Questioning Faith (at ICSC)
Commercial Observer talked to Faith Hope Consolo, the chairman of Douglas Elliman’s retail leasing and sales division, over lunch at Jardin at Encore in Las Vegas, on Sunday, May 22, as the International Council of Shopping Centers’ RECon got underway.
Ms. Consolo was dressed in a uniform light yellow sweater and skirt with little makeup. Seeing a long-ish line for lunch, Ms. Consolo dropped a name to the maître d’, and shortly thereafter, a table for three materialized.
The dame of retail talked about dating a man from Texas who has proposed to her a number of times, but said she won’t be moving to Dallas to be with him. “I can’t move to Texas,” the Connecticut native said, jokingly calling him her “JR Ewing,” as in the fictional character from the old TV show Dallas. The couple met through one of Ms. Consolo’s former husbands.
At a show filled with a sea of men, Ms. Consolo stands out. She said to make it, you need “nerves of steel.” And her overall take on the real estate market is as follows: “When it’s bad it’s good and when it’s good, it’s great.”
Commercial Observer: What’s the big retail real estate story today?
Ms. Consolo: I think the story that needs to be told, that I know that everybody feels there’s too much product and the rents are way, way off but I just think it’s a [blip]. It’s a short dip. I don’t think we’re headed for a complete downturn. I don’t think the rents are off 30 percent. I think we’re off maybe 15 percent, 20 at best.
So no downturn, huh?
No, we’re on a dip. Some product is out there aggressively high because a lot of owners paid very high numbers for it but they’re realizing that too.
What about in terms of concessions and TIs [tenant improvements]?
If that TI is in the form of rent-free time, or build out, the landlords are doing it now, they are. They are listening, they are learning. They learned from the last downturn that they have to be like the shopping center developers. That’s why you see more pop-ups now, too. We’re once again seeing more pop-ups and that’s going to continue.
Because it fills the space, because a retailer makes a shorter-term commitment, but if it’s successful they stay long term. And there are a lot of retailers who stayed long term from last time.
What does that have to do with TIs and everything?
Well, because they get the store, they get it built for them, TI—is the landlords’ now don’t offer you pre-built space, it’s no more “as is.” You have to partner with the retailer to make the space work for them. Now what does that mean? Like we did a whole bunch of medical uses, like CityMD and Mount Sinai, and they have very special requirements, electrical and air and everything, and so the landlord’s do it. When I go and pitch a property now, they say to me, “Faith, what can we do to get the great retailers?” I say, “We’re going to have to build a better mousetrap.”
The landlord’s have to in order to get tenants.
If the building needs a new storefront, the landlord should do it. If they need a better interior, they’ve got to give it to them, what they call in shopping center terms, “a vanilla box.” It’s a weird term. But that’s what the shopping center guys call it. But they also deliver that. And believe me, Brookfield [Property Partners’ has] done it down at their center [Brookfield Place]. Westfield’s doing it [at Westfield World Trade Center]. All the big projects are doing it.
Do you think that Westfield and Brookfield will cannibalize each other?
No. You have to remember the business that was there before at the World Trade Center. There were always these two components and I think it’s an even bigger demand now because of the way Freedom Tower is and the Oculus. You know the number one tourist place is the memorial now? It used to be the Empire State Building. You get even more tourists now than you ever got. Remember the last downturn? We were the last to go down and the first to come up. Think about that. It’s New York. We’re not the middle of nowhere. So where is this strength now? It’s us in New York, it’s Miami, it’s the West Coast. I’m going from here to L.A. I’m working on a deal on Rodeo Drive. If you could see the package I’m asking for from the landlord. I never even would ask for a few months rent free before, but I’m asking for a very creative TI.
What are you asking for?
Rent-free time [and] not only a basic build-out, but a contribution to their whole installation.
And how are you responding to tenant requests for this stuff in New York?
I’m offering a lot on our properties. We’re doing a new storefront on Fifth Avenue, I have 345 Fifth Avenue, which is 25,000 feet, and 390 Fifth Avenue, which is 50,000 feet.
What’s the dynamic between online and brick-and-mortar?
Online works together with brick and mortar. Everybody who is on the street does online. People that are online still have to come out on the street because they want to talk to the customer.
What do you think of the food hall trend—here to stay or fading away?
I think there can only be so many. I’m working on two large ones, one that is 100,000 square feet in Hudson Yards and one that is 50,000 square feet in the Financial District. I’m working on the tenant side. They’re both from Europe. So are you going to see more food halls? We’ll see. There’s a lot already but we’ll see. People seem obsessed with it.
To digress, what are your thoughts about Joseph Aquino? [Mr. Aquino, Ms. Consolo’s right-hand man, was terminated from his job at Douglas Elliman after filing a lawsuit against the company for unpaid commissions. He is not suing Ms. Consolo.] I can’t talk about Joe.
What is your opinion of the Fake Hope Consolo on Twitter, using the handle @FAKEhopeconsolo and a description that reads: “Parody of NYC Retail Real Estate. I eat deals for breakfast, tenants for lunch, landlords for dinner and sexy junior brokers for dessert.”?
Oh nothing. I gave it to me SEO guy. He’s tracking it.
You have Faith and Hope as names. Do you have faith? Do you have hope?
Yes. You have to in the business. I’m an optimist.
Why did your mother name you Faith?
She almost died having me. Then she died of a heart attack at age 30 and I was 11. My dad died when I was 2.
Who raised you?