Top takeaways: icsc@western 2023

Top Takeaways: ICSC@WESTERN 2023

November 2, 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 |
Cody Charfauros | Principal / Managing Director – San Diego |
Dean Weinstock | Senior Vice President |
Joseph Pellizzon | Vice President |
Jason Wang | Assistant Vice President |
Bret Piekaar | Senior Analyst |