Cushman & Wakefield’s Joanne Podell Explains Retail’s Dramatic Changes

With 25 years of experience and retail deals the scale of which would make an office broker’s eyes pop, there are few better to ask about the state of today’s brick-and-mortar leasing environment than Joanne Podell.

The executive vice chair for retail services at Cushman & Wakefield (CWK) sat down with Commercial Observer shortly before Thanksgiving to talk about all the travails the industry has been through in the last several years, putting into perspective the ups and downs that have taken place and pointing out that it’s a good time to be a retail broker.

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Some of Podell’s biggest clients include TD Bank, which she assisted in its expansion in the New York City market by adding over 50 new locations, as well as Nike when in 2016 Podell negotiated a 70,000-square-foot lease for its flagship at 650 Fifth Avenue.

Most recently, Podell (pronounced “Poh-DELL”) helped Chinese retailer Miniso in its New York City expansion with a 5,000-square-foot deal at 150 Broadway in June.

This interview has been edited for length and clarity.

Commercial Observer: Is the retail apocalypse officially over?

Joanne Podell: I think there never was one. What a terrible word, and there’s so many circumstances around it that we have to consider. I mean, the world fell apart, so retail is just a part of everything else that was happening — theater, tourism. It was a terrible confluence of lots of different things. Thrown in there was everybody shopping online, and how is that going to affect everything? 

From the beginning, the National Retail Federation and people like me were saying, “Yeah, e-commerce will definitely take some of the retail business, but also enhance the retail business.” Because people go online, they look at what they like, and some of them want to just go into a store and take a look at it, right? 

Then there’s what they call the halo effect of retail that goes online, where people walk into a store, they shop around, they go home, and they order something online. So, you know, it’s amorphous. It’s very hard to just define it the way that “apocalypse” was used. That was silly.

Who were the retailers who survived it and why?

The ones that struggled the most and still do are because of the office. Most affected were those in food and beverage, obviously, because people are in the office three or four days instead of five. But if a woman wants a coat, she’s an office worker, she’s in New York, then she’s going to shop Tuesday, Wednesday or Thursday for the coat, right? It’s not like she’s never going to buy it. So I think F&B was hurt. 

But every restaurant is packed all the time, and the bars are packed all the time. So F&B is back.

It seems like when it comes to F&B, when one restaurant closes, another opens quickly in its place?

It’s usually the second or third generation of the restaurant that ends up making it, and that’s unfortunate. And the reason is the costs to build out, and get the licensing and permitting, are  just prohibitive. So the guy that gets the space the next, he’s got all of that in place. That’s why second-generation restaurants lease very quickly, because oftentimes the equipment is there. If it’s not, all the fittings are there. And so it’s an easy transition for the second or third restaurant. That’s too bad, because some of these poor guys, they put their heart and soul, their savings, into building something, and then the next guy gets the benefit.

Tell us about some of your more interesting recent deals.

My business has changed a little bit. We were doing a lot of flagships, and so that’s a great business, but now it seems like we have a steady flow of a variety of deals. We represent Miniso out of China, and we’re building a portfolio for them slowly. They had considered doing a flagship, and they said, “You know what? That’s not the direction we want to go.” 

We represent Citizens Bank. We’re very carefully looking at their portfolio and where they need to move if their leases are up or if they need to stay where they are. Luxottica, we represented them, it was filling in where they were missing stores. So it continues to be the steady flow of the retailers that we work with. 

We also represent landlords, and I actually love the balance of representing a landlord and a tenant. You get a much better perspective of the market. You see what landlords are willing to do, how they feel that they can create deals and get them done. It’s a good part of the business, so we do that as well.

A lot of the recent buyers of New York retail properties are foreign buyers. Why is that?

You stabilize what your rent is going to be from a retailer’s point of view. Here’s a negative and why people never bought: It’s because your program changes. For the first couple of years, you’re an apparel store, you include shoes and handbags, right? Then you figure out, “I’m not getting an ROI on that as much as I should. What do I need that big of a store for? I’ll streamline my store 20 percent, I’ll pay less rent. I’m going to do fine.” 

So they don’t buy, they lease, so they have that flexibility. Not the same when you buy, but when you buy — and you’re a conglomerate, you can buy a building — you could break it up for multiple tenants.

Kering’s purchase of 715-717 Fifth Avenue, right? They have 13 brands, so they’re in a position where if one brand doesn’t work, they’ll put another brand in. But single-brand ownership doesn’t make any sense at all. So it’s very unique that they buy. 

Are foreign buyers leasing space too, or are they just buying?

There’s tremendous interest, but they’re not just buying, they’re coming again to lease. The foreign companies are coming back — particularly the Chinese companies. We have another company that’s coming in, too. They’re here already and they’re going to expand in a more significant way. I can’t tell you the name yet. China is becoming an interesting place to look for retail.

One of the things that hurt retail after the pandemic was that the Chinese investors and tourists did not come back quickly.

Are tenant-owners expanding outside of New York?

They have to grow their business. That’s their job. If they don’t, it tanks their stock. So they’re out there making, hopefully, very good decisions on expansion, and that’s a great thing, because all of that leads to more jobs, more manufacturing, hopefully some of it in the U.S.

The malls, very competitive. We are working on getting space for Miniso in some of the local malls, and there is tremendous competition for space.

Look at the investment from American companies in retail. Look at Acadia. They’re a great company. They’re buying a lot of retail. Empire State Realty Trust — for years, you never heard about them buying retail, it was really about maintaining and redoing the Empire State Building and maintaining a very strong office portfolio. They just bought a bunch of retail property in Williamsburg. 

Are there any neighborhoods that haven’t bounced back?

The city is so strong, I would give you an answer if I knew one. I don’t know what’s not bouncing back. It seems like it’s hard to find good space in most residential markets, and certainly you look at Flatiron, SoHo — very strong. Financial District, Downtown — good activity there as well.

Can we finally stop talking about experiential retail?

Many years ago, department stores had makeup departments, right? And we’re talking about 25 years ago. You would go in there, and a woman behind the counter would say, “Try this lipstick.” What is that? That is and always was experiential retail. If you want to take it all the way to the other side, Nike with a basketball court, sure, very nice. But is it critical, or that important? No. I think a good product, good inventory, good service — those are the things that make retail successful, and understanding who your customer is, which probably is the No. 1 thing to mention.

There’s been a big culling of retail brokers in the last few years. What are the effects of that on the market?

I don’t know that there were layoffs, as this is a very hard business. It takes a long time to be good at it, and this is not about ego, because you don’t have to be a genius to be in this business. But it takes perseverance. It takes a willingness to work very hard to be successful.

I think the layoffs come from people who recognize that this is not the business for them. It literally can take five years before someone can make a decent living. And you ask any broker, they’re going to tell you the same thing: It takes years to learn this business. And not to disparage other kinds of brokerage, but retail is so unique, the nuances in retail require a different knowledge base.

You need to know this market and, as the market changes, you have to recognize the changes in the market. You have to be aware of all the different kinds of tenants that are coming into the market, and then you need to work hard and build relationships. When I started, I worked seven days a week. I walked the streets, I met lots of other brokers like myself. That’s a very different thing than other kinds of businesses.

How can a young broker get their foot in the door?

It really depends on the mindset of the broker. Do they want to work by themselves and maybe represent a few people? For me, I could never do the job well if I didn’t have a big team — we do a lot of work in terms of providing information. You know, information is king. It’s not acceptable or viable for a tenant or a landlord to make a decision without knowing what’s going on in the market, what else is available, and the types of companies that are out there. How am I going to know all that?

Every senior broker has a different perspective, so I can only speak for myself. I don’t want anybody coming to work knowing they’re not going to walk away with $1 at the end of the day. So, for me, I’d rather make sure that my guys have a salary of some kind or a draw. I think it’s important. I’m not talking about getting them hundreds of thousands of dollars a year, but you’ve got to do that. 

It’s also your obligation as a senior broker, someone who’s been in the business a long time, you got to train these people. You got to teach them. They have to learn. They have to be part of your life, they have to be in your office, listening to conversations, learning about negotiation. All those things take time. 

What does it mean for the brokers who survived the last eight years or so?

I think that if you’re hardworking and you like what you do, you can be great at it. It’s just your commitment.

What role does data play for you?

I love information. I love data. I think 20-something years ago, I think I was one of the first people to hire someone with a clicker to count how many people walked in front of a store. I desperately believe that without data, you can’t do a good job. You can’t provide enough information to your client. 

At the end of the day, I always tell people the same thing: It’s intuition and information. You need the historical information of that neighborhood. You can get specific information, but the nuances of the neighborhood — that street is always too dark or that one tenant that’s been there forever is really never leaving. The things that don’t show up in Placer.ai data come from you being on the street and understanding it.

As for Williamsburg, Brooklyn, is the market there still going to continue in the direction it’s been heading for the last 10 years or so?

ESRT just invested a lot of money there. Acadia owns property there, right? It’s a good trading area. And I think as long as the rents stay realistic, you’ve got a good demographic.

What are rents like compared to before the pandemic? 

In some cases, we’re almost back. In some cases, it is over. Certain neighborhoods are stable. Because there’s no particular new growth, tenants can only pay so much. There’s no new development that would cause everybody to say, “Oh my god, there’s going to be additional traffic coming there, right?” So they stay pretty much the same. Flatiron, those rents came back so quickly, but they are all stable because of the same thing.

One of the problems that we had historically, which we certainly had a number of years ago, was places like Flatiron got just too expensive. You need tenants to stay in business. It’s not a good look for people to go out of business because they can’t afford the rent. That’s probably my biggest concern.

I know it’s counterintuitive, because brokers get paid on bigger deals, but I want people to stay in business. Now people need security, that’s tough. Theft is at a higher number than it was before. So those are the challenges that we have.

Organized retail theft has been a problem for several years now. Do you think the situation is improving?

I think 34th Street looks much better. There was a good amount of time after the pandemic when it was just awful. I think the business improvement district, they’ve done an amazing job. 

Look, I don’t want to be political, but I can tell you that it appears to me that it looks better. Fifth Avenue — recently I saw some poor families there, but I’m not seeing what I used to see.

What do you think of some of the chains like Foot Locker, Red Lobster and Blink Fitness filing for bankruptcy?

There’s always bankruptcy. That’s normal. Some people make good decisions and commit the right amount of money to growth and to development, and they can outlive their competition. 

Jeff Bezos said this and I totally believe it: Everybody will go bankrupt at some point, including Amazon.

Now to the casino in Times Square — what do you think of that? Is it good or is it bad?

I think if there is going to be a casino, it should be there. I think it’s the right place and I understand the challenges to the office market, and I recognize that we have to increase security for it. There’s a lot that has to be done to make it work. But the amount of revenue that would come from it would be just crazy. And the city could use it. It’d be a lot better than charging $9 for people to drive into Manhattan below 60th Street.

People are afraid. There are beautiful office buildings there, and I guess the folks in the office buildings are a little concerned, but I don’t think they should be. With the right amount of police and sanitation, I think it could be a boon for New York. 

I’ve been going to ICSC Las Vegas every year for about 30 years, and I’ve never put a quarter in a machine. Some people are gamblers, and they enjoy it, and that’s fine, and some people just don’t find it interesting. I don’t think the whole world is going to turn to gambling just because they open a casino.

Mark Hallum can be reached at mhallum@commercialobserver.com.