In this episode of Brokers Angle, Hal Coopersmith sits down with Beth Rosen to discuss the art of preparation and how in-depth research and understanding of the market can add value to clients in the competitive retail space. From Madison Avenue’s evolution to the challenges of finding the perfect retail space, Beth shares valuable insights on staying ahead of trends and the human side of real estate.

Transcript

Hal Coopersmith: Welcome to Brokers Angle. I’m Hal Coopersmith. We are speaking to Beth Rosen of RIPCO. Beth, what really impressed me, you came in here prepared, you listened to other podcasts.

Beth Rosen: I did. If you’re going to invite me here, I want to make you look good by me looking good. So thank you for having me.

Hal Coopersmith: So how do you do preparation in your business? You prepared for this podcast.

Beth Rosen: So you said, Beth, would you like to come? I said I would absolutely like to come and join your podcast. So we didn’t have a pre-podcast meeting set up, so no problem. What I did was I went online. I looked at your former podcast and I listened to them. So I listened to my friend Brendan Singer, who was great, listened to Matt Siegel, who’s in my industry, and of course Cory Zelnik, who all did a great job. I wanted to make sure that if I came on your podcast, I wasn’t repeating the same things that they said. So that you keep this interesting for your listeners, and there’s other things, other dynamics of the business that they hear from me versus the other gentleman that you interviewed.

Hal Coopersmith: And so how do you take that level of preparation in the work that you do for your clients?

Beth Rosen: So just this week I had a pitch with a retailer to help them with their national strategy. And so the first thing I did was obviously dig into the business, how the business got started, who the founder was, why she started the company. Looked at her current locations, why would she pick these locations? Where are they grouped? Where is there room to grow? What is their demographic? Where else does this demographic exist? And so forth. So that’s step one. Then looked at the price point. Who was she catering to? What other services is she providing? This was obviously a service related retailer. Who was she targeting, who are her competitors? What sets her apart from her competitors? What are her competitors’ real estate look like and so forth. And then of course, questions about her, what an LOI looks like to her. Are there any special licenses she needs for her, for her services, since it is sort of a medical use? And just those sorts of things so that when we get on the phone, I don’t have to ask her to start from the beginning. And also I can tell her how I can add value to her business versus maybe someone else she might be speaking to.

Hal Coopersmith: What’s one of the ways in which you are able to add value?

Beth Rosen: Well, I am obviously very thorough, I would like to take a deep dive into the business and use research to find how to replicate, since she is an existing retailer, find ways to replicate her existing business productivity and,  success, and find other markets where that could be replicated. And she could be, you know, get the same clientele and be just as successful, if not more.

Hal Coopersmith: And what are you seeing in the marketplace a little bit more generally? Right now.

Beth Rosen: There are a lot of deals getting done, which we have seen in the past couple years, but it, the volume now is tremendous. And because of that, there’s a supply and demand issue and it’s not as easy to find retail spaces as it has been in the past few years. So whereas it used to be a few years ago, you could just call an owner or a broker and find out what’s available in center or a retail space within the city. Now it’s okay, what might shake out in the next six months to a year, whether it’s a lease expiration or a tenant that maybe isn’t doing so well, not as healthy of a retailer, and really digging into availabilities, aside from just the obvious lease expiration or not lease expiration, but vacant space.

Hal Coopersmith: So even with reports of nationally, there are more doors closing than opening. You’re seeing more of a demand for space.

Beth Rosen: Yes, and be careful what you read, because sometimes there’s more to it than just the headline. So stores might be closing, you know, Joanne’s fabrics might be closing, but it’s a very antiquated tenant party city, very antiquated. They haven’t really kept up with the trends and the change of retail as many others have and need to. So I the end, the news always likes to be more doom and gloom of course, but yes, so it, there are a lot of retailers, you’re probably reading more about retailers opening versus retailers closing and they’re very successful. A lot of the retailers now are doing tremendous volume. It’s where, you know, if, especially the f and b, you, it’s very evident when you walk around New York City, the lines to get lunch, whereas a couple years ago there were none. Now it’s just easier to pick up a smoothie and call it a day rather than waiting in line and taking an hour to, you know, for, to just to pick up your food.

Hal Coopersmith: So you talked about retailers keeping up with trends, trends in retail to stay fresh. What are some things when you’re working with a retailer that you want to make sure that they are on trend or that they stay on trend?

Beth Rosen: Well, technology is obviously a huge one, right? And retailers need to understand their customer and once they’re in the store, they need to be serviced correctly. So I was just in the skim store on Fifth Avenue. The other day, and it was very well run. You walked in and I brought my daughters in there, thinking that it was going to be a nightmare experience and it was very well run. There were. Several employees on every floor, all of which were easily recognizable by their uniforms that were obviously skims, lounge wear, or athleisure. Then these cute little beige sweat suits, and they all had their headsets in and you could easily ask them for size or for different color that wasn’t necessarily on display, and they happily called into wherever they called into the back stock and got you an answer very quickly. Remembered who you were, stayed attentive, and anytime you needed something, there was someone right there for you, that made time for you in a way that you didn’t feel like you were inconveniencing them. When it was time to go to the fitting room, instead of waiting on a line, you were able to scan a QR code, and they texted you when a fitting room was ready, so you were able to still walk around the store and not just wait in a line, which I thought was a pretty, nice thing to have. And the whole experience just flowed until, even to the point when we got to the cash register and I set the clothes down for her to ring up, and she didn’t, you know, Uniqlo has the same thing. It just, the scan just picks up from the table and goes onto the computer and right away you could pay. And I just, I couldn’t believe the whole process, the whole shopping process there, soup to nuts was just very updated, very relevant and it just, it made you want to shop and be in the store and not order online. They were measuring you so you didn’t have to, you know, bring 15 sizes into the fitting room. It was just a really great experience and I wasn’t expecting that.

Hal Coopersmith: So, how are brands that you’re working with, working on their customer experience and elevating to that level?

Beth Rosen: So, we work with a company called Esop, which is a skincare company, and they, we’ve been on store tours with them in the past couple months, and they are making sure that their employees are very well trained, that they’re engaged with the customer, that they’re educating the customer in a way that feels luxurious versus like they’re trying to sell them something. You know, in these types of stores, it’s very important to educate them on the ingredients and they’re promoting the fragrance and making sure they understand. They haven’t always been a marketing brand, right? Their marketing was word of mouth. They’re now realizing with the younger consumer, with Gen Z, it’s important to do some marketing to be on Instagram to, and not in your face, but it’s, whereas marketing might not have been a thing in the past, now this is the way that they’re going to get to Gen Z.

Hal Coopersmith: So, one area of the city in which you are a definitive expert, is Madison Avenue. What’s happening on Madison Avenue now and historically, how has Madison Avenue been?

Beth Rosen: So back in the day, Madison Avenue in the seventies and in the eighties was much more localized. There were a lot of local tenants, a lot of service tenants in mid two thousands, 2000 and let’s call it 2007, I think is actually when it was, they revised the 80 20 rule of the co-ops, which allowed for the co-ops to get more than 20% of their income from non-shareholders, and this was for tax reasons. So once that was revised and the co-ops were able to get more than 20% from outside sources, they all invested in their retail real estate. So that entailed renovating the actual spaces, the configurations of the spaces, the facades, improving the facades and the signage. And what that did was attract more national fashion retail and also at the same time, there were a lot of vacancies or a lot of spaces for lease in the seventies as well, like FRS nine 80 Madison Avenue, the Mark Hotel, 992 Madison, where I was doing the leasing and it was a great opportunity to merchandise the street and attract these retailers to make a shopping district. And for these, affluent upper East Side consumers versus just being service oriented and having these more local boutiques.

So, then there were tenants, retailers like John Vito Rossi, Vince, Sandro, Veronica Beer, that was her first store that she now expanded into twice the size. Zdi, Voltaire Al, Zara, Jois, blue Mercury, blue and Cream. We did a deal during COVID. That’s a very downtown tenant and retailer, and he opened a store there to cater to that community and is doing really well. So there’s a lot of examples of that. There was a, you know, there were some spaces Brooks Brothers on the corner of 86th and Madison used to be a Bolton’s and it was a horrific space. There were about three to four different levels, steps up, no ramp, just a challenging space. And Brooks Brothers came to look at the space for a kids concept because there’s a lot of strollers up there. It’s very, you know, young families in the eighties. And they fell in love with the space and so they ended up opening a nearly 3000 square foot store on the corner of 86th and Madison. That was a national retailer that you never would’ve thought would’ve taken space in Carnegie Hill north of 86th Street.

And then that started a trend in and north of there. Now there’s Blue Mercury, as I mentioned, and Han Row, and there’s a blank Street coffee, which does off the charts in, you know, they’re in about 500 square feet and they’re dying for more space. This area is also catering to the private schools, the most affluent private schools in all of the country. So there’s, you know, just recently. And, and so that was, you know, that was 2007 up until just recently we did leasing at 86th Street and Madison, the southeast corner with which Naftali redeveloped into this gorgeous building called the Belmont that they bought from Vernado. It used to be a, you know, two, three story building that Vernado had, and they built this residential condo, Robert Am Stern, gorgeous building, and we leased to Swarovski and which is obviously a national retailer that you haven’t seen up there. And we put Estee Lauder’s, Frederick Mall fragrance that was for south on 72nd Street up there, which is also a testament of what this area has become. And Todd Snyder, which is a, you know, a fabulous men’s retailer that opened. In line in this building and, you know, it’s just, it just continues to get, you know, become more and more of a destination for people, of course, on Madison Avenue who live in the area. But you can, you know, come even outside the city for spend the day and have lunch at the mark or lunch at San Ambrose, or soon to be Robin Burley’s private Club on 68th Street. That will have a component that’s open to the public and just shop. And it’s really drawing people from different areas.

Then of course, what happens with that is there’s a supply and demand issue, and so rents get a little higher and those are the types of retailers that could pay, versus again, the, you know, more local retailers that used to be there. In the sixties on Madison Avenue, that’s where the conglomerates now reside. They used to be a little further north and they’ve all, you know, followed each other down to the sixties, which is more of that business district meets tourist, meets somewhat local and that’s where they’re planning their flagships. Dior on 57th Street is moving into twice the size of what they used to be. Balenciaga is down there, Celine 625 Madison is going to be rebuilt by related and I’m sure that’s going to be one of the LV or caring or Richmond brands. And it just continuing to be, to prove itself to be one of the most spectacular streets in, in the world.

Hal Coopersmith: So, you see a lot of demand for space. Naturally, the valuations for the real estate increase, how do you project what the valuation and what the rent for a space is going to be?

Beth Rosen: So, of course you look at comparables within the area and what’s kind of happened. And then you look at the sales comps and the sales volumes and the health ratios to see how the retailers are faring, right? Because at the end of the day they need to make a little bit of money. Branding’s important, but they don’t want to just be servicing the landlord and then there’s the, like I mentioned, the supply and demand. So the rents inch up bit by bit as the, as the space lease. In SoHo there’s a big supply and demand situation. There’s a lot of new acquisitions that are happening. Investment sales has finally opened up. And with that, there’s not much space available in the acquisitions they’re underwriting these larger rents and the asking rents have gone from, you know, maybe 50 to $500 square per square foot on one of the best blocks of Green Street to almost $1,200 a square foot. So we’ll see where that pans out and once we have an actual comp. But people are testing the waters. They’re asking higher rents than maybe the space is worth to see what they can get and we’ll see. The future will tell.

Hal Coopersmith: And how are you able to assist in investment sales valuation?

Beth Rosen: Of course, so we get a lot of calls, especially now, as I mentioned, investment sales has opened up. There’s been a lot of purchases with Blackstone and L three buying in SoHo and Acadia, of course, also purchasing in SoHo in Williamsburg, and it’s happening throughout the city. We’re getting calls on, you know, class A office buildings on Madison Avenue and SoHo and meatpacking district and every, you know, these investors want to know what they could possibly get. They want to know what they can get now in rent. They want to know if the rent that they’re currently getting from a tenant is market. If they can get more, if the tenant vacates, if they rebuild, if they fix the signage, etcetera. So we also tell them what users are out there and you list types of tenants that might be in the market, types of users and categories, including, whether it’s a fashion retailer or a home furnishings, home accessories, f and b. Could the space be vented? Experiential is a obviously one that we all talk about, and experiential could mean a watch brand, you know, feeling like you’re shopping in a member’s club, or whether it, you know, or jewelry. If it’s a smaller space. What type of tenants can you get in a 500 square foot space, like a fragrance company. So we help with that. We help with figuring out the concessions and the downtime concessions, including tenant improvement, allowance or free rent, all of that. And that comes with obviously comps, but it’s, it’s also the tenant’s threshold and the types of users and what they could pay and what they’re comfortable with.

Hal Coopersmith: Do you have a great story of either finding a retailer or working with a retailer finding a great space, or on the agency side, filling in someone that, you know, you just kind of think about?

Beth Rosen: Yes, and it ranges from the Apple deal on 74th and Madison that we did to canvassing a fragrance company called by Killian many years ago that Estee Lauder companies eventually bought, you know or working with a co-op, as I mentioned some of these co-ops are very savvy and they have the president of the board happens to run a real estate company, but then you have the smaller mom and pops that aren’t as savvy and needs a lot of handholding. Very smart people, but not necessarily in the real estate business. So, I did a deal on 96 in Madison. It’s not the biggest deal I have, you know, plenty of other deals I’ve done that are much bigger rent wise and commission wise, but sometimes the smaller ones are the ones that you take the most pride in because of the work that goes into it. So this was a building, again, 96 in Madison, the northeast corner, and it was the three guys diner. And as New Yorkers you don’t want to see these businesses that have been in business for generations to close. But this, he actually wanted to close himself, so he decided he wanted to close and then the co-op reached out for us to help them find new tenant and to find a co-op on the Upper East Side that will accept food is very far and few between. So we were very excited about the opportunity. And right away got an engineer in the space to figure out the current condition, what’s to code, what’s not, how much the co-op or the future tenant might need to put into the building. There’s a lot of handholding, a lot of time with co-op.

I called my good friend Jacqueline Klinger, who represents the best food tenants in the business. And I said you have to come meet me at the space. We sat at the diner, we had a cup of coffee, we brainstormed, and we talked about daily provisions and we had to talk about what materials we need to provide them with so that they can see past this 50-year-old diner on 96 in Madison and sure enough we were able to do it. We had Danny Meyer in the space. He fell in love with it and we negotiated a deal with the co-op for, you know, it was a win-win for both parties. We actually had an offer from Chipotle for more money and for Chipotle to do all the work. And the co-op wanted the daily provisions to service the neighborhood. They didn’t want the Uber Eats coming all day long. They didn’t want the bikes, they live in the building and it was just really a really nice deal. And now they’re there. They’re super, super successful. It’s a great tenant to have and it was just a nice story. So yeah, you can do a lot of these deals with the most exclusive brands in the world and put them on a space in Fifth Avenue and it’s so rewarding. But sometimes these smaller deals where you, there’s a lot of strategy and a lot of work, and a lot of handholding is really the most rewarding, especially in a building where the residents live and they’re, you know, they’re so thrilled to have daily provisions at the base of their building.

Hal Coopersmith: Well, that is a fantastic story and a great note to wrap things up on. Beth Rosen, thank you for being a part of Broker’s Angle.

Beth Rosen: Thank you so much. This was really fun.