After a couple of lackluster years, the retail sector is bouncing back—big time. That’s the word from North Texas brokers, developers, shopping center owners, and economic development officials at ICSC’s RECon 2012 in Las Vegas. The annual retail real estate convention—the world’s largest—wraps up today after several days of intense deal-making.
RECon has become a must-attend event. ICSC estimates that roughly half of all retail deals are initiated or executed at the convention. The numbers are staggering: Each year, RECon attracts more than 1,000 exhibitors and 30,000 retail professionals. (Final statistics for 2012 aren’t in, but participants say this year’s attendance is up significantly.)
Here are some on-the-ground impressions, live from Las Vegas.
Bob Young, The Weitzman Group: Things are going quite well. Between Monday, Tuesday, and Wednesday, we’ve had upwards of 400 meetings scheduled, plus countless others just on the fly when walking the halls. We’ve got 60 brokers here, along with our development and management teams.
I refer to ICSC affectionately as a “business Mardi Gras.” In other words, so many activities and so much fun—it’s nonstop. We’re all fighting for position; it’s really active—people from all around the globe come in for this event. Attendance had dipped below 30,000 after the 2008 collapse; this year we’re pushing 35,000 or maybe more.
Retailers that are succeeding are expanding. There may not be a lot of new development in Texas for us, but as we walk the floor, there’s talk of development projects—not just in Dallas -Fort Worth, but all over. There hasn’t been any new construction in a while, so spaces are leasing up. The good stuff is doing really well, getting higher rents. The other stuff is still a fist fight; it’s still tough to get things done. But here at ICSC, there has been a buzz everywhere, from day one.
Steve Lieberman, The Retail Connection: Activity has been great. But we’ve been on a run in Texas for the last 18 months, so there haven’t been any surprises. Really, it’s more of a validation of the strength that we’ve seen in the market. It’s reinforcing Texas’ leading role as a trail marketplace.
The meetings have been fantastic. We see all sides of the business. We do tenant rep and a lot of project work, but we’re also investors. There’s a tremendous amount of capital on the retail side—we’re seeing a lot of New York and coastal investors. They want to be investing in Texas, and they want an operator. They’re coming in with very compelling structures. They’re saying, “We want to be in your market, and we want to be navigated through the market.”
Investors are looking for one of two things: Distressed properties, which Texas doesn’t have a lot of, or high-quality assets—there is a tremendous appetite for that. We just put Arlington Highlands on the market, and I think we have 55 to 60 groups pursuing it. It’s fully developed; there’s just one parcel left. We were holding it for a hotel, but now we’re talking about building out more retail, as it’s 97 percent leased.
With regard to some of our other projects, we just completed another phase of Weatherford Ridge, and a project we acquired in Mesquite a month ago—a former Border’s store—we filled it in less than 60 days. We took a distressed asset and totally stabilized it.
Village on the Parkway is on fire. We have great partners in Lincoln Property Co., Fidelity Real Estate Group, and the City of Addison. Collectively, we’re tearing down half of the property and bringing in Whole Foods and a high-end theater from AMC. They’re going to keep their theater at Valley View—for now. Ours will be more high-end; the one at Valley View will be more moderate. We’re going to break ground in 30 days.
All in all, retail is very strong. We’re in the right place at the right time, doing the right thing.
John Zikos, Venture Commercial Real Estate: Before the convention, I wrote in my RealPoints blog that attendance is up and meetings are up—everything looks good; but let’s see what happens when we get here. Well, the meetings have been upbeat. We’re talking to developers, they have funding, they have a couple of leases signed, and they’re ready to break ground on some developments. Tenants want to open stores. LA Fitness, Sun and Ski Sports, and other clients I represent are getting things signed—they’re ready to move forward. So it’s fun to see people making deals again.
We’ve worked on letters of intent in four or five meetings that I’ve had today, we’re closing gaps. There has been very little new site work because we’re so busy; unless it’s a site my tenants really wanted, I’ve asked people to send me the info and I’ll look at it when I get back to Dallas.
So, activity is good. You get a good cross-section of people from all over the country here. Some places are still struggling. It’s not rosy everywhere, but it’s better everywhere.
Danny Booth, Terrell Economic Development: We’re here touting retail in Terrell. We have The Crossroads at Terrell at Interstate 20 and U.S. 80. Combined, there are about 400 acres with residential around it. Baylor is breaking ground on a new facility nearby in 2014; it already acquired the land. We’re about to start road improvements in association with that.
Things are going well; our sales tax is up 10 percent. Considering the downturn, that is great news for us. We have two industrial projects with five Fortune 500 companies. Across the board, those companies are hiring and doing better. Overall employment is finally starting to pick back up. We had a couple of plant closures but on one of those we’ve already sold the building.
For retail, we compare ourselves to Weatherford. During the last three years, they’ve seen a lot of retail. We think we stack up very well against Weatherford from a trade area standpoint.
Chris Maguire, SRS Real Estate Partners: I haven’t even gotten out of our booth yet. It has been nonstop. I haven’t had a chance to walk the halls at all. We’re always busy, with 20 offices around the country focused exclusively on retail.
The reaction to our deal with Cresa has been great. We had a company meeting yesterday and rolled it out. We already have probably a dozen referrals working back and forth. It’s nice to have a go-to firm so brokers don’t have to wonder how to handle office and industrial referrals. They know they can call Cresa and they’ll perform. It creates another revenue stream that didn’t previously exist.
Frank Bullock, SRS Real Estate Partners: It has been very energetic, with more people than previous years, and more people conducting business rather than just walking around and talking. We had a lot of meetings booked, but it has gone beyond that to become bumper-to-bumper action.
North Texas is the garden spot in the country; Texas in general is hot. People now know what we’ve always known; they love Dallas-Fort Worth. Our national clients are unbelievably excited about our new Asia office. We’re the largest national retail-only firm, and we think we have better speed to market. In football terms, we can go to the ball very well. “Speed kills,” that old adage from the 1960s, isn’t true; speed wins.