The Real Estate Roundtable with IPRG
IPRG Partners and guests discuss various topics on New York City Real Estate and the broader Real Estate Market.
The Real Estate Roundtable with IPRG
IPRG Retail Leasing Featuring Ben Biberaj and Greg Goldberg
For years, Ben Biberaj and Greg Goldberg have dominated the New York City retail leasing scene. With 10-15 years of experience respectively, Ben and Greg are the top names in the game when it comes to filling a space with the right tenant, at the right numbers and with the best terms possible for all parties involved.
Most recently, Ben and Greg have spearheaded the brand new IPRG Retail Leasing Division, which handles spaces all across the five boroughs and in only a short amount of time has done an unheard of amount of volume. Don't miss out on this chance to listen to two of the best in the game.
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www.IPRG.com
All right, we're here at the real estate roundtable with IPRG, and today we're joined by the IPRG retail leasing team headed by Ben Bieberai and Greg Goldberg and Luke Sproviero is here as well, as usual. And uh this is Derek Bestrich, so welcome, guys. Thank you for having us. Thank you. Yeah, we're excited as well. Happy you guys decided to to come join IPRG. I feel like that's a really good step in the right direction for all of us. And we feel like our businesses and relationships are really complementary. So really happy to have you guys here.
SPEAKER_02:Oh, we're super excited. We think, you know, our background and your, you know, the company you've built over the last decade, I think it complements uh both of us very well. So we're super excited for the future.
SPEAKER_03:For sure. Um Yeah, so you know, we we've historically been selling like these middle market type of buildings. You know, it could it could be 20-footers, 25-footers, or bigger buildings as well, but a lot of these buildings have, you know, retail spaces in them. And we know that you guys kind of sell you you lease a lot of similar spaces, right? Like is that right? 20 footers, 25 footers, a little bit bigger.
SPEAKER_02:We specialize really anywhere from you know 500 to 10,000 square feet, non-institutional landlords, um, you know, similar to you we're in the volumes business. So it's about really, you know, being full service for our clients and really making sure that we maximize the value. You know, you have one retail space, eight, eight residential units, like every dollar matters for them on that that return. So we really take a lot of pride in uh you know getting the best rent and the best tenants for for the clients.
SPEAKER_01:For sure. And just like you said, like that middle market, that's where we specialize, especially like in the downtown market, the East Village, the West Village, the Sohos, the No Hos. You know, someone that doesn't want to spend$100,000 on a month uh per month on rent, you know, they're coming to those middle markets, those downtown markets where they're a little more affordable for those retail tenants, those restaurant tenants. And like Ben said, that 500 square foot cafe or maybe that 2,000 square foot restaurant cocktail bar, that's our bread and butter. And we do that, you know, left and right. And I think when we first started coming here, our uh our alignment was kind of similar. You know, your market in the investment sales was similar. Our our align in the retail market was similar. So it was just a great fit and a great mesh.
SPEAKER_04:We agree for sure.
SPEAKER_03:Yeah, we we've always prided ourselves on volume because we sell a lot of properties. Yep. And I think we really like that nature of the business, like just the deal, like consistent deal aspect. Like there's other brokers that will do, you know, a handful of deals a year. We we we like being being busy and on our toes.
SPEAKER_01:We're always busy, we're always just like you said, you're always busy, you're always on our toes, and just we want to be relevant. You know, we're always you're you know, you can't not see Ben and I and traded, you know, every week or every other week, you know, closing a deal here, closing a deal there. So that's kind of you know, obviously we want to hit home runs every day, but the singles and doubles, you know, they they add up. So we feel the same way. Yeah.
SPEAKER_03:I think I saw that's our exact business. I think that's how Ben is ranked like the top of the list for traded for most leasing activities.
SPEAKER_02:So yeah, no, we like like we uh we we really pride ourselves in in the volume that we do and and the work that we deliver for our clients, right? Like as Greg said, the home runs are amazing. We all love the big, notable deals. That's a small percentage of New York City retail leasing. The mom and pops, the small, the neighborhoods, that that's that's what builds the character of New York, and we take a lot of pride in helping build that and and and really, you know, changing neighborhoods and adding value and making people who live here or visit here their experiences completely different based on us putting tenants in place that make it attractive.
SPEAKER_04:Yeah, no, it's important for for these blocks. I know you mentioned that too when you first started here that you transformed, I forgot what block it was, but you worked on transforming several blocks, and it it does matter like what tenants are on these streets.
SPEAKER_03:Are there are there examples of like transformations that you're like especially proud of?
SPEAKER_02:Yeah. Uh Luke's referring to is on the upper west side on Columbus Avenue between uh 85 and 86, I've done seven of the restaurants in that block. I mean, somebody who lives on that corner or on that street can, you know, tell their friends and family what they love about their neighborhood. And I guarantee you, you know, four or five of the deals I've done are as staple marked as everyday, you know, life in the area. And it's amazing to know that we've completely changed someone's experience in a neighborhood based on our deals.
SPEAKER_00:Yeah.
SPEAKER_01:And that's super important because when we're showing a space, nine out of ten times, there's going to be a resident or someone that works in the area, lives in the area. Hey, what's going on in the space? What do you who are you showing it to? What's coming in? And and I I simply ask, what do you want? You know, it's not just about me. Uh I'm getting paid regardless, and it's not about our commission. It's how do we make this block better and how do we transform it uh for the next generation? So someone that's been there, these institutional guys, maybe a Cat's Deli, they're not going anywhere. They've been there for almost a hundred years. But you know, these new and upcoming restaurateurs, they're gonna be there for the next decade, two decades, hopefully three decades. And yeah, so that's you know, that's our goal.
SPEAKER_03:So so when you when you see a space like that, how do you just determine like what will make the the neighborhood or the block or the space better versus like making it worse? Yeah, make it worse.
SPEAKER_01:Canvas canvas the area, see what's in what's in the neighborhood, what's on the block, and what's missing. So you're not gonna put an Italian restaurant next to an Italian restaurant, but maybe there's a vacancy or a lack of uh Asian cuisine. And when you go into Asian cuisine, it can be anything, it could be Chinese, Japanese, uh Thai restaurant, and in in the East Village, there's tons. And then they have different submarkets, those. It could be a ramen restaurant, it could be an Udan noodle specialty. So, you know, we really take a pride and see what that block or that area is missing. Do I need a steakhouse? Do I need a Smash Burger concept? Do I need an ice cream shop? Is it just for dry retail? Could it be a clothing store? Could it be, you know, a coffee shop, a donut shop? Uh so it really, you know, uh this city, we're in the capital of capitalism, and this is uh an island eight by three miles that everyone in the world has a passion and dream to to open a business here, to to make a living here, to bring their their culinary expertise or their their background. So it's it's it's super important. But I mean, we we're great at our jobs, but uh the the neighborhood usually speaks to us. You know, how do we make this retail landscape more attractive, not only to the tenant, not to the residents, the landlord, but uh to like Ben said, to tourists to the world. Because people will come here. I mean, uh just to go back to Cats Delhi, there'll be a line, 500 people at the line or you know, around around the corner, because you know, they're from Europe, they're from Asia, and they've they wanted to try New York City corned beef and pastrami, and they'll come specifically for that. And and that's what we try to do when we have a vacant space. You know, we want to bring them here.
SPEAKER_03:And so you get vacant space and you're like, oh, this would be great for some sort of certain use. Yeah, and then you guys like go to your tenant lists and the connections you have and you'll just try to pull them in.
SPEAKER_02:Exactly. So we've been doing this long enough where you give us any space, we have you know instantly hundreds of tenants that we know it fits their criteria.
SPEAKER_00:Yeah.
SPEAKER_02:We do take a very broad approach, right? We have spaces that are, you know, dry use, and we like to take a broad approach because we we get more eyes on the space. And you know, we've had spaces that were fully turnkey gyms that have rented to restaurants or walk-in clinics that have been fashion stores, right? So it's we don't want to we don't want to limit ourselves to a potential use unless that's what the landlord wants. If our client wants a specific use, we will limit it. But we take a broad approach. We really go out to the market, hit all different angles, and try to get the most interest. And then as we see who is showing the most interest, we really hone in on that and try and find the right tenant for the space. We also pride ourselves on, you know, you know, a lot of our clients will stand behind this. We we we try to get multiple offers on a space. We want the client to not say, like, I took the first deal that I had. We had four offers. There was four different restaurant groups. I went and visited them, I met with them. I felt I moved forward with who I was the most comfortable with. Um, and and we take a lot of pride in that. We we want our clients to know that ultimately the decision was theirs and we give them multiple options to find the right tenant for the space. Yeah.
SPEAKER_04:Is it what what's the best tenant to get these days? Obviously, it's different for blocks and areas, but what are landlords looking for? What are you guys looking for?
SPEAKER_02:Yeah, so obviously every every market's different. Uh food and beverage typically pays the highest price per square foot. Um, if the space is vented, you typically can rent it pretty quickly. Um it it's really every space is rentable. If you price it right, if you prep it right. Um, we we take a lot of pride in making sure our clients, you know, prep the spaces in a condition that's showable. Uh years ago, a tenant would see four or five spaces make a decision on which one they want to move forward with and submit an offer. Now we have tenants that see 30, 40, 50 spaces. So if your space doesn't show well, you're never gonna make that top list when someone's seeing 50 spaces. So we walk, we walk our clients through with contractors, we you know, the epoxy plane floors, the white box of the space, we redo the lights, and we make sure that when somebody walks in, they're gonna have no doubt that our client cares about their space and there's somebody that they want to do a deal with.
SPEAKER_01:And we want to make it look like a gallery. I mean, we want to make it look as nice as possible because, like Ben said, these tenants are seeing 10, 20 spaces, and they're gonna say, hey, this space needs the most work. You know, I love the block, but uh I don't have the capital to bring it up to code. I don't have the capital to even open the doors or security deposit. So when they see a space that has, you know, a restaurant space, it has a kitchen, the kids, the kitchen infrastructure is in place, the gas lines are there, the the black iron uh hood is there, the HVAC is there, the lighting is there, the floor is there, the bars in place. These are all things that are pros that landlords the that the tenants are like, okay, I don't have to take care of that. That's one of the lessons.
SPEAKER_04:They don't want to do work, right? Do they have the vision of like no?
SPEAKER_01:No one wants to do no one wants to do work.
SPEAKER_04:Well, don't they have their own do some businesses have sure have their own vision that how they want to do a space?
SPEAKER_01:But even even if the space is built out, yeah, that was built out for the previous tenants. So the new tenant has a new concept. So just because it's built out, they might request, you know, 12 months free or six months free, because hey, it's a great space, but that's not my concept, and I have to gut the whole space and redo it.
SPEAKER_04:But at least the bones, right?
SPEAKER_01:The bones are there. That's the most important thing.
SPEAKER_04:The lighting, the big bending, the gas.
SPEAKER_02:The issue is like with the kitchen, right? You turn, you you get somebody in with a fully turnkey restaurant. That kitchen assembly, the way the lines are built, is not the same for every restaurant. So you know, they'll they'll save pieces of it, but they ultimately rip it all out. Yeah. The cosmetic, it's very rare that somebody takes the space with the cosmetics close to their brand. So they rip it all out. But it's the bones are important. You need the gas line, you need the ventilation, you need the HVAC. Um, you know, because those are things that you're dealing with the gas, right? With Con Ed. We all know it's a challenge. Nobody wants to deal with that. So if the gas is in place, that's a bonus. If the venting's in place, um you're in a 20-story building, that can be a$300,000 job that they don't have to pay for. It's that the bones are there.
SPEAKER_04:This business just opened. I live in Tribeck and this business just opened. It was under construction forever. And I heard the reason was it was Con Ed. They couldn't get like the sign off for the guests for the guests.
SPEAKER_03:Which uh which business?
SPEAKER_04:It was a supermarket call called uh metal lane in in metalane's blowing up. You can't even get in yet. Yeah, it just opened. There's still lines. They got it. It took it took a long time. I don't want to don't quote me the exact time, but it was really a long time. They had their their their signage up, and we're like, when is this place opening? It's like a a high-end like it's like Errowan, but it they try to be like Erwan, but it's much smaller than Errowan and the food's like good. Like the chicken nuggets are really good. Yeah.
SPEAKER_01:I mean if you have it. If you have a security guard for a supermarket, you're yeah.
SPEAKER_04:I mean, the lines are starting to die down, but the point is, I heard they had a major holdup.
SPEAKER_02:So there's two there's two things that affect a lot of our restaurant deals that are just things when we're negotiating free time that we always try to let our clients know the tenant can't control this. Yeah. If you need to put gas in the space, you're dealing with con edison, they're gonna ask for a year free. You know, they'll if they get up and running earlier, they'll start paying rent typically, but they're gonna ask for a year because they can't control con edison and the liquor, the SLA, the state liquor authority. I mean, we're seeing deals now where we're we're we're we're enticing our our tenants to get to the community board prior to lease signing just to get a head start to apply.
SPEAKER_03:How long does it take the SLA?
SPEAKER_02:A lot of liquor attorneys are telling us now for for the the tenant stats for six to eight months for each.
SPEAKER_03:And and the liquor license doesn't transfer from one no and doesn't stay with the space. It's like easy to do. It's for the tenant and the space.
SPEAKER_04:Is it easier to get if a space has it?
SPEAKER_03:It's way easier.
SPEAKER_04:It's easier to get again, even though the tenant's different. So you have a liquor license in your location right now.
SPEAKER_02:That's a good sign that you'll be able to have a liquor. It's not guaranteed, but that's a good sign typically that you know you have to go through the community board, you have to get approved by the community first. That usually, if they approve you, the the SLA will give you the approval. It's just you know, the time can be anywhere from six to eight months, and you're really at the you know dispense of uh state agency.
SPEAKER_03:Why would they not give a liquor license?
SPEAKER_01:It could be uh so there's certain laws and rules, uh 200-foot rule, 500 foot rule. If you're within that distance of a house of worship, um or a school also um beer and wine you can get pretty much anywhere. Yeah, but when full liquor, you have to be with within those within those areas. Um but in community boards two and three, which is East Village, West Village, so oh no, it's so saturated, those neighborhoods. The community boards say, Hey, we don't want another liquor license, there's already 10 on the block. We're not we're not approving.
SPEAKER_04:There's different ones too, right? You have the 4 a.m., which is the hard line. We're not seeing so much of that. I have a 4 a.m. in one of my buildings.
SPEAKER_02:Yeah, we're not seeing so much of that.
SPEAKER_01:Usually liquor uh usually community boards don't issue 4 a.m.'s to first-time operators, or you know, you might get a stipulation for a midnight or a 2 a.m. and then you could reapply in the next year if you're a good tenant, you don't have any uh violations or complaints from the community, you can reapply to get a later liquor license. It doesn't seem necessary.
SPEAKER_04:It's nothing happens good at 4 a.m. Nothing happens. I want to like shut my door at like 2 a.m.
SPEAKER_01:So I mean tenants are usually okay with with a midnight or a two a.m.
SPEAKER_03:So are these leases contingent on the case?
SPEAKER_01:Yeah, because if they can't get a liquor license, then they can't operate their business.
SPEAKER_02:So yeah, so we we we try to structure it in different ways. Yeah. This is why we we really push to get the tenants on the community board prior to lease signing. If you if you get approved by the community board, you get approved typically by the SLA, again, unless you're within a certain distance of a school or a church or a religious institution. Yeah. Um, but your liquor attorney will find that out prior to even wasting your time to go to the community board. We do our due diligence on that as uh as well. Um how long does community board take? You can sign up usually within a month. You know, you get you yeah, they they they send you the schedule when the next uh the next meeting is, you sign up for it, you show up, um, you bring all your documents and then and they have an open discussion and they either approve you or they don't. If they approve you, the SLA typically you know approves it as well. But the time, it's it's six, eight months from sending in your application sometimes. And it's it's every it's there's nothing you can do to expedite.
SPEAKER_01:Every every community board is different, but usually on the first Tuesday or Thursday of every month, these community boards meet and they decide who gets what and what and what are their stipulations. Got it. But that's what when we you know when we're vetting these tenants, hey, are you a first-time operator? Are you an experienced operator? Are you an experience in in in that neighborhood? You know, you might be in the West Village and you might have five restaurants and you have a great relationship with the community board, your that that process is gonna be very seamless.
SPEAKER_04:Questions. Obviously, this is a hot tent to have a restaurant, and we've all lived in these neighborhoods of New York, the Westville, Tribeca, whatever it is. You see restaurants go in, they go out, some stay for a really long time, which is great. As either a landlord or broker, what do you want to see from a restaurant? What makes you excited about someone? Is it like location count, money in the bank? Like, well, what's on what makes you nervous and what makes you like ready to go?
SPEAKER_01:I I think it's it's a combination of everything. Um, you know, obviously we're living in a social media world, so you want to see if they have a strong social media following. So what does their Instagram look like? Um, how many followers do they have? You know, it's a good sign if they if their restaurants are jam-packed on a Friday, Saturday night. It's a great sign if it's a Tuesday, Wednesday and it's raining and it's cold and it's still a line out the door, like like Hillstone, it's gonna be busy Monday through Sunday, rain or shine. So, like you want to have, you know, that the landlord wants to have that comfortability of, you know, is this gonna make it? You know, I'm signing a 10-year lease, I'm giving half a month, uh half a year free, and I'm spending, you know, broker fees, legal fees.
SPEAKER_04:I want to make sure numerous locations important then, because you're not gonna have any of that. Yeah, but everyone else.
SPEAKER_01:Everyone, everyone starts somewhere.
SPEAKER_04:So aren't so everyone when do you take the risk on someone when they have your own?
SPEAKER_01:They have you know a hospitality group that has 10 plus locations, but for some reason that space didn't work and they have to assign it or uh you know exercise their good guy clause.
SPEAKER_04:So gotta be. When does a landlord say, you know, I'll take a shot on this guy? He has he has no restaurant. Yeah, so yeah.
SPEAKER_02:That's a great question. So it's it's all about it's all about the negotiation, right? So if you're a first-time operator, you come in with substantial background, you have capital, you have investors, people that will sign on the guarantee, a good, a good idea, right? Something that's it's it's not new to New York. It's just, you know, you're we're not reinventing the wheel here, right? So you get somebody who you financially feel you know can commit to some sort of lockout period where they're guaranteed to pay rent, somebody will take a risk. If a space has been sitting on the market for a little while, you know, lower price point under$20,000 a month, you can get those deals done. Let them build their business model up. And if they want to swing for a bigger space in the future, the the proof of concept is what will get them there. So they typically start on the lower price point runs.
SPEAKER_04:Why do I see sometimes like in Williamsburg, for example, market that we love? Like why, like these restaurants that you that have a great name, they open up in a sister restaurant, they're kind of like side street, not side street locations, they're on retail corridors, but not the best blocks. Are they doing this because they have a name and people will find them and they want a cheaper rent? Or is it is there an allure to not be with every other restaurant?
SPEAKER_02:It's a combination, right? So everybody has different ideas on what's best for their business. Um, some operators, they build a brand, they they say it's a sister restaurant, people will go there. So to save, you know, half of rent to be on a side street and you're gonna get the business regardless, that's a no-brainer. Got it. Um, typically for a restaurant, they want 10% of their sales to be their rent. So it's all an economic factor. If they're paying$500,000 a year in rent, they need to make$5 million a year to kind of break even and start making money.
SPEAKER_01:And some of these guys will only look on the avenue. Some of these guys will only want to be on side streets, like you said. Some of these guys only want to be on corners, and that that that's that's a price difference. It's it goes from if you're on a side street, it's gonna be a lower price point. If you're on the avenue, it's gonna be a higher price point, and if you're on a corner, you're looking at a 20% minimum bump from those rents. So it's like it's a combination of everything. And when they open up a sister restaurant, that's great for a landlord because hey, we're we're doing great at this one and we're ready for our next one. So it's it's really how comfortable are they financially and proof of concept.
SPEAKER_04:Makes sense.
SPEAKER_01:But then you have landlords that say, I don't care about the tenant, I care about the rent, and then you have other landlords that say, I don't care about the rent, I care about the quality of tenant, this is my baby, this is my only building, this is one of a hundred buildings. I want a great use. I some some landlords say I want a great use, sometimes I want a great rent, and sometimes we get both.
SPEAKER_04:What's the ideal size of these units? Not just for restaurants, but when you when you go to market with like we sell a lot of 25 footers, right? 25 by 50, 70 could be good.
SPEAKER_02:What about the frontage is important for us, right? So so it's there's not an ideal size. We've we do all sorts of ranges. Um I mean, we've done deals in spaces with 12 feet entrances to 100 feet entrances, right? So it's yeah, it's really not a uh black and white answer to that. It's more about what you know when we price spaces, we take all that into effect. New York City any given day has 10 million people in the city, right? If you price a space, every space in Manhattan is desirable if it's priced into the market.
SPEAKER_04:Correct.
SPEAKER_02:Right? So we we we take a different approach to it. We you know, we we find any challenge that we have in the space and we we figure out a way to make it still attractive and and push it that way.
SPEAKER_01:And there's always going to be challenges in the city. I mean, the city's you know built over a hundred years ago. So all these buildings in the lower markets, you know, this is the only place in the world that these concepts can thrive. And and sometimes, you know, they want to have these unique spaces, a below grade space, above grade space. You know, you go to any other city that's you know a newer city, and everything's ground floor retail. Everyone thing, every store has a 30, 40 foot frontage. But this city, you know, you walk in the West Village, you might have a 10 foot frontage, but it opens up in the back, it might have a U shaped uh layout. But you you don't go anywhere else in the world and see, you know, I gotta go three steps down, four steps down, four or five steps up. And that that's a whole nother challenge, you know. Getting in this business or someone who focuses in traditional high end retail on Madison Ave might not know how. take and market a restaurant space because there are these little it challenges you know just like Ben was saying walking through the tenant through the the the whole kitchen you know the with the whole Con Ed with the with the gas line the HVAC specialist uh that we're we're gonna have an ADA issue if there's a below grade or above grade sometimes it's grandfather and most of the times if in your construction you got to install a ramp.
SPEAKER_02:These some of these brokers just won't know the the deal flow uh uh of a of a restaurant deal which is completely different than you know high in a retail store uh on the upper side or so where you don't need to pull permits or go to you know get sign offs you know you're putting up shelves here I you know the kitchen the vent the HVAC the ADA the liquor license these things it's like an onion it just doesn't it doesn't end until the doors open there's so many things that can go right and so many things that can go wrong and you really need a broker that's done it and that that's experienced in that world uh to get these deals across the finish line got it wow it's a lot it's a lot of stuff it's a lot of stuff and and getting in the business you don't realize how many how much stuff and knowledge goes into a restaurant deal as opposed to a traditional you know jewelry store or clothing store yeah you'd think like a clothing store or jewelry store like as a tenant in a building like if I was like a resie tenant and I'd want I would prefer not to be above a restaurant for less noise less less rodents uh like a clothing store like a rag and bone sounds like if you can land someone like that seems like that's like the best tenant but maybe they pay they don't pay a great price I don't I don't know no no look the reality is most buildings are owned by people that don't live in the building so it's you know they they want somebody that's going to pay the rent that's that they're confident in and and look we understand nobody you know we wouldn't want to live right above a restaurant you get the smells you get the people you get the the rodents it's it's it's it's a lot but New York City's you know food and beverage has always really controlled New York City that's that's one of the reasons I think the biggest reason why people come here it's the hospitality cap capital of the world they go anywhere for food any place I traveled the strongest tenant food and beverage they look they pay the highest price per square foot in most markets right when you do Madison Avenue or some Solo pockets food and beverage can't afford those four five six thousand dollar foot spaces but in most neighborhoods they pay the highest you know price per square foot at almost a 20% increase so that that's where the value is that makes sense.
SPEAKER_03:Negotiating with a food and beverage and like trying to do a deal with them right like there's a say there's a space it's already vented there's already bar like it's it's a decent build out but it's not what this tenant necessarily wants what what are you guys doing in terms of like um TI or concessions?
SPEAKER_02:Yeah so in this environment we're trying to have our clients not put up so much in TI unless it's for a basic infrastructure that's gonna be there regardless if the if the tenant succeeds right HVAC ventilation things like that. It's more free time. The liquor license is going to take six to eight months you can pull permits and build out a restaurant in six to eight months typically so we we try to really adjust it to the what's going to take the longest which is a liquor license and just give them that in free time. And most of our clients understand like they the the the restaurant's not going to start paying rent unless they're up and running and open. They need their liquor license that's their profit. So so most clients are willing to work with them.
SPEAKER_03:So you finally the tenant has six to eight months to do whatever they need to do in terms of build out and getting the liquor license and then they they're up and running. They're up and running.
SPEAKER_02:I mean the opening for restaurants I we think is the most important part for them, right? Their grand opening is is what makes or breaks a lot of these restaurant groups. So that's why that's why a lot of these restaurants won't won't open with a beer and wine license. It's just opening a restaurant not selling alcohol or a liquor it's it's it's hard for them to to build a brand as as a restaurant that doesn't sell liquor.
SPEAKER_01:There's just there's just so much competition and it's the you know fumbling at at day one is never a good sign.
SPEAKER_04:Some of these major build outs on these restaurants that I've been into like it's just like you know it's expensive it's massive there's one on my block in like called uh beef bar.
SPEAKER_02:Yep.
SPEAKER_01:And like I've been in there I was I was there for opening night and it was it was packed during opening night I don't know how they're doing now but it was expensive the build out when you're spending 10 million plus on a build out and you're taking an iconic space where where Nobu started yeah you know on the corner of Franklin and uh in Hudson it's it's yeah it's an iconic building yep iconic brand that was there and it's it's tough shoes to you know fill uh the size of the space makes me nervous it's just so big when you have a 10,000 square foot restaurant in Shaybeck it's gonna be a pricey build out you know yeah we see build outs uh on the low end you know a million and on the high end you know 10 12 15 million dollar buildouts you get into some of these union buildings the build out cost for these tenants it's astronomical I mean you've got 30 40 percent of the build out costs but that's what brings these these tenants in and that's what brings the customers in because the high demand of hospitality you know I travel the world and and you're not treated anywhere nearly as good as you are when you sit down at a good New York City restaurant. I mean it just if you go to a different market you're like wow this is not New York you know when the when you're greeted by the hostess when you're you know greeted by the waiter and it is it just there's little things that that we do here that just separates us from from anywhere else in the city and that's what makes the city special so they pay big rents but you know cities you know living here and working here it's expensive but you know that's why we're here to to experience this on a day-to-day basis it's crazy.
SPEAKER_04:What's the success rate in like these high retail markets right like like retail mean like the clothing like you see them like on Bleaker and Soho and Upper East Side.
SPEAKER_02:Yeah I mean they're definitely much higher than the food and beverage for success.
SPEAKER_01:I think it's 80% fail rate for these operators that will close within the first two years for food and beverage for restaurants.
SPEAKER_04:Yeah crazy it's as a landlord that kind of must make people nervous.
SPEAKER_01:Yeah it's it's a high risk high reward but that's just the nature of the business 80% 80% I think close within you know they sign a 10-15 year lease but they might give the keys back within the first three.
SPEAKER_03:Are are owners negotiating for profit sharing on these leases? Not anymore.
SPEAKER_02:I think that was more of a COVID thing it it happens more if if the tenant really if it's a tenant they really want and they're paying a much below market rent you can negotiate something but it's not super common. It does happen but um it's not as common as it was how do you know the tenant's going to be honest with you I I don't think they're going to be good ways to do it. You have access to the POS systems the way the technology is you can share the reports and things like that. So it's not so much of an issue. It's just the reality is and we we tell our clients who want to get in on the profit sharing, it's like the best thing that can happen for you is this restaurant be super successful let them make so much money that they'll never leave. That's the best thing that can happen. 100% and how does it work if they if they fail and they want to leave the space after two years? Yeah so so we we negotiate what's called a good guy guarantee in most of our leases. So the way that works typically is um you know the tenant sends a 10-year lease they stay for four of the 10 years so they've stayed for 40% of the lease they'll have to pay back 60% of the broker fees that were paid, 60% of the free time. That's why it matters the financials of the individual most businesses are signed on single single purpose entities, right? And then there's an individual that signs on as the guarantee that's somebody with assets somebody who's you know proven to be financially strong and and that person's on the hook to pay back that those unamortized costs of the landlords before they give the keys back.
SPEAKER_03:Trevor Burrus But it's not it's not the unamortized remaining obligation of the lease. No, no it's not the remaining six years.
SPEAKER_02:Sometimes we have lockouts um usually usually you'll have some language where you can't exercise a good guarantee for the first two or three years just to give that confidence that you know you'll be there for that time period. And and most tenants are willing to offer that because they're not going to go spend one, two, three, five million dollars in space thinking they're gonna be out in two years.
SPEAKER_04:Got it and you can get this fee the breakup fee like people get them or is it like a whole litigation thing?
SPEAKER_02:I mean look we see both sides of it it gets it becomes litigation sometimes you know most restaurants know within six months six months in advance that they're gonna close. So you give the six months notice period and then it's a negotiation factor. You'll leave everything in this in the store you leave all the chairs the furniture the equipment you know maybe you negotiate yourself to pay a little bit less because you're giving the landlord a lot of ammo for the next tenant to to get somebody in quickly. So it's a combination it's always a negotiation.
SPEAKER_01:If they're not making it they they don't want them there and if they want to get out you know we want the next tenant in that's gonna be that's gonna make it and you know help pay his mortgage so that usually they we make a deal and but it is a negotiation.
SPEAKER_03:All right what else no good stuff um you get you guys are off to the races I I see I mean you've been hit and traded again and we're trying and we're we're doing deals and I see the um the the the lease signings rolling through so can you share any recent deals that we've done?
SPEAKER_02:Yeah so so just kind of more on a broad picture right our business is our business you know as you know as in the brokerage world you're your own brand yeah right we partnered with IPRG because of the amazing reputation that you have in the industry. We think we we have an amazing reputation also but our clients know who we are people in the industry know who we are so when we switched companies it was no hiccup for us um you know we we've had people that we've worked with years ago people we've never worked with reach out and and and we're really just focused on on getting back into the volume uh we've been here for 12 weeks we've closed 16 deals right not where we were at you know previously but we're growing it we're up to nine brokers we'll be at you know 10 to 15 in the next month or so um and we're super excited for the growth. Yeah it's amazing.
SPEAKER_04:What about some deal what in your career recent like what are deal any good deal stories any good spaces that you want to talk about?
SPEAKER_02:Yeah yeah so bad deals maybe no no no we don't we don't talk about bad deals no you know what the the my favorite deal I've ever done and one thing that I really admire about New York when I moved here from Virginia 15 years ago people in New York love New York. You can live here for a month you could live here for 20 years. It's New York's the best place in the world. You see everyone says it right people leave left during COVID they went to Florida they all came back so true. Like no nobody grass is not greener they all thought it sounds so nice being you know in a hundred degree weather in the middle of winter but New York City is New York City. 100% so I've represented a brand called New York or nowhere at their flagship store at 250 Lava exactly so I so we call that clicks to bricks they were an online retailer they had pop-ups we got them their permanent flagship store um you can't go to a Knicks game a Rangers game a Yankee game without seeing their brand everywhere Aaron Judge wears their stuff uh actors actresses it's just like amazing to see everything every guerrilla traffic at that where I live has that hater they do great they do great events with the marathon and you run the marathon and you show that you know you ran it you get you know free tote bag and and they've really built a New York brand and and you can't go anywhere. I've gone all over the world and seen people at the New Yorker Nowhere get out of here the New Yorker Nowhere um clothes and it's just amazing to know that like we we put them into their space and worked with them and negotiated a deal that I think was super beneficial for them and just helped them grow their brand.
SPEAKER_04:Where was their first store?
SPEAKER_02:250 Lafayette. Oh location they're doing amazing perfect such a great brand it's it's it's it's really just like part of the identity of New York now. They do more than that they do like they do hats, clothes, they do combo with Yankees collaborations with with the Yankees and Mets and I think the Rangers and definitely the Knicks but you can't go to the garden without seeing every third person with a New Yorker nowhere you know something on which is amazing to see it's a good idea. And it's a New York brand it's it's as New York as it gets uh you see people online posting it with the hashtag and and just to say like we had a a little played a little part in helping them grow their business it feels great.
SPEAKER_04:I love that I had no idea about that it's great. Yeah I want one of those hats I don't know which one to get I see I you see them too much. It's insane.
SPEAKER_01:Let's get them all right uh I mean I I guess recently about a year ago my biggest deal was at 598 Broadway in Soho it's uh between Target and Bolson it's the start of Soho uh it was a 9500 square foot deal um about a year ago we had a huge interest in cannabis groups those are dying down but the travel agency I represent the landlord on this transaction is my biggest deal to date uh numbers wise um another one in Soho I've been super active on Grand Street 62 Grand Street this was early on in my career but still my favorite deal to date uh the tattoo artist called Bang Bang and favorite one of my favorite clients to work with on the landlord side and representing the tenant as well is a clothing store for 30 years that hasn't been available for three decades and we got the listing and found a tenant and uh saw everything I DM'd him on Instagram this is when Instagram was just becoming kind of popular in the business world but DM'd him he put out a post hey I'm looking for retail space hit me up I need another location met him the next day he responded toured him Justin Bieber uh interrupted our tour mid-tour I remember it was like it was yesterday we're at 21 Crosby on the corner Grand He only wanted a lower level space for like a private studio and it up ended up becoming like a 3500 square foot second location at 62 Grand Street wait so Justin Bieber took the location no he interrupted the tour he's like hey bang bang I need you to tattoo my chest and he has a sole like line so he happened to know they were in there uh no he was like hey uh bang bang I need you to oh wow I need you to come fly out to LA and he's like hey I need to leave this tour so next week we continued the the oh got it so and I it was just a I was you know somewhat new broker awesome client on both sides but amazing brand and concept but seeing the deal from start to finish working on both sides growing as a broker seeing the tenant side the landlord side and then just seeing the whole construction process that wasn't even a restaurant space but it pretty much was because total gut job I mean I was standing on dirt in a retail space at 62 Grand Street and just seeing what two million dollars does to a space from dirt to polished concrete which was great two million bucks I think it was a about a two million dollar build out and how and what was the square footage about 3500 square feet on ground ground in a lot of water grounds insane yeah he he dug the basement out and I'll do it so I mean literally standing out on the bang bang did all this yeah it was the tattoos yeah it's pretty cool it was if you if you I don't have any tattoos but if you ever want a tattoo you should definitely check out Steve Reynolds our office is covered and he he tells me what they cost and I can't believe it. Yeah I mean everyone's different we we've done you know like Ben said traditional anywhere from mail salons yeah espresso bars restaurants cafes but you know this one stuck out as early on in my career um and just seeing seeing and learning and growing as a broker what it takes to be a good tenant broker what it takes to be a good landlord broker because Ben and I specialize on on landlord representation but just seeing both sides of that on the deal and being involved pretty much on a day-to-day weekly basis just seeing the the the deal and the space progress from reaching out to touring to LOIs to lease negotiations to construction to grand opening I mean it was a real 360 degree it was it was just like everything that you wanted a broker in a deal to grow as a broker just to see the process from both sides of the deal because we usually have our landlord hats on and we're trying to get the highest price for our client and the tenant broker is trying to get the lowest price and we kind of meet somewhere in the middle so negotiating on both sides and seeing that and then seeing just the growth of the deal that was that that one always will stick you know in in our 10 plus career as as my favorite deal just as uh client wise for sure tenant landlord reps and just seeing that whole deal flow and that that that was big but 598 Broadway was a a more recent deal and that was you know a huge a huge deal in Soho and I've been super active in so but brought that was my first Broadway deal so that was like a trophy listing and a trophy deal that really stuck out recently.
SPEAKER_03:Cool so um I I think I think we can I think this has been this been great and we could wrap pretty soon here. But um just one last question. You got you guys clearly have so much activity throughout Manhattan and you I feel like you're the go-to guys for retail leasing in Manhattan right but we have a bigger team now it's a lot of people and we also have a lot of clients at IPRG in in Brooklyn Queens the Bronx we have the Jersey team as well so like what are the plans to to you know fulfill the needs of our our clients in Brooklyn and these other parts to answer that I've already referred three deals good locations in Brooklyn and they crushed all three I know they get the deals done they got them done big numbers.
SPEAKER_02:Yeah I appreciate that so we we're we're actually super active in Brooklyn Queens and the Bronx as well we are currently growing out the team to get you know more brokers to focus on that but we're super active uh we take a very different approach to it um it's our marketing that sets us apart from our competitors we we we're super aggressive we we prep the spaces we do nice videos if they're warranted we make very nice clean marketing so it's very clear clear what's available and we just take an aggressive approach right so we we can run the process um you know for any space I mean we've closed deals in Washington DC Florida California you know we we've done deals all over even though we're based in New York but we're we're still super active in the boroughs um and any one of your clients that are going to negotiate with uh their current tenants like we're happy to send them evaluations to make sure they're getting market rents and we we want to be a resource for them.
SPEAKER_01:Yeah we always want to be a resource so I think that the thing that sets us apart I mean Ben and I have been doing this for over a decade our best ability is our availability like it's not rocket science what we do it's that's a middle ones it's it it sounds silly to say but like you learn pretty quick what separates a good broker and a great broker but if you're just available like if you can get in touch with us we're always going to respond text call email I mean it's just it's the little things that go a long way and we pride ourselves on the little things because I think it outshines the bigger stuff.
SPEAKER_04:You never know you guys have your numbers up right and a tenant can call you if you don't take the call you can miss it. They're gonna cost you you might miss it.
SPEAKER_01:Yeah and then that's that's the thing the tenants are always if they want to be in an area they're gonna go to that area and call every sign off the street for sure if you're not responsive or if you're not you you don't share if you don't show that you you have a passion for for this they're just gonna go to the next guy. Yeah you know how how many brokers are in the city but how many brokers are active and and known as deal makers. So that's that that sets us apart. You know we're always available we're always going to respond you know it's not a it's not an hour or a day or a week to get back to it's gonna be with like matter of seconds or minutes because I get this every day of like wow like I just sent you an email and in 30 seconds you called me. So it's like it's the little things that's right so that that's what we pride ourselves in. We've been doing it for almost over 10 years.
SPEAKER_04:And that's what your that's what your owners want you to do too. They want a broker that's gonna be doing that.
SPEAKER_02:In our industry time kills every deal. So we we do our best to make sure that we don't delay anything. If anything can be done yesterday we've we've gotten it done um there's no reason with technology today you could be on vacation you could be you could be anywhere in the world and you can get deals done moving on and the phone works. Right. So we we may we really pride ourselves on just making sure that there's nothing that we're doing on our end to delay a deal because time kills every deal in our industry for sure.
SPEAKER_04:Well said absolutely facilitated deals and I've got to end right on that because that was good.
SPEAKER_03:Okay let's do it so yeah this has been great guys really insightful thank you looking forward to it thanks for having us for anyone listening if you have some retail spaces you're looking to lease please reach out to Ben and Greg. Perfect we look forward to it thank you thank you so much
