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Little Giants: Does the New Guy Stand A Chance?

Written by Mark Becker, Director, Industrial Services

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Over the years, I have had the pleasure of representing multiple entrepreneurs who have built their brands with much success. These companies not only create value for their customers through innovative products and services, but happily create a magnitude of jobs as a result. On occasion, they sell their businesses to a larger conglomerate and get to ride off into the sunset after their contract burns off, only to emerge beyond the non-compete period. It’s a wonderful illustration of the American Dream, while also creating quite the real estate case study.

I recently had lunch with one such entrepreneur to celebrate the sale of one of his industrial buildings, and to hear about his latest ventures (plural – he can’t ever just have one poker in the fire).  One of his companies is already on the fast-track to success and, being his self-proclaimed trusted advisor on all things real estate, I wanted to take a deeper dive into what his future facility needs would look like. How does a startup define facility needs  when growing at such a rapid pace?  As he eloquently stated, he is fighting alligators while I’m trying to clear the swamp. In other words, I was jumping the gun and needed to check back in after six months.

Corporate consolidation seems to be in the news on a daily basis lately. We personally just experienced it ourselves with the merger of Cushman & Wakefield and DTZ, and change in ownership. Whether a merger of two large banks, insurance providers, or a change in ownership entities of a wireless device manufacturer, it raises the question….can the little guy compete against these behemoths whose worth can reach into the multi-billions of dollars?

Here are a few groups who feel they absolutely can compete:

Food Manufacturers. As consumers increasingly gravitate toward healthy food choices, large food manufacturers are experiencing a loss in market share to the smaller brands, causing employees layoffs across the country. The preference for gluten-free, organic and non-GMO products as well as local ingredients with fewer additives is creating a segmented marketplace for these niche products.

Micro Brews. The craft beer subculture is becoming increasingly popular and stealing market share from the larger players. It is disruptive to the industry to the extent that Anheuser-Busch InBev announced last year it had acquired LA’s largest craft brewery, Golden Road. This is one of its many microbrewery acquisitions and certainly a sign of the popularity and impending success of craft beer.

Fitness Clubs. In recent years, it appeared that the only treadmill in town would be located at one of a handful of large gyms, such as Lifetime or 24 Hour Fitness, as they began opening on every corner, threatening even the local YMCAs. Now, niche gymnasiums are filling the void with spin-offs like CrossFit, boxing centers, ballet, yoga and a whole host of other gymnastics related concepts. While these gyms are smaller in size and scope and lack the large waterparks and other amenities of their larger competitors, they still seem to be  holding their own against the big players. They are taking advantage of smaller retail or industrial space without the need for the flashy, higher priced real estate occupied by the larger gyms.

Restaurants.  Being in North Texas, we don’t have mountains or beaches to occupy our free time, but we do have restaurants, and a lot of them! Chain restaurants are abundant, but there is so much business, the local mom and pop types are also experiencing much success. This, in turn, allows them to continue filling vacancies in strip centers.

These are only a few examples, but a sure sign startups are more than capable of competing with the big business industry. It’s encouraging to see entrepreneurism alive and well and busy fighting off alligators!  Just know we are here to clear the swamp for you when you’re ready.

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Mark Becker is a Director within Cushman & Wakefield’s Occupier Services Group, as well as a member of the Goal Supply Chain Solutions group. Becker represents local and national clients with a variety of requirements including occupier representation, landlord representation, property acquisition and disposition, and consulting services.

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