Product people - we’re an interesting breed. We’re the type of person who will risk a cold-call or email to simply ask a stranger out for coffee to pick their brain. What’s more interesting though, is that some people actually say yes to us - like people in Retail Real Estate.
As a product leader for a real estate intelligence company, I’m constantly keeping an ear to the ground for whisperings of what’s next in how data and technology can solve problems for retail. Conferences like ICSC (International Council of Shopping Centers) offer a wealth of insight into the industry, but what I like best are one-on-one conversations.
Over the last year, I’ve contacted many VPs of Real Estate, Leasing Representatives and Directors of Leasing to get to know more about how they do their jobs, and the pressing issues that exist within them, which could be solved by using technology. Enjoy!
Lesson No. 1: Generosity
The first thing I learned is that these folks are generous with their time. It was incredible to see the number of people who were willing to carve out time in their busy schedules to offer me their insights and perspective. I really respect that. If you’re reading this and we chatted, thank you 🙏
Lesson No. 2: Access to Real Estate Information
“What’s next” is going to be less about getting access to real estate technology, and more about getting access to real estate information. What do I mean by that?
Analytics do the heavy lifting of consolidating millions of data points to understand a market and consumer characteristics at scale. At PiinPoint, we’re proud to do that in an intuitive way. There’s something missing though. Because even if you did a market optimization across Canada on where you should put say your 200 store locations, how do you connect that to what real estate is available?
Lesson No. 3 - Fragmented Site Selection = Missed Opportunities
Real estate properties are tough to keep a pulse on. You can try to get on all the cooperative broker blasts, you can spend hours searching MLS, or as a tenant rep you’re doing this work for your clients, but at the end of the day, once you get the news of a site availability, a lot of time and energy is wasted trying to then make sure it makes sense for the business. Maybe the listing address is across the street from a current, successful store. Maybe the real estate format is totally wrong. You get the picture.
As a result, working Real Estate positions at a retail company requires travel. You literally have your boots on the ground, thousands of air miles points, and an intimate understanding of most city’s major intersections and shopping centers. You call leasing reps inquiring about availabilities, use Google Street View to find For Lease signs, get Google Alerts for new listings online, anything that will help you do your job of finding real estate sites faster.
All this validation takes time, and as I’ve heard, time kills deals. Not being ready to jump on an opportunity - or jumping on the wrong one - can cost a brand hundreds of thousands of dollars in real estate costs, if not more.
Lesson No. 4 - Local Market Knowledge for the Win!
Right now, the best way to maximize your opportunities is in having great relationships with property owners, brokers, and retailers so that you have a sense of who is moving where through relationships. Whether you own property or are searching for property, there’s nothing quite like a site referral, your franchisee’s local-market-knowledge, your broker’s testimonial on an emerging concept they visited in NY to bring to your center, your insight into a planned development next year, or a colleague’s hat tip that some stores will be closing.
But even when you know who’s who, a changing retail environment still challenges the industry, presenting invisible dynamics that must be understood for site selection and leaving the potential for vacant storefronts and consumers with unmet needs.
Lesson No. 5 - Leasing by Demand
It used to be that by looking at the demographics of an area, the existing competition, and balancing that with an understanding of the trade area, you could make an educated decision about a candidate location. Going forward, making a decision around a lease needs to consider more than just who lives nearby, but also the visits and conversations that actually occur there.
Everyone knows the experience of having a missing product or service in their stomping grounds. For me, it’s having a coffee shop within an easy walking distance of my house. Despite being centrally located, I end up consuming far less coffee (and being far less caffeinated!) because there isn’t a thoughtful, specialty-type concept close enough that I can walk to.
It’s become generally accepted that convenience alone, isn’t king. A store that’s close to home won’t necessarily attract your target customer unless it also caters to their unique interests, attitudes, and behaviours. In order to be successful in a lease, properties need to be filled by brands that align with the interests and consumer behaviours of that area.
Lesson No. 6 - The Impact of Commissions on Independents, Regional & Small-Format Retailers
The next generation of consumers - even millennials for that matter - seem to have an affinity for those instagram-worthy consumer experiences. They also gravitate towards brands that are conscious, heartfelt, and unique. In many cases, the retailers that can do this best and do it to their competitive advantage have smaller format stores, where the shopping experience is tailored, different, or honest to goodness, one-of-a-kind.
The trouble for these retailers is that they are largely on their own when it comes to finding real estate. They’re seeking a footprint with less than 1,000 sq ft, shorter lease terms, and even a potential sublease clause to reduce their risk. This all makes sense. Unfortunately though, when a broker’s livelihood is incentivized on longer term, higher rent, quickly conducted leases, their return on investment by representing these concepts is quite low, and quite frankly, not worth it.
When these brands are likely too busy scaling - or too small - to prioritize analytics or strategic software, there’s a big barrier to entry for these awesome gems that define our economic communities; whether you’re a timeless neighborhood icon, or an exciting new online brand making your way into the brick and mortar scene.
There’s an opportunity to better fit the real estate piece of the puzzle into the process of site selection. There’s an opportunity for location intelligence to spur on more wins; for product or service-based retailers to more easily find suitable space, for property reps to more easily fill leases, for landlords to experience fewer vacancies, and for consumers to live within thriving economies that suit their needs and beliefs.
The coffee dates are far from over. Don’t hesitate to reach out if something in this article sparked your imagination, I’d love to chat, you can book a time in my calendar. Or, if you’re working from home these days, let’s set up a video conference.
Sarah Steiner is PiinPoint’s Chief Product Officer, and is one of the first employees. She has gotten to know our customers closely, having worn many hats over the years including sales, marketing, customer experience and product management. She is passionate about giving retail real estate professionals the data they need to make significant decisions around site selection easier and informed.
Outside of product leadership, Sarah enjoys the creative process, as well as sharing her passion for yoga, cooking, community-building, and dance with others.
Photo by Allie Smith on Unsplash