Retailers are feeling pangs of optimism at an opportune time for the developers and real estate brokers who rely on them for survival: The year’s biggest retail real estate gathering is May 23-25 in Las Vegas.
The International Council of Shopping Centers convention has long drawn dozens of representatives from the Indianapolis development and brokerage community, but the numbers shrank last year as the retail market tanked.
Brokers and developers had fewer deals to chase as retailers pulled back in step with consumers. Meantime, demand and financing dried up for speculative new projects—the unveiling of which has been a top draw.
There are signs of a retail turnaround. Earnings reports from most publicly traded retailers have exceeded analyst expectations. And a survey of more than 100 retail executives by CB Richard Ellis found that 92 percent of retailers are planning to increase the number of new-store openings in the next few years. About 70 percent are feeling more confident about the economy.
“The general sense is that the activity is certainly much more vibrant than it was last year at this time,” said Donna Hovey, vice president of retail in CB’s Indianapolis office. “What everyone is sort of bracing themselves for is: Is it real? Will it translate into real activities?”
Most survey respondents, despite seeing signs of improvement, don’t expect a full recovery will set in for another six to 18 months. And in a bit of data that won’t surprise many landlords, more than 90 percent expect rent rates to remain flat or drop.
“It’s still a tenant’s market, and probably will continue to be that way for the next eight to 12 months,” said Hovey, who expects Simon Property Group Inc.’s unsuccessful quest to acquire General Growth Properties will be a particularly hot topic of conversation.
Early numbers suggest last year’s ICSC convention will stand as a low point. More than 30,000 people have registered to attend so far this year, slightly ahead of 2009 but well short of the more than 50,000 who attended a few years earlier.
More people representing banks and loan servicers are expected to attend—since they control more properties these days and many have given up on recovering much value through a quick flip.
“I’m going in with low expectations, so if something good happens, that’ll be a positive,” said Brian Epstein, president of Urban Space Commercial Properties, who hasn’t missed the event in 16 years. “It’s an opportunity to sit in front of landlords from other states under one roof instead of hopping in a car or getting on a plane.”
This year’s event will be shorter by one day than last year’s, and the Las Vegas Convention Center leasing mall will be about half the size it was before the recession and about the same size it was last year.
Simon for a second year will hold court off site, at Caesars Palace. The nation’s largest mall owner in 2008 boasted the largest booth, at more than 25,000 square feet.
Indianapolis-area companies with plans for a booth include Kite Realty Group Trust, Lauth Property Group Inc., Acorn Group Inc. and The Broadbent Co.
One bright side of having fewer people in attendance is, those who make it can get more meetings and potentially get more done, said Steve Delaney, a principal in Sitehawk Retail Real Estate.
Hotels also are cheaper, with high-end accommodations like Caesars sporting rates near what lower-rent properties like Riviera and Rio were charging circa 2007.
“I really thought last year was the worst year,” Delaney said. “If the economy gets better, I think the convention will continue to get better. I think there’s a direct correlation between the two.”•