Chicago Was Hot and So Was The Cheesesteak
Alyson and I attended the Chicago (oh, congratulate her, she's now our vice president) ICSC dealmaking event and, besides the beautiful weather, the show was "hot," with some 3,400 dealmakers in attendance, setting another record, which all the shows seem to be doing for the last few years. And while I'm hopeful, I doubt this trend can continue, especially with all the mixed economic reports that have been coming out for the last few months (I know I keep saying this but eventually I'll be right).
There were two major complaints I heard at the show: 1) the 45 minute to hour and a quarter wait to get your photo and badge IF you didn't pre-register and send in your photograph on time. About 25% of the attendees had not mailed in their photo, which caused the long waits. I recommend to anyone planning on attending future shows that they e-mail their photos to the ICSC NOW so they're not stuck in these lines, especially for Vegas where the wait might be hours. The good news is that at the New York show photos won't be required because they don't have the space in which to take 'em. BUT most of the other shows and Vegas will require it, so don't stall, just do it; 2) was the lack of "real" retailers. There were lots of brokers representing retailers but few actual ones. The only large group of retailers represented was fast food-oriented and some banks. While the Philly show didn't have a problem with registration, the complaint about the lack of retailers was the same.
Anyway, back to Chicago. I attended the Harold Eisenberg Memorial Dinner the night before the show and it was a sellout with 550 in attendance. It pays to attend this event; not only are you supporting a good cause, but you're also getting a great networking opportunity at the same time; two for the price of one (Oh, and the food at the dinner was fantastic).
The ICSC cocktail party the following day was jammed and what was really surprising was that the food was decent (no, I don't have a food fetish). Everyone was upbeat but concerned that the good times can't last much longer (I am not alone). Once again, I heard complaints about the price of acquiring centers and how they're getting a 10% return when they purchase industrial, which a lot are now doing since they "say" they've given up on retail (I don't believe 'em, they've made too much money off of it). The Chicago show, more than most dealmaking events, attracts small developers (other shows that attract these entrepreneurs are Atlanta and Charlotte), in addition to the Simons and Kimcos. I'm more at home with the "little guy" than the "Simons" of the world. They move quickly, know what they want and understand that if they don't produce they die. And above all, since most are self made millionaire$ they're not too conceited or arrogant. The large companies have one major advantage over 'em, MONEY, lots of it, which usually covers their butt on some of their dumber moves. Because the larger companies have been doing so well lately, they can afford numerous blunders before they're in real trouble. The little guy doesn't have that luxury. Now I'm not saying the big guys are dumb, I just believe their size prevents them from making the most logical and efficient decisions (bureaucracies are a bummer). For example, larger companies add to their layers of leasing personnel by having individuals that specialize in "Big Box," medium box and small shop leasing. I'm waiting for them to add a specialist for Chinese buffets. Makes no sense to me; can't their people handle the whole gamut of retailers wanting to lease space in a particular center? It really isn't that hard. Anyway, rambling on, I read an article in SCT Xtra that lifestyle centers will represent 65% of all new developments over the next three years. If that's true, a lot of "poor" performing centers will be built, as lifestyle centers, by their nature, are not meant to be located at every street corner (it's not the concept I have problems with; it's the execution). The economics of these centers don't work for Middle America and the "upscale" consumer represents only 15% to 20% of the population, so there's limited markets they make sense in. Plus, a lot of these "lifestyle" centers are really power centers in disguise, using lifestyle as a name because it represents today's "vanilla."
Every mall developer is converting their "C, D and F" centers to mixed-use and lifestyle centers, and I contend that in 60% of the cases these redeveloped projects will fail. It's a little like 25 years ago when all the failed malls were being converted to outlet centers. The developers believed they found the magic cure, but five years later the failed center was still a bummer. Then they believe their "salvation" was entertainment centers and that also failed. To prove I'm old, I remember my grandmother living over retail stores in Newark, NJ in the 1940s and saving up money so she could move into an apartment, which was considered more prestigious. Today, the condo over the retail is considered upscale, proving my grandmother was a smart lady.
Rambling on...Ann, Alyson, Terry, Rich, Josh and myself attended the Philly show the following week after Chicago and another winner in attendance was posted; Philly was smaller than Chicago (the East Coast considers the Philly and the New York shows as "theirs," so many wait for December to attend a show instead of attending both. I disagree, but that's what makes horse racing. Attendance was up about 400 to 2,300 this year over 1,900 last year. The cocktail party the night before was jammed with everyone upbeat. After the cocktail party, most attended private parties such as Fameco's event at the Hard Rock (which was the busiest). Legend Properties' party was packed also and they announced Maria Aristone was appointed president of the company; they bumped Jim Depetris to chairman. Smart move on their behalf. Also, Marcus and Millichap and Metro Commercial had parties, which were packed. One thing our industry does well is eat, drink and party.
The Philly show got off to a slow start on Thursday morning, but by 10 a.m. it was hectic and stayed busy until the end at 3 p.m., which is good. It used to be this show ended right after lunch, so its value over time is improving. The best comment I heard at the show was from Rene Daniels, who said: "Lot's of people present, but few decision makers." Cute, but unfortunately true. As our industry expands we gain membership, but the ability for these dealmakers to make decisions is lacking, which is why every deal takes forever to be finalized. Oh, I read an interesting article last week; the author contends that if we don't have a good Christmas (guesses are between 2.5% to 5% in sales increases) then Sears will start selling off underperforming Kmart and Sears stores, just what our industry needs, more available real estate.
There were two major complaints I heard at the show: 1) the 45 minute to hour and a quarter wait to get your photo and badge IF you didn't pre-register and send in your photograph on time. About 25% of the attendees had not mailed in their photo, which caused the long waits. I recommend to anyone planning on attending future shows that they e-mail their photos to the ICSC NOW so they're not stuck in these lines, especially for Vegas where the wait might be hours. The good news is that at the New York show photos won't be required because they don't have the space in which to take 'em. BUT most of the other shows and Vegas will require it, so don't stall, just do it; 2) was the lack of "real" retailers. There were lots of brokers representing retailers but few actual ones. The only large group of retailers represented was fast food-oriented and some banks. While the Philly show didn't have a problem with registration, the complaint about the lack of retailers was the same.
Anyway, back to Chicago. I attended the Harold Eisenberg Memorial Dinner the night before the show and it was a sellout with 550 in attendance. It pays to attend this event; not only are you supporting a good cause, but you're also getting a great networking opportunity at the same time; two for the price of one (Oh, and the food at the dinner was fantastic).
The ICSC cocktail party the following day was jammed and what was really surprising was that the food was decent (no, I don't have a food fetish). Everyone was upbeat but concerned that the good times can't last much longer (I am not alone). Once again, I heard complaints about the price of acquiring centers and how they're getting a 10% return when they purchase industrial, which a lot are now doing since they "say" they've given up on retail (I don't believe 'em, they've made too much money off of it). The Chicago show, more than most dealmaking events, attracts small developers (other shows that attract these entrepreneurs are Atlanta and Charlotte), in addition to the Simons and Kimcos. I'm more at home with the "little guy" than the "Simons" of the world. They move quickly, know what they want and understand that if they don't produce they die. And above all, since most are self made millionaire$ they're not too conceited or arrogant. The large companies have one major advantage over 'em, MONEY, lots of it, which usually covers their butt on some of their dumber moves. Because the larger companies have been doing so well lately, they can afford numerous blunders before they're in real trouble. The little guy doesn't have that luxury. Now I'm not saying the big guys are dumb, I just believe their size prevents them from making the most logical and efficient decisions (bureaucracies are a bummer). For example, larger companies add to their layers of leasing personnel by having individuals that specialize in "Big Box," medium box and small shop leasing. I'm waiting for them to add a specialist for Chinese buffets. Makes no sense to me; can't their people handle the whole gamut of retailers wanting to lease space in a particular center? It really isn't that hard. Anyway, rambling on, I read an article in SCT Xtra that lifestyle centers will represent 65% of all new developments over the next three years. If that's true, a lot of "poor" performing centers will be built, as lifestyle centers, by their nature, are not meant to be located at every street corner (it's not the concept I have problems with; it's the execution). The economics of these centers don't work for Middle America and the "upscale" consumer represents only 15% to 20% of the population, so there's limited markets they make sense in. Plus, a lot of these "lifestyle" centers are really power centers in disguise, using lifestyle as a name because it represents today's "vanilla."
Every mall developer is converting their "C, D and F" centers to mixed-use and lifestyle centers, and I contend that in 60% of the cases these redeveloped projects will fail. It's a little like 25 years ago when all the failed malls were being converted to outlet centers. The developers believed they found the magic cure, but five years later the failed center was still a bummer. Then they believe their "salvation" was entertainment centers and that also failed. To prove I'm old, I remember my grandmother living over retail stores in Newark, NJ in the 1940s and saving up money so she could move into an apartment, which was considered more prestigious. Today, the condo over the retail is considered upscale, proving my grandmother was a smart lady.
Rambling on...Ann, Alyson, Terry, Rich, Josh and myself attended the Philly show the following week after Chicago and another winner in attendance was posted; Philly was smaller than Chicago (the East Coast considers the Philly and the New York shows as "theirs," so many wait for December to attend a show instead of attending both. I disagree, but that's what makes horse racing. Attendance was up about 400 to 2,300 this year over 1,900 last year. The cocktail party the night before was jammed with everyone upbeat. After the cocktail party, most attended private parties such as Fameco's event at the Hard Rock (which was the busiest). Legend Properties' party was packed also and they announced Maria Aristone was appointed president of the company; they bumped Jim Depetris to chairman. Smart move on their behalf. Also, Marcus and Millichap and Metro Commercial had parties, which were packed. One thing our industry does well is eat, drink and party.
The Philly show got off to a slow start on Thursday morning, but by 10 a.m. it was hectic and stayed busy until the end at 3 p.m., which is good. It used to be this show ended right after lunch, so its value over time is improving. The best comment I heard at the show was from Rene Daniels, who said: "Lot's of people present, but few decision makers." Cute, but unfortunately true. As our industry expands we gain membership, but the ability for these dealmakers to make decisions is lacking, which is why every deal takes forever to be finalized. Oh, I read an interesting article last week; the author contends that if we don't have a good Christmas (guesses are between 2.5% to 5% in sales increases) then Sears will start selling off underperforming Kmart and Sears stores, just what our industry needs, more available real estate.
posted by tedkraus at 6:10 AM
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