Give the People What They Want: EDENS on creating retail spaces that thrive

Spencer Levy

The old union terminal market in Washington, D.C., is a historic centerpiece of the local food infrastructure. Originally founded in 1931, mainly as a wholesale hub. Today, it is filled with diverse vendors and tastes – more than 35 independent merchants. It's been freshly reimagined as the Union Market District, a food marketplace, and also a cultural destination, a “culinary embassy” in the words of the woman behind its evolution, one of the most prominent leaders in the industry. On this episode, we sit down with a retail visionary, a national developer and operator whose big ideas are based on an intimate, community oriented strategy. 

Jodie McLean

We're in the business of humanity. We're not truly in the business of real estate. We are in the business of humanity and if we can understand humanity, we can always outperform at real estate. 

Spencer Levy

That's Jodie McLean, CEO of EDENS and one of the great minds in the space. We sat down with Jodie at La Cosecha, a 20,000-square foot Latin American food hall at Union Market, which is one of dozens of retail centers in EDENS’ nationwide portfolio, to hear how she's working to redefine retail through placemaking and community revitalization. Coming up, we head back to the retail sector on a trip to a marketplace that may be a sign of the times or a model for the future of shopping. Reimagining retail with EDENS. I'm Spencer Levy and that's right now on The Weekly Take. 

Spencer Levy

Welcome to The Weekly Take and today, we are joined by one of the industry leaders, Jodie McLean, the CEO of EDENS, talking about retail and so many other things. Jodie, thank you for joining the show. 

Jodie McLean

Thank you for having me. It's great to be here and it's really great to host you here at La Cosecha. 

Spencer Levy

What a cool, cool market this is. And I might stick around for lunch for sure…

Jodie McLean

Great.

Spencer Levy

…because the selections are so awesome. So Jodie, for the benefit of our listeners, why don't you tell them who you are, what you do? 

Jodie McLean

What do I do? I hope that I inspire community each and every day. EDENS is a national platform. Mostly, we are on the East Coast: Boston, suburban New York, Washington, DC, Charlotte, Atlanta, Miami. Then we go through the Sun Belt through Texas, Denver, and up the West Coast – San Diego, LA, San Francisco and Seattle. And really our sole purpose, Spencer, is to enrich community. 

Spencer Levy

That's cool. And you know, Jodie, first of all, about how many square feet, ballpark?

Jodie

Just about 15 million. 

Spencer Levy

About 15 million. And I've known the company EDENS for a very long time. And I primarily knew it as an open-air, primarily grocery-anchored store. But we're sitting here today at Union Market and it is super cool. It is a food market, but we're sitting here in a radio studio. It's on this cool, old block that has a lot of high end retailers. Tell us about how EDENS is evolving the way it does retail, the way it interacts with the community in places like this. 

Jodie McLean

Sure, so now, starting about 15 years ago, it dawned on us that retail was going to radically change. And if it was going to radically change and continue to be a reflection of society, we had to continue to evolve with it. And at that point in time, you're right, we were mostly open-air places and we decided what we really needed to be was a reflection of society, which was going to include a lot of urban, walkable districts. And so in doing that, we really thought about how do we best execute on that? And we have been becoming more and more well known as being place makers, as really looking at larger districts, just like where we are here today. The Union Market District is 45 acres located in Northeast DC and is really become one of the fastest growing parts of this city and continues to be today as we look at what happens at the ground level as inspiration for where people want to live, where people want to work, and coming together, most importantly as a singular community. 

Spencer Levy

What's interesting about this particular location is how similar it seems in my mind to many other, what I would call outside of the central business district locations in a lot of cities that have this live, work, play characteristic, have a lot of older buildings that are being adaptive reuse. I would point to Midtown in Atlanta. I would point to the Fulton Market in Chicago. I'd point to Wynwood in Miami. I’d go right down the list. But do you see that as the future of urban retail? 

Jodie McLean

I do. I'm seeing a little bit more broadly than just retail. What I think about is how people want to live their lives. And people want to live their lives, generally, you've heard a lot about the 15 minute city? We've always thought more about a 17-minute trade time, and this really comes from our deep history in retail and understanding what drives retail. And really, Spencer, the truth is, and this has been consistent for almost as long as I've been in this business and is consistent in almost every market we work in, we get 17 minutes to get you out of your seat to our place in the front door. And that's about all the time we get. And you don't sit there at home or in your office and think, Oh, it's going to be 19 minutes, I'm not going. That's not really how our brains work, but it is a total emotional reaction. So as we think about that and it drives every decision we make, it drives our decision of location, design. We have to be convenient. We have to be extremely convenient for you to come in, get out. But we have to be convenient and designed in a place you want to spend time. But I think that - then now has spilled over to every aspect of our life. We want our amenities, so we want where we work to be close. The biggest thing you hear about return to office isn't that I don't want to be with my coworkers, it's the commuting distance. That is the emotional tug that is at play right now. Where our schools are, extremely important. Where we live and where we spend time and community and community was radically important prior to COVID, but we've seen it become even that much more important post-COVID. 

Spencer Levy

And let's talk now outside of the urban areas where I think the majority still of EDENS’ product is. Tell us about that product. What is an optimal product for EDENS? Just a general description of what you have and how you try to pick locations. 

Jodie McLean

We really pick locations using a lot of data, so we look at the data that covers everything on a broad market: GDP, GDP growth, population, population growth. But we go into cost of living, we look at education, we look at jobs, and we look at retail per capita that's already in the marketplace and we rank the MSA. So we have a top 25 MSA ranking and then we're operationally driven. Where can we absolutely operate to excellence? So in what we do, it would be really hard to have a singular asset in a place like Minneapolis because we have to build out a team. Retail cannot be done with excellence sitting behind a computer in Washington, DC. It is a boots on the ground. And once you understand the right markets, you have to understand the right submarkets, you have to understand the right intersection, and then you have to understand the right quadrant to the intersection. Because so much of retail is truly made out of emotional decisions that aren't quite as rational as people think about. So you've got to understand the traffic patterns. You've got to understand which side of the street you're on. You have to understand are people are going to be making right turns or left turns. And one of the things I'll tell you that hasn't changed in all my time doing this in retail, as in constant when people ask me, Oh, you're in disruption, I'm like: That is what retail is. We are constantly evolving. But the one thing that hasn't changed is 80% of all retail decisions are still being made by women. Regardless of who's showing up at the cash register. Sometimes he's showing up with a “Honey, do” list. Sometimes he's showing up to make reservations because somebody, probably she, has recommended where to go. And so the design needs to be understood for their female customer. 

Spencer Levy

So one of the things you just mentioned there struck me, which was you started your description of site selection being very data driven: GDP, average household income, rooftops, you know, the typical model. And so this comes back to what you said a moment ago about emotion versus data. Can you give us a little bit more description of that? Because I think so much of the world is – the data works. It's the algorithm. Where does the emotion come in? 

Jodie McLean

I like to lead with intuition. I like to lead with emotion, but I want it always to be backed up with data. So I would tell you at EDENS, we probably lead first what we call thick data. So that isn't quantitative data. That may be data that we've learned by being in the marketplace, by interviewing people, by talking to retailers, understanding where the void is in the marketplace, or just by watching, by observation. And then we always work backwards to say, wait a second, what does the data look like? You'll think about a 17 minute trade time and that 17 minute trade time here where we're sitting is heavily driven by pedestrian traffic. So how long does it take somebody to walk here? We have the red line Metro, so how long would it take somebody to get on a metro to get here and then vehicular traffic. And so it's hard to just draw rings. That's the easiest way to buy data. But if you really want to understand, then you're going to have to go out and you're going to have to explore, and you're going to have to learn those things. So a lot of our trade areas, they look like something phonetic and a piece of paper. They don't look like a clean, easy shape because that's not really how people operate. And if anything, for EDENS, what we really believe is we're in the business of humanity. We're not truly in the business of real estate. We are in the business of humanity and if we can understand humanity, we can always outperform at real estate. 

Spencer Levy

And what's interesting is some of the new objective data that's available. Jodie, you've been in this business, you've been at EDENS for 25 years. How much has the data improved during that period of time? 

Jodie McLean

Oh, well, maybe I've been here a little bit longer. The amount of data we can collect is incredible. 

Spencer Levy

Yeah.

Jodie McLean

And when we were starting, the amount of data was big maps on the dashboard. Driving. You collected it all yourself. You made a lot of phone calls. The retail partners were typically always really ahead of us in data collection. I think at this point we have been able, especially with new sites, being able to really educate our retail partners. So it’s night and day. There's no comparison from going from a shiny fax that took, you know, 10 minutes to come out of the machine to having information at your fingertips, even sometimes before you even asked for it. 

Spencer Levy

So what's interesting is the data has obviously gotten a lot better. So you can value an asset better because you know, essentially what your trade zone is and what types of tenants you can put in there. But how do you factor in internet sales when you're looking at a bricks and mortar retail location? How do you make the decision of the right grocer to put into some of your stores to service that overall community? 

Jodie McLean

And the grocer is really important because the grocer is still driving somewhere between 1.9 and two and a half trips per week at our places. And it changes and different dynamics. But you've got to understand the marketplace. You have to understand what the void is. You have to understand your consumer. You have to understand what they think is missing. This is retail and this is why retail cannot be done sitting behind a computer in Washington, DC when I was saying about where you live in Maryland. I have to understand the marketplace. I have to understand the people who are there. I have to understand the demographics of the people who are there and what the void is. And it really comes down to that. And we have really deep relationships with our retail partners, and they expect that kind of thick data from us, quantitative data of who's exactly there, what are the dollars right now being spent on grocery? Why are they being spent where they are? What is the void? If you're traveling more than 17 minutes, why? Why? What is that void? How do we pick that up? We deal with a wide variety of grocers, but that grocer is extremely important. 

Spencer Levy

And if you control a large trade area, you're not limited to just one. You could also add the specialty stores as well. 

Jodie McLean

Yes. 

Spencer Levy

And I wrote a blog a while ago. I called it “The Butcher, the Baker, and the Candlestick Maker Might be Making a Comeback” In that there are the mega stores and then there are the specialty stores. You have a point of view on that?

Jodie McLean

We have here I could point to here, but I'll take you – I don't know if you've been to Mosaic, which is just about three miles south of Tysons Corner out in northern Virginia. There, what was the real void was an upscale, organic grocer. So we wound up doing MOM’s, which fit exactly where the void was. Next door to it, we did an independent butcher because we sat down with MOM’s and they do a lot of things great. But we said, we can't give you an exclusive for meat or for fish. And we did a separate fish and we did a separate baker. And the tide has risen, all boats. They're doing just under $2,000 a square foot in sales because they work together as a singular community. 

Spencer Levy

Let's now go beyond grocery for a moment. What about unanchored centers? Is there a market for that as a broad category, but putting it in a neighborhood? No grocer. What do you think? 

Jodie McLean

Clearly, there's a market for it and you are seeing groups that are out there trying to accumulate more, what I would call street retail than anything in larger scale. Clearly, there is. For us, what we have found is we're trying to create broader places. A huge part of our formula and what we're thinking about is how we bring people together and really build community. That is a big formula for us, so that's harder to do. And these smaller one-off, you need some size and scale for that. But I also think that the larger nationals also help drive a lot of foot traffic. And we have found this and we have all sorts of thick data around this. And as we dig and dig and dig into this, what we have found is that a lot of our community members are really loyal. Really loyal to the more local and regional, and they want to see that. And you saw that amplified during COVID. What these smaller retailers need is foot traffic that's being driven by these larger–and so for us, it's not to say that we don't do an anchor, we want to do what builds community, but for the most part, I would tell you that anchor plays a huge part. In our overall thinking about creating a sense of place, creating community, really driving foot traffic. 

Spencer Levy

Jodie We're sitting here in a really cool little studio right in the middle of union market. A lot of different food retailers here. There's a group over there that's selling it looks like handbags. How do you determine the uses beyond traditional retail in your retail centers? 

Jodie McLean

I'm going to tell you, it all comes back to how we drive the most foot traffic. EDENS has over the last 12,15 years done a lot of work with in mixed use. So we have done a lot of densification and our sites. That is driving the highest value to our sites. It's also where we found a lot of retailers wanting to be. It creates a great sense of place. But no retail in our mixed use can live on its own. It always needs a much broader pull. Where we're sitting today inside the Union Market District is actually a market called La Cosecha. La Cosecha is the largest market that is really focused on Latin America. So everybody here represents, authentically represents Mexico, Central America or South America. And the difference between a market and a food hall is really where we think you can come here to do more than just eat and drink. And so this is more like a culinary embassy. We call this a balcón. We do a lot of meetings. We do meetings for Hispanic groups, Hispanic heritage groups. We work with the embassies to allow them to use this as a place where they can engage with broader communities. We do a lot of art here and then we have a lot of retail here. Because people want to do more with each other and they want to be engaged. We do a lot of classes in the Galleria here, cooking classes. When you come together as a community, that means you engage and you interact with other people. And what do those activities look like? 

Spencer Levy

Well, recognizing that you have intentionally made this a Latin American theme with all the different retailers. How did you pick that theme right here? 

Jodie McLean

How we picked it here as we look at our own demographics. One of the things that struck us was one of the largest growing demographics is the Hispanic population. And as it was growing in every market, we were in. What we realized was that it was also very underrepresented. High growing, underrepresented, and so we thought, how do we best work with this? How do we understand? What can we do? We really thought we'd open this marketplace in Miami or in Houston. This was probably in 2014-15 that we were really starting to think through this. And then here in the nation's capital, we thought, Why don't we use this as a platform? We were developing this building. It took off. There was so much interest in it, not only from our retail partners, but also community broadly, that it has been a wild success. 

Spencer Levy

Well, on the theme of ethnically themed retail: ethnic grocers. How do you make a determination whether you go with a national, the Whole Foods, the Wegmans of the world versus going to a more ethnic grocer? 

Jodie McLean

It's pretty easy. You go back to your community. Who is your community and what are the voids? What do they need? What will service our community needs? There are several very, very strong ethnic grocers, but I think for us it all starts first and foremost with what will best serve. And there's a lot of space in this country and as this country continues to evolve for ethnic grocers. 

Spencer Levy

Let me push it just a touch. 

Jodie McLean

Sure.

Spencer Levy

If I could. There is a push and pull when you're dealing with credit versus cool. Right? So I think we would all want to have the coolest center that serves the community the best. But very often those retailers don't have the credit metrics of some of the nationals. How do you handle that? 

Jodie McLean

It's a great question. Credit is important to us, so we are a little bit formulaic in thinking about trips and dwell time. So who's going to drive the most trips? Who's going to drive the most dwell time? That's going to turn to sales. Can they outperform the sales that a national could? And sometimes the answer is yes, and sometimes the answer is no. And when the answer is no, but you started with an intuition that says this cannot be proven now. With the data, we go back and we really think hard about how can we shore up that credit risk and what does that look like to us? If we come back with an intuition because of the thick data, this will outperform. So I'll take you back to Mosaic. At Mosaic, we chose to do an Angelika Theater versus a national, that you would have known, theater. In truth, the national theater was going to pay us more in rent. I can look at some other retailers we had out there, and we had enough thick data that we really said, if we want to really create a sense of community for this community, the hole in the donut in Fairfax County, staring down in the shadows of Tysons, we're going to have to do things that make this a purposeful, intentional trip that's more than just retail. And the arts community out there led us to believe that an art house would do that. The amount of travel, if you looked at the demographics from where - the people who lived there were international, but also that was an international traveler said We want a theater that shows more than just conventional film and we have disposable income that we will spend at your restaurants and in your other retail. It took a while to come around to that and is what has absolutely been a huge part of distinguishing the brand of what Mosaic is and how people think about it. It's not easy, but the other advantage we have is we've gone into investment committee now enough times where we've really wrestled, but now we've collected the data to understand additional trips and understand how much time people are spending and how many trips these riskier decisions have made, where it gets easier and easier to really understand how to make those decisions. 

Spencer Levy

Let's talk malls for just a moment. I think there is no area of retail that has had more controversy than the mall space. Is the mall dead? And we certainly say, well, the A-malls are great, but the B-malls may need to be redeveloped. What do you think? 

Jodie McLean

I don't think the mall is dead. I will say that. I do think there's a reason why EDENS has stayed open air. I will take a step back though, and I will be one of the first people who will continue to tell you, Spencer, I think America is over retail. I do think we're over retail. I said this going into the pandemic somewhere between a billion and a half and 2 billion square feet, which are huge numbers. But if you look at our retail per capita as a country and how demographics are shifting, there is a way to get to that number that would say that we should be going from 23 square feet per capita to 18. Is 18 the right number? I don't really know. But if you look at how we're moving as a demographic, you look at the rest of the world, that feels like that's where the healthy tension should be. We're probably over retail in some c-type malls, so I think the highest number of our type of retail is probably in the C-type malls. But they're hanging on right now. They are hanging on. They used the pandemic to probably right-size lot of the balance sheets. But I think we'll continue to see erosion there. The A-malls, as I understand it, are as healthy as they've ever been. Their occupancy probably isn't back to where it's been. But if you look at the sales, productivity of the stores that are in those malls, they seem to be extremely strong. Do we see opportunity to do the things we like to do? Absolutely. We acquired, now about 18 months ago, the North DeKalb Mall in Atlanta. We moved through entitlements, at sort of a record pace there, 75 acres. We’re a known entity to that county, to that community. They could point to placemaking that had happened there. They could point to a lot of places that we've created on the East Coast that they wanted to see replicated in their own community. So we will have an opportunity to take a place that has closer to 650,000 square feet of retail today, closer to probably 300,000 when all is said and done, 1700 residential units at places where housing is still in high demand, a place where we can add – we don't know yet, hotel will make sense – but probably lodging to that area, townhomes. So we can take an older mall that wasn't driving the foot traffic, wasn't bringing community back, to a really vibrant community-based place. 

Spencer Levy

There are other big issues out there. ESG, of course, being towards the top of the list, if not the top of the list among them. Jodie, big picture, how is EDENS approaching ESG or other big picture issues? 

Jodie McLean

As we think about ESG, it is a part of who we are. Stewardship is one of our eight values as an organization. Starting in 2008 I think, we benchmarked when we think about all of our places and we think about environmental part of the ESG. So we set rolling five-year goals. But our big goal overall is to be carbon neutral. We are carbon neutral as an organization in all of our common areas that we do control. Taking that to our places in total, including where our retail partners control, we're not that far away. We're – over the next 3 to 5 years – we can see we have a path to getting there. So we think about that a good bit. Part of ESG to us, too, we think about diversity. We think about that like this place you're sitting in. We think about that in the people that we work with. What's happening inside of EDENS we think about that was our retail partners. We think about that in the vendors that we use. And we set here rolling three year goals. And what are those goals? For us both on sustainability and D and I, we have very quantitative goals. We manage extremely well that which we measure. So if we can put quantitative goals to paper, we're really intentional about the decisions that we make. And at the end of the day, for me, that's what's most important in our culture is that we're making intentional decisions and they may not be the decision that's going to check the box immediately, but as long as it was well thought through, we understood the implications and we were intentional. We make really great long term decisions. 

Spencer Levy

So just a couple more questions, Jodie. First, your personal journey and congratulations, being CEO of EDENS and I say this with great pride and respect. There are very, very few female CEOs of companies of the stature of EDENS. Tell us a little bit about how you got there. 

Jodie McLean

I think I stumbled in the front door, if the truth be known. But how I got here, I met our founder, Joe Edens, during my senior year of college. I took up an independent study on entrepreneurship, really capitalism. I got called out in a class, in an econ class daydreaming. And I said, I'm sorry Dr. Wood I didn't hear a word you said. And he said, Well, what are you thinking about? I said, Honestly, I'm thinking that I'm about to graduate and I don't really understand how capitalism, how commerce is created. And from there, we did this independent study. Joe Edens was one of the people I met. I graduated in 1990. He recruited me to come on as an analyst, which I agreed to do for two years, at which time I was absolutely 100% going back to Chicago, which is where I grew up, and either back to school or moving back. And he said, fine, we had a handshake agreement. And I just said during that time I would learn absolutely everything I could learn about the business. I think it's pretty well known that Joe would get in at 5 o’clock in the morning. I’d get in at 5 o’clock in the morning, and I just use this time to – He’d say what are you doing here? And I'd say, Oh, I'm working so and so – like, I was really there to cross paths. And he became a mentor and then what I realized is I also became somebody for him to talk to. I don't think people realize, and I certainly had no idea. It's kind of lonely when you're CEO and that led to opportunities and I think, okay, I'm going to stay one more year. And I wasn't afraid to say “no” to anything. I took on things I probably wasn't ready for, and that's okay. A lot of my male peers are doing that every day as well. And it led then to us in ‘97 recapitalizing the company. At that point we were about 250 million in size. Today we're just under 7 billion in size. And I went from being the sponge to deciding that I really needed to become an expert at one thing. And so in ‘97 I became our chief investment officer and grew the company from this 250 to about 2 billion in size in literally two and a half years. It was a crazy ride. In 2006, I think I switched to what I would call a thought-leadership period in my life. I became President and Chief Investment Officer along the way there in 2002. But really, 2006 – and as a working mom who had a small child whose career was on fire – two things happened in my life. I discovered broadband and it was amazing. It would dial up in five or 10 minutes and I could get online. I could buy something that would show up a week later at my house, and it forever changed for me, convenience. But I also realized that my own community was lacking, and if I was totally honest, I would say I was really lonely because I was working and I had this child and both were awesome and intense. And that led me to really this thought leadership was we could be the big mall in the sky that Jeff Bezos obviously was working on extremely well. Or we could be what communities wanted, which was: We could own the space of humanity. And we shifted everything. We shifted everything that EDENS, how we did things. We totally became this purpose, mission-driven company. We shifted how we thought about creating value at our places. It's distinguished us, obviously. And then in 2015, it led to an opportunity to shift my seat just a little bit to the right from being President and Chief Investment Officer to CEO. And I don't think anybody realizes how radical those two inches can be as you shift. And that really led to this period of really, truly executive leadership for me. I'm really kind of boring. I've had my same job since 1990. I’m still at the same company, but I feel like I've probably had eight or nine careers during that time. 

Spencer Levy

Hardly boring. On behalf of The Weekly Take, I want to thank Jodie McLean, CEO of EDENS, for joining us today, talking retail and her career journey. Jodie, thank you so much. 

Jodie McLean

Thank you. 

Spencer Levy

For more on the retail space and related content, please visit our website, CBRE.com/TheWeeklyTake. You can share this show or send us an email, as well as subscribe, rate, and review The Weekly Take wherever you listen. After this trip to the nation's capital, we return to Arizona for a conversation I recently recorded at the CBRE Capital Markets Symposium with writer, educator and executive coach Hitendra Wadhwa, sharing his unique worldview and perspective on leadership. So tune in for that next week. For now, I'm Spencer Levy. Thanks for listening. Be smart. Be safe. Be well.