Top Takeaways: ICSC@WESTERN 2023
Retail dealmakers, innovators, changemakers, and industry experts gathered last week for ICSC@WESTERN in San Diego, California. The Slatt Capital team members were among the thousands of attendees digesting insights from dozens of insightful panels spread across the 3-day event. The following is a selection of our key takeaways from the premier event.
- Retail has made a significant comeback since the pandemic and remains at the forefront of many investors and lenders’ investment focus.
- Rising interest rates have caused concern among investors/developers, but most of those owners are seeking capital outside traditional bank resources in order to execute business plans.
- Access to capital appears more important than the actual cost of that capital.
- Most conversations centered around owner/developers looking for construction and bridge loans instead of purchases or refinances. Many owners see tenant demand is still strong and driving development needs.
- Interest rates have been taking the headlines, but the cost of insurance is flying under the radar and becoming a real cause for concern for future transactions. Sponsors are—or should be—adjusting their proformas to reflect a 20-30% increase.
- Expectations are that tenants will start pushing back on annual rent increases.
- AI will majorly impact the industry within the next 8-12 months. The speed and efficiency of new AI programs currently in development could mean additional competition (investors/sponsors) entering the market.
- Focused strategies for landlords in today’s market:
- Location – Understand where you are investing and what the needs are of that community. Curate the tenant mix accordingly.
- Asset Management – Invest in the property to ensure it has the look and feel of modern amenities.
- Tenant Relationships – Maintain flexibility when working with your tenants on their changing needs (e.g., curbside pickup, managing how people navigate parking structures, EV charging stations, etc.)
- Retail sales have grown 3.1% YTD (January – September 2023 compared to the same period in 2022)
- A 3.8% increase in seasonal retail sales is expected from October – December 2023.
- Suburban retail is strong, especially grocery-anchored retail.
- A lot of dry powder is on the sidelines waiting to deploy into distressed assets.
- Business is slowing dramatically in the luxury retail segment while the value side continues to do quite well.
Michael Kaplan | President | firstname.lastname@example.org
Cody Charfauros | Principal / Managing Director – San Diego | email@example.com
Dean Weinstock | Senior Vice President | firstname.lastname@example.org
Joseph Pellizzon | Vice President | email@example.com
Jason Wang | Assistant Vice President | firstname.lastname@example.org
Bret Piekaar | Senior Analyst | email@example.com