President's Letter to Members
Dear Members,
I am very pleased to report to you on the financial results as well as some of the major ICSC accomplishments for 2010. While most of 2010 was technically well beyond the end of the Great Recession, the International Council of Shopping Centers (ICSC) paralleled much of the world’s shopping center industry by lagging behind a full recovery. New shopping center development activity, particularly in the United States, tends to be closely correlated to activity within ICSC, the industry’s association. Both 2009 and 2010 saw major declines in construction and completions of new retail space. Similarly, membership in ICSC and participation in its programs were down markedly from peaks in 2007 and 2008. Membership ended 2010 at 53,630, down 30% from a peak of 76,297 in 2008, and total registration of all ICSC programs and services was 94,530 in 2010, versus 2008’s peak of 145,407. The good news is that both of these metrics, membership and registrations, ceased to decline in 2010 and a slight upward trend emerged toward year’s end.
Without raising membership fees, which have remained unchanged since 2000, or significantly increasing registration fees, ICSC was able to close out 2010 with a small operating surplus of $610,260, equal to 1% of total revenues. Operating expenses were carefully managed down, yet the number of events ICSC offered its members actually rose by about 15%, to over 300 in 2010.
Responding to the needs of its members, ICSC programs and new initiatives launched in 2010 focused on helping firms stabilize their businesses and on assisting individuals to restart their careers. Demand for traditional deal-making programs was somewhat softer than in past years as firms had less new space to lease. Local one-day programs offering networking and contact opportunities were in greater demand. Attendees at the association’s traditional education programs, including the University of Shopping Centers and the various John T. Riordan Schools for Professional Development, arrived in smaller numbers than in past years but with great enthusiasm. Education offerings outside the United States, where new retail development was less curtailed, remained solid, particularly with the addition of new learning tracks on design, development and construction, complementing ICSC’s new CDP (certified development, design and construction professional) designation.
Many of ICSC’s new services in 2010 were local programs and webinars, often in emerging growth markets for our industry. In Latin America, the number of programs more than doubled to 23, boosting total attendance there from 1,600 to 3,300. With a greater offer in the Latin America region, membership expanded by 56% to over 1,200. Asian membership also grew, by 18%, with much of that growth coming from China, which last year hosted ICSC’s second RECon Asia conference. Although industry activity in Western Europe was modest, this was MICHAEL P. KERCHEVAL President and CEO, ICSC Annual Report 2011 • International Council of Shopping Centers 7 much less the case in Central Europe, where ICSC ran 7 events and witnessed a 3% increase in membership.
During 2010, ICSC significantly ratcheted up its global public policy activities. In a proactive fashion, ICSC also stepped in, sometimes out of necessity, to fill voids created as other trade associations were forced to cut back on their own advocacy initiatives.
Three major pieces of U.S. federal legislation were championed by ICSC, two of which were written by ICSC. The Community Recovery and Enhancement Act of 2010 was conceived, drafted, and introduced by ICSC. This important piece of national legislation was created to direct new equity investments to real estate markets unreached by Wall Street capital and to help keep community and regional commercial banks in the lending business.
The ICSC-introduced H.R. 4839 was a small but critical piece of federal legislation that corrects a situation where local government contributions to the capital of a public-private development partnership were taxed as gross income to the partnership.
Also in 2010, the Main Street Fairness Act of 2010 was introduced. This long -sought-after federal legislation allows states to require that out-of-state Internet retailers collect and remit sales taxes on purchases, leveling the playing field with brick-and-mortar retailers which are currently required to collect sales taxes.
Advocacy efforts extended to the local and international levels. Among other accomplishments, ICSC was a key driver in defeating Florida’s Amendment 4, which would have completely transformed the real estate development process, taking land-use decision making away from professional planners and handing it over to the general electorate. Similarly, common-sense environmental guidelines for retail property were drafted by ICSC to assist the European Union, creating responsible, reasonable, and economically obtainable sustainability goals.
While these proactive items were a first for ICSC, and of a high profile, ICSC also played defense. Throughout the year ICSC continued to counter multiple attempts to inappropriately categorize real estate partnership carried interest as regular income rather than as capital gains. These efforts alone have likely saved countless jobs in the U.S. industry over the last three years.
ICSC’s other knowledge and advocacy areas made several important changes in the programs and services they offer. The Albert Sussman Library went online in 2010 and to the Albert Sussman Collection now being housed at New York University. These library changes will save ICSC money but, more importantly, will vastly broaden members’ access to these resources. The ICSC’s Shopping Center Security Terrorism Awareness Training Program was moved to the National Center for Security Research and Training (NCSRT) at Louisiana State 8 Annual Report 2011 • International Council of Shopping Centers University (LSU). Additionally, LSU received approval from the Department of Homeland Security to administer the course using a federal funded grant, with the results that the training can be offered to ICSC members free-of-charge and at no cost to the association.
Throughout the year, positive momentum steadily developed. ICSC’s 2010 RECon program in May 2010 was modestly improved in attendance versus 2009. The event also marked the beginning of an ongoing initiative to review and reinforce ICSC’s strategic priorities. In its 53-year history, ICSC has grown dramatically in size, scope and reach. It today serves a vastly diverse constituency of professions and nationalities with a singular focus on building and managing the world’s best shopping centers.
ICSC’s 50th worldwide chairman, Peter Sharpe, masterfully guided the association through and out of one of the industry’s darkest economic periods. His leadership led to recovery, growth and a balanced budget for the association. William S. Taubman, elected ICSC’s 51st chairman in May 2010, took the initiative to look well into the future and to challenge ICSC to be even more relevant in meeting the needs of tomorrow’s industry. To both of these extraordinary leaders, and to the countless professionals who volunteer their time and wisdom to benefit the industry through ICSC, we are deeply grateful.
As your president and CEO, I am extraordinarily pleased to be a part of this great organization and to work with ICSC’s remarkable members. Thank you for your spirit and support.
Michael P. Kercheval
President and CEO