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Sometimes a simple phrase can help capture and define a moment in history. Gertrude Stein famously summed up the 1920s as “the lost generation.” In the 1940s, psychoanalyst Carl Jung predicted “The Age of Aquarius,” a period of international peace and understanding. It became shorthand for the make-love-not-war youth of the 1960s.

In our business, we now have a handy if less elegant term that captures the essence of what's going on. It's “aggravated excess liquidity.” Yes, it sounds a little like a gastrointestinal problem, but it's a serious condition that will take more than an over-the-counter remedy to cure.

AEL is the bloat caused by the enormous oversupply of capital that continues to flood into retail real estate, driven by low interest rates, a sinking dollar and a lack of alternatives for investors seeking healthy returns. The excess liquidity has undermined lending discipline, vastly inflated asset prices and depressed cap rates. We thank Jeremiah O'Connor, founder and managing partner of O'Connor Capital Partners, for giving the term currency, first at a conference in Boston and more recently in an interview with Forbes magazine columnist James Grant.

Whether or not folks embrace the term aggravated excess liquidity, we're sure the subject will be a prevalent theme as we gather in Las Vegas for the annual ICSC national convention. Let's hope some of us are talking about a cure.

There will be plenty of other topics to talk about in Vegas, too. Part of our mission at Retail Traffic is to present readers with those important issues that affect their business. Our job is to look beyond the daily flood of news — the new projects, the deals, the data — and figure out what it all means to our readers, helping them craft new strategies to respond to an ever-changing environment. Our editorial team, under the direction of Editor in Chief Beth Karlin, is willing to raise questions like, “Is the Mall Dead?” The answer was a provocative news analysis in the April issue in which Managing Editor David Bodamer gave readers a smart way to think about the momentous movements in the critical department-store sector. (In case you missed it, David's conclusion was that the traditional mall lives — it's the tired old three-department store anchor formula that looks sickly.)

I think you'll find that this special ICSC issue of Retail Traffic brings a well-informed, thoroughly reported analysis of the issues we need to care about:

  • The massive consolidation in mall REITs has produced two giants who, between them, control more than 380 million square feet. Simon Property Group and General Growth Properties are now playing a high-stakes game, the outcome of which will affect all players in the mall business — including retailers. (See cover story, starting on page 88.)

  • The continuing saga of the department-store industry. The same type of aggressive investment firms that made fortunes dismantling cookie and steel companies in the 1980s and by “rationalizing” media in the 1990s are turning to retail. They see in the inflated values of retail real estate an opportunity to “unlock” value. How these masters of the universe “fix” retailing will have an enormous impact on your business. (Read about the latest in excess liquidity and consolidation on pages 30, 36 and 48.)

  • In response to the changing preferences and dynamics of shoppers, developers of retail and mixed-use properties must be increasingly inventive. We're seeing “power towns” — a new model that combines features of lifestyle centers, malls and big-box power centers. (On page 178, Retail Traffic board member and shopping center pioneer Yaromir Steiner writes about the New Town Center.)

  • While department stores and some venerable chains such as Gap continue to struggle, we see a continuing flood of new retail concepts. This is particularly true among food purveyors. Take, for example, a French import, the bakery chain PAUL, which is moving into lifestyle centers or premium scoop shop Cold Stone Creamery. (See stories on pages 72 and 81.) And take a minute to look at our 16th annual SADI Awards, for the best in retail real estate design.

I thank our 37,000 readers for being so engaged in our magazine. I thank our editorial board for being so helpful as we ponder the retail real estate world. And I thank our business partners (a.k.a. advertisers) for their support.

May you conquer AEL! And, if you have a moment, please drop by our booth (319) at ICSC and say hello.

Best regards,

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