Mark Zalatoris, president & CEO, Brett Brown, CFO, and Scott Carr, president of Inland Commercial Property Management Inc., are presenting for Inland Real Estate Corp. at NAREIT's REIT Week.
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Below are notes from the session.
11:08: Carr: (In response to question about sentiment at RECon) The annual ICSC convention in Las Vegas is really our strategic with retailers where we are meeting with the heads of real estate and looking at the rest of this year and beyond. … Retailers … have learned to be profitable in a lower sales environment. Leasing demand is much stronger for existing. Without new development, second generation space is the only place where these retailers can open stores. … Seeing demand for large box space (10,000 sq. ft. and above). … Seeing right-sizing of retailers with the likes of Best Buy, Old Navy and Staples. … And we're seeing new entrants into markets. … We're seeing more of that activity and the momentum build. We're reaching an equilibrium point and the sentiment is beginning to shift in the favor of landlords.
11:11: Carr: The most encouraging thing we saw was in the 10,000-square-foot and below space. We're seeing not a tremendous amount of activity, but to see them back in the playing field is encouraging. … While that's a great source of leasing activity, it's an area that has been quiet for the last two years. … It's a broader indicator—especially when female apparel tenants are expanding—that Mom is shopping again and that we're reaching some kind of recovery.
11:12: Zalatoris: Big-box occupancy is at 97 percent. Small-shop occupancy is 86 percent. We're blended to 94.3 percent occupancy.
11:13: Carr: Haven't seen a dramatic increase in what tenants expect in concessions. With big-box, you're providing them their box. That runs in the range of $20 to $30 per foot. That's about 20 percent of the rental revenue we would generate. That's consistent. … The trend in small shop space is that abatements had run higher during the recession. Today we're giving less abatement on those deals.
11:15: Carr: (In response to question of internet retail taxation.) It really puts retailers at a disadvantage when the e-retailers can sell without claiming the sales tax. We have joined with the retailers to make this case. The political climate is hindering us. Everyone acknowledges it, believes it and thinks it's fair. … Unfortunately, the legislators view it as proposing a tax increase. … Nobody wants to introduce that. It is at the forefront of the minds of retailers and retail landlords. … That parity is critical.
11:18: Zalatoris: (On Inland's non-traded REITs.) Those REITS have separate boards of directors and management teams. We don't interact. We don't share properties. We don't share joint ventures. … The only think we have in common is that the Inland Real Estate Group of Cos. does provide services like IT, human resources. I would say that the only other benefit is that there are opportunities to forward deals on that we can't use or vice versa. But we don't operate anything jointly.