As the retail real estate industry’s big show gets underway in Las Vegas, there are some concerns for the sector hanging in the air. Store closings, troubled properties and other factors are casting a shadow as thousands of attendees and exhibitors head to ICSC’s RECon to talk about the industry’s future and, more importantly, to try and cut some deals.
“It’s a very important convention this year, with retail at an inflection point,” says Marcus & Millichap CEO Hessam Nadji. “There has been a lot of negative media, some of it is legitimate but other coverage has been over-sensationalized. I don’t want to underestimate the pain. There will be stores that don’t make it. But, if ecommerce is displacing all retail, why is TJ Maxx doing well? Why are there outlets doing well?”
For its part, Marcus & Millichap is sending 300 investment sales professionals and 50 managing professionals to RECon.
Despite the concerns, attendance has trended ahead of last year and about 37,000 attendees and 1,200 exhibitors are expected, according to Stephanie Cegeilski, a spokesperson for ICSC. The show itself keeps growing, now spanning 870,000 sq. ft., or about 17,000 more sq. ft. than in 2016.
Cegeilski says one of the trends being highlighting at the show is the growing significance of technology in retail real estate decision-making and the in-store experience.
Attendees can visit ICSC’s Central Main Hub to experience a virtual realty (VR) property tour of Markthal, a new Dutch food hall concept. The VR exhibit will be set up again at ICSC’s New York National Deal Making show later this year.
Bill Rose, first vice president and national director of retail at Marcus & Millichap, says it is also looking forward to discussing new retail concepts, including some larger users of space.
“The notion that the big-box format is dying is false. For instance, Apple and Tesla are presenting the retail industry with amazing new large concepts. Restoration Hardware has its Mansion concept,” Rose explains. He points as well to the launch of PERCH, a startup focused on creating new store concepts.
Everyone will be talking about department stores and what the future holds for mall anchor spaces, says Melina Cordero, head of retail research in the Americas for commercial real estate services firm CBRE. “What has driven the evolution of the department store, and what might happen for both the department store brands and the spaces they inhabit?” Cordero asks. Just over 730 CBRE representatives will be on the show floor this year.
The continuation of retailer rightsizing will be another hot topic on the floor, according to Anjee Solanki, national director of retail services for the U.S. at Colliers International. Colliers is sending about 300 reps to the show.
“How do we take back a junior box or other space to retenant, repurpose, incorporate new nontraditional aspects of retail such as entertainment and service providers?” Solanki asks. There will definitely be space taken back, but how much depends market to market. In additional to financial services, Solanki says she has seen healthcare services, such as Botox clinics on the cosmetic side and wellness services like yoga studios expanding into the retail arena.
“Ultimately the new shopping center will be a true one-stop shop for shopping and services, tailored to what the community surrounding it wants and needs,” Solanki contends.
But that’s all part of the “evolution of retail,” another topic that should be at the forefront of discussion, according to Nadji.
Nadji says the industry is “tired of responding to overinflated stories of retail’s demise,” noting past revolutions in the sector’s timeline: the growth of enclosed regional malls in the 1970s; outlet centers in the 1980s; and lifestyle centers in the 1990s.
“This is important for the industry to hear—that real estate is remaining of great value and importance in retail,” Nadji affirms.
Cordero adds that with all the negative headlines surrounding the current state of the U.S. shopping mall, everyone is wondering whether the country is, indeed, over-retailed. They are also contemplating whether we are witnessing a correction towards less mall space, or whether we are simply moving into the next evolution of the shopping mall. “A lot of evidence supports the latter view,” she notes.
Off-price and discount retailing represents a growing segment of both consumer demand and retail square footage, says Cordero. Consumers of all income levels are raising expectations for bargains and discounts, which is shaping the future of retail significantly, she adds.
The new store concepts, technology, retailer rightsizing and retail evolution aside, attendees at ICSC RECon will also be focusing on business.
“Now the industry is planning for the future—everything slowed last year because of election. But now we know the outcome—it is back to business as usual,” she says.
Commercial real estate services firm JLL firm is sending about 300 retail experts from across the U.S., Canada, Europe and Asia and expects to have upwards of 7,500 meetings during the three-day conference with retailers and investors.
JLL Retail CEO Greg Maloney shared that the firm plans to meet with department stores, big-box, in-line and value retailers to explore their growth plans and new concept roll-outs, and with owners on redevelopment and disposition opportunities. Maloney says JLL expects there to be more restaurant and development-based client needs in the next 18 months, and is planning accordingly.