Ten Progressive Real Estate Partners team members just returned from the retail industry’s biggest conference of the year. Personally, this was my 28th or 29th ICSC Las Vegas show (you start to lose count after 25+) and overall it was a very positive and productive experience.
During the conference our team met with tenants (aka users), property owners, city officials, and tenant rep brokers. Progressive Real Estate Partners is a member of the national Retail Brokers Network (RBN) and not only do they host the booth from which we conduct meetings, we also had the pleasure of interacting and exchanging information with over 300 of our RBN colleagues from across the country.
Below I share some of my key takeaways. Keep in mind that everyone’s ICSC experience is different so this is just one veteran’s thoughts and observations.
Call Tenants “Users” Not Retailers: I heard that an executive from one of the major REITs no longer refers to their tenants as “retailers” since these days so many of them are oriented toward services, entertainment, fitness and the similar. Instead, they refer to their tenants as “Users”— I agree and really like this idea.
Franchising Continues to Grow: Although there are still numerous corporate concepts such as AutoZone, Starbucks, Burlington, and Dollar General, the bulk of the users driving expansion are franchisors that need franchisees. This is particularly true in categories like quick service restaurants, child care and in-line shop users (think Great Clips, the UPS store, etc.). This really changes the dynamic as there is now a new decision maker in the mix – the franchisee.
Also, franchisors frequently have legal mandates to keep locations a specific distance from other franchisees. So even if a site is ideal and wouldn’t cannibalize another location’s sales, the franchisor may be unable to approve it if the impacted franchisee is not interested in growing. Although I recognize this is self-serving, it made me realize that it is even more critical to work with a knowledgeable broker who really understands the trade area surrounding a property because frequently they know which franchisee holds the rights to a specific area and the franchisee’s operating practices such as their deal making style, how they have worked with other landlords, and their real appetite for expansion.
Revenge of the Independent Pharmacy?: Fifteen years ago, amongst the busiest booths at ICSC were Walgreens, CVS, and Rite Aid. This year Rite Aid is bankrupt, CVS did not have a booth, and Walgreens occupied a fairly decent size piece of real estate on the floor but only had two tables in the booth. As I was snapping a picture of the Walgreens booth, one of my colleagues said, “do you really want to share Walgreens joke of a booth with others?”. But a recurring theme amongst some owners and brokers was the fact that all those laid off pharmacists may actually be out looking to open independent locations. I heard of at least a few new leases with independent pharmacists. Maybe we are going to see a return of the independent pharmacy (which I think would be great!).
Mood was Workmanlike: I have been struggling to come up with the right adjective to describe the mood of the conference. For those who don’t know, I enjoy thoroughbred horse racing. A term that is frequently used to describe a horse’s training session is “workmanlike”. It means efficient, steady, professional, and without flash or flair. I think that describes this year’s ICSC conference. There was absolutely no sense of euphoria OR more important doom. Everyone I met was very even keeled about the event. They found it to be productive and a good use of their time, but no one was bragging about how many deals they are getting done with any particular user or that they had just purchased a smoking hot deal or sold a property for a crazy high price. By all measures it was a workmanlike conference.
Interest Rates–Not Tariffs Were the Main Topic: What will happen to interest rates, was the topic that came up the most. First, I certainly get the sense that people are realizing that assuming that long term interest rates will go down in order to make one’s business plan work is not a good plan. Second, I am seeing the recognition that long term rates can go in one direction while short term rates can go in the opposite direction. Third, for those who use “other people’s money” to get “back to business” they are going to need cap rates to increase if long term rates stay the same as they are today. Overall, the discussion regarding interest rates was far more nuanced than it was 6 months ago.
Young People Are Interested in Our Industry: I had two experiences that made me feel really optimistic about our industry’s future. First, to expose college students to the industry, Sandra Agraz with Circle K helped guide about 20 Cal State 
Fullerton students throughout the conference. This was very generous of her which is why I am giving her a “shout out”. She brought them to the Retail Brokers Network booth, and I had the opportunity to spend 30 minutes with these students, and it was my best experience of the conference. Answering their thoughtful questions about the industry, especially brokerage, was a lot of fun. The other instance was speaking to at least a handful of offspring of industry colleagues who are now making their way in the business. These are “kids” that we have discussed over the years as they were growing up and seeing them standing next to their parents as contributors to the industry was inspiring.
ICSC Steps Up: As many of you probably know I haven’t always been ICSC’s biggest fan and have previously shared my frustration with how they have handled certain items. I also firmly believe that if one is going to be a critic, then one must also be willing to give credit and a compliment when deserved. Here goes—First, ICSC did an excellent job navigating the logistical challenge of only having use of the North and South Halls this year and no Central Hall (it was under construction). This could have been a disaster, but they went above and beyond to make sure the disruption to attendees was minimal. Second, I truly enjoyed Sunday’s seminars. I attended three—”How AI is Affecting Shopping Center Marketing”, “Ancillary Income Strategies for Shopping Centers” and “Retail Strategies to Help Solve the Affordable Housing Crisis”. All were interesting and well-worth attending. More important, the seminars were easy to get to, comfortable inside, and well planned. I can’t help but think that maybe ICSC is becoming a better run organization that is working towards putting its members interest first (couldn’t resist that last comment).
Conclusion
The retail real estate industry continues to be a dynamic and ever-changing industry and the networking and learning that happens at ICSC Las Vegas is top-notch. And, in addition to strengthening existing relationships, I very much expect the conference will result in Progressive Real Estate Partners selling and leasing more retail property during the next 6 months than we otherwise might have which further demonstrates the value and importance of being actively involved and participating in industry events. As always, I welcome your feedback and feel free to email me at brad@progressiverep.com