Shopping Center Business
For The Greenberg Group, representing tenants is part analytical, part gut feeling and part personal relationship.
by Randall Shearin
When you are in the tenant representation business, there is no more ultimate goal than servicing the client the best way possible. For The Greenberg Group, doing so means having employees that are committed to retail 120 percent. Shopping Center Business recently spoke to President Steven B. Greenberg to understand his company’s interesting approach to the tenant representation business.
Steven Greenberg joined the real estate industry in a very roundabout way. After he retired from playing professional tennis in 1975, Greenberg started a small chain of athletic footwear stores. He expanded the chain throughout the New York area during the next 10 years. As the owner of a moderately sized chain, Greenberg wore a variety of hats, from staffing to buying to inventory control. One of the problems he had was real estate. Since the chain was small, it couldn’t afford an in-house real estate director. When he needed legal advice, he went to an attorney; when he needed financial advice, he went to an accountant. Greenberg kept asking himself where he could find real estate advice. In the mid-1980s, there weren’t any real estate advisors, and tenant reps were practically unheard of.
In the late 1980s, Greenberg sold his retail company. There was a year-long quiet period where he ran the company for the new owners, but at 34, Greenberg knew he had to plan what he was going to do for the rest of his life.
After the quiet period was over, he returned to New York University to take business courses. He also took courses in economics, demographics and geography. He decided to put together a group of extremely bright, analytical type-A people who would work exclusively for retailers. Seventeen years later, The Greenberg Group is one of the top retail tenant representation firms in the U.S. All of the company’s 12 employees have an MBA or higher degree.
We take a scientific, data driven approach towards site selection,says Greenberg. It goes far beyond site selection. We only work on a long term, contractual basis with our clients.
The client who put Greenberg on the map was Barnes & Noble. He rolled out the first superstore for the company in the early 1990s. The Greenberg Group continued to work with Barnes & Noble until the company reached size after 20 of the stores were open and successful, and plans were launched to open hundreds more where it needed an in-house real estate department. Greenberg also did work for chains like Phillips-Van Heusen during its formative years.
About 9 years ago, the company made a strategic decision to only focus on upscale and luxury tenants. At the time, a fair portion of its clients were luxury tenants, and that was where the company was spending most of its time. The research that these clients demanded, to guarantee successful stores, took a greater investment. The return, however, was also greater. Since that time, Greenberg has carved out a niche for itself in the upscale and luxury brand segments of the retail market. It has worked with clients like Waterworks (8 years), Puma (4 years), Gucci (6 years) and Lacoste (7 years), among many others.
We have a very close relationship with The Greenberg Group, says Bob Siegel, chairman of Lacoste. We communicate with them many times during the week, meet with them at least once every 3 weeks. They are a partner to everything that we do and often develop many ideas that we haven’t thought of.
The Greenberg Group’s assignments typically start with the company performing strategic planning for the retailer. Along with the client’s senior management, The Greenberg Group develops a program that looks 3 years, 5 years and 10 years down the road. When that process is carefully done after 6 to 12 months, it then stays on and executes the plan.
Steven Greenberg (left), president of The Greenberg Group, with Bob Ross, vice president of retail for Lacoste (right), in front of the new Lacoste boutique at Fashion Show Mall in Las Vegas. One of the company’s biggest success stories to date is Lacoste. The Greenberg Group was hired by Lacoste about 8 years ago to help relaunch the Lacoste brand in America. It helped locate the company’s first stores in influential areas like Madison Avenue, Bal Harbour and Worth Avenue. Today, Lacoste is one of the most sought after tenants in the shopping center industry. The company’s stores perform at over $2,000 per square foot. The Greenberg Group isn’t linked to Lacoste on a deal-by-deal basis. Instead, The Greenberg Group’s success is linked to Lacoste’s success. This ensures total dedication and loyalty to the client. As a result, Greenberg and Lacoste have continued their partnership, careful and uncompromising about their real estate decisions.
Finding good employees is another way that Greenberg ensures success to its clients. Greenberg likes to hire people who have a finance background, who have an MBA and who have spent 3 to 5 years in an industry crunching a lot of numbers.
We prefer people who are less emotional about things and more analytical, says Greenberg. That said, site selection is a science and an art form. You can’t do site selection strictly by demographics. A lot is involved about feel. I traveled over 100,000 miles last year looking at sites. When I get a report that says the economy is great in a market, the demographics are excellent, I still have to go out there and look at it, talk to shoppers and spend time closely analyzing the location.
The Greenberg Group’s environment is extremely entrepreneurial. No employee is watched over. Instead, they are relied upon to get the job done for the client. The employees are account based and do not compete against one another. They share information but all company data is open for review by any employee but kept highly confidential within the company’s domain.
The company has strict criteria as to when it will endorse a deal for a particular location. It wants to make sure that, economically, the store will be profitable for the retailer in the first year. The gross occupancy costs must be the proper percentage as it relates to sales. The return on investment must meet a certain level as well.
The Greenberg Group has gone out of its way to gather specific data for clients. For Sean John, owned by Sean Diddy Combs, The Greenberg Group actually performed pedestrian counts in front of possible locations for the store. The Greenberg Group has also acquired data lists of people who own and lease luxury cars. For a client like Lacoste or Waterworks, knowing where the Mercedes and BMW owners and lessees are within a particular market can help the decision for the next location. The company also has a program that can generate a database of sales of homes over $1 million. Using such databases has helped The Greenberg Group identify markets like Montecito, California, Winnetka, Illinois, and Aspen, Colorado, as locations where its luxury retailers should be. For Waterworks, it purchased a list of subscribers to certain magazines, like Architectural Digest and Elle Décor. These lists contain subscribers who are more apt to purchase the architecturally forward bathroom fixtures and services that Waterworks sells.
When we did work for Gucci, we identified a number of niche pockets of wealthy people, says Greenberg. We had already done New York, Chicago, Boston, Dallas and the larger markets and we had to pick away at the submarkets, the playgrounds of the rich.
Since The Greenberg Group is dealing with luxury tenants whose locations must be dead on to achieve high sales goals, the company spends a lot of time with each client. Since most of its clients are opening an average of five to 10 stores each year, the site selection process also is more intricate than for most retailers.
Puma, a Greenberg Group client, is creative with its real estate, like this store on Chicago’s Rush Street. Puma is another company with which The Greenberg Group has had great success. Popular in the 1970s and 80s, the company faded in popularity after Nike came on the scene. In the 1990s, Puma changed direction and reinvented itself from an athletic shoe company to a hip, fashion-forward lifestyle company. Today, Puma shoes and attire are more apt to be seen at a nightclub than on a playing court. The company has been very selective with where it places its stores. It has 40 stores that were opened over the last 3 years. The stores are very creative in their use of real estate, and their modern architecture fits the line’s image. On Chicago’s Rush Street, for example, Puma leased an older building, took the building down to the steel and rebuilt it.
Greenberg was able to partner with top local brokers on behalf of Puma to assist in finding top locations in national markets,says Tom Ulrich, vice president of retail for PUMA North America. They also went the extra mile by visiting and signing off on each location prior to presenting their recommendations to Puma.
One client that the company does have that is expanding at a rapid pace is KaBloom. The floral retailer is opening 50 locations during 2005 at upscale strip and lifestyle centers around the country.
For Steven Greenberg, every day is a new challenge he looks forward to approaching.
I just can’t wait to get here every day, he says. I have enjoyed every career I’ve had, from tennis to being a retailer and I just love the tenant representation business.