to other things. And then I think as well, I’m having a lot of conversations every day about retail repurposing. To mention conversion to industrial that I think is the sort of soup of the day around what what is the opportunity for industrial my portfolio? So I think what we’re gonna see, going into the next couple of years is a lot of activity there and repositioning, repurposing, assessing demand. And, and, you know, post election, I think that’s something that’s gonna grow a lot. Well,

Ressa 30:48
great answers. I was just teasing you guys. But great answers. I appreciate that. So after the election, we have this big thing in America holiday sales, and it affects retail and retail real estate. What are your thoughts on what’s going to happen this holiday season? I will be, you know, I have done a lot of homework I’m looking at because usually about now, there’s a gazillion articles on holiday spending. And if you Google it today, there are there is not nearly as much research at least that I can find on what’s going to happen this holiday season. So I am interested on everyone’s take on this call on, you know what holiday spending looks like? Sure, well, I’ll give

Levy 31:37
you both the practical problem, and then I’ll give you the psychological positive. So the practical negative is the whole buying season was disrupted this year, for all the major retailers. So it’s going to be a significant challenge for inventory, getting new goods to market in a timely fashion, simply because the whole buying cycle got disrupted. So that’s that’s the negative. Now I’m going to give you the big positive. And this is where I’m thrown off the call, Chris.

So I remember

reading a study from the ICSC last year. And the study from the icescr last year measured Gen Zers. Why they buy goods in malls and Gen Z are the number one buyer of goods in malls. And, you know, you would think that there’ll be all kinds of considerations that go into why they buy a particular good we can, you know, you can imagine what all those are, you know, what the number one one was?

Value cost above everything else. And what does that mean? I’ll tell you what it means. It means this. See those cruise ships

sitting off the shore in Miami right now, Fort Lauderdale. Oh, I’m never getting back on a cruise ship. You know, he’s getting out of back on a cruise ship. Me. And you know why I’m getting back on one because the only thing better than a cruise is a cheap cruise. And you price lessons down to zero, and people will get on them and they’re gonna have a damn good time. So the negative is the practical implications of disrupting the buying season. The positive is pent up demand. And this pent up demand is bigger and stronger. And it’s been studied in economics since the beginning of time. It’s going to bring us back. So I’m going to go on record and saying a significant positive surprise and holiday season. Molina

Cordero 33:24
Well, that’s great. I don’t know if we at CBRE have a word from both policy but it sounds like sensitive and the floating from 25 slide I’ve ever heard. Like that one. Again, I agree with what Spencer said I think that the big winners this holiday season. Although they have faced some inventory challenges over the past couple of weeks. I think the big winners are going to be anything off price and discount. As Spencer mentioned, people love a deal. People especially love a deal when we’re in a recessionary environment like we’re in when we saw this No 809 That’s when everything from the TJ Maxx and Burlington ‘s of the world really took off. That’s when Fast, fast casual exploded. Anything that’s in that lower price range, I think is really going to benefit this holiday season. We’ve already been seeing that happening. Dollar Stores have exploded this year, really exploded. And I think that that’s going to continue so agree again with everything Spencer said and I think keep an eye out for the discount and off price. That In addition, is likely going to have some decent inventory from you know, other retailers that have excess stuff that they’re trying to get rid of.

Levy 34:40
The only thing I would I would add just one small piece of cargo Molina I would move the needle not just into the discount category. I think there’s pent up demand for luxury goods and my colleague in in Asia, and returned a terrific colleague of mine coined a term called Revenge retail and revenge retail is there Jean queues of people in Hong Kong, Taiwan and elsewhere to buy luxury goods to so I think there’s some demand in that segment as well. Awesome.

Ressa 35:10
Well, listen, this is this has been fantastic. You guys are a dynamic duo. I now want to pivot to the last part of our show. This is this has really been great and I think the listeners gonna love this last part of the show is called retail wisdom. I ask everybody the same three questions. So are you already I hope all right question. One’s the layup. Best piece of commercial real estate advice for the listeners out there.

Levy 35:46
play the long game. Like that. Molina

Cordero 35:52
for landlords get ecommerce data from

Levy 35:55
your tenants. All right,

Ressa 35:58
I like that.

Second question. This is a fan favorite. I think I’m really interested for Spencer’s answer. What extinct retailer Do you wish would come back from the dead

Levy 36:13
is not dead yet.

I know he’s bankrupt. Neiman Marcus. And I’ll tell you why. And this is personal. My grandmother and my wife and my mother spent every Saturday afternoon at Neiman Marcus in Fort Worth, Texas, every one of them and they had a wonderful experience there. And they were friendly with a staff bear and they were going to have lunch there they had a full experience there. And what does that remind me of? Reminds me of Harrods in London which when people ask me what what is the best store in the world?

So I want to see

store stores like Neiman Marcus come back because I think they provide a lot more than just buying expensive handbag it’s an experience there that I think that is hard to replicate any place even on a high street putting it in one place so I would say I want to see Neiman Marcus and stores like it like Barney’s etc have a have a revival

Ressa 37:11
well you know what extinct retailer Do you wish you’d come back from the dead

Cordero 37:15
it’s one it’s so easy for me and it’s also personal and it’s Toys R Us and it’s actually for a lot of the same reasons that Spencer said for Neiman right I think I was really disappointed to see Toys R Us go the direction it did because I think they had such a golden opportunity to be a category you know own that category and create this experience around toys and childhood and excitement and and they just never did that I still think there’s a huge opportunity there I think you know buying toys online is nowhere near as fun and I’m I would love to see Toys R Us come back with a vengeance and create that in store experience.

Levy 37:52
Great answers really appreciate it. Last question. I

Ressa 38:00
ask everyone a retail product and they give me the retail price. And so I had something keyed up but I just made a pivot because of what was talked about here I am on Carnival cruises website Spencer. Three day trip the Bahamas from Miami Florida. What is that cost per person right now?

Levy 38:25
I’m gonna say a three day cruise to Bahamas to get an economy room I would say is going to be $1,000 per

person Emelina

Cordero 38:36
I am not experienced expert but I will play the game I’m gonna go I’m gonna go 720 person

Ressa 38:43
I have never done this before but I’m going to share my screen for you guys to see because it’s so interesting.

Spencer what is the cost here?

Levy 38:57
129 I am I told you I was going for person sent me the tickets.

Ressa 39:12
The work from boat policy is about to take effect at CBRE or you can say million.

Cordero 39:18
I’ve got to say I’ve got to do the calculation on like what’s my monthly mortgage or rent versus going on the credit I need to do some numbers.

Ressa 39:27
Well, this has been great. Thanks for coming on guys and, and Melina you have been awesome. And this was really awesome info and I think everyone’s gonna love it. So thank you so much. Great talking to you.

Cordero 39:43
Thank you.

Ressa 39:47
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 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

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