Mastering Commercial Real Estate to Secure Essential Warehousing
With the decision made to build our own distribution network for Gorillas, I faced a significant and immediate challenge: securing a suitable warehouse facility. Despite having extensive experience in supply chain and logistics, I had almost no background in commercial real estate. Yet, I was now responsible for finding and leasing a warehouse that would become the cornerstone of our U.S. operations.
Recognizing the gravity of this task, I sought out expertise where I lacked it. I partnered with an industrial real estate specialist from JLL, one of the world's leading commercial real estate firms. This collaboration was instrumental. The broker provided insights into the intricacies of the New York and New Jersey markets, helping me understand key concepts like lease terms, cap rates, escalation clauses, and market dynamics.
Simultaneously, I immersed myself in learning everything I could about commercial real estate. I attended workshops, read extensively, and leaned on my network to fill knowledge gaps. My background in facility management and warehousing operations proved to be a significant asset. While I might not have been well-versed in real estate jargon initially, I knew what operational features were non-negotiable for our facility—loading docks, temperature-controlled zones, proximity to our stores, and scalability potential.
Over the course of several months, I toured over 100 warehouses, from the bustling corridors of New Jersey's industrial zones to potential sites in Chicago, Los Angeles, Baltimore, and Washington D.C. Each visit was an opportunity to refine our criteria and understand the market better. I conducted detailed lease cost analyses for more than 30 properties, projecting costs 10 to 15 years into the future to ensure we were making financially sound decisions.
The competition for suitable spaces was intense. We frequently found ourselves outbid by industry giants like Amazon and FreshDirect. In other cases, internal delays in funding approvals caused us to miss out on prime locations. It was a relentless process, often fraught with frustration. Yet, every setback was a learning experience, sharpening my negotiation skills and deepening my understanding of the market.
By August 2021, Gorillas had achieved a valuation of $1 billion, earning the coveted "unicorn" status. However, the euphoria was short-lived. As with many startups, the focus shifted abruptly to profitability and financial sustainability. Funding constraints led to a dramatic scaling back of expansion plans—from an ambitious 120 stores to a more modest 40. This pivot meant that the large warehouse facility I had been striving to secure was no longer viable.
While it was disappointing to see months of work seemingly amount to nothing, I recognized the value of the journey. I had effectively become an expert in commercial real estate for industrial spaces—a skill set that would prove invaluable in the months to come. More importantly, this experience reinforced the importance of adaptability and resilience. In the fast-paced world of startups, plans change rapidly, and the ability to pivot is crucial.
Ultimately, this chapter of my career wasn't about a successful lease signing but about mastering a new domain under pressure. It highlighted that sometimes the journey itself equips you with the tools and knowledge you'll need to overcome future challenges. By embracing the complexities of commercial real estate, I positioned myself to contribute more strategically to Gorillas' evolving needs.
