A Tech Firm That Can Deliver Tenant Sales Data, and It Does Other Stuff, Too

What does Guesst offer landlords?

We give owners a wide lens of multiple retail- and restaurant-tenant daily sales performances, neatly itemized on one dashboard. It’s like watching a stock channel, except clients see how their tenants perform. To do this, we integrate with multiple cloud-based POS systems, such as Shopify. It’s crucial that the retail real estate ecosystem focuses on consumer spending habits in real time now — whether online, omnichannel or any channel — to be reactive instead of just proactive. As a merchant, owner or lender, you need to know what’s happening in these channels.

Tenants can be shy about providing sales. How do you get them on board?

When COVID hit, the timing was right. Tenants were telling us they needed concessions because their sales disappeared. We’d say: “We’d be glad to help, but you’ll have to report sales.” We knew early on we weren’t going to get every tenant on board, especially the big ones with closed POS systems because we can’t integrate with them. So we decided to go with the small to medium tenants who were seeking creative leasing opportunities, or “flexible retail.” We’re building our ecosystem around this phenomenon. Landlords used to push back on these arrangements because they couldn’t verify sales, but now they can negotiate more favorable deals because [via Guesst] they can actually see sales. Some of our hosts have 300 tenants on our platform, and they can see per-category performance with item-level detail on each. For example, we automate daily tenant sales for partner/customer Eldon Scott, [president] of UrbanSpaceNYC.com, [operator] of pop-up markets … and food halls. I wowed Eldon by telling him once that he sold exactly 823 hamburgers between noon and 1 p.m. He didn’t realize he could get that detail level without poring through mounds of analog sales reports.

So the tradeoff for tenants typically is that they get percentage rent?

Not necessarily. It might be a rent reduction. We just need tenants to plug in so landlords can see their sales. Later, if tenants enjoy surging sales, landlords can go back to original rates.

Doesn’t that motivate tenants to stop working with you when they renew leases?

No because property owners already have the data. But this isn’t just about keeping tenants honest. Data keeps owners honest, too, because they need to know what categories are performing to create better merchandising plans.

Making sure some tenant categories aren’t overrepresented, for example?

It allows owners to validate what they don’t need. It’s one thing to say: “We don’t need you because we think we have too many jewelers.” It’s another to say: “We know from last year that jewelry is overrepresented.” As a retail broker, I understand the players in this business. I knew that in order for struggling retailers to stay in spaces, they’d be willing to enter into this “flexible retail” thing. … There had to be transparency at this level, so we’ve become a super POS for owners because they really get to know what’s going on instead of always being beholden to the tenant. The tenant can also come back and say, “You’ve seen my sales; I need a break.” Property owners always told us they wanted to give tenants rent breaks, but they didn’t have the luxury of variable notes. I said they might now if they get enough comps to share with lenders.

Give us a sense who your landlord clients are.

We’re at every major mall in 28 U.S. markets with many of the big retail REITs. Our lane is specialty leasing. By the way, while many deals already required tenants to report sales every month, many tenants just wrote sales on a paper and handed them over. We needed verifiable reporting. The REIT space has so many specialty programs for carts, kiosks, pop-ups, holiday markets, food halls, et cetera. All the food halls have percentage rent clauses. We sweep through guest accounts, then pay the property owner in seven days. The merchant doesn’t have to worry about calculating percentages. We’ve actually had vendors thank us for not having to deal with accounting. Franchisors like that we can get them accurate royalties.

The Mall Short Hills in New Jersey is one of your clients. How widely are you represented there?

We’re in 5 to 10% of their space, a small but growing section. We’re in all Taubman properties, scaling across their portfolio with about 600 merchants. We’re moving ahead with other REITs.

What do you charge owners?

It’s a $100 setup fee to connect to their tenants’ POS systems and $30 to $50 monthly. Owners are apprehensive about talking to certain tenants, especially on-time payers, so sometimes there isn’t leverage.

After tenants and landlords agree within a lease to use Guesst, you’ve got to get POS systems on board as well. How do you benefit those partners?

Once we’re locked into a lease agreement, you need a comparable POS system. We are working on integrations with leading property management software companies. The only way we can track sales performance is to partner with online-dominant companies like Shopify and other players in that ecosystem. From this, Shopify gets physical adoptions, property owners get new merchants and we get more adoptions. We’ve had over 300 applications and signed multiple lease and license agreements and POS adoptions. Besides Shopify, there’s Ritual, Square, Clover, Toast, Vendhq and Lightspeed. We have five more on the horizon.

You mentioned specialty leasing as your focus. And on July 14, Guesst announced GuesstList, which partners with Shopify to identify digital merchants looking for physical space and partners with landlords like Centennial, Federal, Taubman, and Nuveen that have those spaces.

Digital advertising is getting expensive. Facebook and Google rates have risen exponentially, and the ROI is nominal. Brick-and-mortar, on the other hand, typically offers a halo effect with a 30% lift online. Plus, it boosts showroom sales. These merchants are seeking incubator spaces but want to move into five- to 10-year leases once they’re sure they can perform. So we created our GuesstList, a list of online merchants wanting to try physical retail. We knew if we could produce qualified leads, we’d have owners willing to give them flexible leases.