How E-commerce Has Changed Dealmaking
Brandon Hoffman of real estate investment firm Ashkenazy Acquisitions, during a panel on drawing e-commerce tenants to storefronts at the International Conference of Shopping Centers’ RECon in Las Vegas, said that it is a tough task to make understand the young brands about the 10-years agreements which they make as a landlord. It is because during that period of time those brands have not even been around. He further said that if the landlords wish to gain the attention of start-up retailers, then they need to agree for at least one or two year leases.
The bottom line is that the market will be tested before they commit for the long haul by such companies.
In addition, the CEO of Storefront- Mohamed Houache explained that e-commerce retailers get a handsome amount of help from pop ups in order to find out where they want to sign long-term deals. Also, the landlords who wish to get a way to close the gaps between long-term tenants are connected with retailers by Storefront.
Moreover, you can match your long-term liability with your short-term revenues according to Storefront. He said that vacancy rates are high along Manhattan’s expensive retail corridors that are why New York City owners in particular are searching for pop-up tenants.
In addition, in order to figure out where they should be setting up shop, young online retailers depend greatly on metrics, property comparable and sales volume.
Additionally, e-commerce brands often move faster to close deals unlike traditional retailers.
The veteran retail broker Robin Abrams of Eastern Consolidated said that they did their first pop up for TheRealReal in New York. They did it so finely that they moved up their timeline and signed a longer lease. Also, she said that the online-turned-bricks-and-mortar consignment shop ship from the storefront rather than from a warehouse that’s why it fulfills orders more quickly than many e-commerce operations.
According to Abrams, tenants are now commonly searching for ways to turn pop-ups into long-term affairs. Also, they wish to build in first right of refusals. Hence, this is becoming a norm these days.