Rocky Mountain Chocolate Factory in Great Falls, MT with Amy Hall
Guest: Amy Hall
Topics: Ricky Mountain Chocolate Factory, Caton Commercial Real Estate Group
Chris Ressa 0:02
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Welcome to retail retold everyone today we have Amy Hall, the CEO of K in commercial. Amy has been in the business for over 20 years and brings a an enormous amount of knowledge to the industry. And we are excited to have her on the show. Welcome, Amy.
Amy Hall 1:28
Thanks, Chris. It’s so good to be here with you this morning.
Thanks. So Amy, why don’t you tell us a little bit about what Kate and commercial does and what you guys are up to?
Absolutely. Kate and commercial real estate group is a full service brokerage and property management firm out of the western suburbs of Chicago, we serve not only the Chicago market, but also regional national and we have international clients.
Interesting, what international clients do you work with? So we work with a international group out of Berlin, Germany, and they are a coliving. Group. Wow. Are you guys doing multiple asset classes? We do. So we span them all. We span all of the asset classes we are we have a heavier predominance in retail,
multifamily office industrial and retail. Yes. Wow. We manage across those platforms as well. So just for some context, in terms of employees, how biggest key and commercial?
So we have 2016. Members.
That’s great. And how are you guys? You know, you got it, you have a good lens into multiple asset classes. What are you seeing today? What’s going on? What are you guys working on? What’s been like it like in a COVID-19 environment for you?
Sure. It has been challenging and interesting. It definitely. I think we’re a little early to see how all of this is going to shake out deals that were already fully baked, have have continued through close and we are seeing transactions happen. We’re also seeing a lot of activity where people are interested from whether it be investors or different tenants who are interested in what type of real estate is going to be available as we start to emerge out of the initial panic crisis piece. And people start moving into the living with COVID reality. And we’re very far from seeing what the post COVID Reality is going to be. So we are still seeing activity but any type of any type of transaction that was at early stages or midway point, those people have pulled back.
Got it? Is there. One asset class that has been that you’ve seen that’s been more challenged than the others?
Sure, hospitality and retail, without a doubt. And so the restaurant, our restaurant clients, our clients who have properties with restaurant and service users, any of our properties that had hotels on them, those are really in, some of them are in very dire straits.
Got it. And you’re in Chicago, and recently we had someone on the show who kind of gave us a take on what they thought New York was going to be like coming out of this what do you think Chicago was an interesting place right? People were moving to certain neighborhoods in the city we’re growing. You have people’s concern about the the taxes the real estate taxes in In Illinois, what do you you know, what do you think about, you know, the real estate market coming out of this in Chicago, specifically anything unique about Chicago versus the rest of the country?
I think that the tax implications are an added challenge. And it will be interesting to see how the city and the state, particularly in regard to the new assessor continue to reevaluate commercial real estate from an assessment standpoint, we were we had just started going through the process of the new assessor standardizing the assessment process and reevaluating properties. And that had definitely caused a lot of conversation in the local marketplace. I think that the taxation piece on top of a very dense area where it’s yet to be seen what the physical distancing requirements are going to do to volumes that, whether it be restaurants or retail can generate in the near term, and how that will continue to help them resurface out of this, and how quickly all of that happens. So if we have flare ups, how that impacts both the governor’s plan and the city’s plan of continuing to allow businesses to operate more freely.
So what’s Chicago like right now? Or are people walking out? And about on the streets? Are people pretty hunkered down sheltered in? What do you what do you say?
So here in the suburbs, you you see people out for walks, you, you definitely see people taking advantage of being able to get out into the fresh air, you don’t see a lot of you know, there are pockets, where you’ll see people that are out and about. And for the most part, they’re wearing masks, I will say that that has been an evolutionary change. Because when all of this first started, you would be out and I would be at the grocery store with my face mask on. And I’d be one of 20 You know, that would have a mask on. And now it is very common that people are using the protective gear that has been recommended. But you are seeing people start to get out. And definitely now that the weather is starting to become nicer people are wanting to get out of their homes and enjoy the outdoors.
Well, that’s good to hear. From a from a real estate perspective, are there are there anything you guys are doing at the property level that you know, because of a COVID-19 world that you guys have been forced to do or strategy that you think is going to carry forward through the you know, even after we get through this?
I think that this from a strategic point of view, it is really about client relations and and tenant relations. And understanding that not every situation is the same, I know that the relief efforts have been somewhat of a blanket, not one size fits all. But there were very little qualifying attributes to some of those programs. And when you have tenants that come looking for lease modifications, being that good partner, but also being understanding what their real financial situation is, is a is a delicate relationship when things are in turmoil like they are because you have people who are looking to maybe take advantage of the situation and then you have people who are very much in need of the relief that they’re seeking. So to that from that strategic piece, just making sure that open communication and being a good partner from a physical plant, you know, trying to take into consideration everything that OSHA and from an employer standpoint is recommending from the landlord side and guiding our clients well, is just what is being recommended by the CDC, what has been recommended by the actual health departments as majors to take for them to operate safely in the marketplace.
Are you all you know, I think one of the big things right now, just from an employer perspective that people are thinking about as travel, are you guys traveling to assets yet or not yet?
Not much. There has started to be a little bit of that. And there are some guidelines in Illinois that you have to follow in regard to showing any space or or touring properties. So we’re doing that on a very minimal basis. We’re taking advantage of any virtual touring that can be done and really that remote relationship
how is very tool touring, gone.
You know, it is, I think that many people enjoy it from oftentimes, some feedback that we hear is Oh, I haven’t seen that before we use a software called Matterport with a technology called Matterport to do our 3d virtual tours within the properties, and so people think it’s neat, it’s a novelty. And I do believe that going forward, just from an efficiency standpoint, we’re going to see those tools used more and more often.
So see you guys manage some multifamily properties, correct.
We don’t have any multifamily in the portfolio right now. But we do.
Got it. Okay. And so, are you at the property on the retail side? Are you doing? You know, the next big thing I keep hearing is all this curbside pickup, designated parking area pickup? Have you guys done anything with that? Are you thinking about it? What do you think we’re,
you know, we’re starting to talk with our owners about it. For the most part, we are a third party manager. So working with our clients, and helping them talk through those strategies is definitely something that we are in the midst of right now.
What do you think about curbside pickup in the future that?
I think that there is, even before this happened, I think that curbside had started being appealing to people, particularly in the grocery space. So I think it is a trend that will continue. And I think that you have a sense, an added sense of security right now where you’re in the confines of your vehicle, you have, you know, consider it, each person has to determine how many touches they want on the packages that they have. Right. So it’s just a matter of comfort. But I think from a convenience standpoint, and from the current climate of people, and their personal safety, I think it’s a trend that we’ll continue to see. I think that staging for it has to be very well thought out.
Yeah. Do you do you fall in the camp that curbside pickup is good for retail brick and mortar, or not so good, because they don’t go in the store?
That’s a tough one. That’s a tough one. I think that I think that it serves its purpose in a in a situation right now. And it keeps the activity going. I think that anytime that the consumer can get into the store, the retailer has a greater opportunity to increase their sales volume.
Yeah, I gotta tell you, I went, you know, I ordered a a bacon egg and cheese from the bagel place, and they were doing curbside and you go to the shopping center, your parking space, you call them and they brought out the brown bag with my sandwich, I rolled down my window, they dropped it in my window. And I was like, wow, this is this is amazing. And,
and but I was, you know, as I was driving away, and, you know, munching down my sandwich and you know, probably had ketchup dripping down my shirt. I’m wondering, what is the implications of this for retail? Like, are people not going to want to go in the store? I personally think that it helps. Retail, I think that it’s going to be be good. I think that people are going to it’s going to drive people to the properties. And it’ll actually, in my opinion,
over maybe not in a one shopping experience. But over the course of time, it will it will have people visit the property more, and therefore going to the store more on that on one specific visit. It may I may not go in the store. But I may not have gone to the property in another circumstance and not because of safety, but maybe convenience if they didn’t have it, you know? So, you know, I
think that that’s I think that’s a very valid point. Yeah, bait that you may not have as high a volume of transaction each time, but you may have more frequency. And anytime you can increase frequency and ingrain that habit of a consumer visiting that shopping center or that retailer, that just solidifies that pattern of behavior. So I think that I think that’s a very valid point.
That’s what I think that’s my prediction on what happens. I hope I’m right. That’d be better for brick and mortar but we’ll say absolutely. Anything else from the real estate of real estate today that you and I still have from a friend Jason siendo says that the real estate of real estate, anything that’s been on your mind you’ve been thinking about, that’s interesting that we haven’t touched yet.
I think that it is important that people be careful how many important and long term changes they are making right now, because we are in an adjustment period between the post or the pre COVID reality that we lived in for so long, and the living with COVID reality that I talked about earlier, we are, in my opinion, we are still too far away from a post COVID reality to really understand what that means. And times of crisis and panic and fear, cause us to want to do something about it. And in some cases, we do have to do, we have to mitigate and triage and do those things. But triage is temporary. So I think that companies, tenants or landlords otherwise need to take enough of a pause to make sure that you have enough information to make long term changes. So that’s my thought,
just in general business. I think that’s an interesting topic. That, you know, in my role at DLC, you know, I think about a lot is,
you know, the, how proactive should you be on the long term versus not rushing to judgment, and there’s definitely a balance. You know, the counter to that is, I do believe that sometimes a distance, any decision sometimes is better than indecision. So, I lean a little bit more toward being proactive, and taking some risk and taking some shots.
But there’s something to be said that, not not to rush and make a long term decision that’s, you know, dangerous. And so I think it’s a good point. And I think, you know, business leaders in all industries are dealing with that right now, obviously, we have our challenges in real estate and retail, but, you know, whether it’s the cruise line industry, or whatever it is, right. There’s other industries that are challenged as well. And I think it’s a interesting business leader point of, and we’ll see, you know, in five years, what was right and what was wrong on that? Should we should, should people started to take advantage of opportunities? Or was the opportunity really sitting back and waiting? We’ll see.
There’s always a balance, I think that it was Colin Powell that said, you know, he uses a 4070 rule, anything less than 40% information, it’s, you know, an a risk that may not be worth taking any, if you’re waiting just to get more than 70% information, you’re probably waiting too long. So it’s, it’s an interesting, it is a balance, without a doubt and similar to you in my role, and being able to evaluate, you know, and pivot. From an operational standpoint, as a company, it is crucial, and you do have to sometimes take calculated and informed risks without a doubt.
I haven’t heard that Colin Powell 4070 thing, but I it makes sense. And I I like that, uh, that thought process. So interesting. Thanks for that feedback. I think everyone will like that one. All right. So I think the next thing, you have a story about a deal that was done in the mid 2000s. in Great Falls, Montana and Rocky Mountain Chocolate Factory. Why don’t you tell us about that? And I’m excited to hear. Yeah. So
I think that when you asked me what one of the more fun deals that I had worked on, I’ve, I’ve worked on many over the years, I spent 17 years on the transaction side. And I think one of the most enjoyable things to me was to bring new retail or service providers, whatever the case may be into, whether it’s a market or into the shopping center itself, and one of those was Rocky Mountain Chocolate Factory. And it was fun because not only was it new to Great Falls, Montana, it was new to Montana itself. So looking at and going through the process with a tenant of really determining is a market right for them, because their success is your success. And it’s something that I learned very early in my career that you don’t do yourself Have any favors by leasing to tenants who are not right for your center or not right for your market? So going through that, looking at the composition of who their core customer is, and where are they in Great Falls? And how are they going to capitalize on? What I didn’t know about Rocky Mountain chocolates business is how much corporate gifting they did at the time? And how important that was to their business to look at, was there that type of business opportunity in the area? And how can they capitalize on that. So it was just a lot of fun to walk through that deal with them looking through the eyes of the retailer, because oftentimes, when you lease from the landlord perspective, for the majority of your career, you can have blind spots when it comes to what a tenant needs to be successful. And that was a lot of fun for me, was interesting to walk through.
So I got a bunch of questions. So okay. How did Rocky Mountain Chocolate Factory get interested? in Great Falls, Montana? Was it? Did someone reach out to you? Did you have this doing research, have an idea and reach out to them? What was the start?
So I actually reached out to them because so we had a a shopping center in Colorado as well. So just looking at merchandising mix and looking at some some retail to be able to bring into the market, you know, reached out to them to see if they had any plans to enter into the Montana marketplace. And sometimes timing is key. Yeah, and you catch a retailer when they are, are in expansion mode or that they have you know, Rocky Mountain Chocolate Factory is a franchise model as well. So we worked with not only the corporate, Rocky Mountain chocolate, but there are operators in that market.
So if I unpack this, right, you were looking at retail and multiple markets. You had a center in Colorado where Rocky Mountain Chocolate Factory was, you liked the concept you thought that could translate based on what was going on there to your center in Montana, you reach out to them and
and they’ve got a franchisee to do a deal.
So you start the process. And you know, I think it’s interesting when you bring a new REIT I’ve retailer new to market. I think that is you know, that is a challenge to do. I think most people write the you know, old adage that the most likely deal is probably within your existing market. So absolutely. bringing someone from new to market is always hard, but definitely gratifying. And so how long from when you reach out to them to when they actually signed the deal from a new to market perspective? How long was that process?
It was, and this was like you said it was in the mid 2000s. So if my timing is off, forgive me, I would guess that it was between six and nine months.
Okay. And so the they hadn’t been to the whole state of Montana. And I don’t know Montana well, but is Great Falls typically the first stop for retail or do they do or do they do other markets first, if you’re coming to Montana, they go to
Billings is first, usually, yeah, so the benefit and the advantage that we had was the franchisee was from grateful.
Oh, wow. Yeah, it was serendipitous for sure. It was
Yeah. So had had the franchisee been interested in Billings, you know that. And that’s something else when you have when you have a retailer who’s looking to come into a market, they really they have a strategy around that. And it’s really somewhat difficult to get them off of that you either meet the criteria sometimes or you don’t. And in this particular instance, part of the advantage that we had was that the franchisee was local to where our shopping center was at and that made the barrier to entry for them lower. So that helped us be able to get that across the line.
So okay, so you beat out billings because you have this serendipitous thing because the franchisee stuff I’m there. And what type of market is Great Falls Montana? What give me a little bit about that market.
So it is so there’s a military base in Great Falls. The hospital in the military base are large employers. It is a rancher, you know, it’s mid, it’s in the middle of the state. So you have a lot of ranchers and farming that happened agriculture that happened in the area. So it is, you know it by standards of mshs. It’s a very small marketplace.
And what type of center was this? Includes regional law. Enclosed regional. Okay. Yeah. And so
there are only four or five in the entire state.
Yep. Wyoming. Yeah, there’s, I think, yeah, four in Wyoming. And he’s from Great Falls, he’s interested, he wants to come to the market. And one of the things you mentioned, the corporate gifting, and then you mentioned the military base in the hospital. And those are clearly some drivers of corporate gifting. You know, how did that play into the decision making?
It came in fairly early on the the franchisees were very transparent about that being a big piece of business and being able to drive that piece of it. And not only from a local corporate gifting, but also online. So with Montana being such a small marketplace in even though it’s a very large state, you have, you have predominantly for retail hubs, you’ve got Great Falls, Billings, Missoula, Bozeman, and then Kalispell. So I’m sorry, there are five. And so how do you from a retailer standpoint, even though you’re based in one people will drive a very long way to go to a specific retailer because they really don’t have any choice? So being able to capitalize on that, how do they get the word out? That they’re there? How do they how do they really capitalize on the entire market, not just the immediate marketplace. So that was those were things that we talked about fairly early in the process. And so targeting the military base, the hospital, there’s a lot of tourism and Great Falls, because of Glacier National Park, being to the north, you have the Lewis and Clark Museum in Great Falls itself. So you have some tourism, which means you had a lot of hotels that did gifting you have, you know, the contractors that come in and out of the military base, there were there were opportunities on the corporate gifting side.
Awesome. And then, as far as the deal goes, and the you know, the space in the mall, the the terms of the deal, anything interesting about that any any challenges you had working through that you had to get the franchisee over to get them to the finish line.
You know, in terms of complications, there were not a lot of complications in regard to the deal. It was just them being you know, working through their business model on their end, they took a space, right? At the it was a corner space off of the food court, right at one of the main entrances at the bottom of the escalator from one of the eight anchor stores. I mean, it was a it was a primary spot. So there wasn’t a lot of angst around the deal. It was just a matter of them working through what they needed to come into the market.
Got it? Well, interesting. I love bringing new tenants to a market. I think that’s, you know, great for the community. Obviously, communities love when that happens, it’s new and exciting. Especially if they’ve never heard of them before it’s it gets it’s pretty cool to see and be a part of to be able to bring that to a community. Anything else about this, about this deal that you think is interesting or something you learned that might be helpful to the audience. I mean, a key takeaway for me is, you know, really understanding what drives their business and understanding you know, when you understand the corporate gifting and that you have that there, you know for Rocky Mountain chocolate factory that’s obviously helpful to getting them over the hump. Anything interesting you learned or anything when You’re bringing a new to market tenant to the market anything, any any sage advice for the listeners out there
be realistic about what type of center you have. Because oftentimes, I think that when we are looking at our shopping centers or market we least to what we want it to be versus what the reality of it is. And when there is a mismatch is, if the tenant is not the right fit for the center or the marketplace, it is oftentimes a lose lose situation. So back to the point that you just made understanding your the tenant and what they need to be successful, because their success is your success. And if they can’t make it, you have not done yourself any favors. I’ve had the opportunity to be a part of deals coming into markets, working in the Iowa and Montana and North Dakota markets gave an opportunity to see some new things come to market. And those were always a lot of fun. So if people are listening, and they haven’t had an opportunity to do that, that it’s a it’s a fun transaction to be a part of.
Very cool. Well, that brings us to the last part of the show retail wisdom. So I have three questions for you. Tell me when you’re ready.
I’m ready. All right.
First, question, best piece of commercial real estate advice for the listeners out there.
I have been given many, many wonderful pieces of of knowledge and experience over the years, I think that the one that I go back to most often is do not put no in someone else’s mouth. Don’t make the assumption that they aren’t ready to expand. Don’t make the assumption that you know that there that you know anything until after you’ve sought the information to be able to make an intelligent decision about it. So don’t put and don’t be afraid to make the ask because no is the next best answer to Yes. It helps you evaluate where you’re at.
I love it. One of my friends birthdays or has a book don’t say no for the prospect. So. So I think that’s sage advice. Thank you. Next question. Extinct retailer, you wish would come back from the dead?
Oh, gosh, you know, that’s a tough one. They’re extinct for a reason sometimes. Gosh, you know, one of the things that I do remember from when I was little there was a Montgomery Ward’s that was local to a small town, it was actually on the town square. And I remember going to that with my grandparents. So my grandpa in particular. And that was always a wonderful time. So I think if I have a cherished memory of a retailer that is no longer around, it’s Montgomery Ward, actually.
Perfect. That’s a great answer. And had that one on the show yet. That’s a great answer. All right. Last question, Amy. I am on the grommet.com. Okay, one of the hottest beach items. I’m ready for the beach. This year. Is the Bondi Beach 10 By loving summer. What does that retail for?
The Bondi Beach? I am going to guess 7999.
Well, you’re way off. It’s apparently a much higher end product. It is $160 But thank you for playing.
So what is I have not seen the Bondi Beach tent. Tell me tell me what warrants $160 for a beach tent.
Well, for those who don’t know where on Zoom, I’ll share with you there it is.
I Yeah. Yeah. I would love it. Because, as you can see, I’m not I’m not a candidate for a lot of sun. But yeah, that’s that’s a steep price for sheet and two poles. Yeah. So very fun.
Yes. Listen, Amy. Let’s stay connected as things unfold. Always appreciate your insights and thanks for coming on.
Yeah, absolutely. Chris, thanks so much for having me.
Thank you for listening to retail tools. 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 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