Retail Rap: Seeing and Being Seen at ICSC
I just got back from the International Council of Shopping Centers’ (ICSC) 2015 RECon Convention in Las Vegas, and I came away feeling as good as I have about the state of the industry in some time (and it wasn’t just the weather, which was delightfully on the cool side). Judging by the buzz on the floor at the convention center, the action was definitely heating up.
My sense from talking to colleagues and clients is that developers came out of the conference feeling very good about where they stand. I heard from more than a few folks that they were having great meetings—meaning that the retailers were serious about getting deals done, and that more than the usual number of handshake deals were completed.
While it’s not the first time I’ve used these words, it was clearer than ever before that the hot topic of the conference this year was mixed use. Large numbers of major retail developers are considering either being part of a larger mixed-use development or have taken substantive steps toward adding additional uses such as office, residential, hotel or medical to their own projects. Mixed-use development has long been a category occupied by experts, and the additional complexity and higher degree of difficulty that executing a successful mixed-use project demands has kept many developers away. I’m not entirely certain why we seem to have reached a tipping point where mixed-use has moved from the category of “daunting” to “appealing”, but I suspect that there are many causes.
I’m guessing that part of the increased interest in mixed use comes from the fact that we have been seeing smaller and less complicated mixed-use specialty centers — projects with fairly modest retail components that are simply easier to execute than some of the grand destinations that have characterized the mixed-use segment in the past (for example, the addition of commercial, residential and multi-modal transportation components to Tysons Corner, which was a daunting task). Some of it might be a product of demand, as well: there is a new generation of emerging specialty retailers who have more of a tendency to prioritize outdoor spaces and mixed-use opportunities — particularly street/village retail. But the simplest explanation might be the most compelling: the growing recognition that, to get the most value out of your site, you need to bring in your own demand components.
All of these factors also point toward a reduction in the size of new centers. Instead of large malls, we’ll see more modestly sized destinations and community centers built to the appetite of the market — or the market’s potential. As for ICSC, I suspect we will see growing numbers of representatives from the residential and hospitality sectors showing up at future events. More of these residential and multi-family developers — often looking at urban buildings with first-floor retail — were making their presence known at this year’s event. Hopefully, this is evidence of natural evolution toward working more closely together.
One oddity I noticed at this year’s conference was that while Monday’s traffic at the event was outstanding, Tuesday’s was surprisingly light. While activity always tends to wane somewhat as the conference goes on, the drop-off seemed significantly more noticeable to me than in past years. The parties and social events are back after some lean years, but there is still nothing nearly as extravagant as back in the pre-recessionary bubble days.
On a more serious note, I was encouraged to see the beginnings of an infusion of youth into the business—and some small but encouraging signs of racial and ethnic diversity. The difference is small, but noticeable in an industry that has been so comprehensively dominated by an older generation of mostly white men for such a long time. It’s a welcome step in the right direction.
Overall, I came away from ICSC feeling like this was one of the more positive and productive events in quite some time. I’d love to hear the thoughts and impressions from my fellow attendees. Were you in Vegas this year? If so, what were your thoughts? Let’s keep the conversation going — leave a comment below or send me a note at [email protected].