Gallelli Gazette_November 9, 2023 by gallellire

JKG

THE GALLELLI GAZETTE Retail Roundup

Issue No. 15 | November 9th, 2023

QUOTE OF THE WEEK: “How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually and then suddenly.” - Ernest Hemingway, from The Sun Also Rises (1926)

Pretty lofty goals for a company that subleases office space to small tenants.

TOP TEN RETAIL STORIES OF THE WEEK But the magic (and insanity) of Adam Neumann was his ability to sell some very smart and very rich people on the idea that WeWork, with its tenant rosters of tech startups, was somehow itself a tech company. Thus, a $47 billion valuation with little behind it other than market frothiness and investors looking to harvest the next big tech payday.

Fed’s Goolsbee Says Golden Path of Huge Drop in Inflations W/out a Recession Still Possible CNBC 11/7

This would all fall apart once anyone started scrutinizing their

WEWORK AND THE RETAIL numbers. Which began in the late summer of 2019 as WeWork OPPORTUNITY FOR COWORKING prepared for an initial public offering (IPO) and began releasing 2 its financials. Within just a few weeks, that $47 billion valuation This week saw the very high-profile bankruptcy of the company that is still arguably the face of the entire coworking movement, WeWork. I’ll admit upon hearing the news, my first thought was, “…didn’t they do that already?” Nope. As high profile as their initial 2019 flame out was, the concept somehow avoided bankruptcy until now.

That flame out, of course, was spectacular. In early 2019, WeWork was valued by its biggest investor SoftBank as worth a whopping $47 billion. For comparison’s sake, that’s roughly in line with the current valuations of Target, or Honda. It’s the total GDP of Tunisia. In 2019 the valuation of Regus—it’s biggest competitor space –was just $3 billion even though Regus had over 3,000 locations to WeWork’s +/- 650. No doubt, the two concepts took radically different approaches to providing small business owners with office space. Regus was utilitarian; standard private office space for small professional businesses; a shared executive assistant, shared conference rooms, break rooms, water coolers and coffee machines. If Regus was the button-down option for CPAs, mortgage brokers and small, professional, and financial services firms to hold shop, WeWork would be the hipster opposite. Highly amenitized space with a communal and collaborative vibe (all glass interior walls) for the tech startup set. Locations featured a bevy of in-house attractions ranging from coffee bars with skilled baristas, to yoga, workout, and gym space. Nearly all featured communal gathering and party space, with ubiquitous bar offerings. Some had laundromats within their walls. But that really isn’t the reason for the disparity in valuations between WeWork and Regus. That comes primarily down to the concept’s enigmatic founder Adam Neumann, who once said, “Rather than just renting desks, the company aims to encompass all aspects of people’s lives, in both physical and digital worlds.” His hucksterism knew no bounds. He spoke frequently about becoming the world’s first trillionaire, expanding WeWork to Mars or of potentially one day driving a peaceful solution to the Israeli-Palestinian conflict.

Gallelli Real Estate - www.gallellire.com

had fallen to $7 billion. By October, Neumann was forced out of the company he founded. Increasingly more bizarre revelations about him came to light and the IPO was cancelled. If you want to read a great book about it, check out “The Cult of We” from Wall Street Journal reporters Eliot Brown and Maureen Farrel. But they did not go bankrupt. Eventually WeWork restructured much of its debt directly with creditors. They eventually did go public in 2021 via a SPAC offering initially valued at $9 billion. But the stock has been on a downward trajectory since. As of last week, their market capitalization was just $44 million—a decline of 99.79% from the company’s 2019 peak. It is too soon to know if WeWork will survive this bankruptcy. One potential way out was theorized by Professor Scott Galloway on his business podcast, The Prof G Pod, earlier this week. In it, marketing guru Galloway suggests WeWork could potentially survive and become profitable as a full franchise model. This is not that different than what Dine Brands Global did with IHOP back in 2007, when the chain was on the edge of bankruptcy. They since have shifted to primarily a franchise model and have been profitable even though casual dining concepts would face some outsized challenges first from the Great Financial Crisis, and then through the entirety of the 2010s as Millennials became the dominant consumer generation, with markedly different tastes than their elders. My personal take is this—the problem with WeWork is that the concept itself has never been judged appropriately for what it is—which is an approach to office space that incorporates the principles we continue to see play out as our economy shifts from being a service-based one to becoming experiencebased. (article continued on page 4) If this was shared with you and you would like to receive the Gallelli Gazette Retail Roundup weekly in your email, email me directly at gbrown@gallellire.com and get on my mailing list.

Professor: Fed Needs to Consider Rate Cuts a Lot Sooner Than Market Thinks Business Insider 11/6

NAR Lawsuit: Urgency of the 6% Real Estate Commission After Securing a $1.8 Billion Verdict Vigour Times 11/6

WeWork, Once Valued at $47 Billion, Files for Bankruptcy CNN 11/6

Rite Aid Closing More Stores in BK: Total Projected Closures Now Up to 178 Supermarket News 11/6

NRF Predicts Modest 3-4% Holiday Sales Gains WWD 11/2

Amazon is Closing Its High Tech Fashion Concept, Amazon Style WWD 11/2

The Money Has Stopped Flowing in Commercial Real Estate Wall Street Journal 10/31

Report Says Retail Chains May be Using Theft to Mask Other Issues WTTW 10/28

Retail Vacancy Reaches Lowest Level

at Least 2025 10 Since Bisnow 10/25

JKG

THE GALLELLI GAZETTE Retail Roundup

ECONOMIC, RETAIL AND CONSUMER TRENDS Stimulus-Free Holiday Sales to Grow 3% to 4% Globe Street 11/7 BlackRock: Here Come Long Term 5.5% Borrowing Costs Globe Street 11/6 Shoppers Aren’t Changing Thanksgiving Plans But Are Seeking More Savings Grocery Dive 11/6 The Fed is Done Raising Rates. What it Means for Recessions Risks… Barron’s 11/6 Retailers Face a More Frugal Shopper This Holiday WWD 11/6 Weight Loss Drugs Set to Disrupt Fashion Retail Industry WWD 11/6 Stocks Soar on Optimism of Near Peak Fed Rates Gain Vigour Times 11/6 Politics, War Take Place of Hard Data This Week as Markets Gauge State of Economy US News & World Report 11/6 Retail Job Cuts Highest Since October 2020 Retail Dive 11/6 Most Americans Expect to Maintain or Boost Holiday Shopping Budgets Compared to Last Year Costar 11/5 Holiday Sales Forecast to Reach Record $967B—Shoppers Starting Early CBS Austin 11/5 Young Consumers Take on the Enormous Cost of Holiday Spirit WWD 11/2 Judge’s Ruling Could Completely Change How People Buy Houses Newsweek 11/1 US Home Prices Rose to Record in August Wall Street Journal 10/31 US Consumers Feeling Slightly Less Confident in October for 3rd Straight Month Click Orlando 10/30 Travel Recovery Picks Up Speed Costar 10/29 Luxury Briefing: Greater Retail Productivity and Dwell Time Are Fashion’s New Targets Glossy 10/28 US Economy Posted Stunning Growth in Q3—But it May Not Last NPR 10/26 September Retail Sales Signal Tepid Holiday Spending Retail Dive 10/25 Consumer Sentiment Turns Negative in Canada as High Rates Bite Bloomberg 10/23

TOP RETAIL REAL ESTATE TREND NEWS Strip Malls’ Growing Profile in Retail Globe Street 11/2 Buyers Wary of Big Malls Even as Leasing Market Heats Up Bisnow 11/1 2023 Net Lease Retail Sales Volume & Cap Rates Commercial Property Executive 10/31

Gallelli Real Estate - www.gallellire.com

Issue No. 15 | November 9th, 2023

Strip Malls Are the New King of Retail Real Estate Wall Street Journal 10/30 Step Into the World of Undead Brands NPR 10/30 Urban Focus Returns as Franchisors Look Downtown for Expansion Franchise Times 10/30 Super Commuting is on the Rise and That Spells Big Trouble for Midsize Cities Business Insider 10/30 Why Supermarket Bank Branches Have Increasingly Become a Relic Boston Business Journal 10/29 The Benefits of Retail Driven Mixed-Use Districts Dallas Magazine 10/26 US Regional Malls: The Resilience You Didn’t Expect Altus Group 10/25

BUYERS, SELLERS, AND BUILDERS Washington Prime Nears $1B Retail Financing on 38 Properties Across 15 States Costar 11/6 Developers Plan $250M Industrial/Retail Project in Western Phoenix Costar 11/6 Mixed-Use Projects Replacing Aging Santa Ana Shopping Center Could be Path Forward Los Angeles Times 11/4 Pine Tree, Blue Coast Capital Buy Charleston, SC Shopping Center for $59.7M Shopping Center Business 11/3 Complex Replacing Hawaiian Marketplace Taking Shape BLVD Will Add 400K SF of Retail to Strip Las Vegas Review-Journal 11/2 Viking Partners Buys Chicagoland Retail Asset for $31M Commercial Property Executive 11/2 Continental Realty Makes SoCal Debut With Acquisition of South Coast Collection Commercial Property Executive 11/2 Urban Edge Buys Two Boston Area Shopping Centers for $309M Bisnow 11/1 Tanger Opens First Outlet Mall Since 2019 in Nashville Suburbs Retail & Leisure International 11/1 Fast Food Properties Selling Above Their Asking Price Globe Street 10/31 New Shopping Center Under Construction in Austin Suburbs to be Anchored by Sprouts & Petco Austin Business Journal 10/31 Why Single Tenant Transaction Volume is Thriving Globe Street 10/30 Briston Capital Sells Vegas Shopping Center for $36M Commercial Property Executive 10/31 Tanger Takes on Nashville WWD 10/26 California Investor Pays Almost $35M for Retail Near Chicago’s Midway Airport Costar 10/26 What’s Next for CRE in a World Where the 10-Year Treasury is Around 5% Globe Street 10/26 Mortgage Banking Association Predicts 46% Slump in CRE Lending This Year Globe Street 10/25

JKG

THE GALLELLI GAZETTE Retail Roundup

Toronto Mall to be Demolished to Make Way for Residential BlogTO 10/24 $1.5B Mixed-Use Project Proposed for Fort Wayne Riverfront Inside Indiana Business 10/24 Miami Shopping Center Trail Plaza Sells for $49.3M Shopping Center Business 10/24

REIT-O-RAMA The Rise of Realty Income: a Promising Retail REIT to Keep an Eye On Off Plan Property Exchange 11/6 RioCan REIT: Building Communities with Retail Focus Off Plan Property Exchange 11/3 REIT Site Centers to Spin Off Mall Portfolio to New Publicly Traded Company Bisnow 10/31 Macerich Rides Very Healthy Leasing Pipeline as Retail Builds Momentum Costar 10/31 A New Era of Community Focused Retail: Whitestone REIT Navigates the Sunbelt Market Off Plan Property Exchange 10/31 Revolutionizing the Retail Landscape: Curbline Properties Corp. Launches REIT for Strip Malls Off Plan Property Exchange 10/31 Realty Income to Acquire Spirit Capital in $9.3B Deal Commercial Property Executive 10/31 What’s in Store for Federal Realty This Earnings Season? Yahoo! Finance 10/30 Simon Raises Outlook After Solid Third Quarter WWD 10/30 Morguard Confident in Canadian Retail as it Keeps Focus on Smaller Markets Retail Insider 10/26

SUPPLY CHAIN/ECOMMERCE/OMNICHANNEL/TECH TikTok Emerges as Key Player in Holiday Shopping Ticker TV 11/6 Online Holiday Sales to Grow 7% as Consumers Look for Deals eCommerce Bytes 11/3 This Week in Logistics News (10/28 – 11/3) Logistics Viewpoints 11/3 Redefining Retail: How AI Powers Enhanced Shopping Experiences & Monetization WWD 11/2 Sweetgreen Turns to Salad Slinging Robot to Help Drive Restaurant Portfolio Growth Costar 11/2 Wingstop’s $50M Tech Investment Comes to Life QSR Magazine 11/1 Aniai’s Hamburger Cooking Robot to Expand in North America QSR Magazine 11/1 This Week in Logistics News (10/21 – 10/27) Logistics Viewpoints 10/27 Ugg Introduces Pop-Up AR Mirror at NYC Flagship Retail Dive 10/27 Peak Holiday Shipping Season is Over: Shoppers Bought Earlier & Retailers Imported Sooner WWD 10/24

Gallelli Real Estate - www.gallellire.com

Issue No. 15 | November 9th, 2023

NORTH OF THE BORDER Laemmle’s Western Wear Unveils New Calgary Flagship Retail Insider 11/6 Swedish Activewear Brand Peak Performance Opening New Vancouver Store Vancouver is Awesome 11/4 Alexander Wang to Open First Canadian Flagsjip Store in Toronto Curiocity 11/3 Lush Cosmetics to Open First Canadian Spa Concept in Vancouver Vancouver is Awesome 11/3 1-Unit Ballroom Bowl Coming to Toronto’s Dundas Square; National Expansion Next Retail Insider 11/2 Kit and Ace to Open 3 Metro Vancouver Stores BIV 11/2 Costco Opens NW Toronto Store—Its 107th Canadian Unit Grocery Business 11/2 Twin Roads Socks Wants to Open 7 Mall Stores Through 2025 Retail Insider 11/1 New Kit and Ace Opens in Calgary This Week DH Curated 10/31 DTC Mattress Concept Endy Opening in Toronto’s CF Sherway Gardens Retail Insider 10/30 Canadian Consumer Confidence Hits Six Year Low Ahead of Holidays Retail Insider 10/29 Eataly Opens 2nd Store in Toronto, plans to Open 3rd Grocery Business 10/28 Loblaw’s Maxi Banner Opens 150th Quebec Store Grocery Business 10/28 Metro-Owned Adonis Opens 16th :Location, First in SW Ontario Grocery Business 10/28 7-Unit Craig’s Cookies Inks 5 Unit Development Deal Retail Insider 10/26 9-Unit (6 in Canada/3 in USA) Knix to Open Six Canadian Stores Retail Insider 10/25 Foodtastic Acquires Fast Growing 22-Unit QSR Noodlebox—Wants to Take it to 215 Stores Retail Insider 10/25 TOUS les JOURS Debuts in Canada QSR Magazine 10/25 French Coffee Chain Columbus Café & Co Perks Up w/Indigo Books Deal for 11 In-Store Units Costar 10/24

EXPERIENTIAL EVOLUTION Enter the Secret Phone Booth Door to Planet 13’s DAZED! Consumption Lounge Cannabis Business Times 11/6 Masa & Agave: New Mexican Speakeasy to Open in Minneapolis Fox 9 KMSP 11/6 Speakeasy Trona Opens in East Austin Axios Austin 11/6 Quentin Tarantino-Owned Theater Sets Premiere As other Historic Cinemas Restart in LA Costar 11/6 Smash Park to Open 3rd Unit in Roseville, MN—Next Up: Omaha in 2024 FSR Magazine 11/6

JKG

THE GALLELLI GAZETTE Retail Roundup

(article continued from page 1)

WEWORK AND THE RETAIL OPPORTUNITY FOR COWORKING The economists B. Joseph Pine and James H. Gilmore first floated the concept in 1998 in a Harvard Business Review article. The two would later publish “The Experience Economy,” in 1999, foretelling predicting a future in which consumers would be more motivated by spending their money on experiences than on things. Obviously, all of us involved in retail have seen this play out more extensively over the past decade or more. The Millennial generation was the first “experience economy” workforce, and all indications are that Generation Z is even more set on experience driving their spending decisions. Consider this—a standard economic rule of thumb used to be that in periods of heightened inflation or economic turmoil, the first thing consumers would cut back on was eating out. Yet, we have had a heightened inflationary environment for nearly two years now and consumer restaurant spending has shown almost no slowdown. According to the U.S. Census Bureau’s monthly tracking of retail sales, sales at Restaurants were up annually 9.1% in September. In fact, they have never fallen below a gain of 8.8% this year. It isn’t just that Americans overall continue to spend more eating out than at home, but that for the Millennial and Gen Z demographics, experience-based expenditures like eating out or travel are budgetary items that are less likely to be cut than apparel or furniture. This focus on “experience” is a generational value. What does this have to do with office space or WeWork? First, before the pandemic and the rise of hybrid work, office developers were in an amenities arms race for their downtown high-rise projects. Health club concepts, restaurants, food halls, childcare, dental offices, medical retail… all those tenants on the ground floor of a building drove greater tenant interest (and rents) upstairs. WeWork just took that concept to another level—all firmly aimed at the emerging class of now middle-aged Millennial executives and startup founders. That drive for amenities inspired a slew of competing coworking concepts to start opening locations in (mostly) urban mall space by the late 2010s. On its way up, WeWork was viewed inaccurately through a haze of hucksterism, myth, and investor excess. It’s very real core offering as being experience-based office space perfectly timed and attuned generationally was inflated into something unrecognizable. Sadly, since 2019, those core attributes are still overlooked. Since then, the company has been hobbled by its financial issues and has struggled to stay afloat under the black cloud of what turned out to be challenges too severe to overcome. Of course, the immense drama of WeWork’s collapse, complete with a former leader that seemed less CEO than cult leader, does not help. Incidentally, if you have not seen it yet, Jared Leto’s performance as Adam Neumann in Apple TV’s ‘WeCrashed’ was inspired and worth watching. But let’s get back to looking at the concept’s core premise of experientially focused office space for small companies, startups or for temporary use. Does this concept still make sense today? This is a challenging question to answer because the office market continues to face major challenges. No doubt that the pandemic hit retail and hospitality first and hardest, but that those sectors have since rebounded hard. The true real estate casualty of Covid-19 has been the office market.

Gallelli Real Estate - www.gallellire.com

Issue No. 15 | November 9th, 2023

But we are long past the peak of both 100% remote and hybrid work. The trend continues to slowly move back towards something closer to older norms, though no one really thinks we will return to 2019 office usage patterns. In August the online job search platform Resume Builder conducted a survey of 1,000 company leaders that found that 90% of them will have return-to-office policies implemented by the end of next year—with 30% saying they will fire employees that do not comply. We still have at least a year or so before the national office leasing market can start to return to organic growth but by 2025, virtually every tenant that could have downsized in the post-pandemic environment will have already done so. But as that market starts to finally recover, will amenity rich environments still be what space users require? I would argue it might make more sense today than it did in 2019. No doubt several coworking concepts have benefited from increased demand for temporary office space from space users still trying to work out their post-pandemic attendance strategies. Another big recent winner has been suburban coworking locations. According to CoworkingCafe, about 44% of all coworking inventory is now suburban. This has been a growing shift. In 2019, 80% of coworking was urban. One often overlooked trend that was vastly accelerated by the pandemic was the movement of Millennials into first-time home ownership and the heightened migration trend towards the suburbs. No doubt, Sun Belt and cross state migration was also heightened in 2020 and 2021. But most of those who left New York City, Chicago or San Francisco didn’t leave their respective states. They moved to the burbs. The sad irony of most early mall-based coworking concepts was that they were victims of timing and geography. Timing, in that they went into malls before the recent trends of mall revival and mall reimagining/redevelopment really kicked off in 2021. Geography, in that the real opportunity for mall-based coworking is now suburban. Which brings me to my final thought… which is that I have no idea if WeWork will survive the bankruptcy proceedings ahead of it, nor do I care much either way. But aside from all the mythmaking and nonsense on its rise, and the dark clouds that have hung over it over the last few years of its demise, there was a solid, common-sense-driven concept under there somewhere. And that has not changed—if anything, the rise of the “experience economy” has only intensified. It would be sad if the demise of WeWork closed people’s eyes to the potential opportunity of coworking—particularly well-run, fiscally-responsible, experience-based coworking concepts. I believe there is a real opportunity there. And, incidentally, I think that the greatest coworking opportunity now is at suburban malls and shopping centers in the process of reimagining themselves. If amenities and experiential offerings is what office workers want, why amenitize a high-rise when you can set up shop in the most amenitized spaces on earth—American shopping centers.

JKG

THE GALLELLI GAZETTE Retail Roundup

Monarch Market Food Hall Opens in Uptown Charlotte WCCB Charlotte 11/3 Grocer Northgate Gonzalez is Opening Giant Mexican Style Food Hall in Costa Mesa, CA News Santa Ana 11/3 Downtown’s New Record Shop Spins Vinyl Vibes w/Speakeasy Bar Houston Culture Map 11/3 Tommy Bahama Opens First Ever Resort in Palm Springs Area Retail & Leisure International 11/2 Halidom Eatery Preview Eater Atlanta 11/1 San Francisco’s IKEA-Adjacent Food Hall (Saluhall) to Offer Vegan/Vegetarian SF Gate 11/1 New Vegan Food Hall XMarket Opens in Uptown Chicago Axios Chicago 11/1 The Galley on the Levee Opens in Newport, KY WLWT 11/1 Eataly is Planning a Third Location in Toronto BlogTO 10/31 Ace Pickleball to Take Vacant Bed Bath Store in Uptown Solon Center Cleveland Business Journal 10/30 McLaren Goes Live With Experiential Retail Space at Wynn Las Vegas Luxury Daily 10/30 Seminole Heights Flocale Food Hall is Closed Creative Loafing Tampa 10/30 Cureleaf and GTI Among Six Conditional Consumption Lounge Licenses Awarded in Las Vegas Cannabis Business Times 10/27 New Details on Cineplex’s The Rec Room Opening in DT Vancouver Daily Hive 10/26 Pickleball Kingdom to Open 20 Locations Across New jersey Retail & Leisure International 10/24 The Pickleball Club Announces Orlando Location for Indoor Facility Growth Spotter 10/24 Pickle Haus to Open First Unit in Algonquin, IL this Month FSR Magazine 10/24 CIM Signs Main Event to 52K SF at Montclair Place in SoCal—Will Open in 2025 Commercial Property Executive 10/24 Super Fun London-Based Shuffleboard Bar, Electric Shuffle, Opening in Midtown NYC in 2024 Time Out 10/24 South Knoxville Burger Spot Closing to Make Way for Kern’s Food Hall Development WATE ABC 6 10/24 Cleveland Lakefront Plan Envisions Boutique Hotel, Food Hall, ‘Porch’ Culture Axios Cleveland 10/24 Food Hallls Multiply Across America NACS 10/24 Massive Modern Food Hall “The Square” Brings Chef-Powered Fare to Downtown DC Washington City Paper 10/24 Food Halls Expand Beyond Big Cities The Messenger 10/24 Food Halls, a Hot Real Estate Investment, Conquer the Suburbs Wall Street Journal 10/24

Gallelli Real Estate - www.gallellire.com

Issue No. 15 | November 9th, 2023

POP-UP-A-PALOOZA eBay Opens Streetwear Popup in NYC Fashion Dive 11/6 Carhartt Opens New Pop-Up Location in Midtown Detroit Hour Detroit 11/6 Body Shop Opens ‘Advent of Change’ Popup at Toronto’s Union Station Yahoo! Finance 11/6 SPANX Hosts first Popup at NYC’s Hudson Yards; More to Come Globally Knockturnal 11/6 Luxury Activewear Brand Gigi C Opens First Retail Popup at LA’s The Grove Haute Living 11/5 John Hardy Opens Seasonal Pop Up in Miami Design District Spot Miami’s Community News 11/4 Good Vibes Collective Brings Good Vibe Pop up to Midtown Toronto Streets of Toronto 11/3 Accessories Concept Comme Si Opens First Pop Up in NYC Y! Life 11/3 Bal Harbour Shops Goes on Tour w/Traveling Luxury Pop Ups Forbes 11/1 Zellers Pop Up Planned at Richmond Centre Evokes Nostalgia Richmond News 10/26

HIGH STREET HAPPENINGS Milan’s Best Kept Secret, Serapian, Opens on Madison Avenue Haute Living 11/6 J. McLaughlin Mounts a Menswear Revival w/New Palm Beach Store WWD 11/3 Luxury & Vintage East Kennedy Boutique Opens Second Location in California Fashion Network 11/2 Watchbox Changing Name to The 1916 Company; Expands Rolex Store Holdings by Five Fashion Network 11/2 Luxury Appliance Retailer Pirch Set to Open Second LA Store Designers Today 11/2 Hermes Reopens in Chicago, Further Boosting Oak Street as Mag Mile Works to Come Back Chicago Tribune 10/31 Geiger Says International Expansion & Flourishing Handbag Sales are Driving Strong Results WWD 10/31 British Jeweler Graff Debuts First Stand Alone Store in Southern California WWD 10/30 Balenciaga Opens Large Store in SoCals South Coast Plaza WWD 10/30 Luxury Menswear Brand Paris Laundry Opens First NYC Store Fashion Network 10/28 Shinola to Open Downtown Grand Rapids Retail Store Retail & Leisure International 10/26 Fendi Opens Second Store in Northern California at San Jose’s Valley Fair WWD 10/25 Noah, the NYC Menswear Brand, to Open First LA Store WWD 10/24 Paul Stuart to Relocate Chicago Store to Michigan Avenue WWD 10/24

JKG

THE GALLELLI GAZETTE Retail Roundup

Issue No. 15 | November 9th, 2023

Previously Wholesale Jewelry Only, Fana Opens First Store—A NYC Flagship National Jeweler 10/24

SCHEELS Bringing Second Store to Texas—in Cedar Park PR Newswire 10/24

RETAIL CHAIN STORE OPENINGS AND GROWTH

Footwear Brand Merrell to Open at Tanger Outlets Nashville Rutherford County Source 10/24

Boot Barn to Open 52 Stores in 2024 Chain Store Age 11/6

Aesop and Catbird to Open on Larchmont Next Year Larchmont Buzz 10/24

Boston is Getting a Google Store (One of a Handful) in 2024 Boston.com 11/5

THE GROCERY AISLE

Lids Opens NBA Store in Houston Fashion Network 11/5

Sprouts Farmers Market to Open 35 Sotres in 2024 Retail & Leisure International 11/6

DTC Brand True Classic to Open 3 Stores; Miami, Houston & Dallas Retail & Leisure International 11/3

Asian Grocer Lotte Markets Opens First Florida Store in Tampa FL Winsight Grocery Business 11/6

Healthcare Apparel Retailer Figs Opens First Store in LA; Opening Another in Philadelphia Retail Dive 11/3

Gelson’s Opens First West LA Store and 28th Unit Overall Winsight Grocery Business 11/6

DTC Brand True Classic Opens First Store in Hoston; Wants to Have Up to 100 Stores in Four Years Retail Dive 11/3

Trader Joe’s to Open in Forest Hills, NY Winsight Grocery Business 11/6

HomeSense to Land at Kimco Jacksonville Center Commercial Property Executive 11/2 BJ’s Wholesale Club to Make Alabama Debut with 239th Store Retail & Leisure International 11/2 Wawa Plans to Open Eight Stores in North Carolina in 2024 Costar 11/2 The Bloomie’s Experiment Continues with Seattle Opening WWD 11/1 American Freight Expands into Utah Retail & Leisure International 10/30 Boscov’s Arrival Fuels Rebirth at Meadowbrook Mall WDTV 10/30 Blenders Eyewear Opens Sixth Unit in Delray Beach, FL Retail & Leisure International 10/27 Lego-Themed John’s Box of Brick’s to Open in Prescott, AZ Yahoo! Finance 10/27 Ink + Alloy Brings Color and a Bracelet Bar to NYC JCK Online 10/26 Athleisure Brand Beyond Yoga Opens 5th Store in NorCal; Opening 6th in Chicago Next Month WWD 10/26 Swiss Sportswear Brand On Opens 5th US Store in Miami’s Design District Ocean Drive 10/26 Pakistani Fashion & Lifestyle Brand Khaadi To Open Second US Store in Houston’s Galleria Costar 10/26 BuyBuy Baby Opening Eleven Stores From Maryland to Massachusetts Retail & Leisure International 10/25 Sierra, National Retailer Selling Outdoor Gear & Activewear, Opening in New Hartford, NY Syracuse 10/252 Floor & Décor Eyes Mount Pleasant, SC for New Store Post and Courier 10/25 11-Unit WOW Carwash Plans to Double in Size Over Next 18 Months Las Vegas Review-Journal 10/25 DTC Brand TYR Sport Launching First Store at Roosevelt Field in Garden City, NY PR Newswire 10/24

Gallelli Real Estate - www.gallellire.com

Little Red Box Grocery Aims to Tackle Houston’s Food Desert Problem Houston Chronicle 11/3 Amazon Closing Brick and Mortar Apparel Stores as it Steps Up Grocery Focus Grocery Dive 11/3 Sprouts Farmers Market Coming to West Debtford, NJ CBS News 11/3 Autonomous Grocery Store, Green Picks Market, to Open 2K SF Store in Atlanta Suburbs Winsight Grocery Business 11/3 Grocery Outlet to Open New Glen Burnie MD Store—Envisions 4K Units Nationally Winsight Grocery Business 11/3 Food Deserts Plague Chicago Neighborhoods—Could City Operated Stores Fill in the Gaps? Chicago Sun-Times 11/2 South Asian & Mideast Grocer Desi Brothers Leases 48K SF In North Austin Costar 11/2 Natural Grocers to Open 45th Colorado Store in Loveland, CO Shelby Report 11/2 Fastest Growing Grocery Chain in the Country (ALDI) is Heading for Central Kentucky Lexington Herald Leader 11/1 Walmart to Pour $9B into Upgrading 1,400 Stores Supermarket News 10/31 Natural Grocers Opening Fifth Washington State Store Winsight Grocery Business 10/30 Taiwanese Grocery Store 168 Market Opens Second Bay Area Location San Jose Mercury News 10/30 Pan-Asia Supermarket Plans to Open First Store in Wisconsin, 7th Oveall Milwaukee Journal Sentinel 10/30 Appealing to New Palates, Ethnic Grocers Expand into New Territory Bisnow 10/29 Whole Foods to Open 46K SF Store in Overland Park, KS Shopping Center Business 10/26 H-E-B is Leaning Into a Diverse Array of Store Formats & Facilities Grocery Dive 10/25 H-E-B Cuts Ribbon on New Store in Manvel, TX Winsight Grocery Business 10/25

JKG

THE GALLELLI GAZETTE Retail Roundup

Issue No. 15 | November 9th, 2023

Smart & Final Extra! Opens in Lancaster, CA Winsight Grocery Business 10/25

100 Unit +/- Yoshinoya Upgrades Menu, Plans Arizona Expansion QSR Web 10/31

ShopRite Supermarket w/Hardware Store Set to Open in NH Grocery Dive 10/24

80-Unit Uno Pizzeria & Grill Posts First Positive Net Restaurant Growth in 15 Years Pizza Marketplace 10/31

Trader Joe’s Readies New Florida Store Winsight Grocery Business 10/24

Denny’s to Open At Least 100 Keke’s Breakfast Cafes Over Next Five Years Costar 10/31

Heritage Grocers Group Expands El Rancho Supermercado Banner in Dallas w/29th Store Winsight Grocery Business 10/24

Sickies Burgers and Brews Opening 11th Unit in Orlando Orlando Weekly 10/30

FOOD & BEVERAGE

Tampa Bay’s First Yard House to Open in December Creative Loafing Tampa 10/30

Flying Biscuit Café Opens 30th Unit in Cary, NC FSR Magazine 11/6

15-Unit Sweet Paris Creperie & Café Plans Minnesota Expansion on Way to 2024 Goal of 37 Locations Chain Store Age 10/30

Artisanal Pizza Concept Mister 01 to Open 3rd Unit in Texas FSR Magazine 11/6 Another Broken Egg Cage Opens 94th Unit in Mentor, OH FSR Magazine 11/6 IHOP Drops Guidance From 45-60 Net Openings to 20-30 FSR Magazine 11/6 Shake Shack, Now 500 Global Units Strong, Keeps Learning & Growing QSR Magazine 11/6 7-Unit Jeff’s Bagel Run Opens in Clermont, FL QSR Magazine 11/6 Starbucks Details Reinvention Strategy NACS 11/6 11-Unit Rosa Mexicano to Open 12th in Vegas—Says Will Grow More FSR Magazine 11/3 Chick-fil-A to Open 3,000th North American Unit This Week QSR Web 11/3 Nearly 50-Unit Sarpino’s Opens 1st Colorado Pizza Unit QSR Magazine 11/3 Mo’ Bettahs to Open 47th Unit in Las Vegas QSR Magazine 11/3 Island Fin Pike Opens 27th Franchise Location in Farragut TN QSR Magazine 11/3 MOOYAH Opens in Boca Raton FL QSR Magazine 11/3 Lebanese QSR Concept NAYA to Open 20th Unit in NJ QSR Magazine 11/3 Dirty Soda Concept Swig Opens First Franchised Store in Arkansas QSR Magazine 11/3 11-Unit Kelly’s Roast Beef to Open As Many as 8 Units in 2024 QSR Web 11/3

Bay Area’s Slice House by Tony Gemignani Inks Deal to Open 6 Southern California Units Pizza Marketplace 10/30 Mendocino Farms Opening in Mission Viejo, CA Orange County Register 10/30 Galpao Gaucho Opens 7th Unit in San Diego FSR Magazine 10/27 BJ’s Brewhouse to Open at Least 5 in 2024; 10 in 2025 FSR Magazine 10/27 54-Unit Russo’s New York Pizzeria Opens in Mesa AZ Pizza Marketplace 10/27 Jollibee Opens 95th North American Unit in Tacoma QSR Web 10/26 Pacific Catch Will Open 17th Unit in Santa Monica in 2024; Looking to Expand Outside California FSR Magazine 10/26 Boqueria Opens 10th Unit in West Hartford, CT—Will Open Philadelphia & Atlanta in 2024 FSR Magazine 10/25 Nautical Bowls Nearing 200 Units; Most Recent Opening Has NFL Miami Dolphins Owner QSR Magazine 10/25 Naf Naf Middle Eastern Grill Opening 39th Unit in Wisconsin QSR Magazine 10/24 Single Unit Schmackary’s Now Franchising and Wants to Hit 500+ US Stores QSR Magazine 10/23 Defunct Chain Steak & Ale to Relaunch in Minnesota in Early 2024 FSR Magazine 10/24 Pret A Manger to Open 250 New US Stores by 2029 Retail & Leisure International 10/23 Golden Corral Signs Deal to Grow in SW Ohio FSR Magazine 10/23

Taco Bell, IHOP Parents Look to Store Conversions to Reach Growth Goals Costar 11/2

LOCAL MARKET NEWS

1,100+ Unit Marco’s Pizza Expands in Florida Pizza Marketplace 11/2

Toronto’s Retail Market Finding Equilibrium as Transit Ridership and In Person Dining Bounce Back Retail Insider 11/5

250+ Unit Slim Chickens Opens Two NC Units; Now Has 1,150+ Units In Development Nationally QSR Magazine 11/2 Jack in the Box Opens First Kentucky Unit; Inks Deal for 6 More in State QSR Web 10/31

Gallelli Real Estate - www.gallellire.com

Retail Tenants Active in Denver Despite Shortage of Available Space Costar 11/3 Why Terra’s CEO is Upbeat About South Florida Retail Commercial Property Executive 11/2

JKG

THE GALLELLI GAZETTE Retail Roundup

Share of Retail Sales Grows in Charlotte Suburbs Costar 11/2 Retail Vacancy in Northern New Jersey Flirting with All Time Low Costar 11/1 Limited Availability Takes its Toll on Tampa’s Leasing Activity Costar 11/1 South Coast Plaza Welcomes Luxury Retailers: Byredo, Balmain, Jil Sander, Graff, Palm Angels & More Fashion Network 10/31 Experiential Spaces are Turning NYC Into an Immersive Playground New York Post 10/27 Luxury Brands Lead NYC Retail Leasing Boom—Rents Ramp Up New York Post 10/27 Total Houston Retail Sales Could Fall to 11-Year Low This Year Costar 10/24

RETAIL CHAIN STORE CLOSINGS AND CONTRACTION The Running List of Major Retail Bankruptcies Retail Dive 11/6 Round Two: Another 92 Rite Aid Leases Go Up for Sale as Part of BK Process (78 Offered in First Round) Costar 11/6 Applebee’s to End Year With Roughly 25 Closings Total FSR Magazine 11/6 What Stores Did Target Close? Complete List of Locations Shuttered in October 2023 AS 10/30 Bankruptcies and Closings Signs of Tough Times Ahead for US Pharmacy Chains Dark Daily 10/30 Vons to Close Grocery Store in Vegas’ Southwest Valley Las Vegas Review-Journal 10/26 Furniture Retailer Z Gallerie to Close All 21 of Its Stores in Liquidation Costar 10/25 TJX Closing Two NYC Stores Bisnow 10/25 ShopRite is Closing Five Underperforming Upstate New York Grocery Stores in December Grocery Dive 10/24 Express Reportedly on Verge of Bankruptcy CNY News 10/24

M&A’S, IPO’S, AND OTHER SHENANIGANS Shein Targets Up to $90B Valuation in US IPO Business of Fashion 11/7 The Running List of Major Deals (From IPOs and Acquisitions to SPACs, Etc.) Retail Dive 11/6 Chicken Salad Chick Acquires Piece of 10-Unit Piece of Cake Concept Retail & Leisure International 11/3 Alimentation Couche-Tard to Sell 25 Stores in Canada, 68 Circle Ks in USA Canadian Grocer 11/3 Savory Fund Invests in Houston TX Hot Chicken QSR Magazine 11/2 Twin Peaks Keeps Growing Amid IPO Discussions FSR Magazine 11/1

Gallelli Real Estate - www.gallellire.com

Issue No. 15 | November 9th, 2023

JKG

THE GALLELLI GAZETTE Retail Roundup

New Brand Created from Watchbox Merger w/Jewelry Store Chains: The 1916 Company JCK Online 11/1 UK Private Equity Firm in Talks to Acquire The Body Shop Retail Dive 10/30 Capri Shareholders Approve Sale to Tapestry Fashion Dive 10/26 Overstock to Change Corporate Name to Beyond Retail Dive 10/25

CULTURE CORNER: THE STRANGE STORY OF THE 1890S HIGHEST PAID PERFORMER Joseph Pujol was born in Marseilles on the Cote d’Azur in 1857. He came from a closeknit and loving family. He seemed no different than other children his age. By the age of three, the young Pujol was displaying the precocious behavior of a natural-born entertainer, singing and dancing whenever he could for his doting parents and their guests. It was this love of performance, combined with his early passion for music (he played the trombone), and bran muffins (his father was a baker), that many speculate set him on his path to glory. The story goes that Pujol first learned of his bizarre talent on boyhood visit to the seashore. While preparing to dive beneath choppy ocean waters, he took a deep breath--inadvertently contracting his abdominal muscles. He would tell the French press that suddenly he was pierced by an icy sensation. Panicked, he returned to shore--where he noticed a flood of seawater emanating from his bottom. He soon learned that he could “inhale” as much as two quarts of air in this method and that, by varying the force with which he expelled the air, he could produce musical notes of varying timbre and pitch. Pujol soon found himself mastering simple tunes and astonishing his school chums with impromptu arias. But it was not until he served in the army that Joseph Pujol was first dubbed “Le Pétomane,” roughly translated as fart maniac or fartiste. Upon his release from the service, he returned to Marseilles where he tried to earn his living at first by running a bakeshop. Pujol felt unfulfilled. Feeling as if he “would burst” with pent-up talent, he soon began spending his evenings at local music halls. He tried playing the trombone for profit, but soon found that it was his other wind instrument that the crowd clamored to hear. He developed an act in which he used his special skills to impersonate political and military figures, as well as play patriotic and sentimental songs. He was immediately successful, closing his bakery and hitting the road with a traveling variety show. By 1892 he was ready for his big premiere at the 19th Century’s most famous entertainment hall... the Moulin Rouge (then just three years old). Upon arriving in Paris and seeing the enormous red windmill, Pujol is said to have remarked, “The sails of the Moulin Rouge... what a marvelous fan for my act!” Pujol was an overnight smash. His act is said to have been so funny that it caused at least one man to die of a heart attack due to uncontrollable laughter. Countless women fainted at both the hilarity and the spectacle of Le Pétomane’s 90-minute show. There was no nudity or shockingly exposed body parts (after all, this was Belle Epoque France). No, Pujol would appear fully dressed on stage in formal wear. The only abnormality regarding his clothing was the rubber tube which dangled from his backside. It was this tube (connected to the proper orifice, of course) that allowed him to “breathe” and to do several astonishing feats. Besides blasting out melodies, Le Pétomane could do impressions of famous figures and politicians. He also had a staple of tricks which he would perform each night, such

Gallelli Real Estate - www.gallellire.com

Issue No. 15 | November 9th, 2023

as blowing out a candle from meters away, and smoking cigarettes from both ends at the same time. He would pack houses at the Moulin Rouge for three years; playing to royalty and bourgeoisie alike. He often held special “in-the-buff” private shows for wealthy elite (men only) where he claimed he proved that there was “no trickery in this anus”. It was also during this time that several of France’s leading doctors would examine and confirm the thunderous talent of Joseph Pujol. Dr. Adrien Charpy would comment in a treatise (not published until 1904) that “Le Pétomane uses his abdominal cavity like a bellows.” An even more widely read probe of the subject appeared in an 1892 edition of La Semaine Medicale. Another medical journal piece was simply entitled: “An Extraordinary Case of Rectal Breathing and of Musical Anus,” While at the Moulin Rouge, Joseph Pujol became the highest paid entertainer in the world. He would later comment that this was one of the happiest periods in his life, yet little did he know that this bliss would be clouded by the stench of litigation. Unfortunately, after serenading a few friends in public, Pujol was sued by Joseph Oller, owner of the Moulin Rouge, for breach of contract. Pujol’s defense of “you can’t own the wind!” didn’t float with an unamused judge. Instead, the club owner won, and, after paying the court ordered damages, Le Pétomane decided to open his own nightspot, Le Theatre Pompadour. There, he revamped his act with entirely new material and set about producing what was essentially musical theatre for the deranged. He surrounded himself with a talented troupe of mimes, magicians, and clowns who recreated various folk and fairy tales, set to Pujol’s “music.” His former boss at the Moulin Rouge, hardly content with the size of his settlement versus the loss of his greatest moneymaker, immediately debuted a new star: La FemmePétomane! Her act, of course, was a blatant rip-off of the pioneering artist. Pujol responded by suing his former employer. The newspapers couldn’t get enough of the proceedings. Headlines like “Money Doesn’t Smell” and “One Fart Chasing the Other” fueled the public frenzy for all things Pétomane. When it was revealed that La Femme-Pétomane was a fraud who used a fireplace bellows hidden beneath her petticoats for sound effects, the management of The Moulin Rouge found itself having to issue a public apology for its “ill-conceived joke.” Pujol won and, in what he would later describe as a highlight of his life, emerged from the courthouse to the thunderous noise of thousands of enthralled fans. Of course, some theorized that the entire affair, as well as Pujol’s “talent,” and entire career were staged for entertainment value. Le Pétomane continued to perform as one of France’s highest paid entertainers until 1914 when war broke out and he left the touring circuit for good. When he died in 1945 at the age of 88, a Parisian medical school offered Pujol’s family the sum of $25,000 francs for the privilege of exploring the late, great entertainer’s rectum. And though his sons would later admit that their easygoing father would probably not have minded, and that their family could have used the money... they simply could not take such an offer under any circumstances, his eldest son Louis exclaiming, “there are some things in this life which simply must be treated with reverence.”

Gary Gallelli

CEO - Partner gary@gallellire.com

Pat Ronan

Vice President pat@gallellire.com

JKG

GALLELLI TEAM BROKER CONTACTS

Aman Bains

Adam Rainey

Associate Vice President abains@gallellire.com

Associate Vice President arainey@gallellire.com

Kevin Soares

Bob Berndt

Jeff Hagan

Phillip Kyle

Matt Goldstein

Kurt Conley

Robb Osborne

Brandon Sessions

Executive Vice President | Partner ksoares@gallellire.com

Executive Vice President | Partner bberndt@gallellire.com

Senior Associate kconley@gallellire.com

Kannon Kuhn

Kristopher Krise

Associate kkuhn@gallellire.com

Capital Markets Advisor kkrise@gallellire.com

Senior Vice President pkyle@gallellire.com

Partner rosborne@gallellire.com

Senior Vice President bsessions@gallellire.com

JKG

Vice President mgoldstein@gallellire.com

Senior Vice President | Partner jhagan@gallellire.com

3005 Douglas Blvd., Suite 200 Roseville, CA 95661 916-772-1700

Garrick also produces a regular podcast, The Retail Grind, with Bill Yanek, the CEO of ConnexFM (North America’s largest facilities management trade group), where he explores the latest economic, retail and real estate news.

Garrick H. Brown Gallelli Real Estate gbrown@gallellire.com (916) 789-3324

ABOUT THE WRITER Garrick Brown is one of the leading real estate analysts in the United States; he is a 25-year industry veteran analyst and thought leader in the space, as well as an experienced manager of large, national teams of researchers. He has a strong background in all the commercial real estate product types, though for the last 15 years he has primarily been known for his work in the retail space. Garrick is regularly quoted on real estate, retail and economic matters by the Wall Street Journal, the CBS Evening News, NBC News, CNBC, National Public Radio, Women’s Wear Daily and dozens of Business Journals and other industry publications. Mr. Brown is a major business influencer; he has over 21,000 followers on LinkedIn, where he regularly posts economic and commercial real estate commentary to an audience consisting primarily of brokers, retailers, developers, site selection professionals, appraisers, lenders, investors, private equity, economic development professionals and business media.

Mr. Brown is frequently asked to contribute to major industry publications. He authored the retail real estate portion of the 2023 edition of the Urban Land Institute and PriceWaterhouseCoopers’ trademark industry publication, Emerging Trends in Real Estate. Garrick is a renown public speaker on economic, real estate and retail matters. He is known for his dynamic and entertaining speaking style and for his ability to tell the stories behind the data, synthesizing trends and connecting dots beyond the obvious. He regularly speaks to private and academic groups (Baruch College, Florida State University, Harvard Graduate School of Design, UCLA Ziman Center for Real Estate, etc.), and all the major, national commercial real estate-focused trade groups (BOMA, California Bankers Association, CCIM, ConnexFM, CREW, ICSC, NAIOP, Urban Land Institute, etc.). Mr. Brown currently works as a freelance writer and consultant for a number of private clients. In addition to his public speaking engagements, Garrick frequently advises corporate real estate teams regarding economic conditions, market forecasting, business and brokerage strategies. His previous experience includes managing Cushman & Wakefield’s retail research for the Americas, as well as managing commercial real estate research functions (all property types) for the Western United States for Cassidy Turley and Newmark. He began his career as a research associate with Grubb & Ellis in Kansas City, Missouri and later managed research operations for Colliers International for the Indianapolis, Indiana and Sacramento, California markets.