Rebound Heartens CEOs at RECon Amid Caution

While in Las Vegas, CEOs and other senior executives took time out from their dealmaking duties to take the pulse of the event and offer insights about what's in store for the industry.

May 27, 2010
By Paul Rosta, Senior Editor

Most of the 30,000-plus real estate professionals who returned home from RECon this week are busy following up on potential deals they encountered at the International Council of Shopping Centers’ annual spring convention and trade show. But while in Las Vegas, CEOs and other senior executives took time out from their dealmaking duties to take the pulse of the event and offer insights about what’s in store for the industry.

Without exception, the executives commented on how much morale at the show has improved since the 2009 edition of the show. “The tone is much more upbeat than the past couple of years,” said a clearly pleased John Santora, Cushman & Wakefield Inc.’s president & CEO for the Americas. Investors are looking ahead to 2011 and 2012 and getting ready to make acquisitions, he explained. Santora said his conversations at RECon also confirmed that retail investors are primarily chasing Class A retail properties, even if those assets are located outside of A markets.

Likewise, Cassidy Turley CEO Mark Burkhardt said during a conversation at the firm’s booth on Tuesday, “Our people have been completely booked. There is just a tremendous amount of activity going on. ” As a measure of that activity, Burkhardt said that a Cassidy Turley-sponsored event on Sunday evening had drawn a crowd of 650 people. Joe Stettinius, president of the newly re-launched firm, said that though he had expected the uptick in activity, it was the energy surge at this year’s RECon that proved to be “a pleasant surprise.” That increased wattage was all the more striking on account of the retail sector’s long stretch of dismal performance during the past couple of years, Stettinius explained.

Although encouraged by the improving buzz, CEOs at the convention conveyed an impression of realistic and targeted growth plans for the next year or two. “The acquisition market is really tough,” affirmed Terry Brown, CEO of retail center owner and developer Edens & Avant. The firm is limiting its candidates for new buys to select markets like the Boston and New York City areas, Washington, D.C., and Greater Miami. As a rare region that has the demographics necessary to support retail development right now, the Washington, D.C., market will also be the site of several Edens & Avant projects this year, Brown added.

Commenting on strategy, CEOs and others attending RECon characterized today’s promising but uncertain climate as an ideal time to steal a march on the competition. “We think it’s an ideal time to invest in more people,” contended Rich Walter, CEO of Faris Lee Investments, a boutique retail investment advisory firm based in Irvine, Calif. Besides pursuing seasoned transaction professionals from larger firms, the company has had to add analysts and other support staff to meet the demand for information from clients. Faris Lee is planning to roll out as many as five new offices in major markets like Chicago, Texas and South Florida. The firm’s growth is being driven in large measure by the demand for services tied to disposition of distressed retail properties.

In the midst of the more positive spirit that marked this year’s RECon, some veteran executives stressed that things will get better for real only when the financial markets get back on track. “It’s important for our stable of clients over the next 5 to 10 years,” noted Greg Maloney, CEO of Jones Lang LaSalle Inc.’s retail division. Store remodeling and expansion, for example, need sources of debt and equity. Underlying those activities is the realization that the retail sector’s future is being shaped by technology and the expectations of younger shoppers in particular. “We have to be ready to embrace the change, and make sure clients and investors have the capital to do it.”