Guest: Brett Sheets, Angie Kory
Topics: ICSC, occupancy costs, ground-up developments, supply-demand, recession

In this week’s episode, Chris sits down with Brett Sheets, Senior Vice President of Leasing for Barclay Group ,and Angie Kory, Vice President of leasing for Vestar. Join Chris, Brett, and Angie as they recap the 2024 ICSC conference in Vegas and discuss the top three leasing trends that are shaping the current dealmaking climate.

What You’ll Learn:

1. How are demand trends changing how retailers view vacant space?
2. Which leasing provisions have become more negotiable with tenants?
3. What is the current industry outlook on recession?
4. Why are renewals taking longer to complete than in the past?
5. How are store formats changing?
6. How are retailers and landlords making deals work in with higher construction costs?

About Retail Retold:

The Retail Retold Podcast highlights community retailer stories from across the country and gives a behind-the-scenes perspective from business leaders in both retail and real estate industries. The show’s episodes contain valuable insights that help solve the needs of entrepreneurs and real estate pros. Join host Chris Ressa and new guests weekly for amazing insights and thought-provoking stories.

Transcript:

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.

Today’s episode is brought to you by complete solutions and sourcing. Complete is a partner of ours at DLC and they provide waste and sustainability solutions for our properties

Complete solutions and sourcing Inc. is a customer centric, comprehensive managed waste service provider, independently owned and operated. We are the experts in waste and recycling solutions with a key competitive difference. Our boutique approach. We are driven by our desire to support the commercial real estate industries, owners, landlords and managers as they navigate the ever changing and challenging waste industry. We are honored to work with some of the industry’s top brands to strategically craft implement and manage some of the most impactful waste programs available today. As we reshape the waste industry and lead our clients to their diversion goals. Is your waste program complete? Contact us at complt.com C-O-M-P-L-T .com, and let the experts at complete solutions reduce the environmental impact of your waste program.

Chris Ressa  01:18

Welcome to retail retold everyone. Today I’m joined by Angie Kory and Brett Sheets. Angie is the Vice President of leasing for Vestar and Brett Sheets is the Senior Vice President of Leasing for Barclay group. Excited for you all to be here. Welcome to the show.

Brett Sheets  01:35

Thanks for having us.

Chris Ressa  01:38

And I will be honest with everybody, we actually did record this pre-Vegas and I did not hit the record button. And so from this is a redo. So, but now we are going to get to talk to everyone about our what we learned and what we saw and what our takeaways were for Vegas. So stay tuned, everyone. But first, Brett, why don’t you tell us a little bit more about who you are, what you do and where you’ve come from?

Brett Sheets  02:08

Yes, absolutely. Hello, everybody. Brett Sheets, Senior Vice President of Leasing for Barclays. As Chris mentioned, I started my career actually, as a broker did that for seven, eight years, decided to switch over to the retailer side, believe it or not, so I did real estate for Cold Stone Creamery for five years. I learned a lot about the national sort of platform, met a lot of retailers across the country met a lot of developers across the country, a lot of brokers across the country. And so that that helped me get to the next level, which was a REIT, one of the largest REIT’s in the country, and was there for 15 plus years. That’s where Angie and I met. We had stuff in every state as well. And then when we merged with a different company, I decided to try development and give development a shot. So right now I’m doing the leasing for buildings that aren’t built yet, which is fun, and also handle all the internal renewals on the existing portfolio as well.

Chris Ressa  03:08

Excellent. Angie, how about you?

Angie Kory  03:12

So I’ve been, well, this past ICSC a couple of weeks ago was my sixteenth Vegas show. So I started in the industry in 2008. Brett took a chance on me hiring me with no commercial real estate background I came from the residential side. And I worked underneath him on his team for seven years at the REIT that he mentioned, and really got my feet wet just on shop leasing. And then by the time I was leaving the company I was working on on more of the box deals. And then I moved over to a developer out of Dallas, Cypress Equities, spent three years there working on the conversion of you know, B malls and ground-up development of a couple of different grocery-anchored centers. And then in 2018, I started with Vestar. So I’ve been here for just over six years. My Portfolio primarily consists of our projects in Arizona and Nevada. And I’m currently working on three ground-up new shopping centers. So exciting times, because we are developing again after a 14-year hiatus.

Chris Ressa  04:28

Very cool. Let’s start before we get into our top three leasing trends. Let’s start with the Vegas ICSC. So tell us what were your takeaways from Vegas. What were your thoughts? Go ahead.

Brett Sheets  04:50

Angie want to go first you want me to? I can start out by saying you know Barclay group has the best kickoff cocktail reception on Sunday. So I gotta throw that in there for sure. I think we’re gonna have to change venues, its getting too big. I, you know, three takeaways for me definitely is demand. Demand is still out there big time, especially in the growth markets in the Sunbelt markets. It’s amazing, actually, first time in a long time it’s been a landlord’s market. And we’re getting, you know, two or three LOI’s on one space. So, and we’re working on about eight or nine different developments, just a lot smaller than Angie’s, ours are more grocery-anchored type centers. Still a big topic of conversation with the retailer’s, what, and we had, by the way, 50 plus meetings with my team. So we were, it was a grind, and we don’t have a booth. So we’re hoofing it the whole time. I think we counted out we did, like, over 18 miles, in a day and a half of walking, but is really the costs, you know, and right now, you know, sort of the pay to play sort of thing is happening, these retailers realize that if they don’t step up and pay, they’re gonna lose the space to somebody else. So they’re thinking about occupancy costs in the future, maybe not in five years. But when you look at these, some of these shops space rents that in year 16, because of rent bumps, again, you know, in the mid-80s, and rent, what point can they afford to pay those kind of rents. So that’s, that’s a big thing for those occupancy costs. They want to grow, the ones that need to grow are going to do the deal, and they’re going to pay the freight. And then I think the third one was still construction costs. And also just interest rates in general, they all are praying and hoping that interest rates goes down. And that will help their model and help just construction and everything. So I think those are the two big themes. I got, three big things.

Angie Kory  06:49

Yeah, for for me, I mean, my primary focus was, you know, really pitching our ground-up developments, a large one that we’re building in Buckeye, Arizona, which will be 500,000 square feet. And I would just say the retailers are just super excited about Arizona, and how much development that is occurring here. And as far as growth, I think everyone’s for the most part pretty bullish. I think there’s a few soft goods retailers that are taking a little bit of a slowdown for the rest of 24. And then they’re gonna circle back early 25. On, you know, what their future growth plans are going to be. But everybody, you know, again, to Brett’s point there, the retailers are stepping up, it’s especially on the ground-up, they understand that it’s very, very expensive for us to build these projects. So they’re signing leases at the highest rents that I’ve ever seen. And I would say it takes maybe a little bit longer to get those deals approved during their rec, because there’s so much data they have to pull to support the rents. But other than that, it was it was a great show for us. We were jam packed at our booth the entire time. And really, honestly, usually Tuesday. It’s it’s a ghost town, and I felt like it was still jamming when I left.

Brett Sheets  08:12

Yeah, I noticed that same thing. I had that last meeting at three o’clock. And I thought to usually the Tuesday slow. People heading to the airport. Man. It was jammed.

Angie Kory  08:21

Yeah.

Chris Ressa  08:21

Yeah, I agree. Thank you for sharing that. I think the first thing for me was first takeaway is, we were talking about this supply demand challenge for the retailers, meaning there was no supply and there was excess demand. What I heard this year was an acceptance of that. And whereas last year, I don’t think there was an acceptance by the retailer from the terms of the deal. They knew there was lack of supply but this year I felt, there was an actual acceptance by the retailer that the leverage and the pendulum has swung into the landlord favor. The second thing for me I didn’t take away was I didn’t hear the R word once, recession. Last year I did. People were talking about going into recession last year. I didn’t hear the R word once the whole show. I talked to a lot of people. And then the third takeaway for me is, you know, just how much retailers are scouring for space. People are looking, you know, they want to talk about expirations in 2027 that you have in your shopping centers, and can you get that tenant out. They’re looking at every bankruptcy list, and just the level of scouring to try to find space is pretty remarkable. So those are my three takeaways. Did you guys hear the R word?

Brett Sheets  09:59

I didn’t hear it once. recession? No, I, what I did here was, you know, we have to raise our prices because our costs are going up. So I did hear a few, you know, a few of them say that we have to we have to make an adjustment. We can’t keep going. You know, the dollar store can’t keep charging the dollar, right?

Chris Ressa  10:14

Yeah, but no R word which was surprising to me, I didn’t hear the R word. And last year I heard it a bunch. People were talking about like that was, that was pretty a defensive like, I heard that in a lot of meetings where retailers are talking about potentially we’re gonna go into recession. I heard the R word zero, which was I had thought that we were going to hear some R word talk. I heard zero R-word.

Chris Ressa  11:23

So top three leasing trends. So the first one is the renewal isn’t getting done in five minutes, and maybe this isn’t a bad thing. So Angie, why don’t you start us off on what’s going on with renewals these days, and why maybe isn’t it getting done in five minutes? Like, it might have been once upon a time.

Brett Sheets  11:54

And Chris, you’re breaking up a little bit just so you know.

Chris Ressa  11:57

I’m breaking up? How about now?

Brett Sheets  11:59

You’re good now? Let’s get your Yep.

Chris Ressa  12:02

Okay.

Angie Kory  12:03

So for us, you know, a lot of our leases are very old. And you know, the tenants are running out of options. And so when that is the case, we’re really taking a deep dive into their lease, because there’s just a lot of clauses that don’t apply anymore. And so, and especially if the tenant’s been in our Center for 30 plus years, then and they’re still interested in renewing again, you know, it’s most likely a strong store for them. So we really dive in and abstract the entire lease. So we’re looking at not just, you know, are they paying market rent. But we’re looking at their CAM situation, was there a cap on CAM, that needs to be reset, we’re looking at, does their exclusive need to stay intact, most likely, we’re going to try to remove it, because again, it’s been a proven successful center for them. And there’s a reason why they will renew after their options have run out. We’re also looking at co-tenancy, name co-tenancy not happening anymore in our portfolio, unless it’s you know, a ground-up shopping center. They need that to open but going forward, it is a percentage of the total GLA, we’re really looking into the prohibited uses. I mean, most of our leases, we can’t do movie theaters, we can’t put a Dave & Busters, we can’t put a gym in. So really just making, and we’re restricted on how much office we could put into the project. So really doing a deep dive into the prohibited uses as well. Annual increases are super important for us. And we won’t do just your typical dollar bump every five years or 10% every five years. So those are the top big items that we really are diving into. We’re trying to add percentage rent as well to any lease that doesn’t have any percentage rent, because we’ve seen since COVID, that there’s there’s a lot of percentage rent to collect out there. And I think those are really the top ones that we focus on. I don’t know, Brent, am I missing anything when you guys are doing your renewals with no options remaining?

Brett Sheets  14:19

Yeah no, ditto to everything you said. And we do, I don’t know, probably 25-30 renewals a year. And for the past two years, and probably for the next couple years. Half of our renewals, as to Angie’s point are older leases, and are out of options. And so we want to be fair and reasonable. But to Angie’s point, I’m not going to renew somebody on a 2006 lease, I’m going to get them on our new lease form. And we’re going to look at all those clauses that Angie mentioned. So yeah, it’s it’s a lot more work to do. Even if they don’t have options. You got a lot more, some of our tenants don’t report sales. So they gotta report sales. So you can, you know, you don’t want to make them unhealthy. And in some situations, we’ve told tenants, hey, listen, the markets changed your sales are a rents in the market or be it just maybe not make sense for you to stick around and what makes sense for you to shut down or go look for a cheaper space. So we’ve even having those conversations. Awesome.

Chris Ressa  15:20

That was super helpful. And the reason I was breaking up is because the audio that was synced was through my camera, it wasn’t through my mic, I had to switch the settings on the on this so

Brett Sheets  15:34

you sound 10 times better.

Chris Ressa  15:35

 I’m sure my team’s gonna be really thrilled about that first 10 minutes.

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Chris Ressa  16:32

So I think this is really interesting, because for a decade, the lease has incrementally become more tenant favorable. Every clause in the lease since the great financial crisis has incrementally started to become more and more tenant favorable. And there’s certain provisions that have made it really challenging for a landlord to maximize value at their shopping center. Whether that is exclusives and prohibited uses, co tenancies whether that’s the assignment provision, recapture provisions, relocation rights, all these non-monetary things that really started to make their way into leases post 2008 and become more strict on landlords. Now landlords are taking a look at those and starting to peel that back. So that there’s an opportunity to maximize value at the shopping center. And it’s funny that some of these provisions that are non-monetary, it’s funny how, like, in today’s market, they’re now willing to do them and the previous inhibited landlord’s ability to do certain things. How important were some of these provisions that now they’re acquiescing to let go of some of these. And to me, I’m hopeful that we’ve, we’re not only moving to a phase where we are changing these provisions that helped the property, but actually, that some of the tenants believe that this is a good thing that we’re doing this, right, it’s a good thing, that medical and fitness are no longer prohibited uses in shopping centers, and they are now customary retail uses in shopping centers, and that that’s good for properties. I hope that it’s not just that were,How a that the retailers feel landlords have leveraged so they’re letting that happen, but actually, that they feel this is a good thing for everybody involved. And it’s not just that provision. But it’s provisions like that, that, to me, are more than just a landlord being tough. But it’s about like, I think this is better for the property overall, that you’re going into, because this is what a 2024 world looks like. So I don’t know what you guys think of that.

Brett Sheets  19:04

I completely agree with you. Don’t have much to add to it. 100% right.

Angie Kory  19:10

Yeah, I agree.

Chris Ressa  19:13

All right. Second leasing trend that we’ve been seeing is the change in store format, or the constant change in store format. So I’ll start which is, we’re seeing change in store format from so many different angles. One, retailers are more flexible on size than they ever were. For those who don’t know, there was a point where when we were leasing space in the 2014-15 range, like if tenants prototype was like 14,000 feet, and you had a space that was 13,080. There’s like some retailers that were 13,800 was like, we can’t make it work. And now everyone’s like If you I don’t know, if we turned you down for a space you had, and that space was like 20,000 and our prototype is 25. Call us again on that, we want to take a look at it, we’re trying to work and figure out how to do things smaller. We’re trying to work on figuring out how to do things bigger. We’re going into different product types. We’ve done a lot of business with retailers who historically were only an enclosed malls now they’ve come to the open-air shopping center. And I think this, this flexible format is really good for us. And we, you know, we see, you know, retailers are doing a really good job at innovating this, whether this is Ulta going into Target stores, or Sephora going into Kohl’s stores, whether that’s, you know, changes in size in our shopping center, different spaces, they’re taking the shopping center. To me, the format, and flexibility of retailers is at a premium today and retailers who want to grow know they have to be flexible and are starting to figure out how to be nimble and it’s pretty impressive.

Brett Sheets  21:04

Yeah, I was going to say, Angie, you probably have a different take on this because you’re doing bigger box. But on the smaller boxes, our development team, they’re building the shop buildings at 70-foot bay depths, which wreaks havoc on the smaller tenants, right, because the storefront, you don’t want to go less than 17 feet of storefront. So a lot of the tenants are willing to step up and pay the freight. But we gotta give them smaller spaces. And so that’s creating some issues for us, size-wise, but otherwise, totally agree, they’re being 10 times more flexible on where they’re gonna go, you know, somebody that used to have to have an endcap because of exposure will not go in between, especially if we can give them an architectural feature with a tower. Right, then with the big name on it.

Chris Ressa  21:52

Brett, why don’t you explain to everyone why 70-foot store depth on a small shop building, as you said, wreaks havoc, I’m gonna say is challenging. I wouldn’t say wreaks havoc.

Brett Sheets  22:03

Now you sound like my boss

Chris Ressa  22:04

It’s challenging. And what would ideal depth be? And why?

Brett Sheets  22:10

Yeah, so and we’ve built bay depths at 50 foot bay depths, which, which is easier. But that’s not the ultimate, I think the best is probably 65, 60 to 65 bay depths, because it is more flexible, with where column spacing is, the window mullions, just the architectural features, it’s at bottom line is if if you’re a 70 foot Bay depth and you do 1000 square foot suite, it’s a it’s a bowling alley. It’s just, and half the tenants can’t even lay it out. But that’s why I’m saying they’re being more flexible. So there’s tenants out there that are figuring out a way, you know, where am I going to put my cash wrap? You know, where are we going to put the bathrooms? How many tables can I fit in here, because we we’re having to reduce the size of their storefront. And we have enough users that will fill up a 10,000 square foot shop building that 70 foot Bay depth, even if they’re the smaller suites.

Chris Ressa  23:05

And why would a landlord build a 70 foot bay depth if it’s, if it’s challenging, why is your boss challenging it?

Brett Sheets  23:12

Very good question. It’s all about NOI, right? And, and costs, you know, by adding more bay depth, you’re adding more GLA, you add more GLA you’re increasing your NOI, it does increase the cost a bit. But you already have people on-site building the building, so it’s not it’s not incremental. Bottom line.

Chris Ressa  23:32

Angie, what about you on the store format?

Angie Kory  23:35

So, um, I would just say, you know, like, with the retailers and being flexible with their sizes, I mean, one great example would be Barnes and Noble, they’re, you know, they’re looking at opportunities within our portfolio that range from 8,000 square feet to 30,000 square feet. So it’s, it’s pretty crazy. But, you know, if they want to be in a market, they realize they have to figure out how, and there’s not a lot of vacancy, they got to figure out how best to you know, really lay out that store. So and then with regards to your comment about the mall retailers moving, you know, looking at opportunities, you know, now in the power centers, the grocery-anchored centers, it’s, it’s, I feel like every Vegas there’s more and more and more. So you know, it started with like Bath and Bodyworks and then Sephora started doing it. Buckle’s pretty aggressive with it American Eagle and Aerie, Lululemon. So it’s really nice to as you know, working for a power center developer, it’s really great to see that we’re now able to meet with some of these retailers that would never consider one of our Target or Trader Joe’s anchored projects in the past, so that’s been super exciting for us and it it really helps when we’re building a large you know, 500,000 square foot shopping center where I want to have a soft goods area for all the these residents in Buckeye that have to go 25 miles to get to the closest mall. Now I’m able to build some critical mass as these, these fashion tenants that, you know, typically would never even consider a project like this, you know, in the past, so it’s been super exciting. In this project, specifically, I’ve got a 20,000 square foot shop building that will be all fashion. And majority, the bulk of us are from there typically, traditionally, a mall retailer. So

Chris Ressa  25:33

Fascinating. So, trend one, the renewal is different today, trend two, change in store format, from size to product to everything is happening, the flexible format wins. Number three, construction costs play a bigger role in the lease than they seem like they ever have. I’m sure they always do. But right now, everyone’s feeling that it feels like the whole lease negotiation is about the construction costs. And what I would say is, I like to call it the cost to install the tenant, whether that is the landlord’s bearing the cost, the tenants bearing costs, if the Landlord is doing the work, or it’s in the form of TI and the tenants doing work, there’s still this huge cost that goes into these deals to install tenants. And it’s getting more and more challenging to make the numbers work. By all the leasing records that keep getting posted, it seems like we’re making it work. But we keep hearing about how challenging this is. And so, and it seems like to dominate the entirety of the lease, or LOI, it’s already done in the lease. But the LOI negotiation is all about the cost to install the retailer into the space. So Brad, I’ll start with you. What’s your take on that?

Brett Sheets  27:05

Yeah, I mean, construction cost. I mean, it’s constant chatter about it. We haven’t seen them come down much at all. I don’t know if if Angie, if you guys have, but we’re just not seeing it come down. So the way we’ve combated it, since I’ve been here anyway, is we really back down on what we’re providing to the tenants, and we’re doing the tenant allowance route. So we’re providing what I call a modified gray shell, we’ll drop in the RTU’s, the air conditioning units, and do the typically, you know, eight to 10 foot leave out in the back. And then we’re just stubbing up everything into the back, we’re not providing circuits or any electrical, we don’t do any of that, we run it into the suite, and they gotta tap into it from there. And so that some of the tenants out there just hard for them to get their arms wrapped around that. So the tenants that we do repeat deals with, we know that they’re dialed in, and they can handle it, they have either a construction team, or they’ve done a few with us already. But if it’s a mom-and-pop, we really really make them focus on getting costs before they commit to us. Because they may feel like they can handle it. But man, once they get the bids, and they call us up and say I, you know, I your your TI allowance covered half my bid. And so that’s not good. You know, the amount of allowance we’re having to give because of this market doesn’t get you up to a vanilla box, in my opinion. Yeah. So I think the more and more tenants are trying to figure out ways to be more resourceful. If they’re going to shrink their size. Maybe they won’t do public restrooms, and they’ll just do one restroom in the back, you know, for employees. So you see different ways of them trying to save costs as well. But I like I said, I haven’t seen them come down. I think I feel like they may be stabilized a little bit. But our big concern is, do the tenants know what they’re getting into when they when they sign that lease?

Chris Ressa  29:05

Angie?

Angie Kory  29:07

yeah, so we we take a similar approach when in new developments in trying to just deliver a gray shell. Very, very similar to how Barclay does it. But with that, I mean, because obviously with like the shop tenants, it takes the risk off of the landlord, but because we are achieving the higher base rents, we’re also budgeting a little bit more than we used to for TI, so for restaurants, you know, pre-COVID, we would give you know, 50 bucks a foot, maybe 60 bucks a foot now we realize if we want some of these, you know national tenants or national restaurants or even local chef driven restaurants, we’re pushing closer to 100 bucks a foot. Because we understand that everything is more expensive but bottom line we’d rather give them that money and let them deal with it then for us to take the risk and trying to turnkey on their, their spaces, and then, you know, for the junior acnchors, our turnkeys are double, essentially, I mean, pre COVID. We could do a turnkey for most of the Nationals at 50 bucks a foot, now we’re, we’re going over 100 bucks a foot, so, but the tenants understand that, the tenants also a lot of those nationals have their preferred vendors that we have to utilize when we’re doing the turnkeys. And a lot of time, their vendors are more expensive than ours. So there’s a lot of back and forth with construction during the LOI negotiation, and what can you live with if, you know, could we possibly use our HVACvendor because, you know, we can get him for half the price. So it, I feel like, the retailers understand how much more it’s costing us to do these turnkeys, they’re agreeing to pay the rent that we need to afford to, to builduut their store. But then the construction teams, I think, are starting to play nicer together. And they’re trying to help each other hit timelines and, and, and bring the cost down as much as possible because it helps both sides.

Chris Ressa  31:09

Yeah, so on. I, for us on, we do some new development, but primarily, we own and operate existing shopping centers, and we’re replacing tenants in second gen spaces, and like you said, a turnkey used to be 60-70 bucks. Today, it’s north of 100 for a box tenant, small shop is much more. I think one of the things that is interesting, is we keep having that conversation that you talked about at the end, like, hey, if we use this vendor, maybe the price is this, if we do this, then maybe we can bring the price back down to this. Do you and the do you really need x, to me comes down to this. What is necessary? Versus what is brand standard, versus what is operationally okay. And I think what happened, right? Over the years, if you’re a chain retailer in any retail establishment, the efficiency of having the same layout in space across the country makes a lot of sense. And then you want to provide the same brand experience to the customer, right, the efficiency of the store, right for the supply chain logistics for any store manager that you put in the store makes a lot of sense, from productivity and increases, and opex costs coming down. And then the brand standard, if you have the same prototype across the fleet, providing that consistent experience to the consumer, whether you’re in Arizona or Maine, to me makes a lot of sense. And what we’re coming up against is, what is the power of that, versus the need for a store in this market? And where does the rubber meet the road? And to me for the last decade, the the total pendulum was on, you know what operational efficiencies and brand standard is the key. And now it’s, well, we might miss this market opportunity for the next decade if we don’t act on that. How do we figure out how to maintain brand consistency and have higher productivity? But maybe I can move the gondolas, a couple of places, and maybe the bathrooms can be a different place in this store than they are in the store in Miami. And that shouldn’t disrupt the fleet to that extent, and we’re starting to see that more and more. But for those who don’t know, it’s a big challenge. And now the conversation is consistently happening about how do we work together, and I think this is a positive to bring the overall cost to install it’s heading down. We’re spending a lot of time with tenants trying to figure out how do we work together? Whether that’s to your point, Angie, maybe this vendors the answer? I know you want new bathrooms, and typically your bathrooms are in the front of the store, but in this space, they’re in the back of the store. If we leave them there, it saves 50 grand can we work with the bathrooms in the back of the store? And the answer, you know, eight years ago a lot of times was no, but and and the price was much different, but today, we’re leaving the bathrooms wherever they are in the space a lot more often than we historically did. And I I think this will be overall good, right? We’re not you know, both parties not wasting money, right? Because the end of the day, that retailer probably paying for that in the form of rent anyway. So now I think everyone’s saving these unnecessary dollars. Costs are still high, but at least the converstation is happening about how do we work together to make the cost to install a retailer into a piece of real estate, less expensive than it was?

Brett Sheets  35:09

Yep, completely agree with that, for sure. In fact, there’s still a supply chain issue. Right, right for certain things to switch gear and whatnot. But we are definitely seeing the construction teams, the every retailer now wants a pre construction meeting, even before the lease is signed, to talk about, you know, how you how can we work together? And, honestly, that has helped that communication before the lease is signed has helped tremendously for us.

Chris Ressa  35:37

Yeah, for sure. Yeah, there’s a lot of construction is more involved in the lease process than they ever were today.

Brett Sheets  35:44

Yep, for sure.

Chris Ressa  35:47

All right. Well, everyone, those are our top three leasing trends, which are, the renewal is a little different than it used to be. Change in retail format. And construction costs have never been more present in leasing deals than they are today. Angie, Bret, anything else that we didn’t touch on that you’d like to talk about that we should bring up?

Angie Kory  36:11

I don’t think so

Brett Sheets  36:16

Not that wouldn’t get me in trouble.

Chris Ressa  36:20

I don’t want to get you in trouble. So that’s good. Well, listen,

Brett Sheets  36:23

Thank you very much.

Chris Ressa  36:24

Yeah. Angie, Brett, this was great. Thank you so much for coming on. I’m glad you guys had a great Vegas. I hope you guys crushed it the rest of the year and have a great Fourth of July.

Chris Ressa  36:35

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 mgmt.com This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you are a retailer, broker, entrepreneur, architect or an attorney. Also, don’t forget to subscribe to retail retold so you don’t miss out on next Thursday’s episode