Last year, Las Vegas was flooded with 25,000 retailer and shopping center executives in search of positive news and a few stray deals.
At this year’s International Council of Shopping Centers’ annual RECon event, held May 22 to 25 at the Las Vegas Convention Center, deal-making took top billing. And that’s just part of the good news.
Attendance was up 20%, ICSC said, and talk of expansion was rampant. In fact, Subway announced just prior to the convention that it aimed to open another 2,000 locations prior to yearend — and an army of the chain’s dealmakers stormed Vegas to forge real estate deals from coast to coast.
“Activity was definitely robust at RECon this year,” said Mitchel S. Friedman, senior VP, New York City-based RCS Real Estate Advisors. “There is still some caution out there. But, in general, most people were optimistic about where we are in the economy and where our industry currently stands.”
On both the retail and shopping center fronts, growth was the watchword. Among the new projects unveiled at the show was a major downtown Philadelphia redevelopment, by locally based Pennsylvania Real Estate Investment Trust (PREIT).
“We are launching a comprehensive redevelopment of The Gallery, an urban infill project in downtown Philly comprised of three city blocks,” said Joseph Coradino, president of PREIT Services Inc. and PREIT-Rubin. “We will completely transform the existing retail mall and potentially introduce additional uses. Key to the project will be food and entertainment,” he said.
Other projects introduced at RECon this year included Madison Marquette’s huge southwest Washington, D.C., waterfront development The Wharf, which encompasses 27 acres of land and 24 acres of water with some 3 million sq. ft. of new retail, residential, office, hotel and cultural components. “This area has long needed an overhaul, and that’s what this will be,” said Kurt Ivey, senior VP marketing and corporate communications for Madison Marquette. Groundbreaking is slated for 2012 with a first-phase opening in 2015.
Not all the projects unveiled at RECon were large-scale, but they were significant nonetheless. St. Paul, Minn.-based Paster Enterprises bought a former Circuit City location in Minnetonka, gutted it and is introducing the area’s first Whole Foods Market, a 33,000-sq.-ft. space slated to open in fall 2011. Walgreens’ new prototype opened April 4 at Paster’s Mendota Plaza, in Mendota Heights, Minn., and a prototypical Aldi’s will open at Crystal Shopping Center, in Crystal, Minn.
In fact, such grocers as Aldi and Whole Foods Market are representative of the entire spectrum of the category that is finding success both in the recession and its aftermath.
“The supermarkets are looking to continue their growth,” said Andy Graiser, co-president of Melville, N.Y.-based DJM Realty, a Gordon Bros. Group company. “The sporting goods category and the dollar stores are poised for continued growth as well. But what we’ll see is not new development, but rather growing into surplus real estate,” he said.
The Baker Katz commercial brokerage team, based in Houston, concurred. “We’re not hearing much at this show about new construction,” Jason Baker said. “And of the new projects being unveiled, most are smaller projects and not the large-scale developments,” Kenneth Katz added.
And that’s no surprise, really, if you understand the market. “What we expected to see at RECon 2011 is exactly what we’re seeing,” said Greg Maloney, president of Jones Lang LaSalle Retail, Atlanta. “The positives are that retailers are expanding more, and the open-to-buy lines of credit are improving. On the negative side, the recovery is still slow, and many of the economic fundamentals need to show improvement before we can expect to see dramatic recovery.”