By: Matthew B. Winn, Global Retail COO , Atlanta
ICSC’s RECon event in Las Vegas is like nothing else in the industry and this year was no exception. After a brief respite to hydrate, recover from sleep deprivation and stimulation overload, here are some reflections on RECon 2014:
1. To borrow a phrase from George Costanza We’re back, baby! The mood of the convention was overwhelming positive. C&W worked with MotionLoft to track visitors who passed our booth during the show. In the three days the Leasing Mall was open, we counted over 80,000 passersby despite the fact that a few of the major mall owners have relocated from the convention hall to hotel ballrooms. C&W attendance was up 20% with over 300 retail experts from leasing, capital markets, Valuation & Advisory and Investor Services in attendance. Also of note, C&W Future Leaders (CWFL) and C&W Rising Leaders hosted an event at Encore Beach Club as part of the Opening Sessions.
2. Global is the new black. As ICSC’s first and only global partner, we met with clients and had 30 delegates from 7 countries engaged in talks with globally expanding brands. On the Saturday before the opening of the show, C&W hosted a dinner for its international group and was able to say “sit wherever you want, but do not sit next to someone from the same country.” (Translating this phrase into Portuguese, Korean, and Mandarin was the hard part.)
3. Eating our way to health. Grocery, food & beverage, and healthcare remained important to all of our discussions. Not surprisingly, the Red Lobster spin off from Darden was financed in part by a 500 restaurant portfolio sale-leaseback. GAFO (apparel, furniture and other traditional uses) are competing with restaurants and wellness clinics in open air environments for prime spots across the portfolio. Upgrading credit quality and managing portfolio risk remain part of the new normal. While the economy and results may all point to a resurgent market, memories of the Great Recession continue to drive behavior. The store closures and portfolio reviews are not over. They will not be as drastically felt, however, as the number of tenants for those spaces is increasing. The pool of investors is also on the rise judging from the appetite for NNN leases, urban assets and institutional quality shopping centers.
4. Development is in. For the first time in a few years, large scale mixed use projects seem to be getting traction. In the US, there is no doubt that they are more confined to the smile markets of the East and West Coast as well as the Sun Belt. But, they are definitely there. These new projects are all positioned as either luxury, mixed use or value retail and outlet centers—the physical embodiment of the barbell of prosperity we have been tracking since 2009. Globally, however, there is widespread demand for new product as highlighted by the Global Shopping Center Development Report we released at the show.
5. The future is now. Retailers have incorporated the latest wave of technology into their merchandising strategies. Clicks & bricks is giving way to an integrated omni-presence strategies for both retailers and mall owners. There is no doubt mobile technology, social media and globalization are changing the way we all shop. While it initially seemed a threat, Class A destinations seem to be finding ways to adapt, survive and thrive in the modern world. These locations are benefitting from increased demand and new highs in rent and lows in vacancy and cap rates.
While things are still not the same as they were in the go-go 80s, the internet boom of the late 90s, or the credit boom of the early 2000s, there is no doubt that the global economy has shifted into a higher gear and that the real estate community is ready to react. Thus, the Memorial Day weekend in the U.S. was a much needed break to rest and recover—it’s going to be busy going forward.