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Missives from Las Vegas

Reuters provides a nice preview of RECon.

For David Simon, chief executive of Simon Property Group, the largest U.S. owner of malls and shopping centers, retail property may be less about dress this year and more about distress.

The credit crisis has made the cost of new loans expensive or impossible for commercial real estate buyers and developers. That could leave some with short-term debt scrambling for loans to complete their projects or hold onto new ones.

"There's a lot of broken projects out there," Simon, who heads Simon Property Group, said during a recent conference call.

Soaring gasoline and food prices and the U.S. housing crisis have forced the U.S. consumer to cut other spending and retailers to reel in expansion plans. Those who own shopping centers are likely to feel a double punch: less demand for space and falling prices of their centers due to higher financing costs for buyers.

Meanwhile, CoStar is providing a running commentary on the conference, starting with a short interview with Marcus & Millichap's Bernie Haddigan.

"We focused on the trends shaping the investment sales market. We focused on the construction overhang, which has placed upward pressure on vacancy rates, the disruption of the capital markets and limited rental growth. In addition, we discussed the demand for prime assets in quality locations. Without question, there has been a flight to quality."

"On an industry wide basis, sales north of $20 million in the first quarter of 2008 were down 57.9 percent, compared to the first quarter of 2007. Currently, a majority of the sales activity taking place involves deals under $10 million because capital sources are local banks seeking safe recourse loans. Institutional investors, who have typically closed large deals, are out of business - or waiting on the sidelines."

"Private investors seeking transactions under $10 million are staying much closer to home when purchasing properties." Haddigan said this bodes well for Marcus & Millichap, as the firm's strongpoint is on properties priced between $2 million and $10 million.

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