Last month, I attended my 23rd annual International Shopping Center Convention in Las Vegas. This is usually an upbeat convention where retailers, investors, shopping center owners, lenders, mortgage bankers and brokers chat and play nice. At the very first one that I attended, I met a broker from Detroit who had a shopping center for sale in Zion, Ill. I had a buyer from Long Island, N.Y., and I was in Richmond. We closed a deal within a quarter.
My, how things have changed.
It seems a chill came over Vegas. The only other convention that I could compare it with was the one in 1991, when we were in the midst of the commercial real estate collapse and the Resolution Trust Corporation was taking over banks left and right. Here are some signs of the times: The “unofficial” attendance was 28,000, according to the ICSC. Last year, it was more than 50,000, and in 2007, it was 52,000. Perhaps many of my industry-tradesmen skipped it for the savings.
Exhibitors downplayed their booths or didn’t erect them at all. One major brokerage company called Chain Links merely used tables and chairs and did away with private meeting rooms (of course, they also did away with the cost of the setup and teardown).
There were far fewer cocktail parties in the evenings, especially for a convention that was notorious for conspicuous consumption and multiple parties every night.
General Growth Properties, a shopping center company that normally advertised on the shuttle buses from the hotels to the convention center, is in bankruptcy, and, therefore, a major sponsor was lost.
Simon Properties, one of major mall Real Estate Investment Trusts, moved from the convention center to an off-site location (probably as a savings measure).
One major REIT didn’t send a single leasing agent to the convention.
As for the retailers, in the past, Starbucks had a booth on the convention floor and provided free coffee to everyone every day. This year, there wasn’t a Starbucks booth, and McDonalds supplied the free coffee.
The retailers who were the busiest were the ones with the word “Dollar” in their names – Dollar Tree, Dollar General and Family Dollar. They tend not to be your highest-paying tenants, but they are still in an expansion mode. There was also brisk activity for the fast food retailers, particularly the burger chains, and CVS and Walgreens, the two leading pharmacy chains.
And there were some other unexpected pluses. If you had a meeting scheduled, you had the opportunity for much more “face time,” because there were fewer attendees and fewer meetings. At one meeting, I had the opportunity to spend quality time with the chief operating officer of a large shopping center REIT as well as an out-parcel specialist and one of their leasing agents. For the past few years, it was simply too busy to spend that much time at any one meeting. If you didn’t have a meeting scheduled this year, there was still a good possibility that you could walk up to a booth and set up a meeting on the spot.
But all the negativity can be self-defeating. In our business, optimism counts. During the early ’90s, the weak performers were weeded out in all of the real estate disciplines. Those who survived thrived in the mid- to late-’90s. Let’s hope that history repeats and that next year’s convention is the beginning of a revival coupled with a good dose of staying within the boundaries of sensible business practices.
Brian Glass is a senior vice president at the commercial brokerage Grubb & Ellis | Harrison & Bates. The views expressed here are his and do not represent those of his firm or Richmond BizSense.
