The annual International Council of Shopping Centers RECon conference in Las Vegas has come and gone, but, as always was the place to see and be seen for everyone who makes a living in the “retail world” – retail stores, developers, brokers, leasing agents, lenders, and ALL of the serious general contractors and A/E consultants.
Each May this group convenes to look for opportunities to make “deals” and discuss where the industry is headed. This year more than 37,000 people made the trek to the desert.Here are a few key takeaways from my time at RECon:
- Pure retail deals will be fewer and/or smaller and will include fewer retailers and anchors. Most successful retail developments will be a part of mixed-use projects – the live, work, play model with town centers.
- Future retail projects will focus on being unique and experiential – in essence, getting away from a prototype. Therefore, developers are looking to hire quality and experienced general contractors versus just going for the lowest-cost provider.
- Commodity-type retail (power centers/shopping centers) and Class B and C malls will close – they are an outdated model of convenience. The good news is that these sites may be redeveloped IF they are in good locations, like One Bellevue Place in Nashville.
- Department stores and Class B and C malls are mostly obsolete, so many more will close. Sears and JCPenney are high on this list as reported in the media in the past month. Owners of good malls welcome this because the property of these anchor stores is valuable and can be redeveloped to make the malls more profitable.
- People still long for community and an emotional connection with others. They want a reason to go somewhere – to eat dinner, grab a drink, have a date, meet friends, be entertained, and even shop. They just don’t want to do it the way it’s been done for the last 50 years. So, whoever develops a better mousetrap will be very successful.
- Parking ratios will decrease freeing up land and therefore allowing densification of existing retail centers. This will free up redevelopment, and the permitting process is much easier on these sites.
- All brick and mortar retailers will depend on the internet to survive. At the same time, all major internet retailers will have brick and mortar stores (Amazon Books, Whole Foods, Warby Parker, Bonobos, Caspar…).
- Of course, a major factor in any of these developments taking flight is public financing support, such as Tax Increment Financing and infrastructure help. This has to happen for the projects to make financial sense.
Overall the mood was upbeat. These leaders have moved past the “retail is dying” narrative, and are now trying to figure out ways to adapt to the disruptions affecting stores and developments. There is plenty of room for new and/or improved properties, and the retail outlook is positive and healthy.
