The announcement of Saks Fifth Avenue's Chapter 11 Bankruptcy filing speaks to multiple issues that have some relevance to me in the world of real estate. Here is one aspect of how Saks (who owns Neiman's and Bergdorf's too) is where it is today: aside from accumulating massive debt and the rise of e-commerce, there is much more value in their real estate than the businesses housed in that real estate.

Not too long ago, most brands were extremely reliant on department stores. The buyers and executives within these stores changed, often bringing people outside of the fashion industry exclusively focused on numbers and they saw an opportunity to squeeze more profit out of their vendors. All of a sudden to sell to a big department store, you needed to deliver all your goods to the store with the understanding that you had to pay for advertising, absorb markdowns, pay for the retail space within the store, staffing and take back any unsold goods. Often, payments to vendors were delayed by as much as 3-4 months while the department store collected interest. The abuses started out small in the beginning (usually tied to big promises of fame and exposure) and then slowly grew over time. Sound familiar?

Then what happened? Brands started opening up their own retail stores, often within a mall. Along came digital retail, or e-commerce. That is when the power shifted. But the costs to operate the massive, complex structures became prohibitively expensive, and several brands faltered. At that point, big, powerful holding companies swooped in and grouped the best brands together under one umbrella and today most of those brands are thriving. Smaller luxury retailers have also had to consolidate. Richard's in Greenwich, Stanley Korshak in Dallas, Mitchell's in Westport, Wilkes in San Francisco, and Mario's in Seattle are now grouped together to survive and thrive.

Apply this to the world of real estate, and I think you can see how the recent acquisition by Compass of Anywhere has relevance today.