Buoyed by a national retail vacancy rate under 5 percent, a record 200 million shoppers over the Thanksgiving holiday, strong Black Friday sales figures and predictions of a 4 percent boost in holiday spending to nearly $970 billion this year, participants at the recent ICSC Deal Making session were in an optimistic mood.
The Maryland retail contingent was once again extremely well represented at the Jacob K. Javits Convention Center in New York City and included attendees from Ashkenazy Acquisition, BCT Design Group, Bohler, Continental Realty Corporation, Greenberg Gibbons, KLNB Retail, Lee & Associates, MacKenzie Commercial Real Estate Services, MCB Real Estate, mfi Realty and St. John Properties.
Retail survives numerous punches
KIMCO Realty’s Ross Cooper told participants gathered at a panel that “retail continues to demonstrate its extreme resiliency, having overcome the financial crisis, a major pandemic, a rapidly rising interest rate environment and global situations.” Local professionals at the show agreed.
Tom Fidler, Executive Vice President and Principal, MacKenzie Retail, said that, despite very high interest rates and continued challenges with site development and building costs, there were still plenty of retailers looking for new opportunities at the New York show and, surprisingly, energy and attendance exceeded expectations.
“There is always enormous energy at this show which is driven by the year-end push to get things done,” Fidler said. “Our retail industry is still dominated by food users and this growth segment should continue to underwrite this specialized economy and provide the strength needed to offset the negative factors in the global economy. People still want to go out, eat, be entertained, and shop. The emphasis on the convention floor was more centric to that growing demand.”
Bill Holzman, St. John Properties’ Vice President of Retail Leasing, said the energy on the showroom floor felt like “we were back” with a great turnout of retailers along Retail Row, and all seemed eager to find new sites. In between scheduled meetings, Holzman indicated that “you could not help running into brokers and retailers you did not have meetings scheduled with to either catch up on an existing deal or quickly discuss something new that is always better done face-to-face.”
Real estate is a labor industry
At last month’s Capital Stack event, CBRE’s Spencer Levy reiterated the premise that real estate is a labor industry. Executives from Millman Search Group, who attend ICSC every year to match qualified candidates with companies, indicated that the labor market remains extremely tight and great people are hard to find. They can be found, however, at shows like ICSC and it is time for companies to get creative with their hiring practices, according to Millman.
“There was that ever-familiar hustle and bustle throughout the show floor, which signaled that real estate deals were being made and partnerships were in the making,” stated Chloe Rosenthal, Vice President, Millman Search Group. “We witnessed colleagues reuniting and chatter was heard throughout the two days of the show at the booths, on the floor and everywhere in between.”
Retailers present new concepts
More than 50 retailers lined the center of the show, representing fast-casual restaurants, entertainment, pet-related, fitness, medical, and, of course, pickleball.
Florida-based Woof Gang Bakery & Grooming, which has locations in northern Virginia, is interested in expanding into several Maryland counties, including Anne Arundel, Baltimore, and Howard. The concept turns a routine wash into a luxury spa experience for the pet and tops it off with a selection of treats, food, toys, and accessories.
SweatHouz, billed as an Infrared Sauna and Cold Plunge studio, is also looking at Maryland sites. The concept helps people recover from a strenuous workout or injury by reducing body inflammation. Take your choice of sitting in a sauna that reaches temperatures upwards of 155 degrees or taking a cold plunge that chills the body with 50-degree technology – or both.
“This is what is great about open-air shopping centers,” noted David Donato, Chief Operating Officer of Baltimore-based Continental Realty Corporation, a nationwide investor in open-air shopping centers. “They are fertile ground for any business that sells directly to the consumer. A space with branding and signage facing onto a parking field and located amongst other traffic drivers – retailers want this, fitness concepts want this, beauty and personal services want this, medical operators want this.”
Investment sales expected to rise
After an abnormally slow year for investment sales, KLNB’s Christopher Burnham says most buyers and sellers expect an uptick in activity in the second half of 2024 with more inventory planned to be on the market. The Federal Reserve will most likely cut their benchmark rates at that time, he said.
“The Federal Reserve’s announcements post-ICSC show has confirmed attitudes from the show and lead most participants to be excited for more activity in 2024,” Burnham said. “We personally see a wave of inventory forthcoming in Q1 2024 as most of our clients want to get out ahead of potential over-supply and take advantage of the capital markets stability.”