It's been a rocky nine months with the credit crunch having deep impacts on investment andand pressures on consumers cutting into retail sales. Yet industry executives at ICSC's RECon remain optimistic about the sector's future. Few have taken a bearish stance to the conference. Developers, managers and owners are reporting healthy dealmaking volume. And many will leave Las Vegas confident of the industry's prospects.
Overall, attendance at the show is close to last year's levels, according to ICSC. There were nearly 43,000 pre-registrations--almost the same as last year. Overall, nearly 48,000 attended in 2007. ICSC will report final numbers for this year's conference in a few weeks. However, anecdotally many attendees have said they are coming in for shorter trips this year. Many arrived Monday morning and are planning on leaving Tuesday evening or Wednesday morning rather than staying for the full four days of the conference. As a result, most attendees estimate there's been a drop in foot traffic this year, although it's not as bad as some had feared coming into the conference.
"We're in a correction, not a recession," says Greg Maloney, CEO and president of Atlanta-based Jones Lang LaSalle retail. "Retailers are doing. Maybe it's not as many as a year ago and they are being more selective. But they are active." That's kept Jones Lang LaSalle busy and Maloney says he's been happy with the way things have played out, especially since there was a lot of uncertainty and pessimism heading into the show.
Other attendees are expressing similar sentiments.
"I think the market has softened, but because of the growth in the Phoenix area, our leasing today is the best it's been in three years," says David J. Glimcher, of Glimcher Ventures Southwest, a Scottsdale, Ariz.-based developer. "Part of it is lack of competition and part of it is that our new projects are more about the entertainment experience [rather than just shopping]."
Furthermore, many of the deal negotiations going on are for projects opening in 2009 or later, according to Doug Healey, senior vice president of leasing for Santa Monica, Calif-based Macerich. "Our 2008 deals are done. We're talking about 2009, 2010 and even 2001. That's a long way out. The market will look different. What we're seeing today is just a hiccup."
One of he biggest changes in the market is that leasing negotiations are taking a bit longer, according to Gary A. Glick, a lawyer with Cox Castle Nicholson LLP, a Los Angeles-based commercial real estate law firm. "Tenants are concerned about co-tenancy and it's very hard to get them to commit to open within the next few cycles," he says. "A lot of them are saying 'I don't want to open until 2010, 2011.' It's much more difficult for a developer to lease the space today."
To that point, Starbucks reportedly cut back on its meetings at the show, reflecting its more cautious approach to store openings, according to Kristi A. Keene, director of retail marketing for Steadfast Commercial Properties.
Still, the mood across the board is generally positive.
“It's been very good for us," says Comment from David Sylvester, vice president, retail development Asia for Sands Retail Asia. "We've had a lot of meetings and we've had a good response.”
-- Staff Reports