Texas-Retail Real Estate
Ann and I came back a few weeks ago from the San Antonio show and it's two weeks to go until New York (the end of the year is near). If 2005 ends as it's been running for the past eleven months, New York will be great, as the Texas show was, but on a substantially larger scale. New York is no longer a regional event (not that it ever was); it's our mid year national convention. The 2004 New York dealmaking had 6,100 attendees and 7,000 are expected this year. If you're not coming, you're missing a lot and making a mistake. While the Texas dealmaking was small compared to other shows (a little under 2,000 attended), its growth over the last few years has been substantially larger than the rest. The Texas dealmaking is also "purer," in that less "outsiders" attend. It's really Texas only-oriented; other shows attract from a larger region not just a state, but then Texas is "big." Approximately 90% of those in attendance appeared to be happy with current business, even the ones that feel there's a slowdown/recession on the way looked at it as an opportunity to buy properties at a price that might make sense. Like Atlanta, the majority of developers were "MA&PAs" who owned 10 to 20 centers and, if need be, could finance a 150,000 sq.ft. center out of their own cash flow. Why they would do it is alien to them but they could. They were all bragging about new developments they had going with few mixed-use or lifestyle centers discussed (Texans are bread and potato people), but hundreds of millions of dollars are being spent on new projects and redevelopment in the state, not sexy projects, but excellent workhorses. Percentage-wise, there were fewer "real" retailers than were in Atlanta or Chicago, but there were vast numbers of brokers available to do deals.
About the only negative I had was the layout of their Retailers Runway, which used a seating arrangement around a table instead of the standard walk-up, which I prefer. Ann and I couldn't make the cocktail party but were told it was "so-so." On Wednesday there were several interesting seminars and people spent the day dealmaking or learning. Then, on Thursday the actual deal doing event began, which was active all day. While attendance was up, as was the enthusiasm of the attendees, you could tell there's concern on many of the more mature attendees (old farts), who have seen slowdowns start in manners similar to what we're encountering now (one of the few advantages of age is, if you're lucky, you also gain experience/insight).
Changing back to the New York show, if it wasn't as good as it's been and I know it will be, I could never justify the current hotel rates that we're being gouged with (but in fairness they're not picking on the ICSC, the hotels are ripping everyone off). I assume the hotel business is good, so they want to make hay while they can. The type of year 2006 will be is still a mystery, the economic indications are still too confusing. The stock market is up Monday, Wednesday and Friday and on Tuesday, Thursday and Sunday it's down. REITs are up, down, hot and cold. And that's just on Tuesday. They say there's a real estate bubble, then they come back saying there will just be a slowdown but not a recession. Some say Christmas will be good, some say no. I'm not smart enough to know the answer. I do know, however, that if Christmas is good 2006 should be decent. If it isn't, our "turnaround" division will be busy in the new year. Either way, I don't expect 2006 to be as good as 2005.
On a different note, people are either lazy, stupid or at minimum don't want to go the extra mile to make a deal. An owner offered me a site that I reviewed but turned down for a retailer. When I explained it was too close to an existing store and didn't have enough draw to the area, he disagreed with me and explained I was wrong. When I replied "how am I wrong?" I was told "because you are," not a valid reason to change my mind. I suggested he do a trade map of the area, with different demographics, traffic counts and show all the competing centers in the immediate area, plus demographics on the population half way between their location and our store, something I often ask for when the landlord doesn't like my opinion. Well, this one, as does six out of 10, said "If you want it, you do it." I tried to explain that I didn't want it, that I didn't think the site was for us BUT that I'm willing to review my decision IF they supply the info. He couldn't understand why I didn't want to invest six to 12 hours on a site I don't like to begin with. Needless to say, the deal was not done. The good news is that four out of 10 will provide the requested package even if it isn't part of their standard leasing brochure. Sure, if you have great real estate you don't have to work as hard to lease it, but most properties are in the "C" category and therefore harder work is required. Unfortunately, only 40% are willing to.
Changing topics...because of an operation, I recently spent a week working out of the house. On numerous occasions I needed someone's phone number, and instead of constantly bothering my office, I "googled" for the information. When the company was public, I had no problems getting a phone, fax or e-mail address. But in the majority of the cases, if they were a smaller retailer/developer/broker, I couldn't find 'em or it was extremely difficult. Makes no sense. Even IF you have a web site, that doesn't mean you're indexed by the search engines (that means it's easier for people to find you) and even if you're "brick & mortar-oriented," people should be able to reach you on the net without knowing your URL. The Net and having a search engine strategy should be playing a major role in your leasing/development marketing strategy. If it isn't, you're making a mistake.
If you're a developer, there should be a web site describing not only your main business but every center you have over 100,000 sq.ft., providing information both for the shopping public and potential tenants (If the consumer can find your tenant on the net, the retailer does higher volume, meaning you'll get higher rent). The name of all the top executives and leasing people should be prominently listed. If you're a broker, provide information not only on your services but individual web sites for every center you're leasing. Plus a link to every clients' home page and, if you're a retailer have a "tag line" telling what and where your stores are about both for the consumer and interested landlords. I'm not going to bore you with terms like optimized web site, SRO, PPC, etc...but I do recommend you check into better indexing your homepage, you'll lease more space and that's the name of the game.
Parting thoughts...on a nonpolitical but social note that relates to retail real estate. I was talking to a friend (a retailer that caters to the middle class) and he pointed out that there are monumental negative changes occurring in our nation right now and it's not just the fight between the red and blue states but the rich and poor. The rich are getting richer and the poor are destitute (which is a problem for the retail real estate industry). When Big Lots has to close 170 stores, dollar stores are having a hard time and most importantly, Wal*Mart calling for a higher federal minimum wage, you have to know we're in trouble. A substantial portion of consumers have no money. I don't have the answers to the problem, only the questions (in theory our politicians do, but in reality they just waste time and money). Besides poverty being morally wrong it affects consumer spending and that hurts our industry drastically. Besides the ethical problem of 13% of the population living below poverty (the blue collar worker is desperate and the middle class is broke), having no medical insurance or upward mobility, the poor can't shop at the centers we're building. Sure, Nordstrom is doing great right now, as are most upscale retailers, but only 10 percent of the nation's population makes over $100,000 and there aren't enough of them to support our industry if we only build for the upscale consumer. We need the middle class and blue collar worker if "we" are to grow. It's to our benefit to help the lower income groups. I'm not saying give 'em money. I'm saying help them get a decent job and an education and then they'll be giving us back profits.
Anyway, have a healthy New Year's and a great holiday.
P.S. First, there's still time to attend the Barry Davis Dinner on December 4, call the ICSC at 646-728-3800 for details It's a great networking event and don't forget to stop by our booth at Rhinelander 151 in New York to say Hi.
About the only negative I had was the layout of their Retailers Runway, which used a seating arrangement around a table instead of the standard walk-up, which I prefer. Ann and I couldn't make the cocktail party but were told it was "so-so." On Wednesday there were several interesting seminars and people spent the day dealmaking or learning. Then, on Thursday the actual deal doing event began, which was active all day. While attendance was up, as was the enthusiasm of the attendees, you could tell there's concern on many of the more mature attendees (old farts), who have seen slowdowns start in manners similar to what we're encountering now (one of the few advantages of age is, if you're lucky, you also gain experience/insight).
Changing back to the New York show, if it wasn't as good as it's been and I know it will be, I could never justify the current hotel rates that we're being gouged with (but in fairness they're not picking on the ICSC, the hotels are ripping everyone off). I assume the hotel business is good, so they want to make hay while they can. The type of year 2006 will be is still a mystery, the economic indications are still too confusing. The stock market is up Monday, Wednesday and Friday and on Tuesday, Thursday and Sunday it's down. REITs are up, down, hot and cold. And that's just on Tuesday. They say there's a real estate bubble, then they come back saying there will just be a slowdown but not a recession. Some say Christmas will be good, some say no. I'm not smart enough to know the answer. I do know, however, that if Christmas is good 2006 should be decent. If it isn't, our "turnaround" division will be busy in the new year. Either way, I don't expect 2006 to be as good as 2005.
On a different note, people are either lazy, stupid or at minimum don't want to go the extra mile to make a deal. An owner offered me a site that I reviewed but turned down for a retailer. When I explained it was too close to an existing store and didn't have enough draw to the area, he disagreed with me and explained I was wrong. When I replied "how am I wrong?" I was told "because you are," not a valid reason to change my mind. I suggested he do a trade map of the area, with different demographics, traffic counts and show all the competing centers in the immediate area, plus demographics on the population half way between their location and our store, something I often ask for when the landlord doesn't like my opinion. Well, this one, as does six out of 10, said "If you want it, you do it." I tried to explain that I didn't want it, that I didn't think the site was for us BUT that I'm willing to review my decision IF they supply the info. He couldn't understand why I didn't want to invest six to 12 hours on a site I don't like to begin with. Needless to say, the deal was not done. The good news is that four out of 10 will provide the requested package even if it isn't part of their standard leasing brochure. Sure, if you have great real estate you don't have to work as hard to lease it, but most properties are in the "C" category and therefore harder work is required. Unfortunately, only 40% are willing to.
Changing topics...because of an operation, I recently spent a week working out of the house. On numerous occasions I needed someone's phone number, and instead of constantly bothering my office, I "googled" for the information. When the company was public, I had no problems getting a phone, fax or e-mail address. But in the majority of the cases, if they were a smaller retailer/developer/broker, I couldn't find 'em or it was extremely difficult. Makes no sense. Even IF you have a web site, that doesn't mean you're indexed by the search engines (that means it's easier for people to find you) and even if you're "brick & mortar-oriented," people should be able to reach you on the net without knowing your URL. The Net and having a search engine strategy should be playing a major role in your leasing/development marketing strategy. If it isn't, you're making a mistake.
If you're a developer, there should be a web site describing not only your main business but every center you have over 100,000 sq.ft., providing information both for the shopping public and potential tenants (If the consumer can find your tenant on the net, the retailer does higher volume, meaning you'll get higher rent). The name of all the top executives and leasing people should be prominently listed. If you're a broker, provide information not only on your services but individual web sites for every center you're leasing. Plus a link to every clients' home page and, if you're a retailer have a "tag line" telling what and where your stores are about both for the consumer and interested landlords. I'm not going to bore you with terms like optimized web site, SRO, PPC, etc...but I do recommend you check into better indexing your homepage, you'll lease more space and that's the name of the game.
Parting thoughts...on a nonpolitical but social note that relates to retail real estate. I was talking to a friend (a retailer that caters to the middle class) and he pointed out that there are monumental negative changes occurring in our nation right now and it's not just the fight between the red and blue states but the rich and poor. The rich are getting richer and the poor are destitute (which is a problem for the retail real estate industry). When Big Lots has to close 170 stores, dollar stores are having a hard time and most importantly, Wal*Mart calling for a higher federal minimum wage, you have to know we're in trouble. A substantial portion of consumers have no money. I don't have the answers to the problem, only the questions (in theory our politicians do, but in reality they just waste time and money). Besides poverty being morally wrong it affects consumer spending and that hurts our industry drastically. Besides the ethical problem of 13% of the population living below poverty (the blue collar worker is desperate and the middle class is broke), having no medical insurance or upward mobility, the poor can't shop at the centers we're building. Sure, Nordstrom is doing great right now, as are most upscale retailers, but only 10 percent of the nation's population makes over $100,000 and there aren't enough of them to support our industry if we only build for the upscale consumer. We need the middle class and blue collar worker if "we" are to grow. It's to our benefit to help the lower income groups. I'm not saying give 'em money. I'm saying help them get a decent job and an education and then they'll be giving us back profits.
Anyway, have a healthy New Year's and a great holiday.
P.S. First, there's still time to attend the Barry Davis Dinner on December 4, call the ICSC at 646-728-3800 for details It's a great networking event and don't forget to stop by our booth at Rhinelander 151 in New York to say Hi.
posted by tedkraus at 7:42 AM
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