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NEW YORK ROUNDTABLE 80 • SHOPPING CENTER BUSINESS • December 2016 ing in Brooklyn and it's just starved for quality, good retail. Obviously, Williams- burg has a lot of people going over there for various aspects. They're going out to Williamsburg and Bushwick for new trends. New entertainment concepts are doing repositioned industrial buildings and then in other parts of Brooklyn there are just not a lot of buildings to be; they don't know where to put this. Dollar Tree wants to be there, TJ Maxx wants to be there but they don't know where to put these stores. There are so many people; same thing with the Bronx, and to a lesser degree with parts of Queens. Queens is more like Long Island, built later. There are more quasi-strip centers or two-level retail with a karate studio and a Chinese takeout restaurant. There is a lot of de- mand that is going to go further in those markets and some of the retailers and the trendy restaurants are actually leaving New York because the cooler people are moving to Williamsburg or other parts of Brooklyn; even to Jersey City to a degree. They're getting pushed out because the re- tail rents are so high and they can't sustain that business. SCB: Ariel [Schuster], for a company that does business all over the country, how does your firm look at this change that's taking place in retail? How do you com- pare other cities to New York? Schuster: Our main focus is in urban markets. What we're hearing from retail- ers is similar, whether it's Miami or Los Angeles. There is a group of folks in our office that do a lot of mall deals, and so they're dealing with department stores. One trend that we're seeing a lot in Los Angeles and really in New York, which is driving a lot of demand, is quick service restaurants. They are possibly half of the deals that are being done now. You're seeing a lot of new ones that are entering the market for the first time. You're seeing existing operators that are expanding and a lot of times replacing banks, which is I think great for neighborhoods. They're driving demand. We've talked a lot about restaurants and the complexities, but you still don't see that many restaurant deals getting done. You're seeing Pret a Manger expanding; the consumer is clearly spend- ing more money than they were 10 years ago on food. We're seeing that in Los An- geles. Our business there has been hugely supported by quick service. In New York, as a tenant representative and a landlord representative, we're seeing opportunities to increase rents and improve the overall building by putting in great QSRs. One group that we're bringing in now is Itsu out of London — they have 70 locations in London and they're going to be coming to New York next year. They're going to eventually look at all of the gateway cities, but for them it's logical to come to New York first. Graiser: The thing that's going on with London is retailers are generally con- cerned at looking at New York as an al- ternative because of Brexit. As a broker, that's our approach. I was in London a month ago and that's our spiel is we get them to focus on New York, and it makes sense to diversify their business. We're hearing more and more brokers talk about some of the European retailers thinking of coming into New York. Another thing that's interesting is we're hearing retailers that are looking to come to New York to do 'try-on rooms' similar to Bonobos and others. As brokers, I think people are go- ing to start seeing more of that structure moving to New York and even in certain A malls, you're going to start seeing more of that with not just the European retailers but also U.S. retailers. Some of our clients are now thinking some of the new con- cepts they want to roll our are going into a 1,500-square-foot try-on room. Cohen: One of the challenges for a lot of landlords that we're working with a lot of these new experiences or concepts is the credit of the tenant. Depending on their financial backing, there's a tremen- dous demand for guarantees and a very sophisticated letter of credit. It's interest- ing to understand from the group what experiences you've had when a new con- cept comes in; you really want to bring it in because you think it's going to ignite excitement and create more foot traffic but it's as if you're underwriting to a new concept and taking a risk. Kostic: In the case of Brookfield Place, it's 300,000 square feet of retail below 8 million square feet of office space. The merchandising and what we're putting in the spaces is equally, if not more im- portant, than the economics. I know that doesn't make economic sense, but it's really there to add value upstairs so, in theory, if you put the right concepts in, you're going to get more money from the tenants upstairs. We've got a few spaces left and we're trying to make sure we're careful merchandising and we want to find the right fit. We don't want to just throw something in there that's going to pay the most rent or the best credit. Obviously we want credit and we want the right security if the credit is not up to our standards, but certainly it's a balance. Cooler brands are helping to support the entire project. Graiser: With all of the different retail that you have around, are you investing in these retailers that are now picking up and giving them an opportunity to see how well they can do in brick-and-mortar? You make the investment in them and it may not work out but if it does work out you have an opportunity to roll them out? You see General Growth Properties scout- ing to do that in their A Centers and trying to start giving these guys an opportunity, I'm just curious if you're looking to do the same? Kostic: We're not really looking at it from a pure retail standpoint, we're look at it from an amenity standpoint as an office building. For instance, at the food hall I mentioned earlier, we're looking at should that be something we do and bring something on board and build a platform. We just invested into a conference center company so that we could start to roll that out in our buildings. On the office side we're seeing something similar where office tenants are looking at more effi- cient spaces. If we can provide an office site with a food hall downstairs and pair them with a conference center that they can rent whenever they need it, then all of a sudden we just shaved 30 percent off their footprint and their rent bill. We're trying to think forward and look at the companies that are synergistic with a larg- er roll out.