The International Council of Shopping Center’s (ICSC) 2013 RECon 2013 has come to a close. This year the attendance was up 10% from 2012 with nearly 35,000 attendees from all types of companies making a strong showing.
This is my 28th ICSC event and each one is unique in its own way. What I found encouraging with this year’s event was that for the first time since 2008 people were not talking about the mood of the market, they were talking about business.
With exhibitors ranging from large REITS, developers, investors, brokers, retailers, suppliers and service providers the theme was the same. Most were discussing moving forward.
The “perfect retail storm” is brewing with the following factors present:
>> Almost no new construction for the past five years;
>> Capital markets improving as debt is available;
>> Investors are competing for a smaller pool of assets to purchase;
>> Vacancy rates are declining in many major markets:
>> Rents are ticking slightly upwards.
However, this “perfect retail storm” is a good storm. We believe that the remainder of 2013 will continue to improve from an absorption and vacancy perspective in Phoenix. Velocity Retail has projected that the Phoenix area vacancy will be closing in on single digits by the end of 2013.
In the NNN investment arena, large REITS, institutions, and pension funds are invading the space previously occupied by private investors causing a compression of cap rates driving them down even further.
Arizona is getting back on the radar screen for viable expansion from national retailers and restaurants. Interest is up from many retailer categories which include discounters, farm and home suppliers, quick serve restaurants and box retailers. With the improved mood and positive vibe from the Leasing Mall we can only hope that this will carry into increased absorption in the Arizona retailer marketplace.
We are looking with continued optimism to 2014 and 2015 bringing back an appetite for retailer expansion along with improved store sales after our long pause that began in 2008.