Dicks Sporting Good Credit Card

♪ [theme music] ♪ >>> retail. everybody loves toshop. everybody likes all different types of retail.

Dicks Sporting Good Credit Card, so what's growing,what's doing well in retail? is it luxury, isit fast food, is it for themillenniums? where is it growing innew york and the region?

i've assembled thisgroup of retail experts to provide their insight on thestate of r etail in the region. my guests includetim king, the co-founder and managingpartner of cpec real estate. jon kreiger, who is a vice president at rkf and he is the co-founder of a wonderful coffee company calledbluestone lane coffee. and also with the founder ofretail works, matt chmielecki,

senior vice presidentof cbre retail services. and last but notleast, aaron malinksy, the president and ceoof curbcut urban partners. so you and i have seen retail. you remember, there was bohack, big apple in thesupermarket business, there was j.w. mays, there wasklein's over there. how do you seeretail today in 2016? >> well, it's clearly anevolution and transition.

and the biggest impact in my opinion as of this moment isclearly online shopping. and i've been telling mycolleagues that when we're planning new developments now, we have to basically scale back our expectations of how much retail tobuild. for example, i wasnever reluctant to build 100,000-footof retail stores

in the 4,000-foot and down. today i would be thinking about 50,000 feet. >> i'm not disagreeing with you, but we look at what tim did, you know, at a 100-year-oldbuilding on the sunset parksection of brooklyn. no one would have ever believed that saks, bed bath andbeyond, harman, bye-bye baby,okay, and city market,

cost plus market, wouldbe moving to a warehouse over there. maybe one day they'll have a bluestone or oneof your companies. how do you see that evolution? aaron is correct in his thoughts that if you build too much retail, you know, it's not like the movie, ifthey build it, they will come. >> clearly i can'tdisagree with aaron, he's a bright guy and has

seen it all, and he's 100% right. retail is always avery darwinian business. i think the success of liberty view, bringing in a120,000-square- foot tenant, proximity to the bqe, and frankly, a visionary landlord who was convinced he had the spot for this. and there's another part to this, we talked before we got

started about retailers and their activity anddesire to be in the marketplace. one of the challenges,particularl y in all of the boroughs, if you have a tenant looking for a larger footprint, there's not that many places where you could,for example bedbath is in 120,000 square feet, on a second floor butit's all on one floor. so where do you find 3 acresof re tail space with parking at this point in time anyplace in the five bboroughs?

>>creativity for the largerretailers and their ability not to go with theprototype is critical. the backbone of our companyis having the imagination, the creativity, andthe ability to execute and findthe location and build vertical. but one of the other important dynamics that's occurring in our marketplace is that we have lots of great growing neighborhoods.

so there is opportunity. >> i mean, let's talk about, you know, the coffeeand the retail works. that's because thegrowing neighborhoods, right? how old is bluestone? >> we're three years old. but it's come from -- you talk about the evolution. the evolution is from areal estate at some point.

i think there's a revolution from a consumer standpoint. and so the nature of bluestone or some of the other brands we're rolling out i think is a -- you know, comes from the changing habits of consumers, in any of these majormetropolitan markets. you mentioned prototypes, and

that big box retailers haveto move from that mentality. it's the same thing for smaller retailers. consumers don't want to walk into a restaurant or studio andfeel like they're in a chain. the mentality of, this is a box, this is what it looks like, i don't see that working long term in the major metropolitan markets like manhattan and

chicago and dc. >> do you agree with him? >> i do, especially with regards to if you just talk about your business right now with coffee, a normal person who is walking to work onany given day used to stop at starbucks, and if a starbucks openedtwo blocks closer to them,

they would stop at theirstarbucks, that was part of their routine. now you'reseeing with these gourmet -- >> artisanal. >>artisanal coffee, you see this being part of theirmorning event. >> i go to a placecalled lenny's, it's not fancy, but a lot of people go in therein a similar manner, they don't have artisanal coffee. they have tables.

certain peoplelike that opportunity. people know they can find me on 55th street and 2nd avenue sitting in the corner, okay? >> we left out onething. >> what? >> millennials. >> so wait. you're saying millenniums don't

go to bed bath andbeyond, saks? >> if you talk about what millennials are buying right now. >> since you're not a millennial. >> i'm on the cusp. the biggest brandsthat are expanding right now are the athletic brands, from lululemon to sweaty betty, there's a handful of them, adidas is

expanding, underarmour is expanding. all these millennials are so concerned about their health, these are theclothes they're buying. >> will i see a fitbit store? >> i wouldn't be surprised if you start seeing thosekiosks somewhere. >> you raise the other part of the transition of retail shopping

experience, in that it'snot just about shopping anymore. it's about exercise. it's about restaurants. it's about urgent care. so they're becoming more of the village center. and you have to provide all sorts of services to keep the vibrancy of your shopping environment.

>> you're involvedwith city point, okay? city point is the hub of downtown brooklyn, where all these new housing's over there. century 21, the highest grossing retail store in the world, perhaps, per square foot, in their lower manhattan store, they've been in brooklyn, but this

is a new world forthem. and people will run there. a city target is going over there, trader joe's is opening over up. alamo movie. those are different type -- plus this -- we won't call it a food court becauseit's not a food court. >> it's a food hall, which is,

let's say, a broadselection of artisanal food merchants. but the other important component about city point that makes it differentfrom the general retailing is we'vecreated a major shopping center, acritical mass. >> right, within everything. >> you have 600 -->> 650 out of the million 8.

it's a large one. but i could see perhaps, in a certain manner, you represent shake shack. that, because -- >> they'rea few blocks away now, though. could we put a second store inthere and not cannibalize the street store? no question. >> i firmly believethere are two different ends of downtown brooklynand you can be on both sides. >> the city, basedon the number of

people, the city is underretailed. but you have tohave the right proximity. 15 years ago, would you think there would be a whole foods, a trader joe's, an apple store opening up in williamsburgin such a short area? even let's look atharlem today. harlem had harlemusa like 15 years ago. then there was a small amount of

things that would open up quietly. and now you have sutton's property over there, whole foods, avariety of other things. the city has expanded. and matt was saying prior to the show, don't besurprised to see a shake shackperhaps in washington heights. >> those areas have gentrified. the density is there. it's achange of community

>> i have to disagree,when you talk about the bronx. >> no, not the bronx. >> washington heights. >> he's talking about 125th street and washington heights. >> jon is right,they're gentrifying. if you were to look at the area where shake shack is expanding in washington heights, it's two blocks long.

the area of 125th street where we would like to be, thegentrification is there, but it's slowly movingout. you need to be specialized andfocusing in your view. >> who are the tenants? >> a combination of twoworlds. it's the new tenants like the boutique or theartisinal foods or coffee. and folks, like target who don'twant to cannibalize existing stores. it's back to thatissue of finding a

building that canaccommodate their needs. if i can make a broadgeneralization, real estate is both the ultimate revolutionary, evolutionary business. it's very darwinian, conceptscome and go. on the other hand, it's asupply and demand business. as long as i'vebeen in the business, the demand has almostalways exceeded the supply. >> the otherimportant component in the

boroughs of new york isthat many of the national retailers have notrecognized that we had fabulous communities, and that's why i look at the bronx. the bronx isn't being gentrified. the people living there are getting the opportunity to move up thesocial and economic ladder. >> right. and they didn't have the stores

before toaccommodate them, okay? that was the situation. it was the accommodation. now, i don't want to be thenaysayer on the world. but i do remember recessions. and when certain recessions take place, a certain type of retailers who might be -- i think i mentioned this to you yesterday, the

restaurant guys said to me, you know, when the 2001 recession and 9/11 and the 2009 recession came out, the amount of fine winesold in some of the better restaurants was reduced to beer. so, you know, it'sfine, but when you go in and you spend $4 for a cup of coffee or something like that, it's a different thing.

my greatest phenomenon is that i pay cash when i go to get a cup of coffee in the morning. and i watcheverybody with a credit card. >> or a phone, even. >> so we just added it to all of our stores, a goodpercentage of our customers pay withtheir phone. and so -- and the space that we're

playing in, if youwill, is not luxury by any means. you mentioned thatto me, what happens in the recession, and we saw that statisticwhere fine wines dropped. we're not in that space. we're not in fine dining. >> but we did bring out, and aaron brought up the situation that

starbucks is negotiating a lease in one of his properties, and they said, nowwe want to sell wine and craft beer. so they'reincreasing the situation. you know, i think one of the greatest examples of the food trends would be the -- across the street from the 200 park avenue, there was

this vacant space on the corner for years, shelley fireman saidto me, nah, not going to work. and it's really a great food market, the food market isdoing well. now, i will tell you that i saw the food market at penn station, you know, near the garden. and i think it's aterrible one. they put four or five items in.

it doesn't haveenough variety over there. >> that's wherecity point will be different. you need critical mass, enough product and diversity to make it become adestination for folks. >> we'll have25,000 square feet dedicated. >> my office, that's the urban space you'retalking about, it's fantastic. you can tell that they hand-picked

the artisinal, at thistime -- most popular brands. >> they missed thecoffee. >> john will find a way in. >> i like thatplug. okay. >> that was surprising, that the penn station deal, becauseto my understanding -- and actually i haven't been in it, but -- and i've heard that the retailers are doing very well.

i think as soon ased hogan came in is when they started that. and ed really was behind all of brookfield case, which is a case study globally fora food hall. >> what about, we were talking about affluence sensors. affluence sensors have done well in certain parts of area.

new jersey affluencesensors have done well. a couple of long island. woodbury commons, you don't have to say done well,it's the mostsuccessful around. what about our discussion before about the outward sensor who has a good number of tenant signs in staten island? >> in my opinion ithink the outlet center will do well, becausepeople like a bargain.

i also believe it will attract the tourists, you cantake a very nice boat ride. no better boat ride in the city of new york. will it be an economic success overall for everybody? they'll probably go throughseveral transformations. fundamentally, value shopping on staten island, in that particular location, i think it's a winner.

>> my comment about that is that if you just go a little bit over the bridge, if you're in a car, and you don't wantto pay any sales tax on your clothing, all you do is go to new jersey. >> how much is that toll? >> 8.5%. it depends. it's a question ofwhat you spend.

your big luxury guys. what's up with the luxurymarket in our market today? >> if you look at madison avenue, there's a goodamount of availability. you're seeing prices thatare at record heights. and what that stems from is a lot of landlords who purchase their properties with pro formas in place that they need to hit.

not that they're willing to wait to hit those numbers but they have to wait to hit those numbers. you're starting tosee what i call more of like a healthy plateau than a precipitousdrop in pricing. and i think that'shealthy and that's good. and deals are going to start to get done and then you're going to

start to go through that same cycle again overthe course of years. but deals are getting done onmadison avenue. >> besides the -- as you were saying, the athletica type of companies, if you want to talk about athletica, you're going to see sports authoritygo out of business, they just filed chapter 11.

a lot of that sportingchains haven't done well. the runner shops, the limited type of things formillenniums, for certain groups,have done well. >> paragon. >> that's one location. >> which is a name. >> what about the discussion about amazon opening up some bookstores?

what's yourthought about that? >> i'm a book lover so thatwould make me very happy. >> there's a hole in the market for bookstores right now. the question is are they going to be profitable, andthe next question is, do they need to be profitable. i don't think there's going to be an amazon bookstore per se.

i think there's going to be an amazon bookstore where you also have different kiosks, where you also have an area that you can pick up your goods thatyou purchased online, where you can return goods that you purchasedonline. i think it will bea massive center that just happens to have books.

>> certain people would have said years ago, circuitcity died, and best buy would be dead. best buy is stillaround. why? >> they may be theonly one left. >> you have togive management some credit. however they managed the transformation of that industry, they did it well,without opening new stores.

so i've got togive management credit. >> but in a similar management,as you say, management, sports authority, which was one of the original kmartcompanies, where every one of the kmart companies have gone out of business one way or the other, isgoing out of business. but dick's sportinggoods continues to grow. you know, they'vebeen able to adapt.

but let's look atthis in another manner. we were talkingearlier about this. look at the transformation of the grocery business, okay? remember, there was bohack's. today there's no more waldbaum's. food emporium is just a name. >> it's gone. >> but two of themin manhattan still

have the name on it because they kept with the cooperative. whole foods is here. fairways on thelast legs over here. who do we see? do we see an artisinal ormillenium supermarket chain? >> i think you have. whole foodsis an experience. you walk in and don't feellike you're in a supermarket. >> as my son said to me, it'scalled "whole paycheck" too.

>> then you have trader joe's, and a store in thewest village, mrs. green's. you walk in and itdoesn't feel like a chain. >> mrs. green's isa chain. >> i understand. itdoesn't feel like it. >> in the boroughs, independentfood store operators are doing extremely well. >> what about the alde's? >> very well.

>> alde is afamily part of the trader joe's. it's the cousin oftrader joe's. it is the -- probably the biggest owned brand operation in the world, okay? >> sure . deep discount,limited assortment. deep discount, limitedassortment, basically you bring in your own bags to shop.

as somebody would say, it's more of an urban type of retailer originally in certain markets. they went to the dollar trees of the world, the family dollar stores and so on. >> wegman's iscoming to brooklyn. >> wegman's is going to be an interesting thing because wegman's

is a classy operation, it's in the whole foodsmantra, the venue over there. >> it will be different. and again, it willbe interesting to see how people compare them. i crack up when you say bohack. the firstsignificant deal i ever did was asublet of a former bohack to become aburger king.

bohack at one timewas one of the largest -- talk about getting a screw out of apig. they butchered cowsand sold them in a chain ofstores called bohack. >> that would do very well now. >> back to the future. >> look at amt. the evolution overthere.

we're talkingabout the yoga over there. and, you know, the soul cycle,which has done well. but the question is, if there's a recession, okay, i'm not talking about the coffee, people are going to do that becauseit's reasonably priced. the question is, the equinox, the $300 a month, and then they have their baby sister which they don't

really say is their center, the blink, and then the planet fitness, you have a $10 a month type of thing, there was a guy, a member of the friars, he had one company he just sold to crunch. he said, look, people put it on their credit card and forget they have it on their credit card.

they're there forthe 12 months over there. so what do you see the growthof what new companies? >> boutique fitness. so people want a sort of pay per class model where you can go and have a differenttype of an experience. they say that the big boxmodel is sort of folding. i think equinox ismore of a luxury experience forpeople in manhattan.

>> what about bob's boot camp? >> barry. >> that's aboutique fitness concept. they're doing really well. and so you've got flywheel and soul cycle and the higher end, there's brandslike tracy anderson. i'm telling you, i hear of a new one every week. >> the big difference between

them is that the major, the equinoxes of the world, the new york sports clubs of the world, they exist and their profitablebecause people don't go. >> okay. wait. new york sportsclub is in trouble. new york health and racquetclub is different. the model worksbecause people don't go.

if everybody who had a membership to equinox gym showed up on a weekly basis, they wouldn'tbe able to handle it. >> what about the idea, lifetime fitness, who has these 200,000 square foot mecca locations on long island, a 70,000square foot location. >> yeah, i mean, i'm not sure that other than equinox, as far as

big box gyms go, 24-hour fitness is i believe subleasing all of their -- all trying to sublease all of their locations. it's manhattan. new york sportsclubs is shrinking. and equinox i think sort ofstands on its own. there's probablyroom for another -- >> as i rub my crystal apple,

how do we look at retail overthe next 12 months? matt? >> i think you seethe major corridors. the major corridors, fifth avenue, willcontinue to do monster deals. times square, you'll see a few monster deals announced. and the tertiary markets, you'llsee the side streets, a lot more boutique,artisanal coffee brands, the fast casualis on fire right now. all tenants areexpanding like crazy.

and major restaurantgroups are looking as well. they're being awhole lot more cautious butthey're looking as well. >> aaron, you haveten seconds, 15. >> i believe theretails will continue to learn. if they want to dobig business, they have to be in the boroughsof the city of new york. >> definitely agree. timmy? >> amen.

it's going to become a stronger, more vibrant, morediverse market over the next months. >> a lot of new, creative concepts from the westcoast, from the midwest. all within the health andwellness space. >> okay. so the apple isshiny. and i would like to thank tim, jon, matt, andaaron. i'll see you next week. ♪♪

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