Friday, May 15, 2009 | midnight
- Learning how to survive in the new retail market (3-27-2009)
Beyond the Sun
There will be some noticeable changes at RECON 2009, the International Council of Shopping Centers’ annual global retail real estate convention, which takes place May 17 through May 20 at the Las Vegas Convention Center.
The retail market has taken a serious hit in the past year with dozens of companies, including many household names, filing for bankruptcy. In addition, retail vacancy rates have ballooned in many markets, leaving the future of some prominent real estate investment companies in doubt.
Attendance will certainly be down at this year’s convention. Last year’s attendance estimates ranged from about 45,000, the number some local experts say showed up, to 50,000, which was the stated attendance figure. This year, with less than a week before opening events, the attendance figure on the council’s Web site was just over 25,000 registered conventiongoers, with estimates in the 30,000 range.
Much of this can be attributed to companies cutting back on the number of people they are sending to this year’s event.
A look inside the numbers, however, indicates there is more going on than just fewer people at the show. Some prominent players in the retail real estate market are taking a new approach.
Indiana-based Simon Property Group, the country’s largest real estate investment trust, and Los Angeles-based Westfield Group, the world’s largest listed retail property group, have not reserved space on the trade show floor this year. The absence of two major players on the convention floor demonstrates that a lot has changed in the past 12 months.
Simon Property Group will reportedly conduct business from a private suite away from the Convention Center. Although this may be a cost-saving move for Simon, it could be a major inconvenience for conventiongoers, who will have to leave the convention floor for those meetings
Chicago-based General Growth Properties, the country’s second largest REIT, has space on the trade show floor despite filing for bankruptcy last month.
The projects displayed prominently at the entrance to General Growth’s exhibit space last year — the Shops at Summerlin Centre and High Street at Echelon — have been shelved.
Echelon was envisioned as a 1.5 million-square-foot regional retail center in Summerlin. High Street was to be the retail portion of Boyd Gaming’s mothballed Echelon.
This year, General Growth is struggling for survival and will likely focus on finding buyers for some of its key assets, including the Fashion Show mall, the Grand Canal Shoppes at Venetian and the Shoppes at Palazzo on the Strip.
Rob Moore, managing director of investment sales and leasing for Las Vegas-based Gatski Commercial Real Estate Services, said his company will concentrate on bringing new retailers to the local market.
“Our focus is targeting large retailers that are not in this market and telling them about the availability of big boxes,” Moore said. “We’re going to be showing the space that we have available and targeting the retailers that are surviving, such as discount stores. If we are able to find that one big retailer, it could be a great convention for us.”
Buxton, a Texas-based company that specializes in helping companies identify their customer base and determine which markets are a good fit, has seen a shift in its clients’ needs this year.
Charles Wetzel, Buxton’s president, said that when the economy was booming, companies were focused on expansion, but now are working harder to identify customers in existing markets.
“Within the retail space, only 22 percent of our business is marketer-site driven,” Wetzel said. “If a retailer is not growing, the questions they ask have changed. If they are not looking for their next 100 sites, they are asking who their best customers are and how to market to them.”
The correction in the retail real estate market has some retailers looking to get into markets they previously could not.
“A lot of the growth stories you hear coming out of retail are really because the price of real estate is at a point where certain retailers can now afford it,” Wetzel said. “At a macro-level, it is the discount retailers and the fast-food retailers that are doing well.
Because of the range of services it provides, Buxton actually has about 40 percent more appointments than it had last year, although many companies anticipate a slowdown in business this year.
There are several high-profile speakers at this year’s convention, including former Vice President Al Gore, who will discuss how environmental changes will affect the global economy. Samuel Zell, CEO of the Tribune Co., is also a featured speaker at one of the general sessions.
Many of this year’s meetings will focus on ways to respond to the recession.
Sessions such as “Don’t Just Stand There & Take a Beating …Where Are the Deals in the Current Economy?” will look at ways to take advantage of the down market
Other sessions such as “Managing Crisis Situations in Shopping Centers” will discuss ways to evaluate and assess crises, which have become much more frequent.
Overall, the events seem to mirror what many retailers already know: This is going to be a crucial year in the retail community, and there are likely to be more casualties, but those that survive will be in a position to benefit greatly when the economy recovers.