Jonathan Schley (5:53)

Thanks for having me back.

Lauren Sherman (5:54)

What's going on, buddy?

Jonathan Schley (5:56)

Not a lot. Just hanging out.

Lauren Sherman (5:58)

What did you have for breakfast this morning?

Jonathan Schley (6:01)

I'm dreading, I was dreading this question and thinking deeply about it days in advance, but sadly, nothing. And just black coffee. I'm not really a breakfast guy.

Lauren Sherman (6:11)

You and I were discussing this previously, but I think there needs to be like a style section story about or, you know, who should do an Amanda Moll at Bloomberg the end of breakfast.

Jonathan Schley (6:23)

You're. You're an influencer on the topic, it seems these days though, because the, the impact that the thought in advance had on me was serious.

Lauren Sherman (6:31)

Yeah. Well. So the thing is, when we were growing up, all I ever heard was like, you need to eat breakfast to get your metabolism going. Oprah was like, eat breakfast. You gotta eat. You gotta. The craziest thing to me in diet culture, as someone who's literally never been on our diet, is the fact that, like, they want you to eat so much when you're on a diet. They're like, you gotta eat your protein before the event and after you work out and all this stuff. And at some point in my life, I was like, a, I can never follow this anyway, but B, I'm just going to eat when I'm hungry and that's the end of it. And the reality is I'm not hungry in the morning a lot. I love breakfast food, though.

Jonathan Schley (7:19)

I mostly just eat breakfast when it's a meeting. Otherwise it's just coffee and out the door. So anyways.

Lauren Sherman (7:26)

Anyways, on to a more important thing.

Jonathan Schley (7:28)

Sure.

Lauren Sherman (7:30)

So the last time you were on the podcast, we kind of. Everyone should listen to Jonathan's episode when we chatted about the news of the day. But we know each other from. We discussed this from me being a reporter, kind of a general interest reporter on the fashion industry and occasionally covering real estate. And you are a person who works in real estate. And as we know, everything in life goes back to real estate, but especially in the fashion and luxury Industries and we, I thought it would be interesting to just sort of break down. This is, I mean, there could be a podcast just about retail real estate. I'm sure there is, but for sure. But I thought it'd be fun to do a bottle episode or whatever you want to call it, on how real estate's relationship with the rest of the fashion industry has changed in the last 20 years. You're not that old, but you, you know a lot about it. Can you, I think to start, kind of explain what you do?

Jonathan Schley (8:28)

Yeah. So I, along with my partner and team, act as effectively the real estate partner for various fashion and consumer product and design brands both in North America and globally. You know, if you're a really massive group, usually you have an in house real estate team, but probably still work with someone like me. But sort of the activities that you're doing are slightly different. Probably most people associate it, you know, most directly with real estate brokerage, meaning you find a space for someone, they take it. It's that simplistic. But we tend to be significantly more involved at the strategy stage of actually defining, you know, a first to market plan and a local market strategy and penetration and all that sort of stuff, you know, from the brand side, which is predominantly what we do is represent tenants. However, we also similarly do similar activities, for lack of a better word, on the landlord or investor side, as we call it. Not often, but we represent or work with a few of the more premier exclusive shopping center owners in the country. I hate to use the word consult. I hate when people like fluff up what they do. But it's, you know.

Lauren Sherman (9:53)

Yeah, so you usually have an association with like if I live in Los Angeles, I often see shley and your partner, your name on things. You have an association with a firm, but do you work at the firm or do you like, how does that work?

Jonathan Schley (10:12)

No, I work at the firm. So we, you know, I, I got in my sort of retail real estate entree was really through my time working with Ace hotel on retail brand partnerships. So at that time, which was when we originally met, you know, going on more than 10 years ago, and I, you know, that was kind of like the best real estate brand MBA I could have ever got in the sense that, you know, all those things had to function together and really looked at it through this brand partnerships lens as opposed to like a transactional lens. So, you know, we did. So when we bought the hotel in downtown L. A. I had a real estate brokerage license in L. A from previous activities that I did. And we had a lot of vacant space around us and they were like, go bring brands to be our neighbors. Right. I had no idea what that job even was as a job at the time and just sort of did it as like, hey, we're Ace Hotel. We're doing this project confidentially. Would you come be our neighbor? And then out of that, spun off my own consultancy, which then went in to move me into working at cbre, which is the largest real estate service provider in the world. And then as when we last talked. Where when we last talked, I was still working at. And as of then have now moved. And now I'm at a company called Newmark.

Lauren Sherman (11:39)

Okay, cool. So really quickly, I think the Ace Hotel is. Is a great example of what you do and why I think you have a really specific understanding of the word adjacencies. Comes up a lot in real estate and also at department stores and things and who should be. And I just remember the Ace hotel in downtown LA. This was pre. Covid. This is what, 10 years ago now? 13 or 13. Okay. So it was really early. And downtown LA was like the New Hope. People were buying lofts down there. Everything was affordable. And this Ace Hotel, which was a fabulous hotel, I used to stay there when I would come to la. Sometimes. You put. There was a really cool art deco building across the street. You put an acne there. There was an aesop across the street. By the time you were done, there was all this, like, cool. These cool shops. There a Dune opened up, which is. Dune is a. A restaurant in. In Los Angeles. There was a Verve Coffee around the corner. And you made the area which was basically uninhabited or. Or felt like that prior. There's a bookstore a couple blocks down. You made it feel like it was like a place to be. And there was the Ace, that. That hotel has an amazing theater. I think it does the hotel operate as something else now.

Jonathan Schley (13:01)

It's not an Ace. I'm not sure what it is. It traded and then, you know, Ace went through some restructuring, I believe. And yes, it's a little different now.

Lauren Sherman (13:09)

And there's something else going on with it right. Right now. But that's. That's for a different podcast.

Jonathan Schley (13:15)

But I'm not behind the curtains anymore. I don't know. I have no insight.

Lauren Sherman (13:19)

No. I'm so fascinated by hotel management. But anyway, that is truly for something else. But anyway, you understand, I think you understood very early the importance of, like creating a culture at a hotel. I also remember and I don't know if you did this one. But at the ACE in London, which was truly one of my favorite places to stay, which is. It's no longer an ace, there was like a JW Anderson pop up.

Jonathan Schley (13:47)

That was me.

Lauren Sherman (13:48)

Yes.

Jonathan Schley (13:48)

So, and we did like the, and not just like retail. It was very much like, that was early days. So it was very much like integrating that into, like you said, the, the culture of the environment in a, in a particular, in a particular way. Like we brought in APC to do the blankets and quilts for the hotel and things like that when they were doing those denim quilt. So it was really like, you know, you know, I hate words like curation and stuff like that, but it was really like, hey, what speaks to the, you know, what's going to, what's going to resonate with the consumer in a particular environment?

Lauren Sherman (14:24)

Yeah, that, that makes a lot of sense. Okay. So I have found in, in my career as a reporter that I think it's very obvious that of course real estate is a big part of the fashion industry. You need physical spaces to sell things. But also like the, the two big groups that run the luxury industry, especially lvmh, like it was, it is a real estate firm that became something bigger. And so what I wanted to sort of try to break down with you today is how the mark the retail real estate market and it changes every week. I feel like I talk to people in your world and one week something's going on and then the next week it's not good. But it's a real bellwether for what's happening in the broader consumer culture, not just fashion. And I guess maybe we can start with how did it work with. And let's focus on luxury brands today because it's just there are so many different dynamics. If you're, if you start talking about like a czar or something.

Jonathan Schley (15:41)

Sure.

Lauren Sherman (15:42)

How did it work in like the 90s and the 2000s with real estate? And how did the sort of development of the conglomerates change the dynamic for luxury real estate? And, and over the past 20 years or, or what have you.

Jonathan Schley (16:00)

I mean, look, that's a broader real estate reality where I think, you know, my perception on it, and it's no one thing, obviously, but my perception on it is that, you know, real estate and brand strategy as a function of real estate has always historically been a very locally focused effort. Right. So you would say La La sat as an island from New York, which sat as an island from Paris, which sat it as an island from London, because people simply weren't as Mobile. Right. It was. So everything was sort of, I think decisions probably, like the biggest difference would be decisions were probably made more in isolation back then versus now. There's more of a co. A more coherence in terms of the visibility of strategy. Obviously not made in isolation from the perspective of like capital alloc. From a group. Because you would ultimately say we're allocating this much capital and resources to real estate growth. But in terms of the consumer facing visibility, those strategies need to be uniform now. Right. And cohesive. Because. And I think really the biggest factor at play with that is simply media and more specifically social media. Right. That we have access, you know, whether it's fashion, whether it's retail, whether it's politics, whether it's entertainment, we have significantly, as the consumer significantly more visibility into the goings on day to day. Right. And what's going on behind the scenes by virtue of the way we communicate media. So I think that's really like the fundamental difference and that's fundamentally why our business has been such that we never focused in a singular geography. Right. My attitude was always, if we're going to help you in LA or if we're going to help you in New York, we, you know, we need to be involved in the broader strategy and how the. All those things tie together. Right. So for example, the sort of like aha moment for me on that was really, you know, when we did do that acne studios that you reference. And it was a big, you know, it was like the biggest store they'd ever done in the world because obviously downtown was sort of like still a bit of an up and coming area, so they wanted to make a bigger impact. And then, you know, they had the big Carsten Holler statue inside that they brought in and things like that. And at the time, it was like the first time I'd ever heard this metric be used for anything. But it was the most Instagrammed store in the world in 2013. And that was like a very like, oh yeah, this is a thing. And then, not that I would say we're social media driven and frankly, I don't like using it as an information source, but it, but it, but its impact was very clear at that point for me in how all of these strategies work together.

Lauren Sherman (18:56)

Right, yeah.

Jonathan Schley (18:59)

How?

Lauren Sherman (19:00)

How? I mean, There are just 50 million questions I could ask you, so I'm going to try to structure this as much as I can. But you mentioned the Instagram thing, stores being Instagram. Part of that is driving foot traffic. So the best example of that in Los Angeles is the Paul Smith store with the big pink wall. But there are places in every city that are kind of set up for Instagram to drive. Foot traffic. Foot traffic means something different now than it meant 15 years ago. How about, how important is foot traffic for the success of a brand and how much is it leading to conversion in the way it used to, or is it more just about the exposure?

Jonathan Schley (19:46)

So I think that's brand specific above all else. Right. And geography specific above all else. I would say, obviously, now more than ever with data and information we can take from people's cell phones and things like that, which is like, quite creepy when you look into it in terms of like mass mobile data and things like that. That information can inform decisions. If we're going to focus on luxury, I think the reality is it's less important for luxury brands, right. In terms of its impact for conversion. Right. It. Because it's just, you know, we talk about this with brands all the time in New York where they'll say, you know, oh, what about Prince or Kenmare or whatever street versus, you know, the perpendicular street? And, you know, I'll describe them as like, yeah, you're going to get more visibility on Prince street because there's more traffic, but that's not convertible traffic because that's effectively, you know, the pedestrian equivalent of vehicular traffic. There's streets you go through not to. Right. And so I always think about, ultimately, conversion is dwell time. And just because there's a lot of bodies passing through doesn't mean that that's going to have any direct effect on dwell time. Always is the simple answer.

Lauren Sherman (21:08)

How much do you feel like you are responsible for finding places that will encourage dwell time? Like, are you thinking when you're, when you're scouting stuff for people, are you looking at, okay, this place is going to be a great retail store for this brand for these reasons, and people will stick around. Or is that up to the brand and their architect? And.

Jonathan Schley (21:30)

And we talk about, I mean, we talk about it. It's part of the conversation. I don't. At the end of the day, I don't make the decisions, right? Like, I'm not writing the check, I'm not spending the money, I'm not allocating the capital. Right. And I don't, you know, I'm very. I tried to not be hyperbolic when I have these conversations with brands. I try to be like, here's the reality, here's what we know, here's what we don't know in the, in the corresponding risks, I try to be quite objective to about it. I also think that those conversations shift and change to your point about how the market changes. Right. Because when everything's really hot, everybody's willing to take more risks and be more cool and do something a little edgier and a little experimental. But when stuff seems a little scary, you're a little more protective of your capital and you're going to go more blue chip. Right. So using sticking to LA as an example, since, you know, that's what you referenced in the, you know, pre Covid, everything was like downtown LA and West Hollywood, Right. Those were like the two biggest requests we got. Then during COVID everything shifted to local markets where there was a high density of homeownership and wealth. So Pacific Palisades, Silver Lake, Pasadena, et cetera. Now we're starting to see the shift back to the real like blue trip, blue chip, stable retail areas like Melrose, Melrose Place, Rodeo. Right. And I think some of that is on the tailwinds of luxury growth and some of that is just a reality of the economic environment.

Lauren Sherman (22:57)

Are you seeing a similar pattern in other cities like Miami and New York? Like New York? For me, I hear so much. We're opening on Madison. We're opening on Madison. We're opening on Madison. And it feels like when I think of what the last real neighborhoods in Manhattan are, the Upper east side and the Upper west side are two of them. Whereas like soho is not really a place people live anymore.

Jonathan Schley (23:23)

Yeah. I mean Madison is Madison's Madison. Right. I think the problem with Madison is on a lease cycle, right. Which is 5, 10, 15 years. You know, most in most blue chip areas, you're talking a 10 year lease is the average. Right. The problem with Madison versus a, like a Melrose Place, for example, or a Rodeo for example, or a Bond street for example, is it's virtually infinite. Right. So not, not like, so not, not in a massive way. But every five to 10 years, what's main and main changes a little bit. Right. Because it shifts with the lease cycle and availability. So if a brand wants to come in, there's only a certain availability available based on the lease cycle. Right. So that was like when everything, you know, when the luxury like Cartier was in the 60s, which is now Kate Deal we did, you know, now all that's moving back to the core area of like 57th and lower 60s and things like that, Right. So those shifts happen which make it difficult to like identify or it's difficult for a permanent Pattern to develop. Right. Whereas rodeo is four blocks long. It's finite. It can't extend north, it can't extend south. It. What's there is there.

Lauren Sherman (24:45)

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Jonathan Schley (24:49)

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Lauren Sherman (24:51)

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Jonathan Schley (24:52)

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Lauren Sherman (24:53)

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Jonathan Schley (24:57)

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Lauren Sherman (25:01)

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Jonathan Schley (25:03)

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Lauren Sherman (25:06)

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Jonathan Schley (25:09)

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Lauren Sherman (25:19)

Are the leases traditionally? Because I remember at one point there was a huge, this was probably like 17, 18, huge trend towards pop up shops, especially in this. I was living in New York at the time to fill a lot of empty real estate in New York. And I remember a time when people started talking about the leases are too long, 10, 15 year leases. There were a lot of retailers that were overstored. They felt like the leases were too long. We need to do three year leases. Do you see a trend towards shorter leases sticking? Was that just a blip in the market?

Jonathan Schley (25:59)

No, I don't think. Shorter, no. And I'll tell you, there's multiple reasons for that. So I think what you're describing was a byproduct of the type of brands that were evolving during that period. Right. So this is all on the heels of like the DTC brands and people getting their feet wet, not really wanting to like dive full, full into retail as a customer acquisition model and rather test the waters. Right. I mean the biggest, the best example is I always go back to her because the quotes are just very funny and self defeating. In, in chronological order is like the Michael Prisman quotes of Everlane when it was like, retail's dead retail. We're never going to do retail. Da da da da da. And then there was like the GQ article that was like, you know, Everlane just disrupted itself. And it's like, no, you didn't disrupt yourself. You just went actually back to what a traditional model is. Right. So I think that was more a function of the types of brands that were evolving during that period versus the reality of a dysfunctional real estate issue.

Lauren Sherman (27:04)

Yeah, it's interesting because I obviously covered Everlane quite closely during that period and I believe, I truly believe, like Michael and Emily Weiss and these a lot. Sarah Shapiro is going to have a piece this week actually because we're, you know, It'll be out by the time we run this about kind of what happened to that first group of DTC brand quote unquote DTC. Because as you and I know, their DTC is not a 20 year old thing. It's 100 year old. It's, it's always existed. Right, but, but the reality of it was they really didn't want to be overstored. They didn't want to make the same mistakes. They thought wholesale was totally bad, which it's only kind of bad. They thought that, you know, all these things. And so I believe that Michael truly believed let's not do stores for sure until we absolutely have to. But at some point they realized that there is a value. So what is the value of having a store today?

Jonathan Schley (28:06)

Well, the second, the second part of that equation is just that if you actually do then decide that you want to go develop retail in earnest as a customer acquisition strategy and a distribution model, the capex is expensive, right? You can't amortize a store capex over two years, right. And be profitable or very few people can amortize it over a time period that short and be profitable. Or you're just, you know, like not to sound like a jerk, you're building a probably pretty shitty ugly store. Right? Is, is the reality. So if it's one of these things where from a capex perspective, if you're going to commit, you have to commit. Right? You know, and I also think it became one of those things that you and I have discussed before where DTC stopped being discussed as a bit as a, as a distribution model and started being discussed as a brand category. And the second, all of those brands that had frankly quite like more or less nothing to do with each other type of investment, they had became a brand category. The whole thing got muddled.

Lauren Sherman (29:10)

So, so what would you say in the, in the 12 years since you opened that Ace and in downtown LA, the luxury.

Jonathan Schley (29:23)

Not me. Hundreds of people, but.

Lauren Sherman (29:24)

Yes, hundreds of people. But since you were integral in, in the strategy since that opened, how have the luxury brands changed the way they approach real estate? Like, I'm sure there have been a million different peaks and, and valleys, but what would you say the sort of trajectory has been?

Jonathan Schley (29:46)

Yeah, to be honest, I don't know if I, I wouldn't say. My perception of it at least is that I wouldn't. I don't know if the growth was necessarily intentional because someone sat down and said I want this many more at. Someone at LVMH sat down and said I want this many more Louis Vuitton stores by this date. Right. I think it was, I think it was more a function of that period of time having incredibly cheap capital and then it's what do we do with the incredibly cheap capital? And how does it, how does it, how do we use that for growth? Right?

Lauren Sherman (30:19)

Yeah.

Jonathan Schley (30:20)

And then when real estate's cheap, it's cheap. Right. That's all. You know, one major shift you saw, to answer your question, is that you saw the big groups especially, but not just the big groups buying a lot more real estate. Right. Because if you can. Because ultimately what that does is going back to the same converse, you know, the same point I just made on Madison, how it's infinite and you shift, that allows you as a group to create, you know, more permanence within a particular area. If you're a group like an LVMH or a caring or, you know, you own a handful of brands where you can create a singular density that in theory should create enough critical mass to be self sustaining as an area. Right. So that's what you were seeing. You know, you saw it a lot on Bond street, you saw it a lot on Rodeo, you saw it a little less so in New York, but still somewhat in New York, obviously a lot in Paris. So that, that would, that's what I would say would be the major shift over the last 10 years. If we remain focused on the luxury conversation that you've seen a lot more purchasing, which just allows them to control an environment. And even if it's a space that they don't intend to occupy, then they're leasing it to a competitor and they control the terms.

Lauren Sherman (31:39)

So one thing, probably about a year and a half ago, the CFO of LVMH said on an earnings call, we don't essentially hedged and was like, we don't have to buy it. We're happy. Essentially renting it in this, in a great place is going to end up costing us the same amount of money. Essentially. He was like, we're open to both.

Jonathan Schley (32:00)

Yeah.

Lauren Sherman (32:01)

What do you think about that? And why, why would he say something like that?

Jonathan Schley (32:06)

I mean, very simply. Because that's exactly true. It's like, you know, I don't think, I think they're big enough that it doesn't, you know, they're, I don't think one over the other is necessarily the priority. But if there's a good opportunity to buy, you know, if you're going to go lease a space on, you know, like, let's look at The Prada deal, right. That just happened. If that space is $450 million they bought it for and they're gonna pay, you know, or whatever it was, 470 something in that range, 450 to 500. If they're gonna pay, you know, 8 to 12 million dollars a year in rent for a space on Fifth Avenue and that. Or sometimes more like very quickly do the math. If you look at a 10 to 15 year lease term, it's like, well, at that point you could own it. Right. And obviously at that point, just from like a pure play real estate investment perspective, there's tax efficiencies and things like that. So I think it's just like again it goes back to the period of cheap capital and it's like, well great, if I can own something really cheap, then why not?

Lauren Sherman (33:06)

Yeah, yeah, for sure.

Jonathan Schley (33:08)

And then, and then the, the non economic part of it is just again simply control.

Lauren Sherman (33:12)

So yeah. And these are truly direct to consumer businesses that want to control every single aspect of. Of what they do. How has speaking of controlling and developing these projects, the other thing that's happened in the last 20 years is these mixed use is an old term. But if you look at places like the rise of the Country Marts or there is a place. I did a story when I worked at Business of Fashion on. I was sort of tongue in cheek like the idea of like the modernized outdoor mall. But you go to somewhere like Atlanta and they're is there are a bunch of cool. I remember the brand Sid Mashburn would show up and they are actually at the Brentwood Country Mart. It would show up in a lot of these places. Warby Parker, these sort of very modernized developments that felt of the time and sort of if you were gonna go shopping, there would be like a cool restaurant there. There would be. It would make it feel like better than the traditional suburban mall or what have you. When did that sort of as you mentioned, that acne store having art, like very specific art in the the store. When did that sort of we need to be hip to the what's happening in the culture start to permeate real estate.

Jonathan Schley (34:48)

I mean there's a few things I could point to that I think were impactful at a time, right. I think one is Chelsea Market in Jamestown. Right where it was. Hey, we're gonna highly amenita. Mixed use development is nothing new, right? But typically when you see it in the bread and butter, you know, commercial sentence, it's like a horrible 400 unit apartment building that has like A subway and a Baskin Robbins in the bottom. Right. When you're driving down like Hollywood Boulevard or something like that. Obviously that's not what we're talking about. I think obviously there were just people and developers who had the foresight to make something that fed that same concept, no pun intended, but in a much more interesting way. Right. One of the biggest obviously I think was Chelsea or Chelsea Market where you had, you know, milk studios where there was something creative happening and you had lots of good food and beverage operators and you had cool company anthropology. Anthropology and cool company offices upstairs. Exactly. And you know, a bookstore and just these like amenitized nice environment things. And it goes back to the conversation that you. Or the point you made earlier about you know, well, how does this actually relate to conversion? Well, one way to increase dwell time to your question is get people there to do more things longer. Right. It's, it's, it's fairly simplistic, you know, and, and they were very good at that. So even the, you know, in that 2012 era, they were like sort of the best at that. Right. Was Jamestown. So you know, you mentioned Sid Mashburn, that's like west side Provisions in Atlanta where they are, that's also a Jamestown property. Right. So they were, they were like really early on that and they were really early on the, the DTC train. I think they were quite like on the nose with that early. And then obviously you have, you know, at a much larger scale things like Caruso and Palisades Village and at a smaller scale the Country Marts. And you know, that's, that's.

Lauren Sherman (36:49)

I think cold, Cold Drop yards in London is another example of that. When I first went there I was like no one's ever going to go there. And now I, I like to stay at that standard by King's Cross. I mean that neighborhood has completely transformed in the last 15 years. It's wild.

Jonathan Schley (37:06)

Look you. If you're a developer who approaches a project before you build it by having a multi hundred thousand square foot office lease with a tenant where everyone's relatively high earning like a Google, it's pretty easy to amenitize that property and give that those people something that suits their interest. Right. Whether it's entertainment, whether it's food and beverage, whether it's retail shopping, how long.

Lauren Sherman (37:29)

Does it take for stuff to stick? There are two examples I'm thinking of. One is the arts district in Miami which I literally was like this is never going to happen.

Jonathan Schley (37:38)

You mean Miami Design district?

Lauren Sherman (37:40)

Yeah, design district. Sorry, Craig Robbins, his people, they still pitch me all the time. I'm like, you don't need me anymore. But they used to pitch me every week something new. I was like, this is never going to happen. No one's going to go to the design district in Miami. It happened. It fully happened. And then the other example, and I don't know how this is going, but Hudson Yards, and that's a weird one because of the time, but they really tried to create a new neighborhood. How long is it gonna. I guess the question, both of these, both of those examples are like fully blown new neighborhoods were attempted. How do you. If you don't have a Google, Hudson Yards has, has a couple big companies. How do you make that happen? And how long does that take? 15 years. Does that take?

Jonathan Schley (38:32)

It's a tough question to answer. What I'm always really sensitive to both whether it's store size, whether it's neighborhood, and going back to the overall, how I look at positioning conversation is I'm really sensitive to scale, right? Like very, very sensitive to scale. I think there's things like a South Coast Plaza, which is part of its success in my opinion, and why it's one of the top performing shopping centers in the world is because of the scale. Right. It's still big. It's, it's a million square feet or so. But when you compare that to like a Dallas north center, which is two, I believe it's two million, it's one and a half or two million, I can't recall off the top of my head. The scale is just like that much bigger where the flow is not the same. Right. Like the, the way every, the way the end user, in this case the shopper interacts with things. It doesn't have the same flow. It's like when you go to a hotel lobby and it's empty and it feels kind of like why am I here? Again, something Ace always did really well was not make two big lobbies so that the lobby felt full so that you had some vibe. Right?

Lauren Sherman (39:37)

Yeah.

Jonathan Schley (39:37)

So I think it's the same thing with all those places. I think Hudson cards, you know, honestly, I don't know how it's doing. I've, I've done one deal there ever many years ago and I think it was, to me it was just so ambitious that the scale did not reflect necessarily the environment of. That suits New Yorkers, put it that way. Right. That suits your average high value customer New Yorker. I think comparatively, Miami Design district took a long way. Took a long time. I think it took a long time as well. Because the hardest thing to do. To answer your question, when. How long do these things take? The hardest thing to do is just change consumer behavior. Right. If you're fundamentally changing consumer behavior from. I'm either going to this mall, Aventura, or that mall, Bal harbor. And now I have this new area that historically was, you know, edgy. And everybody has their preconceptions and things like that. It's just difficult to change. Right. And so they've changed it with museums, they've changed it with hospitality, they've changed it with all these elements that in the early days it didn't have, and now it's very much a thing. So, you know, I don't know how to answer exactly how long it takes. I think it's. It's property specific, it's city specific, it's consumer specific. You know, just like what someone in Miami buys from Dior is different than what someone in New York buys from Dior. Right?

Lauren Sherman (41:02)

Totally. Yeah. Yeah. And Hudson Yards is an interesting one. I haven't been in the mall spot since pre Covid, but I do go there a lot to the Whole Foods, to the Daily Provisions, which is an amazing place. I love. I think it's a great change.

Jonathan Schley (41:19)

The Food hall thing or.

Lauren Sherman (41:20)

No, it's different. It's Danny Meyer's Rotisserie, essentially. Boston Market.

Jonathan Schley (41:26)

Cool.

Lauren Sherman (41:27)

The bougie Boston Market. And they have one in, like, Cobble Hill, they have one. Or Boreham Hill, they have one there. And it's an easy. Like, if you want a salad type thing, sure. I think it's a smart concept, but. And the Whole Foods and that stuff, if you're up there, it's like on the way home type thing. But the question of, like, who would want to live there anyway? So we're talking about these brand new, built from scratch neighborhoods, essentially. What about neighborhoods that have been around forever? I just. We just did a commercial project, Full Disclosure, with Tishman Speyer and Rock center, which honestly, a huge reason why I wanted to do it was because I am obsessed with what they've done at Rock Center. I'm obsessed with the food they've brought in. I am obsessed with the retail mix, which is, by the way, not like Chanel. It's like Tom Snyder.

Jonathan Schley (42:27)

I did the McNally Jackson and the Rough Trade there.

Lauren Sherman (42:31)

And so why do you think that's worked? And why do you think it's. Because that's a hard. That's midtown. That's not somewhere that a lot of New Yorkers want to spend time. They do. But what I've appreciated about it is when I am in New York, I try to go to the theater and so there's restaurants to eat at before it's fun if I'm going to go shopping at Bergdorf Goodman to have lunch at. At Lodi afterwards or. What do you think? How do you revive a neighborhood that was seen as sort of. I don't want to say it was a hellhole because that, that can be reserved for Times Square, but it wasn't like a neighborhood people wanted to spend time in previously.

Jonathan Schley (43:18)

I mean, look, that one. And this is not to dis, obviously, I did deals there. Right. I can't. I don't think I can speak to those deals and how they were structured explicitly. But I mean, look, when you have a 10, when you have a project like that or a building like that, where you're talking many millions of square feet. Right. You have to take into account that a couple hundred thousand square feet of retail is not what's going to make the project work or not from a financial perspective for the owner. Right?

Lauren Sherman (43:48)

Yeah.

Jonathan Schley (43:49)

So a project of that scale, they're able to put a significantly higher focus on making sure the retail is an amenity that people want to engage with versus just simply the best economic deal. And what that for them and what that means is that they're able to offer, you know, attractive deals to tenants. And that's, That's a reality. So it's not to say, you know, I, I'm very, I'm very careful in how I'm framing this to not say that they bought all the tenants or anything like that. Right. They've done a great job, and I agree with you. But they're also in the fortunate position that due to the nature of the project, they're allowed to make. They're able to make deals that are favorable, attractive to a tenant to bring good tenants. And that's great.

Lauren Sherman (44:41)

Yeah. And. And so a question for you would be, I think of something like South Street Seaport.

Jonathan Schley (44:47)

Yeah.

Lauren Sherman (44:48)

I will say I haven't been there in probably a year, but there were many attempts of doing. And I don't know, maybe. Maybe that's also Tishman's spiral.

Jonathan Schley (44:57)

No, it's not.

Lauren Sherman (44:59)

So there have been many attempts to build the same sort of like, fun mix. South Street Seaport, Faneuil hall in Boston. These kinds of places used to be super cheesy. Abercrombie and Fitch. There was a store in both of them called the Christmas Dove. I worked There in college, at Faneuil hall in Boston, there's a Victoria's Secret, like a little bit more. The prior generation of those sorts of outdoor shopping centers in urban areas were really highly commercial and they've tried to make, I think a lot of these developers have tried to make them more. Feel more with it or more of the time where people do spend more money on clothing and, and big ticket items. So at one point There was a 10 course of Como in South Street Seaport. There was, I remember Aurora James had an amazing deal there. She had a brother. Valley's there for years. That never gelled for me. And maybe it is, it's working better now, but like without you having to speak badly of any of these places, why does, why do some of them work and why do some of them not? Is it just the person picking the partnerships and who they're reaching out to or.

Jonathan Schley (46:14)

No, I, I think, look, there's just like in a fashion brand where, you know, the stereotype of fashion brands from some places is just that the person at the top makes the decision and everyone's a soldier. Or some places they have more, you know, collaborative decision making and processes. It's just different. Right. And I think it's the same with the real estate companies where it's like you look at something like Tishman Speyer. Rob Speier is a New Yorker. Right. Like he's going to want something that he's going to enjoy patronizing as a New Yorker. Right. So I think there's just a little bit more of a tuned in perception of what the desire for it to be actually is. Right. Whereas if you look at South Street Seaport, you know, that's Howard Hughes company. At the time it was under the tenure of the previous CEO, David Weinreb. Right. Who? David Weinreb is Dallas, he's Las Vegas. He's. He, he. I think he leans more entertainment and sometimes entertainment has a tendency to feel a bit like cheesy, for lack of a better word. Right. Yeah. It's not going to appeal to everybody. Right. So if you, I think to me it's that simple. Like I, you know, I don't think it goes much deeper than that, to be honest. Just got a new puppy or kitten. Congrats. But also, yikes. Between crates, beds, toys, treats, and those first few vet visits, you've probably already dropped a small fortune, which is where lemonade pet insurance comes in.

Lauren Sherman (47:59)

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Lauren Sherman (48:22)

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Lauren Sherman (48:49)

What are brands looking to get out of a store now? Are they, are they expecting the like per square foot sales to be as much as they used to be? Is it more about getting people in to get them exposed so they buy stuff online? Because my experience in many stores is that I go in the store I tried on and I say see ya and I go online and get it for a discount somewhere or I ask my friend who has a discount or I know that this place is going to do 10% because I've never shopped there and sometimes I buy direct. But you know, I, and I and I look like if you're want a really high net worth customers spending sometimes a million dollars a year at an individual brand, that's a different person and that's who they're mostly relying on. But for, for these stores are these, are these stores created for just the person that's spending 70 grand they're dropping 70k when they walk in somewhere or are they or they like what is the, the goal of these stores today?

Jonathan Schley (49:55)

So I mean look, you went through a period 10, 15 years ago where there was very much this I'm gonna get a store on in Times Square or Herald Square or Madison or fifth Avenue that is never gonna be profitable. And it's a billboard, right? I think those days are long gone. But I agree with you. The shopper shops differently now. I'm the same way like I'll buy something on Mr. Porter and you know, try three things and return them and whatever. And it's just like part of the process. Right? Which that type of behavior is fundamentally why people are realizing E Comm isn't as great as they thought it was. Right. And DTC isn't as great as they thought it was. Similarly, I think you're seeing the more recent shift to, you know, directly brand owned retail stores because of the complexities and challenges with wholesale. Right. And all of the multi brand stores and things like this and beyond just the, you know, issues that you hear that you've covered multiple times about actually being paid or are they going to last and they're holding all this inventory or whatever. It's just that I think as a brand, especially an incredibly high touch brand or special brand like the ones at least I, we endeavor to work with and do work with, is you need to control your customer journey. Right. And at the end of the day, having a store is the best venue in which to control your customer journey from a staffing perspective, from a design perspective, from a storytelling perspective, etc. Right. Like without a doubt, it's the best. But that, but I think brands now are maybe less strict about, you know, my E Comm. P and L is entirely bifurcated from my retail P, L is entirely bifurcated from my wholesale P and L. Right. I think that, and this goes back to the conversation about, you know, retail apocalypse and retail is dead. And then it was wholesale and now we're back to this. It's like these are shifts, right? These very simply, these are shifts and each brand is going to have a different equilibrium in the multichannel world that we live in of what's going to work best for them. However, I think, as it's always been and will continue to be, that retail is the best place to own your customer journey. And I don't really think anyone could make an argument against that.

Lauren Sherman (52:18)

Yeah. Okay, final question for you. And, and maybe you can just pop on anytime we have a real estate question and do like five minutes. I am having a lot of conversations with people right now that feel extremely big and existential and I, I tend to not want to get hyperbolic and also believe that everyone thinks they're living in the worst time ever and you need to, everyone needs to chill out because it's just going to get worse.

Jonathan Schley (52:48)

Sure.

Lauren Sherman (52:48)

And so if you, if you frame it that way, I think the bigger thing is that life just, the world changes and either you change with it or you don't. And if you don't, you get left behind. And that's how people should fr. But all that said, this year has been really hard for luxury goods. This is the first time since the industry became a real industry that consolidated. So the last 25 years that they've been truly challenged that the customer in China is not coming back in the same way. It just isn't. That's. It's fundamentally not going to happen. And.

Jonathan Schley (53:25)

And.

Lauren Sherman (53:28)

I was talking to a CEO about this who's been in the industry for 35 years. The fundamental thing is that the industry is mostly consolidated and the way consumers consume luxury goods is changing and there aren't going to be lines out the door that are real as much as there used to be for a while. Like, it's just not. But the stuff inside the stores needs to change in order to. Like I think about. I always have used this anecdote millions of times. Apologies to anyone who actually listens to this more than once. But I've used this anecdote about when I was in college, everyone would stand outside of Tower Records on Newberry street in Boston or Newberry Comics, whatever. If you're cooler and you went to newbery. Com, I was too intimidated. But you would stand outside. For the record, I think all albums came out on Tuesdays. You would stand out and at midnight on Tuesday you would get it that off White or Supreme or whatever. In 2018 was that example of youth culture, people standing in line buying stuff that is gone and something new will replace it. But I think the question for a lot of these brands right now, it's like, what happens in 2026? Do you have new product coming in, a revived creative strategy at a lot of these big companies? And then suddenly the consumer just bounces back and it's like, yeah, I want another handbag or I want another jacket. Or is there a total true shift in the way these companies approach how they sell. Sell things like. And what they sell?

Jonathan Schley (55:13)

Yeah. I mean, look, I'm not a fortune teller or an economist, right? So I can't predict what the economic outlook is going to turn out to be and I can't predict consumer behavior. What I do know or what I feel is that, you know, going back to the comment I made about how when DTC start shifted from being discussed as a. As an. A distribution model and started being discussed as a brand category. I see those same kind of patterns with the luxury industry right now. And that's what concerns me above all else, which is that I don't know that any of them. That's not true. I. At least within the large groups, I don't know that many of them can really articulate what it is they're selling or doing. Right? And I think that's really disconcerting because like the. Even personally as a customer who, you know, I would say is a luxury customer, I buy nice Watches. I buy nice cars, whatever. I buy nice clothes. I don't. I don't walk into those stores, Right? I don't. I don't buy that stuff for myself. The stuff I like is like, you know, Davide Baroncini's Gaia Cashmere in, you know, like that. I want that. Like, I'm gonna do. No, but I'm gonna do that. Instead of.

Lauren Sherman (56:36)

I tease, I'm saying, but. Huge fan.

Jonathan Schley (56:39)

But to me, that. Or like a Drake's or something that, like.

Lauren Sherman (56:42)

Yes.

Jonathan Schley (56:43)

I think what the luxury brands have done that is backfired on them is the customer incentive for being a customer is. Is shallow, right? In the sense that it's. It's not for them any. It's not for the end user anymore. It's not that, oh, I get value out of this because it makes me feel good or because I understand its provenance or because I. I know a story and a history about it, right? That the customer, the luxury customer of today that the big groups have engendered, they don't care about that. Right? And so it makes it very easy to just as quickly not become a customer. If the value proposition you're creating for them and the validation you're creating for them after buying your product is shallow. Right. It just disappears that quickly. So I think that's more of like an inward industry thing that needs to have a bigger. A bigger conversation. But I think, you know, it's, you know, you use the record example, it's like discovering a band, right? It's like. It's like discovering a band for before someone else and being. To tell. Being able to tell your friends about that. That's cool, right? That makes you feel good. That is what empowers you. Owning, like a really expensive sweater doesn't really empower you, right? It's. It's whatever, right? And then eventually. And look, everything's fun and easy and lighthearted when things are good. But to your point, as things start to soften, you start to look at things differently naturally. And that's, I think, the place we're at right now.

Lauren Sherman (58:17)

Yeah. And. And I think that neither you nor I have any sort of. We know this is all a construct.

Jonathan Schley (58:26)

100%.

Lauren Sherman (58:27)

Everything is. All of this is a construct. But the thing is, it needs to feel good. It needs to feel like the word value is overused, but it needs to feel there. Needs to feel like there's a value. This is why I bought this for a reason. Whether the reason is cause I think it's cute and I Have a bunch of money or it's because I think I'm going to wear it forever. And if you look at the brands that are succeeding right now, and I'm. I had a little thing on Monday about craft and how this word craft is definitely being overused. But also, you look at the brands that. That consumers, the hottest brands at Laura, at lvmh, or Laura Piana, Loewe, These are brands that. Yes, Jonathan Anderson's a superstar designer, and there are people buying for him, but he focused so much on. I went to this Loewe exhibit in Japan. That was it. It paid homage to him and was, like, very respectful of him and had an entire room of all his Runway work. But also, like, it was about the bags and the construction, but in a fun way. It didn't take itself too seriously. And the St. Laura Piana, whatever. You think they can sell $2,000 jeans because they're fabric mill. And a person who can afford it is like, I know that the cashmere sweater I'm getting from there, even if I'm overpaying, is the best cashmere, or I think it probably is the best. So, like, they did that pointy toe almond flat that I bet Kate, your wife has or. Or may. May have thought about buying. And that's under a thousand dollars. And so, yes, that's expensive. But there's a value. Bottega. There's a. There's a value in it, I think so.

Jonathan Schley (60:19)

I think. I think they've put themselves in a place where they've just like, archetyped all their customers in such a specific way that like, like, Kate and I and our daughter were at. You know, we were in Cabo a few weeks ago. I don't remember what for. I think Kate's birthday, we went and we stayed at Las Ventanas, right? And I was like. And, you know, you see the other families, and I'm like, I was like, this sounds. I can. Sounds up, for lack of a better word. I'm like, I can tell that family's from Miami. I can tell that family's from Dallas, right? And then later on you talk to them, and it's like, hi, I'm from Miami, and, hi, I'm from Dallas. And like, I'm like, everybody was very nice people, obviously, and, like, people we would all be friends with if we met them and hung out. But, like, the fact that we've. To your point of it being a construct, it's been so constructed that it's become an archetype and Almost like we're memeing ourselves is the problem. And I don't know how we get out of that, but I think that's the conversation that needs to be had.

Lauren Sherman (61:22)

Yeah, I think, think for a company like lvmh, and it does kind of go back to them for me, and because of the. They own pretty much every business that I write about at this point. Like, it. It's just. Is that that's a really diversified business and it can't just be about clothes or handbags, which is obviously a very large part of their business and has become a much bigger part of their business in the last 15 years. The, the wine and spirits used to be a much larger part of the pie, and it's in its decrease. So I think the thing that they do really well is that they think about it as investing in culture. And so they invest in the places where the culture is at at the time. And then as that evolves, they evolve with it. That being said, like, this is going to be a big change. And we don't know. They don't know. The China piece, I think, is, is the, the most complicated part.

Jonathan Schley (62:23)

I think the problem with that argument or that premise, if that's what they're saying, and not just them, but anyone, if that's the premise, is that, you know, are you, are you creating culture or are you pandering to a place where the culture's at? And those are different things. And ultimately at the level they're at or any group is at, if you're actually a luxury brand and making an impact, you should be in, you should be creating. You should, you should be the creator of the culture, not the, hey, I'm selling to whatever the culture demands at the moment.

Lauren Sherman (62:51)

Well, well, this is a challenge for them in particular, because they are second movers. So what they've done mostly is look at what other people have done, look at what Chanel in particular has done, and sort of mimic that, or look at what Hermes has done and mimic that. But Chanel in particular, there's no LVMH without Chanel. Like, those brands were built exactly on what the Wertheimers did there. Like it's. They're in Karl Lagerfeld. Like, there isn't anything different. And even if you look at the last 15 years, Kering hires Alessandro and Demna, then Elvis hires Virgil. So they're fast followers and they are the best at executing of any other. They do it better than anyone else. They're the best brand managers. But I do Think that you're right. Look at the incredible success they've had with Laura Piana. It's truly remarkable. And they have looked at what Hermes did and they have followed what they need to follow there and also just use their principles and it is, is truly amazing. But this next phase, like, what to me, what it all comes down to is, you're right, like how much of culture can they actually create themselves? How fast do they need to be with follow up and also China, China, China, China, China. If they can't get people to buy stuff in China, no matter what, they need to come up with a different strategy.

Jonathan Schley (64:31)

And I think to tie it all back and close the loop where, you know, you said it all comes back to real estate and you're saying they're fast followers, that this is the segment where everybody is the most concerned with co tenancy and who they're next to and who they sit next to and not, you know, where I think the really, truly luxury brands, like, you know, not lowercase L, fashion luxury, but really luxury meeting someone doing something unique, it's like, no, I actually want to be by like the Chicest restaurant. No, I actually want to be like, under the Chicest family office where the best people, the most successful people in the world are, have their family offices and that. And then I'm going to sell them a watch. Right. It's not like I care about being by, you know, Louis Vuitton, Dior, Balenciaga, etc. Right. Like, like, that's so. Yeah.

Lauren Sherman (65:29)

Jonathan, this was so fun. I love chatting with you always. It's good that we do have similar taste.

Jonathan Schley (65:35)

Yeah.

Lauren Sherman (65:36)

Because then it might not be as fun.

Jonathan Schley (65:38)

No.

Lauren Sherman (65:38)

But you know, you're the best. Have a great weekend.

Jonathan Schley (65:40)

Thanks.

Lauren Sherman (65:41)

You too.

Jonathan Schley (65:41)

I'll talk to you too.

Lauren Sherman (65:42)

Bye. Fashion People is a presentation of Odyssey in partnership with Puck. This show was produced and edited by Molly Nugent. Special thanks to our executive producers, Puck co founder John Kelly, executive editor Ben Landy and director of editorial operations, Gabby Grossman. An additional thanks to the team at Odyssey, JD Crowley, Jenna Weiss Berman and Bob Tabador. All right, here we go.

Jonathan Schley (66:10)

New Phineas and Ferb is here.

Lauren Sherman (66:12)

We're back, baby.

Jonathan Schley (66:13)

For 104 more days. I know what we're gonna do today. A summer vacation. I am ready for summer shenanigans. Let's do it.

Lauren Sherman (66:21)

Oh, yeah.

Jonathan Schley (66:22)

We're gonna bust fiddies with Furf once and for all.

Lauren Sherman (66:25)

Are we gonna do this again?

Jonathan Schley (66:26)

New inventions, shenanigans, inators, adventures and songs. Brand new summer vacation new Phineas and Ferb starts June 5th on Disney Channel and next day on Disney on disneyplus.disney.com.