New York, NY The NYREJ recently sat down with David Firestein, partner at SCG Retail, for a question and answer session. Q: You are the chairman of the NY ICSC programming committee. What’s that all about? A: As the importance of the New York show grows in stature, there’s a lot of work that goes on behind the scenes to get a compelling keynote because the keynote speaker sets the tone for the two days. Two dozen ICSC members comprised of brokers, developers, and retailers are part of the committee that selects the speaker. We also put together all of the programming for the NY ICSC show. We look for highly successful people from all walks of life from sports to politics, actors, CEOs, and of course leaders from the real estate world. Last year Donald Trump drew a great response and this year we are very excited about having the Yankees manager Joe Girardi. He was a great player and has done an excellent job managing in the post George era (at the time the selection was made, no one would have believed the Mets would go on the run they did this year!). I’ve been on the committee now for over 20 years and we’ve had some amazing speakers including Magic Johnson, Danny Meyer and Mickey Drexler. Together with my vice-chair, Jason Richter of Capricorn Asset Management, we also oversee programs such as ‘Meet the Retailers Runway’ where executives with new, fresh concepts make presentations about what they do and what they need in regards to locations to make their concepts work. These programs are designed to provide attendees a variety of opportunities to hear from leaders in our industry. Q: What surprised you the most about 2015 in regards to New York commercial real estate? A: It amazes me that rents continue to rise all across the New York City markets. In some cases this escalation is causing prime retail locations to sit vacant for years, particularly in Soho and along Fifth Ave. Having said that, we’re seeing more businesses locate to the city, especially in high tech. This growth in jobs has created more housing needs, and that in turn creates more retail and food opportunities. We’re also seeing more people moving back into the city. Others are delaying that flight to the burbs. The economy feels stable. Combine all of these trends with the very vibrant tourist market that continues to grow, and you start to see why the Metro Area continues to attract interest from around the world. Industry City is an excellent example of how these trends are fueling innovative development that provides new jobs, new housing and new retail. Brooklyn continues to be hot, and the activity is well beyond Williamsburg these days. And yet, one does have to question how high rents can go. But, as long as tenants see potential, deals will continue to get done. And we certainly saw that this year. Examples include: Fairway at 100 Mill Basin, Soul Cycle on Court St., Madwell on North 6th, Equinox in Dumbo and Trader Joes on Kent. Q: It’s been almost four years since you merged with The Shopping Center Group, how’s that been going? A: The brokerage business has transformed dramatically over the years, and so have we. More and more, retailers are relying on us to provide in-depth analysis and strategic support prior to a deal getting done. Once a lease is signed, we are being called upon to help with permits, construction, even post-launch activities. The merger with the Shopping Center Group provided us with a greater capability to provide these support services to our clients. Having the opportunity to work with The Shopping Center Group offices also gave us insights into trends outside the New York area that help us evaluate what we’re seeing here. The merger has certainly boosted our suburban activity in Westchester and Fairfield County as well as New Jersey and Long Island. The merger put us in a stronger position to help landlords and developers, having the wealth of experience and talent of the Shopping Center Group with us now at all times. We opened a Manhattan office and already had to move because demand for our unique brand of service has well outpaced even our optimistic projections. Q: Your background was tenant representation, and now you are also working with landlords and doing investment sales. How have these new services enhanced your ability to get deals done? A: With the backing of The Shopping Center Group, we have been able to bring on board specialists here in New York to focus on landlords, developers and investment sales. Today, we offer the full complement of commercial real estate services. Although I oversee the New York office, my area continues to focus on tenant representation. Having diverse expertise in-house has improved our ability to provide a comprehensive suite of services to our clients. Q: You were responsible for bringing Starbucks to New York City. How many deals have you done with them? How has getting a Starbucks deal done today different from when you started back in the mid-nineties? A: Starbucks transformed the coffee category and in many ways Starbucks transformed the daily habits of most New Yorkers. I’ve done over 300 Starbucks deals, over 200 in Manhattan. When we started, site selection was much more based on gut. We drove around and on the back of a napkin crunched the numbers. Today, we do extensive research and analysis, the tools we have today are much more sophisticated, but there’s still a need to be on the street to really get a sense of a neighborhood. Q: One follow up, what is your favorite Starbucks beverage? A: There was a time when Cappuccino was my standard order, but these days a Flat White works wonders. Q: What major opportunities and challenges do you see for 2016? A: Next year poses many challenges for tenants because nobody knows how high rents can go, they just know that they keep rising. Many tenants are looking for value on side streets and in neighborhoods in transition. We’ve seen this trend for awhile. Many have left prime locations on Fifth, Madison, and Broadway, for side streets, and discovering that the trade-off is worth it. Several areas in transition in Brooklyn are already too hot for many (Greenpoint for example), but there’s still some value out there. There are exciting developments occurring in Queens and the Bronx too. At the end of the day, 2016 will be all about the continual rise in rents. It’s confounded even the best of this town’s prognosticators. As a diehard baseball fan, I sometimes wonder if Yogi Berra had worked in real estate, if he would have said this about these lofty heights: If nobody will pay a rent that high, somebody else will.