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A SEED PLANTED

Fifty years ago a few entrepreneurs gathered to discuss shopping centers

By Michael Tubridy

March marks the 50th anniversary of ICSC’s first meeting. Two North American members look back and discuss the forces and personalities that brought ICSC into being.

It all began March 15, 1957, when seven shopping center industry pioneers gathered at Chicago’s Palmer House. On May 14 of that year, another meeting at the Palmer House attracted 36 developers, who set about electing a board of trustees. ICSC and the Spring Convention were born.

How did that first May meeting come about? “Many of these men knew each other from the real estate business and each knew someone else who would be interested,” said Norman Kranzdorf, a former chairman of Kramont and currently senior vice president of retail services at Urdang Capital Management, as well as a two-term ICSC trustee. “Some knew each other through deals, some through friendships, and some were neighbors.”

That’s how Kranzdorf, a recent law school graduate at the time, came across Leonard Farber, subsequently nicknamed Founding Farber for his pivotal role in establishing the association. “Len Farber did A&P shopping centers in Westchester, New York, mostly,” said Kranzdorf. “At that time, I lived in Westchester and was a lawyer representing a supermarket that was doing business with him.” Farber was a host of parties that gave Kranzdorf and others opportunities to meet and socialize.

For his part, Canadian developer Donald J. Graham, who helped launch Fairview Corp. (later Cadillac Fairview), heard about the planned Chicago meeting from some countrymen: Avie Bennett, his boss at Principal Investments; and Jack Thompson, director of leasing and real estate for the Canadian Imperial Bank of Commerce. The three attended the meeting with yet another Canadian, Nat Gesser, from Claridge Investments, who would shortly join Graham, along with CEMP Investments, in forming Fairview.

Developers were in the dark about retail development and needed to share what they did know, Kranzdorf recalls. “Nobody really knew an awful lot about shopping centers when we formed ICSC in 1957,” he said. “As a matter of fact, most of us used a form lease that came from our local state that was used for downtown properties, so that everybody was doing something different. And at that time, the major tenants set the tone of everything. So the attendees at that first meeting all agreed that we’d better talk together and not get picked off one at a time.

“In those days, when the tenants wielded a lot of power, it wasn’t unusual for them to require you to build the roof so they could take a second floor if their sales got big enough to expand.” Back then “you were really talking to developers by themselves — developers, finance guys and a couple of bankers.”

And so the seeds of collaboration were being sowed. Kranzdorf offers a typical scenario. “It was not unusual in those days,” he said, “if I was doing a lease with A&P, to call one of the other members and say, ‘What did you get out of them last?’ And everyone would answer honestly, ‘Here’s what I got. You want to see the lease?’ And it was that kind of cooperation that everyone was looking for.”

The feeling quickly grew at the May meeting that Farber was “charismatic and everyone would rally around him,” Kranzdorf said. And so Farber was accordingly elected president of the fledgling association.

The group met for three days at that May gathering, during which another ICSC tradition was born: the party. One night, dinner was served at Trader Vic’s Restaurant in the basement of the Palmer House. Afterward, “the others paid and decided to go out nightclubbing,” said Kranzdorf. “But since I was newly married, I declined and said I’d wait for them to return and keep on eating. At the time, I weighed 245 pounds. When they returned, I had run up a tab of $125 by myself. Keep in mind this was at prices of 50 years ago.”

ICSC also faced some steep bills at first, says Kranzdorf. “When the meeting was ending, he [Farber] announced that they forgot to figure in the cost of meeting rooms and lunch. A voluntary collection had to be taken up from those attending to pay the hotel bill before they would let us check out.”

Afterward the group instructed Richard Falletti, a young partner at the Chicago law firm of Winston & Strawn, to draw up incorporation papers with a charter and by-laws. “When we left the meeting in Chicago, we all went home and wrote reports about what should be done,” said Graham.

With Farber based in New York City, and several major chain stores as well, the group decided on New York for its headquarters. By the time group met for its second annual meeting, in February 1958 at New York City’s Hotel Statler, word of the new organization had begun to spread. “Many of the big downtown brokers saw this as a new business and had to find out about it,” said Kranzdorf, pointing out that attendees this time included downtown real estate professionals and representatives of big chain stores, as well as shopping center developers. Already ICSC was diversifying.

Before long, a key individual was added to the association’s team: Albert Sussman, who approached the board with a proposal to start a magazine for the industry. Sussman already had experience with another trade organization, the Automobile Association of America. Though Shopping Centers Today would not launch for 20 years yet, the board did offer Sussman a staff position as executive secretary of the association. Under Sussman’s first employment contract, his remuneration was based solely on the number of new members he enrolled. But he eventually became so successful at recruiting that “ICSC had to cancel that contract and renegotiate a new one with Al,” Kranzdorf said.

“The group grew rather rapidly from about 30 to over 120 in just 10 months,” said Kranzdorf. But there were some rough patches, to be sure. “Whenever there was a big real estate recession, membership fell off tremendously,” Kranzdorf said. “People didn’t pay their dues, and we had a huge deficit.” Kranzdorf and Graham recall how their firms would rush checks to Sussman so that he could pay staff salaries by the end of the week.

In October 1958 members met at the University of Connecticut to work on standards for the industry and focused on leases, budgets and merchants’ associations, among other issues. This meeting was the foundation for ICSC’s CSM (certified shopping center manager) program.

Visionary as these founders were, however, it is unlikely they dreamed that ICSC would one day grow to its present size, with 65,000 members in some 80 countries. “The present scope of the organization,” said Kranzdorf, “is a testament to the leaders, the boards and the professionals.”