What Happens in Vegas

April 26th, 2013

By: Yaromir Steiner

For the past couple of years, the momentum has continued to build at the annual International Council of Shopping Centers (ICSC) RECON convention in Las Vegas. When the world came to a halt in 2008, 2009 and 2010, all we were really seeing was an industry in survival mode: professionals in all corners of the market were just trying to keep their heads above water. In essence, developers were focused on playing defense and not offense.

In 2011 and 2012, however, there was a noticeable degree of momentum beginning to pick up. An industry that had all but ground to a halt was beginning to get the wheels moving again. The change in attitude and confidence on the show floors in Vegas and in New York City over the last couple of years has been significant: we are seeing more blueprints and more hard dollars being spent to get projects off the ground.

While the early years of the recovery seemed to be characterized by an understandable sense of caution, we are now seeing developers stepping in and investing in their own projects in a way that makes it clear that they are not just trying to do the bare minimum, but have the resources and the confidence to once again invest in and create great spaces and places. To go back to the well and revisit the sports metaphor one more time: money has been coming off the sidelines.

I expect that the 2013 ICSC convention will represent a kind of tipping point for an industry that has been waiting to make a move. Leasing is better in general this year, and, anecdotally, people are in a better mood. The macroeconomic factors seem to be providing a tailwind instead of a headwind for the first time in some time, with the economy continuing its slow-but-steady recovery, unemployment coming down, and consumers are spending again.

Another issue is simple demand: retailers are opening fewer stores today, but there are also fewer quality projects for their new stores.

Our own sense of optimism is demonstrated by the fact that we will be unveiling our Liberty Center model in our booth. We haven’t introduced a significant project model in several years, and we are making this investment because we recognize that there is once again sufficient retailer/tenant interest that will be best served with the uniquely illustrative powers of a three-dimensional view into this project.

All of this sunny optimism is not meant to suggest that the market has fully recovered—far from it. Today’s commercial development and leasing marketplace looks very different from its pre-recession state. This is not like the old days of If You Build It, They Will Come, and the continued recovery is not a carte blanche for developers to throw anything against the wall and see what sticks. Quality is prized more than ever. Developers looking to get traction will have to offer projects in great locations, aspirational design, solid funding and a strong mix of uses. These factors are essentially non-negotiable.

There is still plenty of work to be done to get the industry back on a path to sustainable prosperity. But those developers and redevelopers who “get it” are well positioned. There will soon be more demand for quality projects than there is capacity. And, with my apologies to Vegas, it won’t be because of luck or good fortune that developers succeed. Rather, it will be the result of intelligent planning and a marketplace that is once again hungry for high quality projects.

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