What apocalypse? Expo showed few signs of retail’s struggles

Attendance strong at ICSC’s New York event

New York /
Dec.December 13, 2019 08:30 AM
James Famularo of Meridian Capital Group and Jeff Edison of Phillips Edison & Company (Credit: iStock)

James Famularo of Meridian Capital Group and Jeff Edison of Phillips Edison & Company (Credit: iStock)

And it’s a wrap on one of the largest retail real estate conventions in the country.

Attendance at the New York Deal Making conference, put on every December by the International Council of Shopping Centers, was on pace to surpass the usual 10,000 people, an ICSC representative said. Final figures were not immediately available.

As of noon Thursday the three-day West Side event had 9,178 registrants, a figure that does not take into account on-site registrations.

While the focus of the conference was making deals, the ICSC’s decision this year to boost its programming — adding dozens of panels and a mini food hall — was in full effect.

The add-ons reflected the seismic shift in retail, as store closures mount and a new crop of tenants — many internet-based or focused on experiences — step up to take up space they increasingly see as necessary to their bottom lines.

“Retailers are seeing stores as a great way to generate data points,” said Andrew Connolly, a director at Newmark Knight Frank whose retail leasing is focused on the New York metro region.

Many attendees said the show floor felt more upbeat than usual. That’s even as the U.S. has seen more than 9,300 store closures this year and just 4,400 openings, according to Coresight Research. This year also saw several major retailers including Forever 21, Payless and Barneys file for bankruptcy and close hundreds of stores.

For owners of retail space, that means tenants still have the upper hand, said Joseph French, a national retail broker for White Plains–based Marcus & Millichap.

“The problem is the tenants are taking advantage of the fact that there are fewer of them,” he said. “The big issue is they’re increasing their demands for tenant improvements. That’s killing [landlords].”

While traditional apparel retailers have suffered this year, there has been a focus on leasing space to health and wellness concepts — think specialty fitness centers like Soul Cycle and healthy cafes, said James Famularo, president at Meridian Capital Group. In Brooklyn this year, for instance, the top three leases went to Blink gyms, The Real Deal found.

Retail has rotated through a variety of trends — remember all those frozen yogurt chains? — but health is one that is unlikely to go away soon. “Everybody wants to be healthy and fit,” Famularo said.

Jeff Edison, chairman and CEO of Phillips Edison & Company, a grocery-anchored shopping center real estate investment trust, said medical office space and fitness centers are taking a growing percentage of his firm’s portfolio.

“Some of our retailers are cranking,” he said, “and some are in hunker-down mode.”

Still, the atmosphere on the show floor at the Javits Center led French to think that the first quarter of 2020 will be a busy one for retail investment.

“There seems to be good leasing activity, money’s cheap and there’s clearly people looking to invest in shopping centers,” he said.

But now that the show is over, the next question is whether the connections and deals made during the event will lead to closed transactions.

“We come out of here and think the world is just great,” said French. “Come talk to me on January 15th.”

Kevin Sun contributed to this article.


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