In the Mix(ed Use) at RECon
ICSC’s annual RECon convention has long been a rite of spring for many real estate professionals. For three decades, RECon has brought dealmakers and decision-makers to Las Vegas, and today the event regularly attracts more than 30,000 attendees.
In this case, however, what happens in Vegas may not stay in Vegas. In fact, some noteworthy changes at the annual RECon event in recent years are an indication that not just the conference, but the industry is evolving in interesting and impactful ways. Specifically, an event that has always been (and remains) the preeminent retail real estate gathering has begun to attract a significant number of attendees from the world of hospitality and multifamily development.
While retail remains the headline, the trend of hotel brands and multifamily developers/lenders attending a traditionally retail-centric trade show in greater numbers cannot be ignored. For example, this year’s RECon attendees include iconic hotel names like Hilton, Best Western and Marriott, among others. It’s not a coincidence that these same brands are introducing and promoting a range of new hotel concepts that fit well in mixed-use developments.
Hilton’s new Tru concept is a midscale offering designed to appeal to Millennials. Tru includes chic communal gathering spaces for working and socializing, and comes with a full suite of tech conveniences such as wired gadget-friendly rooms, mobile check-in, and keyless entry. Best Western’s new midscale boutique concept, GLō, follows a similar strategy, and comes on the heels of Vib, a more upscale boutique brand that debuted in 2014.
We have recommended to clients the market viability of incorporating Tru and GLō, as well as ACHotel by Marriott, into retail and mixed use projects. These smaller, more efficient designs and Millennial-friendly concepts are a good fit for the kind of dense mixed-use developments and redevelopments that have taken off in recent years.
On the residential side, Lennar Commercial has their roots in the homebuilding industry with Lennar Corporation. This company exemplifies the specialization in retail and mixed-use development, both in dense urban infill spaces and in suburban markets. We are also seeing a long list of big names like Trammel Crow, AvalonBay Communities and Lincoln Property Company on the ICSC list of attendees. Berkadia is on-hand, too, to serve as a financial partner.
While some of these hotel and multifamily brands have been in attendance in the past, they have gone from few and far between to a prominent part of the conference, and that’s a big deal. Or rather, that’s a number of big deals. Because it seems clear that a conference built on the solid platform that is retail deal-making has evolved into something more holistic. To me, it seems like mixed use has become a much more prominent and fully-realized piece of the deal-making puzzle. In fact, the whole notion of deal-making at RECon has become something much broader–and much more interesting. What used to be a series of discussions primarily between shopping center owners and retail tenants is now a complex network of meetings and negotiations that includes hotel and multifamily professionals, as well.
Conference attendees this year will note that the ingredients to put together deals for retail and mixed use projects are located right there along the aisles of RECon2016. On the table is the increasing interest to densify a mall or center with multifamily residential, hotel and/or office–or the transformation of urban infill space into a specialty center.
To my mind, this new conference reality reflects the shifting realities in an evolving commercial development landscape. Mixed-use is much more than just a fad or a phase. Today we are seeing much more new mixed-use development than new shopping centers. Liberty Center is perhaps the most recent high profile shopping center to open, and it could just as easily (and probably more appropriately) be categorized as a mixed-use project.
The integration of non-retail uses is densifying retail environments in major markets like Atlanta and Boston, but also in secondary markets like Kansas City and Des Moines. The live-work-play ethos has come alive in projects like Simon Property Group’s 25-to 30-story luxury hotel and residential tower at The Galleria in Houston. The Atlanta Business Chronicle reported in February 2016 about Equity One’s proposed plans for a redevelopment of the Kroger-anchored Piedmont Peachtree Crossing in Atlanta’s Buckhead that will include an office tower. Boston-based Finard Properties has proposed transforming the University Mall in South Burlington, Vermont into a mixed-use center. The owners envision 200 apartment units, a hotel, movie theater, a skating rink, and the addition of several new shops and restaurants to a mall that is anchored by JC Penney, Kohl’s and Sears¬¬–and is already the largest enclosed mall in the city.
This is the post-recession reality of the industry: mixed-use is ascendant. And not only is RECON an increasingly important venue in which to make mixed-use deals, but (appropriately enough) the convention itself has evolved to become much more like the mixed-use development process: a collaborative exercise in identifying potential synergies. At RECon, as is the case for a promising mixed-use project, there are lots of moving parts. But when those parts come together the right way, great things can happen. I am very much looking forward to this year’s RECon, and to learning more about how non-retail assets are being integrated into traditional retail real estate contexts. And, of course, I’m also looking forward to seeing the sites plans and designs for new urban and suburban integral-use projects. I truly believe that, when other asset classes come to the table, it represents a unique opportunity for owners and developers to transform both their property and the community. I’m excited to see how those opportunities unfold in the months and years ahead.
Jerry Hoffman, president and CEO of Hoffman Strategy Group, brings 30 years of economic and market analysis that provides insights for all pieces of mixed-use projects. Core project specialties include urban retail corridors, infill, and suburban mixed-use as well as shopping center repurposing and redevelopment, entertainment district development, university-led development, and adaptive reuse of property. To learn more, visit http://hoffmanstrategygroup.com or connect with Jerry at [email protected].