RECon Takeaways

This morning, I posted a series of takeaways to our Twitter feed--a stream of consciousness of sorts recounting some of the major themes I heard in meetings and other conversations at the ICSC RECon show that took place in Las Vegas from Sunday through yesterday.

For those of you not following us on Twitter, here's what I posted. I would love to hear others' thoughts on themes from the show as well:

  • The industry is realizing that the future is clicks and bricks. Online sales will grow, but retailing will increasingly be a blend. People use the net to comparison shop already. As more people get smartphones, they'll do that in the store too. Consumers will also be able to research products online while looking at them in person.
  • Social media had a much bigger presence at this year's show. ICSC had a Social Media pavilion that had tons of content. Many more people were Tweeting from the floor. And there were noticeably more tablets. Leasing guys were using those for presentations. And many booths featured one or more QR codes.
  • As one person said, "The show went from being a job fair back to an actual dealmaking convention." In addition, there was a sense that meetings this year resulted in more actionable items. Last year there was a lot more caution. Meetings that took place were more about touching base and feeling out the market than they were about doing deals
  • Whether you're talking investment, leasing or development, class-A in best markets rebounding fastest.
  • The retail development pipeline is in the early stages of restarting, but it will be a while before a real uptick in openings. And many projects on display were ones that got mothballed and then tweaked. The exception to this was the outlet sector. A few projects were announced at the show and other companies talked of intentions to build both high-end and value outlet projects.
  • CMBS 2.0--a term that's gotten thrown around a lot as CMBS issuance has risen--is a misnomer. A more accurate description would be CMBS 1.1. About the only thing that has changed is that underwriting is tighter. But a lot of things discussed when the market had frozen--such as lenders putting more skin in the game or changing how pools are put together--are not happening. Predictions of 2011 issuance varied from $30 billion to $60 billion.
  • The investment sales market continues to mend. First quarter volume was up in 2011 over 2010. Most expect healthy growth for 2011. We might even see a few portfolios become available, although nothing massive will hit the market. The Blackstone/Centro deal was an aberration. There are no other giant mergers like that cooking.
  • Some new concepts and international retailers are in the market looking to take advantage of vacancies to expand, but not a huge amount. One reason is that it is hard to finance startups. Established retailers are in a position to expand, but most are taking a cautious approach. The highest-quality retailers want the best locations and many are also looking at urban markets. That dovetails with a trend among big-box tenants to reduce store footprints. In part it's being driven by efficiency and better merchandising. But it's also stemming from a desire to open in urban spaces. Retailers in some markets also have taken advantage of market conditions to upgrade from class-B or class-C centers to better locations. The outlook for lower-quality properties remains murky.
  • Lastly, tenants are asking for kickouts tied to cotenancy and/or sales, free rent, and tenant improvement allowances, but not necessarily reductions. One hitch is that owners that have debt that's in special servicing may have a hard time getting approvals to grant those allowances.
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