ULI Washington News

ULI Washington Real Estate Trends 2016: Coffee, Chocolate, Beer: How to Make It in DC Recap

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Beer brewed on site, local meats and cheeses on the menu, and a two hour wait on Friday and Saturday nights. While this may sound like another night in one of DC’s thriving dining corridors, this particular scene can be found in the quiet suburb of Vienna, Virginia, located in a non-descript warehouse that is tucked behind a parking lot located adjacent to a wooded bike path. Caboose Brewing Company’s Tim McLaughlin doesn’t reject real estate’s #1 rule, but he certainly suggested that when it comes to location, location, location, beauty may be in the eye of the beer drinker. Tim’s location is driven by two things: function – a location where he is able to brew high quality beer onsite – and convenience – Tim, an avid runner and biker, wanted a place for his fellow Washington and Old Dominion Trail users to stop by after a workout. While typical retailers make location decisions based visibility and parking ratios, Tim argues that his choice of location was made because of his business’s unique needs, and, therefore, has what typical restaurants lack, a sense of authenticity.  

Retail has traditionally focused on creating a customer experience through the use of materials, lights, merchandise placement, and other techniques. In the new retail economy, customers want an even deeper and more tangible connection to the products they buy and the people who make them. Nowhere is this trend more pronounced than in the food industry, where businesses are setting the stage to redefine experiential retail by celebrating food production on an industrial scale. Some of the Washington Region’s most unique up-and-coming entrepreneurs (or, “makerpreneurs”, according to panelist and EDEN’s Vice President, Jeff Kaufman) provided their insights into the strategy and challenge of the new retail economy at this year’s ULI Washington Real Estate Trends Conference. 

Evan Goldman began the session by asking each panelist to describe what prompted them to start their businesses. While each panelist responded with a unique story – Michael Haft credited the comfort and friendship he and fellow United States Marine and Compass Coffee co-founder Harrison Suarez found over cups of coffee in Afghanistan, while Harper Macaw’s Colin Hartman cited a desire to use chocolate manufacturing as a way to combat deforestation through responsible cacao purchasing in his wife’s native country, Brazil – it became clear that each business was founded on the same simple theme: authentic personal passions and interests. Though personal, these passions and interests are kept far from secret. Each makerpreneur emphasized the importance of spreading their stories (mainly through social media or word-of-mouth) to their customers and through their local neighborhoods.

ULI2016-1392Seizing on with the concept of “local”, Evan Goldman asked the panelists about the importance of being seen as a local business that uses locally sourced products. The responses were best summarized by Colin Hartman who stated that “local isn’t the value proposition anymore”; he was quickly supported by Tim McLaughlin’s opinion that “taste trumps everything”. While the group’s sentiment was that quality beats locality, the panelists admitted that, often, products produced by neighbors have a way of being of the best quality. It seems that even makerpreneurs feel the allure of another brand’s story that they know and which feels authentic. By looking locally, the makerpreneurs are able to leverage other well-regarded brands to enhance their own story. EDEN’s tenants at Union Market don’t have to look far for these inspirations; Union Market’s young businesses are located under a shared roof in a converted warehouse where diners and shoppers easily walk from one business to the other. Jeff Kaufman believes that his tenants benefit from more than just co-location. Jeff sees his tenants interact every day and share strategies, collaborate on products, and share lessons learned. Many of Jeff’s tenants have taken these lessons and gone on to open their own stand-alone locations. 

ULI2016-1398Like all entrepreneurs, the panelists are hyper-focused on how they will successfully grow beyond 1 or 2 locations. However, achieving scale can be a challenge when a brand is built around a visible production facility or when the founders spend so much of their day interacting with neighborhood customers. Evan Goldman asked if it was possible to scale these businesses while maintaining the high-touch and authenticity customers have grown to expect. Colin Hartman and Tim McLaughlin suggested the key was in preserving the transparency in how their product is made. To that end, both Colin and Tim recognize the importance of continuing to showcase real production facilities in future locations. What seems like a great strategy for retailers will be a major challenge for the landlords looking to attract them as tenants. Landlords will need to be prepared for complicated build-outs. With so many makerpreneurs hatching in traditionally lower-cost industrially zoned areas, like Union Market, future growth will no doubt face obstacles as semi-industrial uses push into more mainstream retail locations. The panelists emphasized that when deciding on future locations, they value landlords who are willing to use their own land use law prowess to help tenants address zoning regulation challenges.  

At a conference where every other conversation centered on the rejection and disruption of traditional industries, work spaces, and means of transportation, it should be no surprise that this panel featured the rejection of some of the established rules followed by retailers and customers. The success of this panel of makerpreneurs suggests that shoppers demand retailers, and retail establishments, that don’t just showcase an end product, but an entire process and story. If this trend continues, the next wave of retail real estate winners will be the jurisdictions and landlords who are flexible enough to adapt to these creative makerpreneurs and their industrial needs.

Moderator:
Maureen McAvey, Senior Resident Fellow Bucksbaum Family Chair for Retail, ULI-the Urban Land Institute

Panelists:
Jeff Kaufman, Senior Vice President, EDENS
Tim McLaughlin, Co-Owner, Caboose Brewing Compan
Michael Haft, Co-Owner, Compass Coffee
Harrison Suarez, Co-Owner, Compass Coffee
Colin Hartman, Co-Founder, Harper Macaw

Recap Written by Taylor Lawch

Click here for an audio recording of the panel.

 

 

 

 

 

 

 

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