Phase 2 - Real Estate 101 (How to or one big idea)

Podcast - A Holistic View Of The Retail Market

Marcia Cuenca
September 14, 2021
Podcast - A Holistic View Of The Retail Market

As a retailer, the idea of competing with Amazon in a pandemic sounds daunting, but some brick and mortar retailers have found a way to thrive.

Dusty Batsell, Executive Vice President of Real Estate at Baceline Group, joined us on the podcast to discuss the real estate market as a whole and what is causing some retailers to thrive while others struggle.

About Baceline Group

Baceline Group is a premier, boutique private real estate investment and management company that believes in strengthening America’s communities. We do this by building quality relationships with partners through a strategic and innovative approach to commercial real estate investing. By acquiring and revitalizing neighborhood shopping centers in value-rich markets, Baceline creates opportunity for growth and success.


Learn More About Baceline Group at:

*If you'd like to learn more about how ReAllocate + Mariner Wealth Advisors can help you build a roadmap for your real estate investments head to —*

Listen Now

Subscribe To Podcast

Apple Podcasts



RealCrowd (00:00):
All opinions expressed by Adam, Tyler and podcast guests are solely their own opinions and do not reflect the opinion of RealCrowd. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. To gain a better understanding of the risks associated with commercial real estate investing, please consult your advisors.

Adam Hooper (00:23):
Hey, listeners, Adam here. Have you ever wondered if you're investing in the right real estate deals? What about if you're making the right decisions for your overall financial health? Over the last seven years of running RealCrowd, the number one question we received from investors is, "Should I invest in this deal?" Well, we're excited to announce that we can now help you answer that question. Through our sister company ReAllocate and through ReAllocate's partnership with Mariner Wealth Advisors, you can now have access to teams dedicated to helping you build a real estate portfolio based on your personal investment roadmap and financial goals. If you'd like to learn more about how ReAllocate can help you, head to Again, that's

Adam Hooper (1:07):
Hey, Tyler.

Tyler Stewart (01:10):
Hey, Adam. How are you today?

Adam Hooper (01:12):
Tyler, I'm doing well as we brace for finally winter coming here in Portland.

Tyler Stewart (01:17):
Yeah, big snowstorm coming here. Are you ready for it?

Adam Hooper (01:21):
Well, forecast is somewhere between 4 and 17 inches, which means we're probably going to get a light rain. So, I think we'll do okay. But we did visit our local retail stores and shopped in preparation for that, which is a nice little segue into our conversation today.

Tyler Stewart (01:39):
It sure is. We had Dusty Batsell, who is the Executive Vice President of Real Estate at Baceline Investments.

Adam Hooper (01:46):
Yeah. So, we've had Todd Laurie from Baceline come on the show before and talk about how they look at retail space. Dusty was kind enough to join us from Baceline again to give us a little bit of a rundown on how they view retail in the market right now, how their acquisitions pipeline looks, and talk about some of the trends that they're seeing within their tenant base, as I think he said, over 900 tenants that they have in their portfolio. So, they got a pretty good window into how different businesses are performing throughout this crisis.

Tyler Stewart (02:14):
Yeah, yeah. Dusty did go over what's performing well right now throughout the crisis, what's struggling. So, it was interesting to hear the different tenant mix and tenant profiles that are doing well as we're all trying to adjust to this new normal.

Adam Hooper (02:32):
Yeah. You'll hear again, similar threads that we've pulled on with prior episodes of what are some of those changes that they're seeing right now that might outlast this current crisis and become more of a longer term trend, and then also how some of those trends that we've seen before have accelerated during this crisis, more emphasis on the service retail, more emphasis on medical use going into retail as they try to get closer to their users, rather than being more on campus medical use. So, really good just fundamental overview of how they see retail right now and where they see some of the opportunities going forward here in 2021 as they look at different acquisition pipelines.

Tyler Stewart (03:11):
Yeah. Speaking of acquisition pipelines, we talked a bit about pricing, what they're seeing from sellers and whether prices are dropping or what's happening at the negotiation level to get some retail transactions going. So, we talked about transactions, which was great. We also talked about rental rates and what's happening as far as rental rates with tenants. Has COVID impacted those rates or not and why?

Adam Hooper (03:37):
Yeah. Also, be sure to listen for Dusty's take on the resilience of their portfolio and what they see in this space. I think, surprising to a lot of us based on where we would have expected early last year and mid-last year, a lot of good reports that they have out of their portfolio, which is always nice to hear.

Tyler Stewart (03:55):
Yeah, yeah. Overall, it was great to have Dusty on to just give us some insight into what he's seeing.

Adam Hooper (04:00):
Perfect. I guess, that's a good prompt. If any listeners out there, if you want us to cover anything in specific or any questions you'd like us to dig into on the show, send us a note to We love hearing from you guys. But Tyler, with that, let's get to it.

Adam Hooper (04:23):
Dusty, thank you so much for joining us today. We're excited to have another member of the Baceline crew back on the podcast. Tell us a little bit what's going on in the retail space right now.

Dusty Batsell (04:33):
Glad to be here. Thank you, guys, for having me.

Adam Hooper (04:35):
So, for listeners that maybe haven't caught Todd's prior episode, tell us a little bit about what Baceline does, what you guys focus on. How did you end up there? What is your day to day look like?

Dusty Batsell (04:47):
Sure. So, Baceline, we're a private equity real estate investment firm, started in 2003 as a property management company, shifted over into the actual investment side, the principal side, started with a few no-debt funds back in the day, and then have since transitioned and started this aggregation strategy probably five years ago before I had returned to Baceline. We started to use a little bit of leverage. The goal there was to use all the knowledge that we have gained over the last 10 years at the time to really build this institutional quality, institutional size portfolio of neighborhood shopping centers. It's a product type that we have become very familiar with, that we very much believe in.

Dusty Batsell (05:33):
One of our big taglines is we invest in communities. That's exactly what we're trying to do by buying these neighborhood shopping centers, provide a place for the local communities to gather, get their everyday needs, go to their local restaurant, get their nails and hair done. We've found this to be just an extremely reliable and predictable business model for us. It's performed very well. So, we're excited about what the future holds.

Dusty Batsell (06:03):
Me in particular, I oversee all the real estate operations. So, everything that rolls up to me leasing, asset management, acquisitions, dispositions, and really just trying to set the strategy, make sure that we're taking both a broad, holistic view of the market and the industry, where things are going, but also making sure that we've got our information dialed in from a due diligence standpoint, from an asset management standpoint to ensure that we're maximizing return for our investors.

Adam Hooper (06:34):
Now, before we get into more specifically, what you guys are up to, maybe you can help us set the stage for listeners that are maybe new to the show or haven't heard some of the other retail episodes, how do you guys look at the different asset profiles within retail needs-based grocery, maybe big-box strip centers? How do you guys split the universe of retail assets? And then what do you guys look at, I guess, differently across those maybe?

Dusty Batsell (07:02):
Yeah, sure. So, I think everyone probably has a pretty good general concept of what retail is. Everyone's familiar with going into a big shopping mall or going to a power center, which would include your Best Buy next to TJ Max and the Costco across the street and then going to your grocery anchored center. So, your grocery store that you go to on a weekly basis, that also has some small shop space that's attached to it. Those are none of the things that we invest in.

Dusty Batsell (07:31):
We look for the unanchored centers, the true on the corner, anywhere from 15,000 to 50,000 square feet, a lot of shorter [inaudible 00:07:41], anywhere from 1,200 to typically 2,500 square foot spaces. So, a lot of the smaller shops. So, think about that standalone retail center that's on the corner that maybe it has a Starbucks in it. Maybe it has again, the hair salon or nail salon or a liquor store or any of those really essential day-to-day uses.

Dusty Batsell (08:09):
We're actually starting to see a little bit more… It might be where you go to your dentist or go to see your primary care physician. We're seeing that trend pick up steam with medical users taking these spaces that are closer to the rooftops as opposed to being in a central medical district, where their customers have to go park in a big parking garage and walk over to this building and go up an elevator. We're seeing people want to get closer to their customers. So, that's the type of asset that we are looking to buy and looking to again, continue to grow our portfolio with. So, we avoid the mall stuff, the power center stuff, and grocery anchored.

Adam Hooper (08:47):
Perfect. I think just as we have the conversation, one of the continual threads that we've touched on for the last 11, 12 months now is this, COVID is being an accelerant of some of these trends that were already underway. Obviously, early days of COVID, everybody was screaming how retail's dead, retail is never going to be the same. How was retail coming into this crisis heading into 2020 and maybe where have you seen that change? What are you guys looking at now in terms of the future of retail, I guess?

Dusty Batsell (09:23):
For our product type, 2019, even bleeding into the first quarter of 2020 was phenomenal. We had a banner year in 2019 in terms of assets acquired, in terms of the size of our portfolio from AUM standpoint. The start of 2020 was outpacing 2019. So, everything was looking really good. Again, we have to fight this perception issue a lot, because retail does get a bad rap. You hear about all these larger footprint tenants. Most recently, you can think about the JC Penney's of the world, who unfortunately have declared bankruptcy and their business model hasn't survived.

Dusty Batsell (10:03):
Everyone quantifies that as retail and it falls into that retail bucket, which obviously it is, but it's different from the type of retail the way we view it. So, our prototype had been doing well. We had seen occupancy levels had remained high and consistent, despite the claim that retail is dying and everything is moving online. I think it's because a lot of the tenants that occupy our buildings offer those not experiential, but they offer more than-

Adam Hooper (10:35):
Service retail.

Dusty Batsell (10:36):
Yeah, yeah, exactly more service and more convenience than right now, Amazon or any of those other e-retailers can provide.

Adam Hooper (10:46):
I guess from a transaction activity, it sounds like you guys were ramping up heading into 2020. What did you guys see in transaction activity in 2020 and here, I guess, in the early 2021? Have you guys seen any warming up of transaction markets? I think a lot of people anticipated by middle of last year, that there was going to be a ton of distress and there's going to be a ton of opportunistic buyers out there. By and large, I don't think we've seen that materialize. So, I'm curious, have you guys seen transaction volume or any distress start to show itself in the transaction markets yet?

Dusty Batsell (11:25):
You're absolutely right. I'll talk about the volume first and then get to the distress. So, from a volume standpoint, like I said, the first quarter was really strong for us. We had seven new acquisitions. We had a very deep pipeline of opportunities that we had planned on closing on in Q2 and Q3 and beyond. Obviously, when everything hit in March, acquisition activity ground to a halt. There was just too much uncertainty. From our perspective, what we're buying is a stabilized cash flow. We're buying a rent roll of tenants that have been operating or we believe will continue to operate well into the future.

Dusty Batsell (12:01):
When COVID hit and shutdowns were spreading across the country and businesses were unable to operate, obviously, that throws a whole lot of uncertainty as to whether or not these operators are going to be able to continue to survive. So, we hit the pause button. We did not purchase anything in Q2. We saw things start to thaw out a little bit in Q3.We actually closed on three properties at the end of Q3. We bought another two properties at the end of Q4. We've got two properties that we will be closing on here by the end of Q1. We expect that velocity to continue to pick up. That's on your stabilized, typical, what we would consider our fairway products, the Baceline core income holding highly stabilized opportunities.

Dusty Batsell (12:51):
From a distressed standpoint, we thought the same thing. We saw that this could be a really good opportunity to come help save some of these properties where maybe the landlord was not very well capitalized and couldn't get through those tough times. We have not seen that materialize at all. We think that that probably will come at some point. A lot of landlords were helping their tenants out, providing some type of payment plans or even full-on abatements in some cases. But you can only do that so long, particularly if you have debt on an asset. It's going to be tough to do.

Dusty Batsell (13:28):
The banks were being very helpful as well, I think, from what we could tell, at least, from our lenders, our tenants, and obviously ourselves. This was one of those situations where everyone's going to have to pitch in. It's going to be a little bit painful for everyone. But as long as everyone agrees that we can do that, coming out of this, we're all going to be stronger and we're going to have more runway. But I do think that some of that timing is going to run out. That can't go on forever.

Dusty Batsell (13:57):
So, a lot of the bank forbearance, a lot of landlords who are giving some type of rent relief, at some point, that's probably going to have to come to an end when things start to return back to normal. And then there's going to be a period of time where these tenants are going to try and work something out, those that have been most impacted. So, you have to work through that, but eventually, we think there will be some distress on the backside of this. It's just trying to identify what the timing is going to be.

Adam Hooper (14:23):
Have you guys updated your investment thesis or investment strategy at all, you're going to stick to your knitting of the stabilized properties, or do you think there's room for opportunistic buys? How does that fit in with your capital profile?

Dusty Batsell (14:36):
So yes and no, we won't change our investment profile for our core income fund. That is what our full aggregation strategy revolves around. We are toying with the idea of creating something new to take advantage of any distress that might be out there, but the whole point of that would also be to find these distressed properties that [inaudible 00:15:00] what's currently going on would qualify to be in our core income fund, stabilize them, and then essentially have the core income fund buy them.

Adam Hooper (15:09):
Got it.

Dusty Batsell (15:09):
So, everything is aligned towards that mission of aggregating and building our core income fund.

Adam Hooper (15:15):
Again, a lot of the headlines are with the larger retailers. Obviously, we've seen a bunch of… You may think everybody can relate. … your smaller maybe restaurants or some of those smaller operators that we all used to go to in normal times are struggling. Maybe you have closed and who knows if they'll open again. So, what types of tenant profiles have you seen that's weathering the crisis better than others? Maybe where have you seen some underperformers and any surprises in either of those categories?

Dusty Batsell (15:49):
Yeah, I would say the people that have had been able to weather this the best… This is just broad retail, not necessarily our tenants, but I'll touch on that as well. I mean, obviously, grocery stores have done well. Groceries have done well, throughout this. I mean, people still need to eat and get their daily necessities. So, those guys have done well. Discounters have done well. Dollar stores have done very well during this period. Some of the vices have done well. Liquor stores obviously have been… I was reading something the other day that 2020 was a banner year for alcohol sales, which no surprise. I think a lot of people were coping however they could to get through this.

Dusty Batsell (16:29):
What we were surprised to see is that once restriction started to get a little bit more clear, a lot of the appointment-based uses were doing better than we had expected, which, in hindsight, makes sense. If capacity is limited, but if you're going to get your haircut, now you're just going to more of an appointment-based model. So, instead of sitting there in a row of chairs waiting for your turn, you just show up at a specified time and get your haircut and move on. So, I think those types fared a little bit better than we thought. Obviously, QSRs, anybody that pivoted to more pickup and had the ability to do drive thru delivery, those guys have been faring well.

Dusty Batsell (17:08):
As far as those that are struggling in our portfolio, what we've seen is we have a handful of bar and restaurants that maybe had a pretty large bar component, obviously, that has just taken a hit because of capacity requirements or restrictions, I should say. Individual uses, dry cleaners, that has been a use that we've had to work with a lot of our dry cleaners just because weddings are either cancelled or postponed. People aren't going into the office as much. So, all the clothes that they would normally get dry cleaned are not. People are working in joggers and sweatshirts from home.

Adam Hooper (17:46):
No comment.

Dusty Batsell (17:46):
That makes sense. That's one that we fully expect will rebound once things get back to normal, because I can only imagine that those weddings that had been postponed, I can just envision-

Adam Hooper (18:00):
It will come back. Yeah.

Dusty Batsell (18:01):
Yeah, every venue is about booked every day for those folks that have been waiting for their big day. And then other uses that rely on more space that have been impacted by capacity restrictions. Think of dance studios and gyms, where they still have a lot of space, but they can only have 25% of their normal crowd there. Obviously, that puts more pressure on their overhead and fixed costs. So, those are the folks that we've seen that have just needed a little bit more assistance as we get through this.

Adam Hooper (18:35):
Yeah. I guess, you also mentioned the more medical use again. I think that's a trend that we were starting to see pre-COVID. Have you seen that accelerate, or are there any other new uses that you're seeing accelerate adoption or changes of how we use retail space that will maybe be a result of what we're going through right now and coming out of?

Dusty Batsell (18:57):
So, we're definitely still seeing the medical trend. Obviously, the leasing velocity slowed down just a little bit. I mean, we're thrilled to report throughout all of this, we had a net gain in tenants, which-

Adam Hooper (19:08):

Dusty Batsell (19:09):
… if you would have asked us in April, that is definitely not what we would have projected, but it hasn't been quite inside, right? Maybe it's 50% of what we would normally expect to do in any given year. Yeah, I would say medical is definitely still a trend of those folks looking for more neighborhood type locations that are synonymous with what we own. The other thing I think we're going to see is just a complete space evaluation, if that makes sense. Think about a restaurant user that may be pivoted to doing more online orders and doing more delivery and had to let go some of their staff, but now they're seeing that they're not making quite as much top line revenue, but maybe they're maintaining the same level of profitability.

Dusty Batsell (19:58):
So, we're anticipating that we're going to see people that say, "Instead of 3,000 square feet, I only need 2,000 square feet. I'm just going to continue with this online ordering delivery pickup component." Yeah, that's the one thing that we see that could happen. I mean, the counter argument to that is that assumes that people aren't going to want to get back out and dine in anymore. I just don't know that that's true. I know, there's pent up demand on my end for sure about just going to a restaurant and having a beer with a friend or whatever.

Adam Hooper (20:31):
Yeah, I think that's one of the areas that we've also tried to explore is what are some of those longer term trends that we're experiencing now through this very large scale experiment that we think will fundamentally change some of the uses, right? Like you said, maybe reduction in space, maybe more restaurants and those uses shifting to more of a higher takeout component. Again, like you said, maybe even running that more profitably, right? If you don't have to staff a full front of house, you can keep your costs quite low. Are there any other interesting responses to this crisis that you've seen that maybe are going to be longer term trends that will stick once we get through the health side of the crisis?

Dusty Batsell (21:13):
I think in the short term, even let's just say we're six months from now in a fully vaccinated environment and people are going back to normal, I still think you're going to see some hesitation to squeeze all of those tables back together in quite the same ratio that they were before, which to me says you're probably going to see the extension into the outdoor space that lasts a little bit longer.

Dusty Batsell (21:36):
Landlords… I can tell you that we were like this as well. … have been very open to trying to expand the dining areas, particularly for our restaurants, out into the parking lot or wherever you can find space, just so that they can expand their capacity through this time. I can see that continuing, because I think from just a pure experiential standpoint, I think diners, the more outdoor space, the better. Now, maybe not at some of our inner Chicago or Milwaukee properties right now necessarily, but in the nice weather months, I can see that continuing.

Dusty Batsell (22:13):
I definitely think that anybody who invested the time and resources to pivot to more online ordering, whether that's a restaurant or a small shop or anything or even investing in some software that allows them to create appointments for their customers, I don't see that going away. I think they're going to find that to be a more efficient use. They've already spent the money on it. So, now they can extend the useful life of it. So, I don't see that retreating. Yeah, I think in general, you'll probably see a lot of these operators continuing to push the message of keeping their employees and customers safe. I think that's going to be something that stays around for a very long time.

Adam Hooper (22:59):
And then when you were looking at consumer behaviors, again, other than the obvious of just, like you said, appointments and reduced traffic, is there anything that you're learning or tracking with how consumers are going to impact that? I mean, like you said, if you go to an appointment and you know you have to be there a specific time, you're probably not going to spend 15, 20 minutes walking around the other stores, getting your cup of coffee, doing whatever, right? So how have you seen consumer behavior, or is it too early to really get any influence from how that consumer behavior has changed and what that might mean for some of those other retailers?

Dusty Batsell (23:37):
I think it's a little bit too early to see what is going to stick just because this shift in consumer behavior now was not a natural one. It was a reactionary one to what's going on. So, it's tough to say, in my opinion, what that ultimately looks like when you're coming out of this. I mean, I suspect that from an operator standpoint, so from a tenant standpoint, I wish I would have gotten the hand sanitizer business about a year ago, because I truly envision from now until eternity, you're going to see hand sanitizer stations everywhere. People aren't going to go and take those down. But in terms of actual shopper traffic, obviously, people have been cooped up for quite some time.

Dusty Batsell (24:24):
So, I do see a day that once the masks are lifted, I do think people will be starved. There'll be subset that still does not feel comfortable doing that, but I think there's going to be a lot of people that are ready to get back to concert venues, just be more social. I think we all miss that interaction to some degree. I think having the ability to watch some live music or go to a movie surrounded by a bunch of other people to have that feel, that environment, I do envision that coming back. Again, I don't think that was consumer behavior that got to this point naturally. I think it was just because of obviously, the conditions.

Adam Hooper (25:05):
Yeah. Now, when you guys look across your portfolio, what have you guys seen with lease rates? What we've seen locally, again, firsthand because we're looking for space currently, rents haven't really moved that much. There's more concessions. I think most of landlords are looking at this as a fairly short term impact. They don't want to adversely impact their long term cash flow potential and then devalue their assets if they're cutting rents really, really steeply right now. So, I guess, how have you guys seen rental rates or collections hold up across your portfolio? Any trends there that you guys are seeing or surprised by?

Dusty Batsell (25:47):
No, you're absolutely correct. I mean, it's the same thing. I think rental rates, they may have retreated slightly, but nothing material. What you have seen are more concessions. Really, that's to just get people who have expressed interest to make them feel comfortable that they have a long enough runway that they can get through the current times. I mean, everyone that is going to sign a lease, I mean, particularly on the retail side, clearly, they're optimistic and bullish about the future.

Dusty Batsell (26:15):
Yeah, they just are a little bit cautious about what's going on now. They want to make sure they have a safety net and a runway to get through this tough time. So, that's what we're seeing. We're seeing more of that most definitely. But from a rental rate standpoint, no for the same reasons you said, right? Once you reduce someone's rental rate by 50% and lock that in for five years, you're effectively throwing in the towel on your evaluation.

Adam Hooper (26:40):
So, switching back then to the acquisition side, are you guys looking at a different metrics now? You said the idea is that would eventually get to that core income profile. How are you looking at acquisitions differently, any different analysis you're doing or still pretty much sticking with the fundamentals of what you guys were up to before?

Dusty Batsell (27:03):
We saw the same acquisitions criteria. I tell you, what has changed is because of the experience we've had with a large sample size, such as our portfolio of 950 tenants, we know which uses have been most impacted. We know which uses have been… I don't want to say COVID proof, but have been able to weather the COVID storm and still generate sales and still attract customers. So, that information absolutely has infiltrated our underwriting and how we're looking at tenants on a new asset that we may be purchasing, which has helped quite a bit. There are certain assets that we've explored, that we've immediately passed on, because that tenant mix, we know based on our experience that it has not performed well. It's probably going to be unstable for a while. So, for those, we're moving along.

Dusty Batsell (27:55):
Right now, our focus for our deployment of equity is to make sure that we are being as conservative but in a long term way, right? We want to make sure that we're spending our money effectively right now. So, that has influenced the properties that we're looking at. The stuff that we are purchasing, the stuff that we have under contract is full of those tenants that we know have done well. Similar to what we're talking about on the leasing side, what we've seen from a lot of sellers is pricing hasn't really moved much. Yeah, there may have been a 10 to 15 basis point improvement on the buyer side, but what you are seeing are more incentives from sellers.

Dusty Batsell (28:39):
So, for example, we're doing our underwriting. We find a tenant that we feel okay about, but they may be a little bit shaky. We talk to the seller and say, "Here's what we're concerned about. Here's how we'd like to get around it. If you're telling us they're fine, we think they're a little bit shaky. Let's just both go on this together." We're seeing a lot of rent guarantees to get through some short term pain, the seller saying, "Hey, we understand. We believe in them. We're willing to put our money where our mouth is and provide a guarantee on that revenue stream," which is getting us over the finish line in a lot of cases.

Adam Hooper (29:17):
Is there anything different now that makes something look attractive as an acquisition target for you guys that maybe you wouldn't have considered or weren't looking at before the health crisis?

Dusty Batsell (29:27):
What do you mean? Can you give me an example?

Adam Hooper (29:30):
I mean, again, outside of tenant mix, is there anything with programming of the space, anything with your geographic locations, any demographic information you guys are looking at differently, any migration traffic?

Dusty Batsell (29:43):
Got you.

Adam Hooper (29:43):
Have any of those criteria changed or anything that makes a property look more attractive now than it might have pre-crisis?

Dusty Batsell (29:50):
That's actually a great question. In the short term, I would say, we're definitely paying attention… Obviously, we've got properties all over the country. So, we've been tracking how different markets have responded to this from, "Okay, this particular market was much more aggressive and allowing their businesses to reopen and allowing them to open it to a larger capacity," essentially, more pro-business. And then some markets where the restrictions were extremely aggressive and not quite as business friendly and more focused on making sure that there was less circulation, which I understand the balance of, trying to keep the public safe and healthy. And then also making sure that you're not creating another issue by completely tanking a local economy.

Dusty Batsell (30:45):
So, I would say, in the short term, that has influenced where we're focusing our efforts, just because we want to make sure that we're buying property where these businesses are going to have a reasonable chance of continuing to operate. Yeah, again, that's short term, because we do… With all the progress that's being made, vaccinations, obviously, the changing in weather, getting warmer, all of those factors, we think point to this being at least seeing a light at the end of the tunnel. So, once that's lifted and we get back to a normal environment, I think we'll be back to a full national perspective, but right now, it influences a little bit for sure.

Adam Hooper (31:29):
And then maybe taking a little step higher, just macro retail trends, for listeners out there that maybe either own some retail assets or looking at investing in some, what are some of the factors to assess the overall health of the retail world right now? Where do you guys find those? How can listeners maybe track some of those key points that you guys focus on?

Dusty Batsell (31:52):
I think absolutely, capacity restrictions, what's going on in these markets, national credit closures. Which operators are closing stores? Which operators are declaring bankruptcy? On the flip side of that, which stores are expanding, changes in sight requirements. I'm not sure if you saw that recently, Starbucks announced that they're going to put a lot more emphasis on drive thru only locations moving forward. So, I think those are the types of things that we continue to track just because obviously, that's going to have a pretty big impact on our centers. In terms of where… Did you ask that too?

Adam Hooper (32:36):
Where can listeners start to track some of these different factors? Any publications or any data sources that you guys find helpful that are accessible for listeners of the show?

Dusty Batsell (32:48):
There are a ton out there, the more real estate specific ones like GlobeSt and depending on which market you're in, market and product type, the Shopping Center Business, the Texas Real Estate Business, whatever those may be. Obviously, podcasts have become very informative and a great source of obtaining information. And then, the usual suspects like the Wall Street Journal and all of those folks that report on a lot of the big business moves.

Adam Hooper (33:20):
And then I guess, as we sit here in early 2021, it sounds like from what I'm hearing, you would characterize the future of retail as still fairly positive, it seems. I mean, you seem fairly optimistic about the state of the space, maybe not as doomy and gloomy as a lot of the headlines would lead us all to believe. Is that an accurate?

Dusty Batsell (33:43):
Very much, we are bullish on our space. I think it is going to be an interesting next several years for the big mall operators, particularly those that may be in mid-markets. I think the high end luxury lifestyle center product is still going to do fairly well. I'm curious to see what happens with some of the big box stuff. Again, that's where the e-commerce stuff is really coming in, where you have these places where you can just go do a showroom, but everything shipping out of a less expensive warehouse location or last mile location. But for the product type that we believe in, I've said it a few times.

Dusty Batsell (34:29):
I'm not putting it past them because they've pretty much figured everything else out, but Amazon hasn't been able to figure out how to paint your nails, do your hair, those types of things. So, those are the uses you find in our centers, right? You've got those medical uses that want to be close to their customers like chiropractors, dentists. And then you've got the other convenience things, dropping off the dry cleaning. I'm going to pick up a cup of coffee while I do it and maybe grab some flowers for my significant other at the same time.

Adam Hooper (35:01):
What are you guys watching most closely that would be an indicator either way, either to the good or to the bad? You mentioned the health side of this, of course. We're starting to see some vaccine rollouts. Are there any other factors that you guys are paying close attention to that might signal either stronger recovery or maybe a slip backwards into some more troubles?

Dusty Batsell (35:23):
I would say restrictions, what government mandated closures and restrictions, which of by and large, have been at the local or state level. So, we track all that information, just so that we can make sure that our tenants are aware. Throughout this whole process, I will say, one of the, I guess, if you want to call it a silver lining has been how we've gotten more intimately familiar with our tenants. When this all started, we formed this tenant pulse team to reach out. I mean, the first thing was just to find out, "What was going on?" You're getting all kinds of conflicting information.

Dusty Batsell (36:00):
So, everyone got a group of 40 to 50 tenants. We all started calling them, checking on them. We were serving as information exchange too. This is what we're hearing in your market. What have you heard? Because a lot of people didn't know. If they were allowed to operate, what was going on there? So, we're acting as an information source. We're acting as a counselor in some cases. We got extremely familiar with the PPP program. So, we were acting as information source as far as that goes. We developed some tenant resources to help with reopenings once those started to help with some marketing.

Dusty Batsell (36:36):
So, I would say, going back and tracking the closures for us is something that's really important, just so that we can know how to respond and what to prepare for. And then the other thing, we're very much paying attention to what the vaccination adoption rate has been, because as everyone else's, we're very optimistic about how that is going and then obviously, very much looking forward to that number continuing to grow. So, we can return back to a very normal state.

Adam Hooper (37:09):
And then as we round up here, what keeps you up at night? And then what are you most optimistic about here as the year goes on?

Dusty Batsell (37:21):
I think that's it. I mean, for me, I'm most worried going back to the closures, that's the thing that most worries me, because we've seen our tenants, a lot of the small business tenants, how stressful it was for them. I mean, they're fighters. A lot of these people, this is their primary source of income. So, they're going to do everything that it takes to just stay afloat and continue to move on. They've done that. Obviously, a lot of these folks aren't really making money right now. They're just surviving. If they are making profits, they could be thin. So, just for their sake, I worry about another sudden rise that causes some type of mass closure, because that could be really bad for them. So, that, to me, is the biggest thing.

Dusty Batsell (38:13):
I don't believe that is going to happen. It does seem like even in some of the states that maybe were a little bit more aggressive with closures, both in terms of how severe and how long, I think they're starting to realize that the long term economic impacts that it's having of not allowing these businesses to operate. So, I don't envision that there will be this massive roll back. We're based in Denver. We saw it here over the winter that there was a little bit of a spike. They tweaked the capacity restrictions down a little bit, but there was never a full shutdown. So, I think as long as it stays like that and continues to make these incremental improvements, which will be in a much better spot by mid to late summer.

Adam Hooper (39:01):
And then optimism again, I guess, what are you most optimistic about as everything rolls out? Is there anything that maybe listeners might not think as outside of the health recovery and general business recovery? Is there anything interesting that you guys are seeing or surprising that you're hoping for or pulling for or checking optimistically as the year goes on?

Dusty Batsell (39:24):
Well, everything seems to be aligning. I know the vaccination rollout was a little bit slower to begin with and everyone thought, but that seems to be picking up steam. It's coinciding well with again, the changing of the seasons. Obviously, we're in the middle of winter right now. But here, six to eight weeks, we'll be in the spring, which that timing could work extremely well with where the vaccines are at that time. I think just the general mood of everyone being ready to be done with this. I think a lot of people are really starting to say, "Okay, we've done this for a year. I've learned how to adapt a little bit, but I'm ready for this to be done." So, I think all of that is sinking up well to where, like I said, mid to late summer, things will look a lot more like they used to.

Adam Hooper (40:19):
Yeah. I think the unwillingness to accept this current state as the new normal, right?

Dusty Batsell (40:24):
Yeah, exactly. Yeah, that's a great point.

Adam Hooper (40:26):
This is the current normal, but I don't think too many people are that thrilled about this being a long term normal. So, I think just as social beings, I agree, there's definitely a lot of pent up excitement about getting back to some of those behaviors and just patterns that we used to enjoy before. So, hopefully, again, I think timeline is similar. Late summer, hopefully, things should be aligning. We can get back to maybe a more normal new normal than what we're currently in.

Dusty Batsell (40:56):
Oh, I sure hope so.

Adam Hooper (41:00):
Well, Dusty, this is again, great recap of what you guys are seeing in the retail space. Anything that we didn't cover that you want to add or how can listeners learn more about what you guys are up to at Baceline?

Dusty Batsell (41:11):
No, this has been great. I really appreciate the time and great visiting with you guys. As far as what we're up to, you obviously can visit our website, which is That's B-A-C-E-L-I-N-E.

Adam Hooper (41:24):

Dusty Batsell (41:25):
You can go check out a lot of the cool stuff we're doing.

Adam Hooper (41:28):
Great. We'll have the link down in the show notes for everybody as well. So, Dusty, again, really appreciate you coming on today and illuminating what you guys are seeing in the retail space. Thanks for spending some time with us.

Dusty Batsell (41:38):
Yeah, thank you guys.

Adam Hooper (41:39):
All right, listeners. That's all we've got for today. As always, if you have any comments or feedback, please send us a note to With that, we'll catch you on the next one.

Want to see if raising capital online is right for you?