Specialty Grocer in Southeastern Massachusetts
Guest: Michael Branton
Topics: Conviser Property Group, specialty grocer
Chris Ressa 0:00
This is Retail Retold, the story of how that store ended up in your neighborhood. I’m your host, Chris Ressa, and I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC Management.
Welcome to Retail Retold everyone. Today I am joined by Michael Brandon, partner at Conviser Property Group. I’m excited for him to be here. I’ve known Michael for a very long time. And he’s been in the business for how long has it been Michael?
Michael Branton 0:36
I actually had to calculate this this morning. It’s, I’m running up on 17 years in the business
17 years. So we entered the business almost the same time. Well, welcome to the show, Michael. Michael, why don’t you tell everybody a little bit more about you.
Well, thanks so much for having me, Chris, longtime listener first time caller. So let’s see. So like I said, I’ve been in the business now for 17 years. I started out the first, let’s say 15 years of my career working for a third party service provider at Key Point Partners, and we did leasing, property management, and everything in between, and I was part of their leasing team.
And I really cut my teeth on leasing institutional grade assets, urban shopping, storefronts, etc. And then I’d say over the last five years of my career I sort of drifted towards the tenant advisory side of the business. In particular, I focused on really three verticals medtail fitness, I guess, for entertainment and restaurants.
Interesting, and we have a national audience. So every once in a while international, you get some random people. So tell everyone, where are you located? And where, at least for the beginning, now you tend to advisory work in a lot of places, but where did you do most of your first 12 years of your business?
Sure. I mean, I’m still predominantly focused around the New England states. So predominantly, Massachusetts, Rhode Island, Connecticut, New Hampshire, a little bit of work in Maine and Vermont.
And you pivoted to this tenant advisory, medtail, entertainment, and food fitness. So, and you and I recently had a really interesting conversation about the medtail world, not related to this podcast. But I guess, just a high level question. What are you seeing out there today?
Well, it’s kind of interesting, because the irony and you know, we, I’m not an economist, so I won’t bore you with talking about labor construction costs or interest rates. I’ll leave that to the experts. But you know, very early on in the pandemic, the businesses that kind of took the brunt of the pain, first and foremost for restaurants, and fitness and entertainment.
And it seems to me like those who have been the ones that have recovered and roared back in terms of traffic and volumes, their margins may be different, and their operating costs may be different. But in terms of roared back with demand. Yeah, with what things are happening out there that restaurants would be now challenged. But there’s still a, I would say, demand, a big demand for good spaces and good markets. And fitness is still super, super strong as well.
I’ll try not to ask you questions about macro economics. But I will say that, you know, do you think that’s based on a pent up consumer demand? And is that an up demand, kind of going where we saw this, like, pent up demand in late 2020 and 2021? Sure, fitness, restaurant, medical, still, you know, really looking to be occupiers of real estate.
And, you know, we have this backdrop of things happening in the economy. So do you think that’s pent up consumer demand? Or are these just changes in consumer behavior that are here to stay regardless of economic conditions?
I think it’s a little bit of both. Man I hate to be the guy that says it’s both, but in a sense of, you know, medtail was ramping up and there are reasons that we can go into at length why those continued to stay strong as occupiers of retail spaces and then the pent up demand for experiences has been I think a pre COVID nuanced that you and I are super familiar with and has continued to be strong.
Those are the things that are difficult to replicate online. And likewise, the pent up demand for wanting to get out of your house and go to a nice restaurant or just get out of your house and be taken care of by hospitality vendors is without question.
Got it. That makes a lot of sense. So, given all that, what are the challenges you’re facing in your role in the industry today as you try to help and advise these tenants on how to grow?
Well, so I’d say for up until maybe eight months ago or so tenants could kind of dictate terms a little bit. I mean, the dynamic between who has more cards to be played landlords tenants, I think that balance has shifted a little bit in the past couple of months, where you could come into a market, you know, not so much dictate the terms, but sort of set the table for the discussions with certain parameters.
But now I’m finding more often than not with good spaces, that we’re competing, again, we are competing for spaces with whether it’s other tenants in the same vertical or just other tenants looking to grow. Which I think the lat I can’t even remember the last time I really had to educate a client on okay, we’ve got to be aggressive if we want the space. And that’s a dynamic that, you know, you’re an institutional landlord. That’s great news.
Yeah. And our Do you find that some tenants are better at that than others in understanding what it means to do that?
Without question, and it, and it’s not a question of whether they’re one off franchisee, or multi million dollar company with several 100 locations, I think it really just depends upon, you know, where they can stretch their business model, and where they can get creative.
Because the one thing that when you’re signing five and 10 year leases, you have to understand that if you want that space, and it’s the right space for the foreseeable future, if if you don’t attain it, then you might not see it again for five years, or 10. Or, you know, within your tenure, so you have to step up. And some real estate managers and operators are, get it and others don’t understand the scarcity sort of paradigm that’s out there with high quality real estate.
Are you? Yeah, I mean, essentially, are you seeing is there? Or is every landlord, like, really different? Or are there certain things that a tenant can do? Like, if you’re advising the tenants out there, like, and they are competing for space? What are some of the things you would tell tenants advise them to do? If they find themselves in a scenario competing for space for the tenants out there? They get they talk to the landlord, and they’re like, listen, we got three ello eyes on this space. What What would you tell tenants to do?
So there are two big picture factors that, that I kind of go into the discussion with the first one is, and it really comes down to capital. And it both replies to a landlord and to the tenant themselves, whether the tenant has access to capital, and isn’t looking for specific improvements and a TI allowance. And likewise, whether the landlord is equipped or set up to be able to provide that to them.
And some landlords, the bigger institutional ones have access to cheap capital or it’s in their budget. And then you’ve got the mom and pop landlords with, you know, a store block where they’re just not prepared nor capitalized to come out of pocket. So if the tenant can be flexible on that in either direction, then you have a higher probability to make the deal makes sense.
Some tenants have more flexibility than others, some have better access to capital really just depends on their business model. And then the second one, which is a little less cut and dry is, you know, what benefit does this tenant bring to either that property that neighborhood and community or that shopping center and it’s and it becomes about advocating for fit? Is it a merchandise question of your sufficing or satisfying a cat The glory that’s unmet?
Or is it something that the community wants? Or can you make a, an argument that the tenant is going to drive, you know, 2000 members to your property. And likewise, a rising tide raises all ships that will benefit your other tenants. So, you know, those two big factors are kind of where I’m starting my advocacy.
Those are great, I’m going to add a third that we talk about a DLC all the time, that is completely in the tenants control that definitely in a DLC portfolio, but I think everywhere really will help a tenant get to the head of the line, and that is speed.
I knew that’s what you were gonna say. And we’re right in, you’re right on
it. So for us, we’ll sit there and you have like, you know, two tenants, let’s say they’re both similar credit, similar financials for if, if one tenant has a negotiation process, that’s going to take eight months, but I can get to rent, you know, five months faster with the the other tenant, it’s going to move the needle, because it’s not just getting to rank, it’s the point that you made, it’s getting open, it’s getting, it’s getting the senator in a better place, right.
We all have, as landlords have to deal with some of the some of the things that are reality with some of like, our anchor tenants, you know, we, we have a tenant who’s like, listen, the National amazing box tenant in Texas, who was like, listen, we’re setting the delivery date for 2024.
And I was like, this isn’t summer 20 to 24. And they were like, listen, we know because of supply chain, this that the other thing, that it’s gonna take you that long to get it, they’re like, Listen, if you give us some notice, and you tell us, you can do it in 23, great, but I’m telling you, we’ve seen the other landlords, it’s going to be a challenge for you.
So the tenant that can get, you know, can get through a lease and get open quickly. It has a huge leg up on the others, you know, has a huge leg up on the others. And so I the tenants that mean business, and are in growth mode and are ready to open and that are pushing the landlord, let’s go, let’s go, let’s go. I find they get more stores.
Those are the tenants you read about that have, you know, that had a 100 store growth plan and they did 120 deals, they they can move quickly. If they have if they can’t ever deviate from a process or they can’t, or they’re negotiating at nauseam, it’s, it’s going to be tougher to land that deal in a competitive scenario.
Sure. I mean, I think one of the things that you’re that you’re we’re talking about, it really boils down to transparency. And there are tenants who are straightforward about what their need looks like, and when they can open. And when you really sort of work backwards.
And a word I use a lot is reverse engineer, if you look at the process backwards from when they want to start to where you are now and you add in, and how long it’s going to take to get permits, how long is it going to take to get a CEO and, you know, equipment and FFP and all that and you’re like, Okay, so we said 2024. But in reality, we’re talking about a 90 day Delta, between what you’re thinking and where we’re at. It’s not that insurmountable for the tenant that you want.
So and I think you mentioned this many, many years ago, about transparency on a lease form. And when people were going to be out of the office on vacation, I want to say it was this time a year. And that kind of stuck with me because and I asked this the other day on a call a deal that was about to get approved by a publicly traded REIT where I said specific limit. Okay, so what is your process for getting this through your rec committee?
And then likewise, where does that fall within the, you know, the vacuum of holiday 2022 and New Years, and it pretty much put us on So okay, so you might get this through your real estate committee, but we’re not going to see a lease on this until January 1 best case scenario. And my client found that really valuable because they could again, we all report to somebody. Yeah, they had a plan. It was realistic. And yeah, start there.
I’ll use it you know DSW had sent in we were talking about it was DSW. We get to we get to both parties approved. To deal with RTC, the SW has this checklist and they’re like, Okay, we’ll send you, you’ll send us the lease here. We’ll get comments by this date. And then you’ll respond here and they go, oh, wait a second, this attorneys out on vacation here.
So here’s the date here. And so all of a sudden, all these things are coming to fruition that like, we’ve all had that we send, we send an email, like, Hey, where are the least comments, and then all of a sudden, you get a response of a plot an automatic response that says, you know, out of office until 2029, and you’re like, what, what just happened? What do you mean,
right? You’re not doing anybody any favours. So whether you’re in house or whether you’re a third party, it doesn’t really matter. I mean, transparency, transparency wins.
Yeah. Okay. Well, that’s great insights. Michael, I want to you work on so much. You, you have a story for us. Tell us about an interesting deal you worked on? Where are we going?
All right. So God, the names and places have been changed to protect the innocent. I’ll start with that. So, you know, I think the the, the message of my story starts with listening and prospecting as a broker, our GM, you know, two things that you can’t do without. And so I was working on a property in southeastern mass, I was representing the landlord.
And we thought it would be a great it was a pretty diverse, dense market, we thought it’d be a great use to have kind of a, I hate to say ethnic grocery store, I’ll just call them a specialty grocer for them. Sure, especially grocery store, like especially grocery stores, so but they serve a very specific clientele. So we’re, you know, we generated a list of every specialty grocery store within 30 miles. And we’re pounding our way through the list.
And we found one that was on the other side of town, that we set a meeting with to come to his office, and present the site present the opportunity. Now we’re talking to him. And you know, very early on in the meeting, it doesn’t sound like it’s going to work. But the store does big numbers for a, you know, an independently run chain that we thought, Okay, what else can we do with this conversation? What else can we do with this operator?
He knows what he’s doing runs a great business, how can we help him? And so we asked him some pretty straightforward prospecting questions like, well, who’s your core customer who you’re trying to serve. And you know, he’s not a star market Hannaford, or Stop and Shop. So is inventory is pretty specific. And come, we come to find out that he serves a very specific West African community.
And he said, All right, so let’s go back and figure this out, and try to figure out where we can help him find new locations. He’s in growth mode, he wants to expand, he’s under construction with another store at the time. So we go back to our research department and said, Hey, can you plot for us on a map, where the concentrations in New England for this very specific, I mean, it was like a subset of a population, but sizable enough that they exist in most municipalities and most communities, so it’s okay.
So he comes up with this list, and he’s got, you know, 15 or so different, you know, shading on a map. Alright, great. So, we’re digging into it. And it occurred to us that we had a listing that the anchor tenant was moving from a space down the street into the anchor space in this project. And so we called the landlord and said, Hey, are you interested in this kind of use to backfill your old space? They own their box? And they said, absolutely.
So we go back to the tenant, we had spoken to the specialty grocer and said, Alright, so we found you a space in a market where, you know, in terms of a concentration, a shading map of red being the concentration of, of the West African population that they serve. He’s like, Yeah, let’s do it. This is great.
So it kind of converted from prospecting about one thing, and learning about somebody’s business to converting into representing a tenant and ultimately satisfying to different parties, the anchor that didn’t know what to do with their old building, and likewise, a tenant who would have loved to be In this market but didn’t know about a space because it wasn’t on the market. Hmm. Now fast forward to today, the tenants open, the store looks amazing and they’re doing gangbusters.
There’s a lot to take away from that story. So one, you mentioned listening, and I think I think it’s always, you know, one of the so there’s, that’s clear in the story, you mentioned listening, I think one of the things that’s always to a client, you, when they feel like they have and they actually do information that the market doesn’t have it is they find it invaluable. And you gain a lot of trust, and you gain a lot of credibility.
And because that, that shows us that without you, they couldn’t have done this. And you knew about something that the market didn’t know about, and was able to move quickly provide you were listening in the beginning, you were able to explain to him that this is exactly what you want. And nobody knows about this, and you were able to move on.
And I think that’s a really, really compelling lesson for anyone in commercial real estate about keeping your ear to the grindstone about what’s going on, you know, we’ve as an industry, people have gotten so reliant on costar and loop net, and these things and I often saying, well, the the opportunity is what’s not in those data datasets, which is, which is definitely, there’s still a lot of things that aren’t in them.
And that’s like the true real opportunity, it’s nothing against those platforms, what they do is, is great, they’re invaluable,
but they’re not the end all be all is I think you’re at the point, you’re
Yeah, there’s information that they are just, it’s unable to be technically driven, there’s just this qualitative information that’s so crucial to the commercial real estate industry.
I think there, there’s another thing that, you know, it’s, it’s equally as important for the leasing reps and the landlords out there as it is for the tenant reps in your audience is, you know, in addition to listening, you’ve got to be able to make connections. And, you know, having this knowledge of the markets that you serve, and the tenants that are in there, not just, you know, I make a joke about the difference between a landlord rep and a tenant rep.
And, you know, there’s, I’m sure you’ll have a counter argument to this is a landlord rep needs to know their Senate, their center, and they need to know their market, a tenant broker needs to know all of them. And so in the sense of, they need to understand every market and every center, because they have to be able to siphon out what could work for a given requirement and make those connections to your point about loop nets and the costars of the world.
I mean, when we’re talking to tenant clients, and kind of going through the process is, you know, it’s easy to they can go through loop net and costar on their own, they don’t need my help, right, the thing that those don’t show you is the tenants that are closing haven’t closed, or the spaces that could be on the market that aren’t.
And so I go into markets, and I have a story that I’ll share with you another time about looking for the space you want in a market, not the space that exists, or the space that is available today. And and they’re very different. Sure. And if you’re not going for the space that you want, and there are brokers that excel at this, and they’ve made their careers known and continue to crush it, because they go for what is best for the client, and then work backwards. It’s not just Well, here’s what’s available.
Totally. Yeah, I think there’s a lot that like, here’s what’s available for sure. And all right. It’s a great point for going for what you want. So really cool story. Thank you so much. One day, you’ll have to tell us what happened to the space that you were originally trying to lease for what happened to that space for another day with
an adult daycare 15,000 feet which was again not the use I was going for but in the end made a lot of sense.
Very cool. Everybody’s happy. Okay. Well, we’ll take us to the final part of the show. I got three questions for you. Are you ready? Bring it on. All right. What extinct retailer Do you wish would come back from the dead?
Okay, so I have to and I really can’t decide which one, my knee jerk reaction is sharper image. And yeah, these sort of, sort of exist as a site. I think somebody bought their IP, and they have a catalog, but, but the stores were insane. The stores were insane. There were, you know, things that I couldn’t imagine anyone would ever buy. But it was such a cool experience because the stuff was just amazing.
I love going to places one of the things I like about sharper image where you can’t find the products anywhere else. And I think that’s really, one of the things that struck me in the chat is like, you’re always wondering, and you’re like, Oh my God, I’ve never seen this before, you know?
Yeah. I mean, and the other one if I can say to you is a store that was in parts of LA and they had a location in Vegas called Kitson. K-i-t-s-o-n. And it was like a clothing store. But they had cool, just, I don’t know, stuff. And I was always amazed by the stuff that was in there that I’ve never seen or heard about, apparel brands that were, you know, up and coming that, you know, weren’t in every department store and specialty store.
And we’re, and what that, what that signaled to me about both retailers for that matter is they had really, really good buyers. And we’re really thinking ahead of the curve. And again, I think for retailers today it’s about innovation, and part of innovation is bringing the right products to the customer experience.
If you, if you’ve ever talked to an apparel company, and you talk to the real estate people, one of the things they mentioned, they would often mention the CBO. At least in years past, I know technology, maybe it’s changing this, but they would get very excited, a real estate director at some apparel, when a merchant was the CEO.
When someone who comes from the merchandising that knows how to pick product, that knows how to put together a team that picks product, that knows how to make the product work in the store. And real estate directors would always say when, you know, whenever there was change, what are you thinking about this and they’re, they, you know, they get really excited. I love that a merchants at the helm.
You know you have the iconic merchants like Mickey Drexler of the days and whatnot. But they would love that and when, you know, I think they would always get concerned when some, you know, equity, or private equity put some financials person in there.
And they surely didn’t know merchandising. But yeah, I don’t know if it still exists. But that was always the thing, which is, you know, you talk to real estate people. And you know, there was changes in the C suite. So how are you feeling about this? And then merchants at the helm, and they’re excited. So, yeah. Number two. What is the last item over $20 you bought at the store?
I was at a Dick’s Sporting Goods earlier this week, and I bought a mask and snorkel for my son. Oh, where are you guys going? Turks and Caicos.
What an amazing spot.
It’s a cool spot. Not that I don’t love cold weather, because I kind of do. But it’s nice to get out of town here and there.
Yeah, for sure. Last question, Michael, if you and I were shopping at Target, and I lost you, what aisle would I find you at and why?
You would probably find me in the grocery section of Target. And the reason for it is every time I go to Target and I end up in the grocery department, I’m always, and I guess this comes back to merchandising, I’m always impressed by the lines and the inventory that target is is carrying.
Like they carry Stumptown cold brew as an example, like who would have thought that Target would would start to stock that, it’s kind of a specialty coffee item, but they do and you look hard enough and you realize that Target is raising their game, big tip and you’re bringing in lots of great stuff, incubating brands and bringing in great inventory and that’s why Targets doing really, really well right now.
I have a, if you don’t know, a gentleman Chris Walton came in and they have a show called Omni-talk Retail, and they both been on the show. But they, they’re both X target people like they, they’re on the Store of the Future, they run the black box team.
That was, they were in like a separate place, like crazy black box creating the Store of the Future. And so, and and I forget where it comes from. But Chris is from the merchandising background. And so they’re really interesting to get perspective on.
But one of the things they, that Chris has put out that I think you would find interesting is the five reasons stores exist. It’s a really interesting article and he talks about it all the time. And he wrote it some years ago, and I still think it holds true today. You should check it out.
So I will definitely check that out. Yeah, I’m a sponge when it comes to content. Yeah, I just don’t have enough hours in the day.
Well, listen, this was great. Thank you so much for coming on. Pleasure is mine.
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