Retail Is Coming Back: How Community Retail Incubators Are Revitalizing Commercial Real Estate

Crystal Victoria (00:00)
AI is about to change it again because people no longer trust what they see online. You’ve got a lot of fraud happening when people, know, literally e-commerce, I say live stream shopping is going to be a thing because it’s the only way people know where things are real. But that’s even going to be hard because you can create deep fakes that live stream. Okay. I’ve watched two or three movies. I watched two or three movies on this blew my mind. So what does that mean?

Cody Crabb (00:07)
That’s true.

I know, yeah.

Crystal Victoria (00:28)
IRL, in real life experiences, are about to make the most amazing comeback

Cody Crabb (02:06)
Hello and welcome back to the Real Estate Pros podcast by Investor Fuel. I am your host, Cody Crabb. And today I’ve got Crystal Victoria with Target Evolution Inc. working in the Dallas and Houston markets around commercial mixed use and a model she calls Vertical Community Retail Incubators. I’m really excited to unpack what this means. You gave me a little preview before we started here and also kind of talk about what it takes to

something like this. So thank you so much for hopping in.

Crystal Victoria (02:32)
Sure, thank you so much for having me. I’m really grateful for the opportunity to share what we do and an opportunity to be here.

Cody Crabb (02:40)
Yeah, well, I’m happy to have you happy to have you. ⁓ So just to start out, I’d love for you to give kind of a ⁓ broad ⁓ explanation about kind of what what you do. We’re going to dig into a little more detail in just a minute here, but just kind of to give everyone an idea, because it took me a couple of questions to really get my head around it. So would you mind kind of giving us a little ⁓ info there?

Crystal Victoria (03:05)
Sure. So, ⁓ essentially, I personally am a published author of eight books and a college textbook on entrepreneurship and what Target… ⁓ yeah. Well, it’s because we’re talking about real estate today, so the books don’t matter. But what we do at Target Evolution is we design entrepreneurship ecosystems for youth, for kids first, and for adults and their parents, leveraging retail real estate.

Cody Crabb (03:13)
wow, you didn’t even bring that up in the intro, holy cow.

That’s just sh- yeah.

So ⁓ that’s pretty interesting. I’d love for you to give kind of an example about kind of what you told me around the youth kind of focus that you had here, because I found that very interesting and I want to kind of see what our audience thinks.

Crystal Victoria (03:36)
So that’s essentially the one we do.

Sure. So we actually, ⁓ about six years ago, around Christmas, ⁓ we decided to test out doing the holiday pop-up for the kids. We ⁓ rented a 200 square foot space in the back of retail store in the Galleria Mall, Houston. And it was the Team Viz pop-up shop. And kids got to rent a shelf ⁓ and come in and sell their products and keep 80 % of their income.

All the products in our store were sold, created and sold by kids in the local community. So you’re talking about hats, t-shirts, bags, lip gloss, you know, I a lot of people lynch and lemonade. We actually didn’t let them sell food, which is going to change. ⁓ and it.

Cody Crabb (04:40)
That’s probably fair. Well, that’s

probably fair to start out, yeah.

Crystal Victoria (04:43)
And within about 30 days of us being open, we went viral five times. And I was just like, we were on the news and I was like, we’ve got to keep this. And so we actually ended up going into a small kiosk and then we were awarded government funds to build an inline store. And we just kept growing and growing and growing. We actually grew six times. ⁓

into a 3,000 square foot space in the gallery of Houston. ⁓ And then we actually were able to partner with Brookfield Property Group, which is the second largest mall owner in the world, and Macy’s. ⁓ And not only that, we were able to spin off a model for adults. But

as the spaces grew, we got really creative with them. So not only was it just a retail store.

⁓ it was actually an entire headquarters. So our stores had coworking space, conference rooms, ⁓ Instagram’s studio wall for pictures. Right. ⁓ and you know, we started putting these unique spaces in and we were like, you know, we need to keep this and we need to just get creative about the spaces. essentially at the end of the day, when you walk in the stores, the way they’re designed, they look like a retail store. And then in the back.

If you’re a member of the space, then you can use the additional benefits being coworking space in classroom. And so here in the next year, we’re actually working on building a model that not only has the coworking space, sales floor, conference room or training room, but we’re also wanting to build in classrooms, a podcast studio, a maker space and a bakery deli.

so that kids can actually sell food and not only kids but adults too or adult stores.

Cody Crabb (07:23)
Yeah, for

sure. So I find this really interesting. give me the your your model actually is centered around real estate, right? Like that. That’s why you’re that’s why you’re here. You’re here. Tell us a little more about that.

Crystal Victoria (07:36)
Yeah, so, you know, after studying this, you know, for us what ended up happening because obviously we were kind of, we opened in November 2019 before COVID changed what retail, know, consumer spending in retail really was about. I think, ⁓ you know, the misconception is that people think

Cody Crabb (07:58)
Yeah.

Yeah, heck

of a timing there, holy cow. Did you November 2019? That’s, wow.

Crystal Victoria (08:04)
Yeah,

yeah, we grew six times at a time when no one was buying anything but hand sanitizer and toilet paper. you know, to, yeah, so having that kind of experience, retail experience in the most challenging time in retail history is actually pretty interesting. ⁓ But ⁓ what, for us,

Cody Crabb (08:14)
Yeah. Yeah. When you could, yeah.

Crystal Victoria (08:33)
Starting with the kids, what became important is that, you know, ⁓ kids need really, and I have to really back up and say, not just kids. A lot of times people are starting a business and the first thing they want to do is go get some money, right? And obviously, you know, for some businesses, capital is definitely what you need. But what we have discovered, especially starting with the kids, is that a lot of times people don’t necessarily need capital. They need a solid, consistent place to sell their product.

and to constantly get in front of customers and to build communication skills and you need to learn how to sell. And retail gives you that experience. For me, like my background is in retail. I’ve actually worked in retail in stores since I was 14 years old. was a sacker at Winn-Dixie. I worked at every retail store in the mall from Sears to Montgomery Ward’s. I know I dated myself. If you were thinking that I’m in my twenties now, I’m…

Cody Crabb (09:04)
Mm.

Yeah.

you

Crystal Victoria (09:32)
much older

than that. But that being said, over at The Victoria’s Secret, makes these JCPenney’s. And so to have that experience in retail and then see this opportunity and take advantage of it, you know, where we can actually put people that typically wouldn’t be able to afford renting their own store and covering the cost of a build out, we’re able to build out a space and just rent you a shelf. And

We actually ended up studying a lot of different models of this, for-profit models. ⁓ One of our board of directors is from a retail concept like this that was tech-based called Beta, B8TA. They had 22 stores globally. They raised $100 million in five years. ⁓ COVID killed them, right? ⁓ But

Cody Crabb (10:22)
Wow.

Crystal Victoria (10:57)
there was… Right, right? And so…

Cody Crabb (10:57)
Well, the name couldn’t have helped either. Holy cow. But yeah.

Crystal Victoria (11:03)
You know the next thing the next large version of this that we said it was painted tree boutiques And what’s interesting about that if you have to study in commercial real estate painted tree boutiques Just closed all 60 stores nationally About a month ago or less and it was abrupt and you know

Again, we have been studying these different models. There’s been versions called show fields, there’s consignment stores. And in every case, what we found is that people really need to be in the store selling their own stuff. And our model needed to incorporate that. The second thing we found is that having a bakery deli and a daily traffic driver was important to the entire model. Not only putting people in high traffic locations,

but putting them, making sure that there is split traffic so that they can make money. Because the reality is, is that when people aren’t able to make money, they don’t want to pay rent, they don’t want to pay membership, all of those other things kind of falter. And so that’s why we started in the malls. We only worked with high traffic shopping malls in, you know, specific communities. ⁓ And what we are studying now is how to make this entire concept work in open air shopping centers.

Cody Crabb (12:13)
Mm-hmm.

Crystal Victoria (12:22)
and strip malls, strip malls and commercial real estate like that, because that once we figured that out, that’ll be an even more powerful model. And what that really does is it makes us kind of like a tenant manufacturing facility for a property owner that may have other vacant spaces that they can fill using, leveraging people that are growing out of our space. So they are able to test it out.

the property owner is able to see how well they sell, see how well they do, just renting a shelf before giving them an entire store. Right. And so that’s really the power of the model, you know, not only, you know, just making sure that we renovating commercial real estate, right. And modernizing real estate, improving property valuations, but that we are also manufacturing the traffic and making sure that people have

Cody Crabb (13:01)
Yeah.

Yeah.

Crystal Victoria (13:22)
a launch pad or a ladder to their own store. One of the fastest things that kills businesses, especially people selling stuff, is to go from online selling and then go rent out a space, spend God knows how much money renovating it, right? Sign a long-term lease, now you’ve got permanent rent. And this is a vastly different world. So we are go-between. We’re kind of a stopgap. Before someone goes and builds out a store, before property owner rents.

Cody Crabb (13:46)
Yeah.

Crystal Victoria (13:50)
store to someone who may fail in a year, right? ⁓ They’re able to get space in our stores, test it out, test out the concept, make sure they know what they need to know, and they know what to do before growing into their own storefront. The ultimate goal for our people is to grow into our own storefront, but for the property owners that we serve, our ultimate goal is to make sure that they have a steady pipeline.

Cody Crabb (13:59)
Hmm.

Hmm.

Crystal Victoria (14:17)
of tenants that they can put in their properties.

Cody Crabb (14:21)
Yeah, I find this really interesting because ⁓ this also kind of seems ⁓ like it could be a nonprofit. Like you said, you’re looking at multiple models of this. So mean, what kind of good does this do in a community to have something like this?

Crystal Victoria (14:35)
So funny thing you said that we actually are nonprofit. ⁓

Cody Crabb (14:38)
I thought you said you

the for-profit models. Yeah, I assume that meant you were for-profit, but yeah.

Crystal Victoria (14:43)
No? So, and here’s what’s unique about it. I tell people, look, know, the nonprofit, first of all, doesn’t mean no money. A nonprofit is the tax that is not a business model. Okay. And the nonprofit gives us a competitive moat because we are able to access capital that a typical for-profit business can’t touch. So when we talk about the failures and we look at, at models like pain, a tributary, when we look at beta,

Then another thing that we found is one of the primary reasons that these models failed is because they are for profit. And during economic downturns, when consumer spending is down and people aren’t spending money,

their stores don’t make money, their people don’t want to pay rent, and they start pulling out. No one’s making money in the store. What we’re able to do is leverage grants, sponsorships, and government funding ⁓ to cover the cost of our space so that we can kind of get our vendors a break.

and the property don’t still get sprinted without it killing us. We’re able to leverage our nonprofit status to get secure funding to keep us going for other reasons. Now, our model has 13 revenue streams, but that being said, you know, and three of them are associated with nonprofits, you know, grants, sponsorships.

Cody Crabb (16:20)
Yeah.

Crystal Victoria (16:42)
government contracts, donations, you know, those are nonprofit revenue streams that a typical for-profit retail store doesn’t have. So for us, when you marry our model being that again, we monetize our spaces, our store rents as the event center, the coworking, the retail, bakery, deli, podcast studios, makerspace, you’ve got that. And then you have a nonprofit model. Then what happens is you ended up, we ended up building a financial infrastructure that,

generates enough cash flow for us to not only grow, but also to buy real estate and to keep the model going even when no one is buying anything. That’s what makes it powerful. We’re recession-proof.

Cody Crabb (17:20)
Hmm.

Yeah, and I mean, it’s it kind of reaches down toward the people that really could use something recession proof as well. Like that that’s kind of what speaks to me here is that it’s not only is it like, you know, great for the community or helpful or whatever, but it also seems to be one of those things that like it’s it’s kind of a win win. Like there’s no there’s no downside here. So ⁓ I find that really interesting. ⁓ So let’s say ⁓ let’s say someone’s listening to this and they’re like.

This is really interesting. Like, maybe I should look into doing something like this in my area. what would you say to them about like, how would how do they know they have an area where this might work? What would you say to them? And kind of what would be some some things they should know before they start?

Crystal Victoria (18:08)
Okay, ⁓ great question. So the first thing I would say is Placer AI. So for those who don’t know what Placer AI is, Placer is a way to ⁓ monitor and see how much traffic is being generated in specific locations. And when I say traffic, I mean foot traffic. When people go to Walgreens, where do they go after? Are they staying in the shopping center? A lot of people don’t know that your data, your GPS data has been

You know, it’s been aggregated. That’s how retail, ⁓ our top stores, you think it’s Starbucks, Kroger’s, ⁓ Chick-fil-A, how they determine where they’re going to put locations. run placer AIs on address. They look at discretionary income of the local community, but they also look at the traffic associated with that shopping center to make sure it makes sense. And so that’s the first thing that I do is say, make sure that your area can support local makers.

Cody Crabb (18:52)
Interesting.

Hmm.

Crystal Victoria (19:07)
because it’s more of a, it’s an entertainment, it’s an entertainment experience thing, right? And what really makes it helpful is it drives local economic spending in your local community. ⁓ So, you know, as long as the spaces are in communities ⁓ that can afford it. And the reason I’m emphasizing that is because a lot of times people are very tempted to renovate a whole

Cody Crabb (19:22)
Hmm.

Crystal Victoria (19:36)
run down shopping center, you know, in a low income community and say, okay, we’re going to do this as economic development. And it is here’s where that fails. Now you’re having to ask people to come across town to maybe a lower income community and spend money. It shouldn’t be incumbent on a low income community to buy products that are 40 and $50 from local makers that they don’t need when they’re struggling to keep the lights on. All right. And, and again,

Cody Crabb (20:04)
Yeah, see, and it’s

that kind of stuff that I am like, it’s a good thing that if someone has thought of that, that they may not have they may not have thought of this someone has thought of this idea, they may not have thought of that. So that’s that’s really helpful. Yeah.

Crystal Victoria (20:14)
Yeah,

yeah, high traffic locations, ⁓ beautiful properties. You you have to create an experience and visual merchandising is one of the most important keys to our entire model. And we are designing, we have a license, a licensing franchise version of this where somebody can come by the technology. We built our own IT system.

Cody Crabb (20:35)
interesting.

Crystal Victoria (20:38)
I’m the interior design architect. I’ve designed the floor plans and the blueprints for different versions of this in different size spaces from 2500 square feet up to 100,000 square feet 200. Like we can literally take over an old department store Macy’s or we can be as small as an inline store. But I’ve designed floor plans. We’ve got the operation manuals, all of that. Someone can literally come license this entire model and we will come and build it for you. So before you go through the process.

and the struggle of building this cell, call us, let us help you. Okay, that’s the first thing I’d say and place their AI. ⁓ But you know.

Cody Crabb (21:12)
Yeah. Yeah, well, that’s

that’s fascinating. mean, I think like you said, this is a little bit of a unique model. I don’t know if I’ve ever heard of anything like this before. But the idea that you can kind of you are you’re aware of that and they’re like, yeah, I know. So come in if you like the idea. Let me just help you do it. So I think that’s brilliant. Yeah.

Crystal Victoria (21:30)
Yeah, so, you know, again, if you look at the ⁓ the country and real estate commercial retail real estate nationwide, over 60 % of strip malls and retail real estate is extremely old in this country. ⁓ There hasn’t been a

Cody Crabb (21:50)
Yeah, I’m thinking of some of places

in my area and it’s yeah, it’s not in the best shape. Yeah.

Crystal Victoria (21:53)
Yeah, there has

been a lot of new development in commercial real estate and shopping centers. And part of that is because people believe, and I’m going to dispel a myth here, people mistakenly believe that everyone just shops online and all shopping is going to online. Our kids have driven the trend for the last two years back to shopping malls. Here’s the other thing that’s getting ready to happen. So I want you guys, if you’re an investor, real estate investor, property owner, I want you to listen to me right now and listen to me.

AI is about to change it again because people no longer trust what they see online. You’ve got a lot of fraud happening when people, know, literally e-commerce, I say live stream shopping is going to be a thing because it’s the only way people know where things are real. But that’s even going to be hard because you can create deep fakes that live stream. Okay. I’ve watched two or three movies. I watched two or three movies on this blew my mind. So what does that mean?

Cody Crabb (22:30)
That’s true.

I know, yeah.

Crystal Victoria (22:51)
IRL, in real life experiences, are about to make the most amazing

And it’s already started. Shopping mall traffic has been up 25 % year after year, year over year over the last two, three years driven by your children. Your kids want experiences, they want connections, they do not want to live an entire life online, they don’t want to shop online, and they don’t trust what they see online. So what that means is,

We are now about to have a massive amount of people needing retail space, okay? Commercial retail space that A is old and B is expensive, right? And for the person in transition from a TikTok shop store, right? Or an Instagram store, can’t, they, they, sometimes you don’t know what you don’t know. And for them to jump out into this expensive real estate transaction where they’ve leased a space and they paid for the build out.

Cody Crabb (23:31)
Yeah.

Yeah, of course, yeah.

Crystal Victoria (23:50)
you know, they’re going to sometimes that would be a shock to their business because now you’re out of $100,000 before opening day. Okay, so it’s important that we establish some spaces.

Cody Crabb (23:57)
Yeah. And especially on the lower end,

can’t really bear burdens like that. Whereas on a higher scale, you probably could. have to really be careful with the resources you’ve got. So that makes sense.

Crystal Victoria (24:06)
Right.

Exactly. And so again, as we go between and it’s important that communities have these spaces because everybody is asking the question, what are people going to do in the age of AI when there are, you know, when jobs are being replaced by today? What are our kids going to do? What are we going to do? We’re not an entire solution, but I do think there is a solution in revitalizing retail space so that people can come in and sell their own products. If it’s even if it’s just money on the side, this doesn’t mean that they’re actually going to.

do a full-on business. Maybe they’re trying to supplement cash flow for their household and they just need to sell some t-shirts on the side and a little space and work full-time. There’s going to have to be very creative arrangements around how people work, how people live, how people earn money. And we’re one of these creative arrangements. So our goal is to build as many of these spaces as

Crystal Victoria (24:59)
so that we can build these spaces that support the community. It is a great community cause. creates jobs. Every space that we build creates five to seven jobs. And we create jobs. Not only that, but we’re creating businesses. Because when you think you have 40 people in a retail space selling products, all paying rent and all making money, then add that to the job count, right?

as well as the increase to sales tax revenue for that local community. And that sales tax helps to go cover your streets. It helps your schools, it helps your police departments. So models like this are increasingly important, especially during economic downturns when people really buy local and they really buy their necessities. And so, you know, again, our model is, and you said it a minute ago, it’s a win-win. Everyone wins. And we studied this because we were looking like it can’t possibly be a everyone wins.

Cody Crabb (25:24)
Yeah.

Crystal Victoria (25:53)
Let’s look, we kept looking, like who loses? We kept studying to see who would lose the most by this concept and we could find out one entity. Corporations win because they’re able to source new products from our store. Big retailers win because our goal isn’t for the same retailer to be in multiple of our spaces. Our goal is to help you grow into not only your own space but also sell your products to Target, okay?

Cody Crabb (25:54)
Yeah, someone always loses. Yeah.

Yeah, yeah.

Crystal Victoria (26:20)
You know, and

so the corporations win, the city wins, it’s economic development, we’re creating jobs, okay? It’s local tax circulation. The property owner wins because the property owner now has a tenant manufacturing facility that’s helping to rent out his other spaces on campus and on its property. And that’s increased his property valuation, right? You’re talking about an increase in an NOI or net operating income, et cetera.

Cody Crabb (26:27)
tax revenue. Yeah.

Yeah.

Crystal Victoria (26:50)
and you have this recession-proof space that’s gonna always pay rent and

leave, right? And then the maker wins. The person that is creating, ⁓ they win because they’re getting a ⁓ world-class million-dollar retail space for 500 bucks a month, right? So we kept seeing, we kept studying and saying, like, somebody’s gotta lose. And so we were like, well, maybe it’s commercial real estate leasing. And they don’t even lose because we actually decide, we kinda landed on them, we’re saying, okay,

Cody Crabb (26:58)
Of course, yeah.

Yeah.

Crystal Victoria (27:19)
Well, since we’re on a winning streak, let’s design an opportunity for commercial real estate agents to come and work with our vendors

Cody Crabb (27:29)
Yeah, there’s nothing wrong with that. ⁓ Well, this is actually super interesting. ⁓ Like I said, this is kind of the first I’ve heard about something like this. ⁓ I mean, I’ve heard of like co-working spaces by me, but using it as an actual business model is really interesting, because it’s usually viewed through the lens of like, it’s a charitable thing. It’s for, you know, just to help the community and it loses tons of money. But the idea that you can actually make some money doing this and have all of this.

Crystal Victoria (27:54)
make money.

Cody Crabb (27:56)
all these benefits. mean, it’s pretty amazing. ⁓ So if someone is, like I said, if someone wants to look further into this and kind of see if this is something they could do in their area, how can they find you? How can they get in touch with you? And ⁓ where would you send them online?

Crystal Victoria (28:12)
Sure. So our website is targetevolution.org. All right. And on our website, there is a menu option that says Retail Incubators. And it talks all about our Vertical Community Retail Incubator. All of the details you could possibly want is on that page. ⁓ A lot of times people get, ⁓ they’re like, well, you know, how, what does it take to manage something like that? Again, we’ve custom built an IT system based on what works and what we’ve seen in our system.

⁓ that it’s an operating system for this entire model. ⁓ It manages every piece of the store, every vendor, every piece of inventory, as well as gives ⁓ the vendors kind of a weekly performance dashboard and metrics so that they can see how well they’re performing. So you can see everything about how this works, what we do, and how you can get this in your community on our website, targetevolution.org. And again,

Cody Crabb (29:02)
Wow.

Crystal Victoria (29:12)
or forward slash incubator (targetevolution.org/incubator).

Cody Crabb (29:16)
This is awesome. well, everybody should go check that out. If you’ve thought something like this is would be great in your community, this seems like the perfect way to kind of dip your toes in and see what what that’s about. Thank you so much for joining us today, Crystal. I think we’ve all learned a lot for sure. And thank you, audience, for joining us as well. If you found something valuable in this episode, go ahead and give us a like, subscribe, comment, all the things so you don’t miss more episodes like this. Crystal, thank you. Once again, this has been great.