Deal-making tops shopping center convention’s agenda

By Buck Wargo

Fri, May 21, 2010 (3 a.m.)

It’s the place deals get done to build shopping centers across the country.

The annual convention of the International Council of Shopping Centers in Las Vegas has led to shopping centers being built in Southern Nevada, and major retailers deciding to expand their presence or even enter the market.

In a city still mired in a recession while the rest of the country has started recovering and retail vacancy rates at record levels, retailers and developers haven’t been knocking down doors to expand in Southern Nevada or start new projects.

More than 30,000 people are expected at the world’s largest gathering of real estate professionals May 23-25 at the Las Vegas Convention Center.

“It is the annual deal-making convention where anyone whose anyone in the industry somehow makes it to Las Vegas to be able to see what the latest trends are, negotiate, cut their deals and set the tone for the subsequent year,” said Russ Joyner, executive vice president and general manager of the Miracle Mile Shops.

Retail development consultant John Restrepo, principal of Restrepo Consulting Group, said the likely deals are with retailers and developers looking not at Las Vegas, but at other opportunities across the country.

“When the Vegas economy was booming and the Vegas brand was hot, everyone wanted a piece of Vegas and it did generate a lot of deals,” Restrepo said. “It’s not like the old days. The brand is tarnished right now. There are not a lot of deals in this environment today in Las Vegas because of the weak economy and consumer spending and lack of job growth.”

That doesn’t mean retailers and developers coming to Las Vegas will ignore the city when it comes to scoping out opportunities, analysts said.

Some may opt to add a store because rents have been reduced so much, Restrepo said. But the more likely scenario is finding land at discounted prices and waiting for the Las Vegas economy to turn around in the next two to three years.

“It could probably set the stage for negotiations and land banking, but not result in retailers starting to build more chain stores in the short term,” Restrepo said. “But they could tie up properties because they believe in Las Vegas in the long term.”

Jeremy Aguero, a principal at consulting firm Applied Analysis, said there seems to be a shift in companies’ attitude from trying to survive the recession to taking advantage of the recovery. He expects some companies will look for undervalued assets and future opportunities. That could include land and acquiring some shopping centers.

Pamela Ring, president of Las Vegas-based Ring Retail Advisory, said she was shocked to see people so humbled at the conference last year. Developers had problems finding money to build and even halted projects because of the economy.

“It was quite significant for me to see that kind of candor where there is typically bravado among all the deal-makers in the world of real estate development,” Ring said.

Developers remain cautious about projects in Southern Nevada at this time, Ring said. The region isn’t as diversified as other markets and job growth remains weak. As long as people are cautious in their spending, developers are going to be wary about building — but doesn’t mean they will stay on the sidelines, she said.

“I think there are some smart real estate professionals out there who recognize this is a time to buy a bargain, but maybe hold off before developing,” Ring said. “It may be land or existing buildings they buy at distressed prices and manage it and not inject any new money until times have changed.”

Joyner said he uses the shopping center convention to meet with retailers on the Miracle Mile’s wish list. It serves as an opportunity to showcase the mall at Planet Hollywood because a lot of retailers that come to the convention study the marketplace, he said.

“We think this year, better than most, our story reads as good as we can hope … and we want to tell that story to the best of our ability,” Joyner said of the boost in the center’s sales since December. “We feel this year we have as compelling a story as ever and a story that defies what most are reading about in Las Vegas. We think we may be leading the pack in heading out of the recession.”

Maureen Crampton, director of marketing at the Forum Shops at Caesars, said she provides tours for retail executives who want to walk through the center.

“It is really an excellent vehicle for networking and doing deals,” Crampton said.