Is retail really dead? Well, it certainly looked alive to me at last month's International Council of Shopping Centers (ICSC) convention, which is the world's biggest retail shindig held every May in Las Vegas.
But according to the just-released Urban Land Institute (ULI) mid-year forecast, regional malls and strip shopping centers rank 9th and 10th on the list of top 10 property investments.
Having just returned from ICSC, retail is anything but dead and buried. In fact, anytime more than 25,000 converted, dyed-in-the-wool retail people agree on anything one can usually surmise something's up.
I don't know, maybe it's just the fact that retail is so socially oriented. The office, industrial, multifamily and seniors housing segments don't have this kind of attendance (and probably shouldn't because it makes for very long days and nearly constant waiting). Only the hotel industry seems similarly convivial (another heavily service-oriented industry), but not to the tune of 25,000.
At ICSC, networking and party-going is unabashedly rampant. But it brought home the fact that capital is indeed flowing quite nicely into retail of virtually all forms save for power centers, and this up-cycle may only be just beginning.
For many of the nation's largest retail developers/owners/managers and retailers themselves, ICSC is the one and only show of the year to strut their stuff. For example, "booth" is not a term one could use to accurately describe SimonDeBartolo's presence. Perhaps "city" would be a better tag.
But here again, the nation's largest retail REIT made its presence known (and the gold-colored 1996 annual report says something too).
Other major exhibitors like Forest City and First Union had a lot to show off too.
What's making retail so hot right now, at a time when it should be feeling the harsh effects of overbuilding and consolidating among retailers/owners?
The key must lie with the economy. The fact that the Federal Reserve (and resident king Alan Greenspan) decided not to raise interest rates any further at its May 20 meeting was good news to everyone in the middle of ICSC. It means the present economic expansion can continue for at least a bit longer.
That will keep fueling new retailing concepts that are constantly being pitched and funded with venture capital across the country. It seems that many people are tiring of the term "entertainment" though, probably because it takes on so many forms and has become quite abused in recent times to describe everything from virtual reality games to bingo parlors.
Theaters are continuing to expand rapidly, with many more mega-screen venues in development as Hollywood cranks out more movies for the masses every year to meet the growing consumer demand.
It really comes down to supply and demand. Now if we could just work on that equation for a while, we'll be alright.