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I thought it would be beneficial to show how a Red Mango store operates and what the yogurt looks like. In my previous post, I talked about Red Mango’s rapid expansion. For further interest, check out this review of Red Mango.

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Red Mango, one of the yogurt operators in the Yogurt Wars, plans to open 50 stores in 2008. That is a lot of franchisees! Currently Red Mango has 10 stores in the United States and many more in Korea. It will be interesting to see how they compete with Pink Berry and some of the other concepts already penetrating other markets. Most of the Red Mango stores are located in New York and California, but there others dotted across the United States.

Readers of this blog know that the rules of finding a winning site. If you are new to this blog or need a refresher, click here to catch up on the key elements to finding a winning site. As in everything in life( or almost everything) there are exceptions to the rule. Often times, retailers that do not adhere to the “rules” of site selection are known as destination retailers. Many restaurants are destination retailers because people will drive the necessary distance to eat at a particular restaurant. In the dry goods and soft goods world (non-food), there are not as many specialty retailers as there were in earlier times. This is particularly true for suburban America because some many national chains have a presence in the shopping centers and power centers.

Cities of the world are able to have maintain destination retailers, but no retail destination is as well known around the world as Saville Row. Saville Row is a retail street located in Central London that is famous for its Bespoke (uniquely individual) tailoring. Suits from Saville Row are known for their quality and people travel from around the world just to get bespoke clothing. Saville Row is the ultimate retail destination. It’s not really on the main drag, but people still go out of their way to go there because of the reputation. Is your retail business a destination?

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Right now, there is a war going on in major American cities, especially New York and Los Angeles. Many people call it, the Yogurt Wars. Several upscale yogurt concepts created by Korean Entrepreneurs are competing for the mouths and dollars of American consumers. Currently, the most popular concept is Pinkberry. When I was in New York during the holidays, I saw lines going out of the doors and around corners to get in some of the downtown Manhattan Pinkberry locations. Even uptown locations were crowded. Friends living in Los Angeles say that these yogurt concepts are everywhere! The frozen phenomenon is not new, it is just going through a revival. In the 1980s and 1990s, TCBY was definitely the yogurt champion in the Washington D.C. area. But these new yogurt concepts have a very Twenty First century presentation with many more toppings and choices. Right now in the Washington D.C. area, Ice Berry is the pioneer with their Reston Town Center location. More are coming and it will be interesting to see how the location battles begin.

Here are a few of the new frozen concepts battling for the best territory:

  • Pinkberry
  • Ice Berry
  • Red Mango
  • Cali Yogurt
  • Kiwiberry

Others include:

Blue Cherry Yogurt Bar, CéFiore, YogurtBerry, BerryLine, Yo Berry, Snowberry, Roseberry, Berri Good, Limelite, Bear Naked, Pingo Berry, Peach House, Dolci Mango and Cantaloop.

To read more about the Yogurt Wars, click here.

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Banks have been a gloomy topic in the retail/commercial real estate world for the past few months. The summer of 2007 marked the beginning of drastic changes in the banking industry. Banks like Commerce Bank, PNC, Citibank, Bank of America, Wachovia and Chase were opening locations left and right. Banks were in bidding wars to take freestanding buildings at busy intersections and highly visible corner buildings in cities across the United States. Here in the Washington D.C. area, I heard stories about banks paying as much as $500,000 annually for a ground lease. Basically, they had to pay a lot of money for some dirt and then build a building. As always, markets move like pendulums and the bank market started to make its way down around July.

Nobody is certain of the single cause for banks slowing down, but it is fair to say that 1) the credit crunch, 2) slower home growth/undertain housing market and 3) hypergrowth. The first two issues are all over the news, but point 3 is rarely spoken about outside the real estate community. There are just too many banks in one market and they are all over each other. I understand they are fighting for deposits, but there are only so many people and over saturation was inevitabe in many cases.

People are expecting the banks to come back roaring in 2010. It will certainly be interesting to see what happens. I predict that some banks are going to be bought and others are going to get rolling opening more sites.

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Everyone loves New York, especially retailers because retail rents just continue to go through the roof. Check this out from Cushman and Wakefield:

MADISON AVENUE RENTS PASS $1,000 PER SQUARE FOOT

Manhattan retail rents continued their upward climb during the first half of 2007.  According to Mr. Harbert, there is a constant and steady demand from a wide variety of retailers.  Continued strong demand for a limited amount of space has pushed rents to new highs.

Madison Avenue rents experienced the largest increase, passing the $1,000 per square foot mark.  At midyear 2007, average asking rents on the famous corridor reached $1,019, up $134 from this time last year.

Fifth Avenue held strong as the most expensive retail street in the world, with asking rents above 49th Street at $1,500 per square foot.  At midyear 2007, there were no direct availabilities on the Street.  According to Mr. Harbert, last year’s Gucci lease at Trump Tower solidified Fifth Avenue as the destination for both luxury and world-class brands, and the continued interest from retailers validates current asking rents.

(Source: Cushman &Wakefield – July 10, 2007 News Update)

You can read more about the marriage between Gucci and Trump here.

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In any city U.S.A. and other parts of the world, there are parts of town that were once vibrant retail corridors with many boutique retail stores. Many of these retail corridors have shops boarded up and after dark, mainly unsavory characters can be found along the main street. Additionally, these retail corridors are covered with Chinese Carry Outs, Laundromats, Check Cashing Shops, and maybe a few liquor stores. Although, these retail businesses have their place in the world, more is needed in the historic retail corridors.

So what do I think is needed to revitalize historic retail corridors (besides money)?

  • Risk Takers: homegrown business owners and would be entrepreneurs need to establish their businesses in the neighborhood.
  • Community Support: the community needs support the local business owners and not run off to the suburbs to go shopping.
  • National Attention: some major retailers also need to be prepared to open up in these urban corridors. Rumor has it that Walmart intends on targeting many of the urban markets around the United States because the see the potential of the consumer.
  • City Investment and Support: the local municipality needs to bend over backwards to get the properties along these corridors back on the tax role. It is beneficial for everyone. Permitting should be a smooth process and start up business financing should be made available to the budding entrepreneur.

I think the future of North America lies in the cities. Mixed Use development is a growing trend and there is no end in sight as long as the urbanization continues. People are tired of the traffic jams, driving to do all of their shopping and all of the other burdens of suburban sprawl. Bringing life back to the city will help make everyone’s life easier and continue the legacy of our great cities.

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Its no mystery right now that several of the major world currencies are at all time highs against the US Dollar. Right now, one euro can buy one dollar and forty four cents (at the Spot Rate). The Greenback has been sliding for quite some time against many of the major currencies and you can see the impact by just looking at some of the international retailers expanding in major cities across the United States. Some of the retailers popping up in urban centers include Zara, H&M, Mexx, Reiss, Mango, etc.

Now is a great time to expand in the United States if you are financing your business in Euros, Pounds, Loonies (Canadian Dollars), or even Francs. With exchange rates continuing to work in the favor of the retailers, I expect to see a great expansion of international concepts.

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The title of this blog is a pretty typical interaction I have with people I meet at parties, events or between friends I have not seen for some time. When people hear that I am in the real estate business, they suddenly seem very concerned over my health and general wellbeing. I really appreciate the caring and concern, but I think these people are a little unclear as to what it means when I say I am in the real estate business.

Real Estate is such a vast business and there are so many aspects to the real estate industry. The following are some of the sectors of the real estate industry: office class A, office class B, office class C, office condos, retail strip centers, retail enclosed malls, retail mixed-use, retail lifestyle centers, retail condos, industrial, land, residential single family homes, residential condos, residential multifamily, etc. The bottom line is, there are many different property types and classes.

So, when someone sympathizes with me and says that they are going to pray for my situation, I explain to them that right now the Single Family Home and Condo sectors of the residential real estate market are not doing well, but many of the other sectors of the real estate industry are still growing. Its important to remember that the housing market is hitting the fan right now, but many sectors of the commercial real estate industry are still showing strong signs of life.

Of course, it is important to assess your market and determine where the REAL ESTATE industry is at this point.

National Retail, Crow Form $220M Retail Purse [GlobeSt.com]

The Dollar in Decline [Washington Post]

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