Live from New York ... it's ICSC

NEW YORK - Amidst all the concern about overbuilding and a possible recession looming on the horizon, International Council of Shopping Centers (ICSC) conference attendees were reassured that the industry is in good shape and advised not to worry.

"Retail is doing good this year and our reports show that Thanksgiving weekend was very good," said Robert Ward, ICSC chairman and president and CEO of Phoenix-based Westcor Properties.

Ward gave the state-of-the-industry speech at the ICSC New York Idea Exchange & Deal Making conference, which was held Dec. 4-6 in the Big Apple. He assured retailers that 2001 would be a solid year for retail, even though analysts predict a slowdown.

The show featured a retailers' runway, where retailers were able to promote their respective companies, and sessions that discussed topics from shopping center investment opportunities in the new millennium to retailers' Internet strategies. The show also had two days of deal making where more than 300 exhibitors strutted their stuff in hopes of closing a major deal.

Ward explained that malls across the country made a positive start to the healthy season and sales in mall specialty stores increased 2.4% during the Thanksgiving weekend, compared with the same period last year. Still, as of press time, sales have actually decreased 6.9% for the first full week of the holiday season, according to ICSC figures.

Christian Haub, president and CEO of The Great Atlantic and Pacific Tea Co. Inc., Paterson, N.J., was the keynote speaker and stressed the importance of location for retailers. "Location, location, location is still the key ingredient in retail and will be especially important in 2001.

"2001 will be a good opportunity for investors to buy," said Douglas Healy, a principal for Atlanta's Lend Lease Real Estate Investment Inc. Healy was joined by panelists Milton Cooper, president and CEO of New Hyde Park, N.Y.-based Kimco Realty Corp.; Stephen Livaditis, a managing director for the Chicago office of New York-based Eastdil Realty Co.; and moderator Thomas Caputo of H&R Retail of Timonium, Md. They discussed shopping center investments for the coming year and responded to PricewaterhouseCoopers "Emerging Trends in 2001" forecast for retail.

"Regional malls and power centers are big risks. Avoid the B- and C-type malls, they are oversupplied and unsettled," said Nealy. "Hold onto the fortress malls, especially in 24-hour cities such as New York and San Francisco."

Nealy agreed with "Emerging Trends" to sell power centers. Forecasters say there will be a slight depreciation for retail properties in 2001 and minimal appreciation for five- and 10-year periods.

The panelists agreed that the Internet will chip away at sales in books, videos, music and computers, but also agree that consumers still like to "touch and feel" and thus go to the mall.

Livaditis did not think that retail is as dire as "Emerging Trends" reported. "We need to look at retail as being half full instead of half empty," added Livaditis. "I am seeing a lot of capital coming back into retail because volatility is becoming painful in the stock market. As a result, this is a great buying opportunity that is driven by healthy REITs and interest rates," he said.

The panelists also discussed the ongoing problem with the movie theater industry and future investment possibilities or opportunities in that industry. "We look at land and what the building can be used for, we do not finance junk credit," said Cooper of Kimco.

Cineplex operators are filing for bankruptcy after overbuilding stadium theaters. As a result, retail property owners are approaching this type of property very carefully.

"We have done only one transaction in regard to entertainment property," said Nealy. "It is a high-risk. We are waiting to see what happens before we go forward and invest in another. Presently, theaters have three problems: a lot of the buildings are old, there is a bad revenue share with the studios, and most important, there has been a weak movie product. We have not seen a real big blockbuster for some time," he said.

What does this all mean for the retail industry in 2001? PricewaterhouseCooopers "Emerging Trends" predicts that too much space, the Internet, less time to shop and the possibility of slowing economy could mean trouble for retail, but don't tell that to the 4,500 patrons that hit the Big Apple for three days.

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