briefcase | invest smarter | Issue #147

We always knew that one day, we’d be writing about Taylor Swift. Too bad the average age of the briefcase reader is 42, so most of Peter the Intern’s puns and references will go unnoticed.

But, if this email made you 1% more ‘hip’, please forward it to one friend.

When hip-hop magnate Jay-Z asserted he’s “not a businessman, he’s a business, man,” he struck a chord that resonated even louder with artists like Taylor Swift and Beyoncé.

Even in the sporting world, brands like Messi moving to Miami will bring untold economic good fortune. Or, movies, like Barbie, which brought a massive retail resurgence to that brand, leaving us with a shortage of pink paint.

The reality is that these pop culture icons are increasingly turning into business ones. They have transformed from mere entertainers to colossal economic forces, with seismic impacts that they've even caught the eye of JPow and the Federal Reserve.

In the Fed’s July Beige Book—and please, it’s as boring as it sounds, no need to go read it—they stated: “Despite the slowing recovery in tourism in the region overall, one contact highlighted that May was the strongest month for hotel revenue in Philadelphia since the onset of the pandemic, in large part due to an influx of guests for the Taylor Swift concerts in the city.”

The totality of Taylor Swift's Eras Tour will generate a cool $5B in consumer spending in the U.S. alone, and $10B globally. This figure is larger than the GDP of over 50 countries, bringing validity to the term ‘Taylor Nation.’

So, if we avoid a recession, we know we have the Swifties to thank.

Didn’t think you’d see that in a real estate newsletter, did ya?

Swift’s recent 146-date Eras tour orchestrated an astounding $10 billion in consumer spending, the economic equivalent of 55 Super Bowls.

Beyond the music and celebrity ties, these music tours have serious real estate implications. Retail data demonstrates an inescapable shift towards accommodating this post-pandemic live event resurgence.

From August 2022 to 2023, establishments like bars, restaurants, and wellness centers witnessed a 7% sales uptick. Meanwhile, establishments that blossomed during the pandemic, like home improvement and hobby centers, are experiencing diminishing sales.

Retailers have quickly adapted, with top-tier malls registering a 12% traffic increase compared to pre-pandemic figures. They are evolving from mere shopping centers to hubs for experiential attractions, from pop-up shops to interactive displays. As e-commerce begins to plateau, peaking at 21% of all U.S. retail sales, the allure of the physical experience emerges stronger than ever.

Exemplifying this trend, Swift's Eras concert tour film is set to debut in 600 U.S. AMC theaters. Anticipation is so immense that other major movies have rescheduled their releases to avoid clashing with this juggernaut.

In the opening weekend alone, the Eras Tour movie made about $100M across Canada and the U.S., the highest-grossing concert movie ever.

Maybe we should have held onto those AMC stocks after all.

As the momentum behind these mega-events builds, the real estate sector can't help but harmonize with the beat. Taylor Swift fans, for instance, have been reported to spend an average of $1,300 per person at each concert. For a tour with 146 shows, that’s impressive.

Such overwhelming expenditure has ramifications for the entire real estate ecosystem, particularly retail, food, and short-term accommodation assets.

It also presents an opportunity to integrate more entertainment options, innovative socializing arenas (like games), and more to tap into the experience economy's potential.

Some might say, consumers want a more tay-lored experience.

The challenge for real estate and retail lies in transcending the allure of online giants like Netflix and TikTok. It's about curating experiences and encouraging physical participation and attendance.

Even streaming pioneer Netflix recognizes the need for in-person experiences with their recent announcement that they will open physical locations by 2025. The new ‘Netflix House’ concept will be a retail operation where consumers can watch, shop, play, and eat.

Developers and landlords are increasingly adopting flexible layouts, ready to be morphed as per the brand, event, or product lineup. The synergy of sales, foot traffic, and customer data accumulation during events results in a richer net operating income for landlords.

So What? As mega-concerts and events continue their march, they're setting a new rhythm for the real estate and retail sectors. It’s a melody of adaptation, innovation, and engagement.

What’s stopping businesses from banding together to organize a local music festival? How can we take this demand for physical experience to create smaller-scale and unique events that attract groups?

These are the questions we should ask.