October 24, 2022

JF2972: Changing Trends in Retail & How to Adapt ft. Josh Rothstein

Josh Rothstein is a listing specialist at OnSite Retail Group, a commercial real estate brokerage and development company specializing in retail and restaurants. He has been a commercial realtor for 10 years, and he describes his current role as “playing  matchmaker between buyer and seller or landlord.” 


In this episode, he tells us what makes shopping centers succeed (or fail), how urban downtown retailers remained open and survived the pandemic, and tips for how urban core landlords can adapt and fill vacancies post-Covid. 


Josh Rothstein | Real Estate Background

  • Listing specialist at OnSite Retail Group, a commercial real estate brokerage and development company specializing in retail and restaurants.
  • Based in: Cincinnati, OH
  • Say hi to him at:
  • Best Ever Book: Cincinnati Enquirer
  • Greatest Lesson: Patience.



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Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed, and I'm here with Josh Rothstein. Josh is joining us from Cincinnati, like me. He is a listing specialist at Onsite Retail Group, a commercial real estate brokerage and development company specializing in retail and restaurants. He and I have actually corresponded on some of his listings here in Cincinnati. I haven't bought from him yet, though; I need to get on that. Josh, can you start us off with a little bit more about your background, and what you're currently focused on?

Josh Rothstein: Sure. So as you said, I'm a commercial realtor, I have been for about 10 years, and our firm focuses on two things: tenant representation and landlord seller representation. I focus on the listings. So if ever there is a shopping center, or a restaurant, or a building, or a piece of land that becomes available, I'm tasked with filling it, basically playing matchmaker between buyer and seller or landlord, and putting the two together. So that's my focus, and living in a town like Cincinnati, having grown up here, it's a small-big town, so it's not too difficult to get around and know who the players are... And as you said, it's small enough that you and I have corresponded on a listing that I had, maybe two, and it's that small town feel. So that's what we do.

Slocomb Reed: Yeah. A quick little story there for how Josh and I know each other... He had some listings in the neighborhood where I live called North Side, and I was looking for an office hack, mid-year last year; office hack meaning I wanted a place outside of my house, but close to my house, where I could have my office. I also wanted other rental units so that I could be cashflow-positive on my office. Same idea as a house hack, but for work purposes. I ended up, Josh, for you and our Best Ever listeners, just a little farther down Hamilton from your listings. Just past the library, I bought an old buildings zoned office, 4,000 square foot, had been a residence at one time... And I have my office here, and then I have six other office rentals. And for the record, that's why I didn't end up going with your listings, although one of them was just off of Hamilton, wasn't it?

Josh Rothstein: [unintelligible 00:02:54.23]

Slocomb Reed: Gotcha. Those were like a two and a three-unit spaces, weren't they?

Josh Rothstein: One of them was a two-unit, and then the other one was a three-unit, could have been four.

Slocomb Reed: Cool. Yeah, I was calling on everything back then, looking for what eventually became my office hack, for sure. So let's talk about the Cincinnati market... It's special in some ways, and I know you're from here, but it's also indicative of what's happening in a lot of older Midwestern cities. We have a very similar commercial inventory to a lot of cities. So when you say restaurants and shopping centers, what do most of your listings look like?

Josh Rothstein: So I have a couple different categories... We're in the retail space. So we're not industrial, we're not office, we're not multifamily. We're retail. Now, retail encompasses a lot of things that are traditional retail, and some things that may not be. For example, shopping centers, plaza strip centers - that's your typical retail. But an urban, pedestrian-friendly neighborhood, like Northside where you are, where there's a building that's right on the main drag, where people are walking, people are shopping, there's bars and restaurants and shops right around it - that to me is also retail, even though it may have been a bank, or an office building.

So essentially, if you can plug in a business that is servicing the public, you can come in and buy something, to me, that's what retail is. In addition, a lot of shopping centers may not even have a lot of shopping; they may have medical, they may have service-oriented, so retail can also be a space where you're getting a lot of visibility, because there's a lot of traffic, it's easily accessible... So if a business wants to locate somewhere, and there's a transaction to be had, those are the types of listings that we take.

Slocomb Reed: Gotcha. So you're talking about shopping centers, strip centers... One of our other hosts on this show has been trying to talk me into investing in those four years, Ash Patel. The vast majority of our listenership is fairly sophisticated and apartments-focused... So tell me, Josh, understanding that you list some of these properties yourself, thinking not as an owner-occupant business, "I'm going to buy a site to put my shop in it", but thinking from a purely cashflow style investment, what is it that you see about shopping centers in a place like Cincinnati, that should appeal to investors?

Josh Rothstein: It depends on how you look at it. To be honest with you, shopping centers are risky. There are a lot of people that used to invest in shopping centers that may not be so keen on it anymore. Amazon was the first -- not the first, but one of the more popular villains that really emptied out a lot of tenants that were historically in shopping centers. When you have a shopping plaza that was designed around having an anchor, like a grocery store, or being closer to the rooftops in a neighborhood, you want to try and leverage your position on one's traffic flows, so that you can have stores that they have to hit on the way home or on the way out, like a dry cleaner, like a drugstore, like a grocery store that you can pop into before you get home, so you can get dinner prepared, like a nail salon... So you want to have those convenient spaces that people are going to patronize, and from an investment standpoint, there's a lot of flux, there's a lot of questions surfacing, "What are shopping centers going to be?", but at the end of the day, the shopping centers are still well located and highly visible. So any businesses that want to be along the path of those travelers, a shopping center, your traditional shopping centers, it's a good place for them to be.

So the investor that might be looking for a shopping center, generally, I think - unless you're one of the bigger players and you're looking for a massive property that has a lot of national credit tenants inside of it... Cincinnati, the small Midwest town kind of play is a shopping center that may have been overlooked for a while, that there might be an opportunity to carve off an outlet in the front, there might be some value-add play to be had, you can update the shopping center and maybe get higher rents, stronger rents, better tenants... So there's still a lot of play to be had, but the investor pool I think is really slimmed down, and it's turned into a lot of people that have made this their [unintelligible 00:07:35.17] So there aren't as many people, I think, investing into the shopping center type of real estate as there once was.

Slocomb Reed: Decreased demand kind of sounds to me like opportunity. That's certainly not the case of what we're experiencing in apartments. It feels like there's a new apartment investor every minute. And even in 2022, my offers are seeing stiffer competition than they were pre-COVID, for sure.

Josh, with both of us having a lot of market knowledge here in Cincinnati, I want to have more of that conversation, and try to have it in ways that are reflective of other MSAs similar to ours. That said, specific to Cincinnati, when it comes to shopping centers and restaurants, what are the trends that you've been seeing since lockdown? Within office, I know that the downtown office spaces are really struggling; a lot of those companies are moving to having smaller satellite offices, one north of town, one south of town, one east of town, something like that. Are you seeing similar trends in shopping centers and restaurants, that different parts of town now than pre-COVID are gaining popularity?

Josh Rothstein: So downtown, which is your classic example - an area that was dominated by daytime population of office workers, once COVID hit and people started to come back to work, this hybrid model has been adopted, and I think more or less has been made permanent. I'm in the office on Tuesdays and Thursdays, and other people are in on Wednesdays and Fridays... So all of these businesses and restaurants and stores that were downtown because they needed that daily traffic - a lot of them have evaporated. So when you get out into the suburbs, it's a different game, because not a lot of those places really relied on the daytime office population. They relied on just the normal traffic flow; maybe its traffic flow in the evening, maybe its traffic flow during the day, but it wasn't predicated on people going into their office and being there during the day.

So the tenants that have been able to make it last, specifically restaurants - I mean, the honest truth is that COVID decimated a lot of restaurants, a lot of small businesses; but ones that were able to stay, a lot of them had multiple units, a lot of them had buying power, and they figured out how to navigate through the PPP loans and all the other incentives that kept them afloat... And what many of them did is they figured out how to more and work with COVID. So minimize their floor plans, figure out how to make most of their menu items transferable, so that they can be packaged, and people can pick them up and take them home... So a lot of the sloppier meals, which didn't transport very well - you get rid of them, you simplify your menu, you figure out what is actually obtainable through the supply chain crisis, which a lot of these people are still grappling with, you maximize your outdoor space...

One interesting thing I saw, which I love seeing, is that the shopping centers, when there were vacancies, there was plenty of extra parking, so they would take a couple of parking spaces that were lumped together, maybe four, six or eight of them, and create little outdoor patios; they called them [unintelligible 00:10:54.16] The urban areas would carve off some parallel parking spaces that were [unintelligible 00:11:00.12] the sidewalks and create larger outdoor seating areas. So to maximize the outdoor space is an element that surface during COVID, and I think a lot of developers and restauranteurs and landlords are hanging on to, because you create that vibe. And to answer your question, as long as there's an atmosphere, as long as there's, in many cases, walkability, and a place to go get a drink before dinner, get your dinner, get dessert, and there's this interaction, I think that the places that are located in those types of areas are still doing well.

Slocomb Reed: Yeah. And neighborhoods like Over the Rhine in Cincinnati are vibrant again, now in mid-2022, which is good to see. To your point though, I know a lot of places in Over the Rhine, and some of this was planned prior to COVID... But a lot of places gained dedicated outdoor space, a lot of restaurants did, in the urban core. And in Over the Rhine some street blocks were shut down to create outdoor parking for restaurants, and things like that. And I've heard that some of that stuff was planned pre-COVID and only executed post-COVID, due to coincidental timing, but it definitely came at the right time. Josh, you also represent landlords and tenants for shopping centers and restaurant type spaces; do you represent both sides?

Josh Rothstein: I do, but I represent tenants in a limited capacity.

Slocomb Reed: Tenants in a limited capacity, that makes sense. So talk to me as a landlord of a space in an urban core where I've seen my tenants not make it, for whatever reason, and now I have vacancy and spaces that I need to fill... I know, as you said, there were several places that learned how to adapt, and made it through lockdown... But given the vacancy that I now have, hypothetically, who is it that I can expect to gain as new tenants in those spaces, and how does the rent that I can expect to collect compare to what it was pre COVID?

Josh Rothstein: So just as tenants had to adapt, landlords need to adapt also; the days of being able to up your rent and have competing tenants for a space that isn't at Main and Main, the most amazing place - those days are gone. So landlords need to get creative. And thankfully, we're beyond, where COVID was just starting to go away and people were starting to resurface, but for the sake of getting at the topic, it would help landlords to adopt a comfort level of doing a percentage rent deal. There's a lot more risk associated with tenants signing leases these days, especially if it's a long term lease, especially if it requires a tremendous amount of investment on the front... So landlords, if they're willing to do a percentage rent and participate in that risk, and if the tenant does well, they do well, and if the tenant doesn't do well, then the landlord doesn't - that has seemed to help... Landlords offering free rent periods longer than what has generally been market has to help, because a lot of these tenants, if you're in a position to open up a restaurant, you need to go get your equipment... And there's still a big supply chain issue.

I represented Fusion, which is an East [unintelligible 00:14:24.06] sushi restaurant. We found a location on Beechmont Avenue, and Fusion is out of Cincinnati, but within the restaurant brand they've got over a dozen locations; but they still have a hard time getting equipment. Most people do. So they need enough time before they have to start paying rent, because they can't be opened without coolers and [unintelligible 00:14:44.16] equipment. But they can sign a lease, and of course, no landlord wants to hear that, but they had to be flexible with it and comply; because if they didn't, then that space is going to sit on the market and they're going to have to wait for more or less that needle in the haystack. So it is a two-way street.

Break: [00:15:01.05] to [00:16:57.08]

Slocomb Reed: You name dropped Beechmont Avenue; that's a main thoroughfare and a very well-known suburb here in Cincinnati, Anderson Township. I know Fusion, I've definitely eaten at a couple of their places... Are you seeing the restauranteurs and the restaurant companies with multiple brands or multiple locations - do you see them trending more suburban now?

Josh Rothstein: I think it depends on the restaurant. The smart ones will map out where they want to be. They want to go to the bigger markets that have the demographics that cater to them. Fusion is sushi, so it generally scales towards a more sophisticated crowd, with a higher social economic status, better incomes, higher education level... But yeah, they started downtown, and they still have a location downtown at 600 Vine, which is a different location than where they started, but they have expanded more into the suburbs, because they've learned that it's a lot of moms that want to get dinner for their families, or they want to be closer to home, because it's more of a convenience item.

So I have seen, however, that suburbs are moreso adopting these urban types of projects, as opposed to projects in the urban area catching the suburbanites, because a lot of the people in the suburbs don't want to get in their car and go to the urban areas. So in Cincinnati, it's going downtown, or it's going to Oakley. Instead, if you can amass the property and get enough land to build an urban-centric project in the suburbs, you're appealing to a much wider range, and you can be kid-friendly, because these urban areas are not necessarily convenient to [unintelligible 00:18:41.25] around, and have kids who might rip away from your hand and end up into a street. So the urban projects, the Summit Parks, the District of Deerfield, these are the types of projects that I'm seeing attracting the restaurants and the stores and the retailers that are in a position to expand.

Slocomb Reed: Downtown Loveland comes to mind, and for someone in your space to not be able to - is it Liberty Center?

Josh Rothstein: Liberty Center, yeah.

Slocomb Reed: And Liberty Township. There are a lot of more places like that; Summit Park, like you mentioned. Yeah, that makes a lot of sense. There's been a lot of growth in those places the last few years. Now that I have a toddler, I totally get what you're saying about having a suburban core, like an urban core, that's more kid friendly. Park, large sidewalks, less street traffic, less vehicle traffic. That makes a lot of sense.

Josh, as an apartment investor, active owner-operator, and someone who likes doing creative deals that are profitable, but also because I think it's fun, and thinking about me personally, bringing our Best Ever listeners along for the ride, not having much experience personally in your niches within Cincinnati, where do you think is an opportunity for someone like me to break into shopping and restaurants as an investor?

Josh Rothstein: So I think that it all boils down to a couple ways to look at it. If you know of a restaurant that is booming, maybe one that's in north side, and they know that you're a real estate investor - because a lot of your average people don't necessarily care for the difference between multifamily investing, industrial, office or retail... So if you happen to be friendly with an upcoming restauranteur and they say, "We really want to be in Northside", or "We really want to be in College Hill", and you go find a restaurant that is closed down - because there are many of them - and you feel comfortable with them, and you say, "Look, I'll buy the property, you pay me a lease rate of X, and I'll contribute this amount to your buildout, and you'll do more of it", sure, it's going to be a risk, but if you see a return over time, and maybe you do a percentage rent situation with them, that might be one way to start.

Another way to start is you can participate in a fund where it's more hands-off for you, but you can take some of your capital and put it in with another pool of investors and have a team that handles that investment, you can be a partial owner in several different shopping centers. Or you just keep your eyes open for a value-add kind of play. Oftentimes, it's in the smaller towns in the outskirts, the ones that might take you 40, 50 minutes to get to, but if you see something and you know that there's a demand for other retailers or restaurants or offices or medical to be in these certain neighborhoods, you on your own, or you with some other investors can go get it and enhance it, put lipstick on it, and get some tenants in there that are paying more, and will do better over time, and then you can just build up the


Slocomb Reed: That makes a lot of sense. Leaning on my own sphere, and thinking if I find a business that I have some understanding of, and I can see that they're growing, and they have the potential to continue to grow in a new location, most restauranteurs don't want to be real estate investors, at least in my experience. So finding someone who's operating a business that I could partner with to find their location, very similar to what Dollar General does, or Walgreens or CVS, that famously lease all of their spaces - that sounds very similar to that kind of business plan, where someone could get into real estate investing for restaurants by partnering up with an operator who's looking for space. That makes a lot of sense. Josh, are you ready for the Best Ever lightning round?

Josh Rothstein: Let's do it.

Slocomb Reed: What is the Best Ever book you recently read?

Josh Rothstein: I actually don't read books. I spend all my time reading the business couriers and the newspapers and learning about who's acquiring who, who is buying, who is opening... So Cincinnati Enquirer.

Slocomb Reed: Gotcha, nice. What is your Best Ever way to give back?

Josh Rothstein: We can write a check, but that's no fun for me. But going to an event, whether it's a gala, or a fundraiser, or a golf outing, some sort of being there and volunteering, and not only participating financially, but playing a part and getting your hands dirty, if it's a cause that's important to me, that's usually where you'll find me if I'm giving back.

Slocomb Reed: Awesome. Josh, thus far as a listing specialist, shopping centers and restaurants, what's the biggest mistake you've made, and the Best Ever lesson that you learned from it?

Josh Rothstein: We all get really busy, and when you're busy, you might try to rush through things. So rushing through things and not treating every inquiry or request as you should... At the beginning, you get overwhelmed and you might take your eye off the ball a little bit. And I learned that lesson because one of the biggest deals I ever signed, when the guy first called me after my sign, he's asking me simple questions, and I'm thinking to myself, "Who's this guy? This is never gonna go anywhere." And then he called me back after he went and got some answers to some of the questions, and I vetted them a little bit, and then we ended up going toward the property, which of course, I'm glad I did... And it ended up being the biggest deal that I did to date. And the lesson was, like you learned as a kid, never judge a book by its cover.

Slocomb Reed: What is your Best Ever advice?

Josh Rothstein: My Best Ever advice is do what you say you're going to do. I think there's nothing more common in the real estate business when you're talking to somebody, you ask them to do something where the next step is a certain follow-up item, they say "Okay, I'm gonna do it, I'll get back to you tomorrow", tomorrow comes and goes, the next day comes and goes... And it's okay, they'll get back, but just don't bite off more than you can chew. If you're gonna say you're gonna do something, do it, and definitely call people back.

Slocomb Reed: As a fellow service provider in real estate, I totally feel that. As an investor, I'm struggling with contractors who tell me they'll get something done, and then we pass the deadline and they haven't even started yet. I was a full-time residential agent for quite some time, and doing what you say you're going to do - it sounds so basic and fundamental. It's unfortunate how few service providers in the real estate industry actually do it though... So that makes a lot of sense. That's great advice. Josh, where can people get in touch with you?

Josh Rothstein: My office phone number is 513-268-4453. I'm very active on social media; my Instagram handle is @_4lease. And I'm always available by email; you can find my contact information on the website retailgroup.com.

Slocomb Reed: That info is available in the show notes as well. Josh, thank you. Best Ever listeners, thank you as well for tuning in. If you've gained value from this episode, please do subscribe to our show, leave us a five star review, and share this with a friend who you know is interested in shopping center and retail investing. Thank you, and have a Best Ever day.

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