Title: Founder and CEO, Bialow Real Estate
Industry Experience: 26 years
Corey Bialow scouts store locations for retail chains that have outsourced their real estate divisions, and e-commerce sites that are establishing a brick-and-mortar presence. Bialow’s family owned a chain of drug stores in the New York City area, so it was natural that he gravitated toward the retail side of the industry after he got involved in commercial real estate. A former executive who helped Vitamin Shoppe grow from 19 stores to 300, Bialow founded his Needham-based retail consultancy and brokerage in 2006. His clients include Pet Supplies Plus, Sleep Number and Indochino.
Q: How common is it for retail chains to outsource their real estate functions these days?
A: For a lot of clients, they outsource all the functions, not just brokerage. Strategic planning, almost like a vice president of real estate, managing the whole process. It’s becoming more and more of our business. One of our busiest clients is Indochino. They are a custom men’s suit manufacturer and they are probably the largest custom suit maker in North America. They started off online and figured they’d open showrooms as a place to pick up suits. They figured out that the customer likes to see the product and try it on. We’re going to do 18 new stores this year nationwide.
Another is Sleep Number. They used to be more of a mall store format. And now they’ve built what they call a showroom where they highlight their new technology and the new beds. It’s pretty exciting, but you don’t walk out with anything.
Q: How does a chain like Pet Supplies Plus find room for brick-and-mortar growth in this environment?
A: They’re kind of unique. They’re a little more service-oriented and hands-on than some of the larger big-box category killers. They have more of a neighborhood grocery store mentality. And their primary source of revenue is from dog food. If you’re ordering 20 pounds online, it’ll cost more to have it shipped than to pick it up at the store.
Q: What do you think of Amazon’s new stores?
A: Amazon is such a unique brand. It resonates because everyone knows what Amazon is. They could put their name on anything and create a lot of buzz. But to me, the store is a B. Dalton store from 20 years ago. I’d be surprised if they’re making money on it on a per-store basis. They’re doing it to help build their brand and connect with the customer. The store could probably be 500 feet and just show the tech items. The books, I don’t get it. Barnes & Noble is not able to make it with a much more impressive bookstore.
Q: How is Boston’s retail landscape changing? Is the Seaport District eclipsing Back Bay?
A: At the end of the day, the Back Bay is still the number one retail shopping and sales per square foot. Back Bay is always going to be dominant. If you were going to do one store in Boston, it’s still going to be Back Bay. The problem is rents went from $100 to $200 (per foot) within a few year period. When rents go up 100 percent and sales stay flat, that’s the reason you see all the vacancies on the street. It’s not that Back Bay has been hurt by the Seaport or Fenway or these other markets.
What’s happening in the Seaport is probably having more of an impact on the Financial District than the Back Bay. The Financial District is going to be suffering. The restaurants, especially all of the big daytime lunches and corporate meals, now there’s an alternative. The Back Bay is still the dominant tourist area and has the best mix of office, residential and tourist traffic.
Newbury Street just needs to readjust the economics. The landlords will lose buildings to the banks or the banks will refinance their loans, but at the end of the day the retailers will do very well. The other thing people don’t realize is it that on the north side of Newbury Street, the neighborhood association won’t allow new restaurants. They are very restrictive about any change of use. I’m not saying that’s wrong. I like the character of Newbury Street and don’t want it to look like another mall, but it’s not all doom and gloom.
Q: What’s your reaction to City Councilor Matt O’Malley’s proposal to impose “vacancy fees” on buildings with lingering retail vacancies?
A: [New York City Mayor Bill] di Blasio is trying to do the same thing. It’s ironic how the government officials don’t even realize why these storefronts are sitting vacant. The real estate taxes in Boston, especially on Newbury Street, have gone up tremendously in the past six or seven years because they reassess based upon current value. So when the city says they’re going to tax, they already have a tax in place. It’s called real estate taxes. And they have to pay that whether the space is leased or not. Ironically, it would just drive up taxes even higher. The market will adjust based upon supply and demand. You don’t need the government to step in.
I’ve heard major national restaurant chains that had four or five deals lined up, pull out as soon as they heard that Boston was raising the minimum wage. There’s a reason a lot of the restaurant chains are not coming here. I’m a tenant rep broker but I also own a lot of properties and I’ve built a lot of properties. What people don’t realize is because of the regulation and unions, it’s 30 percent more if you’re going to build in Boston.
Bialow’s Five Favorite Local Shopping Destinations:
- Brookline Booksmith
- Whole Foods Market
- Micro Center
- Mr. Sid
- Leavitt & Peirce Tobacco