THE CANARY IN THE COAL MINE
Jerry Miller: Thank you for joining us today to discuss the changing conditions in the retail construction industry. I’m Jerry Miller, Vice President for Strategic Pursuits here at ms consultants. Today, we’re happy to have Jason Christoff with us to discuss the shifting economic policies that seem to be dominating the headlines today. Jason is the Senior Vice President of architecture and Engineering at ms, and he’s been in the multi-unit retail business for 23 years. Jason’s team consists of over 100 architects and engineers performing design on nearly $300 million in construction annually, primarily focusing on multi-unit retail, grocery, big box restaurant, convenience stores, and hospitality venues.
Jason, thanks for joining us today. Could you start the conversation by sharing a bit of your background, and some general thoughts on the current state of the commercial retail market?
Jason Christoff: Yeah. Thanks for having me, Jerry. I think you covered a lot about my background, but a little bit about my role at ms. As the program principle for multi-unit retail, grocery, restaurant, and convenience clients, I’m able to interface directly with both current and prospective clients, and especially lately, at the very least over the last six months, I’ve taken a keen interest in their thoughts about the current economic situation. I’ve been genuinely curious about what they are thinking about it, but of course it also has a very specific effect on what’s going to happen to us professionally as well.
In general, I think that architecture and engineering companies are a bit of a canary in the coal mine, and it comes to onset of some sort of economic condition. So, often you’ll see on the news, metrics measuring construction start or construction projects completed, but the reality is, the design is quite a bit upstream of construction start. At least from where we’re sitting, where we work across multiple markets and multiple brands, we’re able to observe various behaviors that might even be confidential to the measurement that you would see on the news. Generally, that’s what we’re going to speak about a little bit today—those observations of what we see people doing and what we’ve heard about what people are doing in the market.
So, when I think about the current economic conditions, I think it’s easiest to break it down into three distinct parts that are contributing to all these concerns. And the first is about capital investments being made by retailers and restaurateurs for the purpose of renovating or building new facilities.
Also supply chain issues, being the second part. Because generally, those logistical concerns for how companies are stocking their shelves have been headlined quite a bit recently due to tariff pressures.
And then the third being the consumer confidence, and its impact on shopping behaviors and shopping volumes as it affects the market.
BRAKES, DELAYS, AND FULL SPEED AHEAD
Jerry Miller: It’s interesting that you mentioned three components, first being capital investments. A lot of clients we see today are focusing on new builds. Some are looking at renovation of existing spaces. All of that obviously has to do with the bottom line and providing better customer experience.
And again, that’s going to impact the bottom line. So, how do you see companies approaching these uncertain economic times from an investment standpoint?
Jason Christoff: Yeah, so capital investment has at least something to do with what companies are thinking in terms of what kind of sales they can expect in the short term.
I think most of them expect that with uncertainty comes a decline of some sort in the short term, which then creates the opportunity for them to rethink their investment plans. But we’ve got extremely inconsistent reactions. On one side of the coin, companies are reducing the number of capital investments, or new store locations, from what had been planned as many as hundreds at the end of 2024 to just rolling out a few throughout 2025. That’s the extremely negative reaction.
In the middle, some brands are just delaying. They’re pumping the brakes a little bit, and sort of waiting and watching. They’re not willing to say they’re not going to do as much as they planned, but they’re certainly not going to do it right now.
And then on the other side, there are companies who have a longer-term mindset that are continuing business as usual. So, the result of that is that it doesn’t feel as bad because there is no specific, unified trend amongst the company or the market.
Jerry Miller: So, I think generally you’re saying that there’s no market that specifically is pushing the brakes hard versus those that are continuing business as usual.
Jason Christoff: Right. And if we were to draw a parallel to the financial crisis of 2008-2009, that was a very aligned reaction where most everyone was in decline. This particular situation feels nowhere near as bad as all of that.
SUPPLY CHAIN WOES
Jerry Miller: Jason, the wide sweeping nature of the tariffs introduced by the current administration has had impacts on a number of different areas, one of which is supply chain. I wonder if you have any comments or insight on how you think these tariffs will have an impact on supply chain management?
Jason Christoff: I think that the biggest impact has to do with just the unpredictable nature of these events, which makes it really hard to plan for the future. I think we all remember the headlines from mid-April when Walmart, Target, and Home Depot talked with President Trump about the impact that tariffs would have on retailers. I encourage each of you to take a look at some of those articles about the idea of how difficult it is to reevaluate sourcing and how many resources it takes to do so. And what we’re seeing generally is that it steals a lot of energy from thinking about future stores and future development. I think importantly, outside of the supply chain issues for retailers making sure that they don’t have empty shelves, as was indicated in that meeting from mid-April, there were also concerns further down the line for the supply chain issues for contractors and constructors.
We had a lot of these concerns, some of which haven’t even cleared up since the pandemic five years ago, but most of which have been back to business as usual. I fear some resurgence in having a couple of key construction materials not available as quickly and easily as we had hoped, which would delay store openings and further impact that unpredictable nature of consumer investment.
A PULSE CHECK ON CONSUMER SPENDING
Jerry Miller: So capital expenditures and supply chain issues are definitely critical in this environment, but one thing we haven’t talked about yet is the impact of these changing economic conditions on the consumer and their level of confidence that, as you know, can drive a lot of decision making from a corporate standpoint.
Have you seen consumer behavior shift because of some of the sweeping tariffs or the other economic issues that we’ve witnessed?
Jason Christoff: There is a lot in the news about historic low consumer confidence, but we have to remember that generally the basic needs remain constant. During the worst of the pandemic, for example, the grocery market was stable. And some markets, like home improvement, were soaring.
I think there are certain segments of the market, like maybe luxury retailers, that may be more affected than others that are seen as more essential. I think you always have to check yourself a little bit such that I don’t think the world is going to stop spending on the basic needs.
Jerry Miller: So, over your career you’ve seen the banking crisis in 2008-2009. You’ve obviously seen COVID-19 and other types of economic conditions. Are there any lessons that we could learn from what we’ve seen and experienced in the past?
Jason Christoff: Yeah, I mentioned it quickly before, but you know, in 2008, everything was in decline all at the same time.
The pandemic, in contrast, required immediate and abrupt change, but also it wasn’t because of an economic crisis, per se. For this particular issue today, and the economic uncertainty we’re facing now, there isn’t a unified reduction in capital expenditure, which I think could be a positive sign.
The media is suggesting possibilities for increased inflation and even recession, but there’s a lack of definitive or objective data. The one thing that I think is different about this situation today than those others that we’ve talked about in the past is that this one is effectively self-imposed, where policy is creating these particular concerns. And just as quickly as the policies are enacted, they can be paused or lifted.
So, this time it feels a little bit more within our control than it has in the past, which I think also feels like a little bit of a positive sign.
FINDING STEADY FOOTING ON SHIFTING GROUND
Jerry Miller: Even though the condition that we’re in today is obviously self-imposed or it feels that way, it sort of ebbs and flows. One day it feels like it’s really bad, the next day something comes out of the administration that seems like progress is being made and things are moving in a more productive manner.
I wonder, do you have any recommendations for those of us in the AE space, or even clients of folks in the AE space, on how to navigate these times a little bit more effectively?
Jason Christoff: Yeah, I think there’s a couple things that we could do. I think that one of those things is focus on the efficiency of investment. You know, the idea of analyzing materials or processes, construction methods, and design alternatives to ensure the most effective use of capital expenditure –— optimizing project timelines. Those are some of the blocking and tackling things to spend your money as wisely as possible. While this is important all the time, it seems to have an amplified importance during times of uncertainty.
And the other recommendation is a little bit more esoteric. I was lucky enough to be involved in a seminar where 30 leaders within the architecture and engineering space were talking about this very issue of economic uncertainty today. The outcome of that meeting that stuck with me was to focus your decision making on what you do know. In times of uncertainty, it feels like there are so many things that you can’t predict, but there are certainly things that you know are true today and will be true tomorrow. And if you take life through that lens, there are certainly things that you can do to avoid being completely stagnant.
But as an architect and engineer, our impact on the decisions of others could be limited, but generally our role is to be as supportive as possible throughout the process and throughout all our clients’ endeavors. And while it feels uncertain, I do think that there are ways we can all still push forward, regardless of that uncertainty.
Jerry Miller: That idea of focusing on what you do know, especially when it feels unpredictable, really resonates. Pairing that with an emphasis on efficiency, being smart and strategic about where and how investments are made, feels like a powerful combination for navigating this moment. I also really appreciate how you’ve sort of captured the environment in three succinct areas. It gives us all a helpful framework to sort of think through what’s happening, and how to respond. And at the end of the day, the consumer really drives a lot of decision making. If consumer conference is high and they’re buying and they’re present, that’s going to influence a lot of investment going forward.
So, Jason, thank you for your time today. Do you have any other closing thoughts?
Jason Christoff: Well, thanks Jerry for having me and chatting with me about this today. I guess my final thought might just be that when we’re in times like these, it’s important to stay curious, to stay nimble, make sure that you are, like I said before, focusing on those things that you know are true today and will continue to be true tomorrow, and make the best decisions that you can, at the time you make them.
Thanks for having me.
Jerry Miller: Jason, that makes a lot of sense and sounds like good advice. I want to thank you for your time today and for providing perspective on some complicated topics.
We appreciate you tuning into this conversation, brought to you by ms consultants, a full service, multidisciplinary architecture and engineering firm, headquartered in Columbus, Ohio.
To learn more about what we do, visit us at msconsultants.com.
Thank you again for joining us, and we’ll see you next time!
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