Anthony Hau: And how about Office Depot at that – I think there’s an Office Depot at the same asset, right? I think.
Christine Mastandrea: Yes, there is. So, what I’m finding is, Office Depot has changed their business model a little bit, and they act more like a distribution center and a little less like retail, but it performs well there. All the tenants that are there perform very well.
Anthony Hau: Okay, thanks.
Christine Mastandrea: Hey, Anthony, one thing I would just want to note with this is that there is – we are finding that there’s a different type of demand now for larger boxes, but there is demand that actually is coming around fairly strongly in retail. It’s just shifted to a different type of user.
Anthony Hau: What do you mean by that?
Christine Mastandrea: Less hard – yes, less hard goods, more services or a product and a service. So, it’s just – it’s a move to – that’s why we moved to work with EoS at one of our centers, right, because why compete with two other large grocers in the market that are already performing well? And when we did the study and found out that they were missing a fitness type of operator, we went for the strongest operator that was coming into the market. So, that’s what you look at with these boxes. I will – instead of leaning into hard goods, I’ll lean into something that drives repeat visits because then it benefits all the other clients in the center and it benefits the market as a whole when we do that, because again, there’s more of a drive for services right now than product – the sale of hard goods and soft goods.
Anthony Hau: And then like for these big box, like, have you guys ever considered just like kind of like dividing the space up to like smaller spaces? Because I know some of your peer set, they’re trying to do that, right, try to convert these big boxes more these like small shop space to drive higher rents for the center.
Christine Mastandrea: Yes. It depends on the demand in the area. And one of the things that we always have to look at with this type of – there’s always a cost with that. And so, how much linear square footage that – how much linear feed do you have a frontage compared to what type of depth you have? So, fortunately, we don’t have a lot of that type of problem within the portfolio. And we’ve been able to fill the boxes pretty effectively this year and last year because there is, again, the demand is just tapping in the right type of demand making sure that it evolves with the shift and the change in the neighborhood. But yes, we’ve done that a couple of times where necessary, but we’re always kind of cognizant of what the returns would be for doing that.
Anthony Hau: Okay. Sorry, just one last one for me. Which tenant replaced the Bath Beyond box?
Christine Mastandrea: That was the Pickler. So, we’re finding this to be a very interesting source of traffic for our centers, and especially with repeat businesses. So, we had a number – and two things about this. Because this is such a hot sport right now, and it’s really interesting to see that’s a very – it’s a hot sport for a very interesting demographic. We’re finding that the demographic that visits for this has a high repeat visit factor of like three times a week, number one. And also, it happens to be younger people that are playing the sport indoors, all right? So, they’re younger, career-oriented professionals that are looking to make sure they can reserve a court time versus waiting for the weather and other types of elements to play outside.
So, we studied this. We investigated a number of operations that are growing very, very fast and we made a decision to work with one that was more dedicated to the sport. That’s Pickler, and they’re out of Utah and they’ve done a really good job with their – we studied – we not only studied them. We went to visit them. We went to visit other business units as well to understand how they make money. And it’s a relatively low labor cost and it’s actually a low capital cost that you need to put into these things, but the returns are pretty high on their sales. So, we wanted to find the right one, the one that understood how to tap into the market quickly and had the first mover advantage. And so, we worked with Pickler, and very happy. They just got their permit, and we expect them to be open shortly.
Anthony Hau: That’s Pickleball, right? I just want to make sure.
Christine Mastandrea: Yes, it’s Pickleball. I’m sorry. This is – yes, for those that are wondering who the Pickler is, it’s Pickleball. There are a number of variants on this, but we moved more towards the people that are more interested in playing and less towards the entertainment type of venue, like chicken and pickle, which are great, but they’re a higher capital cost. So, we went more into the – what we consider the hardcore and the consistent player that likes to show up every week.
