As happens every year, the GRS Group team hit the annual International Council of Shopping Centers’ RECon show in Las Vegas last month. Members of our team sharing their perspectives are Allen Brown and Kevin May, who both attended the ICSC educational sessions and found very valuable insight from the various networking sessions. What follows are their thoughts on how the retail sector of commercial real is shaping up.
How was this RECon compared to prior years? Was there more traffic or enthusiasm than previous years?
Kevin May: I had not been since before the downturn, but I know registrations were highest they’ve been since the recession and there were 150 new companies exhibiting. Additionally, 36,000 people were registered.
Allen Brown: There was certainly more traffic, both registered and unregistered. Enthusiasm in the NNN retail sector was high, and expectations were for continued strong results in this sector.
Was it a good networking situation this year?
May: Yes. In addition to meetings, and running into people on the conference floor, there were elaborate parties each night. Most of the hottest clubs had been rented out for private parties, and they were all very well attended. I was able to attend seven different parties on Monday and do some great networking.
Brown: Yes. I was able to keep a fairly full schedule of meetings. But the meetings were harder to obtain, as everyone seemed to have plenty scheduled.
What trends in the industry did you learn about?
May: Retailers are working hard to differentiate themselves from online retailers right now and gain more traffic.
Brown: There was some concern that debt costs, for those who use debt to acquire properties, might affect the yields that have been driving this area of the market, which might also lead to slightly higher cap rates and reduced prices for sellers. For tenants under new sale/leaseback transactions, this would equate to slightly higher rents. But thoughts were still positive.
Does the retail real estate sector seem to be improving?
May: Yes, and there is plenty of capital chasing shopping centers, as well.
Brown: Single-tenant NNN retail appears to be OK. The larger, multi-tenant properties, such as enclosed malls, power centers, lifestyle centers and some strip mall owners, were concerned with continued softness in big-box retail areas and how that may have a trickle-down impact on other tenants in the centers and malls. The industry seems to get the idea that the Millennials, and later generations, will shop differently, and are working on ideas for more interactive and experiential shopping that may appeal to these consumers. We might see malls and large lifestyle centers combing the retail experience with mini-fashion shows, DJ’s and food and beverage services. It will be very exciting to see what theses adaptations bring.
What are the ways that GRS Group is providing services for clients in this arena of real estate?
Brown: As always, we continue to present the idea of a single point of contact for due-diligence services. Nobody provides the same array of services products available to the commercial real estate industry that we do at GRS Group. We are finding that many of the younger generation of commercial real estate professionals enjoy these advantages, and are beginning to place multiple service orders. We are even finding that many companies have not returned to pre-recession employment levels and would rather dedicate their internal resources to customer-centric activities, opening the door for GRS Group to partner with them on their due-diligence needs. Finally, we are seeing more and more franchisees embrace our multiple services as a part of their growth strategy, assisting with site selection, M&A advisory, title and closing services, as well as ESA, PCA, survey, zoning reports, appraisal, construction risk management and cost-segregation services.