Last week, the FGRT team attended the third day of the International Council of Shopping Centers (ICSC) New York Deal Making conference in New York City. The three-day event is devoted to real estate deal making, education and networking. Top takeaways from the day’s sessions include:
Last week, the FGRT team attended the third day of the ICSC New York Deal Making conference in New York City. The three-day event draws close to 10,000 retail real estate professionals from across the country. The conference features presentations on brands, the future of retail, emerging retail concepts, and real estate trends and opportunities. Below are our top takeaways from the third and final day of the conference.
1) Food halls are the next step in the evolution of food retail.
In a panel titled “Food Halls: How to Create a Unique Experience,” food industry leaders discussed the growth and merits of food halls and the future of the food hall industry. The panel was moderated by Garrick Brown, VP of Retail Research for the Americas for Cushman & Wakefield. Brown led off the discussion with a statistic: one year ago, according to a report prepared by Cushman & Wakefield, there were 105 food halls in existence. Since then, 35 new projects have been reported to be under construction and at least 80 more are being planned or are under development, he said. Brown jokingly noted that keeping track of the number of food halls that are under development is a full-time job.
The food hall trend has caught on not only in big cities, but also in smaller towns across the nation. Alan Napack, Senior Director of the Retail Services Group at Cushman & Wakefield, said that much of the growth in the food hall industry is a matter of terminology. He said that some of the development projects are simply upgrades of food courts. While such refreshing is needed, these spaces are not necessarily food halls, Napack said, as food halls by definition include local artisan restaurants, food-oriented boutiques and butcher shops. He added that food halls will evolve as more entertainment elements are added and that we will soon be seeing “food halls 2.0.”
The panelists all agreed that food halls are not a fad, but the next step in the evolution of restaurant retail. Phil Colicchio, Founder of Colicchio Consulting and law firm Taylor Colicchio, said that the common thread is community and that people are going to continue to seek interaction. When asked if there are too many food halls, Colicchio said, “That is like asking if there are too many gas stations.” He said he sees great opportunity in the college markets and that Auburn University, the University of Pennsylvania and Columbia are all doing interesting things with their spaces and creating excitement.
Herb Heiserman, Managing Principal at strategy and design firm Streetsense, was optimistic about the future of food halls, but noted that we do not yet have a reputable model for them. He said that “they all cannot be unique,” meaning that if there is too much differentiation, the model is not replicable.
2) Successful food halls offer authenticity, local elements and a “wow” factor.
George Chen, Creator, Cofounder and Executive Chef of San Francisco’s China Live food emporium (which was named Restaurant of the Year in 2017 by Eater), said that building a food hall concept takes a lot of planning, design, collaboration, time and money—and includes everything from selecting the furniture to sourcing the best soy sauces that customers will love. He said, “This is not a jigsaw puzzle effort. Customers want authenticity and they want the local elements of the concept, too. They want to understand where the food came from and how it was made.” Chen noted that cuisine is always interpreted, but that it must always have a “real” feel. Today, customers want more than a plate of food—which is what a food court experience offers, Chen suggested. Rather, they want the positive experience of a food hall, which they can share with their friends on social media. He noted that customers have uploaded tens of thousands of photos of China Live to Instagram. Chen concluded by encouraging the audience to create places that have a definite “wow” factor.
3) By hiring younger workers, companies can gain valuable insights into the younger generation’s values and communication and shopping habits.
Dan Gilbert, Founder and Chairman of Quicken Loans, gave a keynote presentation on the founding of his company. Quicken Loans is a Detroit-based company that was founded in 1985. With more than $96 billion in mortgage loans, the company is expected to surpass Wells Fargo to become the nation’s leading loan lender this year. Gilbert said that Quicken Loans is using a centralized technology platform with competitive pricing that consumers can access from anywhere. Convenience, speed and simplicity are its product differentiators, he said.
Gilbert, a father of five, said that he often asks his children and his employees who are in their twenties what percentage of purchases they make online versus in a store, and that “this percentage is 70% to 80% online.” Gilbert acknowledged that everyone believes that the in-store experience is real and that consumers are still shopping in physical stores, but he encouraged companies to talk to and hire younger people to hear their perspective, since they represent the customers of the future. Quicken Loans hired 1,500 interns from 220 colleges last summer, Gilbert said, adding, “What we learned from these interns…it’s like theft because what they gave us back is priceless.”
The moderator of the session, Becky Quick, who co-anchors Squawk Box on CNBC, asked Gilbert, “What types of things are you learning? Has it changed how you operate?” Gilbert said that by talking to the younger generation, he learns what matters to them, what devices they are using, how they shop, what concerns they have, what social impacts are important to them, and what is important to them in their lives.
Gilbert said that this understanding has changed how Quicken Loans communicates and through which channels. He said that the younger generation uses Instagram, Snapchat and text for the most part and that “email is your grandparents’ mode of communication.” He noted that the company’s internal click rate for opening an email is less than 30% among interns but close to 100% among employees over 50. Gilbert advised the audience, “Get young people into your organization or the world is going to pass you by.”