How Data Drove Old Navy to Dallas
Old Navy never had a store inside the loop in Dallas, Texas, leaving the majority of Dallas’s urban population without close access to the on-trend yet budget-friendly fashion retailer. Big box spaces are rare in Dallas’s urban core and the city’s high real estate prices made for a model that was incongruent with the retailer’s one-level 15,000 square foot typical prototype store. Securing a space for Old Navy within the loop that made sense in terms of location and economics would be difficult, but, if accomplished, a big win for the retailer.
The Great Recession of 2007 left Old Navy, as well as many other retailers, in a stall when it came to new stores. In 2008, before the crash of the financial system, Old Navy did 13 net new deals. Due to the economy, in 2009, there were zero net new deals. Needless to say, it was going to be difficult to get a deal done in 2010.
As Old Navy’s new representatives in Texas, the CBRE Urban team knew that any new store transaction done in 2010’s economic climate would take extraordinary effort but would be important to solidifying the new relationship. It would take a truly perfect opportunity to make it up the chain of command and get the necessary approvals in this challenging economic environment.
We Knew the Site
CBRE had the perfect site for Old Navy. The Shops at Park Lane had opened with notable anchors, including Whole Foods, Nordstrom Rack and Dick’s Sporting Goods. An unusual combination of a mixed-use urban center with power tenants made the project both unique and intriguing. The proximity to NorthPark Mall made The Shops at Park Lane an undeniable location.
Borders had been secured for the project’s cornerstone space, but the economy had halted their growth plans, leaving the signature space available. The CBRE Urban team saw this as a rare opportunity and started to work on creating a business case that would compel Old Navy to approve the space.
Dig for Data to Drive Decision Making
With deep knowledge of the Dallas market, CBRE had a simple thesis: while rents for big box spaces were higher in the loop, sales volumes for big box retailers were higher too. This theory, if proven to be true could help our team craft a compelling case that Old Navy locate a store in Dallas proper.
In order to prove this idea, CBRE leveraged its deep network of local brokers, retailers and developers to compile accurate sales volumes for similar sized retailers within the loop. CBRE’s GIS department plotted the data onto a 7 minute drive time map that included volumes for boxes in the loop as compared with average DFW volumes.
What the data showed was astounding: Sales volumes for box retailers within the 7 minute drive time of the selected site averaged 32% higher than their similarly sized counterparts in the outlying areas of DFW. Armed with this important data, our team was confident they could get the approvals needed if they could make a great deal.
Engineer the Economics
While sales volumes proved helpful in selling the site, the deal would still need the right economics in order to be feasible. CBRE Urban negotiated on behalf of Old Navy with the landlord to secure a lease agreement with the necessary rental rates, co-tenancy requirements and tenant improvement allowances to make the deal especially enticing to the retailer, while equally palpable and beneficiary to the landlord.
Run it up the Proverbial Flag Pole
Due to the tough economic environment, it would take multiple approvals at the highest levels to get the deal done. Armed with hard data and tempting deal terms, CBRE worked with Old Navy’s real estate director to make the case internally. Our team found answers to every question, and patiently persevered through round after round of necessary approvals. In every case, we backed up our recommendations with solid data and took the deal all the way to the top.
In November of 2010, Old Navy opened a two-story 23,000 square foot flagship store at The Shops at Park Lane. The perseverance and patience of the team paid off. The following results were achieved:
- CBRE Urban helped Old Navy secure a flagship location – their first in Dallas’ urban core – with economics that were feasible with their business model.
- The store is now one of the top 3 producing stores in the state of Texas.
- Old Navy’s Park Lane store was one of only two net new deals nationwide in 2010.
Getting this challenging deal done with such success in a difficult economic environment proved our teams value to Old Navy execs. CBRE Urban still represents Old Navy and all of the Gap, Inc. concepts in Texas and has also represented the retailer on deals in Oklahoma and Arkansas.
- Data drives deals – In order to push a retailer to do a deal outside their traditional model, you have to back up your recommendations with hard facts. Executives rely on the numbers for decision making, so you must be prepared to back up your recommendations with solid stats.
- Persistent pays off – Lots of times the best deals take time and persistence. Don’t take no for an answer, stick to your guns and fight for deals you know will be successful.
- Relationships matter – Without the CBRE Urban team’s strong relationships with local retailers and brokers, we would have never been able to gather the data needed to prove our sales volume theory. In real estate, it’s still true: relationships are key to being successful.