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David Simon Speaks (Monday's News & Notes)

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Simon Property Group CEO David Simon is not one of those real estate executives that is exactly effusive with the media or in appearing on public panels. NREI interviewed Simon for a cover story a few months back. But the story is notable exactly because Simon doesn't make himself available much.

So it is noteworthy that last week Simon made a rare public appearance and spoke to members of the Economic Club of Indiana on Thursday at the Indiana Convention Center.

According to the Indianapolis Star, Simon did share some interesting insights in both a prepared speech and a Q&A with the audience.

Some interesting stuff in there. Simon went after Internet taxation--long an issue that ICSC has lobbied Congress to legislate on. Overall he sounds pretty measured. He's not expecting a robust holiday shopping season, but doesn't think it will be terrible either. The prediction on lifestyle centers being "done" as new developments and retailers gravitating back to regional malls will be something to watch for in the coming years as well.

The Indy Star transcribed the Q&A, which I've pasted below:

What is the likelihood of a double-dip recession resulting from the collapse of the commercial real estate market?

"I don't think it will be because of commercial real estate, and I don't think it will be a double dip. But I don't think we can expect significant growth. Very simply, when you regulate more and you tax more, you are going to have less growth, and that's the agenda that we're on, by and large."

What are your predictions for the upcoming holiday shopping season?

"I think the consumer is still under a lot of pressure, so I would be surprised if it's robust. I think there is a high correlation between back-to-school and the Christmas season. Back-to-school was OK. My guess is Christmas will be OK. . . . The best stimulus that we can offer in America is confidence, and it's cheap, right? I think if we have the confidence, frankly, we could kind of get out of the rut we're in. "

How has the Net impacted retail?

"The Internet is my biggest concern. Not to get on my soapbox, but the state of Indiana and other states have a real opportunity to level the playing field. Let me just explain one thing about the Internet. When you buy on the Internet, you don't pay sales tax. When you go to the local mom-and-pop store and buy a blouse or anything else, you pay sales tax. Internet has a distinct advantage, which in my opinion, is unfair, and hopefully we're looking for fairness in our tax system. If you sell it in the physical world versus the virtual world, it ought to be the same. It's not happening. It's killed records. It's hurting books. . . . It's had a marginal impact on apparel. I'm worried what will be next. We need to level the playing field tax-wise."

What is the future of lifestyle centers?

"The lifestyle center was kind of the new project built over the last five or six years. I think that new development of that activity is done. . . . I think we are going to have retail real estate obsolescence. But I think what it will mean is the good retailers will gravitate toward where the retail center is, and in a lot of cases it's the enclosed mall."

What part of your properties is in downtown areas of cities?

"We're in some dynamic places, but not a lot of what I would call true downtowns. Retail in downtown is a challenge unless you have a lot of residents there."

Here are some other news and notes from late last week and over the weekend.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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