Strolling the Agora: Money and Time were the Driving Forces at ICSC’s RECon in Las Vegas

This column of Strolling the Agora appears in the June 8 issue of Shopping Center Digest.
“The two driving forces at the ICSC RECon were money and time,” said Cuthbert as he brought to order the Dinosaur Chowder and Marching Society; the annual gathering of these seasoned veterans is held at the close of the Las Vegas event to gauge their reactions to the 4-day event. “Some of the heaviest hitters, domestic and offshore landlords and investors, have the dollars in hand to buy shopping centers and are patiently waiting until prices drop even more. Interest rates are low, but the banks are not lending.”
“In fact,” chimed in Banker Bob, “the lenders are playing a game called 'Extend and Pretend.' Let's extend our current agreement and make believe we're lending you money. And those wanting to sell their assets, still have an inflated idea as to what their properties are worth.”
“I concur,” said Dealer Dan. “I offered an owner $36 million straight cash for his mall, he wanted $40 mil, got another buyer for his price subject to financing, and the deal fell through when the buyer couldn't get the money. The seller is calling me now.”
“Ditto here,” agreed Financing Fred. “I was negotiating on several centers, the owner is asking a cap rate of 8, I'm offering 10¼. The point is I'm in no rush. If he takes my offer, fine. If he doesn't, also fine, I can afford to wait. And if the deal dies, I don't especially care.”
“I'm representing a landlord,” said Consultant Carl, “who has all the approvals in place, and the main anchors lined up to start building the shopping center. He just bought the land for $15 million. And the bank will only lend him $1.5 million for construction. Ridiculous.”
Looking For C Malls
Leasing Larry said “I have a buyer with $50 mil who wants to buy C Malls. I met with a top exec at GGP (General Growth Properties) and they're being very slow to sell some of their A projects. Look, I told him, you're not going to get the price you want for those prime malls – especially since you're trying to package them with some of the poorer properties. Why not take what you can for these projects that very few of the bigger players want? I'm waiting to hear back.”
“The point is,” said Cuthbert, “too many owners want to get out of their centers the money they have invested in brick, mortar, land and time. It doesn't work that way. Value is based on ROI, and if they have substantial vacancies and tenants at below- market rents, it deteriorates the property. This industry has always operated on the Golden Rule: Them what has the gold makes the rules.”
After the initial flurry of experiences dealing with buying and selling, the consensus was that though the turnout may have been off by some 30 to even 50% from last year's, it was still a very good dealmaking event for the large majority of those attending and those retailers still in the market to expand and open new stores and markets. Most of the retail deals were in the low-end of the spectrum, discount stores, dollar stores, fast food, supermarkets, and the like – very little high-end and for A malls.
“Ya know,” said Sassy Sue, “the crybabies stayed home and made it easier to maneuver around the Leasing Mall, in the hotel suites, and get things done. Because of the decreased time pressures, we were able to talk, build relationships, and go well beyond the 'Here's the deal, take it or leave it, and I got another appointment waiting outside.' “

A Growing Resentment
“I saw a growing resentment against Simon and Westfield,” said Cuthbert, “for moving out of the Leasing Mall into Caesar's and Wynn's, forcing dealmakers to waste precious time and money cabbing back and forth from the hotels to the Leasing Mall.”
“Oh, yeah,” said Angry Al. “I blew them off and refused to set up an appointment. Simon didn't have any dealmakers at Caesar's, only vice presidents. So I'm gonna sit down and talk while he takes notes to bring back to the guy I deal with, and gets the information garbled, and then I gotta waste time trying to straighten out the lack of communication? No way.”
“And the vacant areas created in all three halls by these developers backing out, by others who made booth commitments and then decided not to come, or the space that ICSC couldn't lease,” said Cuthbert. “The empty spaces looked like a guy got hit in the mouth with a 2×4.”
“Also,” asked Querying Quentin, “what's gonna happen next year if Simon and Westfield decide to come back into the Leasing Mall? Is ICSC gonna relocate Centro and CB Richard Ellis and the others who helped them out by taking over those prime locations? It wouldn't be fair, and it wouldn't be right. Or, suppose SPG and Westfield decide they don't need RECon and the heavy costs and make their own arrangements? Remember when we had the convention in Toronto, the major developers didn't like the facilities and moved their dealmaking activities to Inn on the Park and ICSC had to run shuttle buses to them? It took years to get them all back into the fold.”
“What could work,” said Reasonable Ruth, “is if they wanted to come back, they could be placed at the far end of the South Hall, just beyond the Trade Expo; that area was dying because of the lack of a heavy draw to attract dealmakers.” 
“But,” said Tenant Tom, “the retailers on the second level were doing gangbusters, wall to wall people – even though some of it was caused by dealmakers lining up to get a free pretzel.”
“And many of the landlords in the North and Central Halls were complaining,” said Cuthbert, “because putting all those retailers only at the end of the South Hall drew traffic away from their leasing booths.”
Scheduled Appointments
“We're missing the point,” said Senior Sam. “We've been operating for years now on scheduled appointments, whether it's 15 minutes, 20 minutes, or a half-hour. There never has been much chance for drop-in traffic, so what difference does it make if there's a crowd rushing down the corridor outside your booth? With this convention, so many left by Tuesday, that Wednesday was like a morgue, and there was very little chance to backtrack on missed appointments. Yeah, the dance cards were not completely filled and there was more time for meetings and real negotiating because of the smaller attendance. We all made deals, but if someone was willing to stand in line 10 minutes for a pretzel, he didn't have much on his plate to begin with.”
“Perhaps,” said Halloween Harry, “but it felt damned good to now be besieged by landlords trying to make a deal. For years we were chasing developers trying to get locations for our retail stores, and couldn't get a call back. We must have had over 700 business cards dropped off at our leasing booth the first two days. And we made our first deal for 2009 on October 12, 2008.”
Dealmakers reported a lot of activity by brokers trying to put a deal together, job hunters, and those entering into the new arena of consulting. “These last,” said Consulting Carl, “have to be patient. Most clients are taking longer and longer to pay those bills, instead of 30 days, sometimes 3 and 4 months. It's best to insist on, at least, a token monthly retainer.” 
And Then There's China
“Hey, we can't end this meeting without touching on the Far East,” said China Charlie, who has been based in Shanghai since July and heads up a division developing shopping centers on the mainland. “They made many mistakes in the past,” he said, “and my role is to help avoid future mistakes, bring US and Canadian retailers to China, and to incorporate Western and Eastern approaches into a successful operation.
“One thing US-trained dealmakers have to get used to is the difference in size,” he continued. “They have malls and mixed-use projects of 5 million sq. ft. A city with a population of 1 million people is considered a small town. I was offering a furniture retailer a store of 200,000 sq. ft. He said 'I don't think I can operate in that small a store. I have stores over 1 million sq. ft., and my smallest is 500,000 sq. ft.'” 
“We can go on and on,” said Cuthbert, “telling stories and personal experiences. What we all agree on, though, is that this was one of the most interesting conventions we've had in a long time – not the busiest or the most successful by a wide margin. But the most interesting because of the contradictions, the diversity of opinions, and the wide range in conceptions and opinions. Not all of this is good – but it is memorable.
“Now, who's buying the next round?”
More information on Shopping Center Digest and our associate publication, the Directory of Major Malls may be obtained from our website, www.shoppingcenters.com

Strolling the Agora was a twice-monthly column discussing trends, issues of importance, and commentary on the leasing/development aspects of the shopping center/retail chain industry in the US and Canada. Called Strolling the Agora, it was a part of Shopping Center Digest, a newsletter founded in 1973 published until September 2010. The column provided expert insight into various retail focused topics. It was primarily authored by Murray Shor, Editor & Publisher as well as industry and veteran retail experts.  A smattering of archived columns are presented here for your reading “pleasure”. It's an interesting “look back” at what were current hot topics at the time with regard to shopping center/retail industry focus, development and leasing expansions and processes, retail mix, opinions and more.
About Murray Shor:
Reporting and writing on the shopping center/retail industry since the late ’60s. Began as editor at Chain Store Age, founded Shopping Center World (now Retail Traffic), Shopping Center Digest “The Locations Newsletter” in 1973, and the Directory of Major Malls in 1979. Each issue of Shopping Center Digest contained a column called Strolling the Agora which provides commentary on trends, activity, issues of concern to development and leasing in the shopping center/retail industry.

NY Deal Making 2018