RECon Report: ‘It’s Been a Very Encouraging Show’
Paul Rosta / Commercial Property Executive
How many deals will eventually emerge from the thousands of meetings held at the Las Vegas Convention Center during RECon this week will become clear only with time. But even taking into consideration the energy created by 30,000-plus determined dealmakers, the mood at the International Council of Shopping Centers’ spring convention appeared to be genuinely more upbeat than it has been in several years.
“It’s been a very encouraging show,” reported CBL & Associates Inc.’s CEO Stephen Lebovitz late Tuesday afternoon after a second strenuous day of meetings. As activity throughout much of the convention center was winding down, visitors continued to wait for meetings outside CBL’s booth in the complex’s south hall. “The conversations have been about expanding, about new stores, about renovating existing stores to increase productivity,” Lebovitz said. A diverse group of specialty retailers — fashion apparel, jewelry and athletic shoes — were asking about leasing opportunities at Chattanooga-based CBL’s portfolio of regional shopping centers, he added.
Developers told a similar story. Nationwide Realty Investors, an affiliate of Nationwide Mutual Insurance Co., detected more interest from retailers in projects like the Arena District, a $750 million, 1.5 million-square-foot mixed-use project under way near Nationwide Arena in Columbus, Ohio. “We’ve been pleasantly surprised by the level of energy and the legitimate interest in the projects we’re developing,” said Tina Guegold, vice president of marketing.
Retail real estate owners are citing intensified tenant leasing activity in making the case for funding, reported senior executives from KeyBank Real Estate Capital. Besides the decidedly more confident view of the market expressed by prospective borrowers, the passage of time since the worst of the recession may be providing some needed perspective: “Another year of healing,” another year “of getting clarity out of their business models,” suggested Norman Nichols, executive vice president & national manager for KeyBank Real Estate Capital’s income property group.
Although the CMBS market is likely to remain in flux for some time as investors and originators sort out the effect of new regulations, securitizations are expected to reach $40 billion this year, noted Clay Sublett, senior vice president for the firm’s commercial-mortgage group. One trend Sublett is tracking is that “the market is becoming more receptive to middle-market loans” — those in the $10 million to $25 million range.
Given the diversity of the 30,000-plus people at RECon, it was inevitable that the convention’s vibe left varying impressions. “The mood is better,” said Jeff Green, president of Phoenix-based retail real estate consulting firm Jeff Green Partners and a 30-year RECon veteran. Nevertheless, Green added, “the attitude isn’t quite what I expected it to be.” Jason Baker, a principal with Houston-based brokerage and development advisory services firm Baker Katz, reported that plans for new development in the Houston area were scarce during the first two days of RECon. That jibes with the market’s dry development pipeline. But Baker promptly pointed out that retailers leasing 25,000 square feet or less “are very active in our market.”