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INDUSTRY CATCHES SPRING FEVER

Optimism is the buzzword among bullish attendees at Spring Convention in Las Vegas

Brannon Boswell and Steve McLinden

How important is Spring Convention to the retail real estate industry? Ask the delegate who got stuck for two hours in her hotel elevator during the show’s peak. Never mind ambulances and apologies — as soon as emergency personnel pulled her from the top of the car, she was on her cell phone, trying to reschedule the appointments she’d missed.

She was one of more than 45,000 professionals from some 50 countries who converged on the Las Vegas Convention Center this year for the industry’s biggest event. This record showing bested last year’s turnout by about 10 percent.

The Inland Real Estate Group of Cos. upped its delegation by 37 percent to 103 people at this year’s show. The firm had more than 650 individual meetings during the show, about 100 of which were impromptu and the majority of which were deal-specific, according to a spokesman.

Developers Diversified Realty Corp. boosted its delegates this year by about a third, packing its booth with roughly 60 leasing and development executives. “What’s different about this year is not just that we have more meetings, but that those meetings are more strategic,” said Timothy J. Bruce, the firm’s executive vice president of development.

The show just keeps on growing. But so will the Leasing Mall next year. ICSC plans to expand the 1.3 million-square-foot facility by about 500,000 square feet.

Financial institutions, busy finding new projects to finance and refinancing old debt, were more visible than ever at this year’s show. In fact, the number of attendees who identified themselves as representatives of lending institutions grew to 1,830 this year, from 1,730 last year. “It’s not just Wachovia anymore making the trip,” one developer said. Indeed, more institutional investors are committing capital to retail real estate these days, said outgoing ICSC Chairman Charles Grossman in his farewell address to members. “It is now unusual to find a substantial investor who does not have a significant permanent allocation of its capital to property,” he said.

Public officials, too, descended on Las Vegas en masse. The number of public sector attendees this year reached 1,856, up 10 percent from last year. Many of the cities represented this year have been attending Spring Convention for years, but others made their first foray this year, most notably Atlanta. Part of Mayor Shirley Franklin’s plan was to make retailers and developers more aware of the economic power within the inner city. In fact, many of the retailers on hand were seeking in-fill sites and public subsidies to get stores open in those areas.

Wal-Mart, for one, is ratcheting up its inner-city development efforts, said Carl Muller, vice president of design in the retailer’s real estate department, during a panel discussion at the show. “We are committed to being much more inclusive [of community sentiments] as we enter those markets. … Wal-Mart views the underserved urban markets much as Sam Walton viewed small towns as underserved markets. It’s important that you find out who you should be speaking to very early in the process, how you can approach them and what their urban objectives are. It streamlines everything.”

The return of inner-city retail “has been an evolutionary process,” said Lyneir Richardson, vice president of urban land development at General Growth Properties. “First, fast-food eateries got it, then drugstores got it, and now big-box and mass market retailers are getting it.” Most urban projects call for patience, Richardson said. “We don’t ask for speed, but we do need the certainty and the reassurance [from the city] that the project is going to happen.”

Another trend at this year’s show involved American retail developers and their international ambitions. Mixed-use specialist Vornado Realty Trust recently invested $25 million in TCG Infrastructures, which owns and develops office space in India. Urban Retail Properties has put together a team to explore the subcontinent for possible deals. And James A. Ratner, executive vice president of Forest City Enterprises, returned recently from a scouting expedition to the fast-growing country. Taubman Centers is awaiting approval for its proposed retail district in South Korea’s massive New Songdo City free-enterprise zone and for its bid to create the retail portion of Marina Bay, a planned mixed-use complex in Singapore.

“Bullish” is the adjective attendees used most often to describe the atmosphere. “No one was walking in our door saying they want to close stores,” said Simon Property Group COO Richard Sokolov. In fact, some retailers were putting together massive rollouts, while others had whole new concepts to present to potential landlords. “Everybody has a pressure to grow, and a lot of people want to be in retail right now,” said Terry S. Brown, president of Edens & Avant. “Smaller retailers are getting infusions of venture capital, and Wall Street growth expectations have the larger retailers coming out with a lot of new concepts.”