Observations & Conversations
 |
Vegas 2001 was my 20th Spring
Convention and by far the most interesting. |
Even though most of us had just lost our shirt,
the mood was more energetic at the shows during the last recession (1989-1991),
than at this year’s event. I haven’t yet put my finger on the reason why there
was a lack of frenzy running from appointment to appointment and why people had
a “we’ll-get-there-when-we-get-there” attitude. Perhaps, it’s because there
isn’t a huge problem with vacancies (but if you’ve got a Wards or Penney’s
location then you’ve got to be sweating bullets) and most of us are earning more
than we can spend. A lot of people didn’t come to the show with the notion that
they had to justify their keep to their boss and I couldn’t believe how many
people said they were taking time off the floor to “lay at the pool.” (I can
image what Ted would say if any of us at TKO decided to escape the exhibit hall
to catch some rays... there would definitely be a help wanted ad placed the day
we got back from the show!) Never in years past did so few people not have
appointments booked back-to-back, entertainment planned until the wee hours and
high hopes of closing massive numbers of deals... Unfortunately, I think
youthful optimism has faded from our industry. But in fairness, due to the new
format, most of us didn’t have much opportunity to play or network after hours
since many of the parties and outings were cancelled. This has always been an
industry that lived to play hard and in order to pay for the good times, we’re
more than willing to work hard, i.e., meet with as many people as you can at the
show and party hard once they close the convention hall. Maybe next year, more
companies will remember the carrot with the stick and make sure there is plenty
of play time for their employees and for their customers. I think people will be
arriving for the 2002 convention on Friday night, with plans to play and network
the weekend before the show opens (and register - see the article in this issue
about this year’s show with results from an email survey on the outcome of the
show and thoughts on the new format). Ted and I arrived Thursday before the show
opened, and we didn’t have any trouble finding people in the business to have
dinner with over the weekend, but we also stayed a few extra days after the show
and we didn’t bump into anyone from our business after the show ended.
Attendance seemed on par with last year’s convention, we had a few more people
stop by our booth this year. One of the responsibilities of The Dealmakers
editorial crew is to stop all the exhibits and pick up literature on what’s for
lease or sale. It’s always amazing to me how many companies are stingy with
their literature, especially to a trade publication that just maybe will give
them some free press. After going through pounds and pounds of paper dividing up
what’s for lease, shopping centers planning to break ground this year and
projects for sale... there are an overwhelming number of properties on the
selling block. Most of the projects for sale were the run of the mill type deals
with virtually no upside, market-asking prices and little incentive for a buyer
to move fast. A few buyers that I spoke with are now looking for raw land to
acquire, because the existing centers up for sale offer nominal returns. Also, I
saw a number of companies with $200 million plus earmarked for acquisitions and
one company spokesperson said they had 18 months to locate acquisition
candidates, perform due diligence and close, now that’s a company that will be
kissing a lot of toads in the next few months. One thing that did stick out in
my mind on the acquisition side of the business is that no one was discussing
up-REITs and down-REITs, matter of fact there was very little discussion of
REITs at all this year.
As far as new retail concepts presented at the show, the only thing I saw were
two or three movie theater chains that I had never heard of before and other
than that is was the same old players. I talked to several disposition
specialists and they’re banking on this being a very good year with retailers
closing marginal stores or disappearing from the retail scene altogether. One
topic of discussion that came up often with developers was what they will do
when Home Depot and Lowe’s hit their saturation for new stores. Of course last
year this same concern was voiced about drug store chains, but that hasn’t seem
to slow down new development. Most of the deals I heard discussed were with the
dollar-type stores and sites for lease in blue-collar markets. Another notable
trend I saw that was more prevalent this year than last was the idea of tenant
mix. One developer I spoke with was having panic attacks over his Wards space
being taken over by a tenant that he perceived as not worthy of being in a mall
setting and how that would affect his customers perception of his project as
being low-end. Another developer was worried that adding a nail salon to his
center might give it a less than upscale feel and he was trying to come up with
language in the lease to make sure the tenant gave a certain ambience and rights
to evict them if it turned into a cattle-call, low-service type of joint.
Luckily, we’re all in a position that we can be selective about who we lease
space to and hopefully we can continue to afford to be picky.
Next month, we’ll be at the New England Dealmaking in Boston. Be sure to stop by
our booth. Also next month, we’ll be publishing the 2001 Retail Brokers Resource
Guide, a directory of the top retail brokers that you can refer to throughout
the year. The guide is broken down into regions, so you can quickly locate a
broker in a specific market. Year after year, we get comments that the Retail
Brokers Resource Guide is an invaluable tool, so make sure you don’t miss this
years edition.
Until next month,
Ann O’Neal
Publisher