By Garrick Brown, Vice President of Retail Research, Americas
By now everyone in the industry should be back from ICSC ReCon.
I don’t have the final numbers yet but the number I am hearing is that roughly 37,000 people from the industry came this year. That’s roughly the same level of attendance last year and these numbers are still way up from what we saw in the Great Recession. They are not quite yet back to that 40,000 benchmark where attendance was nearing back in 2005 and 2006… but considering all of the upheavals in retail this was pretty impressive. By the way, all of these numbers are ones I am quoting from memory. I apologize in advance to all my friends at ICSC for using these ballpark figures. But you get the gist of it… attendance didn’t take a hit this year even with the insane “Retail Apocalypse” headlines that every media source seems to want to go with (it’s a lot more compelling click-bait than saying “Retail Challenges Create Greater Bifurcation; Challenges for Many, Opportunities for Some.” No, that headline puts me to sleep and I think I actually literally used it on a recent publication.
That said, the tone was actually quite upbeat as well. At least for the most part… The fact is that the current wave of consolidation is impacting malls and iconic retailers and so, despite the fact that these make up a small portion of the marketplace, this is how the average American thinks of retail. And so the current wave of bad news for those sectors has meant black clouds have impacted the popular outlook on retail in general. But as those of us in the business know, the real picture is a whole lot more mixed. No doubt there are huge challenges for certain sectors like apparel, department stores, office supplies, sporting goods, media related retail and some others. But off-price, discount, dollar stores, restaurants and entertainment all remain in strong growth mode and I think we saw that this year.
By the way, I want to thank all of you who came to my Food Hall panel on Monday at ICSC. My apologies to any of you who came and could not get in. We had a hall for 800 people. About 700 registered. But many more came. At the end of the day, we had every seat filled and about 200 people standing. Sadly, I am told the fire marshal had to intervene at a certain point and some people were turned away. My apologies. That said, if you would like me to send you the accompanying slides for this panel I will do so happily. Of course, most of the content was in the discussion, but hopefully we will get a chance to work with ICSC in being able to host similar events like this in the future.
As for the actual business impact of this year’s ReCOn? It’s too soon to really tell… but at the show and in the days since I have talked to at least a few dozen brokers, developers, landlords, lenders and retailers. Though it is just anecdotal, I got the same basic picture from pretty much everyone I spoke to. Most people reported a solid show overall with client meetings generally at about the same level as 2016 ReCon. I have heard from some dealmakers that deal activity at the show was down slightly, but I would assume no more than 20% or so. And many have reported to me that they see this as less a result of the consolidation trend that is impacting some retail sectors but more a reflection of the fact that deals seem to be taking longer nowadays. This is common whenever market conditions are in flux and obviously tenants are gaining the upper hand in negotiations for all retail asset classes with the exception of Class A or trophy assets. And, though landlords of those property types wish it were not so, the reality is that there is greater balance between lessor and lessee emerging there as well.
The dealmakers I have spoken to also have shared with me a few other common trends. Any of you who are actively representing tenants from the afore-mentioned retail growth sectors (restaurants, entertainment, discount, off-price, dollar stores, etc.) tended to report a strong show with lots of client meetings and a good amount of deal activity. Same deal for landlord-side representation whenever these user types were involved. This seemed to hold true across the board for both our urban or suburban specialists.
Those dealmakers who reported to me slower activity at this year’s show, consistently told me how the repositioning of assets was taking center stage this year. To a person, each broker that I spoke to facing this situation reported that while the actual number of deals that they were closing at the show was down, that they were picking up more listings and were optimistic about being able to creatively backfill vacancies at challenged properties.
All things considered, I think ICSC ReCon 2017 will go down in the books as a remarkably successful show considering the current public perception of our sector. That said, I don’t think those black clouds and the consistent pattern of retail being painted with the same broad, black brush is going to go away any time soon.
Also, here a couple of links that you might find useful.
Check out our new report on the Craft Brewing trend and its impact on retail and industrial real estate. Click here to check out The Craft Brewing Revolution and our latest Cool Streets video. In this episode I tour Cincinnati… a town where craft brew rules and has also been a driving force in urban renewal—especially in the super cool Over-the-Rhine neighborhood.
Cushman & Wakefield’s Q4 2016 USA National Shopping Center Report.
Our Bricks vs. Clicks Webcast Series Part I and II explores the impact of the 2016 holiday shopping season and eCommerce on supply chain and bricks-and-mortar retail. Bricks vs. Clicks reviews and further analyzes relevant data points, shopping trends and effects on the industry and its consumers in 2017.
Our Main Streets across the World Report tracks high street retail around the world and breaks out the globe’s premier shopping districts by continent and average asking rent.
Cool Streets of North America Report and accompanying video series.
This post is commentary from the latest weekly edition of our Cushman & Wakefield Retail Newsline, which you can subscribe to for free by e-mailing firstname.lastname@example.org.
Garrick serves as Vice President of Retail Research for the Americas. He speaks frequently at industry events and has been a keynote speaker at symposiums, conferences and market forecasting events for groups like the Appraisal Institute, Urban Land Institute, CREW, ICSC and PRSM. He is also a member of Lambda Alpha International, an invitation-only land use society for those who are involved in the ownership, management, regulation and conservation of land, but also those who are involved in its development, redevelopment and preservation.