RECon 2015 Takeaway: Retail Real Estate is on the Rise Again

Keen Appetites for Value-Added Investment Set the Tone for Annual Las Vegas Gathering

With 35,000-plus attendees thronging last months ICSC RECon event in Las Vegas, it seems safe to say that commercial retail real estate is roaring back from the Great Recession in a big way. Its not just the number of attendees that impressed us but the amount of new blood among them and the intense deal-making mood that pervaded the convention center.

Solid Retail Fundamentals Are Driving the Market on Multiple Levels

Yes, weve seen more attendees at past RECons (the record is 50,000), but weve never seen one of these shows with more capital aggressively chasing deals. Frothy would be a good word to describe the acquisition-oriented activity. The big institutional investors, many of whom we advise, were in a bullish state of mind and on the hunt for high quality, core retail assets as well as core plus and value-added retail properties. In addition to dominant grocery anchored centers, power centers and properties that feature category leading brands and credit tenants are in strong demand.

Ground up development was also drawing its own healthy slice of investor attention. For the first time since the slump began, there is a pipeline of significant development money, which is good news for the construction management team at Levin. Behind all this investor interest is the growing strength of retail fundamentals, particularly in the top-tier markets, which are typically the under retailed, high barrier to entry markets as well as the growth markets.

RECon, As Usual, Reveals Retail Real Estate Trends: Mixed Use, Hot Markets, New Retail restaurant and Entertainment Concepts and Smaller Footprints for Big Box Tenants

Trend watchers always like to keep a sharp eye on gatherings like RECon, scanning the scene for the next big thing. The 2015 event yielded some hints about new industry directions, most of which have been evolving for some time. The biggest driver of change in retail; online shopping, is now a firmly entrenched consumer habit and retailers and retail real estate owners and managers continue to struggle to pry people away from their screens and back into bricks-and-mortar venues. So we see both new retail development and renovations to existing shopping centers that include new restaurant and entertainment concepts, cinemas, and event spaces joining the line-up of traditional retail stores. Mixed-use development is also a focus. Experimentation is the name of the game here, as developers search for the right mix of retail, restaurants, entertainment, residential and/or office uses, and tackle the subtle nuances of pedestrian traffic patterns and tenant positioning. Success in mix use, many are finding, depends on the dynamics of the individual market and thats not something that lends itself to a template or formula.

The retail real estate sector is nothing if not dynamic, and change tends to involve responses to new trends. Wal-Mart and Target, for example, are adjusting to unique environments, particularly the dense urban markets as well as to continued competition from the extreme discount grocers and dollar stores with smaller footprints and new concepts. Expect to see the continued rollout of The Wal-Mart Express convenience stores and The Neighborhood Markets, with emphasis on groceries.

All in all, RECon 2015 was a testament to the resiliency of our industry and a cause for optimism. We are on a roll!

Industry Optimism Reigns at the Super Bowl of Retail Real Estate

ICSC’s RECon is the Number One Place for Deals, News and Trend Spotting

With 32,000 attendees and over 1,000 exhibitors packing the Las Vegas Convention Center, ICSC’s RECon deserves its reputation as the “Super Bowl of Retail Real Estate.” Aiming to do a year’s worth of business in three days, attendees from across the globe gather to network, check out new and proposed retail developments, spot trends, increase their general knowledge and, most important, make deals. This year’s gathering (May 18-20) was no exception. Levin Management, as we have for years, was on the scene. And we want to share some of our observations with you.

The Heat is Back in Retail Real Estate

Levin’s general RECon takeaway jives with that of other attendees and with media coverage of this year’s event. The industry’s mood is upbeat and optimistic, approaching pre-recession attitudes. The momentum, which was lost during the downturn, continues to gain steam. Everyone in every area of our global industry –
retailers, retail service providers, and investors – is eyeing potential acquisitions or expansion in some form.

Investment Capital is Seeking Top-Quality Retail Real Estate Assets

RECon is all about deals and this year institutional investors and fund managers were out in full force, looking aggressively, but very selectively for opportunities. Yes, capital is ready to flow again but only for top-quality retail properties. Memories of the recent downturn are keeping investors cautious. Whatever the cause, institutional investors are very demanding about where they put their dollars. All the boxes have to be checked on every commercial real estate deal these days. Some of the must-haves include:

  • Top notch anchor stores (a #1 or #2 ranked grocer, strong performing boutique grocery store or other market leading necessity oriented brands)
  • Long horizon on anchor leases; lots of in-line credit tenants
  • Strong area demographics; in-fill locations in high barrier markets
  • Good physical plant with great visibility, access and flow

In other words, only the best need apply!

RECon is the Place for Retail Real Estate Trend Spotting

Like all large conventions, RECon was full of buzz about trends and directions. You pick this up at social events, walking the floor, in the booths and seminars, and in the specific media coverage of the event. Just as we’ve seen over the last few conventions, e-commerce and the growing power of the millennial shopper dominated both formal discussions and casual chat.

Online shopping is now an established consumer habit (not just a passing phase) and retailers are looking not just to compete with it, but to harness the power of technology – especially mobile tech – to win customers and enhance the appeal of the brick and mortar experience. Every retail website now is incorporating responsive design, guaranteeing that their look on mobile will be as satisfying as it is on the computer screen.

The digital natives of the millennial generation, who have never known a world without technology are, of course, leading this trend. By 2020, this demographic will be the largest consumer population. Mobile tech is central to virtually every aspect of their daily lives, so shopping is no exception. Value-conscious bargain hunters have led their parents into habits like pre-shopping for the best prices and using mobile couponing. Savvy retailers at RECon were talking about being “where the consumers live” and so, expect to see mobile tech continue as a leader among retailer trends.

The millennial impact is not limited by any means to the virtual world. Retail venues are recasting themselves to meet the tastes of this influential group. That means we’ll see even greater focus and proliferation of mixed-use commercial retail real estate developments. These “lifestyle” centers will go beyond shopping to include entertainment, dining, services, fitness as well as residential, mirroring the urban environments that have proved so appealing to millennials as well as the baby boomers, who want easy access to diverse resources in their retirement years. This mixed-use environment concept, already successful in some locales, will present opportunities for retail construction management services and for architects, particularly in redevelopment of existing properties.

Did you attend RECon this year? What’s your takeaway? Please share your observations with us here on our Retail Property InSites.

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About Joseph Lowry: A 25-year industry veteran, Lowry specializes in evaluating for-sale shopping centers and sourcing off-market retail investment opportunities for Levin Management’s select institutional clients and high-net-worth investors. He also spearheads marketing of the firm’s full suite of third-party services – including leasing, property management, accounting, construction management and marketing – to institutions, fund managers and private owners, including both existing and potential new clients.

What’s Behind Our Six Decades of Success in Retail Real Estate?

Blog Post: By Joe Lowry, Director of Acquisitions & Business Development

1. We think like an owner.

It’s that simple. First and foremost, we care for your property as if it were our own. Levin Management is recognized for the quality of its third-party retail real estate services precisely because our approach to managing and leasing shopping centers is highly proprietary. Our clients, including individual owners, estates and trusts, institutional investors and fund managers, value the resulting hands-on, proactive strategies that flow from our ownership attitude. We believe that our proprietary approach is the core contributor to the continued increase in overall profitability for the properties in our 13 million-square-foot portfolio.

Names like Blackrock Realty Advisors, Clarion Partners, AEW and PNC Realty Investors turn to Levin because they know we are a trusted advisor, as well as the premier landlord-focused retail real estate services provider in the Northeast.

2. We tailor our approach.

Levin knows there is no cookie-cutter template for managing and leasing shopping centers. That’s why we develop a unique business plan for each property based upon its competitive position and its owner’s goals. Our 60-year track record of crafting strategies that drive positive results in diverse economic environments proves that our tailored approach always beats the template.

Levin’s portfolio is filled with a wide range of properties – from Main Street shops; to neighborhood, community, lifestyle and power centers; to enclosed malls and mixed-use projects – in New Jersey, New York, Pennsylvania, Virginia and North Carolina. And we’ve recently expanded into Massachusetts. We’re recognized industry-wide for our success in repositioning, retenanting and renovating retail assets – an expertise that has become particularly vital in today’s increasingly competitive retail environment.

3. We do our job so you can focus on yours.
We’re proud to be recognized as one of the nation’s leading retail real estate services firms. From leasing and property management, to accounting, construction management and marketing, we offer a complete range of services that ensure the most effective and efficient results for each property entrusted to us. Consistent results are among the reasons why so many Levin shopping centers maintain dominance in their markets, and why property owners turn to us, time and again, for the solutions that deliver superior results. Simply put, we provide a tailored, turnkey approach that enables owners and investors to focus on other things, like growing their portfolios.

4. We understand the acquisitions market.

With limited institutional-quality retail real estate coming to market in Levin’s primary area of operation, finding the right shopping center investments can be challenging. If your organization is in buying mode, we can help. We know our primary markets on a granular level. We source off-market acquisition opportunities based on our clients’ specific acquisition criteria, including core, core plus, value-added and opportunistic properties. Additionally, our in-depth knowledge of retail assets and trade areas enables us to provide valuable insight and guidance regarding a specific purchase or sale – from market rental rates, local demographics and traffic data; to information about competing and proposed retail properties; to assessment of a shopping center’s physical infra-structure and capital requirements, tenant roster and upside potential. This expertise is another factor that contributes to our unique position as leaders in the industry.

Look for news and observations from Levin Management executives in upcoming posts here at Retail Property InSites. Please join us and share your comments about our posts or about your own experiences and challenges in retail real estate.

About Joe Lowry: A 25-year industry veteran, Joe Lowry specializes in evaluating for-sale shopping centers and sourcing off-market retail investment opportunities for Levin Management’s select institutional clients and high-net-worth investors. He also spearheads marketing of the firm’s full suite of third-party services – including leasing, property management, accounting, construction management and marketing – to institutions, fund managers and private owners, including both existing and potential new clients.