A Tale of Two Shows
ICSC RECon2015 is done. While it was not a reflection of the best of times, nor of the worst of times, there was a distinct dichotomy between the Big Money Interests and the rest of the industry.
I spoke with a number of developers, brokers, attorneys, and intermediaries claiming to be active in the Big Money Interests side of our industry. The side made up of mega-REITS and CMBS financed power centers anchored by super-tenants such as Neiman Marcus, Macy’s, Bloomindale’s, Nordstrom’s and the like. The side claiming to be putting together billion dollar private equity funds to finance massive acquisitions and million square foot developments in hot urban and suburban markets around the country, using incomprehensible amounts of other people’s money. The side claiming there is a huge volume of untapped capital coming into the market and that, within a year or two, the commercial real estate market will be hotter than it was before the crash in 2008 and that the crash will be little more than a thankfully forgotten memory.
I say they claim these things to be true only because I don’t know for sure whether what they are saying is what they are actually experiencing, or whether they are merely dreaming wistful dreams. What they describe is not my world. I represent the other guys.
I also spoke with a number of people working on much smaller projects. Projects typically in the $3 million to $20 million range, or less. Projects using the developer’s own money, and using financing obtained through local or regional banks. Projects where every dollar spent is a dollar that matters. This is my world. These are the people I represent.
For them, times are still challenging. To them, the focus is on reinventing or repositioning one or more existing properties or urban business centers, large or small, into projects that are profitable and sustainable. These are the value-add developers, the property turn-around specialists, or simply the savvy investors with a vision for a transformative urban or suburban project that may be the missing ingredient to energize a struggling community. These are the property owners focused on finding, attracting and retaining the right mix of retail or service tenants to serve the changing demographics and psychographics of an underserved area’s actual target market. These are the investors, developers and property owners who are doing what is necessary; doing what is affordable; or, perhaps, doing what they can, to fill that last 5% of their center so they can realize a profit. These are the investors, developers and property owners working with community leaders, thinking about the aggregate effect of their project and nearby projects on the local community, and how they can work together with municipal economic development staff, chambers of commerce, and area business leaders to create critical mass to transform an area challenged by insufficient retail, office, or residential options into a thriving business district to satisfy local needs, make a profit and enhance surrounding property values.
Thankfully, ICSC RECon2015 recognized this segment of our industry in a serious, meaningful, and helpful way. The offering of educational programs directed to people working in this space was spectacular. The speakers were knowledgeable, creative and informative. I applaud the ICSC program planners for recognizing that this is a vital segment of our industry that is oftentimes overlooked in favor of the Big Money Interests.
The commercial real estate industry as a whole is remarkably diverse and decentralized. The small to medium sized investors, developers, and owners-operators who make up the bulk of the commercial real estate industry need our help. They need our expertise. They need local community and industry involvement. They need sophisticated, yet cost-conscious services that provide genuine value to help them and our communities succeed.
Special thanks to ICSC for doing its part to serve this segment of the commercial real estate industry.
Thanks for listening.