May 19, 2015 Recon Day 2 - Deborah Weinswig€¦ ·...
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1 Fung Business Intelligence Centre Global Retail & Technology Flash Report: Icsc Recon day 2 Copyright © 2015 The Fung Group. All rights reserved. May 19, 2015 Recon Day 2 AN UPDATE ABOUT THE ICSC FROM THE CHAIRMAN Overall, ICSC membership has enjoyed solid growth of 150%, primarily from outside the US. The organization has also expanded its services, boosting total operating revenue by 15%. The ICSC is confident that consumers will continue to visit shopping centers as the economy continues to recover. RECon remains the largest ICSC annual event, while the New York dealmaking conference is the fastestgrowing event. Today’s sessions delved into some technical aspects of the retail real estate sector: topics included capital markets, strategies to retain retailers, industry certification and women in retail real estate. CAPITAL MARKETS Kieran Quinn, Managing Director, Guggenheim Commercial Real Estate Finance The key takeaway from the capital markets discussion was that lenders are currently focusing on groceranchored regional malls. As for power centers, lenders are being more selective, aiming to ensure the right tenant mix and certain occupancy rates. Bigbox tenants that don’t offer grocery are also subject to this tighter screening process. EXECUTIVE WOMEN IN RETAIL REAL ESTATE Kristin Mueller, EVP and COO, Jones Lang LaSalle Women in business leadership is always a hot topic. The morning blockbuster session was organized in conjunction with CREW, a commercial real estate industry women’s association, to gain insights from women executives in the field. CREW currently has 9,000 members within 72 chapters in the US and Canada. This year, the association is working with MIT on a threeyear benchmark study on compensation and work satisfaction for women in the industry. The panel shared the following insights on the state of the sector and changing consumer behaviors:
Transcript of May 19, 2015 Recon Day 2 - Deborah Weinswig€¦ ·...
1 Fung Business Intelligence Centre Global Retail & Technology Flash Report: Icsc Recon day 2 Copyright © 2015 The Fung Group. All rights reserved.
May 19, 2015
Recon Day 2
AN UPDATE ABOUT THE ICSC FROM THE CHAIRMAN Overall, ICSC membership has enjoyed solid growth of 150%, primarily from outside the US. The organization has also expanded its services, boosting total operating revenue by 15%.
The ICSC is confident that consumers will continue to visit shopping centers as the economy continues to recover. RECon remains the largest ICSC annual event, while the New York deal-‐making conference is the fastest-‐growing event.
Today’s sessions delved into some technical aspects of the retail real estate sector: topics included capital markets, strategies to retain retailers, industry certification and women in retail real estate.
CAPITAL MARKETS Kieran Quinn, Managing Director, Guggenheim Commercial Real Estate Finance
The key take-‐away from the capital markets discussion was that lenders are currently focusing on grocer-‐anchored regional malls. As for power centers, lenders are being more selective, aiming to ensure the right tenant mix and certain occupancy rates. Big-‐box tenants that don’t offer grocery are also subject to this tighter screening process.
EXECUTIVE WOMEN IN RETAIL REAL ESTATE Kristin Mueller, EVP and COO, Jones Lang LaSalle
Women in business leadership is always a hot topic. The morning blockbuster session was organized in conjunction with CREW, a commercial real estate industry women’s association, to gain insights from women executives in the field.
CREW currently has 9,000 members within 72 chapters in the US and Canada. This year, the association is working with MIT on a three-‐year benchmark study on compensation and work satisfaction for women in the industry.
The panel shared the following insights on the state of the sector and changing consumer behaviors:
2 Fung Business Intelligence Centre Global Retail & Technology Flash Report: Icsc Recon day 2 Copyright © 2015 The Fung Group. All rights reserved.
1) Retail Real Estate Is Lagging, but Quickly Catching Up
Retail real estate has been lagging other property types. The recovery process has been slow for retail in comparison to three other major real estate types: office (which has exceeded its 2007 high-‐water mark value), industrial (which experienced a recent surge) and apartment (which is largely saturated). Retail real estate is active and fluid in the market. On the East Coast and in the Dallas area, retail real estate is hitting prerecession price levels and pre-‐2006 acquisition volumes.
Overall, e-‐commerce expansion still presents opportunities in retail real estate, although landlords and retailers need to define the right real estate strategy in order to provide a different shopping experience. However, there’s more opportunity in class B and B+ properties, where rents have rebounded very quickly. Properties that focus on “women off-‐malls” have the most opportunity.
2) Providing Convenience for Busy Women Is Key for Retail Stores
In the US, 80% of shopping decisions are made by women, and the profile of women shoppers is changing rapidly. They are now very highly educated consumers because they conduct online shopping research on pricing and products. Only 5% of households include a stay-‐at-‐home mom. Hence, moms are busier than ever and seeking convenience.
Grocery stores are taking the shopping experience to the next level. For example, some have craft beer bars in store to attract traffic. Shopping centers are also actively working to improve existing centers for busy women shoppers.
LUNCH KEYNOTE SPEECH: OLD NAVY’S BRANDING STORY Stefan Larsson, Global President, Old Navy
Stefan Larsson stated that Old Navy’s brand vision is to provide inspirational items at value price points, a “masspirational” strategy. Old Navy is unique, as no brands compete with the company in this segment; most retailers sell through private labels rather than under a big-‐name brand.
While Old Navy attempts to preserve its heritage in this space, it also faces the challenge of a trend cycle that has shortened from two years to three months. It’s therefore important that Old Navy stay on trend and guide shoppers in terms of trends.
3 Fung Business Intelligence Centre Global Retail & Technology Flash Report: Icsc Recon day 2 Copyright © 2015 The Fung Group. All rights reserved.
The brand has heavily invested in technology: it has installed Wi-‐Fi in over 50% of its stores. Sales associates are trained to help customers search for items and to complete online transactions in stores. For these reasons, stores have become more important than ever, as they’re the focal points of customer engagement.
WHAT’S COMING NEXT? FBIC is attending the Meet the Trustees Breakfast on Tuesday. An industry town hall and panel discussions on “the mall of the future” are also on tomorrow’s agenda. Stay tuned.
4 Fung Business Intelligence Centre Global Retail & Technology Flash Report: Icsc Recon day 2 Copyright © 2015 The Fung Group. All rights reserved.
Deborah Weinswig, CPA Executive Director—Head of Global Retail & Technology Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: +852 6119 1779 [email protected] Cam Bolden [email protected] Marie Driscoll, CFA [email protected] John Harmon, CFA [email protected] Amy Hedrick [email protected] Aragorn Ho [email protected] John Mercer [email protected] Charlie Poon [email protected] Kiril Popov [email protected] Stephanie Reilly [email protected] Lan Rosengard [email protected] Jing Wang [email protected]
