The mood from the floor of the International Council of Shopping Centers’ RECon Monday was a defensive optimism, colored by a recognition that leasing volume was healthy in part because rents have declined.
“Right now, landlords are trying to embrace the new reality of lower rents and bigger contributions,” said Robert Futterman, of the retail-focused brokerage RKF.
But at the same time, tenants are closing some stores, and “right-sizing” their location, and “that’s keeping the brokers very busy,” Futterman added.
The halls were packed earlier Monday, crowded around the booths of brokerages like CBRE, JLL, Newmark Grubb Knight Frank and Marcus & Millichap.
“We all read about the negativity to the industry, but it’s expansion when I speak with brokers,” said Adam Weinblatt, a broker at NGKF. But he acknowledged that pricing has shifted, and there may be more to come.
“Rents have not bottomed out, but they will soon,” he said.
Volume was steady, said Joe Jacobson, a partner with the landlord Madison Capital. “Deals are getting done at realistic levels.”
There was broad agreement on which uses were most active.
“Food, wellness, fitness,” said William Friedland, of Friedland Properties.
David Gomez, of investment sales-focused brokerage Fountain Realty Group, said he was counseling buyers to focus on buying spaces that can accommodate tenants with food uses.
“If you can vent it, you can rent it,” is Fountain’s catchphrase du jour, Gomez said.
Brian Lindley of Chick-fil-A said he saw only a small decline in New York City rents this year compared with last year. But in part he said that’s because his company is looking at “high-profile” neighborhoods.
Generally, landlords are willing to drop rents, brokers said.
“Landlords have a [far] different attitude,” this year, said Peter Braus of Lee & Associates NYC.
Meridian Capital Group held a lunch for its clients, where attendees included Thor Equities’ Joe Sitt, Wharton Properties’ Jeff Sutton and Alex Adjmi. Ralph Herzka gave a speech about the firm’s growth, which was followed by a song and dance show put on by tiny robots. “This is the future, guys!” Herzka said.
Several insiders said they were pleasantly surprised by the number of people walking the halls.
“I’m shocked to see as many people,” said Colliers International’s Bradley Mendelson. “But I don’t think there are as many retailers.”
“We used to play football [in the hall],” said Elizabeth Friedland Meyers, because there were so few attendees. But on Monday there was no space for such games.
By the late afternoon, however, it slowly thinned out, and attendees were spotted trying to figure out which of the evening parties were worth checking out.
Hiten Samtani contributed reporting.
(To view our retail leasing Deal Sheet for the last six months, click here)