Bolstered by improving sales, falling cap rates and increased inquiries from retailers looking for space, the Las Vegas Convention Center was filled with optimism as ICSC’s 2011 RECon show got underway.
“It’s early still, but so far I’d say things are looking good,” said Joseph F. Coradino, president of PREIT Services LLC. “After a few years of the business just being about keeping the lights on, this year the focus is more on finding new 'first to the market' tenants. We really pushed to have meetings with new retailers.”
The mood so far jibes with what many firms were expecting heading into the show. Developers and brokers reported that they would have more meetings and were sending more people than in recent years.
Overall, ICSC said that advance registrations are up 900 over last year. This year, the association received 29,600 advance registrations, up from 28,700 last year. (It will report on-site registrations numbers later.)
New developments
In fact, the mood has improved to the point that a number of new developments—a rarity at recent conventions—have already been announced at this year’s show. The most intriguing news is that Simon Property Group formed a joint venture with Canadian firm Calloway REIT to build a Premium Outlet in a suburb of Toronto.
The move comes three-and-a-half months after Tanger Factory Outlet Centers formed a similar joint venture with RioCan REIT. That joint venture had previously announced plans to build a project in the same suburb that the Simon/Calloway team is targeting.
In addition, Oliver McMillan, a San Diego-based real estate firm that develops urban and mixed-use retail, entertainment and residential projects, unveiled new renderings, a new architectural model and a new name for Buckhead Atlanta, a six-block, eight-acre luxury mixed-use urban village located in the heart of Atlanta’s upscale Buckhead neighborhood.
Formerly known as The Streets of Buckhead, the project stalled as a result of the economic downturn and credit crunch. Oliver McMillan is reviving the project and changing the name as part of converting the development into a mixed-use concept. OliverMcMillan plans to begin construction on the project in late 2011 and plans to invest an additional $300 million to complete the project, beyond the nearly $400 million spent to date.
Another big development in the works is a new outlet center that Tanger and The Peterson Cos. will build at Peterson’s National Harbor development called Tanger Outlets at National Harbor.
It is anticipated that the joint venture will develop an approximately 40-acre parcel into an outlet center that is expected to house approximately 80 outlet designer and name brand stores in a center measuring up to 350,000 square feet.
Peterson and Tanger will co-own the project and jointly provide site development and construction supervision services to the venture; Tanger Outlet Centers will provide management services, leasing and marketing to the joint venture.
The companies are aiming to have the project 50 percent pre-leased and hold a groundbreaking later this year with an opening date 12 to 15 months after the start of construction.
Too much of a good thing?
At least some attendees, however, have concerns that the industry is getting ahead of itself and that cap rates are falling too fast. They are worried that companies are too quickly returning to a “business as usual” mindset when broader economic indicators are still relatively weak.
“A lot of the pricing is not supported by the economy or by leasing activity,” said Joe Dykstra, executive vice president of Westwood Financial Corp. “There are a lot of good properties, but there are also bad ones. And those are benefiting right now from the volume of money chasing deals.”