Introducing Mortar

For the modern brand.

We’ve been leaking bits & pieces of it already, but today we’re excited to officially share what we’ve been building over the last several months.

Introducing Mortar — a real estate technology platform allowing modern, high-growth brands to book, launch & manage dynamic, short-term retail spaces around the world, all in one place.

Shaped over months of private beta testing, calls & meetings with brands, retail property owners & commercial real estate brokers, we’ve been quietly building the industry’s first technology platform set to power next generation retail spaces worldwide. But before we touch on what we’re really building in Mortar, let’s talk about how we got here. This is a problem we’ve seen developing over the last several years, but one that’s been hidden away at the hands of the world’s largest, oldest & slowest industry — until now.

The problem with commercial real estate

Commercial retail real estate runs off a simple, centuries-old model: buy a commercial retail property, lock in a long term lease & profit (on both the upside from monthly rent collections & the downside from a de-risked, long term contract binding the tenant to your space). It’s the oldest form of a subscription model — right alongside your Netflix account (if it came with a five year minimum membership requirement). Commercial real estate & Netflix aren’t comparable (duh) but we make the parallel because being locked into Netflix for five years — no matter the quality of the platform or its content over that timeframe — is the exact situation brands have faced with their storefronts for hundreds of years.

This model has existed for centuries thanks to powerful, old, antiquated but incentivized parties behind the scenes pushing for five- to ten-year leases & secure returns from their commercial properties — namely commercial property owners & their banks. It’s a successful, enduring model for those parties. But surrounded by disincentives to change, enduring models become innovation graveyards. And so, as one of the only existing channels to reach consumers, a very defined set of rules had guided brands in how they should lease, open & use physical retail space — until the 1990s. Enter the dotcom era.

Our road to Mortar

With the introduction & widespread use of the internet & disruptive, once unrelated platforms like Amazon (1994), Shopify (2006) & Instagram (2010), the world of commerce changed forever. Instead of holding claim to the sole channel for connecting with & selling to consumers, physical retail space — what felt like overnight — was suddenly one of many channels available to brands (& vice versa for consumers discovering brands). From 2000–2019, ecommerce as a percentage of total retail sales grew a mind-bending ~22.0x (from 0.5% of total retail sales to 11.1%).

Ecommerce Sales as % of Total Retail Sales

And then came the big one. COVID-19. What ultimately caused that same percentage to nearly double within three months would later usher in an uninterrupted two year period of strict global dependence on digital & set a new normal for commerce & retail real estate. That new normal seems to evolve just a little more every day & with every new shopping season, but some really interesting early observations in retail real estate’s core end user — brands — which we see as strong converging tailwinds behind what we’re building in Mortar:

1. Digitalization. With brands fleeing to ecommerce websites & social media throughout the pandemic to meet consumers where they were forced to shop, brands — new & old, big & small — became digitally adept & tech-forward seemingly overnight. For us, this doesn’t just raise the obvious need for tech-led simplification of the entire industry, but opens the door to a core question on physical storefronts: does more digital equal less (or a dramatically transformed) physical?
2. Youth. The push to digital put digitally native brands — those modern brands born from the minds of young, innovative, tech-first designers & founders on websites & social media accounts — center stage. Finding the “new normal” not so new at all, these brands flourished throughout the pandemic, forcing larger brands to take note — some even replacing old guard, pre-pandemic teams with young, dynamic & tech-first teams at the highest levels (cc: Nike).
3. Unconventionality. Put simply, this newly emerging generation of brands & the designers, founders, executives & teams behind them are just different. Standard operating standards, rules & procedures don’t apply. And that goes for the traditional ways of retail real estate. For many of the youngest, fastest growing ones, real estate’s more synonymous with an archaic, pain in the ass system that they’d just rather avoid dealing with altogether. Just look to some of our favorite brands as examples — all of them large enough & famous enough to warrant a storefront or two, but none with a single space of their own — Telfar, Fear of God, Heron Preston, Casablanca & on & on & on.* And those that are using real estate aren’t really using it for what it’s “meant” to be used for — they’re exploring short-term pop-up spaces to test markets, target market product, build brand awareness & more. Just look at Balenciaga, SKIMS & even Lululemon(!) (who now has a dedicated Pop Up Program for this exact reason).
4. Agility. A byproduct of all the above, young digitally native brands want the same in real estate as they get from websites & social media: access to anyone in the world with a push of a button. What the pandemic taught more traditional, long-term storefront brands was the value of mobility. While digitally-native brands continued to move, expand, grow…move, expand, grow, etc., larger brands went introspective, reexamining their retail & growth strategies, moving to omnichannel & reengineering how they market to, sell to & meet consumers globally.

*It should be noted that many of these brands use physical retail space as a sales & marketing channel, but do so through wholesaling (leaning on stockists like Saks, Selfridges, Nordstrom, etc. as a sort of real estate partner).

Add it all up & what you get is a dramatic transformation in the interfacing with & use case of commercial retail real estate. Add in another wild fact (to be written on later) that Gen Z consumers actually prefer stores to ecommerce & you get a perfect storm of tailwinds for industry innovation. Even if we’re wrong somewhere, what’s most clear is is that a gap has rapidly emerged & quickly widened between old world real estate & new world brands.

What we’re building in Mortar

Based on prodding interviews with brands both before & during private beta testing — all alongside our own attempts to replicate first hand what we had heard by working through the same processes ourselves — we heard the pain point loud & clear: commercial real estate leasing is a b****. Here’s some of what we knew off the bat:

1. It’s stressful. It’s the most frustrating, time consuming & manual seven-figure decision made, maybe ever.* Think about a never-ending, nearly yearlong process of planning, touring, ideating, touring some more, iterating some more & then negotiating between the tens of parties & platforms necessary to get a commercial lease done (see some of the following points). Yet brands are expected to go through it over & over & over again, storefront launch to storefront launch.
2. It’s buried. It’s a process (& industry) gatekept by at least three layers of involved parties at any given point in time — brokers, owners & banks. This makes for just as fun an experience as it sounds.
3. It’s opaque. Email a broker’s email address you found online or on some window sign & cross your fingers. Silence. Finally get on the phone with a broker to inquire about the space. More silence while he/she takes it back to the property owner. This one might be silence forever, or in the best case some comprehensive feedback: “No, sorry. Not a fit.” Nice. If you make it past this stage, now you’re talking about lease agreements. With attorneys. Wishing for silence.
4. It’s disparate. Tens of disconnected platforms constitute the process. Find a space through one of ten different listing platforms, discuss with your team over another, contact its broker through even another, get on a series of calls with all the parties involved, discuss over numerous email chains, sign the lease over yet another & pay monthly rent over just one more.

*We estimate the average retail space takes 8+ months & $2.5+ million to launch & then subsequently operate over the course of a single long-term lease.

But when we really zoomed out, we heard four things from brands: retail real estate is too big a commitment, too complex & intimidating, too stressful & too disconnected. Brands want real estate to mirror what they already have in their websites & social media profile — instant, dynamic access to consumers across the world. In a world of fluidity & mobility, five- to ten-year leases don’t cut it. Getting over that long, single locality commitment is one thing, but looking down the lightless, twisting & turning tunnel to actually get there is another. Working through tens of disconnected, unrelated platforms & three layers of gatekeepers just to start the process? No thanks. Brands aren’t wrong to feel that navigating the process is a daunting undertaking from day one. It’s a long, painful slog of a process that a lot of brands decide to opt out of completely on the very same day they started it.*

*We won’t get into market sizing here, but think this is a huge opportunity. The U.S. non-mall retail leasing space is a $30B+ industry & because of its complexity & cost, only includes big, hallmark brands — the Nikes, J. Crews, North Faces, Lululemons, H&Ms, etc. of the world that you see time & time again in retail pockets across the country. Imagine being able to expand that market by making it accessible to the entire pool of younger — new & emerging, digital & DTC — brands who either drop out of the leasing process early because of its complexities or pass on exploring it altogether for the exact same reasons.

Locked into our long-term vision for commercial retail real estate (read below section) & an unwavering commitment to innovation for next generation brands with all this in mind, we’ve built four core capabilities into the initial platform:

• Save. Brands & their teams — from global heads of retail & real estate to directors of sales, DTC & omnichannel to CEOs & CMOs — can now collaboratively conceptualize, save & iterate on real estate anchored projects across Mortar’s global network of technology powered spaces no matter the use case — from building global brand awareness to target marketing new product to testing out brand new cities for long-term viability.

• Book. Thanks to tech-based tools built on-platform & other third-party integrations, brands will soon be able to handle the full legal & leasing payment process all in one place. Automated permitting (in necessary cities), leasing/licensing agreements pre-built alongside leading commercial real estate attorneys (& further customized by each space’s owner) & credit card autopay will dramatically lower the complexity, intimidation, stress & expense factors too often associated with retail leasing.

• Launch. Where traditional retail leasing processes (& other competitive platforms) leave brands — right after taking their money — is where the back half of Mortar’s platform kicks in. With interactive, network-wide mapping, brands can easily track their team’s on-platform activity & newly launched spaces no matter where they’re at.

• Manage. Take that tracking one step further & dig one layer deeper. With each Mortar-powered space outfitted with integrated POS systems & other foot tracking hardware, each space plugs seamlessly into brands’ analytics dashboard. Launch dynamic spaces across the world at the push of a button & get real-time, 360° access to them with just one more — no matter where brand teams sit globally. Dynamic retail space, fully connected from anywhere.

Paving the road ahead

As (old) Gen Z founders ourselves, we share the same simplified, tech-first worldview held by those next generation designers, founders & executives we’re building for — and with shared passions for design & fashion, we could’ve been right alongside them in another life with our own labels if real estate hadn’t gotten to us first. We say this not to date ourselves, but to say that everything built into Mortar today & everything else to come tomorrow is (& will be) built through the exact same shared visionary eye.

So what’s that tomorrow look like? Technological. Simple. Dynamic. Unconstrained. The tomorrow of retail real estate looks all these things & more. It’s a world where brands around the world can fluidly physically tap into any market they want — NYC & LA to Paris & Tokyo — without delay or friction. It’s a world where your favorite brand launches, runs & compares dozens of spaces across the globe at once, each space serving a uniquely different purpose — one in Miami to test viability of a long-term lease there, one in Aspen to target market a new line of winter activewear, one in New York City to boost brand awareness during Fashion Week, one in Paris to explore an international launch & on & on & on.

Commercial real estate has a lot of problems, all of them bundled together choke-holding the development of that future world. It’s one hell of a chokehold too made up of 100+ year real estate behemoths, a centuries-old operating model & a “future looks more less the same” mindset.* But that’s why we’re here. Welcome to Mortar. Time to start building that world of tomorrow.

*We know this mindset to be true because of all that’s happened over the last two years — a pandemic, exponential growth of ecommerce & record commercial retail vacancies in some of the word’s once-best retail corridors — what was retail leasing’s big innovative answer? Percentage sales-based rent. Original.

A lasting note

This is a public beta. It isn’t a perfect platform (yet) & we know that. But we’re a creative, fast moving, product- & user-obsessed team (of just two for now), working to build the future for all who sit at the intersection of commercial real estate, technology and retail — brands, property owners and soon brokers too. This launch is just the beginning of that. We’ll be launching full scale first across NYC & Brooklyn within the next year before exploring an expansion into other hot major markets (LA & Miami) & secondary cities where we’ve heard high brand demand (Aspen, Boston, Austin, etc.). Our roadmap’s long & there’s a lot more ahead. We’re just getting started.

If you want to learn more, want to talk or have any early feedback, visit our homepage or shoot me a note at brian@mortar.us.