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|Moderator||Gentry Hoit ’90, GreenOak|
|Panelists||Kathryn Bucklew, EDENS|
|Tim Stenta, GGP|
|Scott Trafford, TH Real Estate|
By Jonny Cohen ’18 and Michael Stern ‘19
Given the rapid growth of e-commerce and disruption from companies such as Amazon, an oversupply of retail in the United States, and the decline of brick and mortar sales from retail giants such as Macy’s and Sears, this panel provided an interesting perspective into the challenges and changes facing the retail sector today. Gentry Hoit ’90 opened the panel by displaying bleak images of several recent negative headlines, noting the future challenges of brick and mortar stores and how the retail as we know it is rapidly changing, but that we need to look beyond the media headlines to really understand the sector. The panel featured three highly experienced retail real estate professionals, all experts representing three of the largest retail investors in the world.
The discussion first turned to Tim Stenta who detailed how GGP’s strategy has changed over the past few years due to the transformation of consumer habits. Stenta elaborated about how GGP has sold off the firm’s ownership in non-core retail assets and is shifting the tenancy of its properties away from apparel retailers to electronic retailers, amenity retailers and other tenants that can increase foot traffic at the firm’s malls and retail centers. In addition, GGP has been highly focused on leveraging big data to better understand consumers’ habits at their malls. Through the use of technology, GGP can measure traffic and analyze consumer preferences specific to its properties. This data can help GGP identify and attract new tenants and position them to succeed.
Kathryn Bucklew elaborated on EDENS’ retail strategy and how changing consumer trends has shifted the private REIT’s investment focus. Bucklew noted that despite the recent headlines, retail is still strong and quantified how 70-75% of the U.S. GDP is consumption. However, the proportion of tangible goods consumption is decreasing, and experience consumption is increasing. She highlighted how consumers today would rather spend money on experiences such as trips and vacations and how EDEN’s has to adjust its strategy accordingly. 87% of EDENS’ retail exposure is in well-located grocery anchored retail centers, and Bucklew explained how EDENS is trying to find ways to take older shopping centers in good neighborhoods and reinvigorate them for better uses such as adding in a multifamily component or adjusting the tenancy.
Scott Trafford, who represented TH Real Estate, moved the conversation to the future of retail. Trafford discussed how recent deals such as CVS’s pending acquisition of Aetna, may lead to future consolidation of the pharmacy and grocery market. Trafford sees innovation such as the driverless car leading to smaller footprints for grocers, because everyday goods such as milk, eggs, and cereal can now be easily delivered to consumers’ homes. Trafford believes that consumers of the future will only go to grocery stores to buy specialty products such as specific cuts of meat.
Contrary to the perception in the marketplace, retail is not dead, it is just evolving rapidly. The consensus on the panel was that those players that can reinvent themselves and change with the times will continue to be successful, while those who stick to the old blueprints will face significant challenges.
Jonny Cohen ’18 graduated Summa Cum Laude from the George Washington University with a BBA in Finance and Economics. After graduating he spent three years in real estate investment banking, first with Morgan Stanley in London before moving to J.P. Morgan in New York. Jonny spent his last year and a half before business school with Cohen Equities, a real estate private equity family business. At Cohen Equities Jonny focused on acquisitions, dispositions and refinancing of commercial properties across the country. Jonny plans to re-join Cohen Equities upon graduation in May. Jonny is Co-President of the Real Estate Association (REA).
Michael Stern ’19 is currently a first year MBA candidate at Columbia Business School and the AVP of Education of the Real Estate Association (REA). Prior to Columbia, Michael worked as a Real Estate Private Equity Analyst at Morgan Stanley Real Estate Investing (MSREI). At MSREI, Michael focused on opportunistic and core investing opportunities across all property types where he closed over $460MM of real estate transactions. In addition, Michael is a volunteer for the non-profit iMentor and is a councilmember of Cornell University’s College of Human Ecology Young Alumni Council. Michael received a Bachelor of Science with Distinction in Policy Analysis and Management from Cornell University.