These days it is not surprising to see large amounts of empty storefronts as you walk around the streets of any major urban center in North America. Prior to the COVID-19 pandemic, many retailers were retreating under pressure from e-commerce competitors who were undercutting pricing and providing faster and more convenient delivery of goods through optimized distribution networks. The government-mandated lockdowns around the world only exacerbated these trends. With the majority of stores forced to shut down, the only method for purchasing most goods became online channels. E-commerce platforms thrived at the cost of traditional brick-and-mortar retailers, many of whom either went bankrupt or had to significantly downsize and close stores.
It is easy to see some of these economic and commercial phenomena in hindsight, but they occur slowly over time which makes them difficult to detect as one lives through them. That is why the Ibanez family felt the importance of having a distinguished researcher who can help identify and forecast some of these trends ahead of time, hiring Arash Barati as a Director for their family office named Explora Ventures. The family had sold its chain of supermarkets during the last recession, timely avoiding the turmoil in the retail sector that ensued over the following years. The proceeds of the sale of the business were used to set up a platform for making diversified investments, with current holdings in private equity, venture capital, real assets, growth capital, and numerous fund positions. Arash is directly reporting to the president and is tasked with an important mandate to institutionalize the investment platform. He has been given wide latitude, leading efforts to guide Explora’s capital allocation plans across alternative assets such as real estate and also to identify new opportunities including a potential expansion into the Canadian commercial real estate market. Arash led an important and lengthy research project on Canada to demonstrate the appealing medium to long term fundamentals of the major Canadian markets, which was very impressive to the Explora board and led to the remarkable decision for the firm to focus on the new country.
Arash, who holds a Master’s degree in real estate and a double major in finance and economics from his undergraduate studies, has become one of the leading research associates in the institutional real estate industry. His employers use his modeling and analysis for input to guide their decision making. It was his advice that was relied on when deciding to do more deals in the logistics space, after his findings identified the huge implications that the emergence of e-commerce and the internet economy would have on the sector. “Covid accelerated the systemic shift towards online sales for most retailers. The need for space to store the products in close proximity to the consumer bases has put upward pressure on rents, reaching a record $8.66 per square foot in the US and expected to hit double-digit growth by year-end”, says Arash. They have been busy trading industrial assets around California, having recently sold a 120,480 square foot flex industrial building in Petaluma, CA for $25 million and purchased a fully leased 155,924 square foot warehouse in Valencia north of LA.
