Rumors were running rampant that the temperature had reached 117 degrees outside the Las Vegas Convention Center last May, but the weather wasn’t the only hot topic.
Talk in the aisles of RECon, the International Council of Shopping Centers’ annual real estate convention in Las Vegas, held May 17 to 20, 2009, was of turnarounds.
Not that there weren’t doomsayers. One developer wondered why no bankers were there and suggested the lenders may have anticipated something other than a warm welcome from the 35,000 tenants and landlords in attendance.
Many exhibitors and attendees, however, waxed positive about corners that have been turned and lights flickering on at the end of the tunnel.
Cutting the fat: No question the theme of this year’s convention was that of reducing expenses. And not just inside the once-lavish booths, where 2009 iterations were far sparer than in years past. (Walls once covered in lighted graphics were blank; wood flooring was replaced by carpet, custom-omelet stations were supplanted by fruit and yogurt offerings.) Developers talked of significant pullback both inside their own organizations and among their tenants.
“We were at a point in this industry that we would roll the dice more readily, but that kind of risk-taking has dried up,” said William Taubman, COO of Bloomfield Hills, Mich.-based Taubman Centers. “We’re all now focusing on what we do best.”
Taubman said his focus is on his tenants. “We’re looking ahead, at where our customers will be in three years. If we’re not prepared, then we need to invest our resources toward creating our model going forward.”
Like most, it hasn’t been an easy year for Taubman. The company will have negative NOI growth for the first time in the company’s 59-year history. “That’s what we told the market, and it’s painful. But we have the balance sheet to continue to invest in our assets,” he said.
Repositioning and restructuring: A shifting of priorities is what most in the industry are experiencing, and that’s not necessarily a bad thing. Nina Kampler, executive VP strategic retail and corporate solutions of North-brook, Ill.-based Hilco Real Estate, talked of a repositioning of real estate portfolios in order for companies to continue to operate.
“Any retailer and restaurateur who will continue to survive will have to ensure its occupancy costs are in proportion to its sales,” she said. “We are actively helping companies rearrange and restructure to get those real estate costs in line.” Companies such as Hilco don’t work just with distressed retailers, but are assisting healthy companies evaluate their existing portfolios and decide “what to keep and what to shed,” said Kampler.
Australian-based giant Centro Properties Group has turned full attention to its portfolios and getting them on track and productive. Michael Carroll, president and CEO of Centro U.S., headquartered in New York City, has been challenged with 2.5 million sq. ft. of dark space in his shopping centers, rejected back out of bankruptcy. “We’ve retooled our teams to attack these empty boxes,” Carroll said. “Our redevelopment team has been redirected to handle that duty and, to date, we have addressed 40% of that space, either leased or under LOI.”
Carroll said he sees these difficult times as a unique opportunity to forge new relationships, an unexpected side benefit.
“Hhgregg has signed three leases for us, and we have never worked with them before,” said Carroll. Centro met with Nebraska retailer Gordmans, another new face. “In fact, at RECon we have had over 400 unique retailer meetings. It brings an entirely different character to the activity at this show.”
For more from the RECon show floor, visit