(Real Talk Series 9) James Cook
Guest: James Cook
Topics: Where We Buy Podcast, COVID-19
Transcript:
Chris Ressa 0:02
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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Welcome to retail retold everyone. Today we have James Cook. James is the director of America’s retail research for JLL and the host of the where we buy podcast. Welcome to the show, James.
James Cook 1:23
Hey, thank you so much for having me, Chris. It’s good to virtually see you again.
Ressa 1:27
Yeah, for sure. So James, we’re living in interesting times, and you have an interesting role because you do research on retail, and you get the opportunity to highlight a lot of that research in your podcast. And so first off on your podcast, have you been going out and doing any podcasting? Because a lot of your podcasting you, you go to places to do it?
Cook 1:55
Yeah. I mean, it’s we always said, you know, we’ve tried to do half of the episodes us out, you know, hey, this week, I’m in this city, and we’re talking to this person, and we’re in, you know, at this mall, and all that’s how to go away. So it’s all telephone interviews, and I’m just really itching to get back out in the world, I this past week, I’ve started working at a co working space that I was working at before COVID hit. And the cool thing is, it is on the second floor of a lifestyle center. So I get to work and look over retail. So I’m doing a little bit of retail research. And actually, it’s made me feel kind of optimistic. I’m definitely more optimistic than I was earlier. Because I’m seeing people out and about shopping. My vantage point I, I see an American Eagle right out my window. And I have oftentimes this week seen lines of people lining up now, of course, they’re at limited capacity, and that’s part of it. But you know, I’ve seen the lines at Bath and Bodyworks you know, there’s people out there that just want to get out and shop and you know, I am definitely nervous about retail in cities, because cities are going to be slower to recover because of density and just, you know, you know, fears of interacting with people before we have, you know, some kind of vaccine for COVID. But I think the suburbs are coming back, you know, a lot quicker than I thought they would.
Ressa 3:37
So in where you are, are people wearing masks in stores?
Cook 3:42
Yeah, so that’s a whole nother story. Right? It’s so I’m in the Midwest, I’m in Indiana, suburban Indianapolis. And depending on where you go, it’s 5050 Some places at 6040 in favor of not wearing. I really think the every mile you get closer to a city, the more you’re likely to see people wearing masks. It’s really I kind of live out in the country. And if I go to my local, you know, my local grocery store that’s far away from the city. I don’t know I’m in the minority wearing my mask, definitely. It’s just I think it’s tough for people to it because of viruses invisible. It’s tough for them to treat it as a real thing, you know, but what I have seen is that a lot of retailers, especially national retailers have had pretty a lot of them put rules in place, you know, where you know, you have to wear a mask to go in the store, for example. Barnes and Noble is an example because that’s a place where people are really browsing a lot. And the Barnes and Noble you know, where I work, you know, In that shopping center, they’ve got a, somebody stationed out front, you know, to make sure everybody’s aware you’ve got to wear a mask before you go in. And you know, it’s pretty, it’s pretty serious. But yeah, I don’t know, what’s it like you’re in New Jersey? What’s the mass situation? Like, they’re,
Ressa 5:18
you’re not allowed in a store unless you have a mask. So it’s very simple. So I haven’t been in a store since early March without a mask. Maybe February for me.
Cook 5:32
Yeah, yeah. And that’s true for me, too. But I think a lot of people. Yeah, it’s so funny, because New Jersey was one of the strictest with the longest lock downs. And, you know, some of these, you know, especially, you know, you know, a rural or a suburban area, you know, people just don’t just take it differently. You know,
Ressa 5:52
yeah, I totally get it, it’s, it’ll, it’ll be interesting to see consumer behavior, as we, you know, as we get to 2021, I think that, you know, you mentioned the, the cities versus the suburban and rural areas. And, you know, I feel pretty good, at least at the moment owning suburban shopping centers, because it feels like there’s going to be a D urbanization starting to happen, just like they’re, you know, we’re going back to a little bit of D urbanization. So do you are you thinking that happens?
Cook 6:27
Yeah, it’s an acceleration of a trend that was already starting to happen. Which is, you know, younger people are creating families and finding an unaffordable to rent, the amount of space that they need to raise a family in the city. So we saw more and more people moving to the suburbs and, and moving to, you know, less expensive cities. And this is like, just accelerated that, because of health health issues. But I think in the long term, actually make good and a lot of ways, especially for places like New York, where rents are so exorbitant that I mean, you know, you had to be rich in order to afford a two bedroom apartment. And I think that, that what will happen is we’re going to have an opportunity, where, you know, retail rents are going to go down a bit, and it’s going to create a new opportunity for that next wave of expanding retail to open up and locations in, say, New York, or San Francisco where they couldn’t afford before.
Ressa 7:40
Do do you think rents in suburban markets go down?
Cook 7:46
That’s a great question. I think it depends. If we’re talking about grocery anchored centers? Probably not. I mean, well, you know, let me take that back. I think in line, there’s a certain number of inline tenants that are mom and pops that are small businesses that might not be able to make it through this recession. I’d be curious to see in your centers, because you guys have a lot of that kind of stuff. Yeah, we do. It’s the is it the small businesses that are struggling right now.
Ressa 8:18
So it’s hard. It’s hard to tell right now, because I would say that when a lot of tenants got PPP, and so that’s carrying them through, I don’t think you’re going to really know until they open up fully, they’re off of PPP, they get through a back to school, a Christmas, and I think, you know, early 2021 is going to be a really big tale of the effects of this. I think we were you know, I haven’t seen Knock on wood. And I’m literally knocking on wood, you know, the massive closures of small business that you were hearing was going to happen and I think that’s, you know, government stimulus vendor help, whoever that might be, you know, a landlord, a, a supplier, and to help those get through, you know, the really the, what we’ve seen on the, you know, pending closures has been the nationals that are filing that’s the, you know, I have two JC Penney’s. I have you know, some of these tenants, you know, I had some pure ones, things like that. As far as the rents go, I think it’s an interesting one, because, in some of the major cities, the landlord’s had the leverage. The deals were, you know, high rent low spend. For the suburban nationals. The expansion was fueled by landlords putting a lot of CapEx ti dollars landlord work into deals. So if the rents go down, either the retailer is gonna have to pay that or the landlord is going to have to figure out how to get the cost down. So I think there may be a balance, I think one of the things that will have to happen is construction costs come down. Otherwise, I think there’s a challenge. And I don’t think that we’re going to see in suburban worlds the the rent decrease that some might expect, like there probably will be at the same percentage in the urban environments.
Cook 10:30
Yeah, yeah. That’s a great point. They don’t. They don’t there’s debt on these properties. So they don’t have the flexibility to negotiate with tenants, even if they want to. Yeah, that’s tough. I’m, I mean, I think I’m thinking a lot right now. Like, the big question that we’re trying to figure out is the impact on a department store closures? Like, two questions? What do you do with a vacant department store? And then the other question is, how much of an impact is this going to have on malls in general? Like, I’m still I’m seeing such a wide variety of predictions on how many malls are going to close how many department stores are going to close? We’re working on our own forecast. But it’s really tough. You almost have to look at it mall by mall to figure out what the impact is going to be. Now you said you’ve got JC Penney, as tennis old catalog
Ressa 11:25
stores, open air they look like they could just be a TJ Maxx except it says, you know or a different tenant, you know it could they look like they could be a you know, any box tenant Jr, anchor, but it says JC Penney over the sun.
Cook 11:40
So you’ve got you’ve got some opportunity there, then yeah, you could probably lease that out to somebody else. So that’s good. Yeah, it’s really the it’s really the malls like if you’re if you’re, if you lose one or two department stores and your mall was a little sleepy to begin with. It’s just a tough time. We’re just trying to figure out some ideas for alternatives entertainment, medical. But, you know, there’s no magic bullet to figure that out.
Ressa 12:11
Yeah, there’s definitely no magic bullet. I I think that, you know, at least for me, on the on the Mall side, there’s obviously going to be major transition in malls. You know, some of the tenants in malls will start to be outside tenants and start to go to power centers and gross income centers that they weren’t familiar with stuff before. That, you know, I think that’s going to happen, but I think that, you know, as it relates to the effect it has on the mall, you know, what was the positive that Sears was doing for the mall? Pre COVID? I asked that seriously, you know what I mean? So what was that? You know, just a filling a hole, maybe perception? I don’t know, you have economic challenges for the landlord and maybe enhancing that property. But I’m, I’m wondering, like, obviously in in a mall where the department stores $50 million. You know, there, there’s a challenge with that. But that doesn’t feel like that was majority of the malls in the US. Pretty COVID
Cook 13:17
Yeah, you’re right. And, you know, it’s a couple of things. I mean, let’s say you were, you know, one of your anchors was a Sears that really wasn’t doing that much. It still was an open store, and it had this feeling of vibrancy, you know, and certainly that end of the mall is closed and, and mentally people like, oh, that mall is dying. Now. That’s, you know, that’s a big part of it. But I mean, yeah, depart department stores, you know, the, many of them, you know, like the JC Penney’s, for example. A lot of people still shop there a lot of those JC Penney’s that are going to be closed. We’re still traffic drivers, to these malls.
Ressa 14:03
So I would ask, did those people go into JC Penney and leave? Or did they go into JC Penney and go into the mall?
Cook 14:09
I think a lot of them would do when there was cross shopping, I think definitely. But I think that the beneficiary to your point of closing department stores and closing apparel and malls, is going to be open air centers. Like I think people are just going to say, well, you know, I used to go to JC Penney now. I’m gonna go to Kohl’s, you know, to get the same kinds of things. And, you know, now I’m out you know, and I’m gonna cross shop at those other stores that are in that center.
Ressa 14:41
And so let’s pivot a minute. What we’ve gone through this crazy time, you get to look at different stats figures. What’s been the most interesting stat you’ve seen so far through COVID?
Cook 14:54
I mean, the well interesting the sky rocketing. Unemployment is the scariest chart I’ve ever seen. I’m sure you’ve seen that. Sure. In my, in my real estate world, we track absorption, which for listeners of the show that don’t know what that is, it’s just the change in occupied square feet of retail space. Yep. And it basically means a number. If it’s positive, it’s healthy, because that means that we’ve been leasing more space than has been being vacated. And for 11 years, that number has been positive every quarter, until q1 When it was negative 6 million square feet. And that was only in q1, only one month of that was impacted by COVID. So I’m just waiting to see what that q2 numbers going to look like.
Ressa 15:49
And so that’s interesting research. What, what properties aren’t included in that? Do you got? Yeah, it’s impossible to cover every asset in the country. Right?
Cook 16:02
It is. So that’s major markets. But within major markets, it’s most retail space. I mean, I’m trying to remember, if if we’re covering for that number, it might be over 10,000 square feet in size. So it’s not going to be that real tiny stuff. But that includes all retail in sales.
Ressa 16:22
It’s not just public company. No,
Cook 16:25
no, it’s everything. And it’s it’s about that numbers physical vacancy. So it doesn’t account for, you know, if we know somebody’s going out, but if they’re still physically in the store, and then we’ll counter and it’s occupied. Got it.
Ressa 16:39
So that that’s definitely interesting. Do you think, you know, I was talking to my wife, and she’s a non industry person. And I’m talking about, you know, potential vacancy. And she kind of shrugged it off. And she’s like, I think what will happen is what happens in every business cycle, someone will see an opportunity, it’s America, and they will fill a void. And so it’s so simple, but I thought so profound, which is, we don’t talk about that. All this market share that might get left on the table? Is there going to be new concepts that come on that we don’t know, today that try to take up some of that market share? Or they only go online?
Cook 17:24
Oh, I think your wife is totally on target. Yeah, I mean, I think we’re gonna have a certain amount of space that is obsolete, and is gonna go away. And you know, you think about, you know, your your really old, dead and dying malls, that thing, right. But everything else, there’s a, there’s a highest and best use for all real estate, you know, and it changes over time. And, you know, our prediction for online is that, yes, right now, we’re seeing the highest online retail sales that we’ve ever seen in history, because people have been stuck at home and have to shop online. But as people are now being allowed to restrictions or loosening, people are allowed to come back out, we’re seeing those numbers start to go down. We haven’t, I don’t have any good solid numbers yet, for the US. But in other countries, we’ve seen the online numbers start to go back down to what they were pre COVID are pretty close to it. Our ultimate prediction is that when all of a sudden done COVID will have pushed online penetration forward by like maybe three years. So it’s not like, it’s not like retail, online, retail is going to be 50% of all retail sales or anything like that. It’s going to be more like 20%, which is you know, more than it would have been. But you know, it’s not like all sales are happening online now.
Ressa 19:00
That’s interesting. So three years, it pushed it three years. Do you I ask everyone this, do you have a view? And I don’t know, if you look at this, and your research is, these online sales are not profitable to a lot of retailers. So if it continues to grow, it’s going to can, you know, start to really hurt some of these retailers. You just look at like a Wayfair, who has really, you know, very little physical retail presence, and they lose money. That’s unbelievable to me every quarter. Now it’s invested capital to grow market share, but at some point, it doesn’t make any money. So you know, I wonder and maybe it will because they’re just capturing so much market share, but that they’re not everyone there they’re on the Amazon path to which took forever to get profitable and some argue whether it still is and Maybe that’ll be Wayfair. But take some of the smaller guys who have online. I mean, at the end of the day, you know, if they don’t make money, what do they do? And I guess that brings the point that 50% of like online shopping is done through Amazon. So really, when you’re talking about online, you’re almost really talking about Amazon versus brick and mortar now.
Cook 20:23
Yeah, yeah. I mean, so that’s true. And it’s not necessarily through them, it’s often through third, third party sellers. You know, they’re using it as a platform. I think that a recession will shake out some of that, because all of these online retailers that were losing money in order to gain market share, were being were backed by venture capital that would float them through that, that didn’t care about profits, they only cared about growth. As that money dries up. We’re left with online retailers who have to make a profit in order to stay in business. And I think that’ll change. Although, to your point. There are still some major online retailers out there. We’re going to pass What’s that? Who get a pass? Yeah, well, who? Yeah, who can who can do it? Yeah, who get a pass? That’s exactly right. Who got a pass? Yeah.
Ressa 21:24
The because I only read headline news about Chucky Cheese or Tuesday morning. I don’t read headline news about this unprofitable. Online DTC brand. Who doesn’t have any stores? Are there any, we all talk about these I don’t read headline news about that. They’re gonna have to file because they have no money. And no, the VC firms or the fed up? I don’t read anything about that.
Cook 21:57
I mean, that happened that happens every day. I know. You know, it’s like, you know, like blah blah blah box subscription service for rock of the month or had of the week or just all this crazy stuff. That is a flash in the pan, you know, they ramp up they get some media coverage and then they don’t make money and disappear. Yeah, it happens. It happens all the time. It’s because physical retail has actual physical stores that you can see in your neighborhood that when there’s a story about them closing it’s a big deal and people really care about it.
Ressa 22:35
Interesting perspective I would love for you as your your now immediate man James, whether you want to be or not you are to do some research on that fly by night box subscription service that was actually fly by night? Because I think that would do our industry some good. So I’m going to I’m going to push you to do some homework on that. And have you guys put out a deck on it? What what are you most optimistic about coming out of this pandemic?
Cook 23:10
Short term I feel good about daily needs retail. I feel great about you know, fast casual casual dining, any any, any dining that’s been able to pivot off premise dining, you know, I feel I feel great about I’m really worried about restaurants, especially like small business restaurants, locally owned restaurants that relied on casual dining, that rely on sit down dining that relied on having a full house every Friday and Saturday night in order to make their rent big who are suddenly restricted to 25 50% capacity. I’m really nervous about that. But overall, you know, as I said, before, I’ve I see just people going out and and, you know, starting to return to shopping, you know, I see you know groups of teenagers and they’re, you know, often in mass but wearing you know, carrying h&m bags, and you know, walking with their Starbucks coffee in hand and, you know, the national retailers that are able to weather the storm, I think or have a comeback, you know, come back strong.
Ressa 24:29
The Yeah, that is a the ones who can weather this and they can figure out how to get through this. So you’re in the research world, you’re not in the brokerage world. You’re not in the landlord world you’re on in the retailer world. But you’ve been sitting back and watching what’s been going on with the the tenuous relationship between tenants and landlords in some perspectives. You’ve been reading Headline News, I’m sure you saw you’re in Indiana. One of the landlords, they’re sued of big national tenant recently. And you’re seeing all this.
Cook 25:07
I’m like, Are you law? Are we not allowed to say names?
Ressa 25:10
Just I’m sure you are is it was made headline news. And so what do you think about that relationship and what’s gone on through this?
Cook 25:20
I’m so JLL works for everybody. Like we will work for landlords, we will work for tenants. We manage shopping centers. We represent tenants on leases. So I’ve seen every side of it, and have been pulled into conversations on both sides. And I, I don’t see any villains. I see people between a rock and a hard place. Just trying to do the best they can. I mean, just right before we got into our conversation here, I was exchanging emails with a track trying to be vague about this, it’s a tenant who is wants to be a going concern and continue and is asking for rent relief, and is having pushback from the landlord. And I’m and I bet you that landlord probably is thinking, Hey, I gotta pay debt on this property. You know, and it’s, it’s just a bad conversation. It’s, it’s bad times.
Ressa 26:25
I’m gonna give you one, pre COVID There were locations in America, where a tenant signed up for, I don’t know, 1015 20 year lease. And they decided it wasn’t working. They closed down, they were still on the hook on the lease. And they paid the rents without question. They were not open. They were not making revenue, but they paid the rent. Dark store, we call it alright, least unoccupied in a in a real, you know, like quarterly supplement or something. But that kind of went out the window through this. That kind of perception that I’m on the hook. I owe it but I’m not open. I still owe it because I’m on the hook. What do you think of that distinction?
Cook 27:13
So you make a good point. Maybe I overstepped my bounds when I said there’s no, there’s no, I said, there’s no villains? I don’t think I think people are villains for acting in their own self interest. Yeah, you’re right. I have heard stories of tenants who can afford to pay their rent, taking advantage of the fact that nobody else is paying? You know, so I’m going to demand rent relief, you know, from every landlord that I can. Yeah, I mean, in a lot of cases, the tenants that are demanding this relief are in better financial position than the landlord. Yeah. But it goes both ways. I’m sure there’s landlords who are working hard to tenants where that where they don’t necessarily have to be,
Ressa 28:00
as one of the things that astonished was astonishing to me, and I would love to hear your take, because you’re in the research world. It seems like anecdotally, to me at scale, there was better rent collections in the office world than in retail. We did pretty good on rent collections. But those people couldn’t go to their offices. And they couldn’t use the real estate, no different than a retail tenant. Get there wasn’t the same reaction. Why do you think that happened?
Cook 28:32
Yeah, that’s great. I wish I knew we were going to talk about this because I would be smart and have numbers, don’t worry, because ours, we I have some statistics from office buildings. And the tenants, these are office buildings that we manage. And vast majority of tenants are paying the rent, and the tenants are paying or paying the rent, or the ground floor retail. And yeah, I mean, I think it’s because with retail, it’s like the money comes in and it goes back out in the form of rent and it’s like it’s like if your doors aren’t open, you’re not making any money. Whereas you know, businesses like mine like JLL we’re all just working from home while our office are closed, very few of us are not able to at least perform our basic functions. So we’re able to continue as a going concern even though our doors are closed, those doors and retail that’s your money faucet and you’re shutting your money faucet off so it’s just tough to pay rent.
Ressa 29:45
Sure, good perspective, what is a bold jeans prediction? Like that’s just you know, it’s a Hail Mary prediction is probably not going to happen but something that There’s a chance there’s a slipper.
Cook 30:04
Okay. My favorite thing about my job is experiential retail. And I love traveling around and seeing new shopping centers and how they create new retail experiences. Right now is the worst time in American history for experiential retail. It’s like, it’s, that’s experiential retail is like illegal now we’re shutting it down. My prediction is it is going to come back with a vengeance, like the minute that a majority of Americans are safe because of a vaccine or whatever, where they feel safe going out and shopping. I just, there’s just going to be just, I see droves of people returning to, you know, with their family and friends, to entertainment, retail to restaurants, to theaters. Gosh, I hope theaters can hold on until then. And all of that stuff, you know, American dream at the Meadowlands. You know, that entertainment mall that just delivered it. It just such a bad is such bad timing. If those guys can, can hold on, I think I think that’s the kind of thing that people are going to want to return to.
Ressa 31:27
I love it. Love it. I hope you’re right.
Cook 31:30
So we’ll see. But you guys, you know, you guys are focused on the daily needs people. You’re not nearly as experiential. And that is always a safe bet. Always a safe bet.
Ressa 31:43
The I hope so. I hope I hope I hope all retail does. Well, I hope my wife is you know, is right. And there’s some new concepts that get birthed out of this. And no one’s really talking about that. And I I hope, I think there is I don’t know what it is. But you would think that makes sense. That said, I think the thing that makes me question that a little bit is you take a group like toys r us that had 11 and a half billion dollars in sales. So majority of that was brick and mortar. So people were coming in the store spending 11 and a half billion dollars. They were a fortune 300 company when they filed. And it all went to existing. It all went live in half put billion got chopped up between Walmart, Target Amazon and some online and some other guys. Five Below. Maybe no one came in and took some of that. Which was mind boggling to me. So I hope there’s some guys who, you know, try to take some of whatever ends up going away through this. But we’ll say
Cook 32:55
yeah, that’s a great point. We you know, we live in a post Toys R Us world now. And we now I just never thought that would happen. I thought okay, maybe they fall for back bankruptcy. But they’re not going to liquidate. Right. I mean, so many people shop there, but it was it’s all about debt. You know, it was just poor, poor choices. It was not because there wasn’t a demand, there’s still demand for that retail. Or the wooden this minute there might not be but in the near future when people go out and about again, I think there is
Ressa 33:27
I have a three year old and an 18 month old, there’s demand for toys. I can write that right now. Yeah, toys are in demand.
Cook 33:34
And you know, as so I’m not a parent, so you can answer this? Is it the same to shop for toys online for your kids? Or do you think it’s better to go into the store and shop for the toys?
Ressa 33:46
It’s a great question. One of the things that you get in a well merchandise store, like a Toys R Us is the discovery process, which is very challenging to do online, which is you can touch and feel and see it. And you know, and I’m always a person like, I let’s not live serendipitous, you know, I think there’s a need for brick and mortar, not a want, it’s needed. And, you know, there’s an economic reason to have it because it’s cheaper to do business, they can get the product to the consumer for less. And I don’t live in a world where like, you have to touch it and feel it people are buying cars online. So um, I don’t I don’t want to be confused that you know, I have to touch a $30 product in order to feel good about buying it. But when I’m in touch and feel it just to understand how it works, to see all the different options to you know, to maybe ask questions to an associate. So all that things I think I think make it better to do brick and mortar as a consumer for toys
Cook 35:00
Yeah, I feel and that’s how I feel about gift shopping in general, because I’ll try to give, I’ll try to holiday shop online. And it. It’s tough. It’s really it’s tough to find stuff for people where I’ll go to the mall, you know, around the holidays, I’ll go to the mall and walk around and usually end up finding something for everybody. The discovery process for whatever reason, it’s so much easier in the physical world.
Ressa 35:25
Yeah, totally. It really is. You know, you need well merchandise stores, you need good merchants.
Cook 35:32
That’s true work.
Ressa 35:33
You could merchants for to work. But if you have a good merchant, it’s definitely better. Well, listen, this has been great conversation. What haven’t we talked about that we should talk about?
Cook 35:48
Well, let’s see. I mean, we talked about my favorite topic, which is experiential retail. We talked about daily needs retail. What else is what else is going on? I mean, we talked about restaurants, which is a big one. I mean, what happens to casual dining? I think there’s going to be just so much so many restaurants are going to close that can’t make it through this. And those those chefs, they’re going to turn around and open new restaurants probably, you know, a year down the road. So it’s not it’s not the end of the road for for foodies, but there might be a kind of pause and good new restaurants for a while.
Ressa 36:29
Is there an up and comer that you’re watching who’s like made good strides through this tenant of any, you know, a retailer or a restaurant?
Cook 36:39
Oh, there’s a Michelin star restaurant in Chicago called I think it’s called the Lena Alinea. Alinea. Right, you’ve
Ressa 36:49
heard the story about how they moved to delivery? Yeah, it’s I listened to the podcast. Yeah, it was amazing.
Cook 36:55
Yeah, I’m just blown away by, you know, a place that was doing, you know, 500 bucks ahead meals and pivoted to carry out all our meals. Yeah. And was doing better nights than they’d done before. It’s just brilliant. I love seeing a good pivot.
Ressa 37:14
Yeah, me too. It is a good one. That’s a good example. You know, I was I was I was reading. And I made a post about this. That KPMG put out something that the three categories for the that they thought would there’d be the most m&a With, for consumer and retail were functional beverage, personal care, and plant based. So we’ll, we’ll see, I use the m&a Because I think that’s interesting. You’re gonna, I think you’re gonna see a lot of m&a. You’re gonna see companies on sale. And so I think you’re going to that’s a way to grow. Right? You already heard rumors about Amazon buying AMC or whomever you’re going to see m&a. You just, I don’t know if you saw not as big of a press release as I would have thought but Food Lion bought 62. This is sourced from southeast grocers, by Lowe’s and Harvey’s. So food lines all buy Apple Dell house. And I think you’re gonna start to see the old military adage that one is not and two is one, you’ll start to see some m&a deals start to happen. So we’ll see what synergies can be made by a retailer buying a retailer. But I think that’s going to happen.
Cook 38:44
Yeah, and a recession is the time to do it. Yeah. And the prices are affordable.
Ressa 38:49
So you, let’s, let’s, that’ll be the last thing. You You mentioned recession a couple of times. So are we in a recession right now? I think that’s being debated. Are we in one?
Cook 38:59
Yeah, it was called Man officially this week? Yeah, I saw it was called. And I’ve been saying the R word for quite a while now because we knew it was here. Yeah, it’s funny. So we have JLL has a chief economist, Ryan Severino, who’s our economic modeler. And we’ve been working with him to try to understand how this recession is going to is comparing with past recessions. It is the sharpest and deepest fall that we’ve ever seen, as far as unemployment as far as GDP. But I think the good news is that it was caused by outside forces. It wasn’t some internal financial disaster that caused it. So as we get as restrictions loosen as long as COVID doesn’t spike again, and we’re allowed to get back out there and get back to work. Hopefully, that means it’s a short. It’s a shorter recession. I mean, I think the Fed released some numbers, some unemployment forecasts the other day that showed what like 10% unemployment after maybe a year, it might be getting that a little bit wrong, which is rough, no doubt about it. But there is a kind of a sense that we were going to see a sort of slow and steady kind of return to to a normal.
Ressa 40:29
Yeah, I asked the question that way, because so obviously, we, we, it was made official that we’re in a recession by the government standards. I’ve been talking to a lot of people who have debated me that we’re in a recession because it was using air quotes for those Listen, artificial, and it was government forced. It’s not a real recession. Yes, it’s bad, but we’re gonna bounce back. And that’s why I asked the question that way. So when do you think retail starts to recover?
Cook 41:05
It’s already happening. Love that. Yeah, the retailers like that have been allowed, and that have been able to reopen usually in suburban locations. Not so like the recoveries not not really happening yet in cities. But in the suburbs. I don’t know if you saw American Eagle stores that have been allowed to reopen. They’re at 95% of pre COVID sales. That’s awesome. So unbelievable. Yeah, that’s, that’s great. People are going back where they’re where they can where they’re allowed. It’s just a matter of capacity when those capacity numbers are allowed to be at 100%. You know, I think the recoveries here.
Ressa 41:51
We’re going to end on that. That’s great. The recoveries here everybody?
Cook 41:56
Yeah, that’s the headline quote. Coke says the recoveries here.
Ressa 42:04
Well, listen, we’re gonna go to the last part of the podcast. I’m ask you all three questions. Retail wisdom. You ready?
Cook 42:13
Sure. I didn’t I didn’t remember about this. So no worries. Gonna
Ressa 42:16
ask me. No worries. So one is a simple one best piece of commercial real estate advice. Someone who’s always looking at the data.
Cook 42:28
Yeah, the best piece of advice is look at the data. Don’t follow your emotions. spend too much money or too little. People make mistakes because they follow their emotions when making business decisions. Look at the data.
Ressa 42:44
Second question, extinct retailer you wish would come back from the dead? Oh my gosh.
Cook 42:53
I used to go to sharper image all the time. As a kid I also went to Waldenbooks all the time, the
Ressa 43:02
first one ever said Waldenbooks.
Cook 43:08
Hey, here’s one let me ask you about your New Jersey guy. Do you remember hammock or and glamour? They were like a gadget kind of flagship in Manhattan like 20 or 30 years ago, I used like, like I’m and I used to get their catalogs in the mail. Are they still around?
Ressa 43:28
So I do remember them? It looks like they have a website.
Cook 43:34
But no physical stores because I remember their physical store being like so cool.
Ressa 43:41
I don’t know. I don’t know. It’s a great question. Don’t know.
Cook 43:47
Yeah. Well, anyway, yeah. Well, Walden books and Walden books and sharper image are my two. Do you still read a lot? Renee, do you? What are you reading? I did last. The book I just finished is called the victory lab. And so the pitch for this book is you know, Moneyball. Yeah. So this is Moneyball for politics. So using the same statistical big data stuff, but applying it to politics. It’s a few years old. So the most recent stuff is like a couple of presidential elections back. But it’s the whole history of elections is seen through the eyes of data. So very fun read.
Ressa 44:38
Interesting. If you like Moneyball, top type books there and your data guy in your in real estate. There is a book this couple years old now called Zillow talks. So basically, you gotta check it out. So basically, Zillow had all This data because they were like the first online, you know, platform for this. And they kind of debunked a bunch of myths about residential real estate. And it’s just fascinating. The European data guy, how they use data to get there. Zillow talks great book.
Cook 45:19
That’s cool. I hadn’t heard them have to check it out. Yeah.
Ressa 45:21
Last question, James. So it’s summer I was looking for some summer beach shorts. I was looking at some Tommy Bahamas. But now I was looking I found this Halsey shorts, and Aman Halsey his website and they have the helmsmen sport short. What does the Halsey Hellman helmsmen sport short retail for on their website?
Cook 45:57
I’m gonna guess $45
Ressa 46:01
Well, I haven’t bought it. And this is why I haven’t bought it’s $110. But thank you for playing.
Cook 46:08
Do you think it’s overpriced?
Ressa 46:11
I don’t know. I don’t know if it’s overpriced. Nothing’s overpriced. It’s it’s what someone’s willing to pay for it.
Cook 46:16
It’s what the market will bear. You got it. I have a great pair of fareharbor. I had them on the podcast. Yeah, they do. They make swim trunks and shorts with recycled plastic bottles. And they were nice enough to give me a pair of a pair of shorts. Love them. Wear them all summer. They’re great. They’re worth it.
Ressa 46:40
Awesome. Well, listen, James. It’s been awesome. Thanks for coming on. Thanks for the real time data. And thank you for the headline, the recovery is here.
Cook 46:54
Awesome, you know so great to catch up, Chris. And to I’m crossing my fingers. I’ll get to see you in person within within the year within the 12 months
Ressa 47:03
within 12 months. All right, man. Take care. All right. Thank you for listening to retail tools. 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 retail at DLC mgmt.com. This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you’re 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.