Framed against a seasonal backdrop of busy New York City consumers getting a jump-start on their holiday shopping, approximately 5,800 (down from 6,200 in 2008) retail developers, brokers, representatives from retailers and assorted vendors converged at the International Council of Shopping Centers (ICSC) convention at The Hilton New York & Towers last week. While the mood in stores lining Broadway and the Avenue of the Americas was spirited, the attitude among ICSC participants was one of guarded optimism.
During the 2-day New York National Conference and Dealmaking session is that retailers were everywhere except manning booths on the trade show floor. “Continuing a trend that we experienced at the annual Las Vegas convention, retailers by and large, are still on the sidelines, with the majority not expected to ramp up new store site selection efforts until sometime in 2010,” explained Tom Maddux, president of KLNB Retail, whose firm sent more than 35 brokers to the show. “It is still extremely valuable to network with retail real estate professionals and establish new contacts, but serious deal-making was not a significant part of this show,” he added.
Maddux explained stores that did establish a strong presence at the show included Auto Zone, Burger King, 7-Eleven, Wal-Mart and value retailers such as Dollar General. His general observations of the New York show — and the retail industry in general — are in sync with the conclusions of research recently released by ICSC concerning the mindset among most American shoppers and how these feelings will affect shopping habits now and in the future.
Like most show-goers, consumers remain optimistic heading into 2010; more than 40 percent of respondents believe their personal financial condition will improve over the next year. More than 47 percent think their financial picture will remain the same, and only 11 percent are seeing the worsening of conditions. This confidence, the ICSC study suggests, will translate into increased shopping by about 40 percent of those surveyed. In the past year, ICSC reported that more than 75 percent of the respondents in the survey reduced their shopping expenditures in some manner, while more than half spent less on fine dining, casual dining, attending movies and trips to the salon or spa. Retail categories that did not fare as poorly include discount stores, grocery stores and merchants that market household necessity items.
“Financing remains the major stumbling block among retailers in their efforts to start expanding and building new sites,” explained Joseph Rode, executive vice president of The Mullan Contracting Company, from his booth. “We do see positive momentum in the pharmacy and grocery categories, particularly, with some stores performing ground-up construction and others investing in the improvements to existing locations. Projects under $10 million seem to have the greatest chance of being funded,” he added.
“This is a time of great opportunity for the acquisition of existing projects, the likes of which we have not experienced over the past 10 to 15 years,” commented Dixon Harvey, president of Black Oak Associates, who added that his retail development firm is exploring options throughout the Mid-Atlantic region. “We are looking at properties priced between $5 and 20 million and believe those under $10 million are the most attractive. Market activity seems to be building slowly, and we expect an active 2010.”
7-Eleven, which recently announced an aggressive expansion program that targets opening 50 stores annually in the greater Baltimore, Washington, D.C., and Northern Virginia markets, had a significant presence during the conference. “Our store concept is nearly recession-proof, as we provide commodities that people need and depend on every day,” commented a real estate representative at the 7-Eleven booth. “While most other retailers are pulling back, we have the capital to grow and are looking to open 400 new stores next year nationally.”
The Family Dollar booth was an extremely popular destination for real estate brokers and shopping center owners. “Our goal is to add 200 to 300 new stores in 2010, adding to our 6,700 existing locations,” said Bob McColl, a regional vice president with Family Dollar. “Given our sales growth and destination status, our concept has always been in high demand.”
The overall buzzword for the New York ICSC conference was patience, and most participants were in a more optimistic mood than they were a year ago, when they were only months removed from the Wall Street meltdown. “The good news is that people are attending this show and talking. Deals are out there to be made, and the energy level is up. It just takes some time,” said Jerry Wit, senior vice president of marketing and leasing for St. John Properties.
When the trade show area closed for the evening, he joined the masses in winter coats who were heading out to personally help jump-start the economy. “There is nothing like holiday shopping in New York City,” he said, smiling.
— Larry Lichtenauer is founder and president of Owings Mills, Md.-based Lawrence Howard & Associates.